With Republican Dwight D. Eisenhower’s ascension to the presidency in 1952, American business finally had a chance to undo two decades of Democratic New Deal policies. The Depression and World War II had ended, bolstering the argument for a return to an economy without high tax rates, heavy regulation and government support for labor unions. But once Eisenhower took office, he and the corporate executives who ran his administration validated the post-Depression changes to the domestic economy instead of reversing them.

As Time magazine wrote in 1956, “By conserving and enlarging the social programs inherited from the New and Fair Deals, the Eisenhower Administration helped set a course for the new conservative.” Eisenhower did move economic policy to the right, cutting federal spending and reducing some taxes, and he offered rhetorical paeans to small government and free enterprise. But the actual shift was modest. The top marginal tax rate was 92 percent in 1952, which meant that individuals kept only eight cents of each dollar of taxable income beyond $200,000. Under Eisenhower, the rate fell by a single percentage point, to 91 percent. Labor unions grew at roughly the same pace as the workforce did. Eisenhower’s main labor policy consisted of lobbying behind the scenes to persuade businesses and workers to compromise with each other and sign contracts without costly strikes. His strategy largely worked. Wages continued to rise, and strikes happened less frequently than during the Truman administration.

The more conservative elements of Eisenhower’s coalition were bitterly disappointed. “We cannot see what purpose was served by Republicans fighting the New Deal for 20 years if they were going to wind up by embracing the New Deal,” the editorial board of the Chicago Tribune wrote. The John Birch Society, a far-right group, spread the lie that Eisenhower was a secret communist. Eisenhower’s most conservative brother, Edgar, told him that his administration was validating unconstitutional expansions of government and that Edgar’s friends wondered whether the president was even a Republican. Dwight Eisenhower had some fun in the letter he wrote Edgar in response, pointing out that he was the president and, as such, defined what it meant to be a Republican. It meant accepting the cultural shift among corporate executives and in the American economy. 

The purest sign of the shift could be seen in the compensation that top business executives received.

Many executives did not try to grab every last possible dollar during the postwar decades.

The market for executive salaries has long been a clubby one. Officially, a board of directors, with a fiduciary duty to represent the interests of a company’s shareholders, determines how much money a chief executive receives. In practice, a CEO helps choose the members of the board, some of whom are friends or former colleagues. Many board members are themselves executives at other companies and so are willing to err on the side of overpaying a peer. CEO pay, as a result, tends to be influenced as much by the culture of corporate America at any given time as by market forces.

One executive who rose through corporate America during its post-Depression period of moderation was George Romney. An extrovert who had honed his confidence during his time as a young missionary in London, Romney moved to Washington in the late 1920s and became a lobbyist for the aluminum industry. The leaders of the auto industry noticed Romney and hired him to lobby for them. He spent World War II helping the industry work with the federal government to manufacture military equipment. In 1948, the chairman of one of the carmakers Romney represented, the Nash-Kelvinator Corporation, recruited him to become a top executive at the company.

Romney was soon a star. He pioneered a new kind of vehicle, the compact car. It was part of the burst of consumer goods introduced in the years after the war. Nash-Kelvinator marketed this car, the Rambler, as stylish and affordable, and many families were drawn to the idea of owning a smaller vehicle, especially as a second car. Romney enjoyed mocking Detroit’s larger cars as dinosaurs, a reference to both their size and their supposed future extinction. Company advertisements asked, “Is your car a dinosaur to park?” Sales of the Rambler surged in the late 1950s, as did the company’s profits and stock price. By this point, Romney was running the company.

As pleased as he was with its success, Romney also started to grow uncomfortable with all the money flowing into the company. He worried that executives might become distracted by what he called “the temptations of success” rather than focusing on the business’ long-term health. To avoid that problem, he went to the board of directors with a suggestion: The company should establish an annual cap on pay of $225,000 for any executive. That seemed like plenty of money. It was roughly 40 times as much as a typical American household was earning at the time. The board — which included Romney’s close friend J. Willard Marriott, a restaurant entrepreneur who had recently opened his first hotel — agreed to the cap.

But the board soon found itself with a dilemma. Romney’s original contract called for him to receive a $100,000 bonus if the company reached certain financial benchmarks, and, because of how well the Rambler was selling, the company had done so. The bonus would have put Romney over the cap. To him, the solution was obvious: He forfeited the bonus. As the company continued to thrive in the early 1960s, new bonuses kicked in, and Romney asked the board to cancel them as well. Over a five-year period, he refused $268,000 in pay.

George Romney worried that executives might become distracted by what he called “the temptations of success” rather than focusing on the business’ long-term health. 

He was not the only executive to turn down higher pay during these years. John Ekblom, who ran the Hupp Corporation, an appliance manufacturer, turned down a $110,000 bonus in 1959. The sum, he said, “far exceeds my needs and appetite.” Ekblom explained that he was refusing the money partly to call attention to low-level corporate managers who had been crucial to the economy’s success yet did not earn enough money to save for retirement. The decisions by Romney and Ekblom were sufficiently unusual to receive press coverage at the time, but they were also consistent with a larger trend: Many executives did not try to grab every last possible dollar during the postwar decades.

The pay of the typical CEO of a large company rose only modestly from the 1940s through the 1970s, according to corporate records later analyzed by the economists Carola Frydman and Raven Molloy. CEO pay rose faster than inflation, meaning that the executives were receiving real raises, but these raises tended to be modest. Stock prices, the gross domestic product and the median family income all rose more quickly. As a result, the gap between CEO pay and everybody else’s pay shrank during these years. Executives accepted this situation without much complaint. They also accepted a top marginal tax rate that was above 90 percent in the 1950s. They did not start think tanks or advocacy groups whose mission was to argue that increasing the incentives for standout corporate performance would benefit the entire American economy.

Why not? The answer cannot have involved only pure economics. No doubt Romney, Ekblom and their fellow CEOs could have found enjoyable ways to spend more money. They could have set aside great sums for their heirs or given a sizable donation to their alma mater, perhaps getting their name on a building. To anybody who believes that human beings naturally maximize their own income and living standards, these titans of capitalism were acting irrationally. Yet it did not seem irrational to them. They were acting in accordance with the culture, rejecting the ostentation that could have caused their fellow executives and citizens to lose respect for them. As Adam Smith argued, respect and pride are powerful drivers of human behavior.

Executives like Romney viewed themselves as a benevolent elite who rejected the Darwinian business conservatism of the early 20th century for a more paternalistic and patriotic capitalism. They were part of a shared project to overcome existential threats to the United States — first the Great Depression, then World War II, and finally the Cold War. To do so, the executives moderated their self-interest. They still often fought with labor unions and government bureaucrats, but the different sides came to see their opponents as loyal opposition, ultimately interested in the same goal of creating a prosperous America to lead the world.

In hindsight, it can be seductive to treat these midcentury leaders as more virtuous than their successors. It would also be a mistake. The CEOs of the postwar decades were deeply flawed. They presided over an economy that excluded the great majority of the population — women, people of color, Jews and openly gay Americans — from many positions of authority. Few corporate leaders used their own influence to fight injustices like the Red Scare and racial segregation. What the executives did do was help to create an economy that reduced inequality and lifted living standards for virtually every group of Americans. That was no small thing. It reflected not the individual virtues of the executives but the prevailing culture of their era.

Human beings had not become any greedier than in generations past. Instead, “the avenues to express greed have grown enormously.”

The Romney family underscores this point. George’s youngest child was named Willard, after George’s close friend J. Willard Marriott. The boy, born in 1947, went by his middle name, Mitt. He would grow up to be remarkably similar to his father. Each became a leader in their church. Each first had a successful business career and then entered Republican politics, serving as a governor (George in Michigan, Mitt in Massachusetts) and running unsuccessfully for president. Each displayed an unusual willingness to buck his own political party, George by overseeing a redistricting process in Michigan that reduced the advantages for rural areas and Mitt by being the only Republican to vote to convict Donald Trump in both of his impeachment trials. Each Romney showed more interest in alleviating poverty than most Republican politicians, with George helping to open child care centers in Detroit and Mitt pioneering an expansion of health insurance in Massachusetts. Both Romneys displayed a mix of conservatism, heterodoxy and principle.

Yet there was also a glaring difference between their business careers. The elder Romney capped his annual salary at $225,000 in the early 1960s — the equivalent of about $2 million in today’s terms. The younger Romney earned many multiples of that in the 1980s and 1990s as an executive at Bain & Company, a consulting firm where he helped start a spinoff private equity firm. The firm had a habit of buying a company, laying off some workers, reducing the pensions of other workers, and then selling the company at a profit. After decades at Bain, Mitt Romney’s net worth approached $250 million. Unlike his father, he showed little concern about being corrupted by the “temptations of success.” It would have been unusual if he had. By the time he was running Bain, the culture of corporate America had shifted again. Other CEOs and private equity investors were making similarly huge sums.

Alan Greenspan, the longtime chairman of the Federal Reserve, later explained the shift by saying that human beings had not become any greedier than in generations past. Instead, Greenspan said, “the avenues to express greed have grown enormously.” It was true of the Romneys. Mitt was not inherently more selfish than George. They were both products of their times. 

From the book “Ours was the Shining Future: The Story of the American Dream” by David Leonhardt. Copyright © 2023 by David Leonhardt. Published by Random House, an imprint and division of Penguin Random House LLC. All rights reserved.

This story appears in the December issue of Deseret MagazineLearn more about how to subscribe.