CHAPTER IV
Academic Prestige and the Material Equipment
In the course of the preceding chapter it has appeared that
the introduction of business principles into university policy
has had the immediate and ubiquitous effect of greatly
heightening the directorate's solicitude for a due and creditable
publicity, a convincing visible success, a tactful and effectual
showing of efficiency reflected in an uninterrupted growth in
size and other tangible quantitative features. This is good
policy as seen from the point of view of competitive business
enterprise. In competitive business it is of the gravest
importance to keep up the concern's prestige, or "good will." A
business concern so placed must be possessed of such prestige as
will draw and hold a profitable traffic; otherwise the enterprise
is in a precarious case. For the objective end and aim of
business enterprise is profitable sales, or the equivalent of
such sales if the concern is not occupied with what would
strictly be called sales. The end sought is a net gain over
costs; in effect, to buy cheap and sell dear. The qualities that
count as of prime consequence in business enterprise, therefore, particularly in such business enterprise as has to do with many impressionable customers, are the salesmanlike virtues of effrontery and tact. These are high qualities in all business, because their due exercise is believed to bring a net return above the cost of the goods to the seller, and, indeed, above their value to the buyer. Unless the man in competitive business is able, by force of these businesslike aptitudes, to get something more than he gives, it is felt that he has fallen short of the highest efficiency. So the efficient salesman, and similarly the efficiently managed business concern, are enabled to add to their marketable goods an immaterial increment of "prestige value," as some of the economists are calling it. A margin of prepossessions or illusions as to their superior, but intangible and inexpensive, utility attaches to a given line of goods because of the advertiser's or salesman's work, -- work spent not so much on the goods as on the customer's sensibilities.
In case these illusions of superior worth are of an enduring
character, they will add an increment of such intangible utility
also to goods or other marketable items subsequently to be
offered by the same concern; and they can be added up as a
presumptive aggregate and capitalized as intangible assets of the
business concern in question. Such a body of accumulated and
marketable illusions constitute what is known as "good-will," in
the stricter sense of the term. The illusions in question need, of course, not be delusions; they may be well or ill founded; for the purpose in hand that is an idle question.
The most familiar and convincing illustrations of such good
will are probably those afforded by the sales of patent
medicines, and similar proprietary articles of household
consumption; but intangible values of a similar nature are
involved in nearly all competitive business. They are the product
of salesmanship, not of workmanship; and they are useful to the
seller, not to the buyer. They are useful for purposes of
competitive gain to the businessman, not for serviceability to
the community at large, and their value to their possessor lies
in the differential advantage which they give to one seller as
against another. They have, on the whole, no aggregate value or
utility. From the point of view of the common good, work and
expenditure so incurred for these competitive purposes are
bootless waste.