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FILE NAME: JP Morgan (JPM) DATE: 1939 Apr 3 DOC#: JPM003 DOCUMENT DESCRIPTION: Time Magazine Article - Corporate Soul H'-'* 1^ o u u i -- r im iU U l -- lilY IE http://www.time.eom/time/printout/0,8816,771635,00.html , Back to Article C lick to Print Monday, Apr. 03, 1939 Corporate Soul A source o f glee to the tabloids but a source o f resigned annoyance to dignified Johns-M anville Corp. was the announcement fortnight ago b y Thom as Franklyn ("Tommy") Manville Jr. that he had just picked his fifth wife--blonde Show Girl Yvonne Arden. Although for years Playboy Tom m y has had no connection with the com pany from which he inherited his millions, his penchant for blondes m akes frequent headlines in which he is inevitably labeled the "asbestos heir." This is one public relations problem that Johns-M anville has been unable to solve. A less publicized public relations problem which Johns-M anville has solved is the fact that it is a "Morgan Com pany." T w elve years ago when th e M anvilles sold control to J. P. M organ, J-M 's em ployes felt th e y had been sold down the river. Today, not only have the 10,000 workers forgotten this grievance but their com pany has acquired a position in the public eye as a model Big Business. Despite antitrust, anti-bigness, anti-Morgan sentiment, it alone o f Big Business was held up by Chairman Joseph O'M ahoney o f the M onopoly Committee as an example o f enlightened management. In fact, Johns-M anville was the outstanding public relations success o f 1938. And the man chiefly responsible is its 45-year-old president, big, handsome Lewis Herold Brown. Last week, at a luncheon celebrating his tenth year as president, the J-M Officers Board (a management group as opposed to the ownership group which form s the board o f directors) gave him a gift symbolizing his success in building up J-M esprit de corps--a gold locket containing pictures o f his associates. Three days later at the annual stockholders' meeting J-M owners added their stamp o f unanimous approval. Priests. W hen Lewis Brown went to work for Johns-M anville in 1927, business executives generally considered that th ey had only one duty--to provide their stockholders with bigger profits. Except for that, the w ay they ran their businesses was no one's business but their own. Since then, business management has found itself more often than not in high disrepute with the 1of 5 5/18/2008 9:37 AM Vsi/ifA/iaie o u iu -- r u u i u u i -- I ilvjlc h ttp :// w w w .tim e .e o m /tim e /p r in to u t/0 ,8 8 1 6 ,7 7 1 6 3 5 ,0 0 .htm i Government, with Labor and with the public.* And unable to rationalize the animosity any other way, it has concluded that being in the dog-house is largely the result o f failure to present its case successfully to the public. But many a business executive, expert that he may be in selling goods or building a mousetrap, has no gift for wooing the public: he needs an associate who can expound his "social responsibilities" to workers, to the buying public, to local communities, to the Federal Government. The easiest way to get this done is to hire one o f the small group o f well-fed, top-flight "public relations counsels." Inventor o f this term and first great exponent o f its arts was the late Ivy Lee, the man who transformed John D. Rockefeller's reputation from that o f the most hated man o f his day to that o f the "great benefactor." Ivy Lee's firm, now under the direction o f sober Thomas J. Ross, still has the Rockefellers, the Pennsylvania Railroad, Chrysler Corp. and other industrial giants as clients. More spectacularly successful today are such younger rivals as Edward L. Bemays (Procter & Gamble, Allied Chemical & Dye), Carl Byoir (A. & P., Goodrich, Libbey-Owens-Ford Glass), Steve Hannagan (Miami Beach, Union Pacific), Benjamin Sonnenberg (Texaco, Philip Morris, Remington Rand), Bernard Lichtenberg (Swift & Co., United Brewers Industrial Foundation). The ways & means o f this extraordinary group are best exemplified by Eddie Bemays, a swart, jittery nephew o f Sigmund Freud (a fact o f which he is inordinately proud). He began his career as a newshawk, then as pressagent for Enrico Caruso. Now he likes to consider himself a "priest to Big Business" and he ministers only at a high retainer. Procter & Gamble is said to pay him $25,000 a year. A fair sample o f Bemays' skill was his promotion of a new "high fidelity" radio for Philco Radio & Television Corp. several years ago. Bemays hired Pitts Sanborn, music critic o f the New York World-Telegram, to write several hundred "leaders in the world o f music" asking if they did not agree that it was time a better radio was produced. Those that replied naturally said yes. Bemays then got up a booklet full o f apt quotes from their letters, sent it (over Pitts Sanborn's signature) to newspaper editors with a letter pointing out that musical leaders were demanding a better radio. This received extensive publicity and soon Philco announced that in response to the demand from the musical world it was producing a "high fidelity" radio. The New Way. Bemays, Byoir et al. are at their best when given a specific assignment--like the Philco promotion or Byoir's present job o f persuading the public that chain store taxes are bad. But this is really only super pressagentry, less concerned with giving clients a corporate soul than with giving them the appearance o f one. Business's new concept o f public relations as exemplified by Johns-Manville is an operating philosophy rather than a promotional stunt, actually changing business management instead o f just lifting its face. Its basis is the discovery that good public relations begin at home, that Business can "sell itself" permanently to th e U. S. public only by developing leaders whose comprehension o f public relations is as mature as their knowledge o f their particular trades. Many a top-flight businessman, recognizing his own deficiencies in this line, has added a public relations expert 2 of 5 5/18/2008 9:37 AM corporate sow -- rnnioui -- uivm 1IU|/J/WWW.IUUV.Will/lUUVfpiUIUIUII- to his full tim e staff. General Motors has its Paul Garrett, A. T. & T. its Arthur Page, the stock exchange its Eugene Lokey. There are also a few companies whose chiefs need no such aid, possessing themselves a fine public relations instinct. Such are General Electric's Owen D. Young, American Rolling Mills' Charles Hook' Mon santo Chemical's Edgar Queeny. Such, some o f the time, is Henry Ford. U. S.' Steel's Chairman Edward Stettinius was chosen with that ability chiefly in mind. None o f these has done more for his com pany than Lewis Brown, who has never had a pressagent or sought "publicity" but has nevertheless "sold" the public on Johns-Manville and its progressive management. $242 to $10. In 1858 a New Yorker named H. W. Johns decided he could make a better roofing by putting jute, burlap, woolfelt, pitch, manila paper and asbestos through a clothes wringer. Twenty-two years later a man named Charles B. Manville got into the insulation business in Milwaukee b y putting cement around his neighbors' furnaces. In 1901 the Manvilles bought out the Johns com pany and Thomas Franklyn Manville, son of Charles, became president. He ran sales up to $40,000,000, expanded the company's products to more than 2,000 item s before he dropped dead in 1925. President Manville's will left a block o f stock to his son and namesake, another to his daughter, a third to Johns-M anville's employes. This gave no one undisputed control o f the company. Hiram Edward Manville, brother o f T. F., succeeded to the presidency, but had no wish to retain the job. Young T. F. Manville Jr. had other interests. So H. Edward ended up by buying Tommy's interest, plus most o f the employes' stock, then in 1927 made a dicker whereby J. P. Morgan & Co. bought 400,000 shares (out of 750,000 outstanding) at $50-$55 a share. This inaugurated the J-M era o f bad feeling. Many o f the employes complained bitterly that they never would have sold their stock had they known it was going to land in outside hands. But there was nothing they could do about it and Morgan management soon began to click. T o run JM , Morgan's imported one o f its prize trouble-shooting executives, Theodore Frelinghuysen Merseles, whom it had installed to rescue Montgomery Ward from the depression o f 1921. Mr. Merseles brought Lewis Brown with him as his assistant. And in the next two years J-M sales shot to $62,000,000, its stock to $242. J-M seemed on the way to becoming the General Motors of the building industry with a surface for every purpose. Then Mr. Merseles and the boom died, almost sim ultaneously, in 1929 and Lewis Brown found him self president. He was 35, a very young man at the head o f a very big business. President Brown's position was not enviable. W ith the world crashing, M organ's forgot its grandiose J-M plans. J-M 's employes were still simmering over the Morgan deal. Many an officer was old enough to b e Lewis Brown's father. And during the next three years J-M sales were to slip to $20,000,000, its stock to $10 a share. Lewis Brown's first objectives were therefore plain--to win the confidence o f his employes and fellow officers, and to last out the depression. The first was accomplished by patient tact, the second by shrewd economizing. By 1933 the tide had turned and he was free to try his hand at larger objectives. Since then J-M 's sales have dim bed back to a 1937 peak o f $60,000,000 with earnings o f $5,400,000 (they fell o ff in Depression II to $46,000,000 with 3 of 5 5/18/2008 9:37 AM Corporate Soul - Printout -- TlM b nup://www.urae.coin/uiue/pruuoui/w,ooio>/ / i u j j ,uu.uuiu earnings o f $1,400,000). Sim ultaneously, J-M 's less tangible assets in public goodw ill have been m ultiplied by num erous achievem ents in public relations. Som e sam ples: > Lewis Brown had not been president o f Johns-M anville very long before he discovered that J-M was anything b u t p o p u la r in m o st o f th e 17 to w n s w h ere it h a d fa cto ries an d m in es-- W a u k egan , 111., fo r exam ple, w h ere J-M supported a large part o f th e population. So Johns-M anville cam e down o ff its traditional perch, started a pictorial newssheet fo r em ployes, issued a series o f booklets such as "This is our policy on th e closed shop,"* hired Cartoonist Don H erold to do a set o f down-to-earth advertisem ents fo r local newspapers. J-M plants, says Lewis Brow n, are now getting know n as "good neighbors." > J-M sells products to railroads, utilities, autom otive concerns, bu t its chief interest lies in building m aterials (it sells 28% o f a m odem house). In 1934 Lewis Brown started th e National H ousing Guild, a plan to educate local lum ber dealers in all th e phases o f house-building so th at a prospective builder can get all his inform ation and all h is w o rk a t o n e sp o t. S o fa r, 5,000 m en h av e sp en t tw o w eek s a t th e ir o w n ex p en se a t th e J-M sch o o l. It h a s spread goodw ill for J-M into hundreds o f ham lets. > Som ew hat to Mr. Brow n's surprise, som ething he did a year ago was hailed in the press as the sm artest public relations stunt o f th e year. He issued an annual report to J-M workers as well as stockholders, couching it in one-syllable words with sim ple diagram s to show what happened to the J-M dollar. There had been workers' reports before (International H arvester issued one in 1936) b u t never from th is ABC approach. Som e 80% o f J-M workers said th ey liked it and dozens o f other industries have im itated it since. Three weeks ago Lewis Brown brought ou t his second report to workers along the sam e lines and he also put his report to stockholders into plain English instead o f accounting jargon. >W h en P resid en t B row n w en t to sp ea k at h is facto ry in A sb esto s, Q u eb ec, h e la b o rio u sly m em orized his speech in French -- his audience's native tongue. > Last June Lewis Brow n w as th e first m ajor corporation head to appoint a director to represent th e public. He chose Dr. W alter A lbert Jessup, president o f Carnegie Foundation for the Advancem ent o f Teaching. Again there was a splash o f laudatory headlines. By such actions as these Businessm an Brown has not on ly m agnified Johns-M anville in the public eye; he him self has becom e one o f th e chief spokesm en for all Big Business. Though openly opposed to New Deal m ethods, he has attacked them w ithout rancor, has been equally m odest in his defense o f industry. His significance as a Business spokesm an received th e ultim ate recognition at th e beginning o f D epression II w hen he w as sum m oned from vacation to give his view s to Franklin Roosevelt. "M y W ork." Lewis Brown grew up in tin y Creston, Iowa, w orked his w ay through th e U niversity o f Iowa in 1915, w ent to w ork as a salesm an at $15. T he W ar, which he entered as a private and from which he em erged a captain after nine m onths in France, gave him his first interest in handling men. 4 of 5 5/18/2008 9:37 AM corporate aoui - rnnioui -- mvir, nnp://www.ume.com/ume/prmioui/u,55io, / / iojD,uu.nuni On his w ay home from France he found him self in Chicago with a little time between trains, took a guided tour through the Montgomery Ward premises. When he stopped to thank the man who arranged it, he landed a job in the personnel department interviewing everyone who joined or left the company. His efficiency ideas presently called him to the attention o f President Merseles and when Merseles went to Johns-Manville, Lewis Brown was the only Montgomery Ward man he took with him. One o f the handsomest as well as youngest top executives in the U. S., Businessman Brown lives in swank Greenwich, Conn, in a not-so-swank house, plays good golf, is presently interested in fishing because he just caught a big tarpon. He has three handsome daughters, is sometimes to be seen in the Manville box at the Metropolitan Opera. W hen asked about hobbies, Theodore Merseles used to say he was more interested in making young men than in making money. Lewis Brown has an even more stereotyped reply: "M y work." The best definition o f thai work was given in a speech he made at the International Management Congress last September and quoted by the Monopoly Committee as an example of business enlightenment. Said Businessman Brown: "In the com plex industrial society under which we now live, management no longer represents, as formerly, a single interest; increasingly it functions on the basis o f a trusteeship, endeavoring to maintain a proper balance of equity between four basic interlocking groups: the shareholders. . . the jobholders. . . the custom ers. . . the public." * Last week the latest FORTUNE Survey announced the nation's answer to the question o f who is chiefly to blam e fo r holding back prosperity. The verdict: Business leaders 25.1%, New Deal 23.3%, Labor 17.5%. * J-M is frankly opposed to the closed shop. But it recognizes the right o f collective bargaining, has C. 1. 0 ., A. F. o f L. and independent unions scattered through its plants, is at present on good term s with all. g C lick to Print Find this article at: http://www.time.eom/time/magazine/artide/o,Qi7i.77i 635,oo.htm l 5 of 5 5/18/2008 9:37 AM