GOLDEN RULE

Greymouth Evening Star, 16 January 1928, Page 3

GOLDEN RULE

STORY OF TRADE EXPANSION The remarkable story of the clothing firm of Arthur Nash is too full of paradoxes, and too much the expression of a single: exceptional personality, to give -much guidance in the framing of an industrial policy (says Ramsay Muir, in his book “America the Golden”). It is a fairy tale, and full of charm: but only a man inspired by a sort of evangelistic fervour, and capable of communicating it to those who worked with him, could hope to reproduce its methods with success. Even then he would fail, if what attracted him was not the material advantage to be reaped from these methods. Nevertheless, there is much that is instructive in the story. It affords remarkable illustrations of the striking results . that may flow from the payment of generous wages, and from the placing of confidence in work-people. At the end of 1918 Mr Arthur Nash, a wholesale tailor in Cincinnati, passed through an economic and a spiritual crisis at the same moment. The spiritual crisis was the more important. It arose from the emotions of the war, in which two sons of his were engaged. He was driven back upon the New Testament; and, reading it afresh with heightened comprehension, he reached the conviction that its essence was the Golden Rule, and that this, and not any calculations of profit, must in future be his rule of life, in business as elsewhere. This had a close bearing upon the economic crisis through which he was also passing. Business, was doing badly. He had lost during the year 4000 dollars of his total capital of 60,000 dollars. He resolved that, if things did not ‘quickly mend, he would abandon the tailoring trade and buy a farm with what remained of his capital: perhaps he thought that life according to the Golden Rule would be easier on a farm than in a trade which largely depended upon sweated labour. He had actually begun to look out for a farm when he was. persuaded by pity to buy a small making-up business. The first thing he did on taking over the' new responsibility was to go over the pay roll. He read it with horror; the Golden Rule would not permit him to continue such rates. So he went into the workshop, told the astonished workers about the Golden Rule, announced that all their wages were raised —as much as 300 per cent, in the case-of the worst paid workers, and . not less than 50 per cent in the case of the best paid—and asked them also to try the Golden Rule in their relations with himself. Then, satisfied that his capital would not last long at this rate, he went off to Indiana to look for farms, against the time when he would have to give up business.

At the end of a month he returned and went to his office to find what the loss had been. . Instead of a loss there had been a big profit; because output had iniproved amazingly both in quality and' in quantity. During the course’ of' 1919 sales were multiplied fourfold. New premises had to be taken. Two further increases of wages were voluntarily given. Yet at the end of the year there was a profit of 42,000 dollars, on the 60,000 dollars capital. Such were the practical results of the Golden Rule.

PROFIT-SHARING. The profits, had all been invested in the expansion of the business. But Mr Nash felt that he had no right to the new capital thus created, and he told his work-people so, proposing that they should accept a distribution on a profit-sharing basis. At first they refused to do so, content (as they well might be) to leave their remuneration to, his decision. But later they were persuaded; and Mr. Nash drew out a scheme of distribution in proportion to wages. The scheme was criticised by the more highly-paid workers, who all united in a demand that the basis of the tribution should not be the amount of pay received, but the length of time worked: thus some of the worst paid workers would get more than the managers, qnd foremen. This was what the Golden Rule suggested. In 1920 a severe depression struck the United States. Mills and factories were closed on all hands. There was a “buyers’ strike,” and thousands of tailors —not in Nash’s, blit in other firms —were thrown out of work. The Nash employees held a meeting, and agreed that the Golden Rule imposed upon them two duties: first to reduce the price of clothing, because people could not afford the old prices; and secondly to find work for as many unemployed tailors as possible. To make this practicable, they proposed to Mr Nash that their wages should be reduced all round, and that they should “stand off” without pay for three separate months during the year, if that was necessary to give a chance to the unemployed. It was never* necessary. Prices were reduced. New workers were taken on. A new factory was opened. And the Tesult was that during the year sales again multiplied threefold, rising to 1,500,000 dollars. In 1921 the sales rose only to 2,000,000 dollars, because this was the full capacity of* the existing factory. In 1922, with the extended accommodation, they rose to 3,750,000 dollars. By this time the capital of the concern —all, save the original 60,000 provided out of the profits—had risen to 1,000,000 dollars, of which half was held by the employees. This amazing progress has continued. On the last figures I have seen, the employees’ holdings amounted to 67 per cent, of the total, and they could control the business.

But there is still another chapter in this astonishing sequence of paradoxes. Mr Nash came to the conclusion that he and his people ought to join the Clothing Workers’ Union and adopt its methods of regulation. He told his workers so. They replied that they never had been members of the Union, and saw no advantage in joining it. They did not give way until the evangelist employer had brought down Mr Hillman, the head of the Trade Union, to help him in persuading them. Is not this the culmination of- paradoxes—the employer begging his work-people to join .. a Trade Union, and the workers resisting, and only yielded out of sheer affection for their employer? Such a sequence of paradoxes as this can scarcely be regarded as providing a model capable of being imitated, or likely to be imitated, in ordinary business practice. What a different world it would be in which this story would seem commonplace! It shows, indeed, that the Golden Rule can be applied in business by a. man of apostolic fervour; but that, alas’ is not the condition which can be made normal. Yet even on the most prosaic reading, the story does very pointedly illustrate the economic value of high wages, and, still more, of the spirit of partnership (or, as Mr Nash would prefer to call it, brotherhood)

among the managers and workers of an industrial concern. For these are the solvents of anger and hate, which are the grit in the wheels of progress.