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THE ADDRESS PREPA.."9.ED BY MR. HOPKINS WAS RF.AD BY AUBREY WILLIAMS,
DEPUTY ADMINISTRATOR OF THE WORKS PROGRESS ADMINISTRATION, WHEN SENATE
HEARINGS ON THE RELIEF BILL MADE IT NECESSARY FOR THE ADMINISTRATOR TO
REMAIN IN WASHINGTON•

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THE

WORKS

l)<JCUMENTS

PROGRAM

i\ternlY;;;v

******

ROOM

--Works Progress Administration--

JUN 21 19
- l..1s~A~--<

For Release on Delivery,
Saturday, June 12, 1937

COMMENCEMENT ADDRESS OF HARRY L. HOPKINS, WORKS PROGRESS AmnNISTRATOR, AT
:BABSON I NSTITUTE, 10 :30 A.M., SATURDAY, JUNE 12, 1937 AT BABSOl~ PARK,
MASSACHUSETTS.

I am to speak t o you on "The Business of Relief and the Rel ief
of Bus i ness".

·r

am aware that thi s may bri ng a somewhat apopl e ct ic rea cti on

fro r.1 certain old-line bu siness men who ha ve now come to believe t hat because
bus ine ss in gener a l no longer nee ds l a rge-sca le government a ss ist ance , the
unemployed no longer need it either,
But I am not tal k i ng to them today .

I a~ talking to young men

whose problem it will be, during the next t we nty or thirty year s, to adj ust
the great indust rial system which ol de r men have built to the r api dly
changi ng economic, s oci al and political order i n AI'1er i ca .
between nov1 and 1957 or 196 7?
1917?

What will happen

Well, what has happe ned since 1907, or even

What has happened in transportation and in communicat i on?

happened in world pol itics?

Wha t has

Or, to ge t clos0r t o the basis of t h is dis -

cussion, wha t has happened to a large se gment of the population of t his
country, mainly through mechanization and technica l change in industry and
commerce?
Last week at Grinnell, Iowa , my college class had i ts twentyfifth reuni on.

I couldn't be there, a lthough I wan t ed t o go .

But I f ell

to thinking how little I a.reamed., on the day I got my degr8e, of the
change s that woul d come t o t h i s country in twenty-five years , or of what
my part i n them would be.
I believe that further ch..ange s, perhaps somewhat cU ff er ent in
na ture, will come even more r apidly during the next two or three decades.
They will come , in my opinion, be cause the people of the Unite d Stat es
want them and will approv~ them b y the democrat ic meth od provi de d for
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No. 4-1548

Certainly the basis for several profoun0. chan~es

!-las been laid during the past fo,JT years •
. Most of your futures are assured .
destiny of leadership.

You have be rm favored with the

How far you will go toward really achievin~ it

depends on the way in which you meet your responsibilities.
What does yo11r cornparg,tive security do to you?

Does it make you

smug and self-satisfied, or does it bring you a certain humility and a
real determination to use this flying start that has been given you in a
big and hu.~a.ne way?
All over the country, this month, thousands of bewildered students
are finishtng college and university courses with no jobs to go to.
them, also, it is called

11

commencementl1 •

only of a long, heartbreaking wait,

Commencement of what?

For

Perhaps

Perhaps of an endless round of futile

interviews, ending in a breadline or on a WPA project.
As you move from this institution into junior executive offices,
what are you thinking about these other fellows?

They have worked just as

hard as you have -- perhaps, in many cases, harder.
You can tell them, "Root, hog, or die.
S})Onsibility.

11

You can deny moral re-

You can -- but I don't believe you will .

I believe you will

recognize -th.e· ·barriers which this system built by your fathers has placed
in front of the m~ and that you will come half--wa.y.

That is wh;y I am here ,

without any trick patent-medicine panacea, but merely with a few questions
to raise an.d a few ideas t o present. which may be. of help in thinking the
whole thing through.
In the first place, there seems to be a wide assumption that
business operates on one principle, and relief, or aid to the needy, on
quite a different principle .

Business, it is sai d , operates on the prin-

ciple of self-interest; charitable relief operates on the principle of
altruism.

That is the r eas oning on which we were all brough t up, and

during a certain period iri our national development it was true .
But one of the gr oat change s in the past two or three decades
was the change which made it no longer true - the complete change in relationship between business and the standard of living of all the people.
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This change arrived a good many years before either business or
the government was willing to recognize or acknowledge it, and the result
was the tragically aggravated conditions of 1929 to 1933.
The crash did not come a number of years earlier merely because,
although the stage in this countl'y was all set fcr.r it, we managed to keep
up our prosperity through a succession of ingenious but destructive devices.
Du.ring the World War we raised 40 billion dollars and sent it all abroad
to be destroyed by us and by our allies.

The allies o-oliged us by not

paying back the capital we loaned them, and. which they destroyed.

After

the war we worked out a still more ingenious method of keeping up American
prosperity.

01.u- investment bankers raised tens of billions of dollars

from private investors and loaned this money abroad.
have since been defaulted.

Many of these loans

But while we were shipping the money out of

the country we kept up a feverish prosperity, because the foreign countries
which received it were able to buy our goods with our money and thus keep
our workmen employed.

A dole to the foreigner was regarded as sound finance.

Also, I might add, there was no constitutional Question raised, since the
foreign worker is not protected by American constitutional guarantees.
We launched with haste, in 1933, a vast program of government aid
for the unemployed.

But in that year, the speed with which we worked - a.nd

which is now so severely criticized - was not fast enough f0r many of the
peop'.l.e who now deplore it.

Many important business leaders came to Wash-

ington as the winter of 1933-34 approached, and pleaded for additional
government spending to keep millions of unemployed busy, and give them subsistence.

That was when the Civil Works Administration was launched on top

of the Federal Emergency Relief Administration and 4,000,000 idle and needy
Americans went to work in 90 days.

These two organizations have since boon

succeeded by the Works Progress Administration, which took advantage of the
experience gained 'by its predecessors and limited federal aid to those
persons in need who coul~ be employed on useful public projects which were
requested by local officials.
For the present it is enough to say that I will not plead for
government aid to the unemployed merely on humanitarian ground.s, but will
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ask you to look at tbe whole question from a business angle on the basis of
its relation to the ecoriomic sys tern as a whole.
All through the 19th and the first part of the 20th century,
business was working for a rapid accurrru.lation of capital resources and
capital plant.

We did not consume all that we produced; each year we set

aside a la:cge part of our production to build and finance our capital plant
in order to produce gooc'ls more efficiently and more abundantly.

This was

necessary in a new country which was making a rapid transition from a simple
agrarian economy to a modern industrial system.

Ana. regardless of the fact

that a large part of our national incoMe was being diverted into an accumulation of capital. rather than into a.ire ct consumption, the system
operatei so as to maintain our growing population in comparatively full
employment• . And as long as there was an opportunity for ce.pi tal to invest
its savings, the investment in the capital goods industries put men to
work.

Thus we haa employment, and thus we had prosperity of a certain kind.

It is true that there were periodic depressions brought a·oout by over-confidence in the capacity of the system, but in the end they were overcome
through the opening of new markets in foreign trade, the development of
big new industries or the expansion of capital plant through the mechanization of old industries.
All through this period, popular standards of living were helcl
down in order that more money
expanding of industry.

□ ight

be available for the perfecting and

But early in this century a few industrialists

began to realize that the very perfection of modern mass production might
cause it to fall of its own weight unless more buyers could be found. for
its products.
Henry Ford was the first great manufacturer to act upon this
theory, with his extreme reductions in prices and substantial increases
in wages.

That was a good many years ago.

Since that time virtually

every industrialist in the country has recognized that !'lass production
depends upon the ability of the m:.:i.ss to consume, whether the product be
silk stockings or electric razors.

Business has spent billions of dollars

in advertising campaigns. carefully calculated to make more _people want
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that is , a hi g..1-ie r st3..nd3.rd of living .

It has a rr a.ngP.d P..11 kina_s

of long-time systems of paying by in stallments , so that people can have
l uxuri es even if th'ey do not have the cash on hand to pay for them.
Yet at the same time, a gre at ma.ny elements in business , throuGh
its Chamb ers of Commerce and t ra c1.e as s0ciati0 ns, have been oppos ing t he
movements of l abor and of agri cul tm·e to a chieve more buyi ng-powe r.

And

they have been the spe o.rhead of the attack against governme nt spendi ng to
provide wo rk and buying-power for milli cns whom they could not themselves
employ.
One of the most puzzling things about t hi s question, to me, has
been t h is basic inconsi r,tency in the thinking of s 0 many business men.
They wiJ.l exert every poss ible sa les effort upon the mass e s , but they vlill
cry out against a l most any pl an which make s the ~.asses bette r able to buy.
I do not grant that tho argument fo r lower costs instea.d of
higher wages has any real valid i ty i n the sense that it i s a separate
school of thought.

Both element s are needed , and i nstea.d of being

oppos ite s , the;ir are really inse para~)le.

They 2.re be i ng achieved every

day , and have be en for a good many years.
The t rouble , it s eems to me , is tl:':a t many bus iness men are not
clear about what t hey want ,

Ha,lf of their thi nki ng is ba se d on the old

viewpo i nt of a low standard of living t c ha ve more dollars to put i nto
plant and. i mprovenent , half i s based on the new ma ss-pr oduction vi ewpo int
of which mass buying-power is the keystone.

And. their thi nking on t he

t win questions of unemployme nt and. r eli ef is not a part of t he new concept,
but of the old .
For example, if t he ~ost of rel i P, f is the whol e question , and
our aim is to save federal money , why spend any at all ?
A frien d of rr.i ne who was feelfr.g som8what 'bitter about thi s
sor t of thing recentl y suggested sarcas t ica lly to me trot the Lioert y
League should spo nsor a WPA project t o h?..u l all the une!!!ployed out into
the middle of the ocean and drown them .

He had thought it aE ou t in

great detail.
He assu~ed that there are nine millio n unemployed, and that they
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have thf' average of 1½ persons dependent on each of them, or a total of
23,G00,001) persons either unemployed or dependent upon the ,memployec't.
This is a.bout 19 per cent of the total population which could be drowned.
But then he got to figuring that since 1933 some 10 billi on
a_ol1ars have been spent by local and feder a l governments to support or
pr ovide wo rk for these people.

Nearly 7 billions of this have gone fo r

wages or relief benefits, moct of vrhich went quickly for food and cl othes
a.nd. rent.

And nearly 3 biJ.lions went for other purposes, l arge ly for

ma terials such as cloth, iro n and steel, lumber, paint, cement, to ols, etc.
Now if the unemplo yed were all drownerl, these purchases would
not be made.

I

will l et you imagine for yours e lf how many stores and

factories would close, how many transpo rt a ti on companies would fail.

After

all, our total retail trade in 1935 was only three times that amount.
So this cure for une mployment would only re-sult in more unemployment.

Of course it is an extreme and absurd. idea, but the consequences

po int to a perfectly valid conclusion.

That conclusion i s that we cannot

view the federal work program and other official efforts to a i d the underprivileged as activities of a purely par3.sitic nature, with01:t e conomic
implications over and beyond the mere a id to people in need.
A noted English economist has summed up the problem of purchasing
power in an instructive parable concerni ng two i maginary commu;· '. ties.

It

is granted at the outset that the two co mmuniti es possess equal t echnical
knowledge.

One, however, has its capital plant already fully built up,

wh ile the other is still in the process of co mpl et ing its plant.

On ordi-

nary standard.s, says the economist, t he first community would be regarded
as the riche r of the two.

But the second or poorer communi ty would actually

be abl e to enjoy a h i ghe r standard of living because the opDortunity for
new investment would permit all of its pe ople to be e:nployed.

It would

be able to do this, the economist added with considerable ir ony, until it
had completed its pl ant ana. caught up with the richer community.

Then it

would become just a s poo r E>,s the rich community.
Of course, all this is predicated. on the old-time r elationship
between business and popular st andards of living, and it docs not take
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into account the effor t s either of government or of business to raise
those stand.B.rds.
Thus far I have assumed that you will a9-,11it we have mass
unemployment, even in the face of industrial production almost at the
1989 level.

There is a marked tendency on the part of some people t o

quibble over whether the .jobless total 7 million or 9 million .

But we

know that due to better machines and more efficient methods, nine workers
can do the work today which required ten in 1929, and six workers can do
t!1e work that required ten in 1920 .

We also know that despite this

increase in the amount_ that each worker can do , the number of workers
who need jobs is increasing cy 500 , 000 each year because of the growth
in our population. · We know further that in their sear ch for greater
efficiency, industries are on the move, leaving stranded workmen and, in
fact, whole stranded areas behind them .

Anet we know that the problems

of agriculture are grinding down more and :nore farmers into the status
of tenants and share-croppers .

What will put the job-se ekers of America back to work?

The

only way private business can do it is by heavy expansion in the service
field and a tremendous increase in the level of industrial production.
We must not . forget that even in 1929 there were 2 , 000,000 unemployed, and
the experts tell us that the only way industry can reduce unemployment
even to that level is by producing 20 per cent more goods tha.n it did in
1929 .
What will we do with one-fifth more of everything made in
America

than we had in the greatest yea r of our ind.u stri a l history?

These things must be consumed, and on any realis t ic ba sis the backbone
of this consumption must be the dome stic market .

In short, the American

people must ha ve both the desire and.. the income to buy .
What about the American income?

You know the Br ookings fig~res

on 1929, when the average American famiJ.:r~ needed $2,000 a year for the
minimum of comfort , and had only $1,500 .

You know that the average

annual wage was down to $1,100 b y 1933, and that probably half of all
the families in the nation got along on less than $1,000 that year.
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You know t hat in the lower . strata are large submerged groups wi th
almos t no buying power.

At any rate , we came to great grief shortly after

a President had held forth the hope that poverty might be abo l ished, with
a chicken in every pot and perhaps two cars in every garage .

I have no

quarrel with his idea ; only his method was wrong.
To recogni ze the fact that government must come to the a id of a
large number of its people under circumstances such as we face today i •s not
an attack upon pr i vate business or upon the prir;Giple of private enterprise .
It does not impeach the idea of private enterprise any more than does the
theory of the Protective Tariff - the theory that many pri vato b.dustries
could not develop without the shelter of a government tariff wall .

Whether

or not we believe in this tariff theory , the fact r emains that it has bo on
accepted by the major secti ons of American business , and tlla, t rightly or
wrongly it has guided our government policies during the gr ea t er part of
our history.
Tho truth of the matt er is that we must not confound the principle
of private enterprise with the doctrine of l a,issez faire and a do-nothing
government .

Private enterpri se has never been able to oper ate without

government intervention of one sort ·or another , and different conditi ons
necessitate different types and deeroos of government int e rvent ion in tho
economic order •
It is impossible for mo to pres ont to you , in a sj_ngle talk , tho
details of the Federal Gove rnment ' s re l ief program.
hecauso tho need was so pressing .

I t began a s a dole

At every stage since then - through the

C. W.A. , the latter stage of the F. E. R. A. and the. entire existence of the
W. P. A. - our conviction hP-s been strengthened that the providing of useful
public jobs is oy far the best way to help the able-bodied unemployed.

The

quality of the public work which these unemployed have been given to perform
likewise has improved steadily.

The projects are originated and. requested

by local officials everywhere , and these local officials demonstrate their
communities • desire for the improvement s by contributing an aver age of onefifth of the cost in local money.

Thousands of those local officials , of

a ll political faiths , have given public t es timonials both to the usefulness
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of the projects and the qual ity of the work .
Hearly a million people have left the ViTPA rolls to take pr i vate
jobs as rec overy has progr essed .

It is our belief , supported by thousands

of testimoniaJ.s, that the federal jobs they have had have kept t he ir c:i.ins
up and maj.ntained their wo rking ability so that they were fit for pr ivate
jobs when such jobs came along .
I hope you will neve r fo r get that , no matte r how much we talk
about economics, we a r e dealing with human beings
human re sources .

with the nat i on 's

One of your responsibiJ.ities is to be able to dis crimi-

nate between what makes s ense and what docs not , r egar dle _s s of whether tho
corr ec t answer p l ease s or annoys you.
There are t h r oe or f our sweeping charges which businessmen have
brought r opea.tedly against the unemployed which are not only cruel but which
do not make sense .

It i s ri dicul ous to s2.y that millions of unemployed are loafers,
that their wo r k is no goo d or +,hat they will refus e decent pri vate jobs to
stay on fede ral subsist e n ce.
of them.

It is ridiculous because there a re too many

These milli ons are no better and no \'.'Orse than. the American people ,

though they maybe less for:;unate .

Of course , they include some who are

l azy and stupid , just as the na tional population does .

But 85 per cent of

the letters we rece i ve from them are simply r eques ts for a _chance to wo rk.
Do those letters mean they don't want to wo r k ?
have praised the ir work .

Thousands of communities

Is that because i t is . poor?

During the past two

months we have investigated 75 separate charge s, in 20 states that WPA
wo rker s ha ve r efused private job s, but not a s i ngle cas e of unjustif ied job
r efusal has been found .

I can docume nt the se s tatem8nts with whole filing

cases of ovid.cnce , contain::.ng stori 8 s of courage , patriotism and character
that wou1d am;:i,zc you; but to do so wou1d r e q1::.iro a whole c ourse of l ectures.
Inst8ad, I mu s t p in my faith on your common sense -- on your wiJli ngnoss to
recognize t ha t the:-e .:nust be 2.verage hones ty , u nd i!, dustr;y a nd rimbit i on
amone several mill i 0n jobl ess pe ople distrib~ ted ove r eve ry section of the
land:.
Summed up , then , the manner in which the work s program interacts
with the econom!!l~itis~~m is exceedingly simple. I~rwlf f~ there i s a jam
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in private capital investment ; the government · sets the people to work on
b1.,il ding up the public capital plant of the nation -~ building schoolhouses , hospitals , ai rports.

Insofar as there is a shortage of purchasing

power for the various pro fessional and c1 1ltural services , the government
sets people to work providing such services -- h9spital and nursery care ,
educatio n, recreation, theatrical and artistic entertainment -- eithe r
gr a tis or at low cost.

But a,11 the time the two or three millions of workers

who have been employed by the government in building up the social plant
a nd providing needed social services are getting paid, and what they are
paid they immediately spend.

Their spending helps definitely to keep the

e conomic machine moving upward instead of downward , as it was moving from
1929 to 1933,

And all th e time the workers a r e being maintaine~ as a

r eserve labor pool for business , whenever needed.
Now what is the cost of such a poli cy ?

President Roosevelt has

asked fo r an appropriat i on of a billion and a half dollars for the WPA ,

To

that figure we must add , to be sure, the cost of local and State direct
relief for those not on the WPA rolls.

Even if we includ.e in one total all

expenditures for r elief , the combined figure is less than five per cent of
our present nati onal income.

England , which is considered a model of fin~nc ia.l

conserva tism, is spending 11 per cent of its national incornE: for social
se rvices , notwithstanding the fact that its proportio~ of unemployed in
r elation to its population is much l ower tha n our own .
Compare this expenditure -- this insurance fe e against depression~For the thr oe years 1928 , 1929

with the financial cost of the 1929 collapse .

and 1930 - despite tho big decline in 1930 - our na.tional income to tal ed
228 billion dollars .

billion dollars.
dollars .

For the three years 1931 , 1932 and 1933 it tot al ed 133

That is a d.epression loss in thr ee years of 95 billion

True, it somewhat overstates the decline because of falling prices ;

yet in terms of money incom0 it averaged 31 billion dollars a year for three
successive years ,
Perhaps as prospective l eader s of American business you would also
be int erested to hce r what the depression did to business profits .
goi ng to bore you with detailed totals .

I am not

But the figures as to the return

on invested capital a.re simple and signific ant .

For the five years , 1925

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t o 1929, the average r a te of p rofit- for all cor:poration--s, figur-ed on cap ital
For the f ive

assets -- land, bui1d.ine an-d. equipment · -- wa-s6 .3 · per cent.

years , J.930 to _1934, the average rate - of profit has to be fi gured in red
it wa:s minus 2 .5 per cent figured on capital asse ts.

And if we chart in

dollars a ll profits and losses during t h e ten-ye ·,r period , we find that
while capital made substantial profits in prosperity years , two-thirds of
those profits were ultimately put back and only one-third left as net.
Now I am not going to extoll the virt.ue·s of ab--stinence from profits
-- to tell you for exa.m ple , that if capital had r e strained i ts profits to
the modest total which in the ond it actually r etained, and had di stributcd
the rest i n consume r-purcha si ng power, the community would have b ee n saved
the stagger ing co st of the a.epression and the capitalist would h ave b oon just
as well off as he was in ma king higher profits and then lo sing two-thiras of
them.

All this is visionary, and, besides, un·a.or fr ee e nt e rprise business

cannot li mit its profits to m: avo rage fix ed r ate because th e re is no one to
guarantee that it will go t its IJ1odest profits once it decide s to seek only
modest profits .
But t his much I ca n say.

Let the memory of wl1at 1S29 did to

profits keep you fr om demolishing the system of protective insurance v1hich
the government has set up in the work and socia l -security pro

am s.

To

demolish this program before business has absorbed the u nemployed will save
for business a few pennies in taxes, but for eve ry penny it wil l

save from

Uncle Sam it will have to g ive dollars to future Depressions.
In manifold ways, the prospect of st eady income is brightening
for the depressed groups..

The wages - and-hours legislation now before Cong~·e ss

should open p ri vate jobs to many who cannot now find them.

Federal a nd s tate

governments a lready have begun to supply benefits to those who are aged or
handicapped, or ·ror a variety_ of reasons, unable to wo rk.

I do not say that

a ny of these plans is perfect , any more than the Federal v10 rk program is
perfect ; but they all r epr e sent a beginni ng in broa den ing the buying-;-power
of the American peopl e so that i t can support a sufficiently incr ea s ed l ovel
of production to make importan t inroads i nto the ranks of tho unemployed.

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There is no gainsaying the· fact that the· depre-sdon has been
stopped and that recovery has advanced · to· the poirtt where- prodnc-tion,
measured in ab solute terms, is about eq-,1al to 1929.

If

vre

measure it in

relative terms we still ·have a goo-cl distance to go, in view of the incr ease
in population since 1929 .

Never~heless, we have,~gone a long way, and it

would take a pretty severely prejudiced individual to deny that the Federal
works program has played an important part in this recovery .

Instead of

15 , 000 , 000 unemployed that we had in March, 1933 , we now have eight or nine

million.
The crucial ques tion is what wo should do in the face of this
reduction in unemployment and increase in production.

Should we dismantle

the Federal Works Program on the theory of an approach to normalcy?

Or

should we consolidate our hard-won gains by maintaining the purchasing power
of the unemployed?

I can s ee no choice, short of inviting a repetition of

1929, other than to carry on with a policy of pro te ctive spending against

depression.
Tho larger aspect of the picture - - the v.rhole question of an adequate
income for the mass of the people - - is one of such infinit e complexity that
we need to approach it in all hUmili ty and wi thout prejud.ice.

The answer will

be worked out, and the S;'.-'stem preserved or destroyed , by those of your genera ti on .

You must decide what this country and its tradition of democracy a re

worth to you.

You must determine the price you are willing to pay, whether it

is in cash or hard work or public spirit, for the American system .

Those of

you who go into public life rr:~st have tolera nce for the needs of business and
the honest mot i ves of business men .

Those of you w:11.o go into business must

have equal tolerance toward the efforts of the government to assist in balancing the intricate mechanism of this nation .

All of you mu st give , important-

ly and honestly, of your brains and your fine training if you are to justify
yourselves, for you have had a better chance than most of your generation.
Some day our children will laugh at us for the way we have kept
people in idleness -- l et human resources rust and decay -- while great segments of the population were in desperate need of the things that might have
bee

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No. 4-1548

I believe we have - made importB,nt beginnint;S in the ri-ght direction,
but they a re onl;y beginnings.

As business technicians, their development is

t o a lar ge extent b. your ha nds.
Suppose you had a big industrial plant, in which from ten to twenty
per cent of the worke rs had. nothing to do all the time.

S1•ppose about one-

third of its employees could not afford adequate food or clothing or shc l t or.
Well, you

~

the great e st plant in the '.vorld -- the Unit e d States

of America -- and th o se same things are true about it.
To what higher purpose could you use y0ur excell ent tra ining than
tho adjustmont of this American syst em so that a. do cent minimum of its comforts is ava ila ble e ven unto tho l ea st of its people?
There was a certain ca rpenter of Galile e who ha d
ideas along this line .

SO liilo

v e ry important

If you ne e d guida nc e in tho big ,job you f a ce, I would

recommend. His teachings and philosophy.

They a re as g ood as now, they have

b oon used so seldom.

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NORTHWESTERN UNIVERSITY