Virtue isn’t just limited to personal interactions, but plays a vital role in economic relationships between individuals, companies and countries as well.
Elder Merrill J. Bateman, former president of BYU and Seventy emeritus, spoke to students and faculty at the Wheatley Institution’s Everyday Virtue symposium on Friday.
The Everyday Virtue symposium featured several panels discussing virtue in various aspects of life from family and personal life to professional and business life. Elder Bateman, as the keynote speaker, focused on the impacts the virtue of trust has in economic relations, particularly between the U.S. and China.
Trust in the business world
“Trust, honesty, self reliance is the foundation that allows the economic system to function smoothly,” Elder Bateman said. “It is the grease that keeps the wheels moving. If men and women fail the test of honesty, others will refuse to deal with them.”
Elder Bateman recalled an experience from his days as an executive at the candy giant Mars, Inc. to highlight the importance of trust in business.
During the 1970s, cocoa and sugar markets were highly volatile. In the 1970s, cocoa prices shot up 70 cents, while sugar prices experienced a historical spike. Sugar jumped from 10 cents to 65 cents per pound in a few short months before falling just as rapidly, something never seen before or since.
“Each penny was an extra million and a half dollars,” he said. “I can tell you that the margin on confectionary would not have covered that. It was very dangerous time for the company.”
During such a maelstrom, trust was key in business deals made without modern conveniences, Elder Bateman said. Such institutional trust had been established over years of previous business.
“Purchases and sales were made over the phone with paperwork and signatures to follow,” he said. “One’s word was one’s bond. A verbal order with an authorized associate carried with it the full expectation by the other party that it would be honored.”
Keeping your word
With sugar prices rising daily, a London sugar dealer approached someone from sales offering double option deals provided if certain agreements were met. As long as sugar prices stayed between 20 and 40 the company made money; but, if prices rose above — or fell below — that, the company lost.
The sugar buyer liked the option, but a decision had been reached to not accept the deal.
Elder Batemen left the country for some business a few days later and didn’t return until the weekend. On Monday morning, he received a telephone call from the sugar dealer.
“I asked, ‘why are you calling so early?'” he said. “His response: ‘You owe me $1 million. And it appears you’ll owe another million tomorrow and for a number of days after that.'”
Unbeknownst to the officers, the sugar buyer had ordered from the sugar dealer, accepting the double options, which were now costing the company $1 million a day.
“The news was devastating,” Elder Bateman said. “However there was never a question as to whether we would honor the contract. The company would not break its word.”
Trust between countries
Such trust between companies also should exist between countries, particularly between China and the U.S., Elder Bateman said.
[pullquote]”Honesty, trustworthiness and integrity are the foundation of economic growth, both domestically and across the world.”[/pullquote]
With the current the state of China and U.S. relations, Elder Bateman said trust is the key to a successful outcome on both sides.
“It is in the interest of both China and the U.S. to be good partners, to be trustworthy to have integrity in their trading relationships, just as it was in the interest of the confectionery company to honor the contract with the London sugar dealer,” he said.
Elder Bateman reminded listeners that while China does have vast investments in U.S. bonds, they are also importing another commodity from the U.S.: livestock grains in the form of corn and soybeans. Until recently, China was largely self-sufficient in its food production. But with the rising demand for quality meat, China has become dependent on foreign food crops to raise livestock, most of which come from the U.S.
“As I’ve reviewed what’s happened the past 30, 40 years, I’m amazed at the ways that China shows its trust in the U.S.,” he said. “It is interesting and sobering that China is willing to put a significant portion of its food supply in the hands of foreigners, most of whom are U.S. farmers. Can you imagine that happening 40 years ago?”
Trust in our daily lives
Whether in business, politics or personal relationships, Elder Bateman said much is to be gained by keeping a strong focus on virtuous interactions.
“Honesty, trustworthiness and integrity are the foundation of economic growth, both domestically and across the world,” he said. “Those societies who lack this value suffer in that they are forced to go it alone … On the other hand, nations and citizens whose word is their bond are the recipients of a much better life.”
For more information on Wheatley Institution programs and to watch past lectures visit wheatleyinstitution.byu.edu.