Charles F. Beach France and Her Industrial Needs Address at the twenty-third Annual Convention of the National Association of Manufacturers Waldorf-Astoria, New York May 21, 1918 Charles F. Beach France and Her Industrial Needs Address at the twenty-third Annual Convention of the National Association of Manufacturers Waldorf-Astoria, New York May 21, 191 8 France and Her Industrial Needs TV/TR. Chairman and Gentlemen: When a lawyer addresses him- self to a body of experts like the National Association of Manufactur- ers about their own business he ought to realize that it is a case of the militia against the regular army. My only excuse for being here to-day and for speaking to you upon such a subject as has been assigned to me is that I have lived and been in business in France for almost a quar- ter of a century. In that length of time the dullest of us and the least in- structed man among us does absorb a certain amount of the local color, and does find out a certain number of things that are going on around him. [3] FRANCE AND HER So I have been asked to talk to you about "France and Her Industrial Needs/' If I had phrased it, I should rather have said, "The opportunity for American co-operation in France and w^ith the French, now^ and after the war, along- industrial lines/' I do not like to use the word "needs'' with respect to France. France is not needy: France is not a mendicant: France does not hold out her hand. But there is a very large opportunity for American co-operation. Let us approach it from that angle. France, under normal conditions, as all of you know, is the most self-con- tained country in Europe, that is to say, the most sufficient unto herself of any of the great Powers. Speak- ing generally, France produces all her necessaries and something for export : she makes all her luxuries and much for export. You know, for example, how a certain amount of foodstuffs is exported from France in normal times [4] INDUSTRIAL NEEDS to other countries, notably to Eng- land; and we all know the wealth of luxurious things that go from France to every part of the earth. That condition of things is the re- sult, first of her exceptionally fortun- ate geographical position, her varied climate, and her fertile soil intelli- gently tilled; and second, of the diver- sification of her manufacturing indus- tries. France, as you know, is a country of small, independent proprietors and small manufacturers. The wealth of the country is in many hands; in no country is the wealth so largely and so well distributed. It takes two things to make a coun- try commercially great: She must produce and she must distribute. France produces well and distributes better than any other country. The little has de laine,3.s we say, is in every- body's house. So at the commence- ment of the war France was taking [5] FRANCE AND HER care of herself and helping to feed and take care of the rest of the world. When war was declared, in a mo- ment the machinery of civilized life in all its thousand ramifications stopped short. Every valid man be- tween twenty and forty-eight years of age was called to the colors. Con- sequently trade and industry of every sort came to a standstill in an instant, either wholly or in great part, or was turned as quickly as possible into some form of war industry. War from that moment became the busi- ness of the country, and for four years has so continued. Some of you remember the speech of General Gallieni when he became Minister of War in the early part of 1915. He said: "In July, 1914, France wanted peace; peace for herself and peace for her neighbors. Now France wants war, war to the bitter end." In that temper France [6] INDUSTRIAL NEEDS went into the war business, and she has been in the war business ever since. To get a view of the condition of things in France to-day, imagine the condition of American industry if for four years your factories had been closed, or diverted from normal chan- nels of activity. Suppose that nothing or almost nothing had been produced. Suppose your raw materials and your machinery and your manufactured product had been stolen and trans- ported abroad or destroyed. That in general is the condition of things in France to-day in respect of her indus- trial affairs. So when you say 'What does France need, or what will France need when the war ends," a very gen- eral and a very easy answer for me to make at this moment is that she will need everything. War, and especially such a war as this, always profoundly changes the character of a people. Every modern [7] FRANCE AND HER war has done that. For example, throughout the centuries prior to the Napoleonic era, the chief industries in France were agriculture and war. After the wars of Napoleon France became to a great extent and more and more a manufacturing country. This tendency was stimulated and ac- centuated by the economic activities of the Second Empire, and pushed to its farthest limit by the war of 1870. We know, too, for another example, how our own country was trans- formed by our Civil War. Before the war we were a provincial and agricul- tural country. After the war we be- came a manufacturing, commercial and financial power. The present war is certain to do analagous things in France. It is sure to work a radical change in the life of the country. The old France — the France that we loved — is gone. It will be some sort of a new France which will arise. I believe the small manufacturer [8] INDUSTRIAL NEEDS and the small merchant will survive. That is in the Latin blood; but there will be a tendency more and more to consolidation, to concentration, or, to use Mr. Wilson's word, to co-ordina- tion of a great many things and in a great many directions. That will be in- contrast to the individualization of ante-war methods of merchandising and manufacturing in France. Before the war France was the most individualistic country in the whole world. The little peasant, the little proprietor, the little shop-keeper, the little everybody did their own do very independently. That will sur- vive, more or less, but more than probably all that will somehow be radically changed. In that changed condition, what- ever it is, America will be the most favored nation in anything to be done to co-operate in the rebuilding of France. We shall from every point of view be the most favored nation. [9] FRANCE AND HER We shall certainly have every advan- tage over our chief competitor, Eng- land, in the working out of any plan for the rebuilding of France after the v^ar. Here comes in the matter of senti- ment. Blood is thicker than v^ater, but sentiment is thicker than blood. ^'Greater love hath no man than this, that he lay dov^n his life"— not for his kith and kin, but — "for his friend" — so it is v^ritten. I need not tell you that the sentiment between France and America is something very beau- tiful. France is the sweetheart of the nations, and America is her accepted lover. This will give us an opportunity, in the business that we are to do now and after the war, for the display of all of our tact and all of our business sense. Much was said and well said to-day, and I need not say it over again, about approaching the French people from the proper angle. They [10] INDUSTRIAL NEEDS must be approached in the French fashion. When I began to learn to speak French I remember my teacher said to me, "You must learn to open your mouth in the French fashion.'' Every American manufacturer or merchant or American of any sort who goes abroad to do things in France must learn to open his mouth in the French fashion. That is to say, he must learn to approach the French Frenchwise. We must avoid, above all things, any thought or any air of going over to France to teach them something. The French do not need to be taught. They know quite as much as we do, and they are quite con- scious of it. They do not wish to have us come over with a ponderous air of showing them. Anything of that kind will be quickly resented, but they will welcome our co-operation. Most of all — more important still than that, and this is perhaps only an- [111 FRANCE AND HER other sentimental consideration — we must be careful, and I am sure we shall be careful, that no suspicion arises that American capital and enterprise in going to France now seeks to take advantage of the commercial necessi- ties of the country, or to acquire any- dominating interest in their business. Elaborate measures of economic pro- tection against the infiltration of Ger- man capital and influence after the war are being worked out. France does not intend that Germany shall do over again in this direction what she had undertaken to do before the war. All this opens the door for us if we enter in the right spirit — a purpose to help, but not to dominate or absorb. France will not lack capital after the war. No one should entertain for a moment the senseless idea that France is bled white, physically or financially. There is no notion more foolish than that France after the war will be poor. She will be no poorer than any- [12] INDUSTRIAL NEEDS body else. We shall all be walking around on financial stilts. That is to say, we shall owe a large debt and our taxes will be high, but we shall be col- lecting interest on enormous loans : so that if a man collects ten thousand francs from interest on his loan, and if he pays eight thousand francs taxes, he is still solvent and is only in a way going about on stilts. He is where he was before, when income and taxes were lower. Capital will not be lacking in France. The thing that will be most lacking is man power ; and here again is another danger for us. The French laboring classes will certainly be jeal- ous — in other words, will certainly be apprehensive that foreign labor may come in and do work that the French are doing or might do. They will be afraid that they are going to be ^Vuined by cheap Chinese labor,'^ to use a phrase that we had in this coun- try at one time, and we shall have to [13] FRANCE AND HER be careful about that. But there will certainly be a lack of man power, and there will be a chance for American enterprise in furnishing labor in France. The stronger and more suc- cessful the French resistance to Ger- man intermeddling, the greater that opening for us. Along very general lines — I have spoken only very generally because I warned you at the beginning that I do not know technically very much about it — these are the chances in France for American enterprise. Speaking generally, there will be a chance for everything and everybody going to France from America with good will and holding out a helping hand. Whatever your business is, and what- ever your product, it is more than likely that there will be a market for it in France after the war, and that there is a market for it now, as far as it can be transported. Of course, along particular lines, [14] INDUSTRIAL NEEDS those things that conflict the least with the French tariff, will afford the best opportunities for American enterprise. France is a protective country: that is her undisguised policy. There is little thought or pretense of a tariff for revenue. It is a tariff for protection, and that un- doubtedly will be accentuated after the war. But along those lines where the tariff does not press will be the best opportunity for American activ- ity. I have made a list of certain things which may be suggestive, and yet I am almost ashamed to pronounce it, because it is a veritable car- rying coals to Newcastle. All of you probably know better than I about these things ; but such things as shelf hardware, building hardware, tin plate, news print paper, writing paper, all kinds of paper, typewriters, agri- cultural and industrial chemicals, foodstuffs, shoes, shoe manufacturing [15] FRANCE AND HER machinery and supplies, underwear, cooking utensils, cheap furniture, portable houses, cheap gas and coal stoves and wall paper — these are some of the things that will find a ready market. If any of you are paper manufac- turers — and I hope you are — a curious example of the scarcity of printing paper in France came to me a few months ago when I went to my printer to get some pamphlets re- printed. Four or five years ago he had printed some pamphlets for me. I wanted them reproduced. They were on beautiful paper. He said in de- spair : '^1 cannot furnish that kind of paper, but you are going to America. Take it over there and get it done there. They have the paper and they can do it for half the price." News- papers in France are now printed on the poorest kind of paper. All this, however, is in a certain and larger sense, only incidental [16] INDUSTRIAL NEEDS and by the way. The sale of your merchandise is all very well, but the great work, the fine work, the constructive work, the work at which the most money can be made — to speak the language of the shop — ^will be in the reconstruction of French in- dustry after the war. For the first few months, or for the first year or two there will undoubtedly be an ac- tive market, but that market will con- stantly shrink back to normal. The reconstruction of the country, the re- building of the waste places, is that which will appeal most to Americans of large vision. When I say the building up of the waste places, I do not mean simply the rebuilding of the devas- tated districts, but the building up of everything that is worn out, that has rusted out, that needs renovation. Perhaps here I might say a word about the devastated district. I hope a few of you at least have seen the 117] FRANCE AND HER devastation wrought by the Germans on the western front. In connection with the fine work of the French Restoration Fund, in which I am deeply interested, I have been to that front, and I have seen that country in all of its dreadful devastation. You may see all the moving pictures you like, you may read all the books you like, you may anger your soul as much as you please at the thought of it, but it seems to me you cannot pos- sibly realize the devastation that the Boche has wrought in that beautiful country. You may ride for miles through devastated plains and find nothing of the value of a sou. Every- thing of the slightest value that could be stolen has been stolen by those savages. Everything they could not steal they have burned up. Every- thing they could jnot burn up they have blown up. They cut down the trees, they destroyed the shrubbery, they muti- [18] INDUSTRIAL NEEDS lated tombs, they destroyed churches and hospitals and schools. They left an uncounted number of towns and villages in northern France with not one stone upon another. You may ride through a town that had fifteen hundred or fifteen thousand people — peaceful, quiet civilians — and you can- not find anything to carry away from that place that you could sell for a franc. If you will imagine that sort of thing, you will see what must be done when you rebuild it. When those peo- ple come home to their ruined vil- lages, their ruined little town, or their ruined farm, it must be rebuilt. The reconstruction of that territory is far beyond the physical resources of any one country. All sorts of building material, everything that goes to start civilized life again must be pro- vided, and there will be the opportun- ity for American industry. To take a particular example, my [19] FRANCE AND HER interest at the moment is particularly in the textile business. Some of you perhaps are textile manufacturers. This industry in France has been practically ruined by the war. Lille, Roubaix and Tourcoing — three great cities on the Belgian border — have been for eight hundred years the cen- ter of the wool spinning and the wool weaving industry of Europe. That country was the mother country of wool spinning and weaving. From there it spread to Belgium, to Ger- many and over to England. Those cities being in the invaded district, of course, are still in Ger- man hands, and the industry, as far as the Germans could accomplish it, has been wiped out. Those three cities at the beginning of the war, as you remember, were open cities: no attempt was made to defend them, and the Germans rushed in and took possession. There was no bombard- ment and no physical destruction. [20] INDUSTRIAL NEEDS The great factories therefore were intact; but one hundred and seventy- eight firms with which I am in rela- tion — a group of one hundred and seventy-eight of the textile people in that country, cotton and woolen mill men — have been robbed in raw ma- terial and in finished product of al- most a milliard of francs in value, nine hundred and forty-five million francs, that is about $200,000,000 in raw material, in manufactured prod- uct and in other personal property. The machinery has been carried off to Germany, the buildings have been changed to other uses, so that when the Germans are expelled and the owners go back and start again, this whole industry must be reconstituted. There is something for the manufac- turers of texjtile machinery in this country to do for an indefinitely long period — to reconstitute that industry with American capital. [21] FRANCE AND HER It seems to me I am wasting your time in trying to tell you of these things in detail, ^but the agricultural implement business is another in- dustry where there will be every op- portunity for American activity. Con- sider that for four years no plows, no harrows, no hoes, no shovels, no spades have been produced. The little farmer has worn out what he had and he wants something new. And this suggests another line of thought. The lack of man power and the lack of horses after the war will develop a tendency to introduce me- chanical tractors of all sorts, which are certain to be used in France much more than they have ever been used before. Some of you will say, '^Ah, but the small farmer, the little peasant cannot buy a tractor. He has got only a little piece of land. He plows it with one horse, and he can never have a tractor." Vfery true, but in no [22] INDUSTRIAL NEEDS country are the agricultural classes so well organized as they are in France. In almost every commune these people have grouped themselves together in an organization for the purpose of buying their supplies and selling their products, so it will be entirely possible that after the war these organizations will buy tractors, one or more of them, and they will plow the fields one after the other, thus doing the work of many small proprietors. I think the outlook for the introduction of mechanical trac- tors in France is one of the most in- teresting that is now open to you. Another similar illustration is the enormous business which will result in France after the war from taking care of the immense number of half- worn automobiles, trucks and tractors which at the end of the war the Gov- ernment will throw on the market. If you go about in France now you are astonished at the amazing number of 123] FRANCE AND HER tractors, of automobiles, of mechan- ical trucks with which the country is filled. After the war these half-worn or not-at-all-worn machines will be thrown in uncounted thousands on the market. That is being dealt with in a serious way already. I know two French companies that are organizing themselves to deal with these machines after the war. It seems to me that there is again some- thing for American capital. The pur- pose is to organize all over France transportation companies to deal with the local trafific up to the railway sta- tion. Let us go back a little and consider how French railways, alone among the railways of the world, were con- structed on a scientific plan. In Eng- land and everywhere else they were built perfectly haphazard. Anybody and everybody, for example, could build a railroad in England or Amer- ica. Everybody could get a charter. [24] INDUSTRIAL NEEDS But in France the whole railroad system was laid out on a system- atic plan. Five companies were or- ganized. The lines radiated from Paris to every part of the country. These lines were built so that there was no duplication, and no competi- tion in the territory meted out to the different companies or between the important towns which were reached. Then every other part of the country had to be reached by subsidiary lines. After the war it is proposed to use these traction companies to gather up merchandise and traffic and bring it to the nearest railway station. That is one of the points that is now being discussed. I do not know that it is quite perti- nent to anything that you are now considering, but the banking business offers the largest possibilities for American enterprise. Most of you who have been to Europe and who have been in French banks, know how [25] FRANCE AND HER much the French banking system leaves to be desired. ''They do these things better in France'^ was never said of their banking system. The banking system of France is bad in all the varieties of badness, and if we except the proposed establishment of a Banque d'Exportation pour la France, it shows no very hopeful sign of get- ting any better. One result of that is that foreign banks have begun to come to the country and establish themselves — English ibanks, American banks, Spanish banks, Italian banks, and South American banks. Any kind of a bank is better than a French bank, I am sorry to say. And so in Paris the Equitable Trust Co., the Farmers' Loan and Trust Company, the Guaranty Trust Co., the First National Bank, the London and West- minster Bank, and others are taking hold of the banking business in Paris and making themselves felt. [26] INDUSTRIAL NEEDS But that is not the point. That is not the great field for American banking enterprise in France. That is simply supplementing a bad sys- tem. The place that is open to us in France is to do what the German banks — God save the mark — have done for their country. Most of you, perhaps all of you, know better than I that the commercial prosperity of Germany, the develop- ment of German industry, manufac- turing and commercial, was due very largely to the intelligent co-operation of the German banks, with their local industries. That is to say, in every town in Germany, little or big — every- where in Germany — the manufacturer who had an3'thing in him, whose business had any fair promise of de- velopment, could go to his bank and could get all the assistance that he wanted to develop his industry. The bank became a sort of partner with [27] FRANCE AND HER him. That happened all through Ger- many: it never happened in France. To a French banker that is unthink- able. I have preached this doctrine in season and out of season there for years. I have been the voice of one crying in the wilderness for this long while, to get American banks not to come to France simply to be bankers in the sense that they go over there now, but to go with the fixed purpose to do in France what the German banks did and undoubtedly will do again for the building up of German industry. There is an enor- mous field for that sort of thing in France. These are some of the many things that will occur to everyone of us. Where everything is lacking, it is easy to find an illustration of what will be wanted. When I prepared the outline of these remarks I felt a great deal more confident of my ability to make [28] INDUSTRIAL NEEDS suggestions than I do now, after hav- ing been there all day and hearing the report of your Secretary, and getting some information as to the manifold activities of your association. But I have brought you two recom- mendations, and I shall make them for what they are worth, or for what they are not worth. If I may be pardoned a recommendation to the individual members of your association who de- sire to participate in any business open to them in France, I should say, lose no time in getting in contact with business in France — commence now. I do not know that it is very clever for me to seem to urge American manufacturers or merchants to go af- ter business; but if business is to be sought in France, no time should be lost in establishing the relation. One of the most striking develop- ments of the last years in Paris has been the number of men who have come into my office with letters of in- [29] FRANCE AND HER troduction from America, looking to place themselves in line for business in the French markets, in every sort of business — big business and little busi- ness. The point I make is this: You who wish to do business in France af- ter the war should begin now. You should lose no time. My second recommendation is to your Association as an Association. Perhaps this also is supererogatory. It is to constitute a commission to study and advise on the industrial and economic problems that will arise after the war. I recognize all that you have done. I recognize all the activities that you are developing, and all the different commissions and or- ganizations which exist now in con- nection with your Association; but it seems to me that not one of them has quite come to that point. My precise recommendation is that you organize a commission to study and advise on the industrial and eco- [30] INDUSTRIAL NEEDS nomic problems that will arise after the war and that this commission should be recognized and authorized by the Government. It ought to be a manufacturers' commission, so that it may have the benefit of private initiative and have some go in it, but it should have the approval and support and sanction of the Gov- ernment. France has several such commis- sions, which are working very intelli- gently in considering all the possible and probable problems which may confront the French people after the war — notably the Bureau of Eco- nomic Studies, created under the di- rection of the President of the Council in 1915, and the Commission on Eco- nomic Reorganization, of the present year. No longer ago than March of this year the general question of com- merce and industry after the war was made part of the order of the day by the Chamber. [31] FRANCE AND HER The measures necessary for the economic preparedness of France were on that occasion declared by M. Valliere, amid general approval, to embrace the following urgent re- forms: (1) . Reduction of the price of French manufactures by moderniza- tion, standardization and improved technique. (2) . Diffusion of the methods learned through the war. (3) . Improvement of relations be- tween capital and labor. (4) . Improvement of technical ed- ucation and of the apprenticeship sys- tem. (5) . The co-operation of shops and yards for studies and researches of all kinds, for the purchase of raw ma- terial, the discovery of markets, the shipments of finished products at common expense. (6) . Adaptation of French pro- ducts to the taste of customers, as a [32] INDUSTRIAL NEEDS means toward the conquest of foreign markets. (7) . Development and cheapening of transportation. (8) . Retention of French money for French enterprise; establishment of financial facilities, such as long credits, etc. (9) . Reservation of mineral re- sources for the French, with limited concessions of mines, and state par- ticipation in the profits. (10) . Assistance to production, with a view to reducing imports. (11) . Assistance with a view to in- creasing exports of manufactures. (12) . Abolition of administrative restrictions through liberal legisla- tion. (13) . Increasing the number of state enterprises, and of those in which the state shares in the profits. (14.) Initiation of vast public works on roads and railroads, the deepening of rivers and harbors, [33] FRANCE AND HER the building of a merchant marine and of new marine basins. (15). Immediate utilization of France's exceptional waterpower. (16.) Supplying farmers with necessary implements and fertilizers. These are some of the ways in which France is tackling the economic problems of the near future. She will need our help and will welcome our co-operation. Accordingly, it seems to me — if I do say it as ought not to say it— that this Association might well con- sider the advisability of constituting a commission for study and work along at least some of these lines. «|c >jc sfc This, Gentlemen, is the message with which I have felt myself charged in addressing you to-day. I bring to you in conclusion, Men of America, a word of cheer and good will from France. We are going to [34] INDUSTRIAL NEEDS win this war, mostly by the united efforts of our two great democra- cies, and after the war, proud in our racial primacy, we shall stand together more and more in the forefront of the new civilization — France and America, America and France, twin sisters of 1776 and 1789, looking not backward to our common and glorious past, but forward to our future, big with promise for us and our emancipated children. Charles F. Beach. 24 boulevard des Capucines, Paris. June, 1918. [35]