necessary bureau in your office, depositaries for money, interline
relations and numerous other propositions which usually become
self-suggesting when the broad working principles are established. You
may, perhaps, need another assistant general manager for this work. You
will not have the trouble a general manager in Mexico once did. His
assistant general manager sold out, it is said, to the conductors.
These conductors, mostly Americans, were an enterprising lot. They are
also said to have bought the detective agency that was employed to
check them up.
On some runs where the conductor is busy with numerous train orders you
may find it better to make the head brakeman a collector, but never let
him be a specialist independent of the conductor.
Affectionately, your own,
D. A. D.
LETTER XII.
THE LABOR NEMESIS AND THE MANAGER.
Omaha, Neb., June 24, 1911.
My Dear Boy:--You tell me that you are conducting labor negotiations
these days. As I understand it, all the old grievances have been
merged; after eliminating all demands introduced for trading purposes
it is simply a question of more money. This simplifies the proposition.
The union gets all that it can and the general manager gives up only
what he must. Simple, but barbaric. Such innocent bystanders as the
public and the stockholders may get hurt in the process, but that is
part of the penalty for being innocent bystanders. We are in a
transition period. All the hot air fests that you are now holding are
probably necessary to blow the chaff away from the wheat. Sooner or
later the irrevocable law of supply and demand must operate to place
the whole matter of the compensation of labor upon a more scientific
basis. At present it is rather the strength of the particular union
than the relative justice of its demands.
Our predecessors of two generations ago did many fine things, but they
overlooked some basic propositions. Suppose that fifty or sixty years
ago when a brakeman expected to be promoted to a conductor they had
said: "Fine, my boy. You have the ear-marks of a conductor. You
understand, of course, that we have no conductors who cannot run an
engine. We will arrange, without money loss to you, for you to fire two
or three years. When you assure us of your ability to run an engine we
will begin to commence to talk about making you a conductor." Later on
a man with this splendid all-around training could have specialized
along the line of his greatest aptitude. We would not see freight tied
up in terminals waiting for firemen, with a board full of extra
brakemen. There would be an elasticity of assignment that would work
out for the good of all concerned. We would not have the fireman
straining his back to shovel fifteen or twenty tons of coal while a
different breed of cat, a brakeman, rides on the fireman's seat and
forgets to ring the bell when the train starts.
We blame the unions for expensive lack of interchangeability of
function. The fault lies at the door of the official class. The master
mechanic said: "This is _my man_." The superintendent, and later the
trainmaster, said: "This is _my man_." This pleasing tenacity for
so-called individuality left the company out of the reckoning. The
company got it where the chicken got the axe, sweet Marie. It did not
take the men long to respect the plane of cleavage which the officials
had projected. So we have a number of unions with conflicting demands
rather than the more enlightened self-interest of a larger body. I know
that it has been fashionable to play one union against another, but the
day of this is nearly passed. Just how it will all work out I do not
know; perhaps it is too late to expect amalgamation. Perhaps it will
come of itself when the Firemen and Enginemen absorb or replace the
Brotherhood of Locomotive Engineers, and when the Trainmen outlive the
Order of Railway Conductors. Whatever the cause and whatever the
existing conditions the result is plain. We have a number of forces
operating to restrict the output of capable men. The economic machinery
of society at large is therefore out of balance. You cannot blame the
artisan, skilled or unskilled, for guarding the entrance to his craft.
It is human nature, and it is right. The debatable ground, however, is
as to where the entrance of the public at large should be to prevent
the matter being over-done. No one labor organization can expect, in
the long run, to be given preferred consideration over another; neither
can the labor unions, comprising only a small percentage of the
country's population, expect indefinitely to dominate society at large.
It is useless to expect to accomplish much in the way of increased
elasticity of labor as long as railway officials, through so-called
departments, insist upon narrowing and specialized rigidity. Such
reforms to be effective must begin at the top. It will all come out in
the wash, but in the meantime the laundry bills are disproportionate
and may place cleanliness far beyond godliness.
General Sherman, one of the versatile geniuses developed by our great
Civil War, once said that most men consider the immediate at the
expense of the remote; that a few like himself were handicapped by
considering the remote rather than the immediate; that really great
men, like Grant, derived their title to greatness from an ability to
balance the immediate and the remote. All men are more or less a
product of conditions and environment. The railroad official of to-day
lives from hand to mouth--the hand of expediency to the mouth of
rapid-fire results. When more roads are like the Pennsylvania in having
the stability which admits of intelligent, far-seeing, actual control
by directors and executive officers, it will be easier. The banker,
from his condition and environment, dreads a war or a strike more than
the famine and the pestilence. The former two seem to him to be
avoidable, while the latter may be visitations of Providence.
A strike, like a war, is a terrible thing to contemplate. A surrender
to principle and violation of the broad laws of true altruism can be
even more terrible. Last year when the Pennsylvania, backed by its
directors, called the bluff of the Trainmen, there was hope in many a
breast that a lesson would be learned; that the rights of the community
at large would be vindicated as against the unreasonable demands of the
powerful few. How quickly did the Trainmen find an excuse to back down!
Their friend and adviser, the late Edward A. Moseley, shrewd and
scheming, once told them that their best weapon is a threat of a strike
and not the strike itself. By and by the bankers will learn these
lessons and bargaining will be scientific and altruistic as well as
collective and coercive.
Perhaps you are thinking that, like the minister who lectures the
members present for the non-churchgoing of the absentees, I am taking
too much of this out of you. We all know, as do the labor leaders, that
no general manager ever went through a long strike, successful or
unsuccessful, without ultimately losing his job. The directors start
out with the best intentions of supporting him. As the struggle grows
fiercer, the temporarily reduced earnings have a refrigerating effect
on their feet. This cold storage is reflected by a message to the brain
that the poor Mr. General Manager is so unfortunate; that he lacks
tact. "He is so rash. He jumps right in. We told him he might go out to
swim and hang his clothes on a hickory limb. We cautioned him, as all
prudent mothers should, not to go near the water." Everything in this
world costs something, and nothing is more expensive than an unjust
peace, a peace which leaves out of the reckoning the rights of the body
politic.
One of the hopeful signs of the times is the opposition that the labor
unions have offered to the exponents of so-called scientific
management. Already our critics are giving indications of becoming our
allies as against the hard-headed, selfish opposition of labor unions
to progress. This will serve to help show the public our problems in
their true light. All that we need ask is a fair hearing, and
ultimately the calm judgment of the American people will decide aright.
I have no quarrel with the labor union, as such. Were I in the ranks I
would belong to a union and give it my loyal support. Monopoly and
combination of capital beget as a corollary a labor trust. You and I
are powerless to eliminate the effect of such natural, economic forces.
We can, however, help control the effect of these forces, preferably by
reason. There are so many of the primal instincts and passions still
extant in human nature that at times diplomacy exhausts itself and
falls back upon the protection of forces offensive and defensive,
active and passive.
You see that it is merely a phase of a general problem that a
disproportionate amount of your time is taken up by affording an
opportunity for delegates to make their lodges believe they are earning
their per diem and expenses. What matters it to the locomotive
engineers if their importunities cause scant attention to the unspoken
rights of your clerks and trackmen? Why not figure out just what
proportion of your time the different organizations are entitled to,
shut off senatorial courtesy and limit debate accordingly?
Whatever you do, have your division superintendents present at your
negotiations. Do not flatter yourself that your own wonderful ability
will enable you to take a sound position on every question that may
arise. Such deliberations are staff work and, unlike line
administration, are not a one-man function. The final decision should
rest with you, but in the meantime get all the light you can. Under the
unit system the superintendent can be thus spared from his division to
help save the company money because there is always a competent man to
perform his duties, and a provision all along the line for automatic
successions to meet just such incidents of service. It should be as
easy for a chief assistant superintendent, familiar with the routine,
to assume the superintendent's regular duties any day as for the second
dispatcher to work the first trick. When your mechanical assistant
conducts his shop negotiations, by all means insist that he direct the
superintendent to send in each mechanical assistant superintendent to
assist in the conferences.
One reason that the labor situation has gotten away from us is because
the matter has been handled on too large a scale. The tendency has been
to consider the abstract possibilities rather than the concrete effort.
A superintendent of a 140-mile division once recommended approval of an
application for increase in wages of his milk train crew, because the
men on the next division were getting as much for running only 105
miles. Investigation showed that his men were on duty less than six
hours, of which the total time consumed in handling milk cans was a
trifle over an hour. Each general manager is inclined to believe that
his men will get the worst of it as compared with other roads. He has
been inclined to yield when he should have been firm. The further away
from the concrete local conditions the negotiations can be conducted
the more vulnerable are the officials. The labor leaders know this, and
the more divisions or the more roads they can bunch in a single
negotiation or arbitration the more unwieldy becomes the proposition
and the greater the gain for labor. This condition of things was partly
inevitable, is now partly avoidable. Uniformity may be deadly.
Standardization can be run in the ground, as was shown when a West
Virginia agent of the Chesapeake & Ohio painted his wooden-leg orange
color with maroon trimmings.
Affectionately, your own,
D. A. D.
LETTER XIII.
A DEPARTMENT OF INSPECTION OR EFFICIENCY.
Chicago, July 1, 1911.
My Dear Boy:--One of the easiest things to measure, because definite in
terms and limited in quantity, is money. The things which money may
represent are hard to measure because often intangible and indefinite.
The money account may or may not reflect efficiency in performance.
Have we not been grasping at the shadow of money at the expense of the
substance, effect? Consider, if you please, the working of a bank,
perhaps the corporate institution in whose efficiency the public has
the greatest confidence. In a small country bank one man does all the
work. Later he requires a clerk or a bookkeeper. As the bank grows
there are self-suggesting divisions of labor along such well defined
positions as teller, paying or receiving, cashier, vice-president,
president, etc. In the first place, the same man handles the money and
its written representations, the accounts. When we reach the stage of
having both a teller and a bookkeeper, the one is a check on the other,
because of a difference in point of view. I do not understand that a
bank considers its bookkeepers more honest than its tellers or vice
versa. The bookkeeper came along to check the teller, not because of
such marked variations in humanity, but because of the volume of
business. There was more than one man could do.
The large corporations, including the railways, seem to have followed
governments into a fundamental fallacy in the matter of money and
accounting. Because, now and then, in spite of safeguards, a trust is
violated and money embezzled, a remedy is sought by segregating in
administration all activities having to do directly with fiscal
affairs. The ultimate effect is dwarfing to administration and fatal to
maximum composite efficiency. In a compact establishment like a
department store or a large manufacturing plant, the closer contact of
the departments concerned minimizes the evils of this segregation. The
operations of a government or of a railway extend over so much
territory that such close contact is impossible. The result is that our
bookkeeper is too far away from the paying teller. The bookkeeper then
arrogates to himself fancied qualities of a superior being blessed with
a rectitude born of the guardianship of money. Yes, we must have the
transactions of one man checked by another more or less disinterested.
This is not alone a question of integrity, but concerns the failings of
the human mind. The more conscientious and careful the engineer the
more does he desire a check on his own calculations by competent
persons. We accept the estimates of the engineer, swallow them whole
sometimes. We tell him to go ahead and blow in the company's money or
credit to accomplish a desired result. This is because we have
confidence in his professional ability. When it comes to one of the
components of his constructing work, the disbursement of real money, a
lay function, we balk. We say to him, this is so different that your
vouchers and checks are worthless until mulled over by a distant
circumlocution office. This office, it is true, has no first hand,
practical knowledge of what you are doing, but because this is money we
feel safer by imposing such a check. When the bookkeeper sat in the
same room, like a bank, and checked the engineer, this was a good
working hypothesis. Did we not outgrow it long ago? We trust the
engineer to hire a thousand men, to incur a legal obligation for us to
pay them. Why send the pay-rolls several hundred miles to be checked by
a lot of boys? Why not let the engineer disburse, subject to a real
check, after the fact, by a competent disinterested inspection of his
work?
The same general line of reasoning applies to all the activities of a
railroad. We endeavor to insure integrity by disbursing only through
the central offices of the auditor and the treasurer. By the same
reasoning a large bank would keep its customers waiting at one window
because only one teller would be allowed to pay out money. A bank can
count its cash at the end of a day, but it can never tell exactly what
remittances its correspondents have in the mail. A railway's money is
even more in a state of unstable equilibrium. All night long some of
its ticket offices and lunch counters are open. All night long cash
fares are being collected on trains. The exact amount of money on hand
at a given moment is only an approximation. This is natural from the
characteristics of a railway. It would be a hard matter to stop every
train and determine the exact location of every freight car, at home or
earning per diem, at any particular moment of time. We can, however,
approximate sufficiently closely to the conditions to serve all
practical purposes.
Tremble not at my coming, Clarice; I would not push the auditor off the
pier. Rather would I put him on the band wagon and let him blow a
bigger horn. Is not accounting one of several components of operation
of which collection and disbursement are yet others? Why not frankly
admit that a railway is too unlike a department store to put all the
cashiers and bookkeepers on a single floor? Why not interweave
accounting with operation? Why not make such operating units
self-contained, as experience may prove wise and practicable? Some of
the best roads in the country now have division accounting bureaus in
order that the superintendent may keep his operating expenses in hand.
The next step must be a division disbursing officer. A pay-roll and
certain kinds of vouchers, including some for claims, must become cash
without the worthless certification of the general office.
Returning once more to the bank for inspiration and for light, do
the bookkeepers of a chain of associated banks report to a head
bookkeeper in a central office in a distant city? No, each bank is
a self-contained unit under the president or a manager. The policy
is dictated, the methods are prescribed by a central authority.
Efficiency, integrity, and uniformity are insured by inspections and
audits by competent experts free from local affiliations.
What is going to become of the accounting department? Why, the
accounting department is going to be absorbed by the operating
department. From the ashes of the ruins there will arise a department
of inspection or efficiency which will do the things that the so-called
auditors are now helpless to accomplish. Some of the men in this new
department will be recruited from the earnest officials and clerks of
the accounting department of to-day. These men fail to attain the result
they so loyally desire, not from their own limitations, but from the
fallacy of the system under which they work. They deal with
accounts--mere symbols; with money, a representative. Their work, to be
effective, must deal with things, and above all with men. Audit is
extremely important, but not all-important. Audit is a component part
of a larger activity, inspection. The word inspection on railways is
unfortunately and improperly associated with the thought of secret
service and underhanded spotting. True inspection is as open as the day
and as welcome as the evening. The earlier station agents resented the
creation of the traveling auditor as a reflection upon their integrity.
The station agent of to-day--and as a class what splendid, honest men
they are!--welcomes the traveling auditor, because his visit means a
clearance. The public accountant had a long fight for recognition of
his legitimate function, first in England and later in this country.
To-day he is established and is desired by the general accounting
officers of railway corporations.
Following the public accountant comes the efficiency engineer. While
one inspects conditions, the other audits accounts. By an easy process
of evolution the two positions sooner or later merge into one. The
volume of business may warrant segregation, however, into component
activities. Sooner or later the final certificate must include
inspection of men and things as well as audit of accounts.
We, the railways, are big enough to have our own efficiency engineers.
This is a distinct function for the staff as contra-distinguished from
the line. Efforts, more or less crude, to introduce special staff work
have signally failed on a number of railways. The underlying cause has
been a violation of the principle that the staff can never as such
directly command the line. The temptation of the special staff men,
call them inspectors or efficiency engineers, if you please, is to
become meddlers. They are so enthusiastic for the cause that they
desire to save the country and reform the road all on the same day. The
men who succeed at special staff work are those who stick to the
principle enunciated. An inspector, because he is a staff officer,
should never give an order.
The coming new department of inspection or efficiency, like all
innovations, will have its troubles. One of the temptations will be to
build up an office full of clerks to check a lot of unnecessary
reports. The head of the department, whether he be called general
inspector or vice-president, will have to remember that untrained
persons do not necessarily become endowed with superior intelligence
and professional acumen by the privilege of personal contact with him
and assignment to his department. To be successful his department will
consist of a corps of highly trained inspectors of official rank and
experience, capable of first hand dealing with things and men. The
tendency of both inspection and audit is to become perfunctory. One
remedy, found efficacious by the Army, is definite and periodic
rotation from the line positions. The law of the survival of the
fittest will bring out those all-around men who can succeed in both
line and staff. The superintendent who has been detailed as an
inspector for a year or two will return to a division with a broader
view and will be a better superintendent. He will not resent the
inspection of his division by the other department, because conscious
of the fact that the inspectors are at least his equals, and perhaps
his superiors, in experience and rank. These inspectors will certify
not only that the money has been honestly and legally expended, but
wisely and efficiently as well. While an absolute essential, honesty is
not the only component requirement of good administration. The one road
on which good intentions are standard ballast is not as yet
telegraphing its accidents and its density of traffic to the Interstate
Commerce Commission.
Affectionately, your own,
D. A. D.
LETTER XIV.
PRESERVING ORGANIZATION INTEGRITY.
Chicago, July 8, 1911.
My Dear Boy:--You write me that your work is heavy, that your territory
is extensive, that you wish to divide it into two districts each under
a general superintendent. If your president follows his usual practice
and asks my advice it will be summed up in four letters, "d-o-n-'t."
For years I have been seeking in vain for a general superintendent's
district with an entirely satisfactory administration. I know many
strong general superintendents. The trouble is not with them, but with
the system. Organization is a series of units. These units get out of
balance when they are defective or incomplete. There is usually
withheld from the general superintendent some such vital process as car
distribution, on the specious plea that such activity is so different
it can be more cheaply handled by some higher office. If the
organization unit is created it must have the same full chance for life
and development as the rest of the offspring. A principle in
organization cannot be violated with impunity any more than in other
branches of science.
The average general superintendent's office is a great clearing house
for correspondence. Few matters receive final action and many are
passed along to the general manager's office. The resulting delay
usually does more harm than good. On the other hand, since we all like
to feel that we are highly useful, the general superintendent, or his
chief clerk, is unconsciously dwarfing the initiative of
superintendents by requiring references to him of matters that should
receive final action at division headquarters. If you do not believe
it, check up a few general superintendents' offices and study the
processes. I am not referring to jurisdictions where a general
superintendent is required by charter or other legal requirements. I
have in mind districts which are arbitrarily created by ill-considered
executive mandate.