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Service Is Our Business chapter 5

Is Honesty Declining?

THE example of little things is infectious. Often they set in motion curious reactions. One such instance is the story of an American maker of locomotives. He was about to close a large contract with a foreign government. He had stopped over in London before proceeding on to his destination. He was not too happy about the negotiations since it had been decided, at the insistence of the customer, to substitute an inferior grade of steel in order to keep the cost down to a minimum. It seemed the only way in which his firm could secure the contract.

Leaving his London hotel one morning, he noticed in a shop window some material that he thought would make an attractive sports suit. After he had purchased the goods, a London friend gave him the name of a tailor. The American was impressed by the establishment. He was even more impressed when he met the proprietor.

But when the tailor had taken one look at the cloth, to the amazement of the American, he refused to make the suit. He would not put his label on a suit of clothes made of shoddy material. Neither did he respond to the suggestion that since the cloth had already been purchased, the label could be left oft in this instance. A tailor could not continue to retain the respect of his employees it he expended their honest labor on dishonest material.

With the bolt of cloth under his arm, the maker of locomotives left the tailor’s shop, not angry, but thoughtful. The nameplate on a locomotive, or the label on a suit of clothes, earned respect by the quality of honest labor and honest materials. Unwittingly, the tailor had set him on the right course, as certainly as if he had picked him up physically from one path and set him down upon another.

The first chapter in the “Book of Wisdom” Thomas Jefferson declared, is honesty; and more recently, a well-known editor urged the need for re-establishing the teaching of common honesty in the schools. On the other hand, a school superintendent supporting the affirmative in a debate on the question, “Is Honesty Declining?” placed the responsibility squarely on the shoulders of business. Boys and girls leaving school, he contended, took with them definite standards of honesty and fair play only to be disillusioned by the practices prevailing in places where they worked. “One girl went to work for a dress shop—an exclusive one. As apart of her indoctrination, she was taught three prices for every garment: a top price to be asked first, a middle price, and finally, a minimum. Another lad, when briefed for his part-time work in a grocery store, was told: “Don’t be too particular about weights—that is, don’t give anything away”

If honesty is not to decline, then home, school, church, trade association, and Rotary club must be alert constantly to combat new tendencies—or fresh manifestations of old tendencies—to chisel and to defraud.

Years ago, Rotary was very active world-wide in the effort to check bribery and secret commissions. A past president of Rotary International represented this interest at an international economic conference of the League of Nations. Many countries enacted legislation to check these evils. “Bribery and secret commissions” —the very words have a musty and antique flavor.

Yet in spite of all these efforts, who can say that bribery and secret commissions are a thing of the past? During and since the war, black markets grew and flourished all over the world. The same gangster elements that furnished the bootleggers during the prohibition era in the United States now appeared as black marketers; the same people who patronized them once, were customers again; and the same principle of clandestine corruption was again manifest.

More recently a similar situation was denounced at a district conference of Rotary:

“We should ask ourselves: ‘During recent years when members of all professions were exposed to considerable temptations, have Rotarians succumbed less to these temptations than non-Rotarians?’ In all the professions, right from the jeweler to the apple grower, you find, wherever a temptation offered itself, a high price on the back market or an opportunity to pass off inferior quality for superior or the like, the temptation was always succumbed to.

It is a question of character. The trouble is that we look outward and not inwards when it comes to charges of immorality. There are lots of people who, not out of personal greed, but just on account of the fear of being pointed out as simpletons, follow the general line. And to all such people who think that one honest trader, one lawyer who refuses to take dishonest briefs is not going to improve matters, the ancient wisdom of China gives the answer. There is a Chinese proverb which says: ‘It is better to light a small candle than to sit cursing the darkness.’ “

The same question might be asked with different reference in all the countries which suffered from rising prices and shortages artificially induced.

Could this widespread practice have been checked by vigorous action on the part of trade associations? Or could a strong protest rising from every Rotary club in the world, backed by the example of every Rotarian and his family, have influenced the purchasers and dealers alike to choose the path of strict honesty? Here was an opportunity for vocational service to show its metal and prove its sincerity lest it be classed with those who, in the words of Butler’s Hudibras—

Compound for sins they are inclined to,

By damning those they have no mind to.

The opportunity is still open. The path is plainly marked.

Bribery and secret commissions? There is nothing old-fashioned about them at all. They have simply donned modern clothes.

A whiskey salesman sat at a table and ordered a drink. The proprietor followed the waiter and whispered to him: “What did that whiskey salesman order?”

“He ordered one Scotch;’ said the waiter.

The proprietor then placed three jiggers of rum on the waiter’s tray alongside the Scotch, and said: “Tell him that’s exactly the way I had to buy it!”

What happens one day in a seller’s market may recur in reverse order another day when goods become abundant and tie-in sales are replaced by secret rebates, discounts, and presents to buyers.

Laws against bribery and secret commissions are not enough, though they may help to arouse the public conscience. Only the clear, outspoken, and continuous influence of business leaders can be effective, and then only if the leaders have a vital awareness of just what constitutes bribery.
Too often perception is dimmed by reverence for what is done. A court-martial was held in the North African desert to determine the guilt of an Air Force officer charged with accepting bribes from a contractor who had purchased the waste products from the camp.

The most important evidence for the prosecution came from the contractor himself, who admitted without embarrassment that he had paid certain additional sums to secure the right quantity and quality of “swill,” but he repudiated indignantly the suggestion that he had received something quite different from swill—a few tins of bully beef, perhaps, cigarettes, or, most important of all tea, coffee, or sugar.

He was a man of character, and he was genuinely shocked at the idea that he would have paid a bribe for something he was not entitled to, though in the ordinary course of business, one paid reasonable bribes to see that business was done properly.

At least such a point of view has the merit of being clear and definite even though it might seem reprehensible in other parts of the world. But frequently polite terms, “customs of the trade” or “pressures from business associates” confuse a man, so that he does not know bribery when he sees it.

Two tests are available, both common-sense, both synonymous with that “sense of community” which spells Rotary. The first is publicity. If there is any doubt, for instance, whether a personal gift or a rebate or a price-cut is strictly fair to all concerned, let all concerned know that it is being made. An employer, or a competitor, will be grateful for the information, and the recipient should be flattered to have it known that he is getting this recognition. If the test of publicity arouses embarrassment, then the second and determining test can be applied; that is, whether the gift or other favor tends to raise or lower the level of service by this business or profession.

The Rotarian who applies these tests and still finds himself in a gray zone as to what is really the honest course, can seek the council of the vocational service committee of his club or raise the question in his trade association. From the exploration of such gray zones, real progress in raising standards of practice can often result.

“Honesty Is the Best Policy” is an opinion that is credited to various writers. Emerson went even further. “Men suffer all their lives from the foolish supposition that they can be cheated. The thief steals from himself. The swindler swindles himself’.’ Honesty is efficient. Dishonesty is laborious, hesitant, and wasteful. This view is emphasized by a curious coincidence in the dictionary definition of chiseler: “(i) one who chisels, (a) a child—Ireland’.’ The coincidence of the Irish meaning points to the essential naivete in all chiseling. Mature people just do not do it.

Surely there is no necessary conflict between idealism and good business. As expanding production fills the gap of previous shortages, many Rotarians may find themselves in the happy position of being able to choose between the alternatives suggested in the following instances:

A manufacturer put on a special sales drive, and his dealers stocked up. Then without warning; the advertised price on the article was reduced ten per cent. One large dealer reported that he was not even notified. The stores had to wriggle out of the difficulty as best they could. They had bought something at a high price on which they were forced to absorb a ten per cent loss even before they attempted to sell it. Perhaps the manufacturer did not have the price-cut in mind when he, caused the stores to increase their inventories. But the dealers said he did.

This incident wrecked more goodwill than heavy expense in advertising could restore in many a month. Contrast with it the policy of another manufacturer in the same field:

He had moved up production to a point where he was able to cut $20 from the selling-price of a certain model.

Dealers were requested to report the number of machines they had on hand, and checks were sent to them covering the amount of possible loss owing to the price-cut—actual money, not credit on more merchandise.

Is it any wonder that this manufacturer has a loyal and enthusiastic dealer organization?

Is the customer always right? Most men in business have occasion to ponder this slogan at one time or another. A famous department store made a survey which disclosed that there were 75 complaints in every 10,000 transactions. Consideration was also given to the possibility that many customers did not complain but went elsewhere in future giving the store a bad name among their friends. When salespeople in the store were asked: “Do you believe that it is your job to protect the customer against the store, or the store against the customer?” 99 per cent of them gave the wrong answer.

When it comes to complaints, however, a suspicion sometimes arises whether this slogan is actually true as well as profitable policy. Who is to say whether the customer is really justified in any particular complaint? One Rotarian found an answer that worked satisfactorily. Here it is, in his own words:

“About ten years ago we conceived the idea of allowing our customers to adjust their own complaints. Previous to that time, it had been a poker game. When a customer had a complaint, he would often ask for about twice as much as he expected to get. We would either try to get out of the matter entirely or offer him a quarter of what he asked, and after much wrangling, we would finally agree on some figure.

“By our new methods of making adjustments, the poker playing is eliminated. It is up to the customer to be honest, as we stipulate in making the adjustment that he treat us as he would like to be treated it he were in our place.

“Previous to adopting this policy our adjustments from all causes had run as high as one-and-a-half-percent of our sales. The first year after our new policy went into effect, adjustments dropped to three-quarters of one per cent and have been as low as one-twentieth of one per cent’.’

Is honesty declining? Or, has the business man of today succeeded in removing some of the stigma which once attached to his calling? Was a past president of Rotary International in Great Britain and Ireland correct when he said:

“Until comparatively recent years, the man of business was despised. The only reason was the thought, right or wrong, that meanness, dishonesty, roguery, and often trickery, entered into business transactions. This has only been changed since business men have attempted to put into practice the Golden Rule.”

In the growth of confidence, frankness, and consideration between customers, suppliers, and competitors that has replaced the spirit of “dog-eat-dog” and “caveat emptor’,’ the Rotarian can gain much encouragement for his efforts to promote honest practices in business or profession. Dishonesty is naive and ignorant. It can be exposed as such by the success of persistent and resolute example. Perhaps the experience of the salesman who refused to allow an unearned discount is typical. He was invited to pick up the long-distance phone and check with his home office because a very large contract was at stake. But he steadfastly refused. Nothing could persuade him to even question the established policy of his firm.

Suddenly the buyer changed his mind and signed the contract, saying: “A concern that can afford to be so stiff-necked about its own way of doing business, must have a product that can stand on its own merits.”

What attitude should be taken towards tipping and seasonal gifts to buyers when they are customary?

Is Honesty Declining?

THE example of little things is infectious. Often they set in motion curious reactions. One such instance is the story of an American maker of locomotives. He was about to close a large contract with a foreign government. He had stopped over in London before proceeding on to his destination. He was not too happy about the negotiations since it had been decided, at the insistence of the customer, to substitute an inferior grade of steel in order to keep the cost down to a minimum. It seemed the only way in which his firm could secure the contract.

Leaving his London hotel one morning, he noticed in a shop window some material that he thought would make an attractive sports suit. After he had purchased the goods, a London friend gave him the name of a tailor. The American was impressed by the establishment. He was even more impressed when he met the proprietor.

But when the tailor had taken one look at the cloth, to the amazement of the American, he refused to make the suit. He would not put his label on a suit of clothes made of shoddy material. Neither did he respond to the suggestion that since the cloth had already been purchased, the label could be left oft in this instance. A tailor could not continue to retain the respect of his employees it he expended their honest labor on dishonest material.

With the bolt of cloth under his arm, the maker of locomotives left the tailor’s shop, not angry, but thoughtful. The nameplate on a locomotive, or the label on a suit of clothes, earned respect by the quality of honest labor and honest materials. Unwittingly, the tailor had set him on the right course, as certainly as if he had picked him up physically from one path and set him down upon another.

The first chapter in the “Book of Wisdom” Thomas Jefferson declared, is honesty; and more recently, a well-known editor urged the need for re-establishing the teaching of common honesty in the schools. On the other hand, a school superintendent supporting the affirmative in a debate on the question, “Is Honesty Declining?” placed the responsibility squarely on the shoulders of business. Boys and girls leaving school, he contended, took with them definite standards of honesty and fair play only to be disillusioned by the practices prevailing in places where they worked. “One girl went to work for a dress shop—an exclusive one. As apart of her indoctrination, she was taught three prices for every garment: a top price to be asked first, a middle price, and finally, a minimum. Another lad, when briefed for his part-time work in a grocery store, was told: “Don’t be too particular about weights—that is, don’t give anything away”

If honesty is not to decline, then home, school, church, trade association, and Rotary club must be alert constantly to combat new tendencies—or fresh manifestations of old tendencies—to chisel and to defraud.

Years ago, Rotary was very active world-wide in the effort to check bribery and secret commissions. A past president of Rotary International represented this interest at an international economic conference of the League of Nations. Many countries enacted legislation to check these evils. “Bribery and secret commissions” —the very words have a musty and antique flavor.

Yet in spite of all these efforts, who can say that bribery and secret commissions are a thing of the past? During and since the war, black markets grew and flourished all over the world. The same gangster elements that furnished the bootleggers during the prohibition era in the United States now appeared as black marketers; the same people who patronized them once, were customers again; and the same principle of clandestine corruption was again manifest.

More recently a similar situation was denounced at a district conference of Rotary:

“We should ask ourselves: ‘During recent years when members of all professions were exposed to considerable temptations, have Rotarians succumbed less to these temptations than non-Rotarians?’ In all the professions, right from the jeweler to the apple grower, you find, wherever a temptation offered itself, a high price on the back market or an opportunity to pass off inferior quality for superior or the like, the temptation was always succumbed to.

It is a question of character. The trouble is that we look outward and not inwards when it comes to charges of immorality. There are lots of people who, not out of personal greed, but just on account of the fear of being pointed out as simpletons, follow the general line. And to all such people who think that one honest trader, one lawyer who refuses to take dishonest briefs is not going to improve matters, the ancient wisdom of China gives the answer. There is a Chinese proverb which says: ‘It is better to light a small candle than to sit cursing the darkness.’ “

The same question might be asked with different reference in all the countries which suffered from rising prices and shortages artificially induced.

Could this widespread practice have been checked by vigorous action on the part of trade associations? Or could a strong protest rising from every Rotary club in the world, backed by the example of every Rotarian and his family, have influenced the purchasers and dealers alike to choose the path of strict honesty? Here was an opportunity for vocational service to show its metal and prove its sincerity lest it be classed with those who, in the words of Butler’s Hudibras—

Compound for sins they are inclined to,

By damning those they have no mind to.

The opportunity is still open. The path is plainly marked.

Bribery and secret commissions? There is nothing old-fashioned about them at all. They have simply donned modern clothes.

A whiskey salesman sat at a table and ordered a drink. The proprietor followed the waiter and whispered to him: “What did that whiskey salesman order?”

“He ordered one Scotch;’ said the waiter.

The proprietor then placed three jiggers of rum on the waiter’s tray alongside the Scotch, and said: “Tell him that’s exactly the way I had to buy it!”

What happens one day in a seller’s market may recur in reverse order another day when goods become abundant and tie-in sales are replaced by secret rebates, discounts, and presents to buyers.

Laws against bribery and secret commissions are not enough, though they may help to arouse the public conscience. Only the clear, outspoken, and continuous influence of business leaders can be effective, and then only if the leaders have a vital awareness of just what constitutes bribery.
Too often perception is dimmed by reverence for what is done. A court-martial was held in the North African desert to determine the guilt of an Air Force officer charged with accepting bribes from a contractor who had purchased the waste products from the camp.

The most important evidence for the prosecution came from the contractor himself, who admitted without embarrassment that he had paid certain additional sums to secure the right quantity and quality of “swill,” but he repudiated indignantly the suggestion that he had received something quite different from swill—a few tins of bully beef, perhaps, cigarettes, or, most important of all tea, coffee, or sugar.

He was a man of character, and he was genuinely shocked at the idea that he would have paid a bribe for something he was not entitled to, though in the ordinary course of business, one paid reasonable bribes to see that business was done properly.

At least such a point of view has the merit of being clear and definite even though it might seem reprehensible in other parts of the world. But frequently polite terms, “customs of the trade” or “pressures from business associates” confuse a man, so that he does not know bribery when he sees it.

Two tests are available, both common-sense, both synonymous with that “sense of community” which spells Rotary. The first is publicity. If there is any doubt, for instance, whether a personal gift or a rebate or a price-cut is strictly fair to all concerned, let all concerned know that it is being made. An employer, or a competitor, will be grateful for the information, and the recipient should be flattered to have it known that he is getting this recognition. If the test of publicity arouses embarrassment, then the second and determining test can be applied; that is, whether the gift or other favor tends to raise or lower the level of service by this business or profession.

The Rotarian who applies these tests and still finds himself in a gray zone as to what is really the honest course, can seek the council of the vocational service committee of his club or raise the question in his trade association. From the exploration of such gray zones, real progress in raising standards of practice can often result.

“Honesty Is the Best Policy” is an opinion that is credited to various writers. Emerson went even further. “Men suffer all their lives from the foolish supposition that they can be cheated. The thief steals from himself. The swindler swindles himself’.’ Honesty is efficient. Dishonesty is laborious, hesitant, and wasteful. This view is emphasized by a curious coincidence in the dictionary definition of chiseler: “(i) one who chisels, (a) a child—Ireland’.’ The coincidence of the Irish meaning points to the essential naivete in all chiseling. Mature people just do not do it.

Surely there is no necessary conflict between idealism and good business. As expanding production fills the gap of previous shortages, many Rotarians may find themselves in the happy position of being able to choose between the alternatives suggested in the following instances:

A manufacturer put on a special sales drive, and his dealers stocked up. Then without warning; the advertised price on the article was reduced ten per cent. One large dealer reported that he was not even notified. The stores had to wriggle out of the difficulty as best they could. They had bought something at a high price on which they were forced to absorb a ten per cent loss even before they attempted to sell it. Perhaps the manufacturer did not have the price-cut in mind when he, caused the stores to increase their inventories. But the dealers said he did.

This incident wrecked more goodwill than heavy expense in advertising could restore in many a month. Contrast with it the policy of another manufacturer in the same field:

He had moved up production to a point where he was able to cut $20 from the selling-price of a certain model.

Dealers were requested to report the number of machines they had on hand, and checks were sent to them covering the amount of possible loss owing to the price-cut—actual money, not credit on more merchandise.

Is it any wonder that this manufacturer has a loyal and enthusiastic dealer organization?

Is the customer always right? Most men in business have occasion to ponder this slogan at one time or another. A famous department store made a survey which disclosed that there were 75 complaints in every 10,000 transactions. Consideration was also given to the possibility that many customers did not complain but went elsewhere in future giving the store a bad name among their friends. When salespeople in the store were asked: “Do you believe that it is your job to protect the customer against the store, or the store against the customer?” 99 per cent of them gave the wrong answer.

When it comes to complaints, however, a suspicion sometimes arises whether this slogan is actually true as well as profitable policy. Who is to say whether the customer is really justified in any particular complaint? One Rotarian found an answer that worked satisfactorily. Here it is, in his own words:

“About ten years ago we conceived the idea of allowing our customers to adjust their own complaints. Previous to that time, it had been a poker game. When a customer had a complaint, he would often ask for about twice as much as he expected to get. We would either try to get out of the matter entirely or offer him a quarter of what he asked, and after much wrangling, we would finally agree on some figure.

“By our new methods of making adjustments, the poker playing is eliminated. It is up to the customer to be honest, as we stipulate in making the adjustment that he treat us as he would like to be treated it he were in our place.

“Previous to adopting this policy our adjustments from all causes had run as high as one-and-a-half-percent of our sales. The first year after our new policy went into effect, adjustments dropped to three-quarters of one per cent and have been as low as one-twentieth of one per cent’.’

Is honesty declining? Or, has the business man of today succeeded in removing some of the stigma which once attached to his calling? Was a past president of Rotary International in Great Britain and Ireland correct when he said:

“Until comparatively recent years, the man of business was despised. The only reason was the thought, right or wrong, that meanness, dishonesty, roguery, and often trickery, entered into business transactions. This has only been changed since business men have attempted to put into practice the Golden Rule.”

In the growth of confidence, frankness, and consideration between customers, suppliers, and competitors that has replaced the spirit of “dog-eat-dog” and “caveat emptor’,’ the Rotarian can gain much encouragement for his efforts to promote honest practices in business or profession. Dishonesty is naive and ignorant. It can be exposed as such by the success of persistent and resolute example. Perhaps the experience of the salesman who refused to allow an unearned discount is typical. He was invited to pick up the long-distance phone and check with his home office because a very large contract was at stake. But he steadfastly refused. Nothing could persuade him to even question the established policy of his firm.

Suddenly the buyer changed his mind and signed the contract, saying: “A concern that can afford to be so stiff-necked about its own way of doing business, must have a product that can stand on its own merits.”

What attitude should be taken towards tipping and seasonal gifts to buyers when they are customary?