There are plenty of books on making money by men who haven’t made much. But if J. Paul Getty, who Fortune magazine called `the richest man in the world, ` doesn’t know how, who does? Here the billionaire businessman discloses the secrets of his success – and provided a blueprint for those who want to follow in his footsteps. And he goes beyond the matter of making money to the question of what to do with it.

Paul Getty

Biography

How to Be Rich

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doriangrey

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Greece

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Athens

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PREFACE

In 1960, the editors of playboy magazine approached me

with a request that I prepare a

series of articles based on

the theme: “Men, Money and Values in Today’s Society.”

Admittedly, I found the proposal flattering—as who

would not? On the other hand, I seriously questioned my

qualifications for the task. My entire adult life had been

devoted to building and operating business enterprises. I

doubted that this experience equipped me to hold forth on a

variety of subjects before an audience of millions.

Besides, I was—and, for that matter, still am—active in

business. I was far from certain that I would have the time

necessary to write. Finally, I wasn’t at all convinced that

the magazine’s readers would be very interested in what I

had to say.

But my doubts and reservations were overcome by what,

to me, seemed valid and convincing considerations and

arguments.

First of all, I had long been aware that American

business and businessmen and the entire free-enterprise

system were very often the targets of severe criticism—and

even abuse. Few, indeed, were the reasoned replies and

rebuttals which reached the eyes and ears of the general

public.

Then, as I—and so many other successful businessmen

of my acquaintance—have so frequently noted, many young

people today enter upon busin

ess careers without sufficient

grounding and preparation. By this, I do not mean that

they lack specialized training. Rather, it is that they fail to

grasp the over-all, the long-range picture. They do not

understand and appreciate the universally applicable

fundamentals, the basic philosophies, the endless

implications and ramifications —and particularly the

numberless responsibilities—which are the absolute

essentials of business in this complex age.

Also—and this was far from the least of the

considerations which decided me—I felt that, in our

contemporary society, far too much emphasis was being

placed on

getting

rich, on amassing wealth. Little if any

attention was being paid to the very important question of

how to be rich,

how to discharge the responsibilities

created by wealth even while

constructively enjoying the

privileges and prerogatives conferred by it.

After all, “richness” is at least as much a matter of char-

acter, of philosophy, outlook and attitude, as it is of money.

The “millionaire mentality” is not—and in this day and age,

cannot be—merely an accumulative mentality. The able,

ambitious man who strives for success must understand

that the term “rich” has infinite shadings of meaning. In

order to justify himself and his wealth, he must know

how

to he rich

in virtually every positive sense of the term.

These factors—and some others—all contributed to my

final decision to accede to the editors’ request.

I might add that

PLAYBOY

‘

Editor-Publisher, Hugh M.

Hefner, and the magazine’s Editorial Director, A. C.

Spectorsky, promised that I would be granted carte blanche

to say what I wanted, regardless of how unconventional,

nonconformist or controversial my views happened to be.

They have kept this promise faithfully through the ensuing

years —but I am getting ahead of myself.

“I will prepare the first piece, and then we’ll see,” I said,

in effect.

The results, to say the least, were surprising to me. Al-

though what I have written is unconventional, even icono-

clastic, the response has been overwhelmingly favorable.

Evidently, many people shar

ed my views or had been

waiting for someone to express opinions confirming their

own deep-seated doubts and unease about widely accepted

doctrines and theories.

It has been a source of immeasurable satisfaction that

my writing for

PLAYBOY

has been well received, widely

quoted and has inspired thousands of favorable comments

and letters from press and public. This book is the result of

that reception.

In the years that have intervened since the first article

was published, I have often been asked three questions—

questions I would like to answer here as simply and

directly as possible.

Why, considering the large number of magazines

being published in America today, did I choose

PLAYBOY

the medium through which to express my views?

The answer is, indeed, simple,

PLAYBOY

enjoys a very high

readership among young executives and college students.

These are the individuals who will be the businessmen and

business leaders of the future. These are precisely the in-

dividuals who would be likely to benefit from any

information I might impart as a result of my own

experience in the business world. These are the young men,

and women, whose thinking processes can—and should—be

prodded by ideas and opinions not necessarily contained in

textbooks or staid, over-conservative publications. Whether

they accept or reject the ideas is immaterial; they are able

to think, and they

think constructively as a result of

mental stimuli. They are, in short, the individuals to whom

I want to address any “message” I can offer.

2. Why did I want to express my views in the first

place?

I have already touched on this, but I feel that some

amplification might be in order. I’ve said that although

business is often attacked publicly, it does not very often

find many public defenders. The average businessman

generally speaks before board or stockholders’ meetings or

at trade-association, Chamber of Commerce or service-club

luncheons and dinners. When he writes, it is usually for

house organs or trade journals. Although he has a very

vital and important message for the public at large, he

seldom receives, or takes, the opportunity to deliver it.

Simply stated, I have tried to start the ball rolling —and I

hope that I may have encouraged other successful

businessmen to air their views before the general public.

3. What do I hope to achieve by my writing?

Beyond what I have already mentioned, I have several

hopes and aims. I would like to convince young

businessmen that there are no sure-fire, quick-and-easy

formulas for success in business, that there are no ways in

which a man can automatically become a millionaire in

business.

There are no tricks, no magical incantations or sorcerer’s

potions which can make a business or a businessman an

overnight success. Many qualities and much hard work are

needed, as are innumerable other elements, before a

businessman or woman can achieve success and reach the

millionaire level. The various qualities, elements and

factors which other successful businessmen and I have

found to be essential or helpful are subjects of this book.

I am firmly convinced that the future of American

business, of the American people—and, indeed, of the

entire free world —lies in the perpetuation of a progressive,

farsighted free-enterprise system guided by progressive,

farsighted businessmen who will reap their rewards from

improving the living standards of all. If, by writing this

book, I have passed this message on—even if only to a

receptive few—then I shall have achieved my purpose and

received a very rich reward in the form of personal

gratification from the thought that I have in some small

measure helped spread and strengthen the principles in

which I believe.

—J. Paul Getty

HOW I MADE MY FIRST

BILLION

Though this book is not an autobiography, the views I

express in it are my own and have grown out of my life ex-

perience. I think, therefore, that a brief description of my

career might be of interest to the reader. If I have a

business “philosophy,” it was formed in the oil fields and

elsewhere in the oil industry.

After many fruitless months of prospecting for oil in

Oklahoma, I finally spudded my first test well not far from

Stone Bluff, a tiny Muskogee County hamlet, in early

January 1916.

On February 2, the bailer—the device which cleared

formation rock from the drill

hole—brought up a quantity

of oil sand. This indicated that we were nearing the final

stages of drilling; the next 24 hours would prove whether

the well was a producer or a dry hole.

I was still very young and quite green. My nervousness

and excitement rose to an intolerable pitch. I became more

hindrance than help to the men on my drilling crew. To get

out of their way and ease my own tension, I beat a strategic

retreat to Tulsa, the nearest city of any size. I decided to

wait there until the drilling operation was completed and

the results were known. In Tulsa, J. Carl Smith, a close

friend who was considerably older and far less excitable

than I, volunteered to go to

the drilling site and supervise

the work there for me.

There were no telephones in the remote area where my

well was being drilled. The single line between Stone Bluff

and Tulsa seldom worked. Hence, J. Carl Smith promised

to return to Tulsa on the last train from Stone Bluff the

next day and inform me of the latest developments.

On the following day, I was at the Tulsa railroad depot,

anxiously pacing the windswept passenger platform more

than an hour before the train

was due to arrive. At last, it

pulled into the station. Endless seconds later, J. Carl

Smith’s familiar figure emerged from one of the coaches.

His face beamed, and my hopes soared.

“Congratulations, Paul!” he boomed when he saw me on

the platform. “We brought in your well this afternoon. It’s

producing thirty barrels!”

I automatically assumed he meant thirty barrels a day,

and my elation vanished instantly. Thirty barrels a day—

why, that was a mere trickle compared to the gushers other

oilmen were bringing in at the time.

“Yes, sir,” J. Carl grinned. “We’re getting thirty barrels

an hour . . . “

Thirty barrels an hour!

That made a difference, a world of difference. That

meant the well was producing 720 barrels of crude oil daily.

It also meant that I was in the oil business—to stay.

As the son of a successful oilman, I had been exposed to

the virus of oil fever since childhood. My parents, George F.

and Sarah Getty, and I first visited what was then the

Oklahoma Territory in 1903, when I was ten. While there,

my father, a prosperous Minneapolis attorney-at-law, found

it impossible to resist the lu

re of the Oklahoma Oil Rush,

which was then in full swing. He formed the Minnehoma

Oil Company and began prospecting for oil.

M y father, a self-made man who had known extreme

poverty in his youth, had a practically limitless capacity for

hard work, and he also had an almost uncanny talent for

finding oil. After organizing Minnehoma Oil, h e personally

supervised the drilling of 43 oil wells, of which 42 proved to

be producers!

I served a tough and valuable apprenticeship working as

a roustabout and tooldresser in the oil fields in 1910 and

1911, but I didn’t go into the oil business for myself until

September 1914. I had but recently returned to the United

States after attending Oxford University in England for

two years. My original intent was to enter the U.S.

Diplomatic Service, but I deferred that plan in order to try

my luck as an independent operator—a wildcatter—in

Oklahoma.

The times were favorable. It was a bonanza era for the

burgeoning American petroleum industry. A lusty,

brawling pioneer spirit still prevailed in the oil fields. The

Great Oil Rush continued with unabated vigor and was

given added impetus by the war that had broken out in

Europe that year. Primitive boom towns dotted the

Oklahoma countryside. Many bore bare-knuckled frontier

era names such as those of the four “Right” towns:

Drumright, Dropright, Allright and Damnright.

Streets and roads were unpaved—rivers of mushy clay

and mud in spring and winter and sun-baked, rutted tracks

perpetually shrouded by billowing clouds of harsh red or

yellow dust in summer. Duckboard sidewalks outside the

more prosperous business establishments and gambling

halls were viewed as the ultimate in civic improvements.

The atmosphere was identical to that which historians

describe as prevailing in the California gold fields during

the 1849 Gold Rush. In Oklahoma,

the fever was to find oil,

not gold, and it was an epid

emic. There were few, indeed,

who were immune to the contagion. Fortunes were being

made—and lost—daily. It was not unusual for a penniless

wildcatter, down to his last bit and without cash or credit

with which to buy more, to drill another hundred feet and

bring in a well that made him a rich man. A lease which

sold for a few hundred dollars one afternoon sometimes in-

creased in value a hundredfold or even a thousand fold by

the next morning.

On the other hand, there were men who invested all they

owned in leases and drilling operations only to find that

they had nothing to show for their money and efforts but a

few dismally dry holes. Leases purchased at peak prices

one day proved to be utterly valueless the next. It was all a

supremely thrilling gamble for staggering stakes, and I

plunged into the whirl hopefully. I had no capital of my

own; my personal budget was $100 per month. My first

year was anything but profitable. Large oil strikes were

being reported regularly, and other wildcatters were

bringing in gushers and big producers, but fortune seemed

to elude me.

Then, in the late fall of 1915, a half-interest in an oil

lease near Stone Bluff in Muskogee County—the Nancy

Taylor Allotment—was offered for sale at public auction. I

inspected the property and thought it highly promising. I

knew other independent operators were interested in ob-

taining the lease, and this worried me. I didn’t have much

money at my disposal—certain

ly not enough to match the

prices older, established oilmen would be able to offer. For

this reason, I requested my bank to have one of its repre-

sentatives bid for me at the sale without revealing my iden-

tity as the real bidder.

Surprisingly enough, this rather transparent stratagem

accomplished the purpose I intended. The sale, held in the

town of Muskogee—the county seat—was attended by sev-

eral independent oil operators eager to obtain the lease.

The unexpected appearance of the well-known bank

executive who bid for me unnerved the wildcatters. They

assumed that if a banker was present at the auction, it

could only mean that some large oil company was also

interested in the property and was prepared to top any and

all offers. The independents glumly decided it would be

futile to bid and, in the end, I secured the lease for $500—a

bargain-basement price!

Soon thereafter, a corporation was formed to finance the

drilling of a test well on the property. I, as a wildcatter with

no capital of my own, received a modest 15-percent interest

in the corporation. I assembled a crack drilling crew, and

my men and I labored to erect the necessary wooden der-

rick and to rush the actual drilling operations. I remained

on the site night and day until the drilling went into its

final stages. Then, as I’ve related, I found it impossible to

stand the nervous strain and fled to Tulsa, where my friend

J. Carl Smith brought me the news that the well had come

in.

The lease on the property was sold to a producing oil

company two weeks after that, and I realized $12,000 as

my share of the profits. The amount was not very

impressive when compared to the huge sums others were

making, but it was enough to convince me that I should—

and would—remain in the oil business as a wildcatter.

My father and I had previously formed a partnership.

Under its terms he was to provide financing for any explo-

ration and drilling I conducted and supervised for the part-

nership. In return, he would receive 70 percent of the

profits, while I received the remaining 30 percent. After my

first success, we incorporated the partnership and in May

1916 formed the Getty Oil Company, in which I received a

30-percent stock interest.

Many fanciful—and entirely erroneous—accounts of the

business relationship between us have appeared in print.

Contrary to some published reports, my father did not set

me up in business by giving me any outright cash gifts.

George F. Getty rejected any ideas that a successful man’s

son should be pampered or spoiled or given money as a gift

after he was old enough to earn his own living. My father

did

finance some of my early operations—but solely on the

70/30-percent basis. Insofar as

lease purchases and drilling

or other operations I conducted on my own account were

concerned, I financed these myself. My father neither pro-

vided the money for my private business ventures nor did

he share in the profits I received from them.

Incidentally, there is another popular misconception I’d

like to correct once and for all. It has been said that my

father bequeathed me a huge fortune when he passed away

in 1930. Actually, he left me $500,000 in his will—a con-

siderable sum, I’ll admit, but nonetheless a very small part

of his fortune. It was a token bequest. My father was well

aware that I had already made

several million dollars on

my own, and he left the bulk of his estate to my mother.

After Father and I incorporated our partnership in 1916,

I went right on prospecting and drilling for oil. My enthusi-

asm was not dampened when my second well proved to be a

dry hole. By then, wildcatting was in my blood and I con-

tinued to buy and sell leases and to drill wells. I usually

acted as my own geologist, legal advisor, drilling

superintendent, explosives expe

rt and even, on occasion, as

roughneck and roustabout. The months that followed were

extremely fortunate ones. In most instances, the leases I

bought were sold at a profit, and when I drilled on a

property, I struck oil more often than not.

There were no secrets, no mystical formulas behind

these successes. I operated in much the same manner as

did almost all wildcatters—with one important exception.

In those days, the science of petroleum geology had not yet

gained very wide acceptance in the oil fields. Many oilmen

sneered openly at the idea that some “damned bookworm”

could help them find oil. At best, the vast majority of

oilmen were skeptical about geology as a practical science

and put little stock in geologists’ reports. I was among the

few who believed in geology. I studied the subject avidly at

every opportunity, and applied what I learned to my

operations.

The independent operator had to possess a certain

amount of basic knowledge and skill. He also needed

reliable, loyal and experience

d men on his exploration and

drilling crews. But, beyond these things, I believe the most

important factor that determined whether a wildcatter

would succeed or fail— whether he would bring in a

producing well or wind up with a dry hole—was just plain

luck.

There were some who didn’t consider it luck, among

them T. N. Barnsdall, one of the great Oklahoma oil

pioneers. Multimillionaire Barnsdall often expounded his

favorite theory about what he thought made the difference.

“It’s not luck,” he maintained stoutly. “A man either has

a nose for oil or he doesn’t. If he does, he smells the stuff

even when it’s 3,000 feet down!”

Perhaps. But I rather doubt it myself. Personally, I was

never able to sniff out the presence of a subterranean oil

pool. Nor do I recall that I ever tingled with an oil dowser’s

extrasensory response while tramping across a potential

drilling site. I still think my early successes were due

mainly to pure luck.

However, lest there be those who imagine wildcatters

had little to do but wait for the wheel of fortune to spin and

then reap their profits, let me say that the oil business was

never an easy one. It has always entailed work—hard

work— and it has always been fraught with innumerable

financial pitfalls, especially in the early days. Wells

sometimes blew up, and profits—and often capital—were

devoured with appalling speed by costly efforts to

extinguish the resulting fires.

Dry holes, equipment failures and breakdowns at crucial

periods, squabbles and litigation over leases and rights-of-

way— these were a few of the myriad problems and

setbacks which frequently drained the independent

operator’s financial resources down to a point well below

the danger mark.

In addition, all of us who operated independently often

found ourselves facing heavy competition and opposition

from major oil firms. Some of these huge companies did not

always abide by Marquis of Queensberry rules when they

engaged in legal or financial infighting to smother an inde-

pendent who appeared to be growing too big or too fast.

Wildcatters developed traits and techniques which

enabled them to stay in business and to do more than

merely hold their own against the petroleum industry’s

behemoths. We became flexible, adaptable and versatile—

adept at improvisation and innovation—if for no other

reason than because we

had

to in order to survive. For

example, the big companies employed vast numbers of

specialists and consultants, administrative personnel and

office workers, housing them in large and expensive offices.

We, the independents, found our experts among the hard-

bitten, veteran oil-field workers who formed our

prospecting and drilling crews, or we relied on our own

judgment and experience to solve our problems as they

arose. We did our own administrative and paper work—

keeping both to a minimum. As for our offices, these—more

often than not—traveled with

us in the mud-splotched

automobiles we drove from one drilling site to another.

As I have said, I was lucky—very lucky. I made many

profitable deals and brought in several producing wells in

the months after I first struck oil on the Nancy Taylor

Allotment site. The Getty Oil Company prospered. I was

named one of the company’s directors and elected its

secretary, but this did not mean I exchanged my work

clothes for a business suit. Notwithstanding my heady new

titles, my work was still in the oil fields—and on the

drilling rigs. My role in the company’s affairs remained the

same as it had been. I bought and sold oil leases, and

prospected and drilled for oil.

As the Getty Oil Company’s wealth increased, so did my

own in proportion to my 30-percent share in the firm—and

I was also embarked on profitable ventures on my own ac-

count. All these things kept me very busy—too busy to pay

more than cursory attention to how much money I was

actually making. Then, one day,

I stopped and took detailed

stock of my financial situation. I suddenly realized that I

had gone a very long way toward accomplishing what I’d

set out to do in September 1914. I had built the foundations

of a business of my own in th

e American oil industry. I was

not quite 24, but I had become a successful independent oil

operator. And I had made my first million dollars. I was a

millionaire!

Until then, my life had been devoted chiefly to growing

up, obtaining an education and establishing a business.

Now I found I’d made enough money to meet any personal

requirements I might conceivably have in the foreseeable

future. I made a headstrong snap decision to forget all

about work thereafter and to concentrate on playing, on

enjoying myself.

My decision was influenced—at least in part—by the

fact that there was a war raging in Europe. Although the

United States had not yet entered World War One, I felt

certain that American participation in the conflict was

inevitable. I’d already filed official applications to serve in

either the Air Service—my first choice—or the Field

Artillery when and if the U.S. declared war. I was sure it

would be only a matter of time before I received my orders,

and I wanted to relax and have fun before they arrived.

My mother, father and I had made our permanent home

in Los Angeles, California, since 1906. I’d attended school

and college in California before going on to Oxford and

then, later, starting my business career in the Oklahoma

oil fields. I loved California and the easy, informal and

extremely pleasant life that prevailed there in those days.

Thus, it was only natural that I should choose Los Angeles

as the place to enjoy the money I’d made in the oil fields.

“I’ve made my fortune—and I’m going to retire,” I an-

nounced blandly to my startled parents.

Neither Mother nor Father was pleased with my

decision. Both of them had worked very hard in their own

youth. When first married, my mother had continued to

work as a schoolteacher to help provide my father with the

money he needed to put him through law school. Both of

them firmly believed that an individual had to work to

justify his existence, and that a rich person had to keep his

money working to justify its existence. My father tried to

impress upon me that a businessman’s money is capital to

be invested and reinvested.

“You’ve got to use your money to create, operate and

build businesses,” he argued. “Your wealth represents

potential jobs for countless others—and it can produce

wealth and a better life for a great many people as well as

for yourself.”

I’m afraid I didn’t pay much attention to him—then.

Later, I was to realize the truth of what he said, but first I

had to try things my own way. I owned a spanking new

Cadillac roadster, good clothes and had all the money I

could possibly need. I had made up my mind I wanted to

play, and with these prerequisites, I encountered no

difficulty plunging full tilt into the Southern California-Los

Angeles-Hollywood whirl of fun and frolic. Although the

United States entered the

war, my call-up was first

delayed, then postponed by bureaucratic snarls, and finally

I was informed that my “services would not be needed.” I

consequently spent the World War One years playing and

enjoying myself.

It took me a while to wake up to the fact that I was only

wasting time and that I was bored. By the end of 1918, I

was thoroughly fed up. Early in 1919, I was back in the oil

business—not a little abashed by the “I told you so” smile I

got from my father when I informed him that, having

retired at 24, I was coming out of retirement at 26!

In 1919, oilmen’s attention was already shifting from

Oklahoma to Southern California, where new producing

areas were being discovered and developed. A great new Oil

Rush was in the making, and I was among those who

wanted to be in on it from the beginning. My initial oil-

prospecting venture in Southern California was a fiasco: I

drilled my first California well on the Didier Ranch near

Puente, but the well proved to be a dry hole.

The luck that had stayed with me in Oklahoma had

taken a brief holiday, but it hadn’t deserted me.

Subsequent tries were considerably more successful. I

drilled several wells in the Santa Fe Springs, Torrance,

Long Beach and other Southern California areas, and most

of them proved to be producers, some of them sensational

producers.

I spent most of my time in the field working on the

drilling rigs with my men, a habit which paid many

handsome and unexpected dividends. Not the least of these

stemmed from the drilling crews’ reactions to the presence

of a working boss on the job. The men felt they were

partners with the boss in a mutual effort, rather than

merely employees of some corporation run by executives

they never saw and who had probably never set foot on a

drilling platform in their lives. Morale— and production—

soared as a result.

This was important, for with new wells being drilled by

the hundreds throughout Southern California, there was an

acute shortage of experienced oil-field workers. The person-

nel managers of most large companies engaged in wild

scrambles to find the necessary manpower for their opera-

tions. They bid frantically ag

ainst each other in the labor

market, offering special inducements and benefits to

anyone who’d ever had any experience working on an oil

rig. Most old-timers resented the implication that they had

to be bribed with frills to do an honest day’s work. They

preferred to sign on with wildcatting operators who offered

no fancy extras, but who spoke their language and worked

side by side with them on the drilling sites.

I’ll never forget the time I began drilling on a property

not far from the site on which a major oil company was

drilling a well. Carrying its

employee inducement program

to ludicrous extremes, the firm had designed and built

what its press agents glowingly described as the last word

in drilling rigs. The entire rig was steam heated all the way

up to the crown block. A neatly raked gravel drive led to the

site. There were hot showers for the men and even a

laundry that washed their work clothes while they waited!

Early one afternoon, not long after I’d spudded my well,

a grizzled roughneck appeared on my site and announced

that he wanted to see the boss. When I was pointed out to

him, he came over and wasted no words asking me for a job.

“Are you working now?” I asked.

“Yeah,” came the sour reply.

“Where?”

“Over there,” the roughneck replied, nodding his head

toward the deluxe drilling rig. There were no home

comforts available for my crew, and I told the man so. And,

I added, I couldn’t understand why he would want to leave

a job that offered such luxuries for one on my relatively

primitive operation.

“I’ve been on that rig for four months,” the roughneck

growled unhappily. “And we’ve only gotten down four

thousand feet!” I laughed. Four thousand feet in four

months was a ridiculously slow rate for drilling through the

type of soil formations to be found in that particular field.

“How long do you think it’ll take me to get down that

far?” I asked.

“From the looks of you—about ten days!” the old-timer

answered with a broad grin. “That’s why I’d rather work for

you than for that cream-puff

outfit over there . . .!”

He got the job, and stayed on my payroll for many years.

As a footnote to the story, I might add that my well was

drilled in record time and proved a good producer. The “last

word” in drilling rigs brought in a dry hole and was finally

abandoned.

Another good example of what close teamwork and

mutual confidence between bo

ss and crew could accomplish

can be found in the story of how my men and I licked the

“insoluble” problem of a certain oil lease.

The lease was on a tiny piece of property in the midst of

a forest of oil wells in the rich Seal Beach, California, field.

By some fluke, the lease had been overlooked by the firms

which were operating there.

A company in which I held a

substantial interest acquired the lease, but was about to

write it off as a dead loss. Everyone agreed that nothing

could ever be done with the pr

operty. In the first place, it

was a plot barely larger than the floor area of a small

house. In the second, the only right-of-way providing access

to a road was over a strip of ground several hundred feet

long but less than four feet wide. It was impossible to get

supplies and equipment to the property by truck over this

constricted path. Even if it had been possible, the postage-

stamp-sized plot would not have accommodated a regular-

sized derrick and drilling rig. The companies holding leases

on adjacent properties refuse

d to grant any right-of-way

over their sites, for if a producing well was brought in, it

might diminish the production of their own wells, since it

would be pumping oil from the same pool.

“Forget the lease,” associates with whom I discussed the

matter advised me. “You’ll never get a well drilled there—

not in a million years.”

Stubbornly, I insisted there must be a way; I put the

problem before the men in whom I had the greatest

confidence, the members of on

e of my drilling crews. They

listened to me, and their reaction was the same as mine.

They considered the problem an irresistible challenge.

“Let’s go up and look at things, boss,” a hard-bitten

driller grunted. “We’ll find some way—don’t worry.” Several

men and I went to survey the

situation firsthand, and we

found that it did look fairly hopeless.

“I guess we could drill the well with an undersized rig,”

the driller mused after thinking things over. “If you could

get somebody to design and build it, we could set it up—

but I can’t figure how we’re going to bring everything we

need in from the road …”

The obstacle provided by the limited right-of-way

seemed insuperable, until my mind began to turn over the

driller’s suggestion about a miniature drilling rig. If we

could drill with a miniature rig, then why couldn’t we solve

our transportation problem with a miniature railway? It

was a perfect solution: A narrow-gauge track and a car or

two on which to bring the disassembled “baby” derrick and

supplies and equipment from the road to the drilling site.

Mulish obstinacy? A desire to prove that we were able to

accomplish what everyone else considered impossible? Pos-

sibly—even probably. But both the miniature rig and the

miniature railway were procured. The former was moved in

sections over the latter and assembled by hand on the

microscopic plot of ground. The well was drilled—and a fair

profit was eventually realized on the unusual operation.

I recall other memorable strikes during the 1920s.

Among them is the one I made in the so-called Athens Field

in the southern suburbs of Los Angeles. I acquired the plot

in question for something over $12,000. Because I was

operating entirely on my own account and knew that I

would be stretching my available cash resources thin before

completing the first well, I elected to act as my own drilling

superintendent. Among the men I hired for my crew were

three of the finest drillers in the oil industry: Walter

Phillips, Oscar Prowell and “Spot” McMurdo. We completed

the first well on February 16, 1925, at a depth of 4350 feet

for an initial daily yield of 1500 barrels. A short while later,

I brought in the second well on the site for an initial

production of 2000 barrels per day. In the next nine years,

the two wells on the Athens pr

operty were to show over

$400,000 excess recovery—clear profit over and above all

costs and expenses.

Even more spectacular is the story of the Cleaver Lease

in Alamitos Heights, which I bought with a personal check

for $8000 in October 1926 from a man who had purchased

it for $4000 only a few days before and who wanted to make

a quick profit.

I spudded Well Number One

on February 21, 1927, and

subsequently drilled three more wells on the property. All

proved exceptional producers, bringing up a total of more

than 17,000 barrels daily. Between 1927 and 1939, excess

recovery on the Cleaver Lease wells was nearly $800,000—

a 10,000-percent profit on my original investment. Yet,

within a few weeks after the first well came in, I was not

only close to losing a fortune, but also close to losing the

lease itself. Behind this apparent paradox lie two stories.

One illustrates what the average wildcatter faced when he

jousted with certain major oil companies. The other proves

that while some large firms had no compunctions about

strangling an independent oper

ator, others were ready and

willing to give him a break—and even a helping hand.

As soon as I d brought in Cleaver Well Number One—

which produced an impressive 5100 barrels a day—I cast

about to find a buyer for my

crude production. To my dis-

may, the firms I approached refused to deal with me. The

motives behind this evident boycott became infuriatingly

clear within a few days, when I received several calls from

brokers offering to buy the Cleaver Lease at a very low

price. The brokers refused to name the principals they

represented.

By then, I was an old hand in the petroleum industry. I

recognized all the classic signs indicating a well-organized

squeeze play. Certain interests wanted my lease. Either I

sold out at a ridiculously low price, or I would be left

without any market for the oil produced by the wells on the

property.

Unable to sell my oil, I had to find some way to store it.

The only storage facilities available in the Los Angeles area

were in a defunct refinery—two storage tanks with a total

155,000-barrel capacity, which I immediately leased. In the

meantime, even while I was vainly seeking a buyer for the

5100 barrels of crude my Well Number One was producing

every 24 hours, Well Number Two came in for a 5000-barrel

daily production. This was fo

llowed in short order by

Number Three, which produced 5100 barrels a day, then by

Number Four, the runt of the litter, which brought up 2100

barrels daily. This production rate was rapidly filling the

two storage tanks—and I was still unable to find an outlet

for the oil. I knew that when the tanks were topped off, I’d

have no choice but to shut down my operation entirely.

Obviously, I was receiving no income from the four wells.

My fluid cash resources—already strained by drilling

costs— dwindled rapidly as I paid for leasing the tanks and

for trucking my crude several miles from wells to storage.

The situation could have easily turned into financial

disaster. I decided to make a frontal attack on one of the

biggest of all the major oil companies—Shell Oil. By a

fortunate coincidence, Sir George Legh-Jones, then the

Shell Company’s president, happened to be visiting in Los

Angeles. In desperation, I aimed high, asked for an

interview with him personally, and was informed that he

would be happy to see me during his visit.

A warm, friendly man, Sir George listened attentively to

what I had to say. The deepen

ing scowl that etched across

his face as he heard me was all the proof I needed that his

firm was not a party to the boycott and that he heartily

disapproved of such tactics. When I finished talking, he

smiled his reassurance.

“Relax,” he grinned. “We’ll help you.”

As a starter, the company would buy the next 1,750,000

barrels of crude oil produced by my Cleaver Lease wells, Sir

George told me. In addition, a pipeline would be

constructed to link my wells with the Shell Oil Company’s

pipeline network—and construction work was to commence

the very next day.

Sir George and the Shell Company were as good as their

word. Shell’s work crews arrived on my Cleaver site bright

and early the following morning and started to lay the pipe-

line. The boycott was broken—and the Cleaver Lease was

safely and profitably mine!

As the 1920s drew to a close, the American petroleum in-

dustry began to undergo a radical change. It was rapidly

growing more complex; the costs of finding and producing

oil were spiraling ever higher. Much greater capital

expenditures were needed to purchase leases, machinery

and equipment and to finance exploration and drilling.

Most oil pools that lay near

the surface in known oil belts

had been located and were being exploited. It was

necessary to prospect ever farther afield and to drill ever

deeper to find oil.

There were many mergers and consolidations of oil com-

panies. Some independent operators were falling by the

wayside. Others were selling out to big oil companies.

There was also a strange, ominous undercurrent running

through the entire U.S. economy. The stock market listed

shares at fantastic highs, but there were warnings and

forebodings of economic trouble ahead.

It was a critical period for all wildcatters and a

particularly difficult one for me. I had to look after my own

mushrooming business interests—my own leases,

producing wells and companies. Then, through the years,

I’d bought sizable blocks of stock in my father’s companies

as well. Now, his health began to fail, and I found it

increasingly necessary to take an active part in managing

the operations of these companies.

In 1929, the stock market crashed. The following year,

my father suffered a stroke. Although he was over 75, he

fought death bravely and grimly for several weeks, but the

battle was lost on May 31, 1930, when he passed away. My

mother and I were allowed but little time to grieve. We had

to keep his business going and his companies operating.

The Federal Government pressed for rapid settlement of

the inheritance taxes on the estate. These and many other

matters demanded immediate attention and all were

complicated by the economic factor of the deepening

Depression. Many advised me to liquidate everything—to

sell out not only my late father’s holdings, but my own

firms and interests as well.

“The business situation can only get worse,” they pre-

dicted. “The economy is going to disintegrate completely!”

I didn’t see things that way at all. I was convinced the

nation’s economy was essentially sound—that though it

might sag lower in the near future, it would eventually

bounce back, healthier than ever. I thought it was the time

to buy–not sell.

Many oil stocks were selling at all-time lows; they were

spectacular bargains. I began to envision the organization

of a completely integrated and self-contained oil business,

one embracing not only exploration and production—the

operations in which I’d been

exclusively engaged until that

time— but also transportation, refining and even retail

marketing.

In business, as in politics, it is never easy to go against

the beliefs and attitudes held by the majority. The

businessman who moves counter to the tide of prevailing

opinion must expect to be obstructed, derided and damned.

So it was with me when, in the depths of the U.S. economic

slump of the 1930s, I resolved to make large-scale stock

purchases and build a self-contained oil business. My

friends and acquaintances—to say nothing of my

competitors—felt my buying spree would prove a fatal

mistake. Then, when I announced my intention to buy into

one of the seven major oil companies operating in

California, even those who had been my supporters in the

past were inclined to believe I had taken leave of my

senses.

Major oil companies could, and often did, buy out inde-

pendent operators’ firms. But for an independent operator

to buy a major oil company? That was heresy—an attempt

to turn the established order upside down!

Nonetheless, I went ahead with my plans, for I was

looking to the future. The oil companies I controlled or in

which I held substantial interests were engaged exclusively

in finding oil and getting it out of the ground. To insure

markets for this oil and for that to be produced by new

wells drilled in the future, it seemed a wise move to invest

in a company which needed crude oil and which also had

adequate refining and marketing facilities. There were only

seven such companies in California—all majors.

The list was headed by the Standard Oil Company of

California—obviously far too big a chunk for any

independent to bite off and digest. The same held true for

the Shell Oil Company. The next possibility was the Union

Oil Company, but this firm had its own crude-oil sources.

So did the General Petroleum Company which, in any

event, was virtually a closed corporation, and its stock was

not available for purchase. That left three firms: Richfield

Oil—then in receivership and consequently not a very

tempting prospect; the Texas Oil Company, which was

amply supplied with its own cr

ude; and, lastly, the Tide

Water Associated Oil Company.

Tide Water Associated seemed the logical choice. The

company met only half its refineries’ crude requirements

from its own reserves, buying the rest from other

producers. Tide Water also had a good marketing

organization and its products enjoyed a good reputation

with the consuming public.

I saw great advantages in linking up with Tide Water—

advantages which would be sh

ared by all concerned, and

most particularly Tide Water’s 34,668 individual

shareholders and the consumers who bought the company’s

products.

I began my Tide Water campaign in March 1932, by pur-

chasing 1200 common shares at $2.50 per share. Within the

next six weeks, I’d increased my

holdings to 41,000 shares.

Nearly 20 years were to pass before I gained clear-cut

control of the firm. In that

time, my producing companies

and I would buy millions of shares of Tide Water common. I

didn’t guess wrong when I started buying at depressed

1932 prices. In the next five years, Tide Water’s common

shares rose to more than $16—and eventually each share

came to be worth many times that amount.

It was not easy to gain control of the Tide Water

Associated Oil Company. Many risks were taken, much

opposition encountered, many no-holds-barred proxy and

legal battles were fought. Countless critical situations

developed. The outcome was often in doubt.

My first attempt to obtain a voice in Tide Water’s man-

agement was made in May 1932. I went to the annual

stockholders’ meeting armed with my own 41,000 shares,

plus a proxy for 126,000 additional shares. At the last

moment, the proxy was revoked. My efforts ended in

failure. I bought more stock and tried to sell my ideas to

Tide Water’s directors. They, however, did not see things

my way and dug in for a long, hard fight. Why? Well, I

suppose there were several reasons. First of all, I was an

outsider. I’d had little or no experience in the heady

atmosphere of board rooms.

“Paul Getty should stay where he belongs—on a drilling

rig” a Tide Water director supposedly snorted when told I

was buying the company’s stock right and left. I fear there

were others on the board even less kindly disposed toward

me and my ambitions.

I’d studied Tide Water’s or

ganization and operations

carefully and recommended that the company make certain

changes and practice certain economies. These

recommendations, apparently too radical to suit the

conservative directors, caused considerable resentment.

I’d also concluded that much of Tide Water’s refining

plant was obsolescent and would soon be obsolete. I

believed the company should make provisions for

modernization and replacement, but management was

reluctant to make capital expenditures during the business

slump. The directors called it

“necessary caution.” I viewed

it as short-sighted and dangerous penny-pinching.

By 1933, Getty interests owned nearly 260,000 Tide

Water shares—a block too large to be ignored. I was elected

to the company’s board, but it was a hollow victory. I was

only one among many, and the other directors were still

ranged solidly against me and my proposals. I continued to

buy Tide Water stock. Proxy fights, lawsuits and

countersuits ensued. Injunctions, restraining orders and

writs flew in blizzards.

By late 1937, Getty interests owned enough stock to

obtain a voice in management. Three years later, we held

1,734,577 shares—a shade over one fourth the voting stock,

and many changes I proposed were being implemented. By

1951, I held enough Tidewater stock to have numerical con-

trol. ( B y then, the “Associated” had been dropped from the

company name and “Tide Water” contracted into a single

word.) Two years later, with a

ll but one director elected by

Getty interests, the campaign was finally over. Today, Tide-

water’s assets exceed $800,000,000.

In 1938, I turned momentarily from the oil business and

bought the Hotel Pierre in New York City, purchasing it for

$2,350,000, less than one fourth its original (1929-1930)

cost. Later, I bought several hundred acres of land in

Acapulco, Mexico, where I eventually built the Pierre

Marques Hotel on Revolcadero Beach. These, contrary to

reports which have me owning a string of hotels, are the

only ones I own.

In 1937, as part of the Tide Water campaign, I obtained

control of a firm known as the Mission Corporation. Among

Mission’s holdings was a 57-percent interest in the Skelly

Oil Company, a major oil firm with headquarters in Tulsa,

Oklahoma. Thus, almost as a windfall, I acquired the

controlling interest in a comp

any with a 1937 net income of

$6,400,000— and which, today, has more than

$330,000,000 in assets.

But this is not the whole story. Among Skelly Oil’s sub-

sidiaries was the Spartan Aircraft Corporation, a Tulsa

concern engaged since 1928 in manufacturing aircraft and

training pilots and navigators. I paid my first visit to the

Spartan plant on December 7, 1939. Its aircraft-manufac-

turing operations were rather limited; there were only some

60 workers employed in the factory. The pilot training

school was much more active. It was, in fact, the largest

private flying school in the U.S.

I’d just returned from a trip to Europe, which was

already at war. I was convinced that the United States

would eventually have to throw its weight into the war

against the Axis. Consequently, I felt Spartan Aircraft

would have an increasingly important role in the nation’s

defense program—but I could not guess then how very

important it was destined to be.

Two years to the day after my first visit to Spartan, the

Japanese attacked Pearl Harbor and the United States was

at war. It was in that same month that my beloved mother

died. It was a heavy blow. Although I was by then almost

50, I felt the loss as keenly as though I had still been a

youngster.

War news filled the newspapers. I had not been allowed

to serve in World War One, and I now hoped for the chance

to serve in the second world conflict. I had studied celestial

navigation and had owned—at various times in my life—

three yachts, the largest a 260-foot, 1500-tonner with a

crew of 45. On the basis of this, I volunteered for service in

the United States Navy. To my chagrin, I was politely but

firmly informed that the Navy

didn’t have much use for a

middle-aged businessman unless he was willing to take a

routine, shore-based administrative job. After exhausting

all other avenues, I obtained an interview with Navy

Secretary Frank Knox and pleaded my case. I told him I

wanted a Navy commission and sea duty.

“You qualify for a commission as an administrative or

supply officer,” Secretary Knox declared. “But sea duty is

out of the question.” He paused and studied me closely. “I

understand you hold a large interest in the Spartan

Aircraft Corporation,” he said after a moment. I agreed that

I did.

“The Armed Forces must have every aircraft factory in

large-scale production as soon as possible,” he told me. “The

most important service you can render the war effort is to

drop all your other business interests and take over direct

personal management of Spartan.”

I arrived in Tulsa as the working president of Spartan in

February 1942. There was a tremendous amount to be done

and very little time in which to do it. Manufacturing facili-

ties—including factory space—had to be expanded,

machinery and tools obtained

, engineers and technicians

recruited and workers hired and trained by the thousands.

Despite bottlenecks, shortages and setbacks, peak

production was attained in less than 18 months.

I remained in active and direct charge of Spartan’s

operations throughout the War. Before it ended, the

Spartan flying school was training as many as 1700

fledgling aviators at a time. By V-J Day, the Spartan

factory—employing more than 5500 workers at the peak—

had turned out a vast array of airplane parts and

components on subcontracts

from major aircraft firms.

Among these were: 5800 sets of elevators, ailerons and

rudders for B-24 bombers; 2500 engine-mount sets for P-47

fighters; Curtiss dive-bomber cowlings by the hundreds;

Douglas dive-bomber control surfaces by the thousands;

wings for Grumman Wildcat fighters; tail booms for

Lockheed P-38 pursuits. Spartan also produced N-l primary

trainers on prime contract.

Spartan’s production record brought high

commendations from the Armed Forces—tributes to the

efficiency and loyalty of the men and women who’d worked

for the firm and who did their part in helping to win the

War. I stayed on at Spartan until 1948 to nurse the firm

through the pangs of reconversion to peacetime production

of house trailers. Then once more I went back to my first

and greatest business love— oil.

My oil companies were prospering and were larger and

more active than ever before, but it was time for additional

expansion. Vast demands had been made on America’s oil

reserves by the War, and post-War petroleum consumption

was rising sharply throughout the world. Oil prospectors

were fanning out—to Canada, Central and South America,

Africa and the Middle East—searching for new oil sources.

Instinct, hunch, luck—call it what you will—told me the

Middle East was the most promising locale, the best bet, for

oil exploration. I had almost obtained an oil concession in

the Middle East in the 1930s,

but had allowed my chance to

go by. Now I decided to seek a concession to prospect and

drill there and make up for the opportunity I had lost. In

February 1949, Getty interests obtained a 60-year

concession on a half interest in the so-called Neutral Zone,

an arid, virtually uninhabited and barely explored desert

region lying between Saudi Arabia and Kuwait on the

Persian Gulf.

The concession was granted by His Majesty, Ibn Saud,

king of Saudi Arabia. In immediate consideration for the

right to explore and drill for oil in the Neutral Zone, the

Saudi Arabian Government received $12,500,000. It was a

gargantuan risk and many people in the petroleum

industry once again openly predicted I would bankrupt my

firms and myself.

Four years and $18,000,000 were needed before we

brought in our first producing well in the Neutral Zone.

But, by 1954, I could relax and enjoy a private last laugh at

the expense of those who had prophesied my ruin. The

Neutral Zone has proved to be one of the world’s most

valuable oil properties. Well after well has come in and

petroleum geologists conservatively estimate proven

reserves in place in the region covered by my concession to

exceed 13 billion barrels!

With this tremendous reserve and with producing wells

in the Middle East and elsewhere bringing up millions of

barrels of crude oil annually, it has been necessary to

expand even further in other directions. The companies

have had to build and buy additional refineries to handle

the enormous crude-oil production. Pipelines, storage

facilities, housing projects for workers and innumerable

other installations and facilities have been built or are

abuilding.

A $200,000,000 Tidewater Oil

Company refinery was

completed at Wilmington, Delaware, in 1957. Another

Tidewater refinery near San Francisco has been

modernized at a cost of $60,000,000. There is a new 40,000-

barrel-a-day refinery in Gaeta, Italy, and another with a

20,000-barrel-a-day capacity in Denmark.

In 1954 and 1955, construction began on the first

vessels in a fleet of supertankers. Several of these have

been completed and are now in operation. This tanker-

construction program is proceeding apace. Tonnage afloat

and now under construction exceeds 1,000,000 deadweight

tons. Among the ships are truly giant supertankers

displacing upwards of 70,000 tons.

The Getty interests have recently built spanking new

office buildings in Los Angeles, California; Tulsa,

Oklahoma; and New York City—at a cost approaching

$40,000,000. Regardless of what they produce, plants and

businesses owned by Getty interests are orientated to

steady expansion. Management is constantly seeking ways

and means to increase output, and large-scale projects are

under way to develop new products and to find new

applications and uses for old ones. By no means the least of

the activities in which the companies are engaged are oil

and mineral explorations, which are being conducted

energetically on four continents.

This, then, is the story of how I chose my road to success

and how I traveled it from my wildcatting days in the Okla-

homa oil fields, of how I’ve built my business and made my

fortune. To it, I would like to add a brief, highly personal—

and mildly rueful—footnote.

For years I had managed—at least on the whole—to

avoid personal publicity. Or rather, since I did nothing

either to seek or evade it,

I suppose it would be more

accurate to say that personal publicity avoided me. This

state of peaceful near-ano

nymity ended suddenly and

forever in October 1957, when

Fortune

magazine

published an article listing the wealthiest people in the

United States. My name head

ed the list, and the article

labeled me a billionaire and “The Richest Man in America.”

Subsequently, other publications gave me the even more

grandiloquent title of “The Richest Man in the World.”

Since then, I’ve been besieged by requests to reveal

exactly how much money I have. I’m seldom believed when

I reply in all honesty that I do

n’t know, that there is no way

can

know. Most of my wealth is invested in the

businesses I own or control; I make no claims about the

extent of my wealth and I really don’t care how rich I am.

Today, the companies are thriving, and they’re carrying

out ambitious programs for further expansion. My primary

concern and main interest lie in making certain that these

companies continue to grow so that they can provide more

employment and produce more goods and services for the

benefit of all. M y associates and I are convinced that the

over-all economic trend is up and that despite the alarums

and fears plaguing our era, the world is on the threshold of

a prosperity greater than any in its history.

YOU CAN MAKE A MILLION

TODAY

The door to the American Millionaire’s Club is not locked.

Contrary to popular modern belief, it is still quite possible

for the successful individual to make his million—and

more. There will always be room for the man with energy

and imagination, the man who can successfully implement

new ideas into new products and services.

Anyone who has achieved success is frequently asked

the same question by the people he meets: “How can I—or

others—do it, too?”

When I tell them how I began building the foundations

of my own business as a wild

catting operator more than

four decades ago, they usually reply:

“But you were lucky—you started in business at a time

when it was still possible to

make millions. You couldn’t do

it nowadays. No one could.”

I never cease to be astounded by the prevalence of this

negative—and, in my opinion, totally erroneous—attitude

among supposedly intelligent people. Certainly, there is a

tremendous mass of evidence to prove that imaginative, re-

sourceful and dynamic young men have more opportunities

to achieve wealth and success in business today than ever

before in our history. Countless alert and aggressive

businessmen have proved this by making their fortunes in

a wide variety of business endeavors in recent years.

One man I know was a lower-bracket corporation execu-

tive when, in 1953, he heard of the development of a new,

particularly tough and versatile

plastic. He perceived that

it would make an excellent and economical substitute for

certain costly building materials. Using his savings and

some borrowed money to buy the manufacturing license

and to provide the necessary initial working capital, he

went into business for himself producing and distributing

the plastic. By 1960, he was personally worth well over a

million dollars.

John S. Larkins, a young engineer, took over the Elox

Corporation—a tiny Royal Oak, Michigan, electronics-

equipment manufacturing firm—in 1951. Seeing that there

was a great and constantly growing need for electronic-

control devices in industry, Larkins concentrated on

developing and producing these

items. Within six years, he

had increased his company’s gross sales from $194,000 to

more than $2,200,000 per year.

In 1942, Charles Bluhdorn, then 16, began his career as

a $15-a-week cotton-brokerage clerk. By 1950, he had made

his first million on his own—mostly by importing coffee

from Brazil. Today, he is the kingpin of multi-tentacled

Gulf & Western Industries, whose annual sales well exceed

a billion dollars.

There are innumerable such modern-day success stories.

Among those with which I am personally acquainted, none

is more telling or to the point than that of the late Melville

(Jack) Forrester.

Jack Forrester served with distinction as an OSS agent

in Europe during World War Two. After V-J Day, he found

himself in Paris, out of work and low on funds. He finally

obtained a job as a sort of bird-dogging contact man with a

large investment firm, the World Commerce Corporation.

Forrester toured Europe, the Middle East and Asia, looking

for promising projects and enterprises in which World Com-

merce Corporation could invest money. A shrewd and

astute businessman, he did so well that within a few years

he was made president of the firm’s French subsidiary,

World Commerce Corporation of France. I had known Jack

before the War. I met him again in Paris in 1949. He told

me what he had been doing since V-J Day.

“How would you like to do some work for me?” I asked

him.

“I don’t know much about the oil business,” he replied

with a grin. “But I suppose I can learn fast enough.”

Jack did learn fast—and well. After 1949, he conducted

many delicate and important negotiations for several of m>

companies. He was instrumental in obtaining valuable oil

concessions and prepared and smoothed the way for many

other operations and transactions including deals for

tanker refinery and pipeline construction.

In 1945, Jack Forrester was an ex-OSS man without a

job and with very little money. He was just another of the

many millions of men who were

trying to “reconvert” to

peacetime existence. At his untimely death in 1964, he had

become an eminently successful businessman—and a

millionaire.

There are examples galore to prove that it can be done

that success in business and even “making a million”—

millions—are entirely realizable goals for young men

starting out today. I consider myself neither prophet nor

pundit, economist nor political

scientist. I speak simply as a

practical, working businessman. The careful, continuing

study and evaluation of American and international

business conditions and trends are, however, among my

most important duties and responsibilities to the

companies I control. Basing my opinion on the information

I have been able to gather throughout the years, I believe

that, barring the cataclysmic unforeseen, the outlook for

business is good and that it will become even better as time

goes on. I feel that farsighted, progressive—and, above all,

open-minded—American businessmen, be they beginners or

veterans, have ample reason to be optimistic about their

prospects and profits for years and even decades to come. I

say this fully aware that, in some American business

circles, it has long been fashionable—if not downright

mandatory—to bemoan lack of opportunity and the stifling

of free-enterprise capitalism.

“Confiscatory taxation,” “excessive labor costs,” “unfair

foreign competition” and “creeping socialism” are the

“causes” most often cited for what the doom-mongers would

have us believe is the imminent disintegration of the

American Free Enterprise System. To my way of thinking,

all this is sheer nonsense. The complaints are merely

convenient alibis for the unimaginative, the incompetent,

the near-sighted and narrow-minded and the lazy. True,

taxes are too high—and far too numerous. One of these

days—and soon—our entire tax system will have to be

overhauled from top to bottom. A logical, equitable tax

program will have to be devised to replace the insane

hodgepodge of Federal, state, county and city levies that

make life a fiscal nightmare for everyone. In the meantime,

however, businessmen will just have to live with the

situation. Let’s be honest about it: that they

can

live with it

is obvious enough. Income taxes—the most abused

whipping boys—are, after all, levied only on profits. There

are proportionately more well-to-do businessmen in the

United States than ever before. I’ve never heard of a single

American firm that had to close its doors because of

taxation alone.

Labor costs are also high, but I’ve often observed that

the man who complains the loudest about excessive wages

is the same one who spends fortunes on advertising and

sales campaigns to sell his products to the millions. How on

earth he expects the workers who form the bulk of those

millions to buy his chinaware,

garden furniture or whirling-

spray pipe-cleaners unless they are well paid is beyond my

comprehension. Labor is entitled to good pay, to its share of

the wealth it helps produce. Unless there is a prosperous

“working class,” there can be no mass-markets and no

mass-sales for merchants or manufacturers—and there will

be precious little prosperity for anyone. For its part, labor

must understand that high wages are justified—and can

remain high—only if workers maintain high levels and

standards of production. And, as long as we’re talking

about things that are high, I might add that I, for one,

think it’s high time both capital and labor realized these

basic home truths and ceased their eternal and costly

wrangling. Whether either likes it or not, one cannot exist

in its present form without the other. I doubt very seriously

if either would find the totalitarian alternatives to the

existing system very pleasant or palatable.

As for foreign competition, it has long been my

experience that competition of any kind is promptly labeled

unfair when it begins to hurt those businessmen who do not

possess the imagination and energy to meet it.

Competition—foreign or otherwise—exists to be met and

bested. Competition—the stiffer and more vigorous the

better—is the stimulus, the very basis, of the free

enterprise system. Without competition, business would

stagnate.

These facts are conveniently ignored by those individuals

and pressure groups who loudly demand that the Federal

Government do something about “unfair” foreign

competition. The “something” they want the Government to

“do” is, of course, to raise sky-high tariff walls which would

prevent foreign countries from trading with us—about as

nearsighted a policy as one could imagine.

Creeping socialism? That particular plaint is proven to

be false and without foundation by the very fact that there

are so many more free-enterprise-system American

businessmen to voice it today than there were ten, twenty

or more years ago.

In short, I can’t see any validity in the arguments

advanced by the pessimists and defeatists. But then,

calamity howlers have always been with us, chanting one

dismal and discouraging chorus or another.

When I purchased the Hotel Pierre, located on Manhat-

tan’s swank Fifth Avenue at 61st Street for $2,350,000, it

was New York’s most modern hotel. No crystal ball was

needed to show that this was an excellent buy. The country

was rapidly emerging from the Depression; business

conditions were improving st

eadily. Business and personal

travel were bound to increase greatly. There had been very

little hotel construction in New York for several years, and

none was planned for the immediate future. The Pierre was

a bargain— and a hotel with a great potential. But the

gloom-and-doom chaps were too busy titillating their

masochistic streaks with pessimistic predictions of worse

times to come to recognize such bargains as this when they saw them.

I began negotiations for the purchase of the Hotel Pierre

in October 1938 and took possession the following May. At

today’s land and construction costs, between 25 and 35 mil-

lion dollars would be needed to duplicate the Pierre in New

York City.

I’m not crowing; I’m merely trying to show that there

are always opportunities through which businessmen can

profit handsomely if they will only recognize and seize

them—and if they will disregar

d the pessimistic auguries of

self-appointed prophets of doom.

Conditions are much different now than they were in

1938, 1932 or 1915. Just the same, the last things that

American business needs are complaints, alibis and

defeatist philosophies.

What American business

does

need—and in ever-

increasing numbers—are young businessmen who are

willing and able to assume the responsibilities of

progressive, vigorous industrial and commercial leadership.

The rewards awaiting such men are practically limitless.

There is plenty of room at the top. That figurative

Millionaire’s Club has an unlimited number of vacancies on

its membership rolls. That these aren’t being filled faster

is, I’m afraid, due largely to the fact that too many

potentially highly qualified young applicants give up before

they start. They listen to cautionary defeatism instead of

opening their eyes to the opportunities around them. They

are apparently blind to the many examples provided by

those who have made and are making their fortunes.

As I’ve said, I started my own business career in the

petroleum industry as a wildcatter, and oil has remained

my main business interest. I find it discomfiting that so

many young men today have an idea that the era of the

relatively small-time wildcatter is over. Actually, nothing

could be further from the truth.

Oil is a funny thing. It is likely to turn up in the most

unlikely places. There are many areas in the United States

where an enterprising wildcatter is quite likely to find oil—

and to strike it rich. Admittedly, most structures in

recognized oil belts have been located and are being

exploited. On the other hand, there are many localities

which have received little or no serious attention from oil

prospectors.

At the time I started wildcatting, “everyone” said there

was no oil in the Oklahoma Red Beds. By the same token,

30 or 40 years ago, oil operators got it into their heads that

there was no oil in Oregon, Washington, Idaho, Iowa or

Utah—to name only some states—and passed them up.

This belief has influenced oil exploration ever since. That

it’s a theory without much fact

to support it is proven by

the fact that only a few years back, oil prospectors finally

began drilling test wells in Utah—and discovered oil.

There are many opportunities for the knowledgeable

small-scale wildcatter today. While the oil prospector has to

do his exploration outside recognized—and thus already

exploited— oil belts, scientific and technological advances

have made the business of looking and drilling for oil easier

than it was years ago. Petroleum geology, an infant and at

best uncertain science in 1914, has made fantastic strides.

The modem geologist has the knowledge, experience and

equipment that make it possible for him to spot the

presence of oil with a much-better-than-fair degree of

accuracy. It’s true that most of the oil that lay close to the

surface has been located, and that wells have to be drilled

to much greater depths than was necessary in the early

part of the Twentieth Century. On the other hand, using

modern drilling rigs and equipment, an oil operator can

drill to 6,000 feet more quickly and more cheaply than I

drilled to 2,500 feet in 1916—and in those days, a dollar

was worth far more than it is now.

But the oil industry is by no means the only business

that offers golden opportunities to the beginner today. All

the potentials for an era of unp

recedented business activity

and prosperity are present—for those who are open-minded

and imaginative enough to recognize them. Rapidly

expanding populations at home and abroad and the

awakening desires of human beings all over the world to

better their living conditions and to raise their living

standards are guarantees that there will be ever-expanding

markets for goods and services of every kind for many years

to come. The gigantic strides being made almost daily by

science and technology provide the means whereby those

goods and services may be produced and distributed more

cheaply, in better quality and in greater quantity.

There are still fantastic demands to be met at home. No

one can rightfully say that American business has

discharged its responsibilities and done its job until every

employable citizen has steady, full-time employment and

until every American family is well-fed, well-clothed, well-

housed and able to live in comfort and without fear. I do not

hesitate to predict that many young men who read this will

make their fortunes and spend their entire business careers

dealing exclusively with domestic markets, meeting

domestic demands. On the other hand, I am of the opinion

that the brightest horizons of American business are to be

found outside the United States, in international trade.

Newspapers all over the world

have given a great deal of

prominence to stories about increasing unemployment and

recession in the U.S. and the “dollar-drain” caused by an

unfavorable United States-foreign trade balance. Many

remedies are being suggested to correct these situations.

Among them are demands for “emergency” measures

designed to cut down or even halt imports of many

materials and products from foreign lands.

“The United States must cut all its foreign imports to an

absolute minimum,

a junketing American businessman de-

clared to me not long ago. “That’s the only way American

business will be able to survive.”

I’m afraid he was very surprised when I told him that, in

my opinion, the policy he advocated was tantamount to eco-

nomic suicide. The way I see it, the long-term solution to

our country’s economic problems lies in

more,

not less,

foreign trade. For the long haul, U.S. business will have to

embark on a gigantic, farsighted program of international

trade, seeking and expanding markets in foreign lands.

There is no room for isolationist business philosophies in

our present era. The world has grown far too small. The

American economy cannot batten upon itself; American

business must develop new and more overseas trade. And,

in order to sell to other countries, we must also buy from

them. It’s that simple. I firmly believe that the young

businessman who can rid his mind of outdated,

preconceived notions and gear his thinking to these needs

of the times will reap tremendous rewards. He will make

his millions. For, despite rumors and reports to the

contrary, most foreign countries

want very much to have us

sell them goods. They

want

to buy from us.

I travel extensively abroad, and I have business interests

on five continents. I have found very little evidence to indi-

cate there is any lessening of demand for products which

bear the “Made in U.S.A.” label. The American way of life

remains the golden symbol of good living everywhere. To

duplicate or imitate it is still

the goal of most people in

foreign ands—and the promise that they will do so is still

the most glowingly attractive and effective promise foreign

government leaders and politicians can make to their own

people. Even Russians admit this when they make

predictions that Soviet producti

on and living standards will

equal or surpass prevailing Am

erican levels. Whatever may

have happened to American political prestige in recent

years, there has been no appreciable loss of what, for want

of a better term, I would call American “product prestige.”

The proofs of all this are plain enough to anyone who

lives or travels abroad with open eyes and an open mind.

Most of the world outside th

e Iron Curtain happily sips

American cola and hopes some day to own a Sheaffer pen.

American automobiles are still status symbols for those

who own them in foreign countries—and so are American

refrigerators, washing machines, TV sets and a host of

other items. Arrow shirts, Colgate toothpaste, Gillette

razors and blades—these and a thousand and one other

American trade-marked products are high on the preferred

lists of foreign shoppers. In Communist countries, even

such commonplace American-made items as ballpoint pens,

lipsticks and nylon stockings fetch black-market prices ten

or more times their open-market cost. Any American who

has resided abroad for any length of time knows what it is

to be bombarded by requests that he order this or that item

from the States.

The demand is there—have no doubt about that. Foreign

markets are wide open to the enterprising American

businessman—more so now than ever before because the

wealth and buying power of people in many foreign lands

have multiplied many times in the last decade.

“But we can’t compete with foreign manufacturers,” a

U.S. industrialist complained to me recently. “They can

always undersell us.”

First of all, it’s not true that foreign manufacturers can

“always” undersell American producers. Take just two ran-

dom examples. American coal, mined by highly paid Ameri-

can miners, is sold in a great many parts of Europe at a

lower price than English coal, which is produced by English

miners who earn far less than their U.S. counterparts. An

Italian-made shirt of a quality equal to that of a five-dollar

American shirt sells for more than eight dollars in Italy.

The secret of competing in the foreign market lies in

realizing that no foreign country has yet truly mastered the

techniques of high-quality mass-production to the degree

that we have. Nor do many foreign businessmen

understand the theory behind volume turnover at

comparatively small per-sale profits. In the main, they still

cling to the long-outmoded principle of making large profits

per sale and contenting themselves with relatively small

turnover.

Unquestionably, import duties levied by many foreign

countries often raise the prices on American goods well

above those of like items produced within the countries

themselves.

As I see it, enterprising American businessmen can best

serve their own—and the public’s—interest by demanding

that the U.S. Government use all the resources at its

disposal to prevail upon other countries to lower or abolish

their import duties on American products. This—not the

raising of our own tariff walls—will provide a bulwark

against recession and unemployment.

At the same time, it is the American businessman’s job

to devise new means and techniques which will enable him

to produce more at lower cost while rigorously maintaining

traditional American standards of quality. Then, he must

sell his product abroad just as imaginatively and

energetically as he does at home.

“But how is it possible to reduce production costs when

wages and prices on everything from raw materials to ma-

chinery are constantly rising?” is a question I’ve heard

more times than I’d care to count. I maintain that

production can always be increased and costs can always be

cut if one knows enough about

his business to know where

to look for waste and inefficiency. There are always means

whereby economies may be achieved without lowering

standards of quality.

To start with, it’s an old manufacturing law that when

production is doubled, production costs are automatically

reduced by 20 percent. I hardly

think any further comment

is needed on this. Then, there is administrative overhead—

a cost item which can almost invariably stand a great deal

of judicious pruning. It’s very seldom necessary for an

assistant vice-president’s secretary to have her own

secretary. I’ve run my business personally for decades—and

I’ve never found any need for more than one secretary.

Truth to tell, much that is dictated and then typed in

multiple copies could be passed on faster, more efficiently

and more cheaply by the simple expedient of dialing a

telephone. And I’ll wager that

most firms could slash their

“entertainment” budgets by 50 percent or more without

losing a single sale. I can take a drink or two myself, but

I’ve observed that one generally does far more business in

15 minutes over a cup of coffee than he can possibly do in

three hours over a six-martini lunch.

There is no Federal statute that requires all salesmen

and executives in a company to fly “deluxe” wherever they

go, when they can get where they’re going just as fast,

almost as comfortably—and at an impressively lower cost—

on tourist flights. There are many other areas in which the

smart young businessman will find that he can effect

important economies. There is always room for

improvement—and for savings—in business, be it in the

home office, the plant or wherever.

I’m not advocating senseless penny-pinching. I am, how-

ever, saying that there is no excuse for waste or unneces-

sary expenditures if one is faced with heavy competition. In

any all-out business battle to capture markets, it is neces-

sary to reduce all costs wherever possible—an axiom some

firms and individuals tend to

forget during peak boom

periods.

Young men who want to start making a million today

have a wide variety of business fields from which to choose

when selecting their careers. The one an individual selects

will, of course, depend largely on his particular talents, in-

terest, background, training and experience. The alert man-

ufacturer knows that there is a great demand for new and

improved products of all kinds. The man with a flair for

merchandising will see the great potentials in wholesaling

or retailing. Other men will realize they can make their

fortunes by providing new and better services to industry or

the public at large. Simply stated, it all adds up to this: The

man who comes up with a means for doing or producing

almost anything better, faster or more economically has his

future and his fortune at his fingertips. Don’t

misunderstand me. It is not easy to build a business and

make a million. It takes hard—extremely hard—work.

There are no nine-to-five hours and no five-day weeks for

the boss.

“I studied the lives of great men and famous women,” ex-

President Harry S. Truman remarked, “and I found that

the men and women who got to the top were those who did

the jobs they had in hand, with everything they had of

energy and enthusiasm and hard work.”

There are no absolutely safe or sure-fire formulas for

achieving success in business. Nonetheless, I believe that

there are some fundamental rules to the game which, if

followed, tip the odds for success very much in the

businessman’s favor. These are rules which I’ve applied

throughout my entire career—and which every millionaire

businessman with whom I am acquainted has followed. The

rules have worked for them—and for me. They’ll work for

you, too.

Almost without exception, there is only one way to

make a great deal of money in the business world—and

that is in one’s own business. The man who wants to go into

business for himself should choose a field which he knows

and understands. Obviously, he can’t know everything

there is to know from the very beginning, but he should not

start until he has acquired a good, solid working knowledge

of the business.

The businessman should never lose sight of the

central aim of all business—to produce more and better

goods or provide more and better services to more people at

lower cost.

A sense of thrift is essential for success in business.

The businessman must discipline himself to practice

economy wherever possible, in his personal life as well as

his business affairs. “Make your money first—then think

about spending it,” is the best of all possible credos for the

man who wishes to succeed.

Legitimate opportunities for expansion should never

be ignored or overlooked. On the other hand, the

businessman must always be on his guard against the

temptation to over expand

or launch expansion programs

blindly, without sufficient justification and planning.

Forced growth can be fatal to any business, new or old.

A businessman must run his own business. He

cannot expect his employees to think or do as well as he

can. If they could, they would not be his employees. When

“The Boss” delegates authority or responsibility, he must

maintain close and constant supervision over the

subordinates entrusted with it.

The businessman must be constantly alert for new

ways to improve his products and services and increase his

production and sales. He should also use prosperous

periods to find the ways by which techniques may be

improved and costs lowered. It is only human for people to

give little thought to economies when business is booming.

That, however, is just the time when the businessman has

the mental elbow room to examine his operations calmly

and objectively and thus effect important savings without

sacrificing quality or efficiency. Many businessmen wait for

lean periods to do these things and, as a result, often hit

the panic button and slash costs in the wrong places.

A businessman must be willing to take risks—to risk

his own capital and to lose his credit and risk borrowed

money as well when, in his considered opinion, the risks

are justified. But borrowed money must always be promptly

repaid. Nothing will write finis to a career faster than a bad

credit rating.

A businessman must constantly seek new horizons

and untapped or under-exploited markets. As I’ve already

said at some length, most of the world is eager to buy

American products and know-how; today’s shrewd

businessman looks to foreign markets.

Nothing builds confidence and volume faster or

better than a reputation for standing behind one’s work or

products. Guarantees should always be honored—and in

doubtful cases, the decision should always be in the

customer’s favor. A generous service policy should also be

maintained. The firm that is known to be completely

reliable will have little difficulty filling its order books and

keeping them filled.

10. No matter how many millions an individual amasses,

if he is in business he must always consider his wealth as a

means for improving living conditions everywhere. He must

remember that he has responsibilities toward his as-

sociates, employees, stockholders—and the public.

Do you want to make a million? Believe me, you can— if

you are able to recognize the limitless opportunities and

potentials around you and will apply these rules and work

hard. For today’s alert, ambitious and able young men, all

that glitters truly

can

be gold.

THE MILLIONAIRE

MENTALITY

Luck, knowledge, hard work—especially hard work—a man

needs them all to become a millionaire. But, above all, he

needs what can be called “the millionaire mentality”: that

vitally aware state of mind which harnesses all of an indi-

vidual’s skills and intelligence to the tasks and goals of his

business.

I once hired a’ man—call him George Miller, it’s close

enough—to superintend operations on some oil properties I

owned outside Los Angeles, California. He was an honest,

hardworking individual. He knew the oil business. His sal-

ary was commensurate with the responsibilities of his posi-

tion, and he seemed entirely satisfied with both his job and

the pay he received. Yet, whenever I visited the properties

and inspected the drilling sites

, rigs and producing wells, I

invariably noted things I felt were being done in wrong or

inefficient ways.

There were too many people on the payroll and there

weren’t adequate controls over costs. Certain types of work

were being done too slowly; others were being performed

too rapidly and hence without proper care. Some equipment

items were being overstocked while there were shortages of

others.

As for George Miller himself, I felt he was spending too

much time doing administrative work in the Los Angeles

office and not enough out in the field—on the drilling sites

and rigs. Consequently, he wasn’t able to exercise the

necessary degree of direct personal supervision over the

operations that were his responsibility.

All these things served to keep costs high, to slow pro-

duction and hold down profits. But I liked Miller and was

certain that he possessed all the qualifications of a top-

notch superintendent. After some weeks, I had a man-to-

man talk with him. I informed George bluntly that I

thought there was considerable room for improvement in

the manner in which he was handling his job.

“It’s funny, but I need only to spend an hour on one of

the sites and I spot several things we could do better or

cheaper and increase production and profits,” I told him.

“Frankly, I can’t understand why you don’t see them, too.”

“But you

own

the properties,” the superintendent

declared. “You have a direct personal interest in everything

that happens on or to them. That’s enough to sharpen any

man’s eyes to ways of saving—and thereby making—more

money.”

Truth to tell, I’d never thought of it in quite that way

before. I mulled over what George said for several days and

then decided to try an experiment. I had another talk with

Miller.

“Look, George. Suppose I farm the properties out to you,”

I suggested. “Instead of paying you a salary, I’ll give you a

percent of the profits. The more efficient our operations, the

bigger those profits will be—and the more money you’ll

make.”

Miller gave the proposition some thought and then ac-

cepted the offer enthusiastically.

The change was immediate—and little short of miracu-

lous. As soon as George realized that he, too, had a “direct

personal interest” in the properties he really hit his stride.

No longer merely a salaried employee, the superintendent

became keenly concerned with cutting costs, boosting pro-

duction and increasing the profits in which he was to share.

He viewed operations on the drilling and well sites in an

entirely different light, instantly recognizing—and correct-

ing—faults which had theretofore eluded him. Miller

shucked unnecessary personnel from the payroll, pared

operating expenses to the bone and used his considerable

native ingenuity to devise better methods for getting the

work done. Where he’d previously spent two and sometimes

three days each week in the Los Angeles office, he now

made only brief appearances there once or twice a month

and chafed impatiently until he could return to the drilling

sites.

I inspected my properties again some 60 days after

George Miller took over under the new relationship. I

checked the operations minutely, but could find nothing

wrong. Indeed, I noted little if anything I could have

improved upon personally. Need

less to say, in a very short

time both Miller and I were making far more money than

we had before he started working on a profit-sharing basis.

The incident taught me one of the many lessons which have

led me to believe that most men fall into one of four general

categories.

In the first group are those individuals who work best

when they work entirely for themselves—when they own

and operate their own businesses. Such men do not want to

be employed by anyone. Their desire is to be completely

independent. They care nothing for the security a salaried

job offers. They want to create their own security and build

their own futures entirely on th

eir own. In short, they want

to be their own bosses and are willing to accept the re-

sponsibilities and risk this entails.

Next are the men who, for any of a large number of

reasons, do not want to go into business for themselves, but

who achieve the best, and sometimes spectacular, results

when they are employed by others and share in the profits

of the business. There are many widely different types of

men in this category. They range from topflight salesmen

who prefer working on a commission basis—earning in

proportion to what they produce, with neither floors nor

ceilings on their incomes—to the finest executives in the

business world.

George Miller was one who fit into this category. So— at

the uppermost end of the scale—did the late Charles E.

“Engine Charlie” Wilson. I’m certain that Charles E. Wil-

son would have achieved great success had he gone into

business for himself. But he preferred working for someone

else—first for the Westinghouse Electric Company and

then for the General Motors Corporation. Wilson’s rise from

an 18-cent-an-hour job to the $600,000-a-year presidency of

General Motors is a classic saga of American business.

Charles E. Wilson was always an

employee

—but he

amassed millions through stock-ownership in the

companies for which he worked, thus sharing in the profits

he helped to create.

My third category includes individuals who want only to

be salaried employees, people

who are reluctant to take

risks and who work best when they are employed by others

and enjoy the security of a steady salary. People in this

group are good, conscientious and reliable workers. They

are loyal to their employers, but are content with the lim-

ited incentives of a regular paycheck and hopes for occa-

sional raises in salary. They do not possess the initiative

and independence—and, perhaps, the self-confidence and

drive—of individuals in the first two groups.

Lastly, there are those who work for others but have the

same attitude toward their employers that postal clerks

have toward the Post Office Department. I hasten to make

clear that I intend no slight or slur against postal clerks,

who work hard and well. But they are not motivated by any

need or desire to produce a profit for their employer. Postal

deficits are traditional and they are met regularly by the

Federal Government. I doubt very seriously if there is one

postal clerk in ten who cares whether the Post Office

Department makes a profit or operates at a deficit. This is,

perhaps, as it should be—in the Post Office Department.

But, obviously, such attitudes are fatal to any business op-

erating in a free-enterprise system.

Yet there are far too many men who hold—or would like

to hold—management positions in business whose outlooks

are virtually identical with those of the average postal

clerk. They don’t really care whether the company that

employs them makes a profit or shows a loss as long as

their own paychecks arrive on time.

I’ve encountered countless specimens—graduates of the

nation’s leading schools of business administration among

them—who, incredibly enough, are utterly incapable of

reading a balance sheet and couldn’t even give an intelli-

gent definition of what is me

ant by the term “profits.”

Whatever exalted titles such men may hold, they still

remain nothing more than glorified postal clerks. They feel

little or no sense of responsibility to their employers or the

stockholders of the company for which they work. They are

interested solely in their own personal welfare. Outwardly,

some of these men seem to possess the essential qualifica-

tions for management jobs. They are obviously intelligent

and apparently experienced. But not even a 180 I.Q. will

necessarily make an individual a good businessman or

executive. And, as Roger Falk so correctly points out in his

book,

The Business of Management,

many a man who is

supposed to have, say, ten years’ experience has really had

only one years’ experience repeated ten times over.

Large numbers of these postal clerk types spend years—

even decades—trying to reach the upper rungs of the suc-

cess ladder and wondering why they can’t attain them.

They can’t understand why they aren’t given top jobs or

can’t “get rich.”

The reason they fail? Actually, it’s all in the mind.

Like it or not, there is a thing that can be called The

Millionaire Mentality. There is a frame of mind which puts

an individual a long way ahea

d on the road to success in

business, whether it be in his own or as an executive. In

short, The Millionaire Mentality is one which is always and

above all cost-conscious and profit-minded. It is most likely

to be found among men in the first two categories I have

cited. This Millionaire Mentality is rarely found among

individuals in the third group. But then, they seldom have

ambitions to be anything more than employees in the lower

or middle echelons of a business organization. The

Millionaire Mentality is entirely nonexistent among men in

the fourth category. Unfortunately, however, these are

usually the very people who have the wildest delusions

about their own value —the ones who do the least and

demand the most. They view the company for which they

work as a cornucopia from which good things should flow to

them rather than as something to which they owe loyalty

and which they should strive to build.

There were times in the past when I tried to excuse the

failings of these types on the ground that they hadn’t had

the advantages I’d enjoyed in life. I reasoned that they did

not have the same amount of formal education I’d received,

hadn’t traveled as widely nor had as much business

experience as I. Then I gradually learned that when their

personal interests were involved, these economic illiterates

suddenly became as shrewd as the most successful

financier.

I once took control of a company which had great po-

tentials but a very disappointing earnings record. It didn’t

take me very long to pinpoint the trouble. Three of the

company’s key executives were virtually casebook examples

of the postal clerk, men who were neither cost-conscious

nor profit-minded.

Their monthly salaries ran into four figures. One month,

shortly before payday, I instructed the accounting depart-

ment to “short” each of their paychecks by five dollars—

and, if they complained, to send them directly to me.

As I more or less expected, all three of the executives

concerned presented themselves at my office within an

hour after their checks were delivered on payday. To each,

in turn, I delivered a little speech that was hardly

calculated to brighten his day.

“I’ve been going over the company’s books,” I announced

sourly. “‘I’ve found several examples of what I consider

unnecessary expenditures which have cost this company’s

stockholders many tens of thousands of dollars in the last

year. Apparently, you paid little or no attention to them.

Certainly, I’ve seen no evidence that you tried to reduce the

expenses or correct the situations which caused them to

rise as high as they did. Yet, when your own paycheck is

involved, you instantly notice a five-dollar underpayment

and take immediate steps to have the mistake rectified.”

Two of the executives got the point, took it to heart and

quickly mended their ways. The third did none of these

things—and was soon looking elsewhere for work.

It should go without saying that no business can long

survive unless it makes a profit. It should also go without

saying that businessmen and business executives must be

constantly alert for ways to reduce costs and increase effi-

ciency, production, quality and sales so that the company

he owns—or for which he works—can operate at a profit.

These would appear to be the most basic of all basic

business axioms. Yet it is a sad fact that many

businessmen and executives barely comprehend them—and

there are even those who don’t comprehend them at all!

An all-too-familiar attitude was expressed to me recently

by a young executive who complained bitterly that his de-

partmental budget had been slashed by $20,000.

“Did the cut reduce the efficiency of your department or

curtail any of its productive operations?” I asked him.

“No, I guess not,” he replied after a moment’s thought.

“Then why complain?” I inquired.

“We could have found

something

to spend the money

on!” was this alleged executive’s answer. “After all, you

have to think big and spend money to make money!”

I’m glad this young man wasn’t

on one of my payrolls. I

would have disliked terminating our conversation by firing

him on the spot.

I’ve heard this concept that “you have to think big and

spend money to make money” bandied about ever since I

began my own business career. I doubt if there is any other

business concept more widely misinterpreted. I agree that

anyone who desires to achieve success and wealth in

business must have imagination and be farsighted. He

must also be willing to spend—and risk—money, but only

when the expenditure is justified and the risk is carefully

calculated to be worth it.

In my opinion, it’s more important for the man with The

Millionaire Mentality to be able to think small than to

think big—in the sense that he gives meticulous attention

to even the smallest details and misses no opportunity to

reduce costs in his own or his employer’s business. I

explained my views along these lines not long ago to a

newly graduated aspirant for a junior-executive position.

“Do you mean that a man has to be a penny pincher to be

a success?” he wanted to know.

I replied that what might seem to be penny-pinching at

one level might well loom as a large-scale economy at

another. I mentioned the example of the giant U.S.

corporation that recently made a study of the contents of

the wastebaskets in its administrative offices.

Each night for a week, a team of workers emptied the

waste receptacles and sorted out the usable items of com-

pany property which had been tossed into them by the

firm’s employees during the day. By computing the value of

such minor items as paper clips, rubber bands, erasers,

pencils, and so on which had been discarded during the

week and multiplying the total by 52, company officials

discovered that more than $30,000 was being wasted—

literally thrown away—each year!

Another firm operating a fleet of trucks saved $15,000

annually on its gasoline bills just because an alert

executive noticed that drivers were filling their fuel tanks

to overflowing at the company gas pumps and that gasoline

remaining in hose nozzles was allowed to drip onto the

ground.

In one of my own companies, a bright junior executive

burned much midnight oil to de

vise a shortcut in a produc

tion operation which saved less than a half a cent per unit,

but added up to a total year

ly saving of over $25,000—

more than twice his own salary. Last year, he also reduced

over-all costs by 20 percent and increased production by 12

percent in his own department, This young man quite

definitely has what I term The Millionaire Mentality. He is,

incidentally, no longer a

junior

executive. I do not hesitate

to predict that he will reach the top and make his millions

in record time.

In this day and age, almost every business firm has to

fight a constant battle against rising costs. More than ever

before in history, the emphasis has to be on reducing costs

and increasing production. There is absolutely no room in

today’s business world for even the most junior executive

who has a postal clerk’s outlook—but there is an insatiable

and ever-growing need for executives who possess or will

develop Millionaire Mentalities. Faced with spiraling costs

and shrinking profit margins, many firms have begun to

weed out the former and give greater latitude and oppor-

tunity to the latter.

In my own companies, we have instituted a program of

“early retirement” to rid ourselves of the personnel dead-

wood which has been allowed to collect over the years—

and which, inevitably, collects in almost any business firm.

Several hundred executives and employees have been

compulsorily retired well before reaching the normal

retirement age. The criterion for selecting those to be

retired has been their actual

value to the companies. In

brief, the question asked in each case was whether the

individual was productive, cost-conscious and profit-

minded.

True, the cost of retiring these people and of paying

them pensions years before they were due to receive them

is very high. But we have found that the cost is

significantly less than the cost of keeping them on our

payrolls, where they not only draw full pay, but cause more

harm than good, producing losses instead of profits.

The man with a Millionaire Mentality is not a penny

pincher and money-grubber. If he is an executive, he

watches costs and tries to reduce them—and strives to in-

crease production and sales and thus profits—in every way

he can because he has the interests of the company, its

shareholders and employees at heart. He knows that the

healthier the company, the better its profit picture, the

more those shareholders and employees will benefit.

It is more than a figure of speech to say that an

executive holds the stockholders’ investments and the

employees’ jobs in his trust.

To discharge those trusts, he

must direct every effort to insure that the company makes

a fair profit—one not only large enough for it to continue in

business, but also large enough for it to take advantage of

opportunities for expansion. An executive who understands

this and acts accordingly is already well on his way to

establishing the frame of mind that produces The

Millionaire Mentality.

PART TWO

How to Succeed in Business by Really Trying

WHAT MAKES AN

EXECUTIVE?

As part of a university survey designed to gauge their

understanding of business theories and practices, several

hundred entering freshmen recently were asked this

question:

“Assuming that you owned a large business firm, what is

the principal quality, trait or qualification you would want

your executives to possess?”

Among the answers were these random—but fairly typi-

cal—examples:

“I’d want my executives to dress well and have good

personalities.”

“They would have to know how to entertain important

customers.”

“I’d only hire executives wh

o could keep prices up and

wages down.”

“I’d insist on getting executives who were able to make

people work harder and faster.”

Now, naive as these replies may sound, one cannot

blame freshmen for being somewhat hazy about what goes

on in the business world. Unfortunately, their ignorance is

shared by far too many who are much older and should be

much wiser. The principles of management personnel

selection are often misunderstood, even by some who have

long been active in the management of businesses. I have

encountered more than a few supposedly experienced

businessmen whose concepts of the qualities and

qualifications they or other management personnel should

possess are nearly as muddled as those of the students.

Take, for example, the pompous—and obviously job-

seeking—executive who cornered me recently at a cocktail

party. He complained bitterly

that he had been passed over

for promotion twice by the well-known firm for which he

worked.

“I’m a victim of company politics,” he declared, obviously

believing it. “There’s no other explanation. I’ve always

performed my duties exactly as an executive should!”

“And how is that?” I inquired, my curiosity to hear what

weird theories he’d propound getting the better of my good

judgment.

“I keep a tight rein on the

people in my department. I

never let them put anything over on me or the company. If

they try, I fire them on the spot!” the man replied with

smug ride. “I don’t question my orders and always carry

them out to the letter, regardless of the consequences.”

At this point, I suddenly pret

ended that I’d just recog-

nized a long-lost relative across the room, disengaged my-

self and beat a rapid retreat. I’d heard all I cared to hear—

or could stomach.

I can readily understand why this so-called executive

hadn’t been promoted. What I can’t understand is why he

hadn’t been given the sack long before. Certainly, he

wouldn’t remain on my payroll for five minutes. He per-

sonifies the two worst qualitie

s anyone holding down a re-

sponsible managerial job in a modern business firm could

possibly possess. His attitude toward his subordinates is

clearly that of a slave-driving

martinet. His attitude toward

his superiors—at least to their faces—is just as clearly that

of a complete bootlicker utterly devoid of imagination or

common sense.

Let’s look at it this way. Business management may be

broadly defined as the art of

directing human activities so

as to carry out a business firm’s policies and achieve its

goals. Whether it be general or specialized management—

such as personnel, purchasing, production or sales—the key

to all business management lies in the words:

directing

human activities.

No one possessing the attitudes of the disgruntled execu-

tive I met at the cocktail party could possibly

direct

human

beings in any activity. His type can only drive or bully

those unfortunate enough to work under him. It is hardly

necessary to point out that these are not methods to which

employees will respond favorably or by which they can be

prevailed upon to work productively.

But our horrible example’s managerial failings do not

end there. His straight-faced avowal that he doesn’t

question his orders and always carries them out “to the

letter, regardless of the consequences,” brands him a toady.

It also proves him to be an

extremely stupid person who

has no concept of the responsibilities every executive owes

to his superiors and the company for which he works.

True, an executive should conscientiously and loyally

carry out the instructions he receives from those above him.

But this does not mean he should carry them out blindly,

like some mindless automation. If he is a good executive, it

follows that he will give careful consideration to “the con-

sequences.”

However exalted his position, no man is infallible. Even

board chairmen are human, and thus liable to make mis-

takes. An alert junior executive who recognizes errors, fal-

lacies or weaknesses in the orders he receives from his

superiors and fails to call their attention to them is not

being conscientious or loyal. He is simply shirking his

responsibility.

Any seasoned top-level executive would much rather

have his mistakes pointed out to him early by a

subordinate than have those mistakes make themselves

painfully apparent later in the company’s profit and loss

statement.

Years ago, I had to make some far-reaching decisions

regarding the operations of one of my American companies.

I was in Europe at the time and had received what I

thought were all the needed facts in the form of letters,

memoranda and reports from the company’s management

personnel. I didn’t know, however, that a last-minute

vitally important statistical report—which drastically

amended all such reports previously sent from the U.S.—

had been lost in the mails. Th

e report did not reach me, and

thus, I unwittingly based my planning on incomplete

information.

Arriving at what I considered were the correct decisions,

I sent an instruction letter to the company’s offices in the

United States. A few days later, I received an urgent trans-

atlantic telephone call from one of the firm’s executives. He

politely but firmly pointed out that I’d apparently failed to

take certain important facts into consideration, and that if

the program I’d outlined were implemented, the company

would suffer heavy losses.

After talking at what seemed to be cross-purposes for

several minutes, we both realized I had based some key

calculations on outdated statist

ical information. A copy of

the missing report was airmailed to me immediately and I

revised my calculations, decisions and instructions.

The program I finally outlined eventually proved

successful and profitable—thanks

to the alertness of this

company-management executive. I hate to think what the

results would have been if all the firm’s executives were the

kind who never questioned their orders and carried them

out “to the letter, regardless of the consequences!”

Naturally, I—like everyone else who owns or controls

businesses—have a great interest in management

personnel selection. I believe there are certain universally

applicable criteria by which a business executive’s potential

value to a company may be weighed.

I don’t pretend that my personal yardsticks are

infallible, but they are very similar to those used by a great

many other successful businessmen, and they have proved

fairly accurate through the years. Much of my own business

success is due to my executives’ loyalty and efficiency; thus

I think it reasonable to assume that the criteria by which

they were chosen and promoted are reliable.

How do I judge whether or not a man is—or would be— a

good executive? I hold that the first acid test of an executive

is his ability to think and act for himself. He should have

the intelligence and ability to originate ideas, develop

plans, implement programs, solve problems and meet situa-

tions without running constantly to his superiors for

advice. In my opinion, a man

who cannot do these things is

not an executive. He is a glorified office boy.

Once, when I asked a leading American industrialist

how he visualized the perfect management team, he

conjured up the following picture of a businessman’s

nirvana:

“My executives would be men I could call into my office

at nine

. on January first and tell them: ‘Look, boys, the

company has been making sausage skins for years. Last

year, our profit was a million dollars. This year, I’ve

decided that we stop making sausage skins and start

turning out nuts and bolts.’

“At that, all the executives would smile, nod and file out

of my office. I wouldn’t see them again until five

. on

December thirty-first. Then, they’d come back into my office

to tell me we were producing the world’s finest nuts and

bolts, underselling our competitors by fifty percent—and

had tripled our profits over the previous year!”

Of course, the industrialist’s happy pipe dream was just

that—a pipe dream. But it serves to illustrate the point I’m

trying to make. A good executive is a man who can think

and act independently and needs only the barest minimum

of instruction to carry out his job.

Now, an executive’s principal duty is to direct the activi-

ties—the work—of those under him. Direction being noth-

ing less than another word, leadership, it follows that the

good executive must, perforce, think and act as a leader.

Unfortunately, very few men are natural-born leaders.

There is only one Churchill to a generation. But most in-

telligent, willing men can acquire or develop traits and

qualities of leadership adequate to most situations they are

likely to encounter in their careers.

As for the men who become business executives, some

learn their lessons in leadership at college, others on their

jobs, yet others in company-operated management-training

courses. There are, of course, some who never learn—but

they are very much in the minority and seldom climb very

high on any business-management ladder.

Wherever it may be that an individual obtains his les-

sons in leadership, he learns certain basic rules which

apply with equal validity in a business firm or on a

battlefield. If followed, they go a very long way toward

qualifying any man for a position of leadership. Among

them are these five which I, personally, consider especially

important:

Example is the best means to instruct or inspire

others. The man who shows them as well as tells them is

the one who gets the most from his subordinates.

A good executive accepts full responsibility for the

actions of the people under him. If called before his su-

periors because something has gone wrong in his depart-

ment or office, he accepts full personal blame, for the fault

is his for having exercised poor supervision.

The best leader never asks anyone under him to do

anything he is unable—or unwilling—to do himself.

The man in charge must be fair but firm with his

subordinates, showing concern for their needs and doing all

he can to meet their reasonable requests. He treats his

juniors with patience, unders

tanding and respect and backs

them to the hilt. On the other hand, he does not pamper

them, and always bears in mind that familiarity breeds

contempt.

There is one seemingly small—but actually very im-

portant—point that all executives should remember. Praise

should always be given in public, criticism should always be

delivered in private. Employees who have done a good job

should be told so in front of their fellows; this raises

morale all around. Employees who have done something

wrong should be told so in private: otherwise, they will be

humiliated and morale will drop.

I learned my own lessons in leadership many years ago

in the tough, no-nonsense school

provided by the oil fields.

Virtually all the wildcatting operators—including me—

knew the jobs of every man in

our prospecting and drilling

crews. We never asked a man to do anything we would

not—or could not—do ourselves. Wherever possible, we

showed our men what we wanted done and how we wanted

them to do it.

“The best boss is one who knows the business better

than I do, but trusts me—even though he never lets me

forget that he’s the boss,” an old-time rigger once told me.

“That’s the kind of man I’ll really work my tail off for . . .”

I think that basically every employee feels much the

same way. Although few of toda

y’s executives are out in the

field, sweating alongside their work crews, the old, tried-

and-proved rules still hold. I believe that the most

successful executives are those who follow them implicitly.

Yet another quality I seek in management personnel is

the ability to communicate. Time is money in business; mis-

understandings in the interpretation of requests, reports or

instructions can prove very costly. Thus, the good executive

is one who can explain things and tell people what needs to

be done quickly and clearly.

Interest and enthusiasm are two more qualities a good

executive must possess. No man can properly do a job in

which he is not interested. An executive’s interest must go

far beyond the limits of his own particular department or

office. It is essential that he know what goes on in other

departments and that he be completely conversant with the

company’s policies and over-all activities. Only thus can he

evaluate the role and relative efficiency of his department

and relate its operations as a functioning part of a

functioning whole to the other parts and to the whole itself.

Then, his interest should go

even further: to embrace the

entire field or industry in which his company operates.

Only if he knows the field can he understand his company’s

strengths, weaknesses and problems.

But interest alone is not enough. There must also be a

strong element of enthusiasm in his attitude. I hardly mean

any hip, hip, hooray! variety of enthusiasm. I’ve never gone

along with the school of thou

ght that calls for sales meet-

ings to open with rousing company songs. What I do mean

is that an executive should thoroughly like his work. He

should—starting with the operations of his own department

—actively seek ways whereby h

is firm’s efficiency, produc-

tion, sales and profits may be increased.

Loyalty—another important quality in executives—can

only be recognized and judged after it has been demon-

strated. The executive’s loyalty should not be to any indi-

vidual—but to the stockholders, employees, his associates,

superiors and the company as a whole.

These, then, are the characteristics which I believe are

the most important for business executives to possess.

Doubtless, some readers will be surprised by the fact that

I’ve left out such things as personality, education and

technical knowledge. But, on closer analysis, it should

become clear that these are not really as basic or important

as those qualities I have mentioned.

I’ll agree that an individual with a completely negative

personality can hardly expect to achieve success in any

position which calls for him to work with people. On the

other hand, an executive’s job is to run his department, not

to run in a popularity contest.

As for education, it depends largely on how one is using

the term. I’ve found there are many top-quality business

executives whose formal education stopped at high school

or even grade school. What they know, they taught

themselves. There is much knowledge a good executive

should possess, but he does not necessarily have to obtain it

at a college or university. Although a good, solid formal

education is usually a great help to a man who wants to be

a good executive, I don’t believe that it is always essential.

Technical knowledge? I’ll admit that in this day of com-

plex industrial and business technology, every executive

needs a greater degree of technical knowledge. But the kind

and amount depends largely on what he is doing and where

he is doing it. I can sum up my views on the subject by say-

ing that I’d rather try to make a good technician out of a

good executive who has no technical knowledge than try to

make a good executive out of a good technician who has no

executive ability.

Among other traits I imagine most laymen would list as

being desirable in executives are such things as honesty,

industry and imagination. I have purposely omitted these

and several others because I consider them to be self-

evident and think it is superfluous to mention them.

Certainly, no businessman in his right mind would ever

hire an executive if he had the least suspicion that the man

was dishonest, lazy or unimaginative.

There’s really no magic or secret to being a good

executive. I think any man who has the qualities I’ve listed,

sincerely wants a business career and will work and apply

him-self can become a good executive. Such a man would

most certainly fit most successful businessmen’s

requirements for management personnel. He would most

certainly fit into almost any firm in almost any industry. In

my opinion, his career would be assured. He would, in

short, have it made in the business world.

THE FORCE OF HABIT

There was a time when I was a fairly heavy cigarette

smoker. Then, several years ago, I was on a vacation and

motoring through France. One day, after driving for hours

through some particularly foul rainy weather, I stopped for

the night at a hotel in a small town in the Auvergne. Tired

after the long and difficult dr

ive, I had dinner and went up

to my room. I undressed, got into bed and quickly fell

asleep.

For some reason, I awoke about two

., acutely aware

that I wanted a cigarette. Switching on the light, I reached

for the cigarette package I’d placed on the nightstand

before retiring. It proved to be empty. Annoyed—but still

wanting a cigarette—I got out of bed and searched the

pockets of the clothes I had been wearing. The search

proved fruitless, and I went on to grope through my

luggage in hopes that I might have accidentally left a pack

of cigarettes in one of my suitcases. Again I was

disappointed. I knew the hotel bar and restaurant had

closed long before and guessed that it would be worse than

useless to summon the crotchety

night porter at such an

hour. The only way I could hope to obtain any cigarettes

was by dressing and then going to the railroad station,

which was located at least six blocks away.

The prospect was not very pleasant. The rain still pelted

down outside. My car was garaged a considerable distance

from the hotel and, in any event, I had been warned the

garage closed at midnight and did not reopen until six

o’clock in the morning. The chances of getting a taxi were

nil.

All in all, it was clear that if I was to have the cigarette I

wanted so badly, I would have to walk to the railroad

station—and back—through the pouring rain. But the

desire to smoke gnawed at me and, perversely, the more I

contemplated the difficulties entailed in getting a cigarette,

the more desperately I wanted

to have one. And so I took

off my pajamas and started putting on my clothes. I was

completely dressed and reaching for my raincoat when I

abruptly stopped and began to laugh—at myself. It had

suddenly struck me that my actions were illogical, even

ludicrous.

There I stood, a supposedly intelligent human being, a

supposedly responsible and fa

irly successful businessman

who considered himself sensible

enough to give other peo-

ple orders. Yet I was ready to leave my comfortable hotel

room in the middle of the night and slosh a dozen blocks

through a driving rainstorm for no other reason than that I

wanted a cigarette—because I felt that I “had” to have one.

For the first time in my life, I was brought face to face

with the realization that I had developed a habit so strong

that I was willing—automatically and unthinkingly—to let

myself in for a very great deal of personal discomfort

merely to satisfy it. Instead of simply enjoying the pleasure

of an occasional smoke, I’d allowed myself to form a habit

that had grown completely out of hand and was obviously

operating contrary to my best interests, producing no

commensurately beneficial results. Suddenly sharply aware

of this, I rebelled mentally. I needed only a moment to

arrive at a decision. I considered it an excellent idea—and

an ideal time and place—to rid myself of a habit that was

certainly doing me no good.

Having made up my mind, I took the empty cigarette

packet that still lay on the nightstand, crumpled it up and

tossed it into the wastebasket. Then I undressed, once more

put on my pajamas and got back into bed. It was with a

sense of relief—even of triumph—that I switched off the

light, closed my eyes and listened to the rain beating

against the windows of the

room. In a few minutes, I

drifted off into a sound and contented sleep. I haven’t

smoked a cigarette— nor have I felt any desire to smoke

one—since that night.

Now, I do not intend any of this as an indictment of

either cigarettes or smoking. I recount the anecdote solely

to show how, in my own case, a habit got out of control to

the extent that it controlled me, rather than the other way

around.

Practices do become habits—and the force of those

habits can, indeed, be mighty. However, human beings

have a considerable degree of latitude. They are, after all,

endowed with the ability to form their own habits and to

break or discard those which they find undesirable.

Nowhere do habit patterns count for as much, and no-

where does the force of habit demonstrate its might more

emphatically than in the business world. A businessman’s

habits are among the most important factors that

determine whether he will be a success—or a failure.

For instance, it is a helpful habit for a businessman to

be optimistic and enthusiastic

. It will make his own work

better and easier and will also serve to hearten and inspire

his associates and subordinates. However, habitual opti-

mism and enthusiasm can be carried to dangerous—and

even disastrous—extremes of overestimation and

overzealousness.

I recall the case of a brilliant and highly capable busi-

nessman—Bill Smith is as good a name for him as any—

whose optimism helped him greatly in establishing and op-

erating several manufacturing firms that showed good

profits and great promise. Unfortunately, all of Bill Smith’s

business experience was obtained during a boom period.

Consequently, his rosiest outlooks and hopes were always

realized by developments in what was a steadily rising

market.

Then, suddenly, there was a relatively mild economic

recession. It was a time when

seasoned businessmen pulled

in their horns somewhat, did a little retrenching and pro-

ceeded cautiously while they waited for the business situa-

tion to become stabilized.

Bill Smith was totally unable to adjust to what, for him,

were new and unfamiliar conditions. His habits of optimism

and enthusiasm were too deeply ingrained. Instead of

applying his brakes, he continued to move at full speed,

supremely confident that everything would turn out fine.

Within a very short time, Smith had bitten off far more

than he could chew under the

business conditions that then

prevailed. He overextended himself and his companies and

eventually went bankrupt.

It is the widespread custom to say that people “develop”

good habits and “fall into” bad ones. The implication, of

course, is that the former are difficult to achieve, that the

individual must make a constant conscious effort to form

them, while he will slide easily and effortlessly into the

latter. This is true—but needlessly so and almost solely

because of the perversity of human nature. Actually, a

habit is a habit. There should be no valid reason why it is

any more difficult to fo

rm good ones than bad.

For instance, I—along with a great many others—con-

tend that promptness, or the lack of it, is largely a matter

of habit. One either forms the good habit of being on time

—or forms the bad habit of being chronically tardy.

It is to any individual’s advantage and best interests to

be prompt, whether it is in keeping an appointment, paying

a debt, meeting an obligation or keeping a promise of any

kind.

The habitually late dinner guest discommodes his hosts

and the others who have been invited to the affair. He

quickly becomes unpopular and, sooner or later, he is

dropped from guest lists.

Habitual promptness is an especially valuable asset for

any businessman. That ancient adage “Time is money” has

always been valid and it is more valid today than ever be-

fore. The pace and complexity of contemporary business

place a premium on every hour and minute. Businessmen

and executives must run their

workdays on the tightest of

schedules. They cannot afford to waste their productive

time any more than they can afford to have needless

stoppages on the production line.

Witness the constantly increasing number of corpora-

tions that operate their own aircraft so that they can move

their executives from one place to another faster—to get

them wherever they must go on time. There are more than

34,000 corporate aircraft in the United States today.

General Motors, for example, maintains a fleet of 22 planes.

Montgomery Ward openly admits that the cost of flying

its executives aboard its own airc

raft is a third more than it

would be to send them to their destinations on regular

scheduled airline flights. But the use of corporate planes

saves nearly 60 percent of the company executives’ travel-

ing time—and Montgomery Ward, like so many other com-

panies, understands that the time saved is well worth the

additional cost.

In short, the man who is where he said he would be at

the time he promised to be there is not only making an

excellent impression, he is saving—and thereby making—

money for himself or for his company.

The need for promptness extends to every phase of busi-

ness. The businessmen and firms most likely to succeed are

those that fill their orders, deliver their merchandise,

provide their services, pay their bills and meet their notes

and other obligations on time. Customers who are made to

wait for delivery on their orders beyond the promised time

are likely to place their next

orders elsewhere. Individuals

and firms that pay their bills when they fall due establish

good credit ratings—while those that lag behind soon find

that it becomes extremely difficult or impossible for them to

obtain credit anywhere.

Notwithstanding the countless advantages of habitual

promptness, there are those who form the habit of being

late regardless of the consequences. It is perversity,

laziness and lack of foresight that cause an individual to

form the habit of being tardy—just as it is these same

factors that cause most people to form most of the habits

that harm them and their business careers.

Thrift is another habit that can be formed—and that

very often adds a deciding

ingredient to any business

success formula. Common sense should prove to any person

that it is sound policy to economize wherever it is

reasonably practicable to do so.

This holds true from the bo

ttom up. Assume that a man

wants to start in business for himself. In order to do this,

he must have at least some capital, no matter what the

business may be. In most cases, there are only three

avenues open to him for obtaining that capital. He can

provide it from his own saving

s, get it by taking in a

partner or partners, or borrow it. If the money is his own

from the start, the business, too, will be his own. If,

however, he has to take in partners, he will own only part

of the business and will have to

share his profits. And, if he

borrows money, the loan must be repaid—almost invariably

with interest, which naturally reduces the profits.

Once he has started a busine

ss, an individual who is na-

turally thrifty will have an infinitely greater chance for suc-

cess than another of equal ability who does not possess this

quality. The habitually thrifty person will be able to

immediately recognize opportunities for lowering overhead

and production costs—and in present-day, highly

competitive markets even minor savings can mean a great

deal and even represent the difference between a net profit

and a net loss.

Beyond this, the person who

has formed thrifty habits

will always have a fluid reserve to meet contingencies,

carry him through slack periods

or make it possible for him

to expand or make improvements without resorting to

borrowing.

The astute individual realizes that such habits as

promptness and thrift can greatly help him achieve his

goals. He practices promptness and thrift until they become

second nature to him—and he reaps rewards from the

beneficial force these habits exert on his career.

But these are by no means the only positive habits that

can—and do—provide a powerful propellant to send a man

to the top of the success ladder.

One of the most valuable habits any tyro businessman or

executive can form is that of taking a last-minute pause to

rapidly review his reasoning before he makes a decision.

This final check-out may require only a few minutes or

even a few seconds, but it pays large dividends. It provides

the individual with one final—and priceless—opportunity

to arrange his thoughts in logical order and to refresh his

memory as to why and how he arrived at his decision. This

simple procedure greatly increases the individual’s ability

to instantly and convincingly counter any objections that

may arise. It is, in a way, analogous to the habit formed by

many of the world’s finest actors who, although they may

know their part in a play thoroughly, will nonetheless give

the script or at least their lines a quick skimming over

before the curtain goes up for a performance.

One of the most successful salesmen I have ever

known—he is now a top sales executive in a giant

corporation—maintains that he owes much of his success to

having formed this habit early in his career.

“I even developed a sort of personal gimmick to form the

habit,” he told me. “When calling on an account, I in-

variably stopped off first to have

a cup of coffee, get a shoe-

shine or do something of the sort. This gave me a final

chance to mentally review my presentation before actually

setting foot in the customer’s office. It worked wonders. I

sold much more effectively and was always prepared to

answer any questions or objections that arose.”

There is no doubt about it—at least not in my mind:

whether or not one needs a gimmick to do so, it is an excel

lent idea to form the habit of taking a last-minute mental

breathing spell to organize one’s thoughts before making

decisions.

Another—albeit much less simple—habit that should be

acquired by any man who wants to get ahead rapidly in

business is the habit of being relaxed. The successful

businessman is usually the one who is always relaxed—

even in the face of adversity.

Now, I hardly intend to imply

that he is apathetic, indolent and lethargic. What I mean is

that he keeps his mind receptive and responsive—always

ready to grasp and exploit new opportunities and to

understand and cope with new problems. He is poised, but

never rigid and unyielding,

in the face of changing

situations.

The seasoned businessman is relaxed in the same sense

that a crack football player is relaxed. The football player

who intercepts a pass does not freeze or panic because the

ball has unexpectedly fallen into his hands. The new situa-

tion that has suddenly developed does not leave him im-

mobile. His reactions are flexible enough to grasp and cope

—and he takes a firm grip on the ball and runs with it, still

alert and yet relaxed enough to shift direction and avoid op-

posing tacklers.

A few—a very few—fledgling businessmen have an in-

nate ability to assume this sort of relaxed attitude even

under great stress. But the vast majority of men in

business form the habit through years of experience.

“Always think of yourself as a man who has just fallen

overboard in the middle of a lake,” a veteran oilman ad-

vised me early in my business career. “If you keep your wits

about you, you can always swim to shore or at least dog-

paddle or float until someone fishes you out. But if you lose

your head—if you panic—you’re finished!”

I suppose that a man starting out in the business world

is, in a way, like one who suddenly finds himself in the

middle of a lake. If he remains calm, his chances of survival

are high. If he doesn’t, he’ll most probably drown. The tyro

businessman and young executive should constantly bear

this analogy in mind. It will do

much to help them form the

habit of being relaxed and thus able to handle themselves

in any situation.

Obviously, it would be impossible to list every habit that

is good or bad for every man in business. Far too much de-

pends on the individual, his nature and personality, the

particular field or type of business in which he is engaged

and many other variable factors.

However, any individual—whether he is in business or

not—can determine which habits are beneficial to

him

and

which are harmful. Habits that help an individual live and

work better and achieve his goals are, of course, good ones

—habits that the individual should try to acquire or form.

Those that harm or hinder, interfere or obstruct, serve no

practical purpose or offer no positive results should be

avoided or, if already formed,

should be broken as quickly

as possible.

Executives and businessmen would do well to

periodically make a careful inventory of the things they do

in connection with their work with sufficient regularity for

them to assume the character of

habits. It is a good idea to

list these on a piece of paper. Th

en it is up to the individual

to make his own evaluations of the habits he has listed. If

he is honest with himself, he will readily recognize some of

them as being bad. These he will do his energetic best to

discard with a minimum of delay.

Next, there will be some habits that appear to fall into

the “indifferent” or “undecided” category. These must be

considered objectively to determine if they can be modified

in order to make them positive.

For example, one executive I know had formed the habit

of holding weekly staff meetings with all the employees in

his department. Although the idea was basically sound, the

meetings had been held for several months without

producing any notably useful results.

The executive was almost convinced that he should dis-

continue the practice. Then, making a habit inventory, he

gave considerable thought to the problem of why the

meetings had been failures. Analyzing the matter, he

finally hit upon the answer. He had been holding the staff

meetings at 4:15 every Friday afternoon.

Human nature being what it is, the minds of the

employees at that time each Friday were on going home for

the weekend. They had little interest or enthusiasm for

discussions of office matters 45 minutes before quitting

time. The executive changed the time and the day of the

week—and his habit of holding weekly office-staff meetings

moved up into the good-habit category almost immediately.

The meetings were thereafter productive of many ideas

that improved output and e

fficiency and raised employee

morale to a new high. But an indifferent habit that cannot

be raised to the “good” category should be discarded, for if it

is continued, it can only slide down into the “bad”

classification.

As for those of his business habits that are clearly good,

the astute businessman will strive to make them even more

useful, advantageous and productive. For instance, if he

can lay claim to being habitually thrifty, to being

constantly on the alert for ways to cut costs and effect

savings, he should determine to redouble his efforts—to

find more ways of reducing expenses and thus increasing

the company’s profits.

The individual who wants to reach the top in business

must appreciate the might of the force of habit—and must

understand that practices are what create habits. He must

be quick to break those habi

ts that can break him—and

hasten to adopt those practices that will become the habits

that help him achieve the success he desires.

BUSINESS BLUNDERS

AND BOOBY TRAPS

Every business executive is going to make mistakes in his

career. The important thing is to learn from them—and

avoid repetition. But there are certain recurring situations

and procedures which seem to invite error and

misjudgment. It is up to the alert executive to anticipate

and evaluate these “traps.” As for those blunders and errors

of judgment which will inevitably occur, the same

“millionaire” mentality which ensures success will survive

and

profit by them.

Like most people, I’d much prefer to have the memories

of my mistakes fade quietly into oblivion, but there are

many I cannot forget. Among them are three monumental

blunders I shall always remember.

The first dates back to my days in the Oklahoma oil

fields. Buying the oil lease on a property located in an area

later known as the “Yale Pool,” I hired a geologist to inspect

the site and to recommend whether or not I should drill.

“There’s no oil on the land,”

he reported. “The property is

worthless. The best thing you can do is get rid of the lease!”

I followed his advice and sold. A short time later, the Yale

Pool proved to be a rich oil-producing area. I’d thrown away

a fortune.

My second giant—but hardly economy-sized—blunder

was made in 1931. Firms in which I already held

substantial interests and I bought more than two million

dollars’ worth of Mexican Seaboard Oil Company common

at prevailing Depression-era lows. Then, the stock market

took another downturn. I was certain we’d made a safe and

sound investment in Mexican Seaboard, but my fellow

directors feared that the market would go even lower.

“We can’t take any more risks,” they argued. “We have

to unload.” Outvoted, I fina

lly went along with the

majority. The firms—and I—sold our Mexican Seaboard

stock.

Had we held the shares we already owned and bought

more in 1931, we could have acquired control of the

company at a fantastic bargain price. Mexican Seaboard

common’s subsequent performance proved that this would

have been a major financial coup—and that I would have

made millions.

I pulled my worst boner in 1932. I was interested in ob-

taining an oil concession in Iraq, where geological surveys

and exploration operations indicated the presence of vast

oil deposits beneath the hell-hot desert sands. My

representative, conducting negotiations with Iraqi

government officials in Baghdad, reported that a tempting

concession was available for a price that could be tallied in

tens of thousands of dollars. Just then, the U.S. crude-oil

price broke; East Texas crude plummeted to ten cents a

barrel—and the petroleum industry was in a panic. Fearing

to risk capital outlays under those circumstances, I ordered

my agent in Baghdad to halt all negotiations.

The next time I had an opportunity to buy a Middle

Eastern oil concession, in 1949, I seized it unhesitatingly.

Conditions were far different than they had been 17 years

earlier, however. In 1949, I

had to pay $12,500,000 in cash

upon signing the concession agreement!

Bad as they were, it would be solacing to think these

were my only errors, but I made many others and will

doubtless make many more. As I’ve said before,

businessmen are no exceptions to the rule that everyone

makes mistakes. But personal experience and observation

have taught me that most mistakes made by businessmen

and executives fall into certain broad, though readily

definable, categories.

Naturally enough, it is the young businessman who,

through inexperience or immaturity, usually makes the

most errors. Some of his blunders are inadvertent, not very

serious and entirely understan

dable and excusable. Other

errors are the results of inadeq

uate training or insufficient

or faulty understanding of business in general or of his own

business in particular. Yet other blunders stem from out-

and-out inaptitude or incompetence—but these, needless to

say, soon prove fatal to any business career.

The examples I’ve cited from personal experience serve

to illustrate three of the major categories of mistakes I’ve

found are most commonly and most often made by

businessmen, especially when they are relatively

inexperienced and unseasoned.

The first of these is the failure—or the inability—to dis-

tinguish between what is fact and what is opinion. Though

it may be carefully considered and based on fact, opinion

nonetheless remains opinion—and it is very seldom

infallible. Opinion is never better than the information on

which it is based, the qualifications of the person voicing it

and his ability to correctly interpret the information at his

disposal. Businessmen are sometimes inclined to read or

hear opinions and accept them as facts upon which to base

their plans or make their decisions without further

investigation or study. Such was the error I made when I

sold my lease on the Yale Pool property. Although I was

well aware that in those days geology was far from being

the most exact of sciences, I blindly accepted the word—the

opinion—of the geologist who inspected the property. I did

not take the time nor the trouble to consult anyone else to

obtain a “cross-reading” on the single “expert’s” judgment. I

cannot blame the geologist for making a wrong

recommendation. I can blame only myself for accepting it

without question.

The predilection for accepting opinion or even rumor as

fact is a fairly familiar and widespread human failing. Any-

one harboring doubts on this score need only reflect on how

often he has heard individuals repeat as fact the

opinionated statements they

read in highly biased

newspaper editorials, gleaned from propaganda handouts of

one kind or another or heard as rumors in the streets.

Remember the perennial tale of the leprous Chinese

cook’s thumb that turned up in

a bowl of chow mein at the

(usually local) chop suey parlor? That particular yarn was

already hoary with age when I was a boy—yet it’s still mak-

ing the rounds, and it’s still being given credence by the

gullible. This, of course, is an extreme example, but

businessmen frequently allow their judgment to be

influenced by opinions and rumors which, in their own way,

are no less factitious than this unappetizing fable. Many

otherwise astute businessmen will buy or sell sizable blocks

of stock merely because they “hear” that certain issues are

“due” to go up or down on the Stock Exchange. Nine times

out of ten, they find that they’ve done the wrong thing

because they listened to opinions or rumors rather than

determine the facts for themselves.

A short time ago, a manufacturer I know spent nearly

$100,000 tooling up and buying the raw materials to pro-

duce a novelty item which, according to trade journal

articles he’d read, was in great demand. Not until he was

ready to go into production

did he discover that half-a-

dozen other firms were ahead of him and beginning to

distribute the item. The market was saturated even before

his salesmen could start selling his product. He was badly

stuck. This could not have happened had he checked all the

facts before leaping into a clearly stupid business situation.

There may be some substitute for hard facts and factual

information, but if there is, I have no idea what it can be. It

certainly isn’t rumor or opinion that has been camouflaged

as fact. In order to succeed

in any “deal,” project or

endeavor, the businessman must assemble all the available

pertinent hard facts and study and analyze them himself.

There’s nothing wrong in asking

the opinions of others and

in taking them into consideration. The mistake lies in

accepting and following other p

eople’s advice blindly, in

accepting their opinions without first determining if they

are backed up by facts. This is one of the first lessons young

businessmen and executives should learn—or they will find

themselves being taught it the hard way!

Once satisfied that he has made a sound decision based

on sound judgment of the facts, the businessman can plot

the course whereby he will implement his decisions or pro-

grams. And, he should stick to that course and follow it

through. The failure to do th

is is another of the blunders

often made by young businessmen—and by some who are

not so young.

That’s where I made my big error in 1931. I did not have

the courage of my convictions,

and I failed to stick by my

decisions and to my plans. I was convinced that Mexican

Seaboard common was a good—an unusually good—invest-

ment. I had made careful, painstaking studies of the com-

pany’s history, its organizational, financial and debt

structure, its potential and all other conceivably pertinent

factors. It was only after I’d done all this that I bought

large blocks of Mexican Seaboard stock on my own account

and used my influence to encourage the firms in which I

held substantial interests to do likewise. When Mexican

Seaboard shares dropped a few points, the directors of the

boards on which I also sat became nervous and voted to sell

out the firms’ holdings. My arguments were unavailing,

and the firms sold their Mexican Seaboard stock.

Whereupon, instead of hewing to my original plans, I

followed suit. I “dumped” my own shares. I suffered a

considerable loss on my original investment, for the stock

was selling for less than what I had paid for it. Far more

serious was the loss of the very

large potential profit that

would have accrued to me in the ensuing years, when the

stock multiplied many times in value, just as I had

reasoned it would—as I knew

from my careful studies of

the company that it

must

This was a stock transaction. It is not difficult to find

analogous situations in commerce and industry. Quite

often, businessmen become frightened at the very first

signs of slowdowns or setbacks after they have launched a

well-planned and organized production or sales program.

They hit the panic button and scrap the entire program,

suffering heavy financial losses as a result. This is

particularly true of unseasoned men who do not have the

calm, cool patience to wait until more returns come in nor

the experience to understand that a redoubling of efforts or

even some slight modification in plan might make the

program a complete success, or at least carry it through to

conclusion without loss.

It has always been my contention that if corporate books

were kept properly, there would be a separate ledger in

which accountants entered the dollars-and-cents costs of

executives’ and businessmen’s errors and mistakes.

Certainly, there would be few entries in such ledgers that

would show up more glaringly

than the cost of premature,

defeatist cancellations of plans and programs already under

way.

My 1932 bobble in turning down the Iraqi oil concession

illustrates another blunder frequently made by

businessmen —namely, their reluctance to take risks. A

businessman has to be willing to take risks. They may be

planned and calculated, but they’re risks just the same. The

shrewd businessman weighs all the known and, to his

knowledge, possible factors in a given situation. He tries to

allow for all the variables, but he is well aware that he

cannot think of nor insure against every contingency. He

accepts the idea that there is always a possibility that some

completely unforeseen element or development will turn up

to alter or even wreck his plans. He is, however, secure in

the knowledge that he has done everything within his

power to tip the odds for success in his own favor.

Obviously, I was not very sh

rewd in 1932. Had I stopped

to reason things out, I would have realized that the crude-

oil price-break was only a temporary problem, that the

price of crude would have to go higher—much higher. I

should have also realized that the demand for petroleum

products would continue to increase throughout the years,

and that it would be only a matter of time before the world

would see a mad scramble as oil companies sought new

sources of crude-oil production. Considering the bargain-

basement price at which the Iraqi concession was being

offered, the risks involved in buying it would have been

more than offset by the potentials for eventual profit.

The businessman who is able to calculate his risks—and

then is willing to take them—has his battle for success

nine-tenths won. The remaining one-tenth is the unknown

variable, the unpredictable factor that puts the zest and

excitement into the game. Without that “x” factor, business

would be hopelessly dull, routine and uninteresting.

Young businessmen and executives make other mistakes

than those I’ve already discussed. Often, the fault is not

theirs at all. Young men generally start out in the business

world today as strictly disciplined and as passively obeisant

as the novices of some pagan cult. By the time they leave

their schools and colleges, where they receive

overspecialized educations, they are virtually consecrated

to the Moloch of “Organization” and dedicated to serving

the complex rituals of memorandum and buck-passing.

They are—and remain forever—cloistered from the

unanointed laity of the rank-and-file production workers.

The organization chart—the more complex the better—is

their Grand Totem. Whole volumes— or preferably entire

shelves—of procedural rules are their most honored

fetishes. They are conditioned to meet periodically in

solemn conclave and pore over the esoterica of statistical

tables and committee reports. They are as far removed from

the harsh, mundane realities of commerce and industry as

Egyptian priests arguing abstruse theological doctrines in

the sanctum of the inner temple.

I made my first million dollars in the front seat of a

battered, secondhand Model T Ford. The flivver served as

my executive office and field headquarters—sometimes

even as my bedroom. I transacted enormous amounts of

business and signed many important leases, contracts and

agreements in the front seat of the mud-splattered tin lizzy.

When it was necessary to have documents witnessed, one

or two of my drillers or roustabouts scrawled their

signatures on the papers, using the jalopy’s wrinkled

fenders as writing surfaces. There wasn’t anything unusual

about any of this. Almost every independent operator—the

wildcatter—who prospected and drilled for oil during the

early days in Oklahoma operated in much the same

manner. He had no fixed hours, no five-day week. He had to

be his own promoter, geologist, legal advisor, explosives

expert, drilling superintendent and jack-of-all-trades. Most

of his time was spent in the field, working alongside his

men.

He often went for days without any sleep save for what

naps he could take on the drilling rig or curled up in his

automobile.

The wildcatter operated on a perpetually frayed shoe-

string budget—at least until he brought in his first big pro-

ducer. He constantly faced heavy competition; his business

was fraught with innumerable financial perils and pitfalls;

as a natural consequence, he developed certain traits and

techniques and learned certain lessons which, I’m afraid,

today’s young businessmen have little opportunity to

develop or learn.

We, the “independents,” eliminated all unnecessary ad-

ministrative overhead expenses in our operations. We

scorned renting offices in the boom towns that burgeoned

around the oil fields, partly because we didn’t want to

spend the extra money on what we considered an

unnecessary frill, but mainly because we knew that it was

impossible to run our operations properly from behind a

desk. We familiarized ourselves thoroughly with all aspects

of our business and kept all our costs down by exercising

unceasing and vigilant supervision over every phase of our

operations. We often worked employee-morale and

production miracles by donning

overalls and sweating and

grunting along with our men even on the toughest and

dirtiest jobs.

It wasn’t until I’d brought in a few producing wells that I

thought to trade my Model T for a new Dodge and to rent

desk space in someone else’s Tulsa office. By then, I was

worth a million dollars—on paper. Nonetheless, I still wore

work clothes more often than I did business suits. I was

running three strings of rotary tools—drilling three wells—

simultaneously and acting as

my own financial manager,

purchasing agent, tool-pusher and drilling superintendent.

There were often times when I’d work around several clocks

without sleep to keep things moving on the drilling sites.

Is this boasting? I think not; as I’ve said, most inde-

pendent operators worked the same way. Bill and Charles

Roeser, R. M. McFarlin, George Forman, Josh Cosden, Bill

Skelly—these were only a few of the countless others who

retained their basic outlooks and attitudes toward business

even after they’d made their million or millions.

What I’m trying to point out with all this are some of the

differences between the businessmen of that era and those

of today. I’m also attempting to point up what I consider

some of the glaring errors made by today’s young business-

men and, for that matter, by American business firms and

American business as a whole.

First of all, there is the atti

tude toward administrative

overhead. Years ago, businessmen automatically kept ad-

ministrative overhead to

an absolute minimum. The

present-day trend is in exactly the opposite direction. The

modern business mania is to build greater and ever greater

paper-shuffling empires. Many business firms employ

battalions of super specialized executives, reinforce them

with regiments of office-working drones, give them all

grandiloquent titles —and then mire them down in

bottomless quagmires of forms, reports, memoranda,

“studies” and “surveys.”

Thus, it is hardly surprising that so many young men

start their business careers with the idea that

“administration” is not only the tail that wags the whole

business dog, but that it is, in itself, the whole animal.

These young men will spend half their time trying to find

out what they’re doing through studies and surveys, then

spend the other half informing each other about what—if

anything—they’ve learned through the media of committee

meetings and interoffice memoranda.

I’m still a wildcatter at heart, I suppose. I don’t hold

with the ultra-organization and super administration

theories at all. I still believe that the less overhead there is

in business, the better. The world-wide complex of firms

comprising the Getty interests manages to function

beautifully with a modicum of administrative detail and

paperwork. For example, there are only some 50 people

doing administrative work in our entire Middle Eastern

operation. The Getty Oil Company of Italy—which, in

addition to its other operations, runs a 40,000-barrel-a-day

refinery and a 1,300,000-barrel-capacity tank farm—has an

administrative staff of only 15 persons. This proves—at

least to my associates and me—that businesses

can

operated successfully without proliferating paperwork

empires. The thought may not please exponents of the

“Everything in Quintuplicate” school, but the system cer-

tainly improves efficiency and boosts production. The resul-

tant savings and increased profits make our stockholders

very happy, indeed.

Yet another of the blunders of young businessmen and

executives is their constantly increasing tendency to over-

specialize. The young man who understands all aspects and

phases of business is a rare bird these days. The average

young executive has a thorough theoretical knowledge of

one single facet of business but knows little or nothing

about what goes on in any office or department save his

own. He is like the mythical medical specialist who is so

specialized that he only examines left nostrils.

If the trend continues, the real businessman—the man

who can actually coordinate and run a business because he

knows what makes it tick and how it operates—will

disappear from the scene entirely. His place will no doubt

be taken by some sort of super cybernetic machine. The

machine will establish policy, make final decisions and give

orders after bits and pieces of information encoded on

punched tapes are fed into it by ultra specialized company

executives.

To succeed in a business, to reach the top, an individual

must know all it is possible to know about that business.

He must be acquainted with the duties and responsibilities

of each and every section, offi

ce and department of the firm.

He must know something—the more the better—about ac-

counting as well as production, about sales as well as

purchasing. Like the old time

wildcatters, he should know a

dozen— or a hundred—different

jobs well enough so that he

can exercise direct supervision, increase efficiency and

product quality, reduce costs and still make a profit and

continue to expand.

Any executive can do a much better job if he peels off his

business suit once in a while, climbs into a set of overalls

and gets his hands dirty down in the plant. The vice-

president in charge of purchasing who has fed the raw ma-

terials he buys into a processing vat or a molding oven can

do a much better job of purchasing. He can often learn more

by listening to the conversation of a few production workers

for an hour than he can by reading 10,000 specification

sheets. Advertising and sales

managers who have operated

a lathe or punch press and have actually made a component

of the product about which they rhapsodize will be much

more convincing and successful in their sales campaigns.

The employee-relations expert will have a much clearer and

better understanding of employee problems and psychology

if he spends more time among the employees and less in his

paneled office dreaming up new “morale-building”

gimmicks or bowling parties.

I don’t suppose there are any finer examples to prove my

point than the companies in the Bell Telephone System.

There are few Bell System companies in which the top

executives didn’t work their way up through the ranks.

They began as linemen, cable-splicers, bookkeepers. They

generally moved around as well as up during their careers.

They run their operations with remarkable efficiency.

Walter Munford, the late president of U.S. Steel, began

his career as a die-reamer, working 78 hours per week—

and came up the hard way. Harry B. Cunningham,

president of S. S. Kresge, started as a stock boy and worked

his way up through the various departments and levels of

the giant retail chain. The list of such examples could be

extended indefinitely, but the point, I think, is clear.

Another error that unseasoned businessmen make is

that they relegate, rather than delegate, authority. I

suppose it’s natural for an executive or a man who owns a

business to feel that he should take things as easily as

possible. That’s human nature—but it’s hardly good

business. A businessman can never afford to let down—nor

can he afford to relegate his authority. If he allows others

to run his business without maintaining close and constant

supervision over their policies and operations, he’s most

likely to find that he has made a mistake and that he and

his business are in trouble. All too often, by the time he

makes that discovery, it’s too late to do anything about it.

“If you have a business, make sure that you’re the one

who’s running it,” is a piece of advice I received many years

ago. “If you don’t want to accept the headaches of being

boss, then either close the business down or sell it to some-

one who

will

accept the responsibilities.” I’ve found this to

be sound counsel. A businessman

should delegate authority

—he must, in fact, for no one man can be everywhere and

do everything. But he must also remember that the final re-

sponsibility is his—and thus, he should always retain final

authority.

This brings me to the last of the mistakes I’ve observed

that young businessmen make frequently: their growing

habit of pampering themselves—complaining that they’re

overworked and constantly laboring under “terrific strain

and tension.” They flaunt their real or imagined ailments—

particularly their ulcers—as badges of honor. They spend

huge amounts of time and money on medical checkups,

cardiograms, X rays and test

s and examinations of every

conceivable kind. Nothing could be more nonsensical.

The National Office of Vital Statistics reveals that “men

of the managerial, technical and administrative level as a

whole have lower . . . than . . . average mortality rates.”

Business executives enjoy the lowest rates when buying life

insurance. Medical studies indicate they are less

susceptible to heart trouble—a favorite executive’s

bugaboo—than clerks or laborers, are no more inclined to

contract cancer or most other fatal diseases than

bricklayers or streetcar conductors.

“There’s nothing really wrong with most executives,” the

head of a famous clinic once remarked to me. “They aren’t

overworked or overstrained. They’re just over worried

about holding their jobs and become nervous wrecks as a

result of the office politics they

so often play.” Other doctors

have told me they believe that many executives’ morbid

preoccupation with their health is a by-product of the

status-seeking mania.

“Executives who are secretly afraid they aren’t good

enough to be promoted build up health alibis in advance,” is

the way one physician explained

it. “In the event they fail

to make good, they can convince their wives, their friends—

and themselves—that their health, not their incompetence,

was responsible for their failure.”

One doctor even says that many executives who claim to

have ulcers have nothing of the kind. “Having ulcers has

become a status symbol,” he grins. “There are certain types

of executives who would rather die than admit they have

nothing wrong with their

stomachs. That would be

tantamount to admitting that they were like the hoi polloi!”

Not being a medical authority, I can hardly pass judg-

ment on any of these theories. I can, however, enjoy a

hearty private laugh whenever I hear a 28- or 30-year-old

executive who works at most 48 hours a week—less the

time he spends having three-hour “business lunches” and

playing golf—wail that he’s “overworked” or “laboring

under terrific strain.” The truly great giants and geniuses

of American business habitually worked 16- and 18-hour

days—often seven days a week— and seldom took

vacations. As a result, most of them lived to a ripe old age.

For example, Andrew Mellon was 82 when he died,

Andrew Carnegie and Henry Ford lived to be 84, George L.

Hartford and Samuel H. Kress died at 92. John D.

Rockefeller, Sr., was 98 when he died.

Nor is this true only of businessmen of the past. Hugh

Robertson was 72 in 1959 when he turned over the presi-

dency of the Zenith Radio Corporation to Joseph S. Wright,

and moved up to be a very active chairman of the board.

Walter Johnson—in his eighties—is famous for the energy

and ambition with which he runs two giant companies—

Friden, Inc. and the American Forest Products Co. There

are uncounted others like them.

The “half-strength” executive who complains about his

“overwork” and its menace to his health would do well to

buy a

Who’s Who o f American Businessmen

and study

it carefully. He’d find that the hardest-working and most

successful businessmen most often live longest.

These, then, are the various categories of blunders I’ve

seen young businessmen make so frequently during my

more than 40 years in the

business world. Some are

mistakes that a beginner will almost inevitably make until

he is seasoned and matured in

business. Others are errors

that can be avoided, particularly if an individual is

forewarned about them. Most of the blunders I’ve listed are

errors I’ve committed myself at one time or another. In

business or out of it, there’s nothing unusual or shameful

about making a mistake—once. But, as Cicero said, to

stumble twice against the sa

me stone is a proverbial

disgrace.

THE PSYCHOLOGY OF

SOUND PERSONNEL

MANAGEMENT

No successful businessman has ever made his fortune

without the dedicated help of his employees. The

realization of almost every idea requires the intelligent

work and cooperation of all involved. An ambitious

executive must know how to summon the best from those

around him, regardless of the pr

essure or lack of it. This is

an essential skill that seems to come naturally to some, but

can also be learned.

Many years ago, I had a conversation with one of Amer-

ica’s leading industrialists, a man noted in business circles

for operating his many companies with consistent success.

“You certainly seem to have a magic touch,” I remarked

at one point during our discussion.

“Magic touch?” the magnate said. “No, I don’t think I

have anything of the kind. The reason I’ve done pretty well

is that I long ago discovered the secret ingredient that

makes all the difference in business—the use in

management of applied psychology based on common

sense.”

I could readily understand what he meant, for I had

learned my first lessons about

what sound psychology could

do to make business management more efficient in the

Oklahoma oil fields. I’ll admit the lessons were blunt and

basic—and sometimes even harsh—but then, this was to be

expected when working with the men who formed my

drilling crews.

I was young and relatively inexperienced; the men who

worked for me were mostly older in years and much wiser

in practical knowledge and experience. My position was

somewhat analogous to that of a freshly commissioned

second lieutenant who suddenly finds himself commanding

a unit made up of tough, veteran regulars. I had the

authority and the final responsibility; the seasoned

campaigners watched with wary skepticism to see how I

would use and discharge these, and waited for me to prove

myself.

I knew it would be worse than useless for me to assume

a stern, authoritarian role, to play the martinet; I would

only appear ludicrous and

reap nothing but contempt,

which the men would show by doing as little work as

possible. It would have been equally fatal for me to remain

aloof or, on the other hand, to try to ingratiate myself by

being overly familiar and pretending I was “one of the

boys.” I realized I would have to strike some viable median.

I did not think of it as “psychology”; I doubt if I was then

aware the term could even be used in any such context. It

was simply a question of finding the most effective

techniques for managing the activities of the men on whose

morale and performance my business success hinged.

The direct approach seemed most advisable—if for no

other reason than that the men would have instinctively

sensed any attempt to “con” them. By one means and an-

other, I made my views quite clear. I let the men see I

respected them not only for th

eir superior experience but

also as individuals, and look

ed upon our association as a

mutual effort in which I assumed the financial risks,

accepted the major headaches and was willing to do my

share of the work. I gave no orders or instructions without

explanation, meticulously avoided meddling or nit-picking,

but was always ready to lend a hand on even the messiest

and most difficult tasks whenever a hand was needed.

Within a remarkably short time, my men were acknowl-

edging that, although I was a tenderfoot, I was not a total

ignoramus and, in fact, apparently possessed a fair amount

of knowledge about the oil bu

siness in general and drilling

operations in particular. We rapidly developed a strong

degree of mutual respect, and work on the drilling site

progressed quickly and efficiently. There were, of course, a

few rough spots and potentially taut situations—one of

which I particularly recall.

In those days, drilling crews worked twelve-hour shifts

six days a week. This left little time for week-night sprees

in town, but some of the men were unable to resist the

temptations of the boomtowns, notwithstanding the fact

that morning-after work in the broiling Oklahoma sun was

brutal punishment. One morning, one of my roustabouts

appeared on the drilling site suffering from a monumental

hangover. Although we were at a crucial stage of drilling,

he showed he had no intention of doing any serious work

that day and began to openly soldier on the job.

The other members of the crew watched closely to see

what—if anything—I would do. Luckily, two things were in

my favor. I, myself, had been out the night before and the

crew knew this, and the hung-over goldbricker was only a

few years older than I was.

“Feeling rough?” I asked him. He just glowered at me.

“I’ll make you a deal,” I went

on. “I’ll spot you ten seconds

and race you up the rig. If you beat me, you can have the

day off with pay.”

The roustabout squinted up to the top of the drilling

tower. “Boss, you’re on,” he grunted. I handed one of the

other men my watch. At a signal, the roustabout started a

monkey scramble up the rig. Exactly ten seconds later, I

followed suit—and succeeded in reaching the crown block a

second or two before him.

We were both winded when

we got back down to the

drilling platform—but it was obvious that I had won sev-

eral victories. The other members of the crew were grinning

broadly. I’d handled the situation in a manner that they

could appreciate and had proved my right to be “boss.” The

roustabout was good-naturedly jeered—and he took it all in

equally good stride.

“OK,” he groaned. “I’ll work this shift if it kills me!” He

did work the shift—and it didn’t kill him. Thereafter, he

was one of the hardest-working and most conscientious

members of the crew, and subsequently worked for me on

many other drilling jobs.

I’ll grant the incident is an elementary illustration of

how applied psychology can solve management problems

and help business operate more efficiently. I would hardly

recommend that, say, the executive vice-president of a

construction company enter into a hod-carrying competition

with an apprentice bricklayer in order to prove his

managerial bona fides. Nonetheless, the example serves to

demonstrate that, in directing human activities, there is

much to be said for employin

g methods and taking actions

that have human appeal, that the individuals concerned

can readily grasp.

I think my industrialist friend’s definition of

management might be stated in another way, namely that

the primary function of management is to obtain results

through people.

Consequently, sound management

psychology will motivate, direct, encourage and, in those

exceptional instances where management is in the hands of

exceptional individuals, inspir

e people so they will achieve

the results that make possible the attainment of given

objectives.

There was a time—happily, long past—when

management gave little if any thought to the human

material which has always formed the most valuable asset

of any business. Employees

were considered highly

expendable, stockholders were at the mercy of

manipulators and sharks, and attitudes toward even

customers and clients found de

finitive expression in the

classic utterance “The public be damned!”

The entire concept of management-people relations has

undergone radical change in recent decades. Business and

business management have grown up; they have become

knowledgeable, sophisticated, aware that people count.

Granted, the changes did not come about spontaneously;

they were aided, even forced, by outside pressures.

However, this is not of importance here. The important

thing is that modern management has become acutely

conscious that it must deal with and depend on human

beings, that to get the most out of people it is necessary to

do more than merely growl or shout an order and, above all,

that human beings must be led and never driven.

Having recognized—and regretted—its past errors and

oversights, the business community has done much to

correct them and to develop an enlightened management

psychology. Proof of this can be found in the extensive pro-

grams designed to maintain good employee, stockholder

and public relations and in the effort most companies take

to insure that they are “projecting a favorable corporate

image.” These are all significant manifestations of modern

management’s awareness that it can only obtain results

through people.

Although, broadly speaking, all companies want to

obtain very similar results—such as high employee morale,

high levels of quality production, healthy profits—the

patterns and methods of application of their management

psychology vary, not only in detail but also in effectiveness.

Far too many executives at all levels still fail to

comprehend that sound management psychology, like

charity, begins at home and, while elaborate public-

relations programs doubtless accomplish much, the place to

start applying management psychology is no more distant

than the nearest stenographer, machinist or salesclerk.

No psychological weapon is more potent than example.

An executive who seeks to achieve results through the peo-

ple who work under his direction must himself demonstrate

at least as high a standard of

performance as he hopes to

get from his subordinates. If he makes a habit of spending

three hours over lunch, he has no right to complain when

his secretary dawdles an extra ten minutes over her coffee

break or lacquers her nails when she should be typing a re-

port the board chairman want

s to see the next morning.

Executives need to establish and maintain single

standards in other regards as well. Some fail to do so and

exert a strong adverse psychological influence on their

subordinates. There are those who adopt a

“quod licet

jovi, non licet bovi”—

“what is permitted the gods is not

permitted the cattle”— attitude, blandly assuming their

rank not only bestows privileges but also grants license.

Typical of the genus is the executive who issues menacing

warnings about pilfering and the personal use of company-

owned property. It’s not beyond him to fire the office boy for

appropriating a lead pencil or a five-cent stamp—yet this

same man will blandly spend hours dictating personal

letters to his secretary and will send subordinates out to

run his personal errands on company time.

Workers are quick to learn of such things; a company

grapevine is one of the swiftest means of communication

known to our society. And, when an executive’s bad exam-

ple or his double standards become known, morale and out-

put plummet in his department. I’ve encountered both

types of men during the course of my career and can cite

two representative examples from my experience when I

was managing the Spartan Aircraft Company.

At one point, I became intuitively aware that employee

morale was sagging. I soon found out why. Several

executives had gotten it into their heads they could arrive

for work anywhere from 30 minutes to an hour late each

morning. Naturally, this did not set very well with the

rank-and-file workers who were required to punch time

clocks and were docked pay if they were tardy.

Fire, it is said, can be best fought with fire—and I’ve al-

ways felt that bad management psychology is best

countered by forcefully positive applied psychology. I did

not waste time issuing threats of disciplinary action. I

simply announced that, thenceforth and until further

notice, I would hold daily conferences at which I expected

all management personnel to be present—and the

conference would begin promptly 45 minutes

before

the

start of the regular working day.

I lost a bit of sleep in the next two weeks or so, but I won

a major battle. My executives got the idea; there was no

more habitual tardiness, and worker morale was restored

to a high level in record time.

Not long thereafter, I learned an executive had taken

some company-owned lumber and nails with which he

constructed a dog kennel in his back yard. Although the

lumber came from old, dismantled packing crates, I felt

he’d set a dangerous precedent which could lead to all kinds

of trouble and cause pilferage losses to soar if employees

learned he’d gotten away with it. Since he was a valuable

man, I did not want to fire him and relied on another

applied-psychology stratagem to handle the situation. I

sent the man a pleasantly worded memorandum, asking for

a detailed inventory of the material he’d taken and saying I

would have its appraised value charged against his salary.

The inventory was prepared; the appraisal showed the total

value to be about four dollars, and this sum was duly

charged against his pay. I got the point across, not only to

the executive concerned, but also to the thousands of

Spartan employees, for the story made the rounds rapidly.

We had remarkably little pilferage loss from then on. The

workers, realizing that not even the “brass” could get away

with appropriating company property, evidently took the

lesson to heart themselves.

It should be obvious that the integrity of management

personnel is a decisive factor in creating a sound manage-

ment psychology that will work with subordinates,

superiors, equals, customers and anyone else with whom

executives or their company has contact. Executive

integrity is a many, faceted thing. For example, the good

executive who practices sound management psychology

realizes he cannot bluff those with whom he deals, whether

they be subordinates or superiors. Subordinates in

particular can sense when the boss is bluffing, when he

does not know the answer to a question or problem or has

made a mistake and is trying

to cover up. Nor should the

executive resort to buck passing. Bluffing will only cause

loss of respect, while a frank admission of error or

ignorance will gain human resp

ect. Buck passing will earn

him nothing but the contempt of those who know he passed

the buck and the mortal hatred of those to whom he passed

it.

In dealing with employees, it is essential they be given

recognition as human beings, as individuals. Nothing

achieves this more effectively or establishes a healthier

mental and emotional climate among workers than what

has been termed “responsible participation.”

Unquestionably, financial reward is the principal

motivation that causes people

to work. However, this is not

the sole motivation. For the majority of people—even

though they may not admit or even realize it—work

satisfies a distinct psychological need. The need is most

fully satisfied, and the worker is motivated to do his best, if

he can feel, as Roger Falk puts it, “that he is participating

responsibly, whether alone or in a group, in an enterprise

the over-all objectives of which he can understand.”

Yale’s Professor E. W. Bakke states the proposition as a

management responsibility to insure that an employee

“understands the forces and factors at work in

his

world,”

in other words, in his own work environment. The employee

who is told the whys and wherefores of the job he does, of

the instructions that are given to him and the things that

happen around him, is made to feel he is participating

responsibly in the over-all operation, and is consequently a

happier, more enthusiastic and better worker.

It is indeed sound management psychology to carry the

process of making the worker feel he is participating

responsibly several steps further. There is no more effective

way of doing this than by letting the employee know his

views are of interest to management. Where practicable,

workers should be asked what they think of a problem,

projected innovation or change. Not only will this produce a

surprisingly large number of worth-while suggestions, but

it will give the individual worker a sense of pride—a sense

that he is participating, playing a significant role.

I have long been aware of the value—both intrinsic and

morale-building—of consulting subordinates, asking their

opinions and advice. More than a few times during my ca-

reer, some grizzled driller, veteran machinist or alert

secretary has hit upon simple solutions to problems that

baffled me and my executives, or offered suggestions that

proved of immense value.

It all adds up to this: The worker is not a brute animal

or a robot that can only respond to command. Workers— at

all levels—are thinking, feeling human beings. They derive

psychological satisfaction from the knowledge that man-

agement is interested in their

brains as well as their brawn

and gives thought and consideration to their feelings.

Sound management psychology calls for continuing

interest in all employee problems, even personal ones. This

does not mean management should pry into any employee’s

private affairs. It does mean that management should lend

a sympathetic ear—and, where reasonable, provide

assistance—to an employee with personal problems.

This is done on a broad scale in many companies; there

are employee-welfare programs, counseling services, credit

bureaus and a host of similar facilities. Nonetheless, it is

excellent psychology to carry this spirit through at all

managerial levels. No, a department head should not be a

father-confessor or a Dutch uncle to all his subordinates.

On the other hand, if an executive is to achieve results

through people, he must possess an element of compassion

in his make-up, and must always bear in mind that every

individual has his hopes, intere

sts, problems and fears. If a

worker respects his superior, it

is human nature for him to

seek the superior’s counsel—and it is the soundest

management psychology for the superior to hear him out

and, if possible, help him.

Fairness is another major building block in the structure

of sound management psychology. Management must be

fair to its employees, stockholders, customers and

suppliers. Executives should not play favorites among their

subordinates or customers. Stockholders are entitled to

somewhat more than an even break. Suppliers cannot be

treated capriciously. Salaries and wages paid to workers

should be fair and equitable; promotions should be made on

the basis of merit. The psychological impact of unfairness is

likely to be shattering to the in

dividual; failure to be fair at

all times means just that for management: failure.

Among other things, fairness to employees implies trust.

The feeling that he is not being trusted damages—and fre-

quently destroys—employee morale and performance. No

worker can be contented and productive if he senses that

management distrusts his competence or distrusts him

personally.

In his book

The Naked Society,

Vance Packard

quotes Yale University’s Dr. Chris Argyris, whose

researches into human behavior have shown that “one of

the most powerful motivators of constructive human

conduct is simple trust.” Packard goes on to cite what Dr.

Argyris describes as a “causal chain” of mistrust that

develops in some companies:

The employee comes into the organization with

honest, earnest motives.

He experiences the frustration that comes from a

feeling of failure because he is given little feeling that he is

trusted and little responsibility.

He reacts by feeling less responsibility for the well-

being and success of the organization. He also may

gradually respond to his feeling of failure in a number of

active ways, including stealing. Partly he steals because it

is a safe way to express his aggression. In a deeper sense

“he steals from a company which has helped to alienate him

from feeling responsibility, commitment and trust.”

Once the stealing occurs, management tightens up

the very factors that caused the original stealing.

Now the distrust of the workers is out in the open.

They begin to feel “OK, if they think I cannot be trusted, I

will act as if I cannot.”

Dr. Argyris has found in his studies that distrust is not con-

fined to the lower-level employees. “In my opinion there is a

lot of distrust at the upper levels,” he states.

In discussing the psychology of sound management, one

inevitably and invariably comes full circle, returning to the

fact that business depends on

people and cannot operate

without them. It doesn’t make

much difference how much

other knowledge or experience an executive possesses; if he

is unable to achieve results

through people,

he is

worthless as an executive.

LIVING WITH LABOR

Living with, working with labor—not fighting it or ignoring

it—should be an assumed obligation of the business execu-

tive. Success and profits can be gained more easily—and

happily—with labors honest cooperation than without it.

This should all be obvious, but deplorably few businessmen

see labor relations as anything but an obstacle. Yet my own

experiences have proven to me that a successful (and mu-

tually respectful) liaison with labor

can

be achieved.

Some years ago, for example, representatives of a labor

union sought to negotiate a new contract with a company I

owned and I met with them at the bargaining table. Their

demands centered around an hourly wage increase which I

knew the company could not afford to grant in full. I did,

however, believe we could meet the demands halfway and

felt that such an increase was justified.

Before the negotiations began, my labor-relations

“experts” urged me to give no hint of this in the early

bargaining sessions. “Play it close to the vest,” they

advised. “Offer nothing at

all until the last possible

moment, when the talks reach an apparent impasse—as

they doubtless will. Then start low and edge the offer up

slowly, raising it only as much as is absolutely necessary.”

To my way of thinking, this approach smacked strongly

of bazaar haggling. It seemed to me that such a strategy

was beneath the dignity of the company and an affront to

the union representatives’ intelligence and could only serve

to cause lasting bitterness on both sides. As I owned the

company outright and thus would not be taking risks with

the interests of other stockholders, I had no compunctions

about following my own, and in

my opinion wiser, counsel. I

decided to try an experiment.

I went to the initial bargaining session armed with a few

simple—but accurate, informative—reports. These showed

the company’s production costs and output, its profit-and-

loss statement for the previous year, and reviewed its over-

all financial situation and the outlook for the immediate

future. I listened patiently while labor stated its position

and demands. Then I handed the documents I’d brought

with me to the union spokesman and took the floor.

“I suppose we could be here for days, arguing back and

forth,” I said. “But, as far as I’m concerned, it’s more

sensible to start off where we’d have to end up in any case.

The company is unable to give you all you’re asking—the

reports I just handed yo

u will prove that. You

can

have

half the wage boost—and that’s the absolute limit at the

present time. If production and profits rise in the next year,

I’ll be glad to talk seriously with you about the other half.”

Having said my piece, I glanced around the table, noting

with considerable amusement that my aides looked

horrified, and the union representatives appeared

astounded. I thereupon suggested a recess—a suggestion

the labor side seized upon gratefully. We adjourned the

meeting, agreeing to resume it in the late afternoon.

My assistants were glum. They were certain I had taken

the first steps toward giving away not only my company,

but my shirt and theirs as we

ll. They were convinced I’d

handed the union the proverbial inch—and that it would

consequently insist on taking its mile. At best, they

expected the union to double its demands; at worst, they

feared a long, costly strike.

When the meeting resumed, my aides filed into the con-

ference room with the air of men being led to the tumbrels.

I said nothing, but grinned inwardly at their discomfiture. I

still believed I had assessed the situation correctly and had

followed the right course, a belie

f soon verified by the union

spokesman’s opening remarks.

“To tell you the truth, we thought we were in for a long,

tough fight,” he declared. “But you laid everything on the

line and gave us all the facts at the beginning—so there’s

really nothing to argue about.” He paused and reached

across the table to shake my hand.

“Mr. Getty, you’ve just gotten yourself a new contract,”

he announced with a broad smile. The remaining details

were quickly agreed upon and the contract duly signed. My

“experiment” proved to be a success that had long-lasting

and beneficial aftereffects.

Within the next 12 months, production and profits rose

sufficiently to justify granting an additional wage increase.

A lasting bond of mutual respect was established between

management and labor. To this day, any disputes are still

discussed and settled in the same sort of atmosphere, and

the company has been singularly free of labor strife. The

straightforward approach backed by facts worked—just as

it has in most similar situations I’ve encountered during

my years as a businessman and employer.

The incident is illustrative of my over-all experience, in

that I’ve usually found that organized labor is

fundamentally fair—but that it wants to know the facts.

And, when I say facts, I mean precisely that. I do

not

mean

tailored versions, half-truths or vague platitudes.

Workers and union officials are not ignoramuses. They

are perfectly capable of recognizing attempts to mislead or

misinform them—and, like anyone else, they are quite

likely to resent and rebel against such treatment. On the

other hand, once they are given the unvarnished facts, the

representatives of honest labor unions are generally

cooperative to the maximum extent consistent with their

legitimate aims and their responsibilities toward their

members.

I have not encountered any very great amount of trouble

with labor during my business career. Possibly this is due

in some degree to my own attitude toward labor. Unlike

some businessmen, I’ve never objected to the activities of

free, honest labor unions. I recognize the right of labor to

organize and bargain with management, because I

recognize the innate human urge to a better life. Being a

realist, I understand that for many—possibly most—people,

this urge translates into a desire to have the best possible

working conditions and the highest possible living

standards, and manifests itself in the traditional demands

for shorter hours and more pay.

True, there are limits—set by such factors as production

and profits—beyond which it is impossible for management

to reduce hours and increase wages. It is management’s re-

sponsibility to convince labor of this, to define the limits

clearly and furnish irrefutable facts to prove its case. I’ll

agree that in this sense, management does have to engage

in give-and-take skirmishing with organized labor—but

this is a matter of reasoned argument, not class war.

I certainly have no patience with the all-too-familiar

variety of organization man who habitually and

indiscriminately denounces organized labor. I’ve frequently

observed that most vociferous union haters of this type are

individuals who demand for themselves identically the

same advantages they condemn organized labor for

seeking.

For example, interviews conducted recently with young

executives and business studen

ts show that the majority

declares itself to be against unions. At the same time, some

75 percent of them cite security as the principal reason why

they work—or want to work—for large corporations:

“There’s very little chance of

getting fired or laid off . .

.”

“Regular salary increases . . .”

“Retirement and medical benefits . .

“Yearly vacations with pay . .

Now, I would begrudge no executive what so many of

them have evidently come to regard as their due—be it

job tenure or an annual holiday. But I see no logic or

consistency in the admittedly security-seeking

organization man’s opposition to organized labor’s search

for a similar degree of security.

Like it or not, labor unions are here to stay—and so are

the benefits they have won for their members. The days

when a laborer earned a dollar for 12 hours’ work and

Henry Ward Beecher could pub

licly thunder that a worker

who was not content to live on bread and water was “not fit

to live” are gone.

None but the most antediluvian specimens dwelling in

the murky fens of reaction’s lunatic fringe would want to

turn the clock back to the sweatshop era. Enlightened

modern-day business understand

s and accepts the need for

trade unions, which labor historian Frank Tannenbaum

has called “visible evidence that man is not a commodity,

and that he is not sufficient unto himself.*

Calumet & Hecla executive H. Y. Bassett expressed the

modern business view in his frequently quoted essay,

What

Does Industry Expect o f a Community?

“Progressive

managements have no quarrel with unions, but on the

contrary feel that they have

a place in the present-day

world of business,” Bassett declared.

The late Charles E. (“Engine Charlie”) Wilson’s

comments on annual-improvement and cost-of-living pay

increases reflect progressive businessmen’s attitudes

toward the security benefits gained by labor unions in

recent years. “What we are doing is exploiting machines,

not men,” Wilson said. “It is logical, fair and reasonable to

maintain the purchasing power of an hour’s work in terms

of goods and services the em

ployee must purchase.” He was

clearly aware of a basic economic truth which lesser

businessmen unaccountably often choose to ignore or

overlook—namely, that the worker is no longer just a

worker. He is also a consumer—a customer.

The entire complex operational framework of modern

business rests on the foundations of mass production. And,

where there is mass production, there must also be mass

consumption—mass markets. Otherwise, there are

insufficient outlets for the prod

uction, the pace of business

slows and the economy withers.

Today, labor forms a sizable segment of the mass mar-

kets which consume and use the goods and services mass-

produced by business. Labor’s prosperity—its high earnings

and consequent high buying power—represents an impor-

tant factor in the prosperity of the nation as a whole. Free

and honest—and I strongly emphasize the words free and

honest—labor unions have helped raise the living

standards not only of the American worker, but of every

American citizen. The gains organized labor has won at the

bargaining table have, by raising the workers’ buying

power, contributed materially to the country’s growth. The

myth that labor is out to wreck the free-enterprise system

has been lovingly nurtured in certain quarters. I, for one,

could not disagree more. I cannot see that free, honest

American unions pose any threat to American capitalism. If

anything, they are among democracy’s strongest bulwarks

against political or economic totalitarianism.

I’ve observed that most American workers are well

aware that they are enjoying benefits and a living standard

they could never find in any other country or under any

other political or economic system. The majority of U.S.

labor leaders are cognizant of the grim alternatives to the

free-enterprise system and they have no taste for them, be

they alternatives offered by the extreme left or right.

The fact that our economy is thriving—that our gross

national product now exceeds

half a trillion dollars

annually

—would seem sufficient to refute any charge

that labor is wrecking or seeking to wreck that economy.

Even more convincing proof is provided by yet another fact

often ignored or conveniently forgotten by chronic union

haters: our free-enterprise economy has burgeoned during

the very period that labor unions gained their greatest

strength.

“Our members may clamor for higher wages, shorter

hours and fringe benefits,” a prominent labor leader told

me. “But neither they nor union officials want to destroy or

even change the American free-enterprise system. Labor

knows it has a big stake in business—but it wants business

to realize that it, in turn, has an equally big stake in labor.”

This is reasonable enough—and so are what my experi-

ence as a businessman and employer have shown me to be

labor’s two basic aims. First of all, labor wants to share in

the wealth it helps create. Second, it wants recognition of

its importance—not from the standpoint of the trouble it

can cause, but rather from the standpoint that it does, after

all, do the actual work of producing the goods and providing

the services which business sells.

There is nothing unreasonable about the first aim—pro-

vided labor understands that

wages and other rewards and

benefits constituting its share of the wealth

must

be keyed

to production and profits. This, unfortunately, is an axiom

many workers—and even some labor leaders—sometimes

fail to grasp. Management must explain this axiom and

drive home its implications at every opportunity in all its

dealings with labor. No effort should be spared to acquaint

every employee with the fundamental truth of business

arithmetic –that, in order to survive, a company has to

earn more money than it spends. Labor must be made to

understand that it is necessary for production rates to be

maintained or even increased and a reasonable profit

earned before wage increases can be contemplated. I have

found that this can be done successfully in most instances,

provided management can substantiate its statements.

There really aren’t many legitimate labor leaders who

have any desire to wreck a company that has a contract

with their union. Most will even cooperate in finding ways

to increase production if they are convinced it’s necessary to

keep the company solvent or if it will mean better pay or

greater security for the members of their union. In such

cases, it’s up to management to do the convincing—with

facts. It all adds up to one thing: Working together, instead

of fighting each other, both capital and labor can achieve

their material aims—each can share in the wealth their

combined efforts create.

Helping labor realize its second aim is no less important.

To satisfy labor’s desire for recognition, management must

give it just that. Management must show that it

appreciates the importance of the individuals who actually

perform the work. The responsibility and capacity for

accomplishing this rests, largely, with the individual

executive who, to the worker, represents and even

personifies management.

I never cease to be amazed by the numbers of executives

who do not realize the value of personal contact with rank-

and-file employees. In some companies, the only times a

production worker is likely to see a high-level executive are

during full-dress Army-style inspection tours or when

company “brass” escort VIP visitors through the plant.

Oh, yes. Then there are the executive visits occasionally

staged by the company’s public-relations department. The

scenario for such an expedition usually follows a routine

something like this: At a given hour—generally in the late

morning or midafternoon—an impeccably dressed vice-

president and a covey of bustling retainers descend on the

plant. The party hesitantly and cautiously picks its way

along the aisles between the rows of unfamiliar, noisy

machines and stops, say, in front of a lathe. The vice-

president fidgets, adjusts his necktie, shoots his cuffs and

self-consciously edges closer to the lathe. He tries to look

interested in the work being done on the machine and

pretends to talk to the lathe operator—whose name has

just been whispered into his ear, and which he has garbled.

Two or three photographers raise their cameras and

focus on the dismal tableau. Flash bulbs flare, the vice-

president mumbles something unintelligible—and he and

his retinue beat a hasty retreat, returning to the pine-

paneled peace and quiet of the company’s downtown

administrative offices.

A photograph of the vice-president and the lathe

operator appears in the local paper the next day—and in

the company’s house organ the following week. “Mr. Wilbur

Knowall, Bollix and Company’s vice-president in charge of

personnel maintains close contact with the firm’s

employees,” the caption under the picture reads. “He is

shown conducting one of his frequent on-the-job interviews

with Joe Smith, a lathe operat

or who has been with Bollix

and Company for nearly three years.”

The comments of Joe Smith and his fellow production

workers when they see this are best left to the imagination.

The only ones fooled by the transparent stunt are Mr. Wil-

bur Knowall and the company’s so-called public-relations

director.

Self-respecting workers resent such stunts which make a

mockery of what has been called the dignity of labor— and

so would I, if I were an employee of a “Bollix and

Company.” But then, my attitudes about work and toward

labor were formed in the oil fields, where the inflexible gov-

erning rule was: The man who works for you is entitled to

decent wages, decent working conditions—and your

respect.

My years in those oil fields taught me that the men who

actually

the work are most certai

nly entitled to decent

wages and working conditions and their employers’ respect.

I also learned that nothing inspires worker loyalty or builds

worker morale more swiftly than an employer’s recognition

of his employees’ importance

and his sincere interest in

their well-being.

“A man likes to feel what he’s doing is important—and

that the boss looks at him as

a person, not just a number on

the payroll,” is the way a veteran driller once expressed it

to me. “A man always does better if he figures he’s actually

part of the operation, not just a hired hand working on the

job—and it sure makes him feel good if the boss comes

around now and then to see how he’s making out.”

Executives who stay awake nights trying to find better

ways to improve employee loyalty, morale and efficiency

would do well to paste this old-time driller’s words into

their Homburgs. They could spend years searching for a

better answer or more reliable formula. Cheap stunts and

tinselly morale-building schemes are definitely

not

the an-

swer. The average worker is quick to see through the bogus

stratagems inept or inexperienced management personnel

are likely to devise.

The important thing is to let the worker know that he

and his work

are

important to the company—and to

believe it and mean it. Any executive who doesn’t believe

the rank-and-file employees are really important has no

right to be an executive, for he obviously doesn’t have a

sense of proportion or know what makes business tick.

As a matter of fact, it’s not difficult to imagine situations

in which the hourly-wage em

ployee is far more important

than the salaried executive. Thomas Jones may have the

exalted title of third assistant vice-president, and he may—

and probably does—consider hims

elf indispensable. But my

guess would be that he’s far more expendable than, say, a

crack punch-press operator on

the assembly line. Were

Jones to vanish suddenly from the scene, his secretary—

and he’s sure to have at least one—can probably run things

until he returns or until a replac

ement is found for him. In

any event, the company will keep on going without Jones.

But the absence of the punch-press operator might well

slow or even halt a production line—and, in the last

analysis, it’s the production line and the products which

come off it that count most.

The executive who understands and assumes his respon-

sibilities takes every legitimate opportunity to demonstrate

to his subordinates that he considers their work important

and valuable—and that he respects them as workers and as

individuals. And he takes a sincere interest in their well-

being. He does not flatter, patronize or coddle them. He

does, however, always manage to find time to comment on a

particular job that has been especially well done or to

acknowledge the value of a worker’s or an entire

department’s contribution to the success of a project. In

short, he shows by word and action that he and the

company are aware of the workers’ existence and of the

importance of their work. By so doing, he goes a very long

way toward raising employee morale—and when morale

rises, employee efficiency and

production go up while such

profit-devouring headaches as absenteeism and labor

turnover go down.

The good executive does not disdain checking

personally

on working conditions and takes prompt remedial action

when he finds them below standard. A broken rest-room

washbasin may seem a minor thing. But, if the executive-

as a representative of management—gets it repaired before

the shop steward can bring the matter up before the

grievance committee, the executive will be taking a major

step toward building good labor-management relations.

Believe me, the remedies for many labor-management

problems are just about that simple. When the desires and

demands of labor are boiled down to their essentials and

viewed objectively, they no longer loom as the deadly busi-

ness-destroying menaces they are often represented to be.

They shrink and become entirely understandable—and

there is nothing unnatural, immoral or subversive about

them. Labor’s basic desires and demands are succinctly

stated

that oil-fields adage—the right to decent wages,

decent working conditions—and respect. Management

executives accepting this tried and proven rule and

governing themselves by it are able to live with labor

comfortably, successfully—and profitably. As any successful

businessman will tell you, learning to live with labor is

sound business.

THE BUSINESSMAN AT

BAY

Crises, setbacks, obstacles—these will certainly be met by

any executive in the course of his career. The measure of a

man in such circumstances is not only how he copes with

adversity, but also how he turns it to his advantage. Busi-

ness is always a battle—for sales, improvements, efficiency

—and an executive must lead very much as a general

would: to win.

I remember learning as a youth an invaluable lesson

from a man who even then had extensive business holdings

and who later became one of America’s wealthiest indus-

trialists. Although I knew him fairly well, I hadn’t seen him

for several months before bumping into him one day in the

lobby of a Chicago hotel.

“How are things going?” I asked him after we’d ex-

changed the customary greetings.

“Not good—terrible, in fact,”

he replied with a placid

smile. “One of my companies has been shoved into a tight

corner by the competition. Another is operating in the red

—and a third hasn’t the cash to meet its short-term debts

that fall due this month.”

“You certainly don’t act as though any of it worries you

very much,” I remarked in surprise. I found it hard to

believe that any businessman who was in so much

apparent trouble could be so casual about his problems.

“Hell, Paul, I’m not in the least bit worried,” he

answered. “To tell you the truth, I needed something like

this to get me up on my toes; everything had been going

entirely too smoothly for far too long. An occasional crisis is

good for a businessman. There’s no better exercise for him

than to have a few messes to clean up every now and then.”

Later, I learned that it had taken my friend less than six

months to clean up all his “me

sses.” Despite the fact that

he owned or controlled many other business enterprises, he

plunged enthusiastically into the task of personally

reorganizing and revitalizing the three faltering companies.

He quickly pulled the first one out of the corner into

which it had been driven by its competitors. He began im-

proving old products, developing new ones and launching

an imaginative, aggressive sales campaign that turned the

tables on competing firms. He then put the second firm

back on its feet by initiating new policies and programs,

reducing production costs and increasing output. As for the

third company, he arranged refinancing of its obligations,

made needed changes in management personnel and soon

had the firm on a sound financ

ial footing and operating at a

comfortable profit.

“I had quite a workout getting things in order,” he told

me sometime later. “But I sure enjoyed it—it’s always more

fun to win a hard fight than an easy one.”

“Adversity is the first path to truth,” Lord Byron said

more than a hundred years ago.

“Calamity is man’s true touchstone,” Francis Beaumont

and John Fletcher wrote in the early 17th Century.

Now, Byron and Beaumont and Fletcher were not busi-

nessmen and they did not concern themselves with

business in their writings. Yet, the basic truths implicit in

their lines are applicable to every present-day businessman

and to anyone who hopes to make a success of a business

career.

A machine that is functioning perfectly needs only nom-

inal care. By the same token, a highly prosperous business

that operates year after year without problems requires

little more than caretaker management. No exceptional

ability is needed to run such an enterprise. Unfortunately,

the “perfect business” does not exist. Snags, difficulties and

crises crop up in every busin

ess. For the businessman—as

for any individual—the true test of his mettle comes at the

time when he is faced with adversity.

How do executives or businessmen act and react when

they are at bay?

First, there are those who sit by helplessly, allowing

whatever adversity they face to overwhelm them

completely.

They are like rabbits which, transfixed by the headlights of

an automobile rushing toward

them on a highway, make no

move to save themselves and are consequently crushed

under the vehicle’s wheels. Such men take no action to

change the course of events and prevent disaster because

they are incapable of comprehending what could or might

be done. When they have been finally overwhelmed, they

are stunned, totally unable to understand what went wrong

and why.

Then, there are those who surrender meekly or flee in

fear as soon as things start to go wrong. Such men have

little or no sense of proportion; they are likely to panic and

view even minor slumps and setbacks as unavoidable major

catastrophes. While individuals in the first category fail to

fight back because they do not

know how to fight, business-

men who can be classed in this second group fail to fight

back because they are afraid to do so.

Next come those men who react to adversity in an un-

reasonable, almost hysterical fashion. Terror-stricken, they

snarl and snap, striking back blindly and ineffectually,

squandering their energies in the wrong directions. These

men invariably rail and curse ag

ainst the “impossible odds”

and “rotten breaks” they claim defeated them. Just as in-

variably, they seek to lay the blame for the predicaments in

which they find themselves on shoulders other than their

own.

In another category are those businessmen who fight

good, tenacious—and, very frequently, entirely successful

—defensive actions whenever things start to go wrong.

They are courageous, reliable individuals who unflinchingly

meet threats and solve problems as they arise, acting to the

best of their not-inconsiderable abilities. But there they

stop. Their minds are geared to thinking solely in terms of

plugging the holes in the dike as, if and when they appear.

The men in this group do not have the imagination and

initiative— or lack the experience—to think and plan in

terms of building entirely new and much stronger dikes in

which holes will be far less likely to develop.

Finally, there are those businessmen who are the real

leaders. These are the imaginative, aggressive individuals

who base their business philosophy on the ancient military

axiom that attack—or, at the very least, energetic

counterattack—is invariably the best defense. Obviously,

they can’t —and don’t—always win, but then no general in

the world’s history has ever won

every

battle he fought.

On the other hand—to carry the analogy between busi-

ness affairs and military campaigns a bit further—the gen-

erals who win the wars and have the highest percentage of

victories to their credit are those who can mastermind de-

fensive strategy as well as an offense.

The truly great general views reverses calmly and coolly;

he is fully aware that they are bound to occur occasionally

and refuses to be unnerved by them. When driven back, he

prevents retreat from turning into rout and then adroitly

transforms the retreat into an orderly retrograde

movement.

By so doing, he disengages his forces from those of the

enemy with a minimum of additional loss, saving the bulk

of his manpower and material resources so that they can be

regrouped and made ready for a counterattack. Naturally,

he leaves behind rear guards to protect the withdrawal. He

accepts the losses these covering forces must inevitably

suffer with philosophical stoicism, realizing that it is

sometimes necessary to sacrifice a part in order to save the

whole.

When his troops have been rested and reinforced and his

supplies replenished, the successful general launches his

carefully planned counterattack. Having studied the sit-

uation with great care and having learned much about the

enemy’s capabilities and habits from an analysis of what

has gone before, he employs a combination of every

resource at his command. He makes feinting and

diversionary assaults, aims his major blows at the weakest

points in the enemy line and holds back his reserves until

he can corn-mit them at the right—at the decisive—times

and places. Like the successful military leader, the

successful, veteran businessman understands that he

cannot master every business situation, that he cannot

emerge victorious from every business “battle.” He knows

that, sooner or later, he will encounter problems which

cannot be solved quickly or easily, that he will find his

progress blocked by obstacles which will require much time

and effort to overcome or which will even force him to

retrace his steps and take a 99 new route. He knows that

reverses and losses are sometimes inevitable.

The seasoned business campaigner is well aware that

the line charting the course of any company’s history or any

businessman’s career on a graph would be a jagged one.

The graph would reflect a series of alternating peaks and

lows. But such ups and downs do not bother the seasoned

businessman unduly. He recognizes that the significant

and telling proof lies in whether the line at the right edge of

the chart terminates at a point that is higher or lower than

the point at which it begins on the left.

True business leaders—the real

leaders

—often give

their most impressive demonstrations of leadership and

brilliance at the very times when they are temporarily

forced to go over to the defensive, at the times when they

are at bay. And this is precise

ly what sets them apart and

raises them above the level of other, less successful

businessmen.

Take, for example, the case of my friend who found

himself in three serious business predicaments simultane-

ously. There were several courses of action this business-

man might have followed. He could have done nothing,

allowing matters to take their own course. He could have

closed or sold one or more of the companies, utilizing what-

ever money he realized from any sale or sales to shore up

whatever remained. He might have been content merely to

plug the holes.

But he neither surrendered nor panicked. Nor was he

satisfied with doing a hasty job. A good general, he sur

veyed the situation thoroughly, reorganized his forces,

brought up replacements and reinforcements and made his

plans. Then, marshaling all his resources, he launched

successful counterattacks on all three fronts.

The history of American business and industry is replete

with examples of how the great business leaders of the

nation handily turned serious reverses into major

triumphs.

It was in 1903 that Henry Ford began manufacturing

automobiles of his own. In 1908, he produced the first

famous Model T and soon captured a very large share of the

burgeoning U. S. automobile market.

Ford continued to mass-produce the Model T until 1927,

making few drastic changes in the comparatively primitive

model during that entire time. But, by 1926, Chevrolet—

Ford’s biggest and most dangerous competitor in the low-

priced field—was turning out more powerful, comfortable

and stylish cars. Ford still used the foot-pedal-controlled,

planetary transmission; Chevrolet had a geared transmis-

sion. Chevrolet was producing models in attractive colors;

the Model T was still available only in black.

The automobile-buying public had grown more sophisti-

cated. It wanted more speed, comfort and style. Ford rap-

idly began to lose ground to Chevrolet. Ford sales fell off

alarmingly, while “Chevy” sales skyrocketed. The trend was

well-defined—and many experts predicted that it was ir-

reversible. They prophesied that Ford would never be able

to catch up again; the company was well on the downhill

road to becoming just another of the scores of automobile-

manufacturing firms that had enjoyed a period of success

only to fail subsequently.

These experts failed to estimate the aggressive genius of

Henry Ford correctly. He was losing ground to the competi

tion. He was at bay. But he was far from defeated—and

even further from admitting defeat.

In the spring of 1927, Henry Ford shut down his enor-

mous factory. Although it had been announced that he

would bring out a new model, there were many rumors that

the Ford plant would never reopen, or that when it did, the

new Ford would be a dud, nothing more than just another

obsolescent Model T with a superficial face lifting.

Then, in December 1927, the Ford Motor company

introduced its Model A to the market. Henry Ford

marshaled all his forces—engineering, styling, production

and sales— and launched a counterattack that memorably

pulverized all competition.

A somewhat similar and more recent example in the auto-

motive industry was provided by American Motors and its

then head, energetic George Romney. Faced with falling

sales and mounting losses, American Motors and Romney

staged a spectacular comeback with their Rambler models.

In 1952, the Chicago meat-packing firm of Wilson & Co.

lost $763,000. James D. Cooney became the company’s

president the following year and, according to some of his

associates, “turned the company inside out and around so

that it was pointed in the right direction.” Wilson & Co.’s

1959 earnings exceeded $9,500,000.

In 1933, the outlook for banks

and bankers was bleak,

indeed. The Depression had reached its lowest point. The

Federal Government had ordered the memorable “Bank

Holiday” on March 6th of that year. More than 4000 banks

throughout the country failed, suspended operations or

were placed in receivership during 1933.

One banker who ignored the widespread cries of im-

pending calamity and went ahead to build his banking

business was Walter Bimson of Arizona’s Valley National

Bank. Instead of running for cover and tightening up on

loan policy, Bimson went out to

“sell” loans to Arizonans in

need of money. That his imagination and aggressive,

courageous policies paid off is proven by the fact that

though, in 1933, Valley National

had deposits of less than

$8,000,000, today, the Arizona bank can boast that deposits

have swollen phenomenally to over $765,000,000.

In 1959, Thomas E. Sunderland moved out of the oil

business—and into the fruit business. He took over the

presidency of the giant United Fruit Company, accepting a

job that many lesser men would have feared—or even

refused to touch. The outlook for the future at United Fruit

was hardly a glowing one when he stepped into the top

executive position. Eight years earlier, in 1951, the

company had made a profit of more than $50,000,000. In

the years that followed, profits skidded—dropping to

$12,000,000 in 1959 and dipping even lower to less than

$3,000,000 in 1960.

Thomas Sunderland soon proved that he deserves to be

ranked high among the elite of the business world. Sunder-

land gave the huge company a thorough, top-to-bottom

overhaul. Confident and enthusiastic, he launched a

massive counterattack against all the factors which were

causing United Fruit’s profits to fade. He shifted personnel,

revised policy, modernized methods, reduced costs and

increased efficiency. He achieved remarkable results in

record time. In 1961, United Fruit reported that second-

quarter profits alone exceeded $6,500,000. The company’s

stock, which had slumped as low as 17 1/4, had risen to 27

3/8 by January 1962.

Anyone having knowledge of the American business

scene could cite countless other examples paralleling these

random few that I have mentio

ned. All would further help

to prove that when the really topflight businessman is at

bay, he very often turns adversity and even impending

calamity into victory.

I’ve encountered my share of adversity and reverses. I’ve

spent fortunes drilling many thousands of feet into the

ground at one time or another—to strike nothing but sand.

I’ve had other wells that cost other fortunes run dry or blow

up and burn. I soon learned to accept such misfortunes

philosophically and to take them in my stride, for I realized

that I would not be able to stay in business very long if I

permitted them to discourage me. In fact, each setback

seemed to serve as a special incentive and stimulus to try

again—but even harder the next time.

There were many other, more complex trials and blows,

too. I recall, for example, the

sharp break in crude-oil prices

that occurred in 1921, when oil, which had been selling at

$3.50 per barrel, dropped to $1.75 per barrel in less than 10

days—and the price continued to spiral down in the days

that followed. At least one of the companies in which I held

a substantial interest became hard-pressed for cash as a

result of the price crisis.

When I met with other direct

ors of the company, there

were those among them who verged on panic. Fortunately,

the majority remained calm and objective. Any suggestions

that the company close its doors were immediately voted

down. Instead, it was agreed to retrench and the directors

agreed to obtain the money needed to keep the company

going. They also agreed to sla

sh their compensation to the

bone and reduce management salaries until the crisis was

past. In time, the petroleum market became stabilized once

more—and as soon as conditions returned to normal, the

directors and management implemented an ambitious pro

gram which greatly increased the company’s sales and

profits within a very short period.

I also have vivid recollections of a memorable campaign

my associates and I conducted to obtain control of a large

company. The incumbent—and well-entrenched—directors

of the company fought us fiercely at every step. However,

although the financial resources at our disposal were far

less than those of the opposition, we managed to do a bit

more than merely hold our ow

n and the battle seesawed for

a considerable time.

Then, at one point, the opposition sensed that I had

almost exhausted my financial resources by buying the

company’s stock—and that for a time I would be unable to

purchase any more. As I was still far short of having a

controlling interest in the company, the incumbent

directors believed that they now had the upper hand.

Swiftly changing their tactics, they decided to allow the

issue to be decided by all the stockholders.

This, of course, meant a proxy contest. In a burst of

chivalrous magnanimity, the opposition entered into a sort

of “gentleman’s agreement” with our side. To prevent the

proxy contest from degenerating into a rough-and-tumble

fight that could injure the company’s reputation,

solicitation of proxies would be limited to one reasonably

worded letter from each side. The two letters—one urging

the stockholders to give their proxies to the incumbent

board—would be mailed in the same envelope to each

stockholder. Thus, the individual stockholder would have

both sides of the story before him— and he could make his

own decision as to which of the

two groups best deserved to

control the company.

My associates and I unhesitatingly accepted what we

considered to be a gentlemanly agreement. Our letter was

duly composed, reproduced and

sent off together with the

one prepared by the opposition.

When that had been done, I

assumed that the die was cast and that nothing further

would be—or could be—done to influence the outcome.

Then, only a few days before the scheduled stockholders’

meeting, one of my aides burst into my office. His face was

livid with anger and he clutched a piece of paper in his

hand.

“Read this!” he exclaimed, thrusting the paper at me. I

took it and found that it was a letter—a

second

letter—

which the opposition had sent out to the stockholders only a

day or two earlier. And what a letter it was!

The gist of the no-holds-barred missive was a virulent

personal attack on me and a highly objectionable—and

entirely baseless—implication that my motives for seeking

control of the company were, at

best, dubious. I called my

associates and held a hasty council of war. What could be

done at that late stage of the game? Not much, some of my

associates declared dispiritedly. There wasn’t enough time.

“I’m afraid this licks us, Paul,” one man said, shaking

his head in resignation. “Nothing in this letter is true—but

it’s going to have a tremendous impact on the stockholders.

Not having any way of checking up on the charges that

have been made, they’ll play it safe and give their proxies

to the other side.”

“You really think we’re licked?” I asked, glancing around

at the men in the room with me. Some heads nodded

assent. The faces of some other men showed that they

weren’t entirely convinced that all was lost. A few of my

associates indicated that they refused to accept defeat that

easily.

“Nuts!” one of them snorted. “We still have a chance!”

“I think so, too,” I said.

“Now, let’s get to work.”

Working feverishly against a deadline that was far too

close for comfort, we composed our own second letter. In-

stead of calumny, we stated facts and figures that

demolished every argument and charge advanced by the

opposition.

Then, working straight through the day and night and

the day that followed, we—secretaries, clerks, typists,

executives, my associates and I—reproduced the letters,

addressed envelopes to thousands of stockholders, folded

and inserted the letters and sealed and stamped the

envelopes. At last, we finished the staggering job—and

exhausted men and women carried bundles of the letters to

the nearest post office for mailing.

Would the letters reach the stockholders in time? We

could only hope, and wait to see what happened at the

stockholders’ meeting a few days later. But we didn’t have

to wait that long. The respon

se to our second letter was

astounding. Replies began to pour in from stockholders two

days before the meeting.

“We might make it yet,” one of my aides remarked. And

we did make it. Cold facts, stated clearly and plainly,

proved to be more convincing to the stockholders than were

the heated, personal attacks and irresponsible charges that

had been made by the opposition. To the shocked

amazement <of the incumbent directors—and the delight of

my associates and myself—the voting at the stockholders’

meeting resulted in a clear-cut victory for our side!

Just a few years ago, it appeared that I was facing

another serious—and potentially catastrophic—impasse.

Exploration and drilling operations conducted by a

company in which I held a very large interest indicated

that the Middle Eastern areas in which it held drilling

concessions would soon be producing crude oil in fantastic

quantities. Unfortunately, various factors and restrictions

would prevent importing more than a fraction of the

production into the United States.

On the face of things, the outlook was anything but

bright. Before long, immense quantities of crude oil would

be pouring up out of the ground—but unless something was

done, and quickly, most of it

would be virtually worthless.

Crude oil is, after all, only a raw material. It must be

refined into other products which must then be distributed

and marketed.

As time went on and more an

d more wells came in, there

were those who openly predicted that I would soon find my-

self in a position from which I could not extricate myself.

After spending staggering sums on obtaining the concession

and on exploration and drilling,

the company would be left

with oceans of crude oil which it could not market. There

were even those who gleefully rumored that it wouldn’t be

long before Paul Getty would be in serious financial

trouble.

I’ll admit the corner was getting a bit uncomfortable—

but it was far from being so tight that there was no way out

of it. To the chagrin of those who were predicting that the

Getty interests would soon drown in their oceans of excess

crude oil, we found—in fact,

we virtually created—new out-

lets for our production. If we couldn’t ship all our crude to

the United States for refining and sale, we would ship it

elsewhere, even if we had to

buy or build our own refineries

in other countries. And that is precisely what we did,

buying one almost brand-new refinery in Italy, building

another one in Denmark and finding other refinery

capacity elsewhere. Now, of course, the Getty interests are

avidly searching for

crude oil in the Middle East and

elsewhere in the world.

Experiences such as these—and there have been many

of them—have taught me that the time for the

businessman to think and fight hardest is when the tide

seems to be running against him and his prospects appear

bleak. He can frequently turn even the worst of bad

business situations to the advantage of his company, his

stockholders and himself.

The successful businessman—the true business leader—

is the individual who develops the ability to retain his com-

posure in times of stress and in the face of setbacks. The

young businessman should strive to acquire and develop

this and the related traits I have previously mentioned—

and he should try very early in his career, for it will not be

long before he encounters his first reverses and adversities.

The manner in which he meets the first few tight situations

in which he finds himself will often set the pattern for the

rest of his career.

Plainly, it is not possible for anyone to give a

businessman specific, step-by-step advice on what he

should—or should not—do when he suffers business

reverses. There are far too many variables; each situation

differs greatly from the next. On the other hand, there are

certain fundamental principles which will greatly aid any

businessman in meeting adverse situations and

transforming setbacks into successes:

No matter what happens, do not panic. The panic-

stricken individual cannot think

or act effectively. A certain

amount of trouble is inevitable in any business career—

when it comes, it should be met with calm determination.

When things go wrong, it is always a wise idea to

pull back temporarily—to withdraw just long enough and

far enough to view and evaluate the situation objectively.

In the opening stages of any developing adverse situ-

ation, it may be necessary and advisable to give some

ground, to sacrifice those things which are least important

and most expendable. But it should be a fighting

withdrawal, a retrograde action that goes back only so far

and no further. It must never be a disorderly retreat.

Next, all factors in the situation must be examined

with meticulous care. Every possible course of action must

be weighed. All available resources—cerebral as well as

financial, creative as well as practical—must be marshaled.

Countermoves must be planned with the greatest

care and in the greatest of detail—yet with allowances for

alternative courses in the event unforeseen obstacles are

encountered. Counteraction must be planned on a scale

consistent with the resources available—and the goals set

must be conceivably attainable. It is well to bear in mind,

however, that the impetus of a properly executed

counterattack very often carries the counterattacking force

far beyond the point from which it was driven in the first

place.

6. Once everything is ready, action should be taken con-

fidently, purposefully, aggressively—and above all, enthusi-

astically. There can be no hesitation—and it is here that

the determination, personality and energy of the leader

count the most.

The businessman—young or ol

d—who guides himself ac-

cording to these principles when he has suffered reverses

will not remain at bay very long.

THE IMP OF THE

IMPOSSIBLE

Good judgment and imaginative foresight are two qualities

which, working together,

can

make the “impossible” possible.

The valuable habits of healthy

skepticism and individual con-

fidence can, and often do, help

a determined individual refute

the discouragement of the crowd

. The executive must develop

the ability to rationally and knowledgeably reach decisions and

then go ahead—regardless of th

e “impossibility

” of his goal

Not long ago, I was forced to

demand the resignation of a

top-level executive in one of my

companies. Although he was

intelligent, hard-working and experienced, this man had a

signal weakness that proved fata

l to his career—and which, in

time, might well have proved fa

tal to the company. He simply

could not distinguish between th

e possible and the impossible—

and his myopia extended to matters large and small.

Typical of his costly blunders

was his tendency to undertake

tasks which he should have realized were patently impossible

to fulfill. Also typical were his ebulliently optimistic —and

completely unrealistic—estimates of the time it would take to

carry out an assignment or to complete a project.

“Yes, we can do it,” he’d

promise with bland assurance—

even though “it” could not be

done. “I’ll have everything

finished for you in three days,” he’d say confidently—even

though he must have known three

weeks

would be required

to perform the work in question.

Perhaps he was driven by some compulsive desire to im-

press people with promises. Maybe he was afflicted with some

rare form of sophoman

ia or counted on fort

uitous miracles to

achieve the impossibilities he was in the habit of promising so

rashly. Whatever the reasons, he gradually dragged

himself—and his associates, subordinates and superiors—

down into a morass of totally impractical projects,

backlogged work, canceled orders and incomplete programs

that had to be abandoned with consequent financial loss to

the company.

This executive’s inability to distinguish between the pos-

sible and the impossible created chaos within the company

and alienated its customers. Brought to book for his short-

comings, he again demonstrated his fatal myopia by failing

to realize that one cannot indefinitely hide one’s mistakes

behind glib excuses or displays

of histrionics. He indulged

freely in both in a futile effort to save the job he had

already proved he could not possibly handle.

I believe it was La Rochefoucauld who first argued that

“nothing is impossible.” In my opinion, this is sheer

nonsense and I flatly reject the theory, noting that even La

Rochefoucauld felt it advisable to later amend his adage to

read: “Few things are impossible in themselves.”

I’m inclined to cock a skeptical eye at even this revised

version. However, rather than further disparage the good

Duc de La Rochefoucauld’s philosophies, I’ll assume that

our definitions of the word “few” differ greatly and let it go

at that. In any event, he was referring to matters on a more

esoteric plane—while I am concerned with the hard-fact

specifics of everyday living and particularly of business.

It is my opinion—and it has been my experience—that

there are vast numbers of things which are impossible and

that one is very likely to encounter them frequently in the

business world. I firmly believe that one of the most

valuable assets a businessman or executive can possess is

the ability to study and weigh all the factors in a given

situation and determine what is feasible and what is not—

in short, to distinguish between the possible and the

impossible. The ability is seldom innate; rather, it is

acquired and developed. With it, an individual’s chances of

achieving success are greatly enhanced. Without it, he can

go only so far—or fail altogether. Many an otherwise

capable—or even great—man has failed because he lacked

this capacity.

A comparison between Julius Caesar and Augustus

Caesar indicates that Julius was basically the more able

and gifted of the two. But Ju

lius did not have the judgment

and sense of proportion to separate the wheat of the

possible from the chaff of the impossible—and this is what

ultimately led to his downfall and assassination.

Augustus Caesar, on the other hand, recognized what

were attainable goals, aimed for them and accomplished

them. Consequently, he ruled much longer than Julius, and

his overall accomplishments were much more constructive

and lasting.

Napoleon Bonaparte was also an able and gifted indi-

vidual—but he, too, was eventually destroyed by the

malefic imp of the impossible. Napoleon—like Julius

Caesar—was devoid of a sense of proportion, as evidenced

by his disastrous invasion of Russia. The Compleat

Megalomaniac, he blindly ignored the vast distances

involved, the Russian climate and his own political

weaknesses at home—all fairly obvious factors which

doomed his campaign to failure long before his troops began

their march to the east.

Now, a businessman who fails because he cannot dis-

tinguish between the possible and the impossible will not

be stabbed to death in the boardroom by the company’s

directors—at least, not literally. Nor will he be exiled for

the rest of his days to an island in the South Atlantic (un-

less, perhaps, the company happens to have a subsidiary

plant or branch office there). Nonetheless, the practice of

biting off more than he can properly chew will certainly

prove calamitous to any executive’s or businessman’s career

—and business.

But the converse is equally true, for the imp of the im-

possible is a perverse demon. The individual who is able to

perceive the glint of the possible in a situation which out-

wardly appears to be fraught with insuperable obstacles is

the most likely to reap the ri

chest rewards. One does not

have to look very far to find proof of this.

In the 1920s, self-taught engineer Robert G.

LeTourneau’s ideas for building huge earth-moving

machines were widely considered to be impractical pipe

dreams. LeTourneau, however, knew that he could actually

produce the equipment his detractors predicted would be

useless. He went on to build his giant machines and the

nation’s biggest earth-moving-machinery company—and to

revolutionize the entire heavy-construction industry.

Reaching 65 in 1953, LeTourne

au sold his business to

Westinghouse Air Brake for a reported $31,000,000. He

also agreed not to engage in manufacturing earth-moving

machinery for the next five ye

ars. The consensus held that

it would not be possible for him to get back into business

again —not only because of his age, but also because he

gave most of his money to a charitable foundation.

LeTourneau confounded the consensus, however. By 1959—

at the age of 71 —he was right back in business. He

produced a revolutionary electrically powered, mobile

offshore oil-drilling platform which, incidentally, the

wiseacres had maintained “never could be built and

wouldn’t work even if it was.” At last report, Robert

LeTourneau’s sales were said to be running in the

neighborhood of $10,000,000 a year.

Few people, indeed, considered the Depression-era year

of 1933 an auspicious one in which to start a new business.

Among those who thought otherwise was young J. A.

Ryder, who turned a deaf ear to the calamity howlers’

warnings that any new business was bound to fail. Using

$125 of his $155 “capital,” Ryder bought a secondhand

truck and went into business for himself. With an almost

uncanny talent for perceiving the possible in the most

unpromising times and situations, he went on to build his

business. Within 25 years, he had created a trucking

empire with an annual gross revenue that is said to exceed

$85,000,000.

Shortly before V-E Day, First Lieutenant Melvin J.

David was given a few days’ leave from the front and sent

to an Army rest center in Belgium. One afternoon, he

noticed several Belgian village

rs industriously twisting and

welding scraps of heavy wire into various shapes. He saw

that they were making lamp bases, stands and other

utilitarian and decorative objects out of the wire they’d

salvaged from nearby battlefields and the junk heaps of

Allied supply dumps and depots.

The Belgians’ activity gave David an idea. He saw the

possibilities of using wire to mass-produce a wide range of

industrial and consumer items.

Discharged from the Army

a year later, he went to Southern California and sought to

translate his idea into commercially practical reality. Told

that his ideas were unrealistic and impossible, he used his

slender capital—$1500—to design and build his first ma-

chine and went into business. Today, Mel David’s Melco

Wire Products Company is a thriving enterprise. The com

pany produces everything from bosom-supporters for wom-

en’s bathing suits to vital parts for jet aircraft—all made

from wire.

The annals of American business have always been

replete with such examples which prove that businessmen

can achieve notable success by discerning the possibility of

things which others consider impossible. The most

significant inventions and advancements have been made—

and the most successful businesses and largest fortunes

have been created—in precisely this way.

I encountered—or perhaps I should say I stumbled into

—a potentially possible “impossible” situation in 1940. My

cousin, the late Hal Seymour, and I were vacationing in

Mexico and stopped off in Acapulco. The climate,

surroundings and sea being fine—and swimming being one

of my favorite sports—we decided to stay awhile.

One day—and purely by accident—I met another tourist

who exuberantly declared he’d discovered “the world’s most

beautiful beach” and asked me if I’d care to see it. I agreed

that I would, almost backing out at the last minute when I

learned we’d have to take a truck through some 15 miles of

tropical forest to reach the spot. But I went anyway,

clinging grimly to the side of an ancient truck that jounced

and bumped along a crude dirt trail that looked as though

it had been unused since the

day it had been blazed by

some wandering brontosaurus.

My first glimpse of Revolcadero Beach was ample com-

pensation for the discomfort of the journey and balm for my

bruises. My tourist friend hadn’t exaggerated. It

was

the

world’s most beautiful beach. After a few more visits, I

made up my mind to buy several hundred acres of the pro-

perty and build a luxury resort hotel on the site.

Now, most people I know generally disagree about most

things, but when I announced

my intentions to buy and

build at Revolcadero Beach, their reactions were uniquely

unanimous.

“Impossible!”

The reasons they gave for considering my proposal im-

possible were legion—and, I must admit, ostensibly reason-

able. The land I wanted to buy was completely

undeveloped; it would cost a fortune merely to clear it.

There were no roads and no utilities; these would have to

be built and provided at staggering cost. Revolcadero Beach

was unknown and off the beaten path; people would not

pay luxury-hotel rates in a resort that wasn’t situated in a

“fashionable” location. The type of resort I envisioned would

need boat landings and a yacht basin; another fortune

would be needed to build and dredge them. Europe was

already at war—it was foolhardy to invest large sums in

any foreign country . . .

So the objections ran—on and on. They varied in nature,

but added up to a one-word total: “Impossible!”

I thought—I

knew

—the project was entirely possible.

Development of the land alone would increase its value.

The natural beauty of Revolcadero Beach and the

construction of the type of hotel I envisioned there would be

enough to make the resort “fashionable.” Lower labor and

material costs in Mexico would at least partially offset the

added expense of building from scratch on virgin land.

These and other considerations convinced me—and I

bought the land. Pearl Harbor was attacked shortly

afterward, and the United States entered World War Two.

My plans for Revolcadero Beach were shelved for the

duration.

It wasn’t until 1956 that the Hotel Pierre Marques

finally opened at Revolcader

o Beach. When it did, the

luxurious resort hotel proved

to be all I’d anticipated and

its instant success exceeded all hopes—another

“impossible” project that was 100-percent possible from the

beginning. There have been many others—large and

small—before and after.

Back in the 1920s, a drilling bit that twisted off in a hole

generally was a serious, expensive headache. Days, even

weeks, were spent fruitlessly “fishing” for the bit. Mean-

while, the hole could not be drilled deeper, costs continued

to mount up and frequently the oil for which one was

drilling would be drained off by nearby wells.

“Fishing” was accepted as the only possible remedy for a

twist-off; there seemed to be no feasible alternative. Then,

in 1927, a company in which I held an interest had a twist-

off on a Santa Fe Springs, California, drilling site. Several

weeks were wasted while the crew “fished” for the bit.

Thinking any possible new approach better than none, I

went to a stone yard hard by

the nearest cemetery, where I

bought a six-foot-long marble shaft and had one end cut to

taper. Returning with it to the drilling site, I told the

drillers to throw it down the hole—which they did.

The simple expedient worked. The heavy granite shaft

slammed the bit out of the way. Granite whip stocks have

been used successfully in similar situations on innumerable

occasions since then. In the oil industry, they’re called

“Paul Getty Specials.”

In the 1940s, it was considered impossible to drill hori-

zontally in the oil fields. I was far from convinced that it

couldn’t be done by a newly developed technique utilizing

flexible curved tubing and a mud pump. Shortly after

World War Two ended, I had experiments carried out on

one of my properties.

The techniques was improved and refined in the course

of these experiments and soon proved entirely practical and

efficient. As a result, horizontal drilling is now fairly com-

monplace. Many once-difficult and costly drilling problems

now can be solved quickly and economically.

Even as recently as 1957 many

experts and observers in

the oil industry maintained it was impossible to build an

automated oil refinery. Tidewater built one that same year

in Delaware and it has astounded even its designers by its

trouble-free efficiency ever since.

In very recent years, various

“authorities” have held that

the oil-tanker market is glutted, making it impossible to

operate a tanker fleet profitably. Getty interests maintain a

large tanker fleet, find it quite possible to operate it at a

tidy profit—and have more super-tankers on order.

All top businessmen I know have made their biggest

strides up the success ladder because they were able to see

the possible in what others rejected or ignored as the

impossible. And, I add hastily and emphatically, they

managed to avoid taking large steps backward because

they

generally

were able to recognize the impossible and

give it a wide berth. I emphasize the word “generally”

because everyone makes some mistakes. No one’s record is

perfect.

I’ve spent more than one large sum drilling thousands of

feet into the ground in the belief it was possible I would

strike oil—only to bring in a bone-dry hole.

I’ve sold more than one lease because I thought it

impossible

to find oil on the property—and then learned to

my sorrow that the next leaseholder thought otherwise,

drilled a well and brought in a producer.

I’ve made many other mistakes and miscalculations—

more of them than I’d care to remember on days when I’m

wearing a tight collar. There

aren’t any 1.000 batters. If

there were, baseball wouldn’t be much of a game—and if

businessmen always made the right decisions, business

wouldn’t be business, would it?

The point I’m driving at is that the successful

businessman is the one who makes the right choice

between the possible and the impossible more often than

not. The seasoned businessman does not arrive at such

decisions by haphazard guesswork. Nor does he decide one

way or another because he has a hunch or a clairvoyant

premonition. A great deal of careful thought and

consideration goes into resolving the problem of the

possible versus the impossible.

No, there aren’t any inflexible rules or money-back-guar-

anteed formulae for determining whether something is fea-

sible or not. If there were, the question would never come

up. However, there

an ordered, logical method by which

any given business situation can be studied and weighed—

and by the use of which the risk of error is greatly reduced.

Confronted by the perverse imp of the impossible, the

veteran businessman organizes his thinking and examines

all aspects of the situation with meticulous objectivity. He

does this by asking himself a

series of questions, the most

important of which follow:

What—precisely and in detail—is the situation, proposi-

tion or issue under consideration?

What is at stake—what are the costs, what are the mini-

mum and maximum the company stands to gain and lose?

Are there any precedents and, if so, can they be con-

sidered valid and applicable in this instance?

What do other parties—buyers or sellers, brokers, com-

petitors, customers, etc.—stand to gain or lose either way?

What are the

known

obstacles and difficulties the com-

pany faces if it goes ahead—and precisely how can they be

overcome?

What other difficulties are likely to arise—and if they

do, what resources are available and what steps may be

taken to cope with them?

Are

all

the facts known—could there be any additional,

hidden pitfalls?

How long will it take to accomplish the objectives or

goals in question if it is decided to proceed?

Would the company stand to gain more by devoting

equal time and effort to something else?

Are the personnel who would be responsible for handling

the matter fully qualified and dependable?

Once he has the answers to these questions, the

businessman weighs them in the balance to determine

whether the undertaking is possible or impossible. If the

scales tip heavily in one direction or another, his choice is

not hard to make. If, on the

other hand, the plus and minus

factors tend to balance, then he must use his judgment,

sense of proportion— and even his business intuition—to

decide.

The veteran businessman mentally goes through this

check list of questions automatically whenever there are

any doubts about the practicality of a business situation.

The young executive or beginner in business would do well

under such circumstances to sit

down with pencil and paper

and actually list the questions and his debit-and-credit

answers to them. The tyro is likely to obtain a clear—and

sometimes entirely new and different—view of the problem

confronting him if he sees the pro and con arguments and

the various pertinent factors sp

elled out in black and white.

He’ll thus have before him a detailed inventory of the

advantages and disadvantages, the potential rewards and

potential dangers of all the elements forming the complete

design.

Examining the over-all picture, the novice is very liable

to see angles and aspects, fl

aws and strengths, expedients

and alternatives, and potentials and pitfalls, which had

previously eluded him or which he hadn’t given much

thought to before. Once it’s all in front of him, he is like a

chess player who studies his own pieces and those of his

opponent on the board, then g

oes on to plan his tactics and

strategy and anticipates the opponent’s countermoves.

The chess analogy may well be carried further. Like the

chess player, the executive or businessman can foresee

which moves will “take pieces” from his opponent and

which will cause him to “lose pieces” of his own. He’ll be

able to make a reasonable guess as to whether a certain

gambit or attack will confer an advantage on him or his

opponent. But, be this as it may, eventually he must make

his decision. Is the situat

ion possible—or impossible?

Should he play, forfeit, or resign the game?

In business, as in chess, the final choice always and

inevitably depends on the most important of all factors in

any situation—the judgment of the individual concerned.

Possible—or impossible? When yo

u are in business, it’s

up to

you

to decide.

PART THREE

The Value of Dissent, Culture and

Nonconformity

THE VANISHING

AMERICANS

I recently had occasion to give a dinner party in London

for a rather widely assorted group of friends and acquaint-

ances. Among the guests was an outspoken Socialist I’ve

known for many years. When the table conversation lagged,

he seized the opportunity to deliver a political monolog, ex-

pressing views which were more than slightly left of center.

To my amusement, one of my other guests, a vacationing

American businessman, later felt constrained to ask me

how I, a “leading Capitalist,” could tolerate the presence of

such a wild radical at my dinner table.

“Aren’t you afraid to have a man like that around you,

spouting all those dangerous theories?” he asked.

Keeping a straight face, I tried to explain that Socialism

is an entirely respectable political ideology in Great

Britain, adding, for what I hoped was proper snob-

appealing emphasis, that Socialists are even received at

Buckingham Palace by Her Majesty, the Queen.

I assured my worried fellow countryman I didn’t really

consider the theories we’d heard expounded at all

dangerous. I said I hoped my own convictions weren’t built

on such shifting foundations that a ten-minute tirade by a

Socialist zealot could undermine them or corrupt me.

My arguments did not appear to make very much of an

impression. I strongly suspect the jittery businessman went

away thinking that at best I had been contaminated by ex-

posure to a subversive alien ideology and at worst had

turned into one of those parlor pinks he’d heard so much

about. Quite plainly, the man is one of the unfortunately

far-too-numerous Americans who seem to have lost their

perspective and sense of humor and fair play in recent

years. They’ve developed a tendency to automatically

equate dissension with disloyalty. They view any criticism

of our existing social, economic and political forms as

sedition and subversion.

Now, I am most certainly neither parlor nor any other

shade of pink. It hardly seems necessary for me, of all

people, to say that I’m vigorously opposed to government

ownership of industry, that I’

m an energetic exponent of

the free-enterprise system. I can’t imagine myself

comfortable under a Socialist regime. Nor can I imagine

such a regime looking upon me with much tolerance.

The political implications of the anecdote I’ve cited are

purely incidental and coincidental. I used it solely to il-

lustrate a manifestation of what I, for one, have observed to

be a contemporary American phenomenon and which, to my

mind, is disturbing, deplorable and truly dangerous. I’m

referring to the growing reluctance of Americans to

criticize, and their increasing tendency to condemn those

who, in ever dwindling numbers, will still voice dissent,

dissatisfaction and criticism.

Let me make it quite clear that I hold no special brief for

any particular ideology, party, group or school of thought

which might want or seek to bring about changes of any

kind in our manners, mores or institutions. I am not a

reformer, crusader, social philosopher, political or economic

theorist. I do, however, consider myself enough of a realist

to appreciate that this is not—and never has been and

never will be—the best of all possible worlds. The concept

that any

status quo

is perfect and permanent, that one

must under no circumstances raise questions, voice doubts

or seek improvements can only produce complacency, then

stagnation and finally collapse. It does no good to pretend

there is never anything wrong anywhere, for there is

always something—be it big or little—wrong everywhere.

Individuals and civilizations ca

n only strive for perfection.

It is highly unlikely that they will ever achieve it.

Very often it remains for the dissenter to point out that

which is wrong. He is a skeptic who doubts, questions and

probes—and hence is more likely to recognize lacks, weak-

nesses and abuses than are his complacent neighbors. The

dissenter is also more alert and sensitive to the winds of

impending change. He is thus frequently a prophet of the

inevitable, who cries for action or change while there is yet

time to take action and make changes voluntarily.

Such famed American dissenters of the past as Ida Tar-

bell, Lincoln Steffens, William Allen White and H. L.

Mencken were labeled muckrakers and much worse by

some of their contemporaries. Yet, they were given fair

hearing. No one seriously suggested muzzling them. No one

felt afraid of being exposed to their views. Their biting

commentaries, hard-hitting denunciations and exposes

helped bring about many needed changes and

improvements which even the most antediluvian

conservative of today will admit had to be made and, once

made, were universally beneficial.

But even if the dissenter is a false prophet and cries of

perils or problems which do not really exist, he still per-

forms an important and valuable service to society. He adds

spice, spirit and an invigorating quality to life. He may

create naught but controversy, but if he is allowed to speak,

is heard and answered, he has served to stir the

imaginations of others.

Years ago, there were many ruggedly individualistic dis-

senters on the American scene. They were never hesitant to

disagree with minorities or

with the majority. They aimed

their barbs at vital questions of the day. They expressed

their opinions fearlessly, no matter how unpopular those

opinions might have been. The voice of dissent has died

away to a barely audible whisper. Present-day specimens of

the vanishing breed are generally timorous and

emasculated parodies akin to the medieval pedants who

debated the question of how many angels could dance on

the head of a pin.

Today’s dissenters mainly focus their attention and ex-

pend their energies on the mo

st inconsequential of trivia.

Where the Ida Tarbells and H. L. Menckens made frontal

assaults on fortresses, they snipe at houses of cards. Al-

legedly serious intellectuals quibble endlessly over such ri-

diculous trivialities as the artistic merit versus the political

implications of a mural on the wall of a rural post office. In

the meantime, the public is lulled into a perilous

somnolence, spoon-fed pap and palpable untruths, many of

which are turned out by special-interest and pressure

groups and well-organized propaganda machines.

It is hardly surprising that the public mind is dulled and

forced into a narrow mold which allows no room for

consideration of the day’s important issues. Let a

semiliterate disc jockey’s contract be terminated—for

however valid the reason —and his former employers are

promptly deluged by furious letters, telegrams and

telephone calls expressing protest at the “injustice” and

“persecution.” On the other hand, if a pressure group of

dubious motive forces the resignation of a distinguished

public servant, there are very few protests from the

citizenry.

If a motion-picture fan magazine casts aspersions on the

dramatic talents of some glandular starlet, the result is in-

stant, widespread reaction from a partisan public. But

when a vital piece of legislation is pending before a state

legislature or the United States Congress, the matter is

usually ignored by the overwhelming majority of citizens. It

remains for self-seeking pressure groups and professional

lobbyists to inform the lawmakers of the public’s attitudes

and opinions on the bill in question. The stagnant waters of

indifference and apathy are deep.

Some of our newspapers and magazines are more con-

cerned with the welfare of their advertisers than they are

with the dissemination of news and the discussion of

matters of lasting importance. I recall a recent edition of

one well-known newspaper that devoted two fully and

lavishly illustrated pages to an article purporting to prove

that

Happier Gelatin Molding Makes for a Happier Home

Life

The same issue gave a three-paragraph report on a

government crisis in a Latin American Republic, dispensed

with a far-reaching change in Civil Defense policy in 11

lines, and allotted a scant half column to a resume of

legislative action taken that week in the state capitol.

Editorial policies? “It’s rapidly reaching the point where

you’re allowed to take a strong stand in favor of mothers,

babies and stray dogs, and against crime and spitting in

the streets—and that’s about all,” a veteran newspaper edi-

tor complained bitterly to me not long ago. This, of course,

is obviously an angry man’s extravagant overstatement.

Nonetheless, it should be painfully apparent to any regular

newspaper reader that there is at least some truth to what

he says.

But newspapers and magazines are by no means the

only —nor even the worst—offenders. Radio, television,

motion pictures, popular books—all contribute their very

considerable share to the conditioning process that leads to

the stultification of thought and

the stifling of dissent on all

but the most banal levels. The extent to which some of

these media will go to avoid controversy and to protect their

own narrow interests is often incredible. It is graphically

illustrated by a story I heard recently from a disgusted

radio network executive. It appears that a large radio

station killed a broadcast by a noted clergyman who was to

have delivered a 15-minute talk on

The Sanctity o f

Marriage.

Why was the cleric ruled off the air? The president of a

firm which bought considerable advertising air time from

the station was then involved in a noisy divorce scandal.

The radio station’s management was terrified lest this

sponsor think the clergyman’s remarks were directed at

him!

It is, perhaps, significant that some of the most incisive

and devastating commentaries on our contemporary

manners, mores and institutions are being made today by

nightclub comedians of the so-called sick school. This would

seem to indicate that, to be heard, the present-day critic

must sugar-coat his bitter p

ills, but that, even when he

does, there is at least implied disapproval of his dissent.

Otherwise, why would the public label his cutting, ironical

commentaries as “sick”?

I contend there is nothing sick about dissent and criti-

cism. There is a great need for both in our present-day

society. I firmly believe that now, as never before in our

history, it is essential that not only our intellectuals, but

also our average citizens question, doubt, probe, criticize

and object. The stifling of dissent is not only a negation of

our constitutional guarantees of free speech, but also a

renunciation of the most basic and precious of democratic

principles. Only if there are open discussions and

arguments based on uninhibited criticism can there be an

end to the growing trend toward complacency. And only

when complacency disappears will it be possible for the

United States to fully exert and exploit its vigorous, in-

dividualistic drive to achieve progress, betterment—and

world leadership.

In a free society, nothing that in any way affects the

lives or welfare of the public at large should ever be

immune from examination and criticism. Be it our foreign

policy, labor-management relations, educational system, or

whatever, there is always justification and need for

continuing, critical scrutiny.

As long as I’ve mentioned th

ree specific areas of public

interest, let’s use them as examples and give each a quick

glance. Let’s begin by taking a single facet of our foreign

policy to illustrate my point. Much time, money and energy

are being expended in efforts

to spread the American credo

and to sell the American way of life abroad. Huge sums

have been spent to build roads in countries that have few

automobiles. Our Government has paid for the erection of

giant office buildings in lands where the people live in mud

huts. Costly exhibitions have

been held in underdeveloped

countries to show American refrigerators, television sets,

electric ranges and wall-to-wall carpeting. We accept all

these things as everyday commo

nplaces of our lives; but the

average citizen of the countries in which we boast about our

material wealth looks upon all such objects as unattain-

able—and often incomprehensible—luxuries.

This does not appear to be a very sensible mode of

making friends of people who are underfed, poorly clothed

and badly housed, unless we offer them definite,

immediately workable programs whereby they can obtain

these luxuries. It is almost inconceivable that some of our

foreign-aid administrators have failed to see these self-

evident truths. Nonetheless, there were many who failed to

see them and, for all I know, there still are those who are

constitutionally unable to view the problem in proper

perspective.

This and other forms of blindness have handicapped

America’s ambitious and commendable programs for

making friends and helping less fortunate people in foreign

countries. Instead of giving those people hope and

confidence, our representatives have frequently done

nothing but emphasize the contrast between the host

country’s poverty and America’s riches. Thus, the net result

has been to increase resentment and to widen the gulf

between backward nations and ourselves.

These situations and conditions have existed for quite a

number of years. Yet, until very recently, it was considered

at best very bad taste and at worst subversive to raise any

questions about the omnipotence of those who directed our

overseas aid programs.

As for American labor-management relations, some busi-

nessmen are still living figurati

vely in the long dead and

un-lamented days of public-be-damned laissez faire

Capitalism. They resist any forward stride that may better

the working-man’s lot. In short, they consider labor as their

natural enemy, rather than as their natural ally in a

common effort. On the other hand, quite a number of labor

leaders have ceased being labor leaders. Instead, they’ve

become executives in a new and independent industry

called labor. This form of labor has but one apparent aim:

to compete with business and industry and to make things

as difficult and unprofitable as possible for them.

Clearly, there are errors and abuses on both sides of the

labor-management fence. Yet, anyone who criticizes

management will quickly have the wrath of manufacturers’

groups down on his head. He who criticizes labor or its

leaders will have the full fury of labor groups and

organizations to contend with. In the former case, he will be

reviled as a radical. In the latter, he will be accused of

being a reactionary. Consequently, there are few who are

willing to criticize both sides freely and objectively. There

remains only the highly prejudiced criticism of one side by

the other.

Our educational system? A shocking percentage of our

high school and college graduates are deficient in reading,

writing and simple arithmetic. Their knowledge of geogra-

phy is weak, of history, woolly and muddled. There is ob-

viously something wrong with our educational system. It is

not beyond the realm of possibili

ty that there might even be

something wrong with at least some of our schoolteachers.

But heaven help anyone daring to express such heretical

views.

Through some weird process of brainwashing, the public

has come to believe that our schools are sacrosanct, beyond

criticism or question. As for our teachers, they have been

endowed with sublime qualities; they are pictured as long-

suffering, overworked and underpaid martyrs sacrificing

themselves on the altars of education. Any criticism of

either schools or teachers brings a storm of abusive protest.

Teachers’ groups—and, egged on by them, parent-teacher

associations—are quick to counterattack. The critic is

characterized as an ogre who

hates children and wishes to

destroy civilization and bring about a return of the Dark

Ages.

According to U.S. Office of Education figures, American

schoolteachers’ salaries have risen more than 1000 percent

in the last 50 years or so. The average schoolteacher’s

salary today is over $4000 per year. Would anyone in his

right mind say that the quality of our educational

standards has risen comparably—or risen at all—in the

last half century?

Now, I did not choose these three examples because I

have any particular axes to grind. I do not say that our

foreign policy is bad, nor even that it necessarily needs any

major overhaul. I am not trying to blame either capital or

labor for any economic ills. In no way do I wish to imply

that I believe all our schoolteachers are incompetent or

undeserving of high praise or pay. I chose the examples at

random, merely to point out the fallacy of thinking that

everything is always all right everywhere. There are

always many things that require investigations, critical

examination and evaluation—and then possibly change and

improvement—in all areas of our society.

The public at large cannot allow itself to be swayed from

seeking needed reforms by entrenched bureaucrats, selfish

minority groups or organizations which have their own, and

far from altruistic, reasons for wishing to preserve the

status quo.

In order that our society and its institutions

may be strengthened there must be dissent. There must be

dissenters who will seek out and point out the faults and

abuses which exist or may develop.

“But most people today feel they can’t afford to be dis-

senters,” a moderately successful manufacturer declared to

me recently. “They’re afraid they’ll lose their jobs,

customers or profits if they try to buck powerful special-

interest groups. You’ve got to be a multimillionaire to feel

secure enough to speak out these days.”

It so happens that I

a multimillionaire, but I’d hate

to think it is for this reason alone that I can be a dissenter

if I choose to be one. I don’t be

lieve it’s true. I feel that the

real reason there has been so little dissent of late is that

Americans have been far too satisfied with their lot and

with their achievements. We have all grown indifferent and

complacent. Being too comfortable, we haven’t wanted to

see, say or hear anything which might disturb the bovine

tranquility of our rosy existence.

But I sense a strong wind of change in the offing. I’m of

the opinion that America and its people are awakening to

the realization that the lotus-eating binge is over. The

hangover is already beginning to hurt—but it is having a

highly beneficial effect. Through bleary eyes, we start to see

the grave errors and deadly dangers in the “all is well and

could not be better” thesis so

long peddled by some of our

leaders and the drumbeaters of Madison Avenue. I’m

convinced the American people

are ready to reclaim their

minds and their nation, to take them back from the

pressure groups, selfish minorities and hucksters to whom

they lost them by default in recent years. I predict the

vanishing American dissenters will soon reappear on the

American scene and will once again make themselves

heard—and will once again be give

n fair hearing. It will be

a pleasure and a great relief to welcome them back. The

nation’s future will be brighter—and far more secure—for

the return of the breed!

THE EDUCATED

BARBARIANS

A big-circulation European magazine recently published a

cartoon which depicted a camera-draped American tourist

and a tourist-guide standing in front of some Greek temple

ruins. “First World War or Second?” the caption had the

American asking.

Although this may not sound very funny to you or me,

the cartoon was widely reprinted all over the Continent.

Countless Europeans laughed heartily at what they

considered a telling lampoon of the typical American

tourist. While foreigners have long acknowledged and

acclaimed American leadership—and even supremacy—in

science and technology, they have often been highly

amused by the cultural illiteracy so often displayed by

Americans and particularly by American men.

The curator of a famous French art museum tells me

that he can instantly single out most American men in even

the largest and most heterogeneous crowds that come to his

galleries. “It’s all in their walk,” he claims. “The moment

the average American male steps through the doors, he

assumes a truculently self-conscious half-strut, half-

shamble that tries to say: ‘I don’t really want to be here. I’d

much rather be in a bar or watching a baseball game.'”

In my own opinion, the average American’s cultural

shortcomings can be likened to those of the educated

barbarians of ancient Rome. These were barbarians who

learned to speak —and often to read and write—Latin.

They acquired Roman habits of dress and deportment.

Many of them handily mastered Roman commercial,

engineering and military techniques—but they remained

barbarians nonetheless. They failed to develop any

understanding, appreciation or love for the art and culture

of the great civilization around them.

The culture-shunning American male has been a carica-

turists’ cliché for decades, at home as well as abroad—and

with good reason. The traditional majority view in the

United States has long seemed

to be that culture is for

women, long-hairs and sissies—not for 100-percent, red-

blooded men. Thus, it is hardly surprising that American

women are generally far more advanced culturally than

American males.

Because I spend much of my time abroad, I have many

opportunities to observe my countrymen’s reactions to the

highly refined cultural climates of foreign countries.

Frankly, I’m frequently shocked and discomfited by their

bland lack of interest in anything that is even remotely

cultural in nature. A graphic—and, I fear, all too

representative—example of what I mean can be found in

the story of a meeting I had with an old friend in London

some time ago. My friend, a wealthy U.S. industrialist,

stopped off in London en route to the Continent. He

telephoned me from his hotel, and we arranged to have

lunch together. After we’d eaten, I proposed that we spend

a few hours visiting the Wallace Collection. I knew my

companion had never seen this fabulous trove of antique

furniture and art. As for myself, I was eager to revisit it

and once again enjoy seeing the priceless treasures

exhibited there. My friend, however, practically choked on

the suggestion.

“Good Lord, Paul!” he spluttered indignantly. “I’ve only

two days to spend in London—and I’m not going to waste

an entire afternoon wandering around a musty art gallery.

You can go look at antiques and oil paintings.

I’m

going to

look at the girls at the Windmill!”

Then, I recall the dismal tableau enacted in my Paris

hotel lobby not long ago when I played host to two

American couples visiting Paris for the first time. I stood

silently to one side while the husbands and wives argued

about what they wanted to do that evening.

The ladies wanted to attend a special nighttime showing

of a contemporary sculpture collection that had received

high praise from all art critics. The husbands objected

vehemently.

“Hell, I’ve already seen a statue!” one of the men snorted.

“Let’s go to a night club instead!”

The other man agreed enthusiastically. The wives ca-

pitulated, and I, being the host, submitted to the inevitable

with as much grace as possible under the circumstances. As

a consequence, we all spent the evening in an airless,

smoke-filled cabaret exactly like every other airless, smoke-

filled cabaret anywhere in the world, listening to a fourth-

rate jazz band blare out background noise for a fifth-rate

floor show.

Now, I have nothing against cabarets, jazz bands or

floor-shows. I enjoy all three—provided they’re good and

provided I don’t have to live on a steady diet of them. But I

certainly can’t understand why so many Americans will

travel thousands of miles to a

world cultural center such as

Paris and then spend their time night clubbing.

Countless experiences similar to these I’ve related have

led me to believe that a comparison between modern

American men and the educated barbarians of ancient

Rome is not so terribly far-fetched after all. I’ve found that

the majority of American men really believe there is

something effeminate— if not downright subversively un-

American—about showing any interest in literature,

drama, art, classical music, opera, ballet or any other type

of cultural endeavor. It is virtually their

hubris

that they

are too “manly” and “virile” for such effete things, that they

prefer basketball to Bach or Brueghel and poker to Plato or

Pirandello.

Unfortunately, this culture phobia is not an aberration

peculiar to the uneducated clods in our society. It is to be

found in virulent forms even among highly successful and

otherwise intelligent and well-educated individuals. I’ve

heard more than one man with a Phi Beta Kappa key

glittering on his watch chain proclaim loudly that he

“wouldn’t be caught dead” inside an opera house, concert

hall or art gallery. I’m acquainted with many top-level

businessmen and executives with Ivy League backgrounds

who don’t know the difference between a Corot and a

chromo—and couldn’t care less.

The “ant culture” bias appears to thrive at most levels of

American society. It is reflected in a thousand and one

facets of American life. The nauseating, moronic fare

dished out to radio, television and motion picture

audiences—and presumably relished by them—is one

random example. The comparat

ively sparse attendance at

museums and permanent art exhibitions is another. Only a

tiny percentage of the population reads great books or

listens to great music. It’s doubtful if one in ten Americans

is able to differentiate between a Doric and an Ionic

column. Save for amateur theatrical groups or touring road

companies, the legitimate theater is rare outside New York City.

Americans like to boast that the United States is the

richest nation on earth. They hardly seem to notice that in

proportion to its material wealth and prosperity, the

American people themselves are culturally poor, if not

poverty-stricken.

The far-reaching and powerful influence of traditional

American culture-shunning was, I think, illustrated quite

clearly during the 1960 Presid

ential campaign. The music

editor of the U.S. magazine

Saturday Review

queried

both Presidential candidates for their answers to two

questions:

Are you in favor of establishing a post of Secretary of

Culture with Cabinet rank?

To what extent do you believe the Federal

Government should assist in the support of museums,

symphony orchestras, opera companies and so on?

According to published reports, both candidates rejected

the idea of creating a Cabinet post for a Secretary of

Culture. Neither seemed to think that Federal aid to

domestic cultural activities, institutions and projects

should be extended much beyond that which is already

being given to the Library of Congress and the National

Gallery.

Now, by no means do I intend this as a criticism of either

our late President John F. Ke

nnedy or of Mr. Richard M.

Nixon. I rather imagine that their replies were made on the

advice of their political counselors who doubtless warned

them to tread carefully and avoid having any fatal

“longhair” labels attached to their names.

As far as the first question is concerned, I hardly feel

myself qualified to argue its pros and cons. It is not for me

to judge whether a Secretary of Culture would be good or

bad for the nation. I am, howe

ver, a taxpayer. As such, I

cannot help but feel that a few Federal millions spent on

cultural activities would be at least as well spent as the

countless tens of millions lavished each year on

bureaucratic paper-shuffling

operations. Certainly all of

our citizens would derive much greater benefits from such

expenditures than they do from the costly pork-barrel

projects to be found in almost every Federal budget.

The United States is the only major nation on earth that

does not support its cultural institutions to some degree

with public funds. True, the Federal Government has, in

recent years, spent large sums to send artists, musicians,

entire art exhibits, symphony

orchestras and theatrical and

dance troupes on globe-girdling junkets to spread American

culture abroad for propaganda purposes. These are, of

course, valuable projects which do much to raise American

prestige in foreign lands. It is a grotesque paradox that the

same Federal Government will not spend a penny to spread

culture in America and thus raise the cultural level of our

own people!

It strikes me that there is an Alice in Wonderland

quality to whatever reasoning may lie behind all this. I am

neither a politician nor a government economist. But it

seems to me that if the Federal Government is legally

obligated to see that the nation’s citizens have pure foods,

transcontinental highways and daily mail deliveries, then

it has at least a moral obligation to see that they have the

opportunities and facilities for cultural betterment.

Only one tenth of one percent—a one-thousandth

fraction —of the annual Federal budget would be sufficient

to finance a vast program of support for cultural

institutions and activities throughout the country. It is

hardly overpricing the value of our cultural present and

future to say that they are well worth at least one

thousandth of our Federal tax dollars!

History shows that civilizations live longest through

their artistic and cultural achievements. We have forgotten

the battles fought and the wars won by ancient

civilizations, but we marvel at their architecture, art,

painting, poetry and music. The greatness of nations and

peoples is in their culture, not in their conquests.

Themistocles is given only a line or two in most history

books. Aristophanes, Aeschylu

s, Phidias, Socrates—all of

whom lived in the same Century as Themistocles—are

immortals. The edicts and decrees of the Caesars are

largely forgotten. The poetry of Horace and Virgil lives on

forever. The names of the Medicis, Sforzas and Viscontis

gain their greatest luster from the patronage these noble

families gave to Da Vinci, Michelangelo, Raphael and other

unforgettable artists. What are Gneisenau and Scharnhorst

in comparison to their countrymen and contemporaries:

Beethoven, Schubert, Goethe and Heine? Surely, the moral

should be obvious even to the most stubborn of culture

shurners among today’s Educated Barbarians.

Nonetheless,

entirely too many American men insist

that they can see no reason for developing any cultural

interests or appreciation of th

e arts. Some say they “haven’t

time” for cultural pursuits. Yet, week after week, they will

spend dozens of hours at country clubs, loafing here or

there, slumped in easy chairs in their homes, staring

blankly at the vulgar banalities that flash across the

screens of their television sets.

‘ve

found that a disheartening number of businessmen

and executives—young and old—obstinately maintain that

“business and culture don’t mix.” They cling to the notion

that businessmen have neither the temperament nor the

patience to understand and appreciate anything “artistic.”

They seem to fear that participation in cultural activities

would somehow “soften” them and make them less able to

cope with the harsh realities of the business world. Without

doubt, these are the weakest and most fallacious of all

arguments.

The world’s most successful commercial and industrial

leaders have always been noted as patrons of the arts and

active supporters of all cultural activities. There are also

innumerable proofs that co

mmercial and industrial

development, far from being incompatible with cultural

progress, actually gives culture its strongest forward

impetus. It can be shown that the arts have always

flourished most vigorously in prosperous, highly

commercialized and industrialized nations.

One excellent example of this is provided by the Republic

of Venice, which dominated the commerce of Europe and

Asia for nearly eight centuries. The Venetian traders were

as shrewd and as materialistic as any the world has ever

known.

The Venetians were also crack industrialists, mastering

production-line techniques more than six hundred years

before the first assembly line made its appearance in the

United States. The gigantic arsenal at Venice was geared to

turn out at least one fully equipped, seagoing ship a day on

an assembly line that began with the laying of the vessel’s

keel and finished with the arming and provisioning of the

ship.

The Venetians were hard-headed, profit-conscious mer-

chants and manufacturers. All things considered, they

faced far more risks and problems in their day-to-day

operations than any modern businessman. Nevertheless,

these were the men who were responsible for the building

of the Doges* Palace, the Golden Basilica of St. Mark, the

great

palazzi

along the Grand Canal and uncounted other

magnificent structures which they filled with works of

incomparable beauty.

It was in and for “commercial” Venice that Tintoretto,

Titian, Veronese and many other masters produced then-

greatest works. The canal-laced city of tough-skinned mer-

chants and manufacturers became an artistic wonder of the

world—and so it remains even to this day. The beauty and

esthetic grandeur of Venice have endured—monuments not

only to the artists who created the beauty, but also to the

businessmen at whose behest it was created.

In modern times, cultural progress has certainly kept

pace with industrial and co

mmercial expansion in such

nations as England, France, Italy and Sweden—to name

only a few. Neither businessmen nor the populace as a

whole in any of these countries is taking any less interest

in cultural activities today than they did years, decades or

generations ago. Quite to the contrary. It is evident that,

although their lives have grown more complex and their

pace of living has been greatly accelerated, they are still

packing the art galleries, museums, concert halls, theaters

and opera houses.

These people have learned a lesson it would be well for

many Americans to study. They have learned that culture

bestows many rewards and benefits—among them a better,

more satisfactory life, great inner satisfaction and mental

and emotional refreshment and inspiration.

Americans traveling abroad are often startled to hear

rubbish collectors or street sweepers singing operatic arias

or humming the themes of symphonies or concertos as they

go about their work. If they happen to know the language of

the country they are visiting, American tourists are even

more surprised when—as frequently happens—they hear

restaurant waiters or hotel employees arguing heatedly

among themselves over the relative merits of various

Impressionist painters or classical dramatists.

Many Americans who go overseas on business are non-

plused to find their foreign counterparts interspersing their

business conversations with references—and quotations—

from great authors, poets, playwrights and philosophers

about whom the Americans have only the haziest

knowledge.

Saddest of all are some American businessmen I’ve en-

countered in Europe who went abroad to buy or invest and

expected European manufacturers to entertain them in the

best accepted Madison Avenue tradition—with wild nights

on the town. I’ve listened with a straight face and, I hope,

with an adequately sympathetic expression to the woeful

recitals of several of these men who wailed that instead of

the anticipated champagne-soaked orgies, they found them-

selves being taken to the opera or the ballet.

What I’m driving at is that the average man in most

civilized foreign countries—be he laborer or industrial

magnate—takes a keen interest in and has a deep

appreciation of all forms of cultural and artistic expression.

There are, I suppose, several principal reasons for the in-

difference—if not open hostility—of the majority of

American men toward all things that come under artistic or

cultural headings. Some of the roots can be found in our

Puritan heritage. Early American Puritans, hewing to their

stern, super-Calvinist doctrines, equated art with

depravity, branded most music as carnal and licentious,

shunned literature other than religious tracts or theological

discourses and condemned virtua

lly all cultural pursuits as

being frivolous and sinful. In the Puritan view, that which

was not starkly simple and coldly functional was,

propter

hoc,

debauched and degenerate.

Despite the fact that the Puritans were only a minority

to begin with and were entirely engulfed by later infusions

of non-Puritan stock into the American melting pot, the

influence of the Puritan herita

ge on American thought and

behavior can be noted even to this day.

Then, there is the Colonial and Revolutionary tradition

which so many alleged authorities have quite incorrectly

defined as having demanded a

complete break with all that

was European, including the “decadent” cultures of

England and the Continent.

The founding fathers desired no such thing. They sought

political independence from England and wished to

eliminate monarchy and titled aristocracy from the

American scheme. But most leading figures of the

American Revolution hoped to preserve the cultural

traditions of the Old World and to transplant the highly

developed art and culture of England and Europe to the

New World.

Benjamin Franklin, George Washington, John Adams—

to mention only three—were all men of culture. Anyone

who has ever visited Thomas Jefferson’s home in Monticello

must have been impressed by the flawless taste reflected in

the architecture and furnishings of the house built by this

man who read the classics in Greek and Latin.

But then, one need look no further than the architecture

of the nation’s capital to find

refutation of the theory that

the founders of the United States desired to discard foreign

artistic and cultural influenc

es. The Capitol Building and

the White House, both designed soon after the

Revolutionary War ended, are excellent examples. The

Capitol Building is strongly reminiscent of St. Peter’s

Basilica in Rome. There is a startling resemblance between

the main facade of the White House and that of the Duke of

Leinster’s home in Dublin, on which architect James Hoban

based his designs for the Executive Mansion.

Despite the mass of incontrovertible proof to the

contrary, there are still ultra patriots and professional

chauvinists who believe that the Colonial tradition entailed

a repudiation of classical—and

particularly European or

foreign—art and culture. From this fallacious concept it is

only a short step to the theory that

all

cultural activities

are un-American and unsuited for red-blooded Americans.

As if these influences—the Puritan and what might be

termed the pseudo-Colonial traditions—were not enough,

the average American man’s attitude toward culture has

been further warped by the mythical mystique of the

American frontier heritage. The rough-and-ready, generally

unlettered and often uncouth, frontiersman long ago

became the figure after which generations of American men

would subconsciously pattern themselves. Believing that

they are emulating praiseworthy qualities of their pioneer

forebears, many U.S. males sneer at any art above the

September Morn

level and jeer at any music that cannot

be played on a honky-tonk piano or twanged and scraped

out by a self-taught banjo player and an amateur fiddler.

The figure of the two-fisted, fast-drawing and culture-

hating frontiersman may be picturesque, but it is a

misleading one.

There were many cultured men—and men who thirsted for

culture—as well as barroom brawlers and gunslingers on

the American frontier.

It is, perhaps, significant to note the examples provided

by two rough, tough cities th

at played important roles in

America’s Westward expansion—San Francisco and

Denver.

San Francisco’s Barbary Coast and Denver’s Holladay

Street were probably the wickedest and wildest enclaves in

all the wild, wild West. Even so, there were few Eastern

metropolises that gave such quick and unstinting support

to cultural projects as did

San Francisco and Denver, even

in their raucous infancy.

San Franciscans always showed an appreciation for

music and art—even in the days when the city was a gold-

rush-era Helidorado. There are very few metropolises in the

United States today with higher general levels of taste and

culture than San Francisco—and the city’s cultural

traditions go back well over a century.

Denver had its Occidental Hall and the Tabor Grand

Opera House—the latter built by

H. A. W. Tabor, as crude a

character as can be found in American history. The Tabor

Grand Opera House was a showplace of the West. Operas,

concerts and lectures were given there—and Denverites

packed the auditorium, liste

ned attentively and, if

contemporary accounts are to be believed, appreciatively.

I believe I am qualified to comment personally on the

culture-shunning myth of the American frontier. My own

forebears came to the United States in the Eighteenth

Century. They were pioneers, mainly farmers, who came to

America to build their futures in the wilderness. It was for

one of them, James Getty, th

at Gettysburg, Pennsylvania,

was named. Judging by the memorabilia these people left

behind, they and large numbers of their contemporaries

hungered for culture and knowledge in all forms. They read

avidly, passing books—particularly the classics—from hand

to hand. They dreamed of the day when they could have

good oil paintings on the walls of the good homes they

hoped to build. They tried to teach their children to

appreciate and love fine literature, art and music.

My own father was born in 1855 on an Ohio farm—and a

very poor and unproductive farm at that. His widowed

mother was impoverished and life was anything but simple

and easy. Yet, the thirst for intellectual and cultural

betterment was great. My father worked his way through

school and college, and one of his greatest sources of pride

was his membership in the university’s literary society.

I, myself, had a heaping helpin

g of life on America’s last

frontier when, in 1904, my fath

er, mother and I went to the

Oklahoma Territory. Clapboard and raw-pine settlements

had mushroomed overnight around newly discovered oil

fields and newly established drilling sites. Most grown men

habitually carried six-guns strapped to their waists;

shooting affrays were everyday commonplaces.

The oil-field workers and wildcatters were certainly

hard, tough and virile, but I can remember many of the

toughest among them dressing up in their Sunday best and

going to Oklahoma City or Tulsa to hear a touring opera

company or a concert artist perform.

When they struck it rich, a great many oil men—I might

even say most—bought or built homes and purchased

paintings, sculpture and antique furniture and rugs for

them. They also went East, to New York, to see the plays

and hear the operas and concerts.

True, their tastes were seldom refined or matured—at

least not at first. But the fact remains that these rugged,

hard-bitten men

did

thirst for artistic beauty, and they

did

take an active interest in and show appreciation for

things cultural. By no means were they the culture phobes

that so many modern Americans think all frontiersmen and

old timers were and whose imagined example they seek to

emulate in order to prove themselves rugged, two-fisted all-

male men.

There are other factors that help produce such a high

proportion of educated barbarians among American men—

but, regardless of the causes, the results are deplorable.

The saddest part of the whole situation is that the

United States

does

possess outstanding cultural

institutions and facilities. American symphony orchestras

and opera companies are among the finest in the world.

American museums and art galleries—public and private—

have amassed some of the world’s greatest collections of

paintings, sculpture, tapestries, antique furniture—of art

in all its forms from all historical periods.

Great music is available on phonograph records and

recording tapes. Fine works by contemporary painters and

sculptors and fine reproductions of the works of the

masters are well within the reach of most Americans’

pocketbooks. The great classics of literature are available in

editions costing only a few cents per volume. Courses in art

and music appreciation, literature, poetry and drama are

offered, not only in the public schools and colleges, but also

in adult education programs.

Tragically, only a comparatively tiny fraction of the

population—and particularly of

the male population—takes

advantage of the myriad facilities and opportunities that

are offered throughout the country.

Symphony orchestras and opera companies often end

their seasons with staggering deficits. Few, indeed, are the

art museums and galleries that can report regular heavy

attendance. Countless record albums featuring the

caterwaulings of some bosomy

chanteuse

or tone-deaf

crooner are sold for every album of serious music that is

purchased. Even greater numbers of lurid, ill-written

novels are snapped up for every volume of serious literature

that is bought. Save for a few sections of the country,

cultural classes and courses seldom if ever have capacity

enrollments. Teachers and professors who conduct such

classes have told me that a course that should have 30 or

40 students enrolled in it will have only six or eight.

Americans, and especially American men, must realize

that an understanding and appreciation of literature,

drama, art, music—in short, of culture—will give them a

broader, better foundation in life, and will enable them to

enjoy life more, and more fully. It will provide them with

better balance and perspective, with interests that are

pleasing to the senses and inwardly satisfying and

gratifying.

Far from emasculating or effeminizing a man, a cultural

interest serves to make him more completely male as well

as a more complete human being. It stimulates and

vitalizes him as an individual—and sharpens his tastes,

sensibilities and sensitivity for and to all things in life.

The cultured man is almost invariably a self-assured,

urbane and completely confident male. He recognizes,

appreciates and enjoys the subtler shadings and nuances to

be found in the intellectual, emotional and even physical

spheres of human existence—and in the relationships

between human beings. Be it in a board room or a bedroom,

he is much better equipped to play his masculine role than

is the heavy-handed and maladroit educated barbarian.

It isn’t necessary to force-feed oneself with culture nor to

forsake other interests in order to experience the benefits

and pleasures offered by cultural pursuits. One’s

preferences, tastes and knowledge should be developed

slowly, gradually—and enjoyably. Culture is like a fine wine

that one drinks in the compan

y of a beautiful woman. It

should be sipped and savored—never gulped.

THE HOMOGENIZED MAN

odd moments, when sunk in contemplation of some

cosmic navel, the vague suspicion that I am, at heart, an

anarchist flashes through my mind. Not that any impulse

to strew high explosives in palace gardens or parliamentary

antechambers stirs within me; I certainly bear no malice

whatsoever toward aged arch

dukes or young czarevitches.

My evanescent anarchistic tendencies are purely

classical. I use the word anarchist in the sense in which it

was understood by the ancient Greeks. They, of course,

accepted the anarchist as a fairly respectable—if somewhat

vehement—opponent of government encroachment on the

individual’s rights to think and act freely. It is in this sense

that I glimpse myself as an anarchist—regretting the

growth of government and the ever-increasing trend toward

regulation and, worst of all, standardization of human

activity.

I never dwell long on such thoughts, however, for no

man relishes seeing himself as an anachronism clinging

hopelessly to obsolete concepts. Being a realist, I am forced

to concede that in the

guerre d outrance

between

individual rights and government prerogatives, the latter

have clearly emerged the victors.

Big government has been with us for quite some time—

and it continues to grow bigger. The government

administrator and “planner” and the electronic brain are

inheriting what daily becomes more and more of a punch-

card world. Led by big government—which, after all, sets

the style—we are moving rapidly and inexorably into the

era of the completely structured society, the bureaucrat’s

beehive Utopia in which there will be just one great

assonant buzz.

I, personally, find the prospect dismal, but I appreciate

that what is a strait jacket for one man may well seem a

loose-flowing toga to the next

. Even such words as forward

and backward are relative terms; their meanings depend on

where one is standing before he starts to move. There are

unquestionably many to whom the planned and ordered—if

not very brave— new world of the future will appear as the

safest of all possible havens.

Nonetheless, it should be plain to all that the completely

structured society will impose increasingly severe

restrictions on its members and will drastically change

most—and quite possibly all—of our existing social and

economic patterns. But then, these changes will not really

be new—only final and complete. They have been taking

place more or less gradually for a long time; the trend

toward the structuring of society has been evident for

centuries.

In the ancient Greek city-states, premiums were set on

individuality in almost all things. But, with the emergence

of the concept of empire, th

e movement toward uniformity

was firmly established.

Within the Roman Empire, for example, such diverse

things as laws, the administrati

on of justice, fashions in

wearing apparel and business practices became highly

standardized. The civilization, customs, manners and

mores exported by Rome impressed themselves—and were

impressed upon—subjected and allied peoples, many

classes among whom eagerly accepted and aped them.

Temples, amphitheaters, dwelling places and other

structures built by the Roman legions in the Empire’s far

flung reaches were, save perhaps for size, virtually

identical to like structures built in Rome. The artistic style

and techniques apparent in a Second Century portrait bust

found in a Roman ruin in Syria are practically

indistinguishable from those to be seen in a Second

Century bust dug from the banks of the Tiber.

It is not unreasonable to assume that if the Roman

Empire had survived, the civilizations of Europe, the

Middle East and North Africa might well have developed

according to the prototypal patterns established by Rome.

The Empire, however, collapsed. The ordered whole was

shattered into myriad splintered fragments. Even Latin,

long the language of Western civilization, was split into

innumerable languages and dialects. With that, the trend

toward standardization was temporarily halted. Countless

highly individualistic tribal societies and minor

principalities replaced strongly organized imperial gov-

ernment. The chaotic patchwork remained until, at last,

the feudal system that had ev

olved during the Dark Ages

finally withered and died. Then

, with the re-emergence of

strong central governments, a marked trend toward

unification and standardization began again.

The movement has continued steadily throughout the

last four or five hundred years. In more recent generations,

burgeoning populations, multiplying social and economic

problems and such other factors as vastly improved

communications have strengthened the trend and caused it

to move at a progressively faster pace. Today, the tendency

toward standardization is evident almost everywhere on

the globe. Native costumes have been largely discarded in

many countries; the custom is to dress in Western-style

clothing. A woman’s dress fashion set in Paris one day is

reported by press, radio and television on every continent

within hours; within a week it has become the vogue

throughout much of the world. There isn’t much difference

between the appearance of, say, refrigerators built in

England and those manufactured in the United States,

France, Italy or Germany. Let an architectural style catch

on in one country, and you can be sure that it will become

the rage in a dozen other countries in short order.

Today, the inherent nature of government in an

increasingly complex civilization creates strong pressures

toward systemization and standardization, which, in turn,

serves to create vast bureaucratic complexes. In

government (as in overgrown big-business corporations

that have assumed government-style managerial practices)

the attempt to establish rigid procedures for the most

minute activities tends to guarantee imposition of a

structured conformity. Needless to say, all this proves espe-

cially appealing to the type of job seeker and job holder who

is bereft of courage and imagination and basks like some

somnolent embryo in the amniotic comfort of a completely

regulated life.

The bureaucratic mazes of government are self-

perpetuating, self-propagating and given to mitosis—and

they grow ever more intricate, unwieldy and ubiquitous. I

do not suggest that there is a malevolent force behind any

of this. It is simply the way things are, simply the way they

have developed and continue to develop.

Our own country’s history provides an illuminating

example of how nations move toward the creation of a

structured society. Originally 13 rather loosely federated

states dedicated to the proposition that all government

should be held to a minimum and individual liberty kept at

a maximum, the United States has changed greatly since

the Declaration of Independence was signed. Modern

America is a country with national, state and local

governments that are infinitely more powerful than was

ever envisioned by our founding fathers. Today, the hand of

government can be felt—regulating, prescribing,

proscribing and standardizing—in almost every area of

human activity.

True, our nation’s citizens are as free as any people on

the face of the earth, far more than most. But just

how

free are they? To what extent has government already

encroached on their freedoms and their rights to life, liberty

and the pursuit of happiness?

I think the average American would be astounded to

realize how many commonplace things he may

not

unless he maintains standards set by government and

obtains permission from government to do them in the first

place. I rather doubt that most

people have ever stopped to

think about it.

For example, the average American citizen cannot sell a

bottle of beer, get married, go hunting or fishing, drive an

automobile or even keep a dog for a pet without appropriate

licenses from government. In most places throughout the

United States, he cannot hold

a parade, build a house or

even add a bathroom to his home unless he first obtains

permits to do these things from government. He must not

operate so much as a pet shop

, a boardinghouse or a soda

fountain without licenses or permits from such government

departments as police, health, fire and so on, ad

bureaucratic infinitum.

From the moment he is born and his birth certificate is

filled out and recorded, the average American is a marked

human being. His life, habits and activities become the

concern of numberless bureaucratic offices and agencies

which register, enroll, scrutinize, supervise and regulate

him and whatever he may do until the day he dies, and

even after.

Our free American

must

be enrolled in school at a

certain age and must remain there for a prescribed period

studying at least some prescribed subjects. Male members

of the population must register with Selective Service

boards. They remain eligible for military service for many

years; if called, they must serve in the Armed Forces for a

specified time. Most Americans—regardless of sex—must

workmen’s compensation, income tax, census and other

Federal, state, county, or city government bureaus.

Now, I hasten to make clear that I consider these

requirements necessary and beneficial. Obviously there

must be laws and standards in our complex civilization.

Unrestricted hunting would quickly wipe out all game

animals; unlicensed drivers would greatly increase the

already appalling slaughter

on our jammed streets and

highways. An individual cannot be allowed to erect a

slovenly shack where others have built fine homes; nor

should he be allowed to operate a boardinghouse that is a

firetrap or a menace to the health of its tenants. The

nation’s security in a troubled world depends on its armed

forces, hence the need for Selective Service. Certainly no

sane person would want to abolish the census. Government,

law, control and regulation—and even concomitant

bureaucracy— are essential if a nation of 190,000,000

people is to exist and function, if there is not to be utter

chaos and eventual destruction.

I would like to repeat and make it very clear that I am no

antigovernment reactionary. I do not maintain that the

restrictions I have cited are undesirable. They are, in my

opinion, entirely necessary, in that their purpose is to make

life safer and more pleasant for all.

The issue is not that any of these manifestations are

good or bad. The point is simply that they

are,

that they

exist, are implemented and enforced, affecting all citizens.

They are mentioned only as demonstrations of the extent to

which we are already living in a regulated society.

Further proof may be found in the manifold ways in

which government at all levels controls the nation’s

business and economy. Like it or not, the so-called free-

enterprise system is not nearly as free as some might

imagine. The Federal Government alone has some 30

independent

regulatory agencies which wield great

power and influence over practically every aspect of U. S.

business.

Take, for example, the duties and responsibilities of just

three of these agencies. The Interstate Commerce

Commission fixes rates and grants franchises for railroads,

barge lines, trucking and pipeline firms. The Civil

Aeronautics Board sets airline routes, rates and safety

standards. The Federal Communications Commission

determines who may (or may not) operate radio or

television broadcasting stations. In addition to such

independent regulatory agencies, there are scores of other

Federal bureaus and offices that exert influence and

exercise varying degrees of direct and indirect control over

the country’s economy and business. Farm production is

regulated through price supports, acreage controls and

other methods—and the effects are felt not only by the

farmer but by the produce trucker, food wholesaler, corner

grocer and consumer as well. Government affects business

activity and expansion by raising or lowering Federal

Reserve discount rates, tariffs, taxes and by innumerable

other means. Whatever it does in these directions is soon

reflected in production and sales figures, employment

statistics and price indexes.

In short, big government wields numberless big sticks

over American business and th

e American economy. And,

when I speak of big government, I do not mean the Federal

Government alone. The various states—and even counties

and cities —license, tax, inspect and regulate businesses

within their jurisdictions. It should hardly be necessary to

mention that it is but a short step from such economic

regulation as exists at the present time to the

establishment of a completely regulated economy. And—be

it for better or for worse—all recognizable signs augur

more, rather than less, economic regulation for the future.

With government setting the example, it is little wonder

that many of the nation’s citi

zens anticipate the seemingly

inevitable and hasten to conform to standardized patterns.

Business firms that establish their own bureaucracies and

individuals who strive to be conformists are merely floating

with the tide that is carrying our society toward final, top-

to-bottom “structurization.”

There are abundant indications

that this is in the offing, that the civilization that produced

homogenized milk will soon produce the homogenized man.

Not long ago, the Federal Government, acutely concerned

over the shortage of scientific and engineering personnel in

the United States, launched a program designed to

encourage young people to become scientists and engineers.

To date, the technique employed has been one that seeks to

impel

young people to choose these careers. Public

statements by national leaders and other prominent

persons and widespread publicity campaigns aim to make

science and engineering attractive, to excite the

imaginations of the young and to sell the idea of following

such careers to students in hi

gh schools and colleges. Huge

money grants are financing the expansion of training

facilities at universities and colleges and are making it

possible for these institutions to offer scholarships and

fellowships on an unprecedented scale.

Now, all this is very necessary—and very much to the

good. But, considering the trend, it should not be too

difficult for any moderately imaginative person to visualize

a day when government will no longer

impel,

but will

compel

individuals to enter certain professions or career

fields.

One does not have to be a science-fiction addict to

imagine how this might be accomplished in a fully

programmed society. Somewhere in a government building,

an electronic computer whirs, calculating how many new

physicians the country will require six years hence. The

data obtained is fed into another machine which promptly

spews out punch cards on which are recorded the names of

the nation’s high school seniors who made the highest

scores on the medical section of the Standard Career

Aptitude Test. Within a few days, the students receive their

career-assignment notices through the zip-coded mails.

That such a system might prevail at some time in the

future is no longer a fantasy. It is a distinct possibility. We

have already passed the point of no return in our race to

establish the structured society.

“But then, we are headed for regimentation!” the reader

is Quite likely to protest. Well, we are—and we aren’t. I’ll

admit that at first glance, the difference between a

structured society and a regimented one may not be too

apparent. But there are differences—and very big

differences, at that. Although I can hardly say that I would

be overjoyed by the prospect of living in either, if forced to

make a choice, I would most certainly take the former.

As defined by common usage, the regimented society is

one produced by totalitarianism and dictatorship. It is

created, operated and controlled by a selfish and cynical

minority using ruthless methods and totally disregarding

the rights, welfare and human dignity of the majority. In it,

the majority exists solely to se

rve the ruling minority’s ends

and purposes. To me, at least, the regimented society

implies all the classic appurtenances of dictatorship—

terror, concentration camps—and the end to all human

dignity.

On the other hand, the structured society, as I choose to

understand it, is one that evolves with the consent—be it

active or tacit—of the majority of its’ members. Although it

is organized, regulated, standardized and programmed, its

goals are still to provide the greatest good for the greatest

number without using oppressive measures against any.

And, at least to these extents, the governing elements in

such a society are benevolent and altruistic in their intents.

They do not rely on rigged show trials or

Nacht und

Nehel

decrees to govern.

Stated simply, the regimented society is the Orwellian

nightmare, while the structured society is the do-good

social theoretician’s dull, monochromatic dream of Utopia.

The completely structured civilization will provide complete

security for its members, quite literally from womb to tomb.

The individual’s needs will be defined, anticipated and

met—not through his own foresight and abilities but by

government experts and administrators. They will watch

him—and watch over him. They will classify him, evaluate

his potentials, assign him to h

is tasks, supervise his life,

and press him into the mold they determine to be the one

he fits or should fit. They will, of course, do these things for

his “own good” and for the “good of society as a whole.”

Theoretically, at any rate, there will be very little

insecurity or want in this Erewhonian ants’ nest. The

individual will face few of the anxieties he is liable to

encounter in a freely competitive society. His progress

through life will be a measured journey up a neatly

structured ladder. He will go from one faceless level to

another, under constant surveillance by those appointed to

guard the rungs. “A slot for everyone—and everyone in his

slot,” will be the guiding principle.

It all promises to be rather boring. Whatever else the

structured society may or may not offer, it definitely will

not

offer the individual adventure or inspiration—and

precious little challenge. He will plod slowly along in the

groove provided him, knowin

g full well exactly what to

expect at every step.

Many forces are at work to bring this era of the

homogenized man ever closer. Each contributes its part in

preparing the ground and the

conditioning process which

will make the majority accept its advent without a

protesting murmur.

I’ve already dwelt at some length on the role played by

government, which tends to impress the patterns it has

adopted for its bureaucratic microcosms on the social

macrocosm. Business, too, hastens the coming of the

structured society—and, as a conceivable consequence, its

own doom—by its ever-increasing tendency to over

organize, to place more emphasis on procedural rules than

on production and to show more concern over committee

meetings than customers.

Many businessmen who complain most about

government’s bureaucratic meddling are lost in

bureaucratic labyrinths of their own making. Far too many

wallow in organizational charts, administrative directives

and quintuplicated memoranda, worrying more about doing

their paperwork than about doing business.

Labor unions contribute their share by such attitudes as

inflexible insistence that seniority rather than merit and

efficiency be the yardstick by which eligibility for promotion

is measured. Thus, the time server takes precedence and

receives preference over the toiler.

Schools and colleges do their not-inconsiderable bit by

producing overspecialized gr

aduates whose knowledge and

horizons are severely limited. An unfortunately large

percentage of students leave their schools ready tailored to

fit only the narrowest of grooves.

Individuals help accelerate the trend toward a

programmed social and economic system by their

complacent, almost bovine, acceptance of it all. In many

instances, they rush pell-mell to conform, to be the first to

enjoy the dubious fruits they hope to find in the safely

structured nirvana. Vast numbers have already anticipated

the dawn of homogenized civilization, but there are still

those who refuse to join the cults of the conformists, status

seekers and organization men which form the super

mystique of security at all costs.

One might well ask what, in an increasingly

standardized society, dominated by standardizing and

stultifying government, the individual can do to protect

himself from becoming a homogenized man. In my opinion,

there is much he can do.

In the first place, to be forewarned is to be forearmed.

The man who wants to be an individualist, call his life his

own and retain considerable freedom of will and action

should be alert to those acti

vities and courses of action

which might lead him unwittingly into the trap of

standardization. For instance, such comparatively simple

things as the reading of newspapers and listening to the

opinions of others—all with an

open mind tempered with a

bit of healthy skepticism—are a great help. Then, whenever

the individual is confronted with the necessity of making a

choice—be it in voting, choosing a career or a job, buying

something, or whatever—the question of whether he wants

(or thinks he wants) to do this or that should not be the

only consideration governing the choice. The individual

must also ask himself whether the choice will circumscribe

his life or make him more susceptible to the forces in our

society that tend to standardize people.

The would-be individualist will carefully examine his

motives for wanting something and ask himself whether he

is making his choice because it is safe, secure, easy. He will

strive to accept or reject so that he will maintain as much

mobility and personal freedom as possible. He will

understand that however high the price of courage and self-

determination, the rewards are ultimately far greater in

terms of personal satisfaction than can be obtained by

passively permitting himself to be trundled from infancy to

decrepitude by governments and institutions which may

indeed wish him well, but whic

h throttle his individualism.

I am convinced there will always be those who reject any

system that considers them as numbers, as code holes in a

punch card. Admittedly, the completely structured society

will be heaven on earth for

the meek conformists and for

those who lack imagination, initiative, self-confidence and

self-respect. But there will always be individualists and

they will always make their presence known as they assert

their individuality. Such persons have always existed and

will always exist, never content to have their lives

systematized. Whatever the forces against them, they live

their own lives and achieve their aims on their own.

I can’t honestly say that I think the over-all outlook is

very bright. I believe that more and more regulation,

standardization and uniformity are virtually inevitable—if

for no other reason than that populations and social and

economic problems have become too complex to be coped

with in any other manner.

There is, however, hope for any person who wants to

remain an individual. He can assert himself and refuse to

conform. He’ll be on his own, that’s true, but while he will

not have the security enjoyed by those who do conform,

there will be no limits to what he may achieve.

It shouldn’t be very difficult for anyone to resist the

temptation to force himself into the pattern of the

structured man. One needs only to remember that a groove

may be safe—but that, as one wears away at it, the groove

becomes first a rut and finally a grave.

PART FOUR

The Art of Investment

THE WALL STREET

INVESTOR

On Monday, May 28, 1962, prices of the New York Stock

Exchange crumbled rapidly before an avalanche of sell

orders. The Dow-Jones industrial average plunged nearly

35 points to register its biggest one-day drop in over 32

years. Crashing through the 600 level for the first time

since 1960, it hit a day’s low of 576.93.

By the end of the day, many big-board stocks were

selling at prices from 30 to 80 percent below their 1962

highs. Shares traded on the American Exchange and over-

the-counter markets followed suit and also went into

nosedives. Headline writers were quick to respond to the

developments being reported by the lagging ticker:

BLACK MONDAY PANIC ON WALL STREET

INVESTORS LOSE BILLIONS AS MARKET

BREAKS NATION FEARS NEW

1929

DEBACLE

Such were the scare heads that appeared on the front

pages of the nation’s newspapers after the New York Stock

Exchange closed for the day.

By the time later editions

came off the press, experts

and analysts, economists and

pundits were offering their explanations, hindsight

diagnoses and spur-of-the-moment prognostications. As is

often the case in such situations, some of the second-

guessers and crystal-ball gazers tried to gloss over the

implications of the collapse, while others appeared to take

an almost sadistic delight in

prophesying even worse things

to come.

Two days later, several newspapers and wire-service cor-

respondents descended on me. They wanted to know my

opinions and reactions and asked what I was doing because

of the break in stock prices. I told them quite frankly that,

while I sympathized wholeheartedly with anyone who had

lost money because of market developments, I saw little if

any reason for alarm and absolutely none for panic.

The over-all current business picture was favorable and,

what was even more important, gave promise of getting

better in the future. There was nothing basically wrong

with the American economy nor the vast majority of

companies whose stocks were listed on the New York Stock

Exchange. In my view, some stocks had been grossly over-

priced. Irrational buying had driven their prices to totally

unrealistic levels. The May 28 break was an inevitable

consequence.

I said that I felt the stock market was in a much

healthier and certainly in a much more realistic position

because of the long-needed adjustment of prices. As for

what I was doing, the answer was simple. I was buying

stocks.

“I’d be foolish

not

to buy,” I explained to a young corre-

spondent who looked as though he thought I’d taken leave

of my senses by buying when everyone else seemed to be

selling. “Most seasoned investors are doubtless doing much

the same thing,” I went on, feeling somewhat like a

schoolmaster conducting a short course in the First

Principles of Investment. “They’re snapping up the fine

stock bargains available as a result of the emotionally

inspired selling wave.”

Since the petroleum industry is the one I know best, I

bought oil stocks. By the end of the New York Stock

Exchange trading day on May 29, my brokers had

purchased several tens of thousands of shares for my

account. I hasten to emphasize that I bought the stocks for

investment

and not for speculation. I fully intend holding

on to them, for I believe they will continue to increase in

value over the years to come.

It has long been the custom for journalists and financial

writers to interview successful businessmen and investors

whenever there is an “unusual” stock market development.

The opinions, information and advice gathered from these

sources are then published, ostensibly for the guidance of

less sophisticated investors. For as long as I can remember,

veteran businessmen and investors—I among them—have

been warning about the dangers of irrational stock

speculation and hammering away

at the theme that stock

certificates are deeds of ownership in business enterprises

and

not

betting slips.

Get-rich-quick schemes just don’t work. If they did, then

everyone on the face of the earth would be a millionaire.

This holds as true for stock market dealings as it does for

any other form of business activity.

Don’t misunderstand me. It is possible to make money—

and a great deal of money—in the stock market. But it can’t

be done overnight or by haphazard buying and selling. The

big profits go to the intelligent, careful and patient

investor, not to the reckless and overeager speculator.

Conversely, it is the speculator who suffers the losses when

the market takes a sudden downturn. The seasoned

investor buys his stocks when they are priced low, holds

them for the long-pull rise and takes in-between dips and

slumps in his stride.

“Buy when stock prices are low—the lower the better—

and hold onto your securities,” a highly successful financier

advised me years ago, when I first started buying stocks.

“Bank on the trends and don’t worry about the tremors.

Keep your mind on the long-term cycles and ignore the

sporadic ups and downs . . . “

Great numbers of people who purchase stocks seem

unable to grasp these simple principles. They do not buy

when prices are low. They are fearful of bargains. They

wait until a stock goes by—and up—and then buy because

they feel they are thus getting

in on a sure thing. Very

often, they buy too late— just before a stock has reached

one of its peaks. Then they get caught and suffer losses

when the price breaks even a few points.

Typical of these people is an acquaintance of mine with

whom I had lunch one day in 1955. We talked about many

things—including the stock market. During the course of

the conversation I happened to mention that the X

Corporations shares were selling

at 4 ½, and that I thought

the stock would go up in price.

By late 1957, the stock stood

at 11 I later learned that

my acquaintance had kept his eye on the stock for two

years and, when it reached 11 1/

4, he finally decided it was

safe to buy and purchased several hundred shares. He

watched happily while the stock climbed to 13 ½ in the next

six months. Then there was a dip. X shares fell to 10 and

stayed there. My Johnny-come-lately acquaintance sold out

and lost money. Those of us who’d bought early held on, for

the securities were worth more than twice what we had

paid for them.

Eventually, the stock rose again, going up several more

points to reach another fairly steady price plateau. Today,

it’s around 15—and those of us who bought early are

holding on to it firmly. I might add that we’ve also collected

satisfactory dividends on the stock through the years.

I began buying common stocks at the depths of the

Depression. Prices were at their lowest, and there weren’t

many stock buyers around. Most people with money to

invest were unable to see the forest of potential profit for

the multitudinous trees of their largely baseless fears. I

had confidence in the future of the American economy and

realized that the shares of many entirely sound companies

with fine potentials were selling at only a fraction of their

true worth.

When I first bought Tide Water Associated Oil Company

stock in 1932, its price was as low as $2.12 per share. The

average per-share open-market price of the stock rose

steadily, as shown below:

Year $

1933 8.23

1934 9.39

1935 11.61

1936 15.54

1937 20.83

The price fell off during the 1938 slump, but this was

just one of the sporadic tremors. I not only held on to the

shares I owned, but bought more.

My confidence was fully justified in the years that

followed as the value of the stock increased many, many

times, and I— along with all the other stockholders—also

collected handsome dividends.

In May 1932, I also started purchasing Petroleum

Corporation stock. In that month, I bought 10,000 shares at

$3.45 per share. I continued to buy steadily until, by

September 14 1933, I held a total of 190,000 shares. In that

month, the shares were worth nearly $15 each; the average

per-share cost of my 190,000 shares was only $6.537.

I have reached back to the Depression era for two

examples based on my own expe

riences. I could cite others

from that period and from su

bsequent ones. Some stocks I

own today are worth more than 100 times what I originally

paid for them. But many other investors have had even

greater successes. More examples would serve only to

further underscore the same basic truth, one that every

investor and would-be investor would do well to paste in his

hat:

Sound stocks, purchased

for investment when

their prices are low and held for the long

pull, are very likely to produce high profits

through dividends and

increases in value.

This is a self-evident “secret” of successful investment

that vast numbers of people disregard. There are other not-

so-secret secrets that investors would do well to learn and

consider as inflexible rules in their stock market dealings.

Highly important among them is the axiom that no one

should ever buy a stock without knowing as much as

possible about the company that issues it. In more cases

than legitimate brokers would care to count, such so-called

investors have insisted on buying large numbers of shares

in companies without having the foggiest notion of what

those companies do or produce.

As I see it, the average person should consider the

purchase of common stock as the investment of surplus

capital for the purpose of earning an annual return on that

capital and of eventually increasing the capital as much as

possible.

The average individual begins

“investing” by opening a

savings account or by buying insurance or annuities. He

usually graduates to buying Government bonds. Later,

when he is more experienced and sure of himself, he may

decide to invest in common stocks. If and when he does so,

he should follow certain definite rules for his own

protection and benefit.

In the main, the average investor should consider

buying only such common stocks as are listed on a major

stock exchange. There are many good reasons for this.

Some unlisted stocks are worthless, bogus shares peddled

by fly-by-night companies. Even when the unlisted stocks

are legitimate the buyer often finds that he is “locked in”

with his investment; it is frequently difficult to sell an

unlisted security.

The person who buys or sells listed stocks can always be

certain he is paying—or receiving—a price that is fair and

bona fide to the extent that it has been set by buyers and

sellers according to the law of supply and demand in a free

market place. The same cannot always be said for unlisted

stocks, which may be pegged at artificially high prices or, in

some cases, have no value at all.

Common stocks should be purchased when their prices

are low, not after they have risen to high levels during an

upward bull-market spiral. Buy when everyone else is

selling and hold on until everyone else is buying—this is

more than just a catchy slogan. It is the very essence of

successful investment.

History shows that the overall trend of stock prices—

like the overall trend of living costs, wages and almost

everything else—is up. Naturally there have been and

always will be dips, slumps, recessions and even

depressions, but these are invariably followed by recoveries

which carry most stock prices to new highs. Assuming that

a stock and the company behind

it are sound, an investor

can hardly lose if he buys shares at the bottom and holds

them until the inevitable upward cycle gets well under way.

Withal, the wise investor realizes that it is no longer

possible to consider the stock market as a whole. Today’s

stock market is far too vast and complex for anyone to

make sweeping generalized predictions about the course

the market as such will follow.

It is necessary to view the present-day stock market in

terms of groups of stocks, but it is not enough merely to

classify them as, say, industrials or aircrafts, and so on.

This is an era of constant and revolutionary scientific and

technological changes and advances. Not only individual

firms, but also entire industries must be judged as to their

ability to keep pace with the needs of the future. The

investor has to be certain that neither the products of the

company in which he invests nor the particular industry

itself will become obsolete in a few years.

In the early part of the century, farsighted individuals

realized that automobiles had more of a future than buck-

boards, that automobile-tire manufacturers’ stocks were

better investment bets than the stocks of firms that

manufactured wagon wheels.

The trolley-car industry was a good bet—until trolley

cars began to be supplanted by buses. Airplane makers who

insisted on producing nothing but canvas-covered planes

after the day of the all-metal airplane dawned had little

future. Today, the manufacturer of jet or turboprop

transport planes is much more likely to be in business and

make money than one, say, who insisted on turning out

trimotored, piston-engined transports.

It is indeed surprising that so many investors fail to

recognize business situations only slightly less obvious than

these dated or farfetched examples. They will buy stocks in

faltering or dying firms and industries and ignore tempting

opportunities to buy into companies and industries that

cannot help but burgeon as time goes on.

It follows that the investor must know as much as he

possibly can about the corporation in which he buys stock.

The following are some of the questions for which he should

get satisfactory answers before he invests his money:

What is the company’s history: Is it a solid and

reputable firm, and does it have able, efficient and

seasoned management?

Is the company producing or dealing in goods or

services for which there will be a continuing demand in the

foreseeable future?

Is the company in a field that is not dangerously

overcrowded, and is it in a good competitive position?

Are company policies and operations farsighted and

aggressive without calling for unjustified and dangerous

over-expansion?

Will the corporate balance sheet stand up under the

close scrutiny of a critical and impartial auditor?

Does the corporation have a satisfactory earnings

record?

Have reasonable dividends been paid regularly to

stockholders? If dividend payments were missed, were

there good and sufficient reasons?

Is the company well within safe limits insofar as

both long- and short-term borrowing are concerned?

Has the price of the stock moved up and down over

the past few years without violently wide and

apparently inexplicable fluctuations?

10. Does the per-share value of the company’s net real-

izable assets exceed the stock exchange value of a common

stock share at the time the investor contemplates buying?

Many stock buyers have failed to ask these questions. In

some cases, they bought the stocks of companies that had

not shown a profit for some time. But the issues would “get

hot,” as speculators are wont to say, and multiply several

times over their issue price within a matter of weeks or

even days. Then, someone would realize that the heat was

being generated solely by irrational buying—and the prices

would plummet.

I repeat that I personally believe that selected—and I

want again to emphasize the word

selected

—common

stocks are excellent investments. There are innumerable

fine buys on the market today. Among them are many

stocks issued by companies with net realizable assets two,

three, four and even more times greater than the stock

exchange value of their issued shares.

What does this mean to the investor? Well, for example,

let’s suppose that the mythical XYZ Corporation has

realizable assets with a net value of $20,000,000. At the

same time, it has 1,000,000 shares of common stock

outstanding and the stock is se

lling at $10 per share. The

arithmetic is simple. The $20,000,000 net value of the

company’s realizable assets is double the total $10,000,000

value of its outstanding common shares. Thus, anyone

buying a share of the XYZ Corporation’s common stock at

$10 is buying $20 worth of actual, hard assets.

Such situations are not nearly so unusual as one might

imagine—and the shrewd, seasoned investor takes the time

and trouble to seek them ou

t. Occasionally—though admit-

tedly such instances are rare—especially astute investors

discover companies that have undistributed surpluses

equal to a sizable percentage of the market value of the

outstanding common stock. Anyone buying stock in such a

company is actually buying an amount of money equal to a

goodly portion of his investment, as well as a share in the

corporation’s other assets.

I might point out, however, that the exact opposite may

be true, and that the investor will still be safe. An

individual does not necessarily have to buy stocks in a

company whose vaults are bulging with cash in order to

make a sound investment. There are many times when an

entirely healthy company w

ill be very short of cash.

Another valuable investment secret is that the owners of

sound securities should never panic and unload their

holdings when prices skid.

Countless individuals have

panicked during slumps, selling out when their stocks fell a

few points, only to find that before long the prices were

once more rising.

The professional or experienced semiprofessional

investor has little in common with speculators who

hopefully play the market when prices are spiraling up.

The veteran investor objectively looks for bargains in

growth stocks—which he buys and holds, and from which

he generally reaps handsome profits over a period of years.

He banks on the climate—and makes all necessary

allowances and takes all precautions so that he can ride out

any stock market storms.

There is still a lingering misc

onception that the small or

amateur investor is at the mercy of the big investors and

the Wall Street financiers. This might have been the case

in the dim, distant and unlamented days of Jay Gould, but

nothing could be further from the truth today. No ruthless,

rapacious Wall Street tycoon can rig the market or corner

the stocks of an entire indust

ry these days. For one thing,

stock market transactions are closely regulated by such

highly efficient and potent watchdog organizations and

agencies as the Federal Securities and Exchange

Commission—the SEC. For anothe

r, the common stocks of

most large corporations are ow

ned by thousands and tens of

thousands of individuals, or

ganizations, mutual fund

groups and so on. “Big” investors seldom own more than a

comparatively small percentage of a large corporation’s

common stock.

If anything, it is the professional investor who is at the

mercy of the speculator and the amateur—at least in the

sense that the latter categories of stock buyers and sellers

set the pattern for the market.

The professional investor purchases stocks on what

might be termed a scientific, or at least a cerebral, basis.

He analyzes facts and figures objectively and with great

care and does his buying for purposes of long-term

investment. He is, in effect, banking that the stocks he buys

will increase appreciably in value over the next few or

several years.

It is the emotional nonprofessional investor who sends

the price of a stock up or down in sharp, sporadic and more

or less short-lived spurts. A politician’s speech, an ivory-

tower pundit’s pronouncements or prophecies, a newspaper

item or a whispered rumor—such things are enough to

trigger wildly enthusiastic buying sprees or hysterical

orgies of panicky selling by thousands of self-styled

investors. The professional investor has no choice but to sit

by quietly while the mob has its day, until the enthusiasm

or the panic of the speculators and nonprofessionals have

been spent.

The seasoned investor does not allow temporary fluctu-

ations in stock-market prices to influence his decisions to

any great extent. Usually, he waits until prices return to

approximately the levels at which he wants to buy or sell.

He is not impatient, nor is he even in a very great hurry,

for he is an investor—not a gambler nor a speculator.

People often ask me what specific advice I would give to

individuals who have various amounts—$1000, $10,000,

$100,000 or even more—to invest in common stocks. My

answers are always the same. Whether I had $100 or

$1,000,-000 to invest, I would consider buying

only

such

common stocks as are listed on a major stock exchange. I

would apply the rules and tests I’ve enumerated and select

the soundest and most promising growth stocks. And, I

might add, I would certainly ignore the advice of promoters

and theorists who peddle harebrained formulas or “secret”

methods for making huge and quick profits on the stock

market. There has been a spate of

How to Get Rich

Overnight

books in recent years. Seasoned financiers and

investors laugh at them—or rather, they feel only pity for

the gullible individuals who follow the “advice” contained in

such tomes. The May 1962 Wa

ll Street collapse pulled

down many of these “blinkered” speculators, so its history

should be worth examining.

In order to achieve any understanding of that collapse, it

is helpful to first quickly trace the course of the market

over the preceding 12 years. The easiest way to do this is by

following the Dow-Jones industrial average.

At the 1950 low, the Dow-Jones industrial average stood

at 161.60. It climbed to 293.79 by the end of 1952, dropped

to 255.49 in mid-1953, then climbed steadily to 521.04 in

1956, from which level it drifted down to around 420 at the

end of 1957.

From 420 in 1957, the Dow-Jones average rose to well

over 650 in 1959, made some up-and-down zigzags and hit

a late-1960 low of 566.05. From that base, it shot up to a

then all-time peak of 734

.91 on December 13, 1961.

As the market moved upward through 1961, some Wall

Street veterans dusted off the oft-quoted pre-1929 crash

saying that the stock market was discounting not only the

future, but the hereafter as well.

Many years ago, the per-share price

vs.

per-share

earnings ratio was widely—though unofficially—adopted as

a reliable rule-of-thumb indicator of stock values. “Ten

times earnings” was long considered the maximum

permissible price one could pay for a stock and still

reasonably expect to make a profit.

Then, in the late 1920s, GM-Du Pont’s John J. Raskob—

whose outlook was judged quite bullish—ventured the opin-

ion that certain stocks might be worth as much as 15 times

their per-share earnings. After the 1929 crash, ratios were,

of course, very much lower and, even as late as 1950, the

price-earnings ratios of the stocks listed in the Dow-Jones

industrial index averaged out to about 6:1.

Views on the price-earnings ratio underwent

considerable revision in recent years. Some knowledgeable

investors allowed that in a rapidly burgeoning economy,

stocks of especially healthy companies might reasonably

sell for as much as 20 times their per-share earnings. Other

professional investors argued persuasively that when

healthy companies had tangible assets with net, per-share

replacement or liquidation values in excess of per-share

prices, the importance of the price-earnings ratio would

logically dwindle.

But few seasoned investors approved such situations as

developed in 1960-1962, when fr

enzied buying drove prices

so high that some issues were selling for more than 100

times their per-share earnings. In more than a few

instances during the 1960-1962 period, staggering prices

were paid for the stocks of companies that had only

negligible assets, questionable potentials—and that hadn’t

shown much in the way of profits for a considerable time.

It has been suggested that the boom that began in 1960

was caused by people buying stocks as a hedge against

inflation. If this is true, the insane inflation of certain

common-stock prices was an extremely odd way to go about

it. But the hedge theory appears even less valid when one

remembers that buyers consistently ignored many fine

stocks that, by any standards of measurement, were

underpriced

and concentrated on certain issues,

continuing to buy them after their prices had soared out of

sight. All evidence inclines the observer to believe that the

great mass of non-professional buyers was obeying a sort of

herd instinct, following the crowd to snap up the popular

issues without much regard for facts. Many people were

doing their investment thinking—if it can properly be

called that—with their emotions rather than with their

heads. They looked for lightning-fast growth in stocks that

were already priced higher than the limits of any genuine

value levels to which they could conceivably grow in the

foreseeable future.

It is an old Wall Street saw that the stock market will

always find a reason for whatever it does—after having

done it. Innumerable theories have been advanced to

explain why the market broke on May 28, 1962. The blame

has been placed on everything from “selling waves by

foreign speculators” to the Kennedy Administration’s

reaction to the aborted steel industry price increase—in

fact, on everything but the most obvious reasons.

The factors that bring on financial panics are many and

varied. For example, in 1869, the cause was an attempted

corner on gold. In 1873 and 1907, bank failures started the

trouble. In 1929, the stock market was vastly overpriced,

and the general state of American business and the rate of

America’s economic expansion were such as to justify little

or none of the stock buying that carried prices to the

towering peaks from which they inevitably had to fall.

Despite all the efforts that ha

ve been expended to draw a

close parallel between the 1929 crash and the 1962 price

break, the two have practically nothing in common.

True, some segments of the stock market were grossly

overpriced in 1960-1962; far too many stocks were priced

far too high. But the nation’s business outlook was

generally good in 1962, and the economy was expanding at

a merry clip. There were no hidden, deep-down structural

flaws in the economy such as there had been in 1929.

There were other great differences. In 1929, stock specu-

lation was done mainly on borrowed money; shares were

purchased on the most slender of margins. Thus, when

prices collapsed, credit collapsed, too.

Then, of course, there is the most important difference of

all, the one the calamity howlers conveniently forgot. May

28, 1962, was not a crash. It was an adjustment—albeit a

somewhat violent one.

As I’ve said, some stocks were selling for more than 100

times their earnings during the height of the 1960-1962

boom. Now, it would be rather difficult for a company to

expand enough to justify stock prices that were 100 times

the company’s per-share earnings. Even assuming that

every penny of the company’s earnings were paid out in

dividends to common-stockholders, the stockholders would

still be receiving only a one-percent return on their

investment. But if all earnings were distributed in

dividends, there would be no money left for the company to

spend on expansion. That, of course, would effectively

eliminate any possibility of capital growth. Yet, even with

these glaringly self-evident truths staring them in the face,

people bought overpriced stocks.

Such were the difficult situations that developed—and

that caused the stock market to fall. Experienced investors

should have been able to read the warning signals loud and

clear long before the May 28 break took place.

As I stated previously, the Dow-Jones industrial average

shot to its all-time high of 734.91 on December 13, 1961.

The downward movement began immediately afterward

and continued through December 1961 and January 1962.

There was a brief recovery that continued until March,

when the Dow-Jones average edged up over 720, but the

graph line shows the recovery was an uncertain, faltering

one. The downward trend was resumed in March—and the

graph line from then on makes a steep descent that is

broken by only a few spasmodic upward jogs.

The May 28, 1962, price break had its beginnings in

December 1961. The downward adjustment was evidently

needed and unavoidable. That it culminated in the sharp

price plunge of May 28 was due to the emotional reaction—

verging on panic—shown by inexperienced investors who

were unable to realize that what was happening

had

happen and, what was worse, who understood almost

nothing of what was going on around them. To paraphrase

Abraham Lincoln,

all

stock market investors cannot fool

themselves

all

of the time. The awakening had to come—

and it did.

The anatomy of a stock market boom-and-bust such as

the country experienced in 1962 is not too difficult to

analyze. The seeds of any bust are inherent in any boom

that outstrips the pace of whatever solid factors gave it its

impetus in the first place.

An old and rather corny comedy line has it that the only

part of an automobile that cannot be made foolproof by a

safety device is the nut that holds the wheel. By much the

same token, there are no safeguards that can protect the

emotional investor from himself.

Having bid the market up irrationally, these emotional

investors became terrified and unloaded their holdings just

as irrationally. Unfortunately, an emotionally inspired sell-

ing wave snowballs and carries with it the prices of all

issues, even those that should

be going up rather than

down.

Withal, I believe it is absolutely essential for the

American public to bear in mind that:

The nation’s economy was relatively sound on Friday

afternoon, May 25, 1962, when the New York Stock Ex-

change closed for the weekend.

The U.S. economy was just as sound on the following

Monday morning, when the stock exchange reopened.

The economy was basically no less sound when

trading ended on that hectic Monday. Few—if any—

industrial orders were canceled. Few—if any—jobs were

lost. Few—if any— business establishments were forced to

close their doors. Few —if any—investors, large or small,

were completely wiped out as so many had been in 1929.

I realize that all this is scant comfort to those who lost

money when stock prices fell on May 28. It can only be

hoped that they will profit

from the painful lesson.

The wise investor will recognize that many stocks being

offered on the market are still considerably

underpriced.

For example, there are many issues selling for as little as

one-third or even one-fourth the net, per-share liquidation

values of the issuing company’s assets. To understand what

this can mean to the stockholder, consider the case of the

Honolulu Oil Company.

A few years ago, the directors and stockholders of the

Honolulu Oil Company decided

for reasons of their own to

dissolve the company. One comp

any in which I hold a sub-

stantial interest and another oil company learned of this

decision and together signified their desire to buy Honolulu

Oil’s assets.

The stockholders of Honolulu

Oil had their choice of two

ways in which they could sell their company’s assets. First,

they could sell their stock to the two buying companies. Or,

alternatively, they could hold their stock, sell the actual

assets and distribute the proceeds among themselves before

formally dissolving their company.

Honolulu Oil’s shareholders chose the latter method.

The company’s stock was selling at around $30 per share—

but, so valuable were its tangible assets, that the price the

buying companies paid for them worked out to about $100

per share. This, of course, was the sum each Honolulu

stockholder received for each share he held when the

company was dissolved. In other words, the cash value of

Honolulu Oil’s assets was more than three times as much

as the total value of its issued stock.

Naturally, shareholders can reap this particular type of

windfall profit only when the company concerned is

dissolved. But it should be plain to see how much added

safety there is in investing in a company that has tangible

assets with a net liquidation value greater than the value

of its stock. If, as an exampl

e, the net liquidation value is

three times that of the stock, then, in effect, each dollar of

the stockholder’s investment is secured by three dollars’

worth of realizable assets.

There are more such companies than one might imagine.

They can be found in various industries, but I am most

familiar with companies in the petroleum industry and,

more particularly, with thos

e engaged in the business of

producing oil.

Several oil stocks issued by sound, thriving companies

are selling at prices well within any reasonable price-

earnings ratio limits. Some of these oil companies also have

tangible assets worth three, four and even more times the

total value of their issued stock. It might be of interest to

consider just one reason why this is so. Producing oil

companies normally carry their oil and gas leases at cost on

their balance sheets. A lease for which a company paid, say,

$25,000 is carried at that figure even though it covers a

property on which the proven crude-oil reserves in place

are, as is entirely possible, 50,000,000 barrels. On the

books, the lease is shown as an asset worth $25,000, even

though any other producing oil company would gladly pay

several million dollars to take it over. The implications of

this bit of accounting intelligence will not be lost on the

alert investor. Similar situations exist in many other

industries, and the astute investor will find them and profit

from them.

My own confidence in the stock market has not been

shaken by the May 28 price break nor by later drops. I am

still a heavy investor in common stocks. I’m still banking—

to the tune of many millions of dollars—on the healthy

climate of the American economy and the bright future of

American business.

This, in essence, is the on

ly advice and counsel a

successful, experienced investor can give to anyone who

wishes to reap the benefits of a boom and to avoid the

losses of a bust.

A REAL APPROACH TO

REAL ESTATE

Almost every American family has its tales of fabulous

real estate opportunities that were missed or ignored by

one or another of its members at some time in the past.

“Forty years ago, my grandfather turned down a chance

to buy 1000 acres of land at $10 per acre. Today, that land

is worth $30,000 an acre . .

“I could have bought an empty lot at the south end of

Main Street for $750 in 1932. Last week, that same lot sold

for $20,000 . .

“We sold our house for $5000 just before World War Two.

Now the land on which the house stood is alone worth more

than ten times that amount . .

Such stories are to be heard whenever real estate crops

up as a subject for discussion. I have more than a few to tell

about my own family—and about myself.

In the 1880s, the city of Detroit, Michigan, had a popu-

lation of about 116,000. My mother’s brother-in-law,

Travers Leach, owned a 160-acre farm outside what were

then Detroit’s city limits. Sometime before the turn of the

century, Leach sold the farm for a few thousand dollars,

making what he considered a fair profit on the sale.

Unfortunately, Travers Leach could not foresee that by

1920 the population of Detroit would soar to nearly

1,000,000 and that a mushrooming urban area would

engulf his farmland. Had he held onto his farm, he and his

heirs would have become multimillionaires. By 1920, each

of his 160 acres was worth many, many times what the

entire property had been worth in the 1890s. Today, of

course, a 160-acre tract in what has become virtually the

heart of Detroit would fetch an astronomical sum.

In 1906, my father could have purchased all of 70-

square-mile Santa Catalina Island off the Southern

California coast for only $250,000. He turned the offer

down. Catalina Island was later purchased by the Wrigley

interests and transformed into one of the best-known and

most profitable resort areas on the West Coast. For years,

the value of Santa Catalina Island has been calculated in

the tens of millions of dollars.

During the Depression years, I could have picked up

huge parcels of undeveloped la

nd in Southern California

and elsewhere for only a few do

llars per acre. In those days,

the tracts were far outside the limits of any incorporated

town or city. Since 1945, the towns and cities have grown

with lightning speed, spreading out in all directions. The

once practically worthless tracts have become thriving

residential or industrial areas. Much land that sold for as

little as $500 an acre—and even less—in the Depression

days now brings $50,000 and even more per acre.

But, for every such story of missed opportunity, there is

one that tells of opportunities which were recognized and

exploited to the full. It is obvious that someone ultimately

reaped huge profits from Travers Leach’s Detroit farmland.

The Wrigley interests recognized the potentials of Catalina

Island, bought it and profited

accordingly. Other men pur-

chased the tracts I turn

ed down in the 1930s and

eventually reaped gigantic profits by subdividing and

developing the property.

My father may have bobbled his chance to buy Catalina

Island at a bargain price, but he made many other shrewd

and profitable real estate investments. In 1907, Father

bought some land on Wilshire Boulevard in Los Angeles for

about $10,000 and built our family home on it. The land

was then well outside the city’s built-up areas—so much so

that it was surrounded on all sides by meadowland, and the

nearest paved road was more th

an a mile distant. In the

1920s, he was offered $300,000 for the property, but he re-

fused to sell. The property, which is still owned by “Getty

interests,” is now worth somewhere in the neighborhood of

$2,000,000.

I, myself, have bought real estate at rock-bottom prices

and have seen the values of the properties increase in my

own lifetime—often even within a few years. On one occa-

sion some years ago, for example, I purchased several dozen

acres of land in Malibu, Ca

lifornia, paying about $150,000

for the property. Today, real estate brokers tell me, I could

probably realize $4,000,000 on my investment if I were to

subdivide and sell the land.

I’m seldom eager to sell simply for the sake of making a

quick profit. I always remember the lease I bought for

$8000 from a friend who was doubling his money overnight.

Later, I drilled four oil wells on that property and, in the

next 12 years, those four wells showed an excess recovery—

a net profit—of $800,000.

I have not cited these examples of my successful real

estate dealings in order to boast or gloat. I mentioned them

solely to show that real estate

can

be a highly profitable

form of investment.

At first glance, it might seem

that I consider it easy to

make money in real estate. I probably appear to be

expounding a theory that one needs only to buy cheap land

far outside a city’s expanding li

mits and then wait until the

city grows out to meet the property, and that the buyer will

make money if he can hold onto his property long enough.

Unfortunately, it’s seldom as simple as that. The real

estate investor can never be certain that cities will

mushroom in any particular direction, nor even that they

will grow at all. If he buys property within the city, called

income property, he has no assurance that it will increase

in value. It may, in fact, lose value if, for example, a

neighborhood ceases to be fashionable.

Then, no matter how low the price of an undeveloped

property may be, its purchase still entails a capital outlay—

and the capital sum may have to

be tied up for a very long

time without producing any income before property values

begin to rise. Also, there are property taxes, assessments

and other expenses which must be paid, and these can add

up to large sums over the years.

Some time ago, a friend of mine bought 200 undeveloped

acres at the northern edge of a Midwestern city, paying

$100,000 for the land. He was qu

ite correct in his basic as-

sumption that the city would expand and grow—but he

could not foresee that when it did, public taste and

preference would cause the growth to take place in the

city’s southern and eastern sections.

My friend still owns the property, which is worth no

more today than it was when he bought it. His $100,000

investment has brought him absolutely no income for more

than a decade, and it has been necessary for him to pay

annual property taxes on the acreage. In addition, he has

spent sizable amounts in efforts to attract buyers for the

property— all to no avail. He has already suffered

considerable financial loss. He will continue to lose money

on his investment unless he can sell the land, for there is

no indication that the city’s northern suburbs will ever find

favor with homeowners or industrial firms.

In short, a prospective investor must always bear in

mind that while real estate can be a highly profitable form

of investment, it can also prove quite risky. Often there are

many variable factors which affect the value of a property,

and these factors are not always obvious even to

experienced eyes. It is sometimes difficult to appraise the

value of a given property accurately, and mistakes in

appraisal can be costly. Another potential drawback to

investing heavily in real esta

te is that an individual who

ties a large amount of his capital up in real property and

then has a sudden need for cash

may well find it difficult to

sell and realize cash quickly without incurring considerable

losses.

In real estate, as in the stock market, it is the

intelligent, patient investor who is most likely to make

money in the long run. The real estate speculator, like his

stock market counterpart, may make some short-term

profits, but he takes much greater chances and his profits

will never be anywhere near those of the investor.

There are two kinds of real estate investors. The first in-

cludes those who buy at very low prices before an upward

trend begins and hold onto their properties for many years,

patiently waiting for values to rise to high levels. They may

buy undeveloped land with, po

ssibly, a view to subdividing

it, or they may purchase income property which they hope

will eventually increase in valu

e, even while it produces

regular returns on their invest

ed capital. The second type

of real estate investor buys soon after a real estate boom

has already begun. He pays more for a property than

investors in the first category because prices are already on

the way up when he gets into the market. On the other

hand, he immobilizes his capital for much shorter periods.

Naturally, everyone would like to be the first kind of

investor. The trouble is that not too many people have large

amounts of capital they can invest and allow to lie more or

less fallow for long periods. Also, there aren’t many people

who can foresee a boom early enough or gauge its duration

with sufficient accuracy to take advantage of it.

One man I know correctly anticipated the post-War

housing shortage and bought several large apartment

houses at comparatively low prices in 1943. In 1950, he was

offered 80 percent more than he had paid for the properties.

“I’m going to sell out,” he announced to his real estate

broker. “I’ve made a fairly good income on my investment

over the last seven years, but I figure I had best take my

profit now. I don’t believe that property values can possibly

go any higher than they are.”

“I think you’re making a big mistake,” the broker cau-

tioned. “If I were you, I’d hold on. Property values will go

considerably higher in the next few years. You’re going to

miss a wonderful opportunity if you sell.”

The man ignored his broker’s prophetic advice and sold

his apartment houses in 1950. He has been regretting his

decision ever since. Today, the properties are worth at least

three times what he paid for them in 1943.

Many investors have made the same error during the

current real estate boom. They sold out prematurely

because they were convinced the peak had been reached or

that it would be reached within a very short time. They

feared the consequences of the bust they were certain

would follow. Their reasoning and their fears were based on

past experiences or on recollections of the histories of such

ill-starred real estate booms as those which drove real

property prices into the stratosphere in Florida, California

and elsewhere in the 1920s.

I, personally, do not believe there is any similarity

between those booms and the one which began at the end of

World War Two and is still continuing today. The great real

estate balloons which were in

flated—and then burst so

disastrously—during the Roaring Twenties were almost

entirely fueled by purely speculative buying and selling.

Despite all the frenzied activity

of property trading, there

was little genuine desire for ownership on the part of the

speculators. In those days, a piece of property could—and

often did—change hands dozens of times, but not because

anyone anywhere along the line actually wanted to own

land, build a home or operate income property. Each

momentary “owner” of a piece of property had but a single

thought in his mind—to sell as soon as he could and to

make as large a profit as possible.

For example, there were an estimated 2000 real estate

offices and 25,000 real estate salesmen in Miami, Florida,

alone in 1925. Theoretically, they sold property—ranging

from single lots to huge tracts of land. In actual practice, all

that most of them sold were “binders.” The buyer paid a

small percentage of the agreed sales price of a property and

received a receipt which constituted a binder; the property

was then his until the next payment fell due 30 or 60 days

later. The overwhelming majority of buyers sold their

binders just as soon as they could realize a profit on them.

With prices spiraling wildly, they seldom had to wait more

than a few days—or at most, a few weeks—before finding

another feverish speculator who would give them more

money than they’d paid.

There was more truth than humor in the following tale

that made the rounds at the height of the 1920s* Florida

land boom. According to the story, a Miami realtor had

taken a prospective buyer out to look at a dismal and

utterly useless swamp tract. The client stared at the

forbidding landscape in dismay.

“No one could ever build anything on this land!” he said.

“It’s worthless!”

“So what?” the realtor shrugged. “Land down here ain’t

for ownin’; it’s for tradin’ . . . !”

The post-World War Two real estate boom is entirely dif-

ferent from those which took place during the Twenties.

There is a solid demand for building sites, for homes, com-

mercial and industrial sites and buildings and income prop-

erties. The people and the firms who are in the market for

such properties are serious buyers. They want to buy or

build houses, stores, factories—or whatever—for their own

use or for the purpose of leasing or renting them to others

in order to earn income for themselves. In short, they really

want to

own

the properties they buy. The number of out-

and-out speculators today is, as far as I can see, negligible.

Current real estate prices aren’t high because they have

been driven up by irresponsible speculation, as was so often

the case in the past. Prices have risen because a constantly

increasing population with money to invest has created—

and continues to create—a great demand for real property

of all kinds in almost every part of the country.

I, for one, do not anticipate any major break in real

estate values in the foreseeable future. Some soft spots may

develop here and there and there may be tendencies to

oversell or overbuild in some areas, but I believe the over-

all trend in real estate will continue to be up for a

considerable time to come.

Of late, the companies in which I hold substantial in-

terests have made sizable investments in real estate. The

Tidewater Oil Company Building on Wilshire Boulevard in

Los Angeles was completed not long ago at a cost of nearly

$10,000,000. This building is de

signed for expansion after

restrictive zoning regulations now in force have expired.

The new 15-story Skelly Oil Company Building in Tulsa,

Oklahoma, also represents a $10,000,000 investment. The

even newer 22-story Getty Oil Company Building in New

York City involved an investment of some $14,000,000.

I would imagine that the real estate investments these

companies and I have undertaken in recent years provide

convincing demonstrations of the confidence my associates

and I have in the reality of real estate values.

Investors can find many potentially profitable

opportunities in real estate today. They must, however,

know what they are doing before and after they invest their

money if they hope to reap profits. I think that I’ve already

indicated that real estate is not always the safest form of

investment for the inexperienced. This applies even to the

most common type of real estate investment—home buying

or building.

The home builder or buyer should take great care in

selecting the site or house he buys. He should, for example,

acquaint himself thoroughly

with the zoning regulations

which govern building and the use of property in the neigh-

borhood or section in which the property he wishes to buy is

located. It’s not enough merely to ask the real estate

salesman or the neighbors. Many a happy family has

moved into its vine-covered dream cottage only to wake up

one fine morning and discover that a glue factory or

sewage-disposal plant was being built next door.

The home builder or buyer should also know something

—and the more the better—about building. He should be

able to judge—at least within reasonable limits—whether

or not a house is built well. If he doesn’t know about such

things himself, he should most certainly have someone who

does

know make an inspection of the house for him before

he buys, or keep an eye on the

progress of construction if he

builds.

As for the professional or semiprofessional real estate

investor, in order to have any hope of success, he must have

knowledge of a vast range of subjects running the alpha-

betical gamut from architecture to zoning laws. He should

also retain a much-better-than-average lawyer. If it’s true

that possession is nine points of the law, it’s equally true

that nine tenths of the problems involved in the possession

of real property are legal ones.

It’s not possible to list any specific, universally

applicable rules to guide the real estate investor. There are

far too many different types of real property—ranging from

single lots in uninhabited areas to entire complexes of

residential, industrial or co

mmercial buildings. The rules

investors follow—or should follow—vary widely according

to the type of property involved, the use which is to be

made of it and local and even individual considerations.

Nonetheless, there

are

some general rules and pointers

which provide a valuable checklist of things to do—and not

to do—for anyone who is thinking of making an investment

in any kind of real estate.

Make a thorough study of the real estate market and

its prospects in your area before you buy. Naturally, you

should seek to buy when prices are low and the indications

are that values will rise. Always take into consideration

such

factors as the rate of population increase and the general

prospects of business in the area. There is no quicker way

to lose money in real estate than by investing it in property

located in declining areas.

Know or learn as much as possible about every

aspect of the particular use to which you intend putting the

property you wish to buy. In other words, don’t buy a house

unless you’re certain that it’s suited to the requirements of

your family and that it’s well built. Don’t plan on having a

house built unless you know something about building—or

at the very least until you’ve found an architect and a

building contractor in whom you have complete confidence.

Don’t consider buying, say, a motel unless you know

enough about motel management to have a fair chance of

operating it profitably—or agai

n at the very least, until you

know enough to efficiently supervise anyone you hire to run

the motel for you.

Deal only through licensed and reputable real estate

brokers. Beware the fast-talking, high-pressure real estate

salesman who promises everything—verbally. He is

probably a fly-by-night who doesn’t much care what he sells

you or anyone else.

If you buy a property with a view to improving it or

building on it, be certain that you have adequate capital or

are able to obtain adequate financing to complete the

project.

If at all possible, always obtain at least one

impartial, third-party appraisal of any property before you

buy it.

If buying a building of

any kind—be it a Cape Cod

cottage, 1000-room hotel or Willow Run-size factory—have

it inspected carefully by qualified and disinterested

architects or builders before entering into any building

commitments. If buying an existing income property such

as an apartment house, have the owner’s books checked by

a disinterested accountant. If

the owner of the building or

the income property balks at such inspections, look out.

Whether you’re in the market for a cabin site or a

skyscraper, shop around widely and cautiously. Unless you

happen to run across an irresistible bargain you must snap

up immediately, take your time about making up your

mind. Don’t allow yourself to be stampeded into paying any

deposits or binders until you’re absolutely certain you’ve

found the property you want. Remember that the purchase

of real property usually involves heavy capital investment;

don’t take unnecessary chances with your money.

Make certain you have the best available legal advice

before signing any agreements, contracts or other

documents. I do not mean to suggest that there is anything

dishonest or misleading in the majority of such documents.

On the other hand, few laymen are able to follow the

labyrinthine mazes of legal terminology which are used in

them. To avoid misunderstandings, it is always best to have

an attorney translate the “whereas”-studded fine-print

clauses into coherent everyday English. Even seasoned real

estate investors sometimes fail to have this done—and the

ensuing squabbles between buye

rs and sellers usually wind

up in courtrooms.

Always insure the title to any property you buy. Even

the most meticulous title search

may fail to turn up all the

pertinent facts about the histor

y of a property. The cost of

title insurance is negligible. The expense of fighting a

lawsuit

over a clouded title can be staggering—as many real estate

investors, I among them, have discovered to their regret.

10.

Once you’ve bought your property, treat it as a

long-

term investment, not as a short-term speculation. You’ll

find

that—99 times out of a hundred—you’ll make much greater

profits that way. In fact, if yo

u wish to make money in real

estate, always think in terms of investing and never in

terms

of speculating.

These ten pointers do not, by any means, comprise an

all-inclusive guide to successful real estate investment. Nor

does the individual who follows them—however faithfully—

have any guarantee that he will make a profit when he

invests his money in real property.

But, I believe that the person who observes these rules

goes a long way toward eliminating a significant portion of

the most common dangers inherent in any transaction

involving real property. And that, in itself, is sufficient to

give him a head start on the road to successful real estate

investment.

FINE ART: THE FINEST

INVESTMENT

Newspaper editors seldom allot front-page space to art—

and more’s the pity. But art made headlines throughout the

world not long ago, when the great Erickson collection of

old masters was sold at auction in New York City. Among

the 24 paintings that had been collected by the late adver-

tising magnate Alfred W. Erickson and that had been

ordered sold by the executors of his widow’s estate, were:

one major and two lesser Rembrandts, a Fragonard, a

Crivelli and works by Holbein the Younger, Vandyke,

Cranach the Elder and Terborch.

The major Rembrandt,

Aristotle Contemplating the

Bust of Homer,

and Fragonard’s

La Liseuse

were

exceptionally choice items over which any collector’s or

museum curator’s mouth would water. It was generally

conceded that the paintings would fetch record prices and

for weeks before the sale the entire art world buzzed with

speculation about the sums likely to be involved and who

the highest bidders would be. Top presale estimates were

$1,800,000 for the Rembrandt and $350,000 for the

Fragonard.

Actually, the amounts bid and paid at the auction were

far greater than those predicted by even the most educated

estimators.

Aristotle Contemplating the Bust of

Homer,

the only important Rembrandt not then in a

museum, was purchased by New York’s Metropolitan

Museum of Art, which paid

a resounding $2,300,000 for it.

This price was much the highest ever paid for a single

painting, twice the previous record $1,166,400 Andrew

Mellon paid the Soviet Government in 1931 to get

Raphael’s

Alba Madonna

out of the U.S.S.R. and into the

National Gallery in Washington.

Fragonard’s

La Liseuse

brought $875,000 and was

purchased for the National Gallery. This represented the

second highest price paid for a picture at an art auction

since 1959, when Rubens’

Adoration o f the Magi

was

sold for $770,000. Incidentally,

I attended that sale, going

to $560,000 before dropping out of the bidding.

The point of all this is simply that the art market is

booming and that fine art is a fine—and possibly the

finest— investment in more ways than one. But then, art

has long been a fine investment.

Alfred Erickson purchased

Aristotle Contemplating

the Bust o f Homer

from Duveen Brothers in 1928,

when he paid $750,000 for it. During the depths of the

Depression, he sold it back to the Duveens for $500,000 and

then, in 1936, bought it again for $590,000. Simple

arithmetic shows that he paid a total of $840,000 for the

picture—and that the difference between this over-all

purchase price and the most recent sale price is $1,460,000.

True, on the face of it, it appears that Erickson took a

one-third loss between the time he first bought the painting

and sold it back to Duveens’. But this must be viewed in

light of the general economic conditions prevailing at the

respective times involved. Alfred Erickson first bought in

1928, a peak-prosperity year. He sold when the Depression

was approaching its lowest lows.

To obtain a proper perspective, it is necessary to remem-

ber what happened to business and all forms of investment

during corresponding periods. Stocks plummeted, even

such bluest of blue chips as U.S. Steel, which fell from a

peak 261 3/4 to 21 1/4. In 1932, U.S. Industry was

operating at well below 50 percent of the maximum levels it

had reached before the 1929 crash. Wages paid out in 1932

were 60 percent less than in 1929; dividends paid by

companies still able to pay dividends were 57 percent less.

Considered against this background, Erickson’s temporary

33 1/3-percent loss on his painting would seem strong

verification, indeed, of my contention that art

a fine

investment.

Don’t misunderstand me. Being a collector myself, I

would be the last person in the world to suggest that Alfred

W. Erickson bought—or that any serious collector buys—

works of art for the purpose of realizing a financial profit on

their subsequent sale. I’m only too well aware that art

collectors are just that, and not art dealers.

Aline B. Saarinen, analyzing the motives of great

American art collectors, writes: “Their overpowering

common denominator is this: For each of them, the

collecting of art was a primary means of expression.”

Jacques Lipchitz, the sculptor, who owns one of the

world’s finest collections of primitive art, says, “Collecting

is for learning about the human being and the way he feels

and expresses himself, and about the material he uses to

express himself and the way he uses the material.”

I find nothing exceptionable in these opinions, but my

own views go a step or two further. Like most serious

collectors, I by no means consider the works of art I own as

inanimate ornamental possessions. To me, they are vital

embodiments of their creators. They mirror the hopes and

frustrations of those who cre

ated them—and the times and

places in which they were created. Although the artists

may be long dead, and even the civilizations in which they

worked long since disintegrated, their art lives on.

The interest and pleasure an individual takes in his col-

lection does not stem from the monetary value of the works

of art he owns. They derive from the enduring beauty of the

art and from a realization of the validity and permanence of

the fundamental values that art represents. The collector

takes pleasure in the beauty of art, and he never really

ceases to be stimulated by it.

The 16th Century Italian poet

Federico da Porto ad-

mitted he was “stupefied and overwhelmed” by what he

saw when he visited the magnificent collection of the Vene-

tian statesman-historian Marino Sanudo. Da Porto’s poem

marking the visit indicates that collectors of the 1500s were

no different from those of today—and that he, himself, was

infected by the sense of exhilaration and gratification that

Sanudo obviously possessed in no less measure than do his

modern-day collector counterparts. Wrote Da Porto:

Then u p the stairs you lead us,

and we find A spacious corridor

before us spread, As i f it were

another ocean full O f rarest

things; the wall invisible

With glorious pictures hid—no blank

appears,

But various figures, men o f every guise;

A thousand unaccustomed scenes we see.

Here Spain, there Greece, and here the

apparel fair

O f France.

It is of such stuff that collections—and collectors—are

made. The collector marvels at the wonders of the art he

owns —and he displays his

possessions proudly, sharing

their beauty with others. Cert

ainly, his principal concern is

not with the pecuniary value of his works of art—although

collectors will often stretch and even wreck their budgets to

obtain an object they desire.

Nonetheless, it remains an undeniable fact that fine art

is a fine investment. The dollars-and-cents values of

paintings, sculpture, tapestries, fine antique furniture and

virtually all forms of art have shown a marked tendency to

rise—and even soar—over the years. Much of this, of

course, is due to the increased—and still increasing—

awareness that art represents basic values that are not

only lasting, but that become more valid as time goes on.

Thus, there is competition to secure works of art—and thus

their monetary value, the price people are willing to pay for

them, rises.

The trend has not been limited to art of any particular

school, style, period or medium. A few examples taken at

random should suffice to illustrate the manner in which the

money values of art have spiraled.

In 1885, the Victoria and Al

bert Museum of London

bought more than 1000 drawings by the 18th Century

Italian master Giovanni Battista Tiepolo. Although

Tiepolo’s breathtaking frescos adorned the Labia Palace in

Venice, the Kaisersaal of the Prince-Bishop’s House in

Wurzburg, Germany, the throne room of Spain’s King

Charles III and dozens of other great homes, churches and

public buildings, his drawings were not then in vogue. The

Victoria and Albert Museum paid about ten cents apiece for

them. Today,

each drawing

would bring at least

$1500—if the museum wanted to sell them, which, of

course, it has no intention of doing.

The 19th Century English master Joseph M. W. Turner

produced many fine water-color paintings during his long

and successful career. In the 1940s, these sold for between

$500 and $1000 apiece. At the present time, a large Turner

water color will fetch anywhere up to $25,000.

Paul Gauguin’s

Te Tiai Nei Au I Te Rata

—”I

Await the Letter”—is said to have once sold for less than

$50. At an auction in 1959, the painting realized more than

$300,000. In that same year, one of Braque’s early works—

which had once been sold at auction for $15—was eagerly

snapped up by the Queensland Art Gallery at a price of

$155,000. Also in 1959, an illuminated manuscript

prepared under the direction of Matthew Paris at St.

Albans Abbey about 1250

sold for $190,000—as against

the $115,000 paid for a comparable manuscript not very

long before.

Such a list could be extended almost indefinitely and ex-

panded to include practically every medium, period and

school of art, from prehistoric figurines to contemporary

works by abstract expressionists, action painters and

representatives of the welding-torch school of sculpture—

and most certainly such things as tapestries, carpets and

fine antique furniture.

I have seen the money value of the works of art I’ve

purchased increase and even multiply several times during

the years since I acquired them.

In 1938, I purchased the historic and almost legendary

Ardabil Persian carpet, which had been made on the royal

looms of Tabriz in 1535. Moslem Persians had considered

this fabulous, ll-by-24-foot carpet so beautiful that they had

said it was “too good for Christian eyes to gaze upon.” But

“Christian eyes” had often “gazed upon” the Ardabil carpet

and had marveled at what they saw.

“It is worth all the pictures ever painted,” the American

artist James Whistler declared after seeing the Ardabil.

The carpet, a symphony of glowing colors executed with

unsurpassed artistry and fantastic in its detail, is generally

acknowledged to be one of the two finest carpets in the

Western world.

The Ardabil sold for $27,000 in 1910. Nine years later, it

was purchased by the famous art expert—dealer Lord

Duveen, who paid $57,000 for it. I bought the carpet from

Lord Duveen in 1938, paying him $68,000. I subsequently

received many offers for the Ardabil, including one of

$250,000 from Egypt’s then-King Farouk. I declined his

offer along with all the others. In 1958, the Los Angeles

County Museum—to which I had donated the carpet—

placed its value at $1,000,000, almost 40 times the price for

which it had been sold in 1910 and nearly 15 times what I

had paid for it.

In the same year that I bought the Ardabil carpet, I also

acquired the fine Rembrandt portrait of Marten Looten,

which the great Dutch master had painted in 1632. I paid

$65,000 for the picture and considered it a bargain, for I

had been quite prepared to go as high as $100,000 to obtain

it. The market value of the painting increased fantastically

through the years. How much it would fetch at a sale today

is a purely academic question, for the portrait was also do-

nated to the Los Angeles County Museum. However, the

record $2,300,000 paid for Rembrandt’s

Aristotle

Contemplating the Bust o f Homer

would seem to

indicate that

Marten Looten

would bring a price many

times greater than what I paid for it.

But one does not have to buy the works of acknowledged

old masters to obtain fine works of art—or, for that matter,

to make excellent investments.

For example, the Spanish artist Joaquin Sorolla y

Bastida lived from 1893 to 1923. In 1933, I attended an art

sale in New York City, saw some of his work and thought it

excellent. I bought ten of Sorolla y Bastida’s paintings for a

total of well under $10,000. By 1938, the world had begun

to really appreciate the artist’s talent, and the ten

paintings had risen in value to a total of $40,000. Today

Joaquin Sorolla y Bastida is ranked among the top 20

Spanish painters of all time— and I hesitate to guess what

the ten paintings I bought in 1933 would bring if placed on

sale.

Nor is it even necessary to spend thousands—or even

many hundreds—of dollars to start and build an art

collection that will almost certainly increase in value in the

years to come. There are—and always have been—many

opportunities to obtain real bargains in art.

I might add that, in some remote corner of every art col-

lector’s heart, there always lurks a secret hope of making a

discovery, of picking up a painting at a bargain price and

then learning it is really the long-lost work of some great

master. This does happen on occasion. I know, for it

happened to me.

About 25 years ago, I attended an art sale at Sotheby’s

in London. Among the objects on sale was a rather battered

Italian painting of a madonna—a work, the Sotheby

experts declared, produced by some unknown artist.

Although the madonna was badly begrimed and in a poor

state of preservation, I liked the picture; it was, I thought,

reminiscent of Raphael. I bought it—for $200.

In 1963, I decided to have the painting cleaned. The job

was entrusted to the famous firm of restorers, Thomas

Agnew & Sons. Representatives of the firm soon called me

excitedly. The painting was, indeed, the work of Raphael,

they said— and this was quickly authenticated by such

leading art experts as Alfred Scharf. The painting I

purchased for $200 has proved to be Raphael’s

Madonna

di Loreto,

painted in 1508-1509. Its real value: upwards

of a million dollars.

I’ll grant there isn’t much likelihood that the average

art buyer will pick up a $300,000 Gauguin, a $155,000

Braque or even a $1500 Tiepolo for pennies in a corner junk

shop. On the other hand, such remarkable finds as a

London art critic’s recent discovery in a Dublin shed of five

soot-blackened canvases which proved to be important

Guardi figure compositions se

rve to keep all art buyers’

hopes high.

In addition to the million-dollar

Ardabil carpet

and Rembrandt’s

Marten Looten,

J. Paul Getty has donated other extremely valuable

pieces of fine art to the Los Ange

les County Museum.

Incidentally, he

derived no tax benefits for himself by

making the gifts to

the institution.

He still has a multimillion-dollar collec

tion, but even a large part of this

has been donated to the J. Paul Ge

tty Museum. The collection includes

Boucher tapestries, rare carpets and a collection of French 18th

Century furniture which Sir James

Mann, director of the Wallace

Collection and an outstanding authori

ty on the subject,

has judged to be

finer than the one owned by the Lo

uvre. There are also Fourth and

Fifth Century,

B.C.,

Greek marbles-including some of the famed Elgin

marbles—terra cottas, bronzes, Roma

n portraits and sculpture and the

renowned Lansdowne

Hercules.

Among the paintings are works by

Titian, Lotto, Tintoretto,

Rubens, Gainsborough

and other masters. All

the items are sumptuously hous

ed and displayed in Getty’s own

magnificent Ranch-Museum on the

Pacific Coast Highway in Malibu,

California. The museum is open

to the public without charge.

Editor

Certainly, it is often possible to buy good, reasonably

priced works by lesser artists, particularly in out-of-the-

way art stores, antique shops, and even second-hand

bookstores, which are frequently excellent places to pick up

prints and etchings. Then, of course, one can shop very

advantageously for the works of talented young artists who

have not yet arrived, but who show promise. It should

hardly be necessary to point out that an artist does not yet

have to be established for his work to be good and have

lasting value.

Even people with very slender budgets can acquire works

of art that will prove excellent investments in beauty,

pleasure —and also in the financial sense. I know many

individuals who have paid modest prices for works of art

and have then seen the market value of their purchases

spiral upward.

The experiences of a journalist friend of mine provide a

trenchant four-in-one example of what an individual with a

little common sense and taste can do. This journalist

travels extensively to New York, London, Paris and Venice.

By no means an art expert and far from rich, he likes to

browse— and occasionally buy—in art, antique and

secondhand bookstores. His tastes run quite a gamut; he

buys things that please him and satisfy him aesthetically,

regardless of whether they are ancient or ultramodern. But

he shops carefully—and the collection for which he paid

about $2000 over the last six years already has a market

value of at least $8000.

Typical of his successful investments are these four pur-

chases, each made in a different

one of the four cities he

visits regularly: Six years ago, he bought three water colors

by a young Greenwich Village artist, paying a total of $140

for all three. They now have a sale value of $125 apiece.

During 1957, my friend was in London, where he found a

set of six small, neatly framed 19th Century

gouaches

which he bought for 17 guineas—$51—and for which he

was recently offered $250. In 1958, while visiting Paris, he

purchased eight early 19th Century prints for the

equivalent of $24; two years later, an American dealer

offered $150 for the set. Only last year in Venice, my

journalist friend saw—and liked—two paintings by the

young Italian artist Fioravante

Seibezzi and bought them

for 30,000 lire—about $50—apiece. Shortly thereafter,

Seibezzi had a one-man show that drew critical raves, and

the market value of the paintings jumped 300 percent—and

is still going up.

My friend has rejected all offers for his acquisitions. Al-

though he is convinced their market values will continue to

rise, this is not his reason for refusing to sell. He has the in-

stincts of the true art-loving collector. “I bought them

because I wanted to own them,” he explains. “I like them all

far too much to sell them for any price anyone is likely to

offer.”

This astute art investor’s experiences serve to

underscore the fact that many

tourists and people who

travel on business often overlook chances to invest wisely

in fine art during their travels. They have a habit of

shopping for gaudy and frequently costly souvenirs that

have little or no value. They fail to realize they could

acquire objects of considerable beauty— and of considerable

and permanent value—without expending any more effort

or money than they spend in buying the trivial.

One man I know served in Japan and Korea with the

United States Army. Mildly interested in Oriental art, he

used some of his off-duty time looking for a few good pieces

to take home. Shunning the main-street stores and tourist-

trap bazaars, he poked about in out-of-the-way shops and

market places. Spending a total of less than $300, he

acquired several pieces for which a San Francisco dealer

later offered him $1500.

Another man I know took his wife to Turkey on a holiday

in 1956. Instead of buying the tawdry wares traditionally

hawked to tourists in many Mediterranean countries, they

did their shopping carefully and off the beaten track. They

bought some ancient metal castings, figurines and carvings,

paying about $650 in all for them. Experts who appraised

the items when the couple returned to the United States

that same year fixed their immediate sale value at $1400.

In the ensuing five years, various factors served to increase

this value. By 1961, the art objects for which the couple had

paid $650 were worth $2000.

Now, none of these people are art experts. Their knowl-

edge of art is limited to what they have picked up on their

own by reading, visiting galleries and exhibitions and

browsing in art and antique shops. To them, art collecting

is simply a very pleasant extracurricular interest, a hobby

if you prefer. They enjoy having objects around them that

they consider aesthetically satisfying. They find it makes

their lives more pleasurable.

The fundamentals of art collecting are not difficult to

master. Obviously, the average person is not financially

able to go on a shopping spree for Rembrandts, Fragonards,

Gauguins or other paintings that—when and if available—

run into the hundreds of thousands or even millions of

dollars.

But even the individual who has only a very few hundred

dollars to spend can buy good works of art—objects that are

of high quality and that will retain or increase their value.

It stands to reason that the safest way to buy art is to

employ an expert to do the buying—or to buy only in the

most reputable galleries. But, by so doing, one will be

paying the peak current market prices. Also, most people

do not have the budgets to buy on the scale such

purchasing implies— and many people would rather savor

the adventure of shopping for works of art on their own.

However he does it, to buy art wisely, an individual must

first make up his mind about what mediums and periods

please him the most. He should then learn something—the

more the better—about them. There are copies and counter-

feits galore on the market—and the only way to distinguish

between them and the genuine is by knowing which is

which. (Reputable dealers will, of course, almost always

permit the prospective buyer the right to have a piece

authenticated, or will provide authoritative authentication

themselves.)

What to buy? This depends on two factors. The first is

the individual’s taste—and, if he is to buy wisely, it must be

assumed that he has fairly good taste. The second factor is

the individual’s wallet. Whatever the price range he can

afford, the art collector must al

ways strive to buy the best

he can within that range. One good item is worth a dozen—

or even a hundred—bad ones.

On the one hand, the collector must always remember

that artistic value does not necessarily follow the value set

by the market place, or vice versa. On the other hand, a col-

lector can appreciate art and revel in its beauty, yet he is

entirely justified in wanting to invest his money wisely. It

is just as foolish to throw good

money away on bad art as it

is to throw good money away on anything bad—and only a

fool would knowingly overpay for whatever he buys.

Then, to determine whether one really likes a work of

art enough to buy it, there is no better rule-of-thumb test

than that provided by the cl

assic question he should ask

himself: “Can I live with it?”

The individual who owns a

piece—be it a painting, marble bust, French Renaissance

escritoire or whatever—will have to look at it often and

long. If he believes an object he contemplates buying will

continue to please him over a period of time, then—all

other things being equal—he should buy it. If not, he

should look for something else

. “I buy the things I like—and

like the things I buy,” is the true collector’s guiding

philosophy.

Once he has made his purchase, it is up to the individual

to decide what he wants to do with it. He has two choices:

He can hold it until there is a rise in its market value, sell

it and pocket his profit. Or he can keep what he has bought

and enjoy it, holding onto it no matter how high the market

value goes. If he does this, he can be satisfied that he has

invested wisely, for he owns something that has lasting

artistic

value and pays him regular dividends in pleasure

even while it unobtrusively continues to increase in

monetary value. Either way, buying fine art can be the

finest and most satisfying of all investments.

PART FIVE

Of Money and Values

THE MORALS OF MONEY

Words such as millionaire, multimillionaire and

billionaire carry a magic and compelling ring.

Understandably enough, many people are mesmerized by

those words, by what they th

ink those words imply—and by

the thought of piling up a pers

onal fortune as an end in

itself.

These people seem to believe that every millionaire has

his millions in ready cash, stored in strongboxes beneath

his bed or in a handy wall safe in his library, to hold or

squander according to his whim. They also apparently

believe that money can buy them everything and solve all

their problems.

In the case of a “working” millionaire—a wealthy

individual actively engaged in business—nothing could be

further from the truth. In

the first place, although a

businessman may be “worth” many millions of dollars,

precious little of his wealth is in fluid, spendable cash. His

fortune is invested—tied up— in land, buildings,

machinery, equipment, raw materials, finished-product

inventories, in all the things which make up his business

and keep it in operation.

Certainly, only a minute fraction of any working busi-

nessman’s fortune is ever available to him as personal cash

on hand unless he chooses to

go out of business and liqui-

dates his holdings by selling them. But the successful busi-

nessman very seldom sells out. He knows that wealth

which serves no constructive purpose has no real

justification for its existence. It might be said that he views

business as a creative art. He uses his money as capital,

investing and reinvesting it to create businesses and jobs

and produce goods and services.

The successful businessman also knows that wealth does

not automatically grant him a year-round, no-limit license

for fun-filled frolic. He is well aware that money has the

power to do many things

for

people—but he also realizes

that money can do many things, bad as well as good,

people, their private lives, personalities and moral and

intellectual values.

Believe me, wealth is something with which one has to

learn to live—and the task is not always as simple as might

be imagined. A man who becomes rich finds it necessary to

adjust to the idea of being wealthy. He must make certain

that he maintains his perspective and his sense of values.

He must learn to cope with the special problems his wealth

creates, to handle the types of people who are wont to flock

around him because he is rich. And even though the

successful businessman may not have to worry about his

rent or grocery bills, though he may be secure from

personal financial want, he is never secure from financial

worries. The businessman’s wealth derives from the profits

made from his business ventures—profits which are

dependent upon the efficient operation of those ventures.

Consequently, he always has money “problems.”

If one of his firms is operating at a loss—as will often

happen—he must take immediate steps to remedy the

situation. He must find money to finance the expansion and

modernization programs of his companies. He must see to it

that his companies pay debts promptly. He always has to

think— and often has to worry—about these and countless

other questions of finance. Take my word for it, a

businessman’s worries over paying off a $5,000,000 bond

issue that has matured are no less great, immediate and

personal than those of a $75-a-week clerk who has to meet

a $500 note that’s falling due!

Once an individual achieves financial success and is

identified as a millionaire, he is thenceforth a marked man,

and matters only get worse as his wealth increases. If he’s

seen talking to other businessmen over a restaurant lunch,

he is sure to receive a dozen telephone calls a few hours

later from people asking him to confirm or deny the reports

of projected mergers, stock splits or extra dividend

payments which are already making the rounds. Let him

attend a social function and

dance with a young lady more

than once, and the rumors of a “sizzling new romance”

which buzz through the ballroom are certain to find their

way into the gossip columns. The conversation at the

luncheon table may have been concerned solely with

hobbies or horse racing. The millionaire’s dancing partner

may have been his niece or his cousin. But the results are

inevitable.

No, despite all the many advantages he enjoys, the

wealthy businessman’s life is not all champagne and caviar.

He must accept the fact that, despite his wealth and

position, there

are

drawbacks to being a millionaire. He

may be respected or admired for achieving success and

wealth, but he must expect that a considerable and

vociferous segment of the population will envy and even

hate him for it. There are times when he may be praised for

what he says or does, but he will be reviled at least as

often.

In some ways, a millionaire just

can’t win. If he spends

too freely, he is criticized for being extravagant and

ostentatious. If, on the other hand, he lives quietly and

thriftily, the same people who

would have criticized him for

being profligate will call him a miser. If he goes to parties

and night clubs, he is labeled a wastrel and doubts are

raised about his maturity and sense of responsibility. Let

him shun the salons and saloons, and he is promptly tagged

as a recluse or misanthrope.

To the auditors and critics of the rich, even the most

minor actions loom as matters of major concern. Take

tipping, for example. I’ve found that if I leave a liberal tip

in a restaurant, someone is sure to say I’m showing off. If I

don’t over tip, that same someone will be the first to say

that “Paul Getty is a penny pincher.” If I talk to reporters

word gets around quickly that I’m a publicity hound. If I

don’t grant interviews, I’m considered “uncooperative” or

hostile to the press, and some gossip columnist is certain to

write something to the effect that “Paul Getty is strangely

uncommunicative these days. Could it be that he’s trying to

avoid answering certain highly explosive questions?”

Am I complaining? No. Not at all. I’m merely listing

some of the things a millionaire has to accept with rueful

and resigned good humor.

A wealthy person can obviously buy a plenitude of the

material things in life. He can have an extensive wardrobe,

automobiles, a fine house, servants—in short, all the

material

appurtenances of luxury living. The extent to

which he is able to enjoy these depends on him, and, if he is

an active businessman, to a considerable degree on the

demands which his business makes upon his time and

energies.

I still find that it’s often necessary to work 16 and 18

hours a day, and sometimes right around the clock. When I

travel, the problems of business are never farther than the

nearest telegraph or cable office or telephone. I can’t

remember a single day of vacation in the last 45 years that

was not somehow interrupted by a cable, telegram or

telephone call that made me tend to business for at least a

few hours. Such work schedules and the need for devoting

the majority of my time to building and expanding my

businesses have taken a heavy toll of my personal life.

I’ve been married and divorced five times. I deeply

regret these marital failures, but I can understand

why

they were failures. Each one of my former wives is a

wonderful woman who did her utmost to make her

marriage to me a success. But a woman doesn’t feel secure,

contented or happy—she doesn’t feel as though she is really

a wife, or that she really has a husband—when she finds

that her husband is thinking of

his business interests first

and foremost and that she comes next, almost as an

afterthought. Five marital failures have also taught me

that a happy marriage is another of the countless things in

life that no man can buy no matter how many millions he

possesses.

Friendship is something else that can’t be bought—

although there are many who try to sell its counterfeit. I’ve

often said that time is the only reliable gauge by which a

wealthy person can measure friendships. I consider myself

to be extremely fortunate in having made many real and

good friends who have been my friends for years and even

decades. They’ve never tried to profit financially from our

friendships. If they have asked me for anything, their

requests were reasonable— the kind that good friends are

likely to make of each other.

Such is not the case with the familiar type of individual

who goes out of his way to be

come friendly with a wealthy

person with premeditated intent to get something for

nothing. That “something” may be a job, an inside tip on

the stock market, money to start a new business or to shore

up an old one that’s crumbling, an outright cash gift—or a

cash gift that’s euphemistically described as a loan.

For example, I have four grown sons. All chose to enter

the family business. When each made his decision to do so,

he was allowed to start right in—at the bottom of the

ladder. My sons served their apprenticeships by serving

customers in filling stations owned by companies in which I

had large investments. They sold gasoline and lubricating

oil, filled batteries, changed tires and did their share of

cleaning grease racks and sweeping the premises where

they worked. Yet, innumerabl

e casual acquaintances have

blandly asked me to do them a “favor” and give

their

sons,

or unemployed relatives, executive-level jobs in firms I

control. They never seem to understand why I turn them

down, and almost always become highly indignant when I

do.

Then there are those who ask me for tips which will

make them rich overnight—or within a week or two at

most. It’s useless to tell them I have none to give. The get-

rich-quick dreamers won’t believe me.

“You damned millionaires are all selfish and unfair!”

“You’ve got secrets for making money, but you won’t share

them.” “You don’t want anyone else to get rich!” So go some

of the tirades.

Apparently, these individuals believe that modern

business is conducted in the dark of the moon by warlocks

and sorcerers who chant mystical incantations and draw

pentagrams on the floors of board rooms. It doesn’t do any

good to argue with them. They will not believe that hard

work—not tips or secrets—is the key to business success.

They don’t want to believe it. They want success and

wealth served up to them. They don’t want to work.

The effect a rich man’s money will have on others is

often surprising, sometimes barely believable, and by no

means always salutary or ennobling. I’ve said before that a

millionaire is a marked man. There are many who consider

him an easy mark as well. For instance, I have long been

an avid and serious art collector. Through the years, I have

been offered bogus Botticellis, counterfeit Corots and fake

Fragonards by the carloads.

I recall one man who tried to sell me what he said was a

rare 16th Century tapestry, and for “a mere $45,000.”

When I told him I wasn’t inte

rested, he flew into a rage.

“But you’ve

got

to buy it!” he shouted, thrusting the

tapestry at me. “My wife worked months to make it!”

Another enterprising soul informed me that he was

breaking up his collection of paintings and showed me

several soot-begrimed, tenth-rate canvases in cheap,

cracked frames. He had collected the paintings, all right—

from scrap heaps and junk shops.

I don’t suppose anything illustrates the cupidity and eco-

nomic ignorance of some people better than the floods of

letters by which all reputedly wealthy persons are

constantly plagued. I receive up to 3000 letters every

month from people who are totally unknown to me. Some

are written by women—of all ages and from all walks of

life, I gather— who say they’ve read or heard that I’m

extremely rich and currently unmarried.

“You’re just the man I’ve always wanted for a husband .

. .” “It’s plain to see that

you need a wife, and I know I

would fill the bill to perfection . . . ” “I’ll gladly divorce my

husband and marry you, if you’ll just send me the money to

pay the lawyer’s fees . . . ” These are typical lines taken

from some of the marriage-proposal letters sent to me. The

ladies often enclose snapshots or

salon

portraits which

display greater or lesser quantities of their charms. On

occasion, they’ll send along entire photo albums. Some of

these amorous hopefuls, I might add, hint coyly—or state

bluntly—that they’re willing to waive the fusty formalities

of marriage and overwhelm me with love and

companionship provided appropriate financial

arrangements are made beforehand.

But the majority of my unwanted mail—about 70

percent, according to a tally made by my secretary—is

made up of letters written by people who ask me to send

them money. I do not doubt for a moment that some small

percentage of these are from individuals who are actually

in need. Unfortunately, it is utterly impossible to separate

these from the thousands sent by professional panhandlers

and chronic beggars. The letters come from practically

every country in the world. It would cost vast sums to check

the validity of the appeals. Thus, it’s necessary to refuse

them all.

Like almost all wealthy men—certainly, all with whom I

am acquainted—I make my contributions only to organized,

legitimate charities. Each and every year, my companies

and I contribute sums totaling many hundreds of

thousands of dollars to charity. This is the only way one can

give money with any degree of assurance that it will be

received eventually by deserving persons. I’ve tried to make

this clear in press interviews and public statements, but

without avail. Thousands of people who want me to send

them money continue to write to me. “You’re rich. You’ll

never miss the money,” most of my unbidden

correspondents write, as though this explains and justifies

everything. Some plead. Others demand. A few even

threaten. A surprisingly large number cannily specify that

I’m to send them “cash—no checks” because they “don’t

want the tax authorities to find out about the money.”

There are even those who demand the sum they request

“net —with all taxes paid.”

The head of a state medical association once asked me

for $250,000—so that he could buy a yacht. “It’s not much,

considering what I’ve heard about the size of your fortune,”

he wrote. This, mind you, was a professional man—a

physician who was obviously highly regarded in his

community and his state. So, I presume, was the certified

public accountant who used his firm’s impressive stationery

to request $500,000. He’d “discovered a sure-fire system for

playing the stock market”— and wanted to play it with my

money. “I’ll see that you get te

n percent of the profits,” he

promised generously.

Then there was the high-school teacher who wanted a

million tax-free dollars so that she could help her relatives,

and the banker who wrote that he’d embezzled $100,000

and was certain I would make good his defalcations.

I could cite such examples almost indefinitely. In an

average month, the total amount requested by these mail-

order mendicants easily exceeds $3,000,000. On one

memorable day a short while ago, a

single

mail delivery

brought letters asking for a total of no less than

$15,000,000!

All this, of course, is but a relatively minor annoyance

among the sundry problems that come with wealth. I’ve

mentioned several in this article which serve to make a rich

man’s life—pleasant and enjoyable as it is in many ways—

something less than the carefree idyll so many people

picture it to be. Money can do things for people—and it can

also do many things

them. What money does for or to a

particular individual is largel

y dependent on his moral and

intellectual standards, his outlooks and his attitudes

toward life.

If he’s a businessman, the important consideration is

what he

does

with his money. As I have said earlier, the

best use he can make of it is to invest it in enterprises

which produce more and better goods and services for more

people at lower cost. His aim should be to create and

operate businesses which contribute their share to the

progressive upward movement of the world’s economy, and

which thus work to make life better for all. Therein lies the

justification for wealth, and there from does the working

businessman derive the greatest sense of satisfaction.

That is what I have tried to do with my money, and

those are the aims and goals of the companies in which I

have invested. Those are—or should be—the morals of the

successful businessman’s money.

THE ART OF

INDIVIDUALITY

The successful executive—the leader, the innovator—is

the exceptional man. He is

not

a conformist, except in his

adherence to his own ideals and beliefs.

A young business executive I met once might well serve

as the prototype for the entire breed of case-hardened con-

formist “organization men” one finds in ever-increasing

numbers in the business world

today. His clothes, manners,

speech, attitudes—and ideas—were all studied stereotypes.

It was obvious that he believed conformity was essential for

success in his career, but he complained that he wasn’t

getting ahead fast enough and asked me if I could offer any

advice.

“How can I achieve success and wealth in business?” he

asked earnestly. “How can I make a million dollars?”

“I can’t give you any sure-fire formulas,” I replied, “but

I’m certain of one thing. You’ll go much further if you stop

trying to look and act and think like everyone else on Madi-

son Avenue or Wacker Drive or Wilshire Boulevard. Try be-

ing a nonconformist for a change. Be an individualist—and

an individual. You’ll be amazed at how much faster you’ll

‘get ahead.'”

I rather doubt if what I said made much impression on

the young man. I fear he was far too dedicated a disciple of

that curious present-day hyper orthodoxy, the Cult of Con-

formity, to heed my heretical counsel. I’m sure he will

spend the rest of his life apin

g and parroting the things he

believes, or has been led to believe, are “right” and safe.

He’ll conform to petty, arbitrary codes and conventions,

desperately trying to prove himself stable and reliable—but

he will only demonstrate that he is unimaginative,

unenterprising and mediocre. The success and wealth for

which men such as this yearn will always elude them. They

will remain minor executives, shuffled and shunted from

one corporate pigeonhole to another, throughout their

entire business careers.

I pretend to be neither sage nor savant. Nor would I care

to set myself up as an arbiter of anyone’s mores or beliefs.

But I do think that I know something about business and

the business world. In my opinion, no one can possibly

achieve any real and lasting success or “get rich” in

business by being a conformist. A businessman who wants

to be successful cannot afford to imitate others or to

squeeze his thoughts and acti

ons into trite and shopworn

molds. He must be very much of an individualist who can

think and act independently.

He must be an original,

imaginative, resourceful and entirely self-reliant

entrepreneur. If I may be perm

itted the analogy, he must

be a creative artist rather than merely an artisan of

business.

The successful businessman’s nonconformity is most gen-

erally—and most obviously—evident in the manner and

methods of his business operat

ions and activities. These

will be unorthodox in the sense that they are radically

unlike those of his hidebound, less imaginative—and less

successful—associates or competitors. Often, his innate

impatience with the futility of superficial conventions and

dogma of all kinds will manifest itself in varying degrees of

personal eccentricity.

Everyone knows about the late John D. Rockefeller, Sr.’s

idiosyncratic habit of handing out shiny new dimes

wherever he went. Howard Hughes is noted for his

penchant for wearing tennis sneakers and open-throated

shirts. Bernard Baruch held his most important business

conferences on park benches. These are only three among

the many multimillionaires who made their fortunes by

giving their individualism free rein and who never worried

if their nonconformity showed in their private lives.

Now, I would hardly suggest that adoption of some

slightly eccentric habit of dress or manner is in itself

sufficient to catapult a man to the top of a corporate

management pyramid or make him rich overnight. I do,

however, steadfastly maintain that few—if any—people

who insist on squeezing themselves into stereotyped molds

will ever get very far on the road to success.

I find it disheartening that so many young businessmen

today conform blindly and rigidly to patterns they believe

some nebulous majority has decreed are prerequisites for

approval by society and for success in business. In this,

they fall prey to a fundamental fallacy: the notion that the

majority is automatically and invariably right. Such is

hardly the case. The majority is by no means omniscient

just because it is the majority. In fact, I’ve found that the

line which divides majority opinion from mass hysteria is

often so fine as to be virtually

invisible. This holds as true

in business as it does in any other aspect of human activity.

That the majority of businessmen think this or that, does

not necessarily guarantee the validity of their opinions. The

majority often has a tendency

to plod slowly or to mill

around helplessly. The nonconformist businessman who

follows his own counsel, ignoring the cries of the pack, often

reaps fantastic rewards. There are classic examples

galore—some of the most dramatic ones dating from the

Depression.

The Rockefellers began building Rockefeller Center, the

largest privately-owned business and entertainment

complex in the United States—and possibly the entire

world—in 1931, during the depths of the Depression. Most

American businessmen considered the project an insane

one. They conformed to the prevailing opinion which held

that the nation’s economy was

in ruins and prophesied that

the giant skyscrapers would remain untenanted shells for

decades. “Rockefeller Center will be the world’s biggest

White Elephant,” they predicted. “The Rockefellers are

throwing their money down a bottomless drain.”

Nonetheless, the Rockefellers went ahead with their plans

and built the great Center. They reaped large profits from

the project—and proved that they were right, and that the

majority was dead wrong.

Conrad Hilton started buying and building hotels when

most other hoteliers were eagerly scanning all available

horizons for prospective buyers on whom they could unload

their properties. There is certainly no need to go into

details about nonconformist Conrad Hilton’s phenomenal

success.

I, myself, began buying stocks during the Depression,

when shares were selling at bargain-basement prices and

“everyone” believed they would fall even lower.

The conformists were selling out, dumping their stocks

on the market for whatever they would bring. Their one

thought was to “salvage” what they could before the

ultimate economic catastrophe so freely predicted by “the

majority” took place.

Nevertheless, I continued to buy stocks. The results?

Many shares I bought during the 1930s are now worth a

hundred —and more—times what I paid for them. One

particular issue in which I purchased sizable blocks has

netted me no less than 4500% profit through the years.

No, I’m not boasting nor claiming that I was endowed

with any unique powers of economic clairvoyance. There

were other businessmen and investors who did the same—

and profited accordingly. But we were the exceptions, the

nonconformists who refused to be carried along by the wave

of dismal pessimism then the vogue with the majority.

The truly successful businessman is essentially a

dissenter, a rebel who is seldom if ever satisfied with the

status quo. He creates his success and wealth by constantly

seeking— and often finding—new and better ways to do

and make things.

The list of those who have achieved great success by re-

fusing to accept and follow established patterns is a long

one. It spans two centuries of American history and runs

the alphabetical gamut from John Jacob Astor to Adolph

Zukor. These men relied on those four qualities already

enumerated: their own imagination, originality,

individualism and initiative. They made good—while the

rock-ribbed conformists remained by the wayside.

The conformists simply do not realize that only the least

able and efficient among them derive any benefit from the

dubious blessings of conformism. The best men are

inevitably dragged down to the insipid levels at which the

second-raters—the prigs, pedants, precisians and

procrastinators—set the pace. The craze for conformity is

having its effect on our entire civilization—and, the way I

see it, the effect is far from a salubrious one. It isn’t a very

long step from a conformist society to a regimented society.

Although it would take longer to create an Orwellian

nightmare through voluntary surrender of individuality—

and thus of independence—than through totalitarian edict,

the results would be very much the same. In some respects,

a society in which the member

s reach a universal level in

which they are anonymous drones by choice is even more

frightening than one in which they are forced to be so

against their will. When human

beings relinquish their in-

dividuality and identity of thei

r own volition, they are also

relinquishing their claim to being human.

In business, the mystique of conformity is sapping the

dynamic individualism that is the most priceless quality an

executive or businessman can possibly possess. It has

produced the lifeless, cardboard-cutout figure of the

organization man who tries vainly to hide his fears, lack of

confidence and incompetence behind the stylized facades of

conformity.

The conformist is not born. He is made. I believe the

brainwashing process begins in the schools and colleges.

Many teachers and professors seem hell-bent on imbuing

their students with a desire to achieve “security” above

all—and at all costs. Beyond this, high school and

university curricula are frequently designed to turn out

nothing but “specialists” with circumscribed knowledge and

interests. The theory seems to be that accountants should

only be accountants, traffic managers should only be traffic

managers, and so on ad nauseam. There doesn’t appear to

be much effort made to produce young men who have a

grasp of the over-all business picture and who will assume

the responsibilities of leadership. Countless otherwise

intelligent young men leave the universities where they

have received overspecialized educations and then

disappear into one of the administrative rabbit warrens of

our over organized corporations.

To be sure, there are many other pressures that force

the young man of today to be a conformist. He is

bombarded from all sides by arguments that he must tailor

himself, literally and figuratively, to fit the current clean-

cut image, which means that he must be just like everyone

else. He does not understand

that the arguments are those

of the almost-weres and never-will-bes who want him as

company to share the misery of their frustrations and

failures. Heaven help the man who dares to be different in

thought or action. Any deviation from the mediocre norm,

he is told, will brand him a Bohemian or a Bolshevik, a

crank or a crackpot—a man who is unpredictable and thus

unreliable.

This, of course, is sheer nonsense. Any man who allows

his individuality to assert itself

constructively will soon rise

to the top. He will be the man who is most likely to succeed.

But the brainwashing continues throughout many a man’s

career. The women of his life fr

equently do their part to

keep him in his conformist’s strait jacket. Mothers, fiancées

and wives are particularly prone to be arch-conservatives

who consider a weekly paycheck a bird in hand to be

guarded, cherished and protected—and never mind what

valuable

rara avis

may be nesting in the nearby bushes.

Wives have a habit of raising harrowing spectres to deter a

husband who might wish to risk his safe, secure job and

seek fulfillment and wealth via imaginative and

enterprising action. “You’ve got a good future with the

Totter and Plod Company,” they wail. “Don’t risk it by

doing anything rash. Remember all the bills and payments

we have to meet—and we simply

must

get a new car this

year!”

Consequently, the full-flowering conformist organization

man takes the 8:36 train every weekday morning and hopes

that in a few years hell be moved far enough up the ladder

so that he can ride the 9:03 with the middle-bracket

executives. The businessman conformist is the Caspar

Milquetoast of the present era. His future is not very

bright. His conformist’s rut w

ill grow ever deeper until, at

last, it becomes the grave for the hopes, ambitions and

chances he might have once had for achieving wealth and

success. The confirmed organization man spends his

business career bogged down in a morass of procedural

rules, multi-copy memoranda and endless committee

meetings in which he and

the men who are his carbon

copies come up with hackneyed answers to whatever

problems are placed before them. He worries and frets

about things that are trivial and superficial—even unto

wearing what someone tells him is the “proper” garb for an

executive in his salary bracket and to buying his split-level

house in what some canny realtor convinces him is an

“executives’ subdivision.”

Such a man defeats his own purpose. He remains a

second-string player on what he somewhat sophomorically

likes to call “the team,” instead of becoming the captain or

star player. He misses the limitless opportunities which

today present themselves to the imaginative individualist.

But he really doesn’t care. “I want security,” he declares. “I

want to know that my job is safe and that I’ll get my

regular raises in salary, vacations with pay and a good

pension when I retire.” This, unhappily, seems to sum up

too many young men’s ambitions. It is a confession of

weakness and cowardice.

There is a dearth of young executives who are willing to

stick their necks out, to assert themselves and fight for

what they think is right and best even if they have to

pound on the corporation president’s desk to make their

point.

True, an executive who crosses swords with his superiors

may sometimes risk his job in the process, but a firm that

will fire a man merely because he has the courage of his

convictions is not one for which a really good executive

would care to work in the first place. And, if he is a good

executive, he will quickly get a better job in the event he

fired—you may be sure of that. You can also be sure that

the conformist who never dares vary from the norm will

stay in the lower—or at best middle—echelons in any firm

for which he works. He will not reach the top or get rich by

merely seeking to second-gue

ss his superiors. The man who

will win success is the man who is markedly different from

the others around him. He has new ideas and can visualize

fresh approaches to problems. He has the ability—and the

will—to think and act on his own, not caring if he is

damned or derided by “the majority” for his nonconformist

ideas and actions.

The men who will make their marks in commerce,

industry and finance are the ones with freewheeling

imaginations and strong,

highly individualistic

personalities. Such men may no

t care whether their hair is

crewcut or in a pompadour, and they may prefer chess to

golf—but they will see and seize the opportunities around

them. Their minds unfettered by the stultifying mystiques

of organization-man conformity, they will be the ones to

devise new concepts by means of which production and

sales may be increased. They will develop new products and

cut costs—to increase profits and build their own fortunes.

These economic free-thinkers are the individuals who

create new businesses and revitalize and expand old ones.

They rely on their own judgment rather than on surveys,

studies and committee meetings. They refer to no manuals

of procedural rules, for they know that every business

situation is different from the next and that no thousand

volumes could ever contain enough rules to cover all

contingencies.

The successful businessman is no narrow specialist. He

knows and understands all aspects of his business. He can

spot a production bottleneck as quickly as he can an

accounting error, rectify a weakness in a sales campaign as

easily as a flaw in personnel procurement methods. The

successful businessman is a leader—who solicits opinion

and advice from his subordinates, but makes the final

decisions, gives the orders and assumes the responsibility

for whatever happens. I’ve said it before, and I say it again:

There is a fantastic demand for such men in business

today—both as top executives and as owners and operators

of their own businesses. There is

ample room for them in all

categories of business endeavor.

The resourceful and aggressive man who wants to get

rich will find the field wide open, provided he is willing to

heed and act upon his imagination, relying on his own

abilities and judgment rather than conforming to patterns

and practices established by others.

The nonconformist—the leader and originator—has an

excellent chance to make his fortune in the business world.

He can wear a green toga in

stead of a gray-flannel suit,

drink yak’s milk rather than martinis, drive a Kibitka

instead of a Cadillac and vote the straight Vegetarian

Ticket—and none of it will make the slightest difference.

Ability and achievement are bona fides no one dares

question, no matter how unconventional the man who

presents them.

A SENSE OF VALUES

To be truly rich, regardless of his fortune or lack of it, a

man must live by his own values. If those values are not

personally meaningful, then

no amount of money gained

can hide the emptiness of a life without them.

I have known entirely too many people who spend their

lives trying to be what others want them to be and doing

what others expect them to do. They force themselves into

patterns of behavior which have been established for—and

by—people with personalities entirely different from their

own. Seeking to conform to those patterns, they dissolve

into grotesque, blurred mirror images as they obliterate

their individuality to imitate others. Rootless, dissatisfied,

they strive frantically— and most often vainly—to find

their own identities within the constricting limits of an

existence alien to their natures, instincts and innate

desires.

“I wanted to be a writer. My father refused to hear of it

and insisted I go to law school and become an attorney. I

make a good living now, but I’m bored and restless . . .”

“I’d like to sell my business and buy a ranch somewhere,

but my wife won’t let me because she’s afraid it would

mean a loss of income and prestige . . . “

“There’s nothing I hate more than suburban living. I’d

much rather have an apartme

nt in the city, but all the

other executives in my firm have homes in the suburbs . .

“I feel trapped, as though I’m caught up in a pointless

rat race. I really don’t like or enjoy my work, but I don’t

know what else I could do and

still make as much money as

I’m making now . . .”

I’ve heard such statements as these made with ever-

increasing frequency in recent years. Essentially, they are

expressions of personal disc

ontent—and even defeat—but

they also reflect a constantly growing social illness of our

time.

The post-World War One period was said to have

produced a confused, insecure and disillusioned Lost

Generation. There is, tragically enough, ample evidence to

indicate that the post-World War Two era produced a

generation which has, in large part, lost its sense of

perspective and purpose. It is a generation whose members

are prone to substitute flimsy dollars-and-cents price tags

for scales of lasting values and who meekly surrender their

individuality and even their integrity as human beings. A

glaringly obvious manifestation of this can be found in the

social phenomenon of status seeking, which has become so

widespread and prevalent that it looms as one of the princi-

ple motivating forces behind our contemporary social

behavior patterns.

Now, I agree that the desire of human beings to rise

above the mass and to gain the respect of their fellow men

is a basic one. Within certain

broad limits and subject to

certain self-evident reservations, it is a constructive and

salutary motivation. The desire to excel has impelled

countless individuals to make important contributions to

the progress of civilization. But, as more than one observer

has noted, the rationale of today’s status seeking and the

directions it takes are neither constructive nor healthy.

To my way of thinking, status may be defined as a form

of recognition an individual’s peers award him for above-

average contributions to society. It is something that must

be earned, a reward for accomplishment that is awarded at

a degree proportionate to the value or importance of what

the individual contributes toward the common good.

Nowadays, however, the tendency is to equate status

almost automatically—and all but exclusively—with

financial success. And, it seems that the achievement of

status not only is, per se, considered an end unto itself, but

that for many it has become the sole motivation and the

only worthwhile goal.

Vast numbers of people have apparently convinced

themselves that the amassing of money and the material

things it can buy alone signifies achievement, connotes

success and confers status. They pile up money and the

material possessions which they believe are solid proofs

rather than frail symbols of ability, achievement and

success. They accept as manifest truth the shoddy theory

that they can gain social position and the respect of others

only by out earning and out buying those around them.

They have no interest in building anything but their own

bank balances; they are not concerned with values, but only

with the dollars-and-cents prices they pay for their

possessions.

I’ve encountered more concrete examples of this

distorted viewpoint than I’d care to count. Quite typical of

them was my recent experience with a businessman who

paid me a visit in London, arriving with a letter of

introduction from a mutual acquaintance in New York.

After spending more than two hours boasting about how

much money he’d made in the last few years, my visitor

informed me that he was on his way to France, where he

intended to buy some paintings.

“I’ve heard that you’re quite an art collector,” he said. “I

thought you could help me out by giving me the names and

addresses of some reliable art galleries or dealers from

whom I could do my buying.”

“Are you interested in paintings from any special period

or of any particular school?” I inquired. “Or are you looking

for works by some particular artist?”

“It doesn’t make any difference to me,” the man

shrugged impatiently. “I wouldn’t know one from another

in any case. I just have to buy some paintings—and I have

to spend at least $100,000 for them.”

“Why can’t you spend less than that?” I asked, puzzled

that anyone would set an arbi

trary minimum rather than a

maximum on what he wanted to spend.

“Oh, it’s one of those things,” came the straight-faced ex-

planation. “My partner was over here a couple of months

ago and he paid $75,000 for some pictures. I figure that to

make any kind of an impression back home, I’ve got to top

him by at least $25,000. . . “

It is easy to see how this man judges values. I strongly

suspect that it is also a safe bet that whatever he has done

in life, his motives were always just as shallow and trivial

as his purely status-seeking reasons for wanting to buy

paintings. Unfortunately, there are many people like him.

In my opinion, it would be difficult to find justification for

their wealth; I do not believe they really earn—or, for that

matter, deserve—their money.

I am a stubborn advocate of enlightened free-enterprise

Capitalism and the last person in the world to question

anyone’s fundamental right to achieve financial success. I

contend that a person who possesses the imagination and

ability to “get rich” and goes about his money-making

activities legitimately should be allowed every opportunity

to do so. On the other hand, I firmly believe that an

individual who seeks financial success should be motivated

by much more than merely a desire to amass a personal

fortune.

My own father, as I have said, was poor—very poor—in

his youth, and although he made a great deal of money

during his lifetime, he did not make it with any intention of

caching it away for his own exclusive benefit. He knew the

value of money and had very definite ideas about its uses.

My father considered his wealth

primarily as capital, to be

invested for the direct benefit of his employees, associates,

stockholders, customers and their families.

His attitude toward his wealth was governed by a maxim

he took from Sir Francis Bacon: “No man’s fortune can be

an end worthy of his being.” He loved the challenge of

business, but the incentive was not to pile up money, but

rather to accomplish something lasting. I doubt seriously if

his total personal and family expenditures ever exceeded

$30,000 a year—yet, he was probably one of the first

businessmen to build swimming pools and provide other

recreational facilities for his employees.

I learned from my father that the astute, progressive

and truly successful businessman does not think of his

work primarily in terms of profits. The money value of my

holdings in the companies I own or control has been

estimated in the hundreds of millions of dollars. But this is

a paper fortune and it is still a means and not an end. Only

an infinitesimal part of my fo

rtune is held by me in cash.

My wealth is represented by machinery, oil wells, pipelines,

tankers, refineries, factory and office buildings—by all the

myriad assets of the companies in which I have invested

my capital. And those companies are continuing to produce

goods and perform services—and to grow and expand.

Thus, my wealth is continuing to perform useful, creative

work. These are the worth-while ends to which wealth is a

means, and which give money its real value.

I do not measure my success in terms of dollars and

cents. I measure it in terms of the jobs and the productivity

my labors and my wealth—invested and reinvested as

capital in my various business enterprises—have made

possible. I doubt very seriously if I could have reached

anywhere near the level of success that I have reached if I’d

employed any other yardsticks to gauge my progress during

my career.

I’ve found that, to establish his identity, to feel that he is

a fully participating member of society, an individual must

have purpose and feel that what

he does has some enduring

value well beyond the limits of his own personal interests.

In order to achieve any contentment in life, he must derive

genuine satisfaction and an equally genuine sense of

accomplishment from his work. These are considerations at

least as important as the size of the income he receives

from his job, profession or business.

By no means am I suggesting that a vow of poverty—or

anything even remotely approaching it—will provide an in-

dividual with a shortcut to ecstatic bliss. There is very little

room for the wandering mendicant and his begging-bowl in

our civilization. Human beings have progressed well

beyond the stage where they can be satisfied with their lot

while living on a diet of black bread and boiled cabbage.

They must have decent living standards—all the

necessities and many of the luxuries of life—if they are to

be even moderately content. For these things, they must

earn money.

This does not, however, change the fact that there are

many ways of gauging values besides placing them on a

monetary scale. A badly written, banal contemporary novel

may sell for five dollars a copy, while a great literary classic

may be purchased in a paperback edition for 50 cents.

Certainly the latter has infinitely greater real

value

than

the former, regardless of the tr

emendous disparity in their

prices. By the same token, th

ere are many kinds of success

other than purely financial success. I hold that an

individual’s standing in society should be judged by criteria

other than merely his income, accumulated monetary

wealth or the number and money value of his material

possessions.

Past and present, there are uncounted examples of

individuals who made priceless contributions to civilization,

but who realized little or no monetary rewards from what

they did. Innumerable great philosophers, scientists, artists

and musicians were poor men all their lives. Mozart,

Beethoven, Modigliani and Gauguin—among others of

comparable stature—died poverty-stricken. No one on earth

could possibly estimate the value of the contributions made

to mankind by such men as the late Dr. Albert Schweitzer

or the late Dr. Thomas Dooley; yet, it’s highly doubtful if

either of them ever enjoyed a

personal income as large as

that earned by the average department-store buyer.

The architect who designs a breathtakingly beautiful

building is often a poor man compared to the tenants who

will occupy it. The engineer who builds a dam may well

earn less from his labors than the landowner whose acres

are irrigated by water from the dam. The architect and

engineer have created and built; their success is no less

great because they did not earn fortunes from their work.

Also largely overlooked in this age of treadmill

scrambling for money and status is the fact that there are

many forms of wealth other than financial wealth. One of

the most genuinely contented men I’ve ever known was my

cousin, Hal Seymour. Hal and I grew up together; we were

always close friends and for long periods we were constant

companions. Hal cared very little for money. Content to

earn enough for his own needs, he good-naturedly turned

down every opportunity I offered him for earning more.

Working here and there—he was a topflight oil driller,

photographer, miner, a master of many trades—he never

had much money. But he managed to satisfy his desires to

go many places and do many things—and he always en-

joyed himself thoroughly with the armies of friends he

made wherever he went. His aim in life was always to do

whatever he attempted well. He realized this aim; he

always gave more than he took.

Hal considered himself to be very wealthy in personal

freedom. He was always able to

do the things he wanted to

do, and always had the time in which to do them. He

seldom missed a chance to remind me that, in these

regards, I was much poorer than he. Before his death a few

years ago, he frequently wrote me letters which opened

with the wryly humorous but

meaningful salutation: “To

the Richest Man in the World from the Wealthiest. . . “

I’ll have to admit that I envied Hal his abundance of

time —which is one of the forms of wealth that people tend

to disregard these days. Rich as I may be from a material

standpoint, I’ve long felt that

I’m very poor, indeed, in time.

For decades, my business affairs have made extremely

heavy inroads on my time, leaving me very little I could use

as I pleased. There are books that I have wanted to read—

and books I have wanted to write. I’ve always yearned to

travel to remote parts of the globe which I’ve never seen;

one of my greatest unfulfilled ambitions has been to go on a

long, leisurely safari in Africa.

Money has not been a bar to the realization of these

desires; insofar as money is concerned, I could have easily

afforded to do any of these things for many years. The blunt

and simple truth is that I’ve never been able to do them

because I could never afford the time. It’s paradoxical but

true that the so-called captains of industry frequently have

less time for indulging their personal desires than their

rear-rank privates. This applies to little things as well as

big ones.

It is not my intent to imply that I am in any way

dissatisfied with my lot in life. Indeed, I would be more

than ungrateful for the good fortune and advantages I’ve

enjoyed if I were anything less than happy. Moreover, I am

very gratified that I have managed to accomplish most of

the goals I set for myself when I began my business career.

The point I’m trying to make is that each individual has

to establish his own standards of values, and that these are

largely subjective. They are based on what the individual

considers most important to him and what he is willing to

give for a certain thing or in order to achieve a certain aim.

Old—but true—are the bromides that you can’t have

everything and that you can’t get something for nothing.

An individual always has to give—or give up—something in

order to have or get something else. Whether he’s willing to

make the exchange or not is entirely up to him and his own

sense of values.

Acknowledging all this, I nevertheless believe that there

are certain values which, if not absolute in the strict sense

of the word, are surely basic and can be said to be generally

valid. I never cease to be amazed by the casual and even

callous manner in which sizable segments of our population

ignore these fundamental values.

It is estimated that more than 120,000 Americans take

their own lives each year. This figure includes cases which

are officially recorded as suicides and the cases of those

who do away with themselves, but whose deaths, for one

reason or another, are not recorded officially as such. A

significant portion of these 120,000 annual tragedies are

classed as “economic suicides.”

According to Dr. Thomas P. Malone, head of the Atlanta,

Georgia, Psychiatric Clinic, an acknowledged authority on

the macabre subject: “At least 30 to 40 percent of so-called

economic suicides occur when a man is successful, not when

he is failing. When a man has achieved the peak of success,

often he has nothing left to scramble for.”

I’m no psychiatrist, but it seems to me that anyone who

takes his own life because he has achieved success and has

“nothing left to scramble for” never had any worthwhile

motives to scramble for in the first place. The goals he

sought— and achieved—were meaningless. When he

realized this he also realized that what he had actually

achieved was not success but pathetic failure.

In a report in the

Journal of the American

Medical Association,

Drs. Richard E. and Katherine K.

Gordon revealed the results of an intensive study they

made of families living in a typical contemporary status-

seekers’ suburban community. They determined that the

diseases which stem primarily from emotional stresses—

notably ulcers, coronary thrombosis, hypertension and

hypertensive cardiovascular disease—were markedly more

prevalent there than in communities in which status

seeking was not such a dominant social factor. Anyone who

has encountered specimens of the ulcer-ridden,

tranquilizer-devouring and status-seeking Organization

Man and their nervously shrill-voiced, apprehensive wives

will hardly be surprised by this revelation.

I am unable to see that the achievement of any degree of

social status is worth the price of a man’s life or the

destruction of his or his family

‘s health. Assuredly, there is

something very wrong basically when human beings are

willing to sell their lives and their health so cheaply. Nor

am I able to see that money or the dubious benefits

conferred by the attainment of what passes for status are

worth the price of one’s individuality and personal

integrity. I am apparently in the minority. It is becoming

increasingly apparent that it’s no longer fashionable to pay

much heed to these considerations. Their value has been

swept aside in the pell-mell rush to conform to what is

regarded as the majority view—which regards the ac-

cumulation of money and material things and the gaining

of status as the approved goa

ls and places no ceiling on the

price which can be paid for achieving them.

I consider it one of the major tragedies of our civilization

that people have come to regard it virtually mandatory to

imitate in order to win the social acceptance of their

fellows. The end result of this can only be to reduce even

the most brilliant individuals to a sterile cipher.

Toady and lickspittle are nasty words. The average man

would probably be inclined to use his fists on anyone who

called him either. Yet, countless men will lower themselves

to such absurd devices as wearing bow ties because their

employers wear them, cutting their hair the way their

superiors do, or buying their homes where the other

executives buy theirs. They ap

e and echo the ideas, views

and actions of those they seek to impress, proving nothing

but that they are servile toadies. Imitation may be the most

sincere form of flattery— but it

imitation, and flattery is

nothing more than a pat on the head from someone who

knows he deserves a kick in the behind.

I once obtained control of a company and was

immediately —and far from favorably—impressed by the

fawning attitude of the majority of the firm’s executives.

Most were obsequious yes-men feverishly trying to please

the new boss so that they could further their own narrow

ambitions. Wanting to see just how far they were willing to

go, I called a special management meeting. At the meeting,

I proposed a wholly impractical and ruinous scheme which,

if implemented, would have quickly bankrupted the firm.

Of the nine executives present, six instantly expressed

their approval of my “plans.” Three of these men went to

the extreme of modestly hinting that they’d been “thinking

along similar lines”—something I could well believe from

having studied the firm’s profit-and-loss statements. Two

very junior executives remain

ed glumly and disapprovingly

silent. Only one man in the group had the temerity to stand

up and point out the flaws in my proposal.

Needless to say, the company soon had some new faces

in its executive offices. The

three dissidents remained; all

are still associated with my companies and, I might add,

are now in the upper income brackets.

It has always been my contention that an individual

who can be relied upon to be himself and to be honest unto

himself can be relied upon in every other way. He places

value—not a price—on himself and his principles. And that,

in the final analysis, is the me

asure of anyone’s sense of

values—and of the true worth of any man.