Spencer Heath Archive

Item 1736

Pencil dictation taken from Heath by Spencer MacCallum (who owned some Hertz shares), for a letter to Walter L. Jacobs, president, Hertz Corporation.

Winter, 1956-57?

Dear Mr. Jacobs:

     In your address to the Los Angeles Society of Security Analysts on November 8, 1956, the following very significant paragraph appears:

Twenty years ago most car rental customers did not own automobiles of their own. Today the situation is reversed, and nine out of ten of our customers are car owners who rent our automobiles for convenience. But here is a new and very interesting development: In crowded metropolitan areas such as New York, Chicago, and Los Angeles, we find that many people are beginning to abandon car ownership completely, thus freeing themselves of the worry and cost of car ownership, maintenance, parking and garaging during their periods of absence or non-use. The family automobile — once the proud symbol of status in America — is being replaced by The Hertz Idea.

     This letter is apropos of that paragraph.

     In our system of free enterprise, productive properties of similar kind tend to combine. Individual and divided ownership becomes transformed into voting share interests — into undivided ownerships — in large united properties and organizations such as yours. Thus society evolves.

     Mass services, like mass production, can flow only out of the centralized contractual administration of consolidated properties under proprietary and not political administration. And such consolidations of wealth need never be feared; for the more productive, profitable and permanent the accumulation of such amassed wealth or united properties, and the more they promote the prosperity of the population they serve, the more do they attract the investment of savings and the more widely dispersed becomes their ownership and thus their profits and their ultimate control. /This paragraph from “Progress & Poverty Reviewed,” page 21/

     What you are looking to is of course, and primarily, the great profit potential in this coming widely-extended consumer service. This is good, good for everybody; not only you and your Company, but for the public as a whole. For the advantages of making a profit are not limited to those who receive it. They extend to society as a whole. Profit merely reflects the public estimate of the services it has received. So it is well worth while to look at some of the advantages to the public.

     First, probably no problem is so acute as the parking problem. With this systematic selling of car service instead of the cars themselves, practically every car could be kept in service all the time (less time out for upkeep and so forth). This will reduce the number of cars in service to perhaps a small fraction of those now required. That of itself will empty the public streets and highways of more than half the cars that now idly occupy them. Moreover, the owning company will not tolerate the expense of cars standing idle, except for servicing, when they could be making dividends for the stockholders and capital for the enlargement or perfecting of the business. The idea there is that the car would not only be off the street because there is a place for it, but in that place only the time necessary for keeping it in good condition.

     This brings us to the matter of accidents, the tragic death toll. Under the proprietary arrangement, there would be no ill-conditioned cars in service. Self-interest would be powerful; but if not sufficient, competition between the various companies would take care of this and self-interest alone as a safety factor finally prevail.

     This Foundation is considering the publication of an article based on your paragraph, for the social and economic implications are enormous, not only for the serving of the public but also for the saving of its lives. Take the parking problem for example. A small fraction of the present number of cars could provide all the transportation we now have, and these would be either in active service or being put in condition (they can’t afford to be paying garage rent /on cars/ that are not there for any purpose but to be off the street). Probably never more than 20 per cent of cars would ever be in garage at any one time. Wouldn’t need — wouldn’t ever call them all in.)

     Speaking of garage space: this will be small, because most of your cars will be in service most of the time. Then there is the matter of safety. (They could keep them new.) You could not afford to have unsafe cars. Most of your cars would be new and the remainder kept new. Moreover, your buying power would dictate the manufacture of safer and better designed cars than we now have. This will cut down the death toll and lower insurance costs. Also, it would lower the public cost of policing and inspecting and regulating so many useless and offending cars. Not to mention the streets being open for safer driving instead of congested for storage.

     And in these times of capital shortage and high interest rates, think of the billions of idle capital wasting itself away along the curbs the length and breadth of the land. Business could use this.

     The fact is, Mr. Jacobs, the public and the nation at large need your services a whole lot more than you need the patronage. You can live without them buying from you, but a whole lot of them are dying right now for want of services which you can supply.

     Give a bouquet to yourself. Your business is a whole lot more important than you may have supposed.

 

/Tentative outline of article suggested by the above dictation:

                                 A.         Profit to the Company

                                 B.                Solve Nation’s Parking Problem

C.        Reduce Nation’s Accident Toll

                                                                           1.       Simplify traffic situation

                                                Parking

                                                Eliminate unnecessary cars circling the block

                                  

 2.     Cars in service will be

   Newer cars

   Well serviced

   Better designed (easier servicing)

                                 D.         Release Nation’s Productive Capital

 

Theme: Society is working out its own alternative to the traffic problem. /