President Franklin Delano Roosevelt
January 4, 1938
THE PRESIDENT: Well, having talked to the bankers [referring to Budget Press Conference] for the last hour, I am glad to welcome the medical profession. I don't think there is any particular news.
Q. Mr. President, in Detroit today the Hudson Motor Car Company announced a new small automobile to compete with Chevrolet and Ford. They announced also that they would put six thousand men to work in a few weeks in addition to the six thousand men already at work, that they were going to spend eleven million dollars, and that their payroll would be increased by over a million dollars more than it is. The news is rather good for this season, and I was wondering if you would care to comment.
THE PRESIDENT: Excellent, excellent, perfectly fine. I wish we had more of it. That reminds me—I will tell you a story. Last August, the last week of August, I was in a little village, and I happened to know the fellow who runs the garage, and who is also the agent for one of the larger automobile companies. We used to play on the same ball team together.
I said, "Bill, how are you getting on?" He said, "I am getting on too well."I said, "What do you mean?"
He said, "It is this way: You know, people in this vicinity to whom we cater, own a total of about one hundred automobiles—pleasure cars—which they use. Well, these people are not rich and they do not get a new car every year. They get their cars every three years or four years or five years or six years. I figure the average turnover is about one car-one new car—every three years, perhaps a little bit more. I figure they ought to buy about thirty new cars every year." Then he said, "This year, in this community, they have bought sixty-two new cars. Well, I have sold a lot of them myself. I have sold over half of them myself. I had no right to and they had no business buying sixty-two new cars. That means that next year I am going to have an awful year. Sixty-two families out of a hundred have new cars, and I don't think next year I will sell more than ten or fifteen cars. That is why I say I am doing much too well."
I just use this by way of example of one of the evils I mentioned yesterday in my message to the Congress. I said, "How do you account for it?" He said, "There are two reasons: The first is that all of us fellows who sell cars have been pushed to sell more cars, and we have been told to hand out a line of talk."
I said, "What kind?" He said, "We have been handing out a line of talk that next year the cost of an automobile will go up a hundred dollars, that you had better buy one now, that next year it will cost a hundred dollars more. You have no idea how that word has been spread out in this country: 'Buy now or you will have to pay more next year.' A lot of people bought on that statement who would not have bought otherwise. Another reason is that they did something I thought was awfully foolish. We have been selling cars on an 18-months' paying basis, and they told us that we should adopt a new policy of selling on a 24-months' paying basis. Well, what does that mean? I used to go and say, 'Buy a new car and pay for it at forty dollars a month.' I can now go to them and say, 'You can get a new car for thirty dollars a month and pay for it in twenty four months instead of eighteen months.' They say, 'That is pretty good; I guess I will buy.'" In other words, they have been budgeting cars too fast.
That is one illustration. Another one is this: I said to a very large steel manufacturer the other day, "How is it that you suddenly dropped from 90 per cent to around 28 per cent?. . . . Oh," he said, "a lot of factors entered into it. One was automobile steel. Then there was another curious thing that happened: The railroads in the country last spring suddenly came to us and gave us orders for all the steel rails that they needed for a full year and they said, 'We want them now.' So all through the summer we were working seven days a week, turning out steel rails, to fill these orders, and they got all their steel rails in the course of the summer months. Now they do not need, or want, any more for another nine months."
I said, "What do you think of it?" He said, "I call it highly unintelligent."
That is another illustration.
Q. Is that another parable?
THE PRESIDENT: No, it is a straight story actual illustrations.
Q. Stories about sixty-two families?
THE PRESIDENT: Oh, no; it has nothing to do with individual people. It was just an unintelligent way of handling business; and it is so admitted by the people today who were responsible for it.
Now, we want to help them so they won't do that sort of thing in the future. If there is any way in which the Government can help, we will help.
Q. Why did the railroads want the rails right away?
THE PRESIDENT: Because they thought the price of rails might go up. I think that was the chief reason.
Q. Would you say it is a good business idea for a firm at this time to expand as this firm is doing?
THE PRESIDENT: I don't think I can go into that because this, after all, is a selling campaign. If we can put men to work building cheap cars for the people of this country, that would be pretty good, with emphasis on the word "cheap."
Q. How can the Government do anything to prevent this type of unintelligent business operation? Can you give us any idea of how you would go about it, what can be done?
THE PRESIDENT: Oh, yes; I think so. Let us take an example: Don't write the story that I am advocating the immediate reenactment of NRA. But the fact remains that in quite a number of the code industries under NRA it was perfectly legal for the heads of all the companies in a given industry to sit down around a table with the Government, and, from their own statistics and the statistics of their own trade associations and the statistics given them by the Government, figure out much more clearly than they ever had before, as an industry, what the probable demand of the country would be for a period of six months or a year ahead. In other words, they could make a more intelligent group estimate as to the purchasing power of the country and the inventories of the particular article necessary for the immediate future.
Now, done that way, it is a perfectly legitimate thing for them to do—sitting there, with the Government, and trying honestly to find out what the needs are going to be for the next six months or a year, so that they won't overproduce. It is legitimate just so long as it is done without any attempts at price-fixing or driving competitors out of business or things like that as a result of the conference.
There is a question today whether a meeting of that kind, around a table, is legal under the anti-trust laws. A lot of people are afraid of it. I would very much favor making it a completely legal thing to do: to meet around a table to find out, with the help of the Government, what the demands are, what the purchasing power of the country is, what the inventories are.
Q. How would the estimated annual production be allocated among the units of the industry?
THE PRESIDENT: Don't do that—keep competition. . . .
Q. In your message yesterday, you mentioned the need for responsibility on the part of labor organizations which should grow commensurately with their own power. I wonder if you think there is a need for further responsibility on the part of labor unions at the present time?
THE PRESIDENT: Yes—I think it is growing too. For example, among labor unions there has been a distinct increase in willingness to make public their accounts of receipts and disbursements. Isn't it the Garment Workers Union in New York that makes public its receipts and disbursements?
Q. Yes, sir.
THE PRESIDENT: That is a growing tendency, and it is a good thing.
Q. I think his question referred to the need and your answer implied—
THE PRESIDENT: Oh, no; I meant there was a growing assumption of responsibility.
Q. You said it was a good thing that this trend is now evident. Could you explain that a little further?
THE PRESIDENT: The trouble is when you come down to specific things. I suppose the easiest way of putting it is this: In England there is a great deal more responsibility on the part of labor unions than there is here. They went through the growing pains there that we are going through here now; they went through them ten or fifteen years ago; and we are now heading in the same direction that they have been going.
Q. There is an idea that has been growing among some members on the Hill—an idea of having labor unions made responsible by legislation, responsible for their contracts, mutually responsible with employers.
THE PRESIDENT: It is difficult to answer that specifically. All we can point out is a series of cases where we have to devise ways and means to prevent them from going on in the same way. Just for example, .there is a very difficult situation at the present time out in Portland, Oregon, where they have those lumber mills where they saw up the logs. A good many years ago they organized a union among the workers in those mills which became an affiliate of the A.F. of L. and which was placed under the jurisdiction of Hutcheson of the Carpenters Union. Later on, the C.I.O. went into the same plants and organized. As I remember it, the Federal Government held an election there, and the C.I.O. organization won a majority, whereupon the minority refused to accept, pulled out the teamsters, and tied up everything "tighter than a drum." Later on the Governor of Oregon held another election. He thought it would go the other way. It didn't. They still went C.I.O. by a bigger majority. The entire works were still tied up.
That would seem to be a local situation, but it isn't. It extends back to the East Coast. The carpenters on the East Coast are told that they cannot build a house out of red wood that is shipped out of Portland, Oregon. That is a pretty impossible situation, to tie up building construction in the East because there is a jurisdictional fight in the West.
That happened to be between the A.F of L. and the C.I.O. You get the same thing in building trades. You want to put a garbage chute into a new apartment house or a dumbwaiter chute, and one particular union might start to go ahead with it when the elevator shaft men would say, "No, that is an elevator shaft," and then the whole building is tied up. That is the kind of thing I was referring to. We need definite improvement to end jurisdictional disputes.
Q. Do you expect to get it done with Federal legislation?
THE PRESIDENT: I don't know.
Q. Do you think it should be done with Federal legislation?
THE PRESIDENT: I think the first thing is to give them a chance to do it themselves, the same way we gave capital a chance to cure some of its ills; do it, so far as possible, without legislation.
Q. Does that imply that if capital does not do it that legislation may be had?
THE PRESIDENT: If neither side cures its ills, something will have to be done.
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