Old Empire, New Prince

(See Cover)

Lord Leverhulme was a grocer's son, He learned to sell when he was young, And all the tune that he could play Was "Advertising Makes It Pay" Over the hills and across the skies, By God it pays to advertise.*

At a curve in London's Thames Embankment, midway between the Houses of Parliament and the Tower, stands a massive granite pile, boldly convex. Its 16 grey Ionic columns give an impression of opulent security worthy of a king's exchequer. This is Unilever House. In front stands a statue of Queen Victoria, symbol of Empire. The juxtaposition is apt. For Unilever House is an empire within the Empire, the greatest industrial realm in the British world.

It all grew from a yellow soap bearing the trademarked name "Sunlight." To sell it, the Lancashire grocer's son flooded England with ads asking a magic question: "Why does a woman look old sooner than a man?" No one ever answered that.

But the million-times repeated question made William Hesketh Lever England's biggest soapmaker.

Soon "Sunlight" was shining around the world, and the grocer's son was a peer, Lord Leverhulme (pronounced leave-er-hume), Viscount of the Western Isles. By the time brusque, autocratic, globetrotting Lord Leverhulme /- died in 1925, his mercantile empire was well on its way to preeminence. By last week it had few equals anywhere in size, prosperity, diversity and complexity.

Now, functioning as Lever Brothers & Unilever Ltd. (with a British-controlled twin in The Netherlands, Lever Brothers & Unilever N.V.), this private empire is a prime bulwark of Britain's reconstruction economy. As it waxes or wanes, so will much of the economic life of the Empire grow stronger or weaker. Through more than 400 subsidiaries operating more than 800 factories in 37 countries (notable exception: Soviet Russia), Unilever dominates the world's soap and margarine businesses. It also sells ice cream, baby food, rubber, cocoa, salad oil, lye, paper, candles, copra, perfume, toothpaste, vitamins, fish, silks, cattle cake, fertilizer.

It operates two million acres of palm-oil plantations in the Belgian Congo, 300,000 acres of coconut plantations in the Solomon Islands. It has its own freighter service between West Africa and England, sends three fleets of its own trawlers into the North Sea for fish (until midway in World War II, Unilever operated 17 of the world's fastest whalers).

For good measure, Unilever controls the Lipton Tea Co., has exclusive rights to use Bird's Eye frozen-food processes outside the U.S., runs a General Motors agency in the Union of South Africa. At the model town of Port Sunlight, near Liverpool, Unilever runs the world's largest private printing press, the world's largest private dock, has built acres of Tudor-style, neatly landscaped cottages for workers. They get a guaranteed wage from Lever, have their children educated by Lever, their doctor bills paid by Lever --and are buried by Lever.

From all these activities, imperial Unilever last year grossed a staggering $1,200,000,000.

The Bright Diamond. In this diadem of empire, the most sparkling asset is Unilever's star-spangled subsidiary, the U.S. Lever Brothers Co. To most U.S. citizens, Pepsodent toothpaste and Lifebuoy soap are as American as the hot dog. But Pepsodent and Lifebuoy--along with Lux, Rinso, Spry and a radio contract with Comedian Bob Hope--are topmost among the assets listed on the books of Unilever House. The unrelenting war against body odor is a British war.

This week, Unilever and its overseas colony throbbed with transoceanic cables, scurrying couriers and all the excitement that once attended the birth of an infanta.

The excitement was over a new head for the empire's most important overseas post. From headquarters at Cambridge, Mass, came the solemn announcement: on July 1, Charles Luckman, sometimes called the jet-propelled wonder boy of U.S. sales promotion, will become the boss of Lever Bros, in the U.S. Luckman's age: 37. His new salary: $300,000 a year.

On his new job, "Chuck" Luckman will take over the second-largest soap-selling enterprise in the U.S. (first: Procter & Gamble), and the third-highest advertising and promotion budget ($25 million in 1945). What manner of prodigy is he?

The Bright Boy. Above all, like old Lord Leverhulme, Luckman knows how to play that advertising tune. No braggart, but no man for mock modesty either, Luckman himself lays his swift rise, like a bar of soap whooshing out of. a bather's fist, to three things: breaks, courage, ability.

Yet Chuck Luckman is quiet, softspoken, unassuming, with an old man's Wisdom in handling other men, an impish sense of humor, a rare flair for showmanship. Once, at a formal Boston dinner, he rose to make a speech, looked down at the assembled Lowells and Cabots around him and said solemnly,: "Just call me God."*Except for his hair, which he has more of, and his clothes, which are conservative, he could pass for an unsung, unsinging Bing Crosby. (Occasionally mistaken for his good friend, he obligingly autographs Bing's name.)

Luckman likes to trade gags and mashie shots with Employe Bob Hope. He also likes to collect pipes (his teeth are white without benefit of Pepsodent)--but he never smokes before lunch. He also likes to remodel houses--he is now busy on his $65,000 new house in Boston's suburban Wellesley Hills. Best of all he likes to ride cow ponies with his wife, attractive Harriet McElvoy Luckman, and three sons --Charles Jr., 13, James, 10, Stephen, 7--on their 22,000-acre "Lucky Five" cattle ranch near Julian, Calif.

Beneath this easygoing exterior, Luckman has dry-ice nerves, intense energy. He gets up every day at 5:30, works at home till breakfast, then spends another ten hours at work, usually in his paneled office in Cambridge. He never raises his voice, never loses his temper, never makes snap judgments, always pla.is everything in advance. But when the plans are made, "then is the time to get in there and go like hell."

Time Out. Luckman, who has been executive vice president of Lever Bros. since Jan. 1, is now set to go like hell. He has shaken up the top level of management, plans to shake it even more by bringing up young blood from within the company and from outside. Probable result: almost a whole new first team by summer's end, with the emphasis on youthful zip and the old school try.

The biggest shake-up will come in Lever's radio advertising. Long a leading purveyor of that curious phenomenon of U.S. culture, the soap opera, the company is going to cut down. Luckman has nothing against soap opera as such. Says he: "You can't reach a mass market with a symphony orchestra." But he thinks that radio talent has become too high-priced for Lever's advertising dollar.

Two Lever radio shows (Rinso's Big Sister and Lifebuoy's Bob Burns program) are to be axed. Before he's done, Luckman plans to slice $5 million from the budget for radio, pay it out for newspaper and magazine advertising. The budget, now weighted 70% to 30% in radio's favor, will be balanced, 50-50. Where Lever leads, others often follow.

Chuck Luckman knows that neither soap nor anything else can be sold by advertising alone. He is so dead certain that he keeps an eye on his and competitors' products by door-to-door selling himself.

Only two months ago he rang doorbells in Los Angeles. One matron complained that a competitor's soap wouldn't suds-up properly. Luckman, who thought it a good soap, challenged this. So he was hauled into the kitchen, made to roll up his sleeves and find out for himself. The woman was right. Her parting crack: "Young man, you have a lot to learn about the soap business."

Honors at 16. Luckman is well aware of this. But he has always learned fast. Born in Kansas City, of a family with little spare cash, he started selling newspapers at nine, later jerked sodas, delivered groceries, clerked. This didn't prevent him from graduating, at 16, with top honors in a class of 2,000 from Northeast High School--or from being class president, yearbook editor, prom chairman, debating captain and a member of the track team. That he was voted most-likely-to-succeed was anticlimactic.

He decided to be an architect. After a year at Kansas City Junior College, where he got in trouble for firebrand editorials in the school paper, he worked for two years as a plumber and draftsman in Chicago, saved enough money to study architecture at the University of Illinois.

A week before he got his Illinois diploma (in another blaze of scholastic honors), Chuck Luckman suddenly married the girl he had been going with since his freshman year. This was one of the few times he has given way to impulse. It meant goodbye to architecture. In 1931 few architects could support wives. So he was glad to get a "temporary" salesman's job with Colgate-Palmolive-Peetat$125amonth. From then on his life matched the triumphs of one of his own soap operas.

On Chicago's tough South Side, Chuck Luckman sold soap to seven of the first eight stores he visited. (Later he quipped: "If I couldn't sell soap in a dirty slum area I might as well quit.") He went on to chalk up an office sales record.

At 24, Luckman was manager of Colgate's Wisconsin district. There he converted an $80,000 deficit into an $80,000 profit, kept climbing. A typical stunt: he bought two carloads of scrub pails, sold them to grocers at cost, then staged a spring-housecleaning sale in which the pails, filled with scrub brushes, clothespins and Colgate soap, were retailed as a "package" for 89-c-. Results were so spectacular that they caught the eye of Chicago's famed advertising millionaire, Albert Lasker (Lord & Thomas), who owned the Pepsodent Co., and a gloomy balance sheet. From a distance, Luckman looked like the man to fix this. Closeup, he looked entirely too young. Calmly Luckman lied to Lasker about his age: he said he was 30, instead of 26. Lasker hired him as salesmanager, at $10,000 a year.

Down With Pepsodent. At Pepsodent, Luckman found himself in hot, deep water. Reason: cut-rate druggists and department stores were selling the 29-c- tube of Pepsodent as a loss leader for anywhere from 21-c- to 2-c- just to get customers through their doors. Other druggists boycotted the toothpaste.

Chuck Luckman ended this rout by plunking out $25,000 to help the druggists lobby the Miller-Tydings Fair Trade Act through Congress. He put in his own form of price control, retaining title to the tubes until they were actually retailed. Then Luckman went on the road to make friends with individual druggists all over the U.S. (he traveled in 51 of his first 52 weeks), learned to call 35,000 druggists by their first names. Result: sales started up. By 1942 Pepsodent was leading the field for the first time. It has never been headed since.

By the time he was made president of Pepsodent in 1943 (at $100,000 a year plus bonuses), Luckman had boosted the company's annual gross profit before taxes from $600,000 to nearly $3,000,000. He plugged one thing, Irium (patented name for sodium alkyl sulphate, a cleaning agent), picked the right man to help do it. The man: Bob Hope. Luckman spotted him in a Broadway musical, offered to sponsor him on the air if he would tone down his smart-alecky manner. Hope refused. But after he had flopped with another sponsor, he meekly went back to see Luckman. Now Hope is signed to a ten-year Pepsodent contract at $20,000 a week (Hope's net after paying off the rest of the show: about $10,000).

Up With Pepsodent. Pepsodent's rise was closely watched by Lever Bros. In 1944 Lever Bros, decided to buy, paying out $15,000,000 for Pepsodent. Along with it they got Chuck Luckman. He got $1,500,000 (after taxes) for his stock.

Up till then Unilever's U.S. subsidiary had been largely the creation of President Francis A. Countway, an elegant patrician who sometimes seemed more like a Renaissance prince than what many people called him: "the greatest advertising man in the U.S." Lifebuoy soap was introduced from England in 1898, but it was Countway who, after a golf game one hot afternoon, invented B.O. to go with it. He had presided over the debuts of Lux Toilet Soap, Rinso, Swan and Spry. He had earned his huge salary (in 1939, $469,000, highest in the U.S. outside Hollywood) by boosting Lever sales from less than $1,000,000 in 1913 to $250,000,000 last year. But now Countway, old (69) and ill, was ready to let Chuck Luckman play the tune.

Like many Unilever subsidiaries, the U.S. company is virtually on its own. At the beginning of this year, it sent Unilever House a one-page memo containing estimates of expenditures, sales and profits for 1946. They were approved, as usual. Now all Chuck Luckman has to do is make the profits.

Trust v. Trust. But the operations of the Unilever empire are not quite so simple. In fact, they are so complex, and sometimes so purposely camouflaged, that even the top men of Unilever don't always keep them straight.

One reason for the complexity lies in the empire's swift, turbulent, helter-skelter growth. Founder Lever (Cofounder and brother James Darcy Lever reared early) couldn't resist buying up plants, setting up subsidiaries wherever he went (he circled the earth five times).

And then things were further complicated in 1927, after the empire collided with Europe's powerful trust, the Margarine Union. The collision evolved into a merger. Out of the merger came two new companies, Lever Bros. & Unilever Ltd., with headquarters in London, and Lever Bros. & Unilever N.V.,* with headquarters in Rotterdam. "Limited" controls subsidiaries within the British Empire, "N.V." those outside--including the U.S.

To make matters worse, World War II forced N.V. to reshuffle its holdings to keep them out of Nazi control. So U.S. Lever Bros, is now supposedly responsible, not directly to Unilever N.V. in Rotterdam, but to the Overseas Holdings Co. in Durban, South Africa. All told, there are four layers of subsidiaries between Cambridge and Rotterdam.

Identical Twins. Unilever House likes to say that Limited and N.V. are different companies. But for practical purposes they are the same. The board of directors of Limited, who get at least $40,000 a year and are usually bigwig politicians or financiers, are the same for N.V. But the board is controlled by Limited. It makes the policy for both companies. They buy materials together, pool profits, pay the same amount in dividends.

Governor of the board is William Hulme Lever, son of the founder and second Viscount Leverhulme, now 58. As his father did, he still owns the largest single block of stock in Unilever Ltd., enough to give him a working control of the company. Unlike his father, he has shown little flair for selling. Most of Unilever's plans are concocted by Geoffrey Heyworth, the stocky, handsome chairman of the board. A onetime Rugby player, he came to Lever at 18, has climbed to the top chiefly because of his rare organizational talent which has kept the empire running with a maximum of dispatch, a minimum of confusion. When Chairman Heyworth has some important business with U.S. Lever Bros., he does not follow the tortuous way to Cambridge via South Africa. Instead, he simply picks up the phone, calls Chuck Luckman long distance.

Growing Boys. Yet the mumbo-jumbo of subsidiaries came in handy during the war. Profits (e.g., from U.S. Lever Bros., estimated at $14,000,000 in 1945), which should have gone to Rotterdam and might have fallen into the hands of the Nazis, were simply stopped along the way.

Now accumulated U.S. profits of six years, some $80,000,000, are again flowing to Rotterdam. Some of them will be used to rebuild Unilever plants on the Continent, although they were comparatively little damaged. Some will go to pay N.V. stockholders a whopping back dividend of 29.6%, announced last week. Probably Unilever Ltd., which has never missed a dividend (10% in prewar years), will now boost its wartime rate of 5%.

How the profits from the U.S. eventually reach Unilever House is a Unilever secret. But few doubt that they are the basis of Unilever's ambitious postwar plans. Unilever expects to spend some $100,000,000 for expansion all over the globe. It also hopes to buy up what is left of the great German soap company, Henkel, and thus have close to a monopoly on the Continent.

Although some of Unilever's methods have smacked of monopoly, it has more often been an apostle of free competition, in which it has shown a notable ability to come out on top. For this reason there has been no talk of nationalizing Unilever, even if the Socialist Government could find a way through the labyrinth of subsidiaries. Furthermore, it is one of the few British companies which has come close to beating U.S. companies at their own game --on their own field. If Britain is to get on her financial feet again, that is a trick which a great many more British companies must learn. To some, the lesson from Unilever seemed to be: what Britain needed was not more nationalization, but more free enterprise--and more such grocer's boys.

*Reprinted by permission of Random House. Copyright 1940 by Louis MacNeice.

/- Hulme was his wife's maiden name.

* And this is good old Boston The home of the bean and the cod, Where the Lowells talk only to Cabots And the Cabots talk only to God. --John Collins Bossidy

*Naamlooze Vennootschap, meaning "limited liability."

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