Chapter 4

Never let mere pride or obstinacy stand in the way of bowing to the storm. Firmness of character should on these terrible occasions be turned inside out, and be formed into a plasticity of intellect which finds at once its inspiration and its courage in the adoption of novel expedients. The courage of the heart will let no expedient of the ingenuity be left untried. But both ingenuity and courage will find their real source in a health which has not yet exhausted the resources of the body. Firmness which is not obstinacy, health which is not the fad of the valetudinarian, adaptability which is not weakness, enterprise which is not rashness--these are the qualities which will preserve men in those evil days when the "blast of the terrible one is against the wall."

X

DEPRESSION

Depression is not a word which sounds cheerfully in the ears of men of affairs. But the actuality is not as bad as the term. It differs in every respect from Panic. It is not a sudden and furious gust breaking on a peaceful situation, irrational both in its onset and in its passing away, but something which can be foreseen, and ought to be foreseen, by any prudent voyager on the waters of business. The wise mariner will furl his sails before the winds blow too strong.

Nor is depression in itself a disaster. It is merely the wholesome corrective which Nature applies to the swollen periods of the world's affairs. As with trade and commerce, so with the individual.

The high-spirited man pays for his hours of elation and optimism, when every prospect seems to be open to him and the sunshine of life a thing which will last for ever, by corresponding states of reaction and gloom, when the whole universe seems to be involved in a conspiracy against his welfare. The process is a salutary if not a pleasant one--and has been applied remorsely ever since Jeshurun waxed fat and kicked.

So it is with the volume of the world's business. However well men may try to balance the trend of affairs so as to produce a normal relation between the output and the needs of humanity, the natural laws do not cease to operate in a rhythmic alternation between the high prices which stimulate production and the glut of goods which overtakes the demand of the market and breaks the price.

But this change in the sequence from boom to depression is not an 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."