Alfred P. Sloan Quotes

The business of business is business.

I had trouble at first, in the early 1900s, in selling Mr. Leland our roller bearings. He then taught me the need for greater accuracy in our products to meet the exacting standards of interchangeable parts. Mr. Leland came to the industry with a mature experience in general engineering and in gasoline engines, which he had long made for boats. One of his specialties was precision metalwork, which went back to his experience in toolmaking for a federal arsenal during the Civil War, and which he afterward developed in the Brown and Sharpe Company, machine-tool makers of Providence, Rhode Island. It has been called to my attention It has been called to my attention that Eli Whitney, long before, had started the development of interchangeable parts, a fact which suggests a line of descent from Whitney to Leland to the automobile industry.

A recovery after a depression is as inevitable as that day follows night. It can not be permanently suppressed. Its vitality is so powerful that it will break down the barriers set up by the most arbitrary dictator. Hence there is developing a new confidence and a new faith in those principles which have formed the the foundation of economic evolution and industrial progress during the last several decades — principles which we have been proud to call "American principles," and for which we have been reared with a wholesome respect. There are still lacking the assurances of a broad and definitely defined opportunity and the elimination of certain unsound economic policies, thus limiting the application of these vital principles we have always known and retarding their ability to accelerate our economic recovery.

I had taken up the question of interdivisional relations with Mr. Durant [president of GM at the time] before I entered General Motors and my views on it were well enough known for me to be appointed chairman of a committee "to formulate rules and regulations pertaining to interdivisional business" on December 31, 1918. I completed the report by the following summer and presented it to the Executive Committee on December 6, 1919. I select here a few of its first principles which, though they are an accepted part of management doctrine today, were not so well known then. I think they are still worth attention.

What has taken place is a shift of business from one manufacturer to another, and the announcements in the press as well as the general publicity of those manufacturers who have succeeded in increasing their business give, I think, the impression that this is true of the whole industry. If we could assume, for the sake of argument, that we will reach the point at which twenty-five million cars and trucks will be registered in the United States an assumption that from what we have accomplished so far is certainly perfectly reasonable then I think we could safely say that the replacement demand, plus the export demand which will increase for many years yet, plus the normal growth, would amount to something like four to four and one half million vehicles a year and would require the manufacture of a number of cars equal to or greater than has yet been produced in any year in the history of the industry...

Gentlemen, I take it we are all in complete agreement on the decision here. Then, I propose we postpone further discussion of this matter until the next meeting to give ourselves time to develop disagreement, and perhaps gain some understanding of what the decision is all about.

I have already remarked that the 'theory of scarcity has been a dominating influence in many of our economic policies. In the case of taxation, however, there is involved the 'theory of plenty' and there must now be involved the 'theory of plenty more.' Every dollar of the billions that are being indiscriminately spent without accountability is a mortgage on the income, the savings, as well as the security of the people. There must be brought home to the consciousness of all that the more the government takes, the less each one has no one can possibly escape.

Industry must further expand its horizon of thinking and action Industry must further expand its horizon of thinking and action. It must assume the role of an enlightened industrial statesmanship. To the extent that it accepts such broadened responsibilities, to that degree does it assure the maintenance of private enterprise, and with it the exercise of free initiative as the most efficient creator of wealth.

Competition is the final price determinant and competitive prices may result in profits which force you to accept a rate of return less than you hoped for, or for that matter to accept temporary losses. And, in times of inflation, the rate-of-return concept comes up against the problem of assets undervalued in terms of replacement. Nevertheless, no other financial principle with which I am acquainted serves better than rate of return as an objective aid to business judgment. This principle had governed the thinking of the Finance Committee of General Motors since 1917.

Get the facts. Recognize the equities of all concerned. Realize the necessity of doing a better job every day. Keep an open mind and work hard. The last is most important at all. There is no short cut.

First let us ask whether our wealth-creating agencies, particular that of industry, are to be based upon private enterprise of policy management. I can not see how any intelligent observer can have any possible faith in the capacity of political management to provide either stability or progress if it should set out to operate the agencies of wealth creation, particularly industry. It is my firm conviction that any form of 'Government Regulation of Business' is bound to result in an ever-increasing interference with the broad exercise of initiative - the very foundation of the American system. That is the natural evolution of bureaucracy. If that be so, might not the ultimate logical result be the necessity for the socialization of industry through the break down of the profit system induced by the accumulative effect of the ever-increasing political management. We do not need to go far afield to see definite evidences of that possibility

The transformation of the automobile market was essentially complete in 1929. If Mr. Ford, in that pivotal year in the modern economy, still held stubbornly to his old concept in his new Model A, he was counterbalanced by Mr. Chrysler, who had come up from nowhere with tremendous vitality and with a market policy similar to General Motors'. The fact that Mr. Ford built nearly two million of the five million U.S.-produced cars and trucks sold that year was only incidental from the long-term point of view. it was a splurge, not the sign of a trend.

Competition is the final price determinant and competitive prices may result in profits which force you to accept a rate of return less than you hoped for, or for that matter to accept temporary losses.

There was excitement for us all in the fact that I had a job in the mechanical field, so that my education would count.... Well, I am bound to admit the first sight of my opportunity was disappointing... Not far from a city dump on a weed-grown, marshy plain was an old weather-worn building, like an overgrown barn. In its indefinite yard there was a small mound of coal and a great mound of reddish-gray cinders and ashes; also a disorderly accumulation of discarded machinery ... Once the factory had been painted brown. Only one word describes it: "dirty." Smoke from the dump carried an acric odor. Eventually across the wall nearest the railroad track there was lettered in black this legend: HYATT ROLLER BEARING COMPANY

Technological progress — and it is a pity more do not appreciate it — is the one sound approach to increased employment and higher wages. There is no other way. Irrespective of what is being said to the contrary, new industries can be created, present industries can be expanded, unemployment can be eliminated in a practical way