Depression Strikes!

Shortly after our second daughter, Dorothy, was born, I persuaded my younger brother, Russell, then 20, to come back to Chicago and join me in the advertising business. He had been employed in an office job with the Portland Gas & Coke Co. in Portland, Oregon.

My Brother’s Experience

I gave him what instruction and coaching I could, and sent him out calling on prospects to sell advertising space for our magazines. But after several days—or perhaps two or three weeks—he didn’t seem to be doing so well. I knew he had not had any of this kind of experience. So I decided to take him on a call with me, to observe the manner in which I talked with prospective advertisers. I decided that we should call together on someone I had never met before.

The J. I. Case tractor account had just switched to a new agency I had never contacted. I decided to make the call on the space buyer of this agency. It was one of my “on” days, and about 10:30 in the morning.

I wanted to set a good example for Russell, to show him how it was done. We went together to the agency office. Briskly, and with dignity I stepped up to the receptionist.

“Tell Mr. Blank that Mr. Armstrong is here to see him,” I said in a positive tone. I had found that this approach usually got me right in on my man.

The space buyer came out to the reception office, holding my card which I had sent in by the receptionist.

“What bank journals do you represent?” he asked.

“The nine largest—all of them that are worth using,” I replied snappily and positively, and in a tone of authority.

“Well!” he exclaimed. “Come in!”

In his office I immediately launched into the situation my surveys had disclosed, slapping down on his desk a pile of hundreds of questionnaires from bankers and tractor dealers, and taking out of my briefcase the typed tabulations and summaries of the surveys.

He was tremendously impressed.

“Mr. Armstrong,” he said after we had covered the material in the surveys, “I wonder if you could prepare for me a statement of the combined circulations, page sizes, rates, etcetera, of your publications.”

“I have it right here—already prepared for you,” I said, handing the statement to him.

He asked me to prepare for him some other statement. I reached into the briefcase and handed it to him. He asked if I would send over to him sample copies of each of my magazines. I reached in the briefcase, and handed them to him.

“Well,” he said finally, “that just about covers everything. Now tell me, Mr. Armstrong—I see you know this problem thoroughly, and you know your own publications. Just what do you advise for this J. I. Case account—which magazines, and how much space ought they to use to accomplish their objective with the bankers?”

“They should use nothing but full pages,” I said, speaking authoritatively, “and they should use all nine publications for a concentrated national circulation, because the J. I. Case distribution is national; and they should use it every issue on a year-around basis because they have an educational problem which is going to require constant educational-type copy over an extended period of time. You’ve got to change the attitude of bankers in regard to mechanized power farming. That’s a big order. It can only be done with big space, and it’s going to take time. And here I have for you the data and arguments you should incorporate into the advertising copy to convince the bankers. These are the facts that will convince them if you present them in important-size space and keep it up month after month.”

I handed him the typed statement of facts, data and arguments which my surveys and personal interviews with bankers had indicated would be most effective in changing banker attitudes toward tractors.

He thanked me, and Russell and I left.

Record-breaking Contract

Out in the hall, on the way to the elevator, I asked Russell: “Do you think we will remain on the J. I. Case list, for renewal contracts for another year?”

“Boy!” exclaimed Russell. “Will we! Why, I think he will do just what you recommended. Why, you had him literally eating right out of your hand.”

“Well, did that experience help you, Russ?”

I was completely surprised at his answer.

“No! It certainly didn’t! Instead, it showed me why I haven’t been landing any contracts. Look, Herb! I’m only 20 years old. They think of me as just a kid. You are 28. You’ve been in this for years, and you’ve had experience I haven’t had. You have all the facts right on your tongue tip. You speak with assurance and authority. You know your stuff, and men you talk to know that you know your stuff. They have confidence in you immediately. But I don’t have all this knowledge yet, and I don’t appear as mature, and I can’t talk as confidently.”

I was disappointed. To try to help my brother, I had really keyed myself up to “put on a good show” for him on this call. It boomeranged. It reacted in reverse. It discouraged him. And I didn’t know what to do about it. What he had said was true. It would take him years to gain maturity of appearance, and the knowledge of all these merchandising and distribution problems, just as it had taken me years to acquire this knowledge and maturity.

That same afternoon the space buyer in the agency we had called on that morning called me on the telephone.

“Hello, Mr. Armstrong. I have some good news for you. I didn’t tell you this morning, but while you were here, the president and advertising manager of the J. I. Case Co. were here in the office of our president, making up the lists for the next year. I took all your data list.”

“Splendid!” I replied. “But how much space?” I was already carrying the J. I. Case account, with half-page space in only three magazines.

“Full page,” he replied.

“Splendid! But how many magazines?”

“Oh,” as if he had not thought to tell me, “all nine of them.”

“Splendid! But how many months?” I was having to drag it out of him.

“Fifteen months,” he replied. “We will start with the October numbers, using October, November and December of this year, and then the entire calendar year next year, making a total of 15 pages in each magazine.”

“Wow!” It was the biggest advertising contract ever sold for bank journals, so far as I knew. And so far as I know, it probably is still the record today. By this time advertising rates on all my magazines had gone up considerably. My commission on this order was probably around $3,500—a good fee for about one hour’s consultation that morning!

For some little time longer I tried to keep Russell on the job, not soliciting tractor accounts, but smaller-space advertising. But he was just too young. He procured a job with one of my clients, a burglar alarm manufacturer, selling their burglar alarm system to banks. He traveled for some months in northern Illinois and in Wisconsin, gaining some valuable experience, getting together board meetings in banks to present his product to them. But, although he did better on this, his youth proved too great a handicap, and finally he returned to Portland, Oregon, and to his job with the gas company.

Depression Strikes

In January 1920, the well-known statistician Roger Babson was the speaker at one of our Association of Commerce luncheons then being held each Wednesday in the Cameo Room of the Morrison Hotel. Through the Advertising Club, a division of the Chicago Association of Commerce, I had been a member of the association for some years.

We were then at the very height of a wave of postwar prosperity.

“Gentlemen,” said Mr. Babson, “we are about to enter the worst business depression that our generation has ever experienced. I advise you all to set your houses in order. I advise against any further plans of expansion until this depression has passed over.”

Seated at tables in that large room were leading bankers and business executives of Chicago. I glanced around. I saw amused smirks animate the faces of many prominent men.

Through the next few months of 1920 business activity continued its boom upswing.

In the summer of that year I attended the American Bankers Association national convention in Washington, D.C. While passing the White House one day, I was stopped at the driveway for a large limousine emerging from the White House to pass. In the rear seat was President Woodrow Wilson. He smiled and waved his hand to the two or three of us who happened to be passing at the moment.

Mr. Wilson was the fourth president I had seen in person. At age 5 or 6, when we lived in Marshalltown, Iowa, held in my father’s arms, I saw President William McKinley. He was making a rear platform address from his private train. The event was so vividly stamped in my memory that I remember it distinctly, even though I was scarcely out of babyhood at the time.

I saw and heard President Theodore Roosevelt several times, both during his administration and afterward. I sat within about 15 feet of him at an Association of Commerce banquet in the ballroom of Hotel LaSalle in Chicago. I saw President Taft when he made a speech in Des Moines, Iowa. But since seeing and waving back to President Wilson that day in 1920, I have not seen a single president in person—though of course, since television, most of us have seen every president many times; and I had seen all presidents since Wilson in newsreels.

A highlight of that 1920 convention trip to Washington, D.C., was a long conversation I had, lasting more than an hour, with John McHugh, in the lobby of the Willard Hotel. Mr. McHugh was then president of the Mechanics and Metals National Bank of New York. Later, through consolidations of this bank and others into the gigantic Chase National Bank, Mr. McHugh was elevated to a position two levels higher than the president of the largest bank on Earth, with the title “Chairman of the Executive Committee.”

But one might ask: “What price glory?” in the business world, after all. A very few years ago I stopped in at the Wall Street offices of the Chase National Bank, and asked for information as to the latter days of John McHugh.

“Who? Never heard of him!” was the only reply I could get from those of today’s staff that I questioned. Had he been a glamour-boy movie star instead of a world-famous banker, his name might have lived after him more effectively.

I was really puzzled about one thing. John McHugh was the very epitome of a quiet, cultured, dignified gentleman. He was extremely courteous, kindly, polite. Naturally he had many friends and many who posed as friends. How could a soft-spoken and kindly gentleman like John McHugh turn down a conniving, scheming, professing “friend” who might come to him for a large, undeserved loan?

“Didn’t friends and acquaintances take advantage of such a gentle soul?” I asked one of my bank journal publishers.

He laughed. “Oh, no,” he explained. “Don’t worry about the wrong kind taking advantage of John McHugh’s friendliness. His judgment is very keen, else he would never have risen to such high level in the banking world. Nobody puts anything over on him. He simply remains gracious and friendly, and explains that loans of this type are handled by such and such officer. He then offers to introduce the would-be borrower, expressing confidence he will be well taken care of. He always is. Such procedure is the signal to the other officer to turn the man down. The would-be borrower friend, of course, becomes angry and furious at this other officer—but not at Mr. McHugh, who still retains the friendships.”

Before the end of 1920, Roger Babson’s predicted depression did strike—with sudden and intense fury. By January 1921, we had reached and passed its lowest ebb.

‘Thermometers on the Wall’

At this time Roger Babson once again was the guest speaker in the Morrison Hotel Cameo Room Association of Commerce luncheon.

“Well, gentlemen,” he said, “you will remember that a year ago I warned you that within one year we would be in the throes of the worst depression our generation has ever seen. I noticed many of you smiling unbelievingly then. Well, that year has rolled around, and here I am again, and here is the depression with me.”

Chicago business leaders were not smiling now. Mr. Babson then proceeded to explain why he knew what was coming and business executives did not.

“It is now midwinter,” he said. “If I want to know what the temperature is, now, in this room, I go to the wall and look at the thermometer. If I want to know what it has been, up to now, and the existing trend as of the moment, I look at a recording thermometer. But if I want to know what the temperature in this room is going to be, an hour from now, I go to the source which determines future temperatures—I go down to the boiler room and see what is happening down there. You gentlemen looked at bank clearings, indexes of business activity, stock car loadings, stock-market quotations—you looked at the thermometers on the wall; I looked at the way people as a whole were dealing with one another. I looked to the source which determines future conditions. I have found that that source may be defined in terms of ‘righteousness.’ When 51 percent or more of the whole people are reasonably ‘righteous’ in their dealings with one another, we are heading into increasing prosperity. When 51 percent of the people become ‘unrighteous’ in their business dealings with their fellows, then we are headed for bad times economically!”

I have never forgotten Mr. Babson’s explanation. I hope my readers today may remember and profit by it, too.

I paid with the loss of my business to learn the lesson!

Every one of my big-space advertisers in the tractor and similar industries went into economic failure in that flash depression of late 1920. It wiped out my business and source of income—literally!

I was not a quitter. I had learned, now, not to give up. But I had not learned that a dead horse is dead! For two years I stayed on in Chicago vainly attempting to revive a dead business.