Doctor, Cure Yourself

The nation's businessmen spoke out in great numbers on the state of the U.S. economy, mixing pessimism and optimism with a healthy amount of sharp selfcriticism.

At the 42nd annual meeting of the National Industrial Conference Board in Manhattan, a panel of economic experts took the view that no real business upturn is likely until next year at least. One of the big reasons for the pessimistic view: a new report from businessmen pointing to a further decline in spending for plant expansion that will last into 1959.

In Wall Street Henry Clay Alexander, chairman of J. P. Morgan & Co., called for a tax cut of $5 billion or more as the real spur to economic activity. Such a cut, said Alexander, "is the course of prudence in today's circumstances. Our economy is as much a weapon in the struggle for survival as our rockets and our missiles."

Back to a Lost Art. Most of the talking was done at an economic mobilization conference sponsored by the American Management Association in Manhattan and organized by Charles H. Percy, president of Bell & Howell Co. Conference theme: what can businessmen do to meet the challenge of the recession without leaning on tax cuts or other Government help? The principal way to fight the slump, said Percy in his prepared speech, is to "produce better values -and do it fast." His company moved up by a year the introduction of nine new products, reduced prices to attract customers, planned a 67% increase in spending for capital equipment in 1958 over 1957. Said Percy: "We cannot believe in profits without believing in risks." Bell & Howell payoff: first-quarter gains of 21 1/2% in sales, 23% in net earnings, 4 1/2% in total employment.

Another way to fight the recession, said Whirlpool Corp. Chairman Elisha Gray II, is to take a close look at products already on the shelf and see why they are not selling. "You can only conclude that it is because the merchandise we manufacturers have offered has not been attractive enough. Our past market experience has told us that we had overdesigned some of the features we were offering -I refer particularly to the complexity of some of today's modern home appliances -and our review has brought us back a little to products that are simpler to operate, a little more direct in their appeal to the customer."

Attracting the customer not only involves redesigning and lower prices, but a return to "the lost art of selling," said R. S. Ingersoll, president of Borg-Warner Corp. "In this connection the automobile industry has been the whipping boy of this recession. But the same thing is happening in other industries too. Today, there is a re-emphasis on healthy, hardhitting selling."

All very well, said Cloud Wampler, chairman of the board of Carrier Corp., but industry must not confuse hard selling with overselling. "Did the sale of more than 7,000,000 motorcars in 1955 help or hurt the American economy?" Wampler admitted that his own firm has also been guilty of overselling, said it intends to correct this by doing "a better forecasting job" about its markets and the general state of the economy.

Satisfy Appetites. One of the bugaboos of the recession is the theory that the nation's industrial plant has become overbuilt, now has too much capacity. "I doubt that this is true," said Harry A. Bullis, chairman of the board of General

Mills, Inc. "We need to keep foremost in mind the appetites of the consumer and the capital needs of our businesses to keep those appetites satisfied." In the food industry alone, said Bullis. there is a huge market for foods with "built-in maid service" as a result of the increasing number of housewives who are working and the shortage of domestic help.

What such consumer needs mean to the food industry this year, said Franklin J. Lunding, chairman of the board of jewel Tea Co., is an expansion program despite the recession. Some 2,000 new stores will be built in 1958 by food chains and another 1,700 stores remodeled, creating approximately 50,000 new jobs.

Perhaps the best example of confidence in the inevitable increase of consumer needs was given by Frederick R. Kappel, president of American Telephone & Telegraph Co. Though the rate at which A.T. & T. is installing phones is down about 40% this year, "we have chosen to go ahead with our modernization program virtually without change." This year A.T. & T. will spend about $1.3 billion on added capacity to take care of more customers, more long-distance calls. In the 1949 recession A.T. & T.'s employment force declined nearly 10% when business fell off. Today the company has about 25,000 more people at work than in the boom year of 1955, this year intends to recruit 1,500 college graduates. Said Kappel: "We are adding capacity faster today, in relation to the growth we foresee in the months ahead, than we have done for quite a while. We are sure the capacity will all be used, but some of it will not be used immediately."

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