The most famous Bata slogan and strategic conviction was “Every worker should become
a capitalist.” This irritated not only trade unions, but also industrial associations
endeavoring, along with the State, to see that the hardships of the Great Depression was
shared “equitably” between as many firms as possible. This “redistribution of pain” became
the clarion call of international socialists. In such a climate, Bata’s remarkable
achievements—high wages, low prices, content customers and dynamic growth—had
to be punished, not rewarded or even left alone.
Such views were widely held during the Great Depression also in the U.S., especially
under the presidency of Franklin D. Roosevelt (FDR). Before that, President
Hoover launched public works projects, raised taxes, extended emergency loans to failing
firms, hobbled international trade, and lent money to the states for relief programs.
FDR accused Hoover of having presided over “the greatest spending administration in
peacetime in all of history” (Woods 2009). Then he became the President.
According to a typical story of the day, the so-called Sweater Fable (Will 2009),
FDR got the idea of the redistributive new deal at a meeting with journalists on April
12, 1933, barely a month into his new office. The success of “a certain little sweater
factory in a little town” became an inspirational symbol for the almost two decades of
crisis ahead.
The new president described a small sweater factory’s efforts to fight the crisis. The
factory employed some 200 people and was well-known for good relations between its
owners and workers. It was the town’s only industry. When sweater sales dropped
sharply, the town was virtually starving.
Then the employees agreed that they could keep their factory going if wages were
cut by 33 percent. Sweater prices could then be reduced, thus creating an edge over
their competition. FDR narrated about how the factory’s salesmen went to New York
and sold so many sweaters in 24 hours that the factory had enough work for three shifts
a day for the next six months. Journalists were impressed and naturally excited by the
tale of a small American community triumphing over the Great Depression.
FDR looked at them through his pince-nez: “They get a good deal of cash into the
community. . . . [But] they undoubtedly, by taking these orders, put two other sweater
factories completely out of business,” he counter climaxed. Then he started to belabor
his government’s plan for the bulk of consumption in any given industry to be spread
equitably through the sector as a whole. “Instead of trying to concentrate production
to meet that consumption into the hands of a small portion of the industry, we want to
spread it out. . . . It might be called the regulation of production or, to put it better, the
prevention of foolish overproduction,” FDR said.
That is how the New Deal was born, prolonging the economic crisis well into the
beginning of the 1950s. The New Deal interfered with the free movement of prices and
wages, overruling the market’s attempts to reallocate resources in an optimal fashion.
Both Hoover and Roosevelt were “leading the country down the path to socialism.”1
This is precisely what Bata was facing in his own country and around the world.