What was Good for General Motors?

Charlie E. Wilson, Secretary of Defense (1953-1957) as shown on cover illustration of Time Magazine.

Charlie E. Wilson, Secretary of Defense (1953-1957) as shown on cover illustration of Time Magazine.

This Groundhog’s Day I revisit the Senate Armed Forces Committee 1953 confirmation hearing of highly-paid General Motors CEO, “Engine” Charles E. Wilson.  How different are today’s governmental ethics concerns from those of our grandparents? 

Eight Millionaires and a Plumber

In reading Eisenhower: In War and Peace I stumbled upon this old story of Charles E. WIlson’s controversial confirmation hearing in 1953.  Perhaps you’ve heard the following (mis-)quotation before without knowing its historical context, or even who it was who originally said it,

“What is good for General Motors, is good for America.”

That speaker would be Charles E. Wilson, who was selected for President Dwight D. Eisenhower by two of his Republican transition team advisers for the position of Secretary of Defense.  The CEO of General Motors, was known popularly as “Engine Charlie,” to distinguish him from another contemporary CEO, “Electric Charlie” of General Electric who shared the same name.  He was one of the eight millionaires (and a plumber) who author Jean Edward Smith pointed out as having made up Eisenhower’s first-term cabinet in the aforementioned book.

Conflicts of Interest

Regrettably, the quote everybody remembers was not exactly what Mr. Wilson had said. There was concern in the chamber about whether somebody who had such close business ties to GM, which was a major defense contractor at that time, would be independent as the chief civilian administering the Defense Department.  New Jersey Republican Senator Robert Hendrickson put the question to the Republican President’s nominee,

If a situation did arise where you had to make a decision which was extremely adverse to the interests of your stock and General Motors Corp. or any of these other companies, or extremely adverse to the company, in the interests of the United States Government, could you make that decision?

Without excessive naiveté, we all recognize that sometimes in political circles you will see a member of one’s own party (here both Hendrickson and Eisenhower were Republicans) present what might appear to be a critical question in a “softball” manner to be easy on a nominee.  Senator Hendrickson would’ve been no stranger to GM, as they were one of the leading employers of his constituents (even as late as the 1990s, GM had plants in Linden and Trenton).  Nevertheless, today we often find modern partisanship includes ignoring or deflecting any criticism, rather than addressing it forthrightly.  Let us now get to Charlie’s actual response,

Yes, sir; I could. I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the Nation is quite considerable.

So in all fairness to Charlie, his actual quote was more like, “What was good for [America] was good for General Motors, and vice versa.”  He explained by making an allusion to GM’s size (it was the largest company in the United States at the time), and that its welfare went hand-in-hand with that of the country as a whole. Even in the wake of the financial crisis of 2008, the U.S. government’s view hadn’t changed, investing heavily in GM to prevent its liquidation.

Will You Sir, Divest Yourself of Your Stock Ownership?

Political cartoon from January 22, 1953 shows Senate Armed Forces Committee prohibiting Engine Charlie from boarding Eisenhower's Cabinet with the large, mangy animal labeled his GM Stock.

Political cartoon from January 22, 1953

Perhaps the highest-paid executive of that era, Wilson was said to make $500,000 a year, aside from his extensive investment holdings he would be taking away from GM that were valued at over $2.5 million.  By comparison, a Secretary-level cabinet position in 1953 paid only $22,500 a year in salary.  Why then would any industrial tycoon take such a step down in his earnings potential, if not to make it up through funneling defense business to GM?

The Republicans held control of both the House and Senate, and Eisenhower was popular (although as mentioned earlier, he did not choose Wilson, and so made little effort to assist him in his confirmation).  Yet Wilson was unlikely to be confirmed unless he sold his shares in GM.  Congress believed the ethical quandaries of a former defense contractor CEO administering the Pentagon were simply too great.  He ultimately did divest himself of his GM stock, and was confirmed as Eisenhower’s Secretary of Defense by a Senate vote of 77 – 6.


Overhead aerial photograph of the Pentagon.

The Pentagon

Charles E. Wilson went on to modest success as Secretary of Defense from 1953-1957.  His greatest advantage was his experience administering America’s largest company, and he applied that to getting the newly re-organized Department of Defense off of the ground on a sound administrative footing.  He delegated responsibility to the different military branches where it made sense, pushing through decentralized management practices and increasing efficiency across America’s massive defense bureaucracy.

The New Look

Drawing upon his experience as Supreme Commander during World War 2, Eisenhower formulated the “New Look” to America’s defense policy in the 1950s.  This included:

  • A “massive retaliation” mindset that featured a reliance upon nuclear weaponry (in which the U.S. had superiority).
  • The firm conviction that the United States should be militarily prepared to fight only a “big war,” instead of “limited, small wars.” Eisenhower saw “limited war” as something America could not afford, both from a budgetary standpoint, and because the idea of fighting “limited wars” made warfare more likely.
  • Shift in focus favoring the Strategic Air Command.

Wilson was Ike’s salesman for the New Look–not of Cadillacs, but of getting the Army and Navy to curtail their budgets while the Air Force added strategic bombers.  He presented a plan delineating responsibility between the service branches for America’s defense.

While the New Look provided America with peace during the Eisenhower administration, it was soon to become obsolete:

  • The Soviets would eventually catch-up in the arms race, and by the next decade nuclear superiority could be seen slipping to nuclear sufficiency.
  • Interests in the Army, Navy, military-industrial complex, and thinkers such as Henry Kissinger criticized the policy from the inside. Eventually, they would get their “limited war” preparedness, and the limited wars to go along with it.
  • While Eisenhower played a good game of poker holding a strong hand, I’m not sure even he would still see this policy as working out well as nuclear arms proliferated, and the world shifted from unipolar to bipolar to multipolar.  He would recognize all too well that no plan in war can be expected to survive first contact with the enemy.

Ethics: Then and Now

In some ways I was struck by how remarkably little has changed between now and the Fifties in the selection process of an elected President’s cabinet.  Like Ike, President Donald J. Trump is seen as an “outsider” to Washington.  His Cabinet reveals itself to be the product of a “transition team” of advisers and handlers, more so than the elected President’s own selections.  The Cabinet choices are invariably wealthy, successful white men (with the occasional woman or minority pick).  I was surprised to read in Smith’s Eisenhower: In War and Peace, that two members of Goldman Sachs were consulted and gave their opinions on each of the potential Cabinet nominations.

This stands in stark contrast to some of the differences between our grandparent’s era and today, ethics-wise.  Senators weren’t afraid to ask tough questions, even of their own party’s nominees and when it concerned the employer of many of their own local constituents.  Despite the cabinet’s affluence (known so popularly that Wilson was well known by the moniker, “Engine Charlie”), the Congress could demand that its officials divest themselves of clear conflicts-of-interest.  Nobody would place their own standing before that which was set forth in the Constitution, and seemingly every political decision was made in deference to what that document stated, or at least believed it intended.

Similarities and differences.  The biggest challenge of the 21st century is the change it must bring, but best we choose carefully, and wisely, to make only good changes.

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