Free Markets, National Security, and the Defense Production Act

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Even as the United States entered World War II, automakers and other companies hoped for business as usual. It made no economic sense for consumer goods manufacturers, demand-starved through the Great Depression, to stop producing—war or no war. But the conquest of Europe and then Pearl Harbor convinced even the staunchest free marketeers in Congress that there were times when the common good had to override market mechanisms.  The results were the first and  second War Powers Acts of 1941 and 1942 which gave the Executive Branch the ability to control broad swaths of the economy in the national defense. Among these powers were the ability to fix wages and prices, ration goods, provide loans and antitrust exemptions, and among the most controversial, the right to allocate materials to industries considered a priority. The Best Made Plans, my biography of Robert R. Nathan, the economist at the center of the World War II planning effort, details the resulting struggle between the Executive Branch, industry, and the military over priorities, allocation, and defense production.

Although the War Powers Act lapsed in the postwar years, when the Korean Conflict began, Congress was quick to heed lessons recently learned. The result was the Defense Production Act of 1950.  At first its powers were nearly as sweeping as those in place during World War II, but Congress gradually removed the most controversial. Renewed many times since 1950, the Defense Production Act has been used regularly by the Executive Branch to bring resources to bear on projects broadly considered to be in the national defense—which, today as in 1941, are often enterprises that market mechanisms alone deem unworthy of investment. Recently invoked by President Trump to help fight the coronavirus pandemic, the Defense Production Act remains in force at least until 2025.

Federal Writers Talk Oral History

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Oral History emerged as a distinct practice in the post-World War II years.  So it is fascinating to find, in the depression-era Federal Writers Project records in the Library of Congress, a transcript in which prewar writers contest concepts familiar to today’s interviewer.

In the summer of 1939, Stuart Engstadt, Nelson Algren, and Jack Conroy were planning an “Industrial Folklore” project in Chicago. Engstadt, who moved from socially conscious books to psychological potboilers in the postwar, insisted that to keep interviewees on track “you must approach them with an idea in mind.” Algren, who became famous for the gritty The Man with The Golden Arm in the 1950s, said let them ramble, “they might say more than if they feel you’ve got an idea in mind.” Having already published The Disinherited, still America’s greatest proletarian novel, Conroy dominated the discussion, repeatedly emphasizing the importance of the skilled interviewer. “It’s just better to let them talk and sift the chaff,” he concluded. Lead or let them talk? A question I’ve asked myself hundreds of times while watching the minutes tick by on the recorder.

See the transcript at https://www.loc.gov/resource/wpalh0.07020105/?sp=1

A Brief History of Circuit Breakers

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There have been moments in my fifteen years studying financial regulation that have seemed arcane, even irrelevant. Not yesterday. When the S&P fell seven percent in the first few minutes of trading, I knew what would come next, and why.

Yesterday was nothing compared to October 19, 1987 when the Dow plunged more than 22 percent. To avoid a repeat, regulators proposed pausing all trading after specific point drops, allowing markets to recover. SEC official Rick Ketchum implemented these market-wide “circuit breakers,” in 1989. “I’m glad they haven’t been used very much,” Ketchum told me in 2008.

When first activated in 1989 the circuit breakers were based on points.  By the time they kicked in again in 1997 they were calibrated to a percentage of the market—the first circuit broke after ten percent drop. But the breaker failed in the spectacular May 2010 “Flash Crash” when the market dove (in mere minutes) by about nine percent.

So the SEC adjusted the machinery for the era of lightning-fast trading, with regulators like James Brigagliano concerned about volatility in both directions.  “Limit up/limit down prevents executions beyond the market band,” Brigagliano told me a year after its 2013 implementation, “it’s designed to prevent trades at absurd prices.” The first band was set at seven percent of the S&P 500. Yesterday the market dropped below that, trading stopped for 15 minutes, and the market recovered.  The circuit breaker worked.

For more on this and other topics related to financial regulation visit the SEC Historical Society Virtual Museum and Archive at http://www.sechistorical.org/

Cantonments, General Contracting, and Spanish Flu

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This historic photography does not do justice to the uncropped original. In 1917, the Army deployed panoramic photographers to sixteen “cantonments,” medium-sized cities built for draftees in just a few months. That summer, twelve trains a day, each 50 cars long, delivered materials that 200,000 construction workers turned into 19,200 structures—1,200 per camp. The Army could not accomplish such a big job so quickly, nor could general contractors under the slow traditional bid system. Instead, the Army hired the nation’s largest constructors on the cost-plus basis pioneered by the George A. Fuller Company in building early skyscrapers.

By fall 1917 the sixteen cantonments were complete, including Camp Funston (pictured), built by Fuller in Kansas. By early 1918 politicians were leveling accusations of profiteering, their assault convincing formerly wary competitors to get behind a struggling trade group called the Associated General Contractors of America. I told this story in my organizational history book, 100 Years: Building on Experience but left out a related event of early 1918. It appears to have been at Camp Funston, on March 4, 102 years ago today, that Spanish Flu emerged, the deadliest pandemic in modern times.

Transportation History

Contours of Corporate History: Contesting 20th Century Transportation

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A century ago a turning point in corporate history came when, despite political debates, trucking emerged as a competitor to railroads.  At the time a three-sided battle was raging between the government, which had taken over the railways during World War I, organized labor, and the railroad companies. Legislation passed on February 28, 1920 returned the lines to private ownership but imposed regulations that weakened them over the next 60 years. Largely ignored during the debate was a factor that did even more to remake freight transportation over the same period—the rise of trucking.

Before the war, draymen had done short hauls in solid-wheeled vehicles. By 1917, as I point out in my book Never Stand Still (1999), the pneumatic truck tire was widely available and designs like the “Bulldog” Mack allowed for dependable long hauls. Ironically, the overwhelmed railroads’ inability to get Army “motor trucks” shipped to Europe before war’s end left plenty available for returning servicemen who became truckers—easy to do since unlike railroaders they did not need to build their right-of-way. By the time of the battle over railroad control, the long-haul industry was taking shape. Trucks rather than trains emerged the winner from the February 1920 fight over 20th century transportation.

Acker Book Published

New Corporate History Published

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I’m happy to announce the publication of my 18th corporate history book, The Story of Acker: The 200-Year History of America’s Oldest Wine Shop. This was a terrific project for a number of reasons: the client had very little existing historical material, meaning nearly every stage, from archival research through oral history interviewing and writing, brought a steady stream of epiphanies. I packed four stories between the covers: the tale of an immigrant family; a study of one of the nation’s largest luxury grocers; the profile of an Upper West Side package store; and the account of the creation and explosive growth of the world’s leading auctioneer of fine wines.

Like my other most successful projects, this one was fully supported by top management. Chairman John Kapon worked overtime through the holidays with the designer, printer, and me to finish the book in time for Acker’s gala birthday event on Saturday, February 8. I want to thank the other members of the Acker team and especially Michael and Suzanne Welch at Abzorb Design, Stewart Jordan and the Jamie Stotz at Westland Printers, and Jen Giambrone and Emily Sullivan at HAI, which served as prime contractor for the project.

Building Your Brand

Building Your Brand with Corporate History

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It is tempting to think that you can define your corporate personality—to build your brand—out of little more than public relations and advertising. In fact, a corporate personality is something that develops over time, the result of months or years of hard work, employee relations, and customer communications.

To understand that corporate personality is to make sense of a complex past; to uncover the story of how the brand grew and developed, guided by both internal initiatives and external factors. The best way to do this is through history—pulling from written, visual, and remembered records to create a coherent narrative that explains how the brand developed and conveys what the brand can bring to customers in the future. Whether leveraged in a book, an exhibit, or a digital history, the cost of a high-quality history project can be comparable to that of a public relations or advertising campaign, but when you compare the impact, an investment in a powerful, authentic brand equity can be a bargain. Moreover, the research you do and the interviews that you capture will be an invaluable corporate resource, otherwise lost, for generations to come.

Consider the optics. The typical “About” page on many corporate websites contain a few fragments of origin lore, generalizations about the intervening decades, and unsupported claims about the company’s “mission” and “commitment.” If you spare no expense to ensure that your products are faultless and your services are expert, why cut corners with your story?

Beyond external appearance is the matter of internal integrity. If your employees do not know how your company came to do what it does, then the entirety of your organization is unlikely to succeed. A compelling corporate story serves as a foundation upon which a strong corporate culture can rest.

But it is in terms of strategy that an investment in history earns its greatest returns. Respect for an organization’s history, and evidence of a commitment to honor that past drives most successful companies forward. When you honor your heritage, you not only provide employees with a sense of mission, you reassure customers of your intention and commitment to your business. History is the ballast that keeps a company upright through the tumult of changing technologies and transforming markets. For a company that has weathered tough times, the value of the lessons learned is tremendous—and incorporating those lessons into the corporate culture is something for which history is well suited.

Nearly every enterprise is the product of a complex history. Telling your corporate history presents an opportunity, if not an obligation, for building your brand with corporate history to show how your company intends to live up to its past in the future.

Walter Chrysler building in Manhattan, New York City, NY

Contours of Corporate History: Chrysler

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A landmark in corporate history was reached 90 years ago today that auto tycoon Walter Chrysler opened his namesake building in Manhattan. The art deco masterpiece was by far the most visually compelling addition to the New York skyline and also the tallest, outstripping the Woolworth Building by more than 200 feet. Walter Chrysler’s moment in the sun did not last long: The Empire State Building overtook it less than a year later.

As the smallest of the “Big Three” automakers, Chrysler knew what it was like to be in the shade of Ford and GM. By the 1970s all three were in trouble due to rising production costs, quality problems, and years of design complacency. In 1979, Lee Iacocca created a new corporate landmark when he famously convinced the United States Congress to provide Chrysler with a $1.5 billion relief package. That landmark held until 2009 when GM received its own, much larger, federal bailout. Today, Walter Chrysler’s company (now Fiat Chrysler) remains a distant third among US automakers. His building has dropped to 11th place in the Manhattan skyline sweepstakes.

Brooklyn-Bridge

A New Year and a New New York

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This week, New Yorkers from across the boroughs gathered together in Times Square to celebrate New Year’s Eve, just as they have done since 1907 (with a few exceptions). But just ten years earlier they gathered separately. On December 31, 1897, to fireworks and bands, Manhattanites celebrated both the new year and the creation of “Greater New York.” Across the East River, the best citizens gathered in mourning on an appropriately cold and rainy night. At midnight, Brooklyn, then the nation’s fourth largest city, would give up its independence. Some thought it inevitable, at least since completion of the bridge in 1883, but it could have been otherwise—the “consolidation” movement won by a mere 277 votes out of 129,000.

Corky

“Corky:” A Telling Holiday Tradition

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It takes minimal equipment: a table, a glass, and a champagne cork. This game began by accident a few years ago and has become a family tradition. It’s a simple thing that says a lot about our family culture. We usually ignore the living room and gather in the kitchen with good food, drink, and the occasional activity. We’re all fiercely competitive, and my daughter prefers literal diminutive names. (Her pets were “fishy,” and “tabby;” our game is “Corky.”) In researching a biography or corporate history that is also a family story, this is exactly the kind of telling tradition I look for. If anyone ever writes about my family, they’d better mention Corky.