unmixed evil. Prosperity spells extravagance in production. While the
good times endure, there is no sufficient incentive either to economy or
to invention. A concern which is selling goods at a high profit as fast
as it can make them will not trouble to manage its affairs on strict
economic lines. It is when the pinch begins to be felt that men will
investigate with relentless zeal their whole method of production, will
welcome every procedure which reduces cost, and seek for every new
invention which promises an economy. Depression is the purge of
business. The lean years abolish the adipose deposit of prosperity. The
athlete is once more trained down fine for the battle.
Men who realise these facts will not, therefore, grumble overmuch at bad
times. They will, at least, have had the sense to see that those times
were bound to come, and have refused to believe that they had entered
into a perpetual paradise of high prices. In this respect free will
makes the individual superior to the alternations of the market. He, at
least, is not compelled to be always either exalted or depressed. If he
cannot be the master of the market, he is, at least, master of his own
fate.
How, then, should men deal with the alternate cycles of flourishing and
declining trade? There is a celebrated dictum, "Sell on arising market,
buy on a falling one."
That man will be safest who will reject this time-worn theory, or will
only accept it with profound modifications. The advice I tender on this
subject is as applicable to Throgmorton Street as it is good for Mincing
Lane. The danger of the dictum is that it commits the believer to rowing
for ever against the tide.
Let us take the case of buying on a falling market. That a man should
abstain from all buying transactions while the market is falling is an
absurd proposition. But it is none the less true in the main that such a
course is a mistaken one. The machinery of his industry must, of course,
be kept in motion, or it will rust and cease to be able to move in
better times. But it is unwise to embark on new enterprises and
commitments when commerce, finance, and industry are all stagnant. And
very frequently buying on a falling market means just this.
It is like sowing in the depths of winter seeds which would mature just
as well if they were sown in March. No; it is when the tide has
definitely turned that new enterprises should be undertaken. The iron
frost is then broken, and the sower may go out to scatter in the
spring-time seeds which will bring in their harvest. To buy before the
turn is to incur the cost of carrying stocks for many unnecessary
months.
The converse of the proposition is to sell on a rising market.
Certainly. Sell on a rising market, but do not stop selling because the
market ceases to rise. A great part of the art of business is the
selling capacity and the organisation of sales, but to carry out a
preordained system of selling on an abstract theory is mere folly. To
cease selling just because the market is not rising at a given moment,
and to wait for a better day--which may not dawn--is to burden a firm
unduly with the carrying of stocks and commodities.
There is a saying in Canada, "Go, while the going is good." The
phrase--an invitation to sell--finds its origin in the state of the
roads. When the winter is making, the roads are hard and smooth for
sleighing, and are kept so by the continual fresh falls of snow, and you
can speed swiftly over the firm surface. But when the winter is
breaking, the falls of snow cease, and the sleigh leaps with a crash and
a bump over great gullies, tossing the traveller from side to side and
dashing his head against the dashboard. These depressions are called
"thank you marms," because that is the ejaculation with which the victim
informs his companions that he has recovered his equanimity. The man who
will never sell on a falling market is the man who will not face the
"thank you marms." He will "go while the going is good," but he will not
accept the corollary to the dictum, "But don't stop because going is
bad." He has not the nerve to face the bump and come up smiling. Don't
be afraid to sell on a falling market, or you will be afraid to sell at
all until you are forced to sell at far lower prices because of the
weight of stocks or commitments which must be liquidated at any cost. It
is precisely in time of depression that the men of business ought to
press their selling and organise their sales organisation to the utmost
limit. If finance, commerce, and industry could only be persuaded to
take this course in the slack times, then every action in this direction
would cure the evil by lessening the duration of the bad times. Not
till the surplus stocks have been unloaded will the winter pass and the
summer come again in the enterprise of the world. Selling is the final
cure for depression.
XI
FAILURE
The bitterest thing in life is failure, and the pity is that it is
almost always the result of some avoidable error or misconception. With
the rare exception of a man who is by nature a criminal or a waster,
there need be no such thing as failure. Every man has a career before
him, or, at worst, every man can find a niche in the social order into
which he can fit himself with success.
The trouble in so many cases is that it takes time and opportunity for a
man to discover in what direction his natural bent lies. He springs from
a certain stock or class, and the circumstances which surround him in
youth naturally dictate to him the choice of a career. In many cases it
will be a method of living to which he is totally unsuited. But once he
is embarked on it the clogs are about his feet, and it is hard to break
away and begin all over again. And this ill-fitting of men to jobs may
not even embrace so wide a divergence as that between one kind of
activity and business and another. A young man may be in the right
business for him, and yet in the wrong department of it. In any case,
the result is the same. The employer votes him no use, or at least just
passable, or second rate. Much worse, the employee knows himself that he
has failed to make good, and that at the best nothing but a career of
mediocrity stretches out before him. He admits a failure, and by that
very act of admission he has failed. The waters of despair close above
his head, and the consequence may be ruin.
Such mistakes spring from a wrong conception of the nature of the human
mind. We are too apt to believe in a kind of abstraction called "general
ability," which is expected to exhibit itself under any and every
condition. According to this doctrine, if a man is clever at one thing
or successful under one set of circumstances, he must be equally clever
at everything and equally successful under all conditions. Such a view
is manifestly untrue.
The mind of man is shut off into separate compartments, often capable of
acting quite independently of each other. No one would dream of
measuring the capacity of the individual for domestic affection by that
of his power for oratory, or his spirituality by his business instinct.
And what is true of the larger distinctions of the soul is also true of
that particular part of the mind which is devoted to practical success.
Specialised aptitude for one particular branch of activity is the
exception rather than the rule. The contrary opinion may, indeed, easily
lead to grave error in the judgment of men, and therefore in the
management of affairs. There is no art in which either the barrister,
the politician, or, for that matter, the journalist excels so much as in
the rapid grasp of a logical position, the power of assimilating great
masses of material against it or for it, and of putting out the results
of this research again in a lucid and convincing form. Anyone listening
to such an exposition would be tempted to believe that here was a man of
such high general ability that he would be perfectly capable of handling
in practice, and with superb ability, the affairs he has been
explaining. And yet such a judgment would be wrong. The expositor would
be a failure as an active agent. It would not be difficult to find the
exact converse to the case. The greatest of all the editors of big
London newspapers will fail entirely to appreciate a careful and logical
statement of a situation when it is subjected to him. But place before
him the raw material and the implements of his own profession, and his
infallible instinct for news will enable him to produce a newspaper far
transcending that which his more logical critic could have achieved.
Leaving aside a few strange exceptions, a musician is not a soldier, a
barrister not a stockbroker, a poet not a man of business, or a
politician a great organiser. Anyone who had strayed in youth to the
wrong profession and failed might yet prove himself an immense success
in another, and these broad distinctions at the top ramify downwards
until the general truth is equally applicable to all the subdivisions of
business and even to all the administrative sections of particular
firms.
To take a single practical instance, there is the department of
salesmanship and the department of finance. Salesmanship requires, above
all, the spirit of optimism. That same spirit carried into the sphere of
finance might ruin a firm. The success in one branch might therefore
well be the failure in the other, and vice versa. No young man,
therefore, has failed until he has succeeded.
If I had to choose one single and celebrated instance of this doctrine I
should find it in the career of Lord Reading, Viceroy of India.
It may be objected that, as he is of the Jewish race and religion, his
is not a fair test case by which to try the abilities and aptitudes of
the young men of Great Britain. I do not accept the distinction. The
powers and mental aptitudes of the Jews are exactly the same as ours,
except that they come to full flower earlier. The precocity of this
maturity is interpreted as a special genius for affairs--which it is
not.
Lord Reading started his career on the Stock Exchange, where he failed
utterly. No doubt experience would have brought him a reasonable measure
of success; but it was equally clear that this was not the sphere for
his preeminent abilities. He therefore broke boldly away and entered at
the Bar, where his intellect secured him a reputation and an income,
especially in commercial cases, which left his competitors divided
between admiration and annoyance. In a single year he made £40,000. The
peg had found the round hole. His eminence procured him the
Attorney-Generalship. Yet with all his ability and his personal
popularity he was not a real success in the House of Commons.
Parliamentary warfare was not his aptitude. So he became Lord Chief
Justice. His great personal character and reputation gave Lord Reading
in his new position a certain reputation as a great Lord Chief. From my
own limited experience I do not agree. I had to watch closely a certain
case he was trying, and I did not think Lord Reading was a great judge.
He failed to carry the jury with him; the final Court of Appeal ordered
a new trial, which resulted in the reversal of the judgment. Such a
thing might happen to any judge, but a strong one would have put a
prompt end to proceedings which were obviously vexatious and entailed
great cost by the delay on defendants, who had obviously been dragged
improperly into the action. But his real opportunity came with his
mission to the United States during the war. No ambassador had ever
achieved such popularity and influence or brought back such rich sheaves
with him. As a diplomatist, a man of law, and a man of business, he
shone supreme. Once more, since his days at the commercial bar, he had
found the real field for his talents.
From the Law Courts he has journeyed to a position of great
responsibility in India. Some voices are already acclaiming the success
of the new Viceroy. It will be wiser to wait until it is clear whether
his versatile genius will find successful play in its new environment.
But the moral of Lord Reading's career is plain. Do not despair over
initial failure. Seek a new opening more suited to your talents. Fight
on in the certain hope that a career waits for every man.
XII
CONSISTENCY
Nothing is so bad as consistency. There exists no more terrible person
than the man who remarks: "Well, you may say what you like, but at any
rate I have been consistent." This argument is generally advanced as the
palliation for some notorious failure. And this is natural For the man
who is consistent must be out of touch with reality. There is no
consistency in the course of events, in history, in the weather, or in
the mental attitude of one's fellow-men. The consistent man means that
he intends to apply a single foot-rule to all the chances and changes of
the universe.
This mental standpoint must of necessity be founded on error. To adopt
it is to sacrifice judgment, to cast away experience, and to treat
knowledge as of no account. The man who prides himself on his
consistency means that facts are nothing compared to his superior sense
of intellectual virtue. But to attack consistency is quite a different
thing from elevating inconsistency to the rank of an ideal. The man who
was proud of being inconsistent, not from necessity but from choice,
would be as much of a fool as his opposite. Life, in a word, can never
be lived by a theory.
The politicians are the most prominent victims of the doctrine of
consistency. They practice an art which, above all others, depends for
success on opportunism--on dealing adequately with the chances and
changes of circumstances and personalities. And yet the politician more
than anyone else has to consider how far he dare do the right thing
to-day in view of what he said yesterday. The policy of a great nation
is often diverted into wrong channels by the memories of old speeches,
and statesmen fear men who mole in Hansard.
Again, I do not recommend inconsistency as a good thing in itself. If a
politician believes in some great general economic policy such as Free
Trade or Protection, he will only be justified in changing his mind
under the irresistible pressure of a change of circumstance. He will be
slow, and rightly, to change his standpoint until the evidence carries
absolute conviction.
In business consistency of mental attitude is a terrible vice, for a
simple and obvious reason. By an inevitable process like the swaying of
the solstice the business world alternates between periods of boom and
periods of depression. The wheel is always revolving, fast or slow,
round the full cycle of over-or under-production. It is clear that a
policy which is right in one stage of the process must necessarily be
wrong in the other. What would happen to a man who said, "I am
consistent. I always buy," or to one who replied, "No man can charge me
with lack of principle. I invariably sell"? Their stories would soon be
written in the _Gazette_.
This is the most obvious instance of the perils of consistency in the
world of business. But, quite apart from this, nothing but fluidity of
judgment can ever lead the man of affairs to success.
I once took the chairmanship of a bank which had passed into a state of
torpor threatening final decay. There was not a living fibre in it, and
my task was to try to galvanise the corpse. I sought here and there and
in every direction for an opening, like a boxer feeling for a weak point
in his opponent's guard. My fellow directors, who had served on the
board for many years, were shrewd business men, but if the bank had not
lost the capacity for either accepting or creating new situations it
would not have been in a state of decay. The board met once a week, and
the directors gathered together before the meeting at the
luncheon-table. "What surprise proposal are you going to spring on us
to-day?" they used to ask me. And the mere fact that the proposal was of
the nature of a surprise was almost invariably the only criticism
against it. I may have been wrong in surprising my colleagues by the
various projects that I put forward, but in the propositions themselves
I proved right.
The criticism was really based on the doctrine of consistency fatal to
all business enterprise.
Suppose an amalgamation was contemplated one day I would be a buyer of
another bank, and if by next week this plan had fallen through I would
be strongly in favour of selling to a bigger bank. "But you are
inconsistent," said my colleagues. My answer is that what the business
needed was life and movement at all costs, and that buying or selling,
consistency or inconsistency were neither here nor there.
The prominent capitalist is often open to this particular charge. On
Wednesday, says the adversary, he was all for this great scheme; on
Friday he has forgotten all about it and has another one. This is
perfectly true--but then between Wednesday and Friday the weather has
changed completely. Is the barometer fickle or inconsistent because it
registers an alteration of weather?
Nevertheless, the men of affairs who follow facts to success rather than
consistency to failure must expect to pay the penalty. Or at least, if
they are to avoid the punishment for being right they must take enormous
precautions.
The principle penalty is the prompt criticism that although the
successful business man plays the game with vigour, nerve, and sinew,
yet he plays it according to his own rules. The truth is that there is
no other way in which to play the game. Fluidity of judgment, adversely
described as fickleness and inconsistency, is the essence of success.
But the criticism is damaging. There are only two ways of combating it,
the wrong one and the right one. The wrong method is that of
hypocrisy--claiming a consistency which does not exist. The right one is
to cultivate the art of pleasing, so that inconsistency may be forgiven.
Friends may thus be retained though business policies vary. This is the
highest art of financial diplomacy.
Those who by some misfortune of character or upbringing are incapable of
this practice must make up their minds to face the abuse which their
successful practice of inconsistency will entail. They will not, if they
are wise, cultivate hypocrisy, not because the practice will damage them
in the esteem of their colleagues and neighbours, for, on the contrary,
it will enhance their repute, but because it will damage their own
self-respect. They would know that they were right in following fact and
fortune, and yet would be making a public admission that they were
wrong.
XIII
PREJUDICE
The most common, and, perhaps, the most serious of vices is prejudice.
It is a thing imbibed with one's mother's milk, fortified by all one's
youthful surroundings, and only broken through, if at all, by experience
of the world and a deliberate mental effort.
Prejudice is, indeed, a vice in the most serious sense of the term. It
is more damaging and corroding in its effects than most of the evil
habits which are usually described by that term. It is destructive of
judgment and devastating in its effect on the mentality because it is a
symptom of a narrowness of outlook on the world. The man who can learn
to outlive prejudice has broken through an iron ring which binds the
mind. And yet we all come into the world of affairs in early youth with
that ring surrounding our temples. We have subconscious prejudices even
where we have no conscious ones. Family, tradition, early instruction
and upbringing fasten on every man preconceptions which are hard to
break.
I write out of my own experience. I was brought up as the son of a
minister of the Church of Scotland, who left Edinburgh University as a
young man to take up a ministry in Canada. The Presbyterian faith was,
therefore, the one in which I was brought up in my boyhood, and I still
feel in my inner being a prejudice, which I cannot defend in reason,
against those doctrines which traverse the Westminster Confession of
Faith. However much thought and experience have modified my views on
religious questions, my tendency is to become the Church of Scotland
militant if any other denomination challenges its views or organisation.
Such are the prepossessions which surround youth. They are formidable,
whether they take the shape of religion or politics or class--and a
fixed form of religious belief is probably the most operative of them
all. It is quite possible that but for subconscious training of the
mind inbred through the generations neither man nor society would have
been able to survive. None the less, now that man has attained the stage
of social reason, prejudice is rather a weakness than a strength.
The greatest prejudice in social life is that against persons--not
against people known to one, for in that case it is dislike or
indifference or even hatred, but against some individual not even known
by sight.
A mentions B to C. "Oh!" says C. "I loathe that man." "But have you ever
met him?" says A. "No, and I don't want to, but I know quite enough
about him."
"But what do you know against him?"
"Well, I know that E told D, who told me, that he was black through and
through, and a bad man."
A few weeks afterwards C sits next B at dinner; finds him an excellent
sort of man to talk to and to do business with, and henceforward goes
about chanting his praises. Thus is personal prejudice disproved by the
actual fact. It is a curious freak of circumstance, not easily
accounted for, that men who possess that fascination of personality
which makes them firm friends and violent enemies are most liable to be
adversely judged out of that lack of knowledge which is called
prejudice.
There is another form of the error which is found in the business world.
Men of affairs conceive quite irrational dislikes for certain types of
securities or transactions. They are given, perhaps, an excellent offer,
out of which they might make a considerable profit. They turn the matter
down without further consideration. Their ostensible reason is that they
are not accustomed to deal in that particular class of security. Their
real reason for refusing is that they are the victims of their own
environment, and that they have not the intellectual courage or force to
break away from it even when every argument proves that it would be to
their advantage to do so. Their intellects have become musclebound by
habit or tradition.
The fourth and, perhaps, the most violent form of prejudice, outside the
sphere of religion, may be found in politics. Men embrace certain
political conceptions, and, though the whole world breaks into ruins,
and is reconstructed around them, nothing will alter their original
ideas. The Radical says that the Tory does not change his spots, and the
Tory is convinced that a Radical is still a direct emanation of the evil
one. In the middle of these conflicting antagonisms the real road to
national peace, prosperity, and security is missed by those who prefer
prejudice to the lessons which reality teaches. The most infamous case
of all to the unbending partisan is that of a man who has so far
outlived the prejudices of party as to be able to criticise one side
without joining another.
The advantage of prejudice is the preservation of tradition; its
disadvantage is the inability which it brings to an individual or to a
nation to adapt life to the change of circumstance. It is, therefore, at
once both the vice of youth and of age. Youth is prejudiced by
upbringing; age is prejudiced because it cannot adapt itself to the
circumstances of a changing world. But both youth and age can fight by
the power of the human will against the tendencies which steep them in
their own prepossessions.
Youth can say: "I will forget that I was brought up to be a Scotsman
and a Presbyterian, and so prejudiced against all Roman Catholics or
Jews; the world is open to me, I will form my own convictions and judge
men and religion on their merits." The subconscious self will still
operate, but its extravagances will be checked by reason and will.