IfcZI 
 
 B6 
 
 THE LIBRARY 
 
 OF THE 
 
 NEW YORK STATE SCHOOL 
 
 OF 
 
 INDUSTRIAL AND LABOR 
 
 RELATIONS 
 
 AT 
 
 CORNELL UNIVERSITY 
 
 Digitized by Microsoft® 
 
This book was digitized by Microsoft Corporation in 
 
 cooperation with Cornell University Libraries, 2007. 
 
 You may use and print this copy in limited quantity 
 
 for your personal purposes, but may not distribute or 
 
 provide access to it (or modified or partial versions of it) 
 
 for revenue-generating or other commercial purposes. 
 
 Digitized by Microsoft® 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924002677114 
 
 Digitized by Microsoft® 
 
SCIENTIFIC MANAGEMENT 
 
 AND 
 
 RAILROADS 
 
 BEING PART OF A BRIEF SUBMITTED TO THE 
 INTERSTATE COMMERCE COMMISSION 
 
 BY 
 
 LOUIS D. BRANDEIS 
 
 PROPERTY OF LIBRARY 
 
 NEW YORK STATE SCHOOL 
 INDUSTRIAL AND LABOR RELATIONS 
 
 CORN^^U^^RSITY 
 
 THE ENGINEERING MAGAZINE 
 1911 
 
 Digitized by Microsoft® 
 
COPYBIGHT, 1911 
 
 By JOHN E. DUNLAP 
 
 Digitized by Microsoft® 
 
THE GREAT QUESTION INVOLVED 
 
 THE RAILROADS' POSITION 
 
 Commissioner Lane. Is there any reason to believe that 
 these increases would stop with the present increase if it 
 should be allowed ? 
 
 President Willard (of the Baltimore & Ohio). Increases 
 in rates 1 
 
 Commissioner Lane. Increases in rates, yes, sir. 
 
 President Willard. No, I think not. I think the ten- 
 dency of rates will be to continue upward. 
 
 Commissioner Lane. You think there will have to be a 
 progressive increase ? 
 
 President Willard. Yes, sir. 
 
 (Record, p. 2188.) 
 
 THE SHIPPERS' POSITION 
 
 As an alternative to the railroads' practice of combining 
 to increase rates we offer co-operation to reduce costs 
 Instead of a dangerous makeshift, we offer a constructive 
 policy — scientific management, under which as costs fall 
 wages rise. 
 
 LET THE CONSUMER BEWARE 
 
 Of the vicious circle of ever increasing freight rates, and 
 ever increasing cost of living. 
 
 HE 
 14,2-1 
 
 36 
 
 Digitized by Microsoft® 
 
Digitized by Microsoft® 
 
PREFACE 
 
 The efficiency movement, of which scientific management 
 is an important factor, expresses a new philosophy that 
 conceives of conservation as the central motive in the 
 conduct of industry. In an industrial system which, like 
 ours today, is marked by the decline of competition as a 
 force making for progress, the definite pursuit of efficiency 
 is the only cure for a vicious cycle of increasing costs and 
 increasing prices. Competition is not thereby discarded, 
 but is directed to desirable ends and is balanced and con- 
 trolled by finer constructive forces. It is changed from a 
 strife to a stimulus. 
 
 The goal in view is the elimination of waste, because in 
 the end waste can benefit nobody, and the apportionment 
 of the savings among all concerned. The result is a soften- 
 ing of the struggle for existence, developing the faculties 
 and increasing the happiness of the worker. Efficiency 
 preaches a gospel of hope. 
 
 Efficiency is attained by the use of the best methods for 
 the achievement of the best ideals. Ideals are spiritual, 
 and know no limits except those which at any given time 
 may be set by the circumstances surrounding a particular 
 undertaking, or by the methods that our limited knowledge 
 of science and the arts may impose. Efficiency in any par- 
 ticular case, therefore, is measured by the degree to which 
 the opportunities of that case are realized. 
 
 About June, 1910, the railroads of the United States, 
 operating East of the Mississippi and North of the Ohio 
 and Potomac Eivers, acting in pursuance of a common pur- 
 pose, filed with the Interstate Commerce Commission new 
 tariffs providing for large advances in freight rates. The 
 Commission ordered a public investigation as to the justice 
 and reasonableness of the proposed increased rates, and 
 
 Digitized by Microsoft® 
 
meanwhile suspended the operation of the new tariffs. The 
 I investigation occupied about six months. 
 
 In this investigation Mr. Louis D. Brandeis of Boston 
 acted as counsel for the Traffic Committee of the Trade 
 t~ Organizations of the Atlantic Seaboard. 
 
 The railroads sought to justify the increased rates on 
 the ground that they needed greater net income, and 
 asserted that this need was due to increased operating costs, 
 I resulting mainly from higher wages. They contended that 
 1 increased rates were imperative because the possibilities 
 of economies in the operation of railroads had been prac- 
 tically exhausted. 
 
 Mr. Brandeis opposed the proposed advance on several 
 
 grounds; but that which attracted most attention was his 
 
 contention that there still existed in railroad operation 
 
 f huge possibilities of economies which could be attained by 
 
 % the introduction of scientific management — economies ag- 
 
 1 gregating on all the American railroads ' ' at least a million 
 
 dollars a day." 
 
 On January 3, 1911, Mr. Brandeis submitted to the Com- 
 mission a brief in which the evidence introduced at earlier 
 ""hearings was referred to and discussed. About one-half of 
 vthe brief related to the subject of scientific management. 
 That part is now reprinted. 
 
 Bailroad operation is a special case surrounded by many 
 opportunities and beset by many difficulties. Where de- 
 mand has been made imperative by competition (as in some 
 passenger service), railroad efficiency is relatively high. 
 When the measure of competition has not been in use (that 
 is, in economy, or the equivalence between expenditure and 
 return), railroad efficiency is relatively low. So long as the 
 question of expenditure can be shifted to others for solu- 
 tion, it will not be answered by the railroads. Whenever 
 some force as powerful as competition is brought to bear 
 upon railway operating expenditures, costs as well as serv- 
 ice will become efficient. The pursuit of efficiency through 
 scientific management supplies this force. 
 
 Our easiest and surest instruction comes from the study 
 of experience gained by others. The demonstration in the 
 following pages is made wholly from practical experience. 
 
 Digitized by Microsoft® 
 
The case which Mr. Brandeis builds up with masterly skill 
 in construction and interpretation, is built of facts proved 
 in industries differing from the railways only in outward 
 form, but in no principle essential to the application of sci- 
 entific management; for that management is applicable to 
 any case in which men are employed to do work. The 
 testimony affords abundant proof that the railways may 
 find in scientific management the same happy results that 
 manufacturers have invariably found — increased profits, 
 decreased costs, ability to increase wages and to lower 
 prices to their patrons — and this with easier, instead of 
 harder, working conditions for the employees. 
 
 The proof is in Mr. Brandeis 's pages, and needs no sum- 
 mary here. The Engineering Magazine feels it a privi- 
 lege to have been offered the opportunity to preserve and 
 to present in book form this reproduction of that part of 
 Mr. Brandeis 's brief which covers the principles and results 
 of scientific management. They are offered here, as they" 1 
 were offered by Mr. Brandeis, not in any spirit of contro- 
 versy or criticism, but in a spirit of constructive effort and , 
 in dedication to a public service. C. B. G. 
 
 Digitized by Microsoft® 
 
Digitized by Microsoft® 
 
TABLE OF CONTENTS 
 
 The Railroads' Contention that the Possibilities of Econ- 
 omies in Operation have been Exhausted 1 
 
 Economies through Scientific Management 5 
 
 1. Scientific Management is not merely Competent and Progressive 
 
 Management 6 
 
 2. What Scientific Management Involves 8 
 
 3. Scientific Management Demands the Separation of Planning from 
 
 Performing 11 
 
 4. Scientific Management Changes the Relations of the Management 
 
 to Labor 14 
 
 5. Scientific Management Demands Preparedness 17 
 
 6. Scientific Management Demands Analytical Study 22 
 
 7. Scientific Management Demands Records of Industrial Per- 
 
 formance 25 
 
 8. Scientific Management Demands Standardized Methods and 
 
 Equipment 28 
 
 9. How Scientific Management has Increased the Efficiency of the 
 
 Individual 29 
 
 10. How Scientific Management Increases the Efficiency of Plant and 
 
 Equipment 30 
 
 11. How Scientific Management Increases the Efficiency of Material . 33 
 
 12. What Labor Gains from Scientific Management 35 
 
 A. Financial Gains 35 
 
 1. Increased Pay 35 
 
 2. Promotion 37 
 
 B. Social Gains 38 
 
 C. Aiding the Less Competent 41 
 
 D. The Bonus 43 
 
 E. Piece Work 43 
 
 13. What the Employer Gains from Scientific Management .... 48 
 
 14. What the Consumer Gains from Scientific Management .... 49 
 
 Digitized by Microsoft® 
 
Page 
 
 15. The Introduction of Scientific Management a Process 50 
 
 1. Obstacles to be Overcome 51 
 
 2. Finding Better Methods 52 
 
 3. Great Gains in Short Time 53 
 
 16. Scientific Management and Labor Unions 55 
 
 17. Scientific Management Applicable to all Businesses 61 
 
 18. Scientific Management is Applicable to Railroads 63 
 
 (1) Maintenance of Equipment 68 
 
 (2) Maintenance of Way 71 
 
 (3) Transportation 72 
 
 19. How Railroads can Co-operate to Reduce Costs 74 
 
 20. Eliminating Graft as a By-Product 78 
 
 21. Railroads are not Scientifically Managed 79 
 
 22. Scientific Management does not Involve Large Capital Ex- 
 
 penditures 81 
 
 23. Saving $1,000,000 a Day 83 
 
 24. The Commission should Undertake an Independent Investigation 
 
 into the Application of Scientific Management to Railroads - . 88 
 
 Conclusion 91 
 
 Digitized by Microsoft® 
 
Digitized by Microsoft® 
 
Digitized by Microsoft® 
 
THE RAILROADS' CONTENTION THAT THE POSSIBILITIES OF 
 ECONOMIES IN OPERATION HAVE BEEN EXHAUSTED 
 
 The railroads contend that they have practically ex- 
 hausted the possibilities of economies in operation. 
 
 (a) President McCrea of the Pennsylvania Railroad said: 
 "So far as concerns economies which will result from reduction 
 
 in grades, increasing hauling capacity of locomotives and increased 
 capacity of cars, the Company is to-day already practically deriving 
 the full benefits from those which are possible in this direction due 
 to repairs heretofore made, for we have practically completed our 
 grade levels, and have probably reached the maximum size of our 
 cars and engines. ... (P. 1957.) 
 
 Mr. Brandeis. . . . Now, Mr. McCrea, one other question. 
 You stated that you thought the limit of increase in efficiency and 
 resultant economy was practically reached. 
 
 Mr. McCrea. I did, sir. (P. 2025.) 
 
 Mr. Brandeis. . . . and that those methods of increasing 
 efficiency — those more or less remunerative investments of property 
 through increased efficiency — had, so far as you were aware, ex- 
 hausted the improvements in the line of efficiency that you deemed 
 possible? 
 
 Mr. McCrea. In the line of economies. . . . You said 'effi- 
 ciency'; I say 'economies.' That is about true. I said 'practically 
 so'; that is my belief." (P. 2026.) 
 
 (b) President Willard, of the Baltimore and Ohio Railroad, said : 
 " Commissioner Lane. Do you think there should be an increase 
 
 in rate every time there is a considerable increase in wages? 
 
 Mr. Willard. I think that depends. In my opinion the two 
 things will be found to be very closely related to each other in the 
 
 Digitized by Microsoft® 
 
future, and for the reason stated by Mr. McCrea yesterday, I think 
 the possibilities of further operating economies have been pretty 
 well exhausted. ... I must confess that I am unable to see very 
 much more that can be done in the way of reducing the cost of 
 operation." (P. 2182.) 
 
 In substantially every other branch of manufacture, 
 not controlled by trusts, including those much older than 
 railroading and in which there has been the persistent 
 prodding of competition, nearly every year still records 
 important new economies. And (except where the ten- 
 dency to reduce costs has been thwarted by an extraor- 
 dinary rise in raw material or the control by a trust of 
 some of the instruments of production) these economies 
 in private manufacturing have been so great that they 
 have generally been sufficient to prevent any rise in selling 
 prices in spite of large increases in wages paid. 
 
 The contention that the possibilities of economy in rail- 
 roading have been practically exhausted is contrary to all 
 human experience in other lines of activity. Why then 
 should the manufacture of railroad transportation be sup- 
 posed to have reached the irreducible and now unmain- 
 tainable minimum of cost? 
 
 The railroads have introduced certain large economies 
 within the last fifteen vears; but these have been accom- 
 plished, mainly, through large expenditures of capital, as 
 in leveling grades, straightening curves, strengthening 
 bridges and road beds, making possible the use of larger 
 cars and engines, and thus imposing also the great costs 
 of the new equipment. 
 
 But advances in the art of transportation have been 
 relatively few. Striking instances of failure to introduce 
 advanced methods must be obvious to any careful ob- 
 server. Most conspicuous perhaps is the persistence of 
 the old methods of handling baggage and freight; for, 
 
 Digitized by Microsoft® 
 
with few exceptions of very limited scope, the loading 
 and unloading of ordinary freight are still conducted by 
 hand substantially in the same manner as at the birth of 
 railroading. 
 
 Indeed, the most marked advances made in connection \^- 
 with railroading in recent years have been forced upon 
 the roads by law, against their strenuous opposition. 
 This is true of the safety appliances, the abolition of re- 
 bates and passes, and, to a great extent, the abolition of 
 grade crossings. 
 
 By some railroad managers the duty of finding new 
 avenues to economy has been recognized, as shown by 
 the following passages from the Report to Stockholders 
 of the Lehigh Valley Road Company for the year ending 
 June 30, 1910 (pp. 6, 19) : 
 
 " It may be pointed out that the increases in revenue have occurred, 
 with one exception, in each month of the year during a period when 
 the general business of the country has not, to any appreciable 
 extent, advanced, but on the other hand has during the last few 
 months shown some evidence of receding. While the solicitation of 
 both passenger and freight traffic has been actively carried on in 
 competition with other lines, the increase may in large measure be 
 ascribed to the high character of service rendered shippers and the 
 traveling public, your management having consistently sought to 
 improve the service, believing, as has undoubtedly been the case, 
 that the revenues would respond to the improvement in the service. 
 
 Notwithstanding the high character of the service rendered and 
 with a liberal allowance for maintenance and depreciation of the 
 property, the operating expenses have increased but $1,108,410.93, 
 or 5.39 per cent, over the preceding year, and are actually lower than 
 for the fiscal years 1907 and 1908, when the earnings closely approxi- 
 mated those of the present year. It is particularly gratifying to 
 observe that the expenses have been so controlled that the major 
 portion of the increase in gross earnings has been retained in the 
 net operating revenue, making the total of the latter $929,134.85 in 
 excess of the best previous year. It is also pertinent to state that 
 these results have been attained during a year when practically all 
 
 Digitized by Microsoft® 
 
the elements of cost entering into the expense of operation have 
 materially advanced. One of the most serious of these is the increase 
 in rates of wages granted to all classes of employes. While this has 
 affected the results for the year it has only been in the latter months, 
 as the more important increases did not apply until after January 1st. 
 
 The ratio of operating expenses to operating revenues was 59.95 
 per cent, a decrease of 2.14 per cent, as compared with the preceding 
 year. . . . 
 
 If for any reason, however, the gross revenues cannot be so in- 
 creased, the constantly increasing cost of the service will diminish 
 the net revenue of the Company and it becomes, therefore, of the 
 utmost necessity to effect the greatest possible economies in opera- 
 tion. This problem of keeping the expenses of the Company within 
 reasonable and well-defined limits, without any impairment of its 
 physical well-being, has been given the most careful study and 
 attention by your management, and many improved methods and 
 economies have been introduced which have materially reduced the 
 units of cost in various branches of the service." 
 
 Digitized by Microsoft® 
 
ECONOMIES THROUGH SCIENTIFIC 
 MANAGEMENT 
 
 It is undoubtedly true that even under the system of 
 management prevailing among railroads, numerous econ- 
 omies are possible upon each railroad which, if introduced, 
 would result in very large savings to that company, — 
 savings far greater in amount than the added expense 
 due to the recent increases in the wage scale. If, for 
 instance, each railroad were now to adopt in each depart- 
 ment the best methods and practices now prevailing in 
 any other American railroad, it is clear that the operating 
 expenses of each company would be very largely reduced. 
 
 But a far greater measure of economy would result to 
 each company from the introduction of scientific manage- 
 ment by which the efficiency of labor, plant and machinery, 
 and materials would be very largely increased. Scientific 
 management increases efficiency; and economy comes as 
 a biproduct. 
 
 The science of management is new. Some of its prin- 
 ciples were discovered and applied a quarter of a century 
 ago by Fred W- Taylor in the Midvale Steel Works. 
 Other principles have been discovered and developed by 
 him and by many others since. It was not until the pub- 
 lication of his essay on " Shop Management " in 1903 that 
 the results of his work and that of his associates, particu- 
 larly H. L. Gantt and C. G. Barth, were presented to the 
 public in a comprehensive form; and it is scarcely more 
 than three or four years since these principles developed 
 into a science. Emerson on " Efficiency " and " Going's 
 
 Digitized by Microsoft® 
 
" Santa Fe Management " were published in 1909; Gantt's 
 " Work, Wages and Profits " in 1910. 
 
 Gantt (Record, p. 3452). 
 
 "Mr. Brandeis. And when would you say the different principles 
 which were involved in the works management had sufficiently de- 
 veloped to be entitled to be, as it were, brought together into a body 
 which might be termed science? 
 
 Mr. Gantt. That is very recent; not more than three or four 
 years at the most." 
 
 (Compare Towne: Record, p. 3287.) 
 
 1. Scientific Management is not merely Competent and 
 Progressive Management 
 
 The demand for scientific management and the high 
 degree of efficiency and economy which go with it is not 
 to be interpreted as a general charge of incompetency on 
 the part of the present managing officials of the railroads 
 or of their subordinates. Nor is it merely a demand for 
 what is commonly known as progressive management. 
 Scientific management differs radically from the most 
 competent and progressive management under the old 
 system. It differs also from systematized management. 
 The difference is one in kind; and not merely in the de- 
 gree of competence, or in the existence of progressive as 
 opposed to conservative methods. Scientific management 
 differs from that now generally practised by railroads, 
 much as production by machinery differs from production 
 by hand; and the revolution in railroading and other in- 
 dustries, which must result from the introduction of scien- 
 tific management, is comparable only to that involved in 
 the transition from hand to machine production. 
 
 (a) Gantt (Record, pp. 3454-3456). 
 
 "Mr. Brandeis. I wanted, just before going into specific matters, 
 to ask whether you will distinguish between what is understood as 
 
 Digitized by Microsoft® 
 
unsystematized business, and a systematized business, and scientific 
 management; those three different classes. 
 
 Mr. Gantt. I think I have had some experience with all three 
 kinds. The unsystematized business is where the order is issued 
 from the office to the shop, and the office feels that their entire respon- 
 sibility ends when they have issued the order to the shop. They feel 
 no responsibility whatever until the date on which they wish that 
 goods to be shipped passes, and then they feel that it is their duty to 
 go out and raise row with the shipping clerk, first, and then with the 
 one the next higher up, and then with the one the next higher up, and 
 so on until they get as far back as possible. That is the unsystema- 
 tized business. 
 
 The systematized business or manufacture is where they have a 
 regular routine by which these orders shall proceed, from the office 
 to the different departments, through to the shipping department, 
 and in many cases they have a proper sequence worked out, so that 
 the method of filling the order is not entirely left to the subordinates. 
 That is the first step from the unsystematized to the systematized 
 business; that is a step in the right direction, as everybody will 
 admit. 
 
 The scientific management comes when each of those steps has 
 been thoroughly investigated, each of the steps through which the 
 work shall proceed, from the point at which it originates, to the 
 point that it comes out of the works, when each of the steps has been 
 investigated by the best expert available, be it a mechanic or what- 
 ever other person he may be. When that has been done, when each of 
 those steps through which the work has progressed has been studied 
 in detail, and a specific, definite route has been laid out, reduced to 
 writing, and the returns come to the office to show how this work 
 has progressed each day, from the time it is issued from the office; 
 and when any failure to live up to these instructions is immediately 
 reported back to the office, and a proper person who knows how it 
 should be done goes out and helps the work along — does not wait 
 until it is three or four or five days late and then go out and make a 
 row — but as soon as it is one day late, he goes out and tries to re- 
 move the obstacle so that it can proceed, and perhaps catch up with 
 the other work that has gone before it — that is scientific manage- 
 ment. That is the difference between scientific management and the 
 systematized management. 
 
 In the systematized management, the responsibility has not been 
 
 Digitized by Microsoft® 
 
8 
 
 fully developed, as I take it, to see that each person is proceeding 
 with the proper means whereby he is to get this work through." 
 
 (b) Emerson (Record, pp. 3530-3531). 
 
 "Mr. Brandeis. What is the distinction between what you call 
 scientific management and system or systematizing of business? 
 
 Mr. Emeeson. Recently in writing a letter to a correspondent I 
 told him that if he got his breakfast every morning at exactly the 
 same hour and served in exactly the same manner, with the same 
 knives and forks and spoons, in the same place, that might be sys- 
 tem; but that if I took him out into the woods and made him tramp 
 twenty miles, with forty pounds on his back, and pitch his own tent 
 at night and cook his own meals, if I succeeded in restoring his shat- 
 tered constitution that would be efficiency engineering. (Laughter.) " 
 
 2. What Scientific Management Involves 
 
 The action of the efficiency engineer working under 
 scientific management has been aptly compared to a 
 machine. He considers a business as an intricate machine. 
 He analyzes each process into its ultimate units, and com- 
 pares each of the smallest steps of the process with an 
 ideal of perfect conditions. He then makes all due allow- 
 ance for rational and practical conditions and establishes 
 an attainable commercial standard at every step. Then 
 he seeks to obtain continuously this standard, involving 
 both qualities and quantities, — the interlocking or as- 
 sembling of all these prime elements in each process into 
 a well-built smooth-running machine; and when there 
 are, as usual, several processes in each department and 
 several departments in the business, all the departments 
 as well as all the processes must be co-ordinated, so that 
 the machinery of the whole business works with equal 
 smoothness. 
 
 Engineering, whether applied to the production of 
 transportation or of cotton cloth, or shoes, or machines, 
 
 Digitized by Microsoft® 
 
9 
 
 means the planning in advance of production so as to 
 secure certain results. The distinction between the 
 mechanic and the engineer is that the mechanic cuts and 
 tries and works by formula based on empiricism; the 
 engineer calculates and plans with absolute certainty of 
 the accomplishment of the final result in accordance with 
 his plans which are based ultimately on fundamental 
 truths and natural science. 
 
 In scientific management, therefore, results are prede-^ 
 termined. Before the work is commenced, it is deter- 
 mined not only as to what shall be done, but how it shall 
 be done, when it shall be done and what it shall cost. 
 
 Emerson (Efficiency, pp. 102-103, 104-105). 
 
 "There are two radically different methods of ascertaining costs: 
 the first method, to ascertain them after the work is completed; 
 the second method, to ascertain them before the work is undertaken. 
 The first method is the old one, still used in most manufacturing and 
 maintenance undertakings; the second method is the new one, 
 beginning to be used in some very large plants, where its feasibility 
 and practical value have already been demonstrated. y 
 
 The objections to the old method are not only that it delays infor- 
 mation until little value is left in it, but that it is wholly and abso- 
 lutely incorrect, mixing up with costs incidents that do not have 
 the remotest direct connection with them, so that analysis of cost 
 statements as, for instance, repair costs per locomotive mile, does 
 not lead to elimination of wastes. The advantages of the second 
 method are not only that costs must be ascertained before the work 
 is begun, but that the costs as finally tabulated are the real costs 
 divided as to each unit, whether a single element or aggregated out 
 of a million separate elements (1) into standard expense and (2) 
 into avoidable loss. An analysis of costs so stated facilitates an 
 almost inexorable elimination of inefficient conditions of all kinds, 
 standard expenses being constantly standardized at new levels — 
 
 wastes, the excess above standard cost, being constantly removed 
 
 r * Predetermination of results is the main characteristic of the n 
 
 ^modern method. The acceptance of the hap-hazard is the mairi~ / 
 
 characteristic of the old method, still in full and orthodox standing 
 
 Digitized by Microsoft® 
 
10 
 
 in cost accounting. Predetermination of results is based on scien- 
 tific certainties modified by experience. It ought not to be neces- 
 sary to prove that retrospect costs based on servile record of the 
 haphazard cannot be of value, but actual illustrations from actual 
 practice of their unreliability may hasten the conversion of those 
 who are still skeptical. 
 
 Two closely similar types of locomotives were operating on a great 
 railroad, one type in the East, the other in the West, both doing 
 virtually the same work. The vice-president of the road desired to 
 order a large number of new locomotives of the general type in 
 question. He called for the records of the two classes and found 
 that the locomotives operating in the West cost $0.14 per mile for 
 maintenance, but that the locomotives in the East cost $0.10 per 
 mile for maintenance. With these records before him he felt inclined 
 to order the type costing for repairs $0.10 per mile. The facts were, 
 however, that the Western round-houses and repair shops were 
 operating at 50 per cent efficiency, and the Eastern shops and 
 round-houses at 80 per cent efficiency, so that the real respective 
 costs of the locomotives were for the Western $0.07 per mile and 
 for the Eastern $0.08 per mile. In this case so-called actual costs 
 would have been expensively misleading. . . . 
 
 There was a railroad shop in which charges were distributed with 
 such painful care that the shop sweepers subdivided their time to 
 the various locomotives around which they loitered. But loco- 
 motives, as well as men, can loiter, and one of the locomotives stood 
 in this shop three months waiting for a steel deck plate. Being 
 Familiar with its number, the workers charged all the time they 
 could not readily account for to this locomotive, so that at the end 
 of three months the total amounted to more than $5,000. The 
 fictitious accuracy as to the sweepers' time made more glaring the 
 gross falsity of the locomotive charge. In principle there is no 
 difference between charging an hour of wholly wasted time to a 
 locomotive and charging it with two hours of time when one hour 
 should have accomplished the work. The moment specific wastes 
 of any kind are charged to a definite order instead of being charged 
 to some inefficiency account, real costs are vitiated." 
 
 Digitized by Microsoft® 
 
11 
 
 3. Scientific Management Demands the Separation 
 of Planning from Performing 
 
 Planning in advance is of the essence of scientific man- 
 agement. The business engineer makes his plans and spe- 
 cifications covering the process of production before it is 
 entered upon, — extending his directions like the me- 
 chanical engineer into minute details in order to secure 
 the perfect product. Those engaged in actually per- 
 forming the work would rarely be competent to do such 
 planning; but even if competent, they could not under- 
 take that function while engaged in performance without 
 seriously impairing the progress of the work. 
 
 Gilbreth (Record, pp. 3405-3407). 
 
 " Separate the planning from the performing. Put that in writing 
 in the form of an instruction card, so that you have it, not in accord- 
 ance with the description in a cook book, but still more than that, so 
 that each element of the operation which has been determined and 
 standardized is written down in detail that will make a man sick that 
 does not understand the purpose of it." He says: "That is the way 
 these scientists have found out that this can be done the best." 
 That instruction card can be depended upon to carry the word of 
 the master or the manager without a line of translation in the way of 
 the human element. I did not believe any of this, and when Mr. 
 Taylor said to me, "Mr. Gilbreth, it is a shame that a man as strenu- 
 ous as you are cannot be converted," I said, "When you tell me you 
 can get my men to do three times as much work, you do not know 
 what you are talking about. When my men go home at night, their 
 first inclination is to sit down and rest. I have the best management 
 there is anywhere on getting work out of men." That is the way every 
 man talks to Taylor, and nearly all of his time is taken up trying to 
 convert people that know an awful lot about military management, 
 and do not know anything about functional foremen management. 
 
 By degrees I took some of his advice and tried it. I have abso- 
 lutely revolutionized the trade of bricklaying. Mr. Towne said, 
 "The man that can see the end in the advance of scientific manage- 
 ment shows signs of decay." That does not begin to tell the story. 
 
 Digitized by Microsoft® 
 
12 
 
 I have thought by revolutionizing bricklaying I had reached the 
 limit of it. I cannot prophesy the end. There is no end. As every 
 other science progressed, this science of the handling of workmen is 
 progressing." 
 
 The planning department becomes highly developed. 
 
 Hathaway (Record, p. 3035). 
 
 In the Tabor Manufacturing Co. there were only seventy-five 
 persons working in the machine shop, and twenty in the planning 
 department. 
 
 The work of the planning department in the Brighton 
 Mills is thus described: 
 
 Scheel (Record, pp. 3358-3362). 
 
 " Mr. Brandeis. You said, Mr. Scheel, you were the head of the 
 planning department. I wish you would describe or state what that 
 planning department consists of, who the members are, and their 
 various functions. 
 
 Mr. Scheel. The planning department consists of those of the 
 staff of the factory. It consists of the routing clerk, a cost clerk — 
 
 Mr. Bbandeis (interrupting). You are the head? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. You are called the head? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. What is the next person? 
 
 Mr. Scheel. The man sitting next to me is the cost clerk or the 
 cost accountant clerk. He is assisted by a cost clerk, who works up 
 the preliminary figures for him. 
 
 Mr. Brandeis. What does the cost clerk or the cost accountant 
 do? 
 
 Mr. Scheel. The cost accountant draws conclusions from time 
 cards, store cards, memorandum of the cotton used and the distribu- 
 tion of expense to the different kinds of fabric and accounts generally. 
 
 Mr. Brandeis. He is currently keeping daily the cost of the article 
 produced, is he? 
 
 Mr. Scheel. Yes, so that some result may be attained. The 
 fundamental figures are worked up daily. The results are worked up 
 monthly or every six months. 
 
 Digitized by Microsoft® 
 
13 
 
 Mr. Brandeis. Next to the cost accountant is the cost clerk. 
 What is the next person? 
 
 Mr. Scheel. The routing clerk, for the latter portion of the 
 mill. 
 
 Mr. Brandeis. Is there more than one routing clerk? 
 
 Mr. Scheel. Yes, there are two routing clerks. There is one for 
 the weaving room and the departments allied to it — 
 
 Mr. Brandeis (interrupting). The finishing? 
 
 Mr. Scheel. The finishing and the warping and winding, where 
 the warps are prepared and where the filling is prepared. The other 
 routing clerk directs the manufacture as to kind in the card room and 
 spinning room and twisters. 
 
 Mr. Brandeis. What does the routing clerk do? 
 
 Mr. Scheel. He keeps a schedule showing what work is in pro- 
 cess and what work is planned for. 
 
 Mr. Brandeis. That is, he makes up really the time table, does 
 he, of all the work as it goes through these eighteen different de- 
 partments? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. And there are stations at which they are due 
 right through these departments? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. And he is keeping all the time records as to just 
 what there is at each station as it comes along? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. Whether it is on time or overdue? 
 
 Mr. Scheel. Yes, or ready in preparation. 
 
 Mr. Brandeis. What is the next official? 
 
 Mr. Scheel. There is a balance-of-stores clerk in the office. 
 
 Mr. Brandeis. What does he do? 
 
 Mr. Scheel. All stores are issued on cards, cards showing the 
 taking out of stores. All receipts and all orders pass through his 
 desk. He keeps the tonnage balance of materials in stores. 
 
 Mr. Brandeis. He is the one who keeps account of just what 
 there is at all times, so he may determine what there should be? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. The next one is what? 
 
 Mr. Scheel. The time keepers. There are four of them. They 
 work up the time cards. Their work is finished when the entry is 
 made on the pay roll, and the entries for the day on the pay roll 
 checked. 
 
 Digitized by Microsoft® 
 
14 
 
 Mr. Beandeis. What next? 
 
 Mr. Scheel. There are the investigators. 
 
 Mr. Beandeis. How many of them are there? 
 
 Mr. Scheel. There are six. 
 
 Mr. Beandeis. Six investigators, and what are their duties? 
 
 Mr. Scheel. They are engaged in investigating problems in 
 various parts of the mill, all the time studying and working in the 
 training of the workmen to bring them up to the standard. That 
 about covers it, I think. 
 
 Mr. Beandeis. The gang boss is doing the training of the work- 
 men, is he not? 
 
 Mr. Scheel. Not initially, necessarily, but the gang boss does 
 that currently. When a thing is once established, the outside people 
 keep going, but the investigator is a superior brain that gets it 
 started and makes the preliminary studies and investigation." 
 
 4. Scientific Management Changes the Relations 
 of the Management to Labor 
 
 Under scientific management, the management of the 
 business assumes towards the workmen a wholly new 
 function. Instead of the prevailing " putting it up " to 
 the employee to do his work with such stimulus as may be 
 given through force or inducement, the management, 
 under the new science, assumes the responsibility of en- 
 abling the employee to work under the best possible con- 
 ditions of perfect team play. It undertakes to instruct 
 him definitely what to do and the best method of doing 
 the particular work. It undertakes to provide him with 
 the best tools, and with machines in the best condition. 
 It undertakes to furnish him with assistance to perform 
 those parts of the operation requiring less skill than his 
 own. It keeps him constantly supplied with appropriate 
 material. Acting in full co-operation with the workmen, 
 the management thus removes all obstacles to the work- 
 
 Digitized by Microsoft® 
 
15 
 
 1 
 men's full performance and supplies all aids necessary^ 
 
 to secure full performance. The management thus as- 
 sumes the burdens of management, and relieves labor 
 of responsibilities not its own. It substitutes functional 
 or staff organization for the military system. 
 
 Emerson (Record, pp. 3588-3592). 
 
 "Mr. Beandeis. Just a word. Something was said about the mili- 
 tary organization being objectionable, and the need of a staff organ- 
 ization essential to scientific management. If you can, in a word, 
 state what you mean, or what is meant by that. 
 
 Mr. Emerson. I would like to relate a little experience that will 
 illustrate what I mean. In the old type of shop the vice-president of 
 a railroad appoints the superintendent of motive power; the superin- 
 tendent of motive power may select a shop superintendent; he may 
 select his foreman; the foreman may select the man, and the doing 
 of the job is delegated to the man. 
 
 A casting that ought to be machined in three hours will come in, 
 and it is a very hard casting, and it takes twenty hours to machine 
 it. The man is entirely contented. It is easier for him. He does not 
 have to set up other castings, and he stays there and watches his 
 machine take off these fine, hair cuts, and the twenty hours are taken 
 up in machining that casting. 
 
 That is the old method. 
 
 Under the new method, we reversed that, in theory, as far as we 
 could. Our theory was that it was the machine that did the work; 
 that the man was there for the sake of the machine; that the foreman 
 was there for the sake of the man; that the superintendent was there 
 for the sake of the foreman; that the president was there for the sake 
 of the superintendent; and in that way that the machine could call 
 on the vice-president in case it got into any difficulty. That was the 
 type of organization. 
 
 It requires nothing revolutionary to bring that about, except an 
 entire change of view. 
 
 In this particular shop they had scheduled the work at three 
 hours. The man tried his casting, and it took him twenty-three 
 hours to machine it. He was losing out on his efficiency; he was 
 naturally losing his efficiency reward, and he set up a yell to the 
 foreman, "Look at this outrageous thing here, giving me three hours 
 
 Digitized by Microsoft® 
 
16 
 
 on that thing. And it takes twenty-three hours to do it." The 
 foreman was losing his efficiency on the man. He came around, in a 
 hurry, to see what could be done to help out that casting, and to see 
 whether the machine was at fault, and found that he could not do 
 anything, so he hustled up to the superintendent, and said: 
 
 " Bill is very dissatisfied. It has taken him twenty-three hours to 
 get out that work, that he would ordinarily do in three hours, on an 
 ordinary casting, and I am dissatisfied, and we do not think it is a 
 fair deal. It is not a right thing". What are you going to do about 
 it?" 
 
 The superintendent went up and investigated, and said: "I will 
 anneal those castings" — there were thirty-five of them. "I will put 
 them in the big flange furnace, and anneal them, and soften them." 
 
 So he did put them in the big furnace, and tried to anneal them, 
 and soften them, but there was manganese in the steel, and it did not 
 soften. So that it was just as hard as ever. 
 
 He had exhausted his resources and came up to me and told me 
 the trouble. He said: "What would you recommend doing?" He 
 said: "I have done everything that I could." I said: "The proper 
 thing to do is to have a special time study made for those thirty-five 
 castings. They are special castings, much harder than normal. You 
 have an entire change of conditions. Go in and make a new study, 
 and make it date back to the first casting that the man had." So a 
 new study was made, under the superintendent, by this time-study 
 man, and the time was settled for these particular castings of twenty 
 hours. The man, after that, attained his twenty hours, and he was 
 contented. The foreman was contented. 
 
 I said to the superintendent: "You don't get out of it so easily. 
 You are going to be charged up with the seventeen hours' loss on 
 each one of those castings. That is pure waste and should not have 
 occurred." He said: "What could I do about it?" I said: "You 
 should never have let hard castings like that come into the shop." 
 What are you here for, if you don't look at your material as it comes 
 in?" He said: "What can I do about it?" I said: "Go and kill the 
 purchasing agent." He said : " I will do it. I will write him a letter." 
 So he wrote a letter to the purchasing agent, and I wrote a letter to 
 the vice-president, calling his attention to the matter, and it was 
 taken up with the steel foundry company that supplied the castings, 
 and a complaint was made that they were furnishing castings with 
 manganese in them, that were too hard, and that that condition 
 
 Digitized by Microsoft® 
 
17 
 
 would have to be rectified; that the road would not receive castings 
 of that kind, or it would charge the extra amount of work up to the 
 foundry that furnished them. 
 
 That system resulted in making the vice-president remedy a dif- 
 ficulty that otherwise might have lasted indefinitely and greatly 
 added to the expense of the operation. 
 
 Mr. Brandeis. And that would also have detracted from the 
 reputation of the workman who did the job? " 
 
 5. Scientific Management Demands Preparedness 
 
 The results attained through scientific management 
 depend upon universal preparedness. Under scientific 
 management nothing is left to chance. All is carefully 
 prepared in advance. Every operation is to be performed 
 according to a predetermined schedule under definite in- 
 structions, and the execution under this plan is inspected 
 and supervised at every point. Errors are prevented in- 
 stead of being corrected. The terrible waste of delays 
 and accidents is avoided. Calculation is substituted for 
 guess; demonstration for opinion. The high efficiency 
 of the limited passenger train is sought to be obtained in 
 the ordinary operations of the business. The same pre- 
 paredness is invoked for industry which secured to Prussia 
 her victory over France and to Japan her victory over 
 Russia. 
 
 Hathaway (Record, pp. 3039-3048). 
 
 "Mr. Brandeis. Will you now describe what you did with a view of 
 preparing the way for the twenty men who were to functionalize this 
 business? 
 
 Mr. Hathaway. We first installed a tool room and equipped it 
 with tools. We arranged storerooms for the proper handling and 
 storage of materials, and a planning department equipped with the 
 necessary paraphernalia for doing the planning, planning the work. 
 Planning the work consists of taking the drawings for any given job, 
 
 Digitized by Microsoft® 
 
18 
 
 and from them mapping out in advance a definite course of procedure 
 for prosecuting the work. Formerly the drawings were turned over 
 to the foreman in the shop and his clerk ordered the castings and 
 materials, and when they came in he planned it as well as he could 
 or left it to the workman to plan out in case he had not time. As it 
 is now, no piece of work is started in our shop until the method to be 
 followed in prosecuting it has been completely mapped out. We 
 determine in advance just how the machines shall be built, just what 
 operations shall be performed on each of the parts that enter into 
 that machine, and what machines they shall use in the sequence of 
 the operations. We take each operation and plan the best method for 
 doing it, and the tools that shall be used, and also as we do that we 
 determine the time that that operation should take in its performance. 
 The materials are all ordered in advance, before the work or the order 
 goes into the shop at all, and the planning is going on during the 
 time that the materials are being gotten into the shop. When the 
 work is started in the shop, every possible preparation has been 
 made, everything has been anticipated so far as possible to do it. 
 
 Mr. Brandeis. That is, when the work first enters the shop for the 
 first piece of work to be done on it, you have prepared everything 
 that is to follow in precisely the same way that the mechanical en- 
 gineer has prepared everything when he is building a bridge or a 
 steel structure or the like? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. And that applies to every single operation in the 
 process of manufacture? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. As it goes through your plant? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. So that the planning is entirely comparable to the 
 planning of the mechanical engineer who is constructing a bridge or 
 a ship or any similar structure? 
 
 Mr. Hathaway. Precisely, yes. 
 
 Mr. Brandeis. In planning that work will you describe just the 
 steps and the different functions of these twenty men that you 
 speak of and what they are doing? 
 
 Mr. Hathaway. As soon as the drawings have been prepared — 
 
 Mr. Brandeis (interrupting). That preparation of drawings is 
 precisely the same under the new system as it was under the old? 
 
 Mr. Hathaway. Precisely, excepting that our drawings now con- 
 
 Digitized by Microsoft® 
 
19 
 
 vey the information necessary for the manufacture of goods a little 
 more clearly than formerly. 
 
 Mr. Brandeis. It has certain additional instructions to the work- 
 men? 
 
 Mr. Hathaway. Yes, and the planning appears more clearly. 
 
 Mr. Brandeis. But aside from that, there is no appreciable dif- 
 ference in the drafting room? 
 
 Mr. Hathaway. No. 
 
 Mr. Brandeis. What takes place when it goes into the manufactur- 
 ing department? 
 
 Mr. Hathaway. The first step is to prepare a diagram or chart — • 
 that is, providing it is a machine composed of a number of parts — 
 showing the relation of the various parts to each other, their relative 
 importance, so far as they are to be pushed through the shop. For 
 instance, a part that takes longer to get the casting for and has more 
 operations, or operations of a more intricate nature on it, which we 
 regard as being more important than a simple part that has one or 
 two operations on it, is pushed through the shop, and this diagram 
 indicates that and shows its relation to the other parts. 
 
 Mr. Brandeis. As I understand it, when the original planning is 
 made, you are providing in advance or determining in advance those 
 portions of the machine which it will require a longer time to get 
 ready? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. So that when the period of manufacturing arrives, 
 when they are needed, they will be ready to go forward on the train 
 of manufacture? 
 
 Mr. Hathaway. Yes. This diagram shows the materials required 
 for each of the various parts, the relation of the parts one to another, 
 the operations to be performed on each of the parts, and which parts 
 are to be manufactured especially for the order in question, and 
 which can be drawn from stores or from stock. At that time what 
 we call route sheets are made up on which the progress of what work 
 we are sending through the shop is later kept track of. Orders on 
 the storeroom for all material to come from stock are made up. 
 
 Mr. Brandeis. Take this route sheet which comes in at the begin- 
 ning. Is there a predetermination approximately of the date when 
 every bit of work on this order is to be performed? 
 
 Mr. Hathaway. Approximately there is. There is a date fixed 
 for the completion of the entire lot of machines, and from that we 
 
 Digitized by Microsoft® 
 
20 
 
 work backwards and fix dates when the various groups of sections 
 of machines should be completed. 
 
 Mr. Bbandeis. In the planning? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. In the planning there is fixed a time schedule? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. When the work, or each particular piece of the work, 
 must be completed? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. In order that the train may arrive on time? 
 
 Mr. Hathaway. Yes. That, however, is not done by the man 
 who plans the methods for doing the work. It is a different man, a 
 different function. 
 
 Mr. Brandeis. It is a difEerent man who does that? 
 
 Mr. Hathaway. Yes. That is the first step in the planning. After 
 this diagram or these diagrams have been made up the next step 
 is to see that we either have in stock all of the materials required, 
 or that we have them ordered. The castings are ordered by a clerk 
 whose duty it is to see that the castings get in on time, arid who is in 
 constant touch with the founderies, and it is his duty to see that 
 the castings get in when wanted. The materials that are ordinarily 
 carried in stock or in the stores are looked after by a clerk whose 
 duty it is to see that the stock of standard articles, such as cap 
 screws, bolts, bar steel and raw materials of that sort, is kept up. 
 
 The next step after that is to plan in detail the various operations, 
 and in doing that the clerk whom we call the instruction card man 
 gets the drawings for each piece and studies that particular opera- 
 tion and writes up an instruction card, stating the best method and 
 the method which should be followed in performing that particular 
 operation. 
 
 Mr. Brandeis. These men are among your functionalized twenty? 
 
 Mr. Hathaway. Yes, sir. 
 
 Mr. Brandeis. These men determine from the drawings the best 
 way of performing every operation required in the construction of 
 the machines? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. And they reduce it to writing? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. The instructions for performing that operation are 
 reduced to writing by them? 
 
 Digitized by Microsoft® 
 
21 
 
 Mr. Hathaway. Yes. They describe the method to be followed 
 in performing that operation, in just the same way as they would do 
 if they were going on the machine to do it themselves, and as they 
 do that they at the same time make up a list of tools required for 
 doing this operation in accordance with the method they have planned. 
 
 Mr. Brandeis. Are there any other instructions that are given? 
 
 Mr. Hathaway. Those are the principal instructions. 
 
 Mr. Brandeis. Is there any instruction as to the time which shall 
 be required in performing the particular operation? 
 
 Mr.' Hathaway. Yes, I neglected to say that in writing up this 
 instruction card they put down each element that enters into it, 
 such as putting in and taking out drills, putting on clamps for holding 
 the work, changing the feeds and spools — every movement that 
 must be performed is taken into consideration and put down in this 
 instruction card in its proper sequence. 
 
 Mr. Brandeis. That instruction card will give a definite statement 
 of the thing to be done? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. And the time allowed? 
 
 Mr. Hathaway. And the time allowed for doing each particular 
 thing or performing that particular element. 
 
 Mr. Brandeis. And that instruction card is handed to the man 
 who is to perform the work? 
 
 Mr. Hathaway. That instruction card is handed to the man who 
 is to perform the work for his guidance and for the guidance of his 
 gang boss or machine boss. 
 
 Mr. Brandeis. What is the next step? 
 
 Mr. Hathaway. The next step is putting the work in process or 
 starting it out in the shop. I am a little ahead of myself there. In 
 the meantime there have been operation orders written up; that is, 
 an order for each operation, which is posted in the shop, and a bulle- 
 tin board for each machine. They are written up. The orders for 
 movement of work from place to place are written up. In fact, 
 everything is arranged in advance or prepared in advance. Then the 
 work is ready to be started in the shop as soon as the materials have 
 arrived. 
 
 Mr. Brandeis. That is, everything that is to be done in the build- 
 ing of this machine is provided by specifications in advance? 
 
 Mr. Hathaway. Has been planned and prepared for. 
 
 Digitized by Microsoft® 
 
22 
 
 Mr. Brandeis. So that the different pieces of work are assembled 
 from time to time just as if you had completed the machine? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. Now go forward. 
 
 Mr. Hathaway. When the work is started in the shop, as soon as 
 the materials arrive in the shop — we will assume we have some 
 castings coming in ordered shipped for these machines or for a given 
 machine. When they arrive, a notice is sent to the planning depart- 
 ment and the clerk whom we call the recording clerk gets that notice. 
 He immediately takes from the orders which have been written in 
 advance and which have been placed in a receptacle, one of those 
 orders and hands it to the move man, a man who does nothing but 
 move the material. He does nothing except on written orders." 
 
 6. Scientific Management Demands Analytical Study 
 
 The results attained through scientific management de- 
 pend further on a careful study of each operation with a 
 view to determining in the first place what time should nor- 
 mally be taken in performing the operation, and secondly, 
 whether it can be performed in a better manner than has 
 hitherto been practised. No assumption is made that the 
 time hitherto employed was necessarily the proper time, 
 nor that the way in which it has been performed is the best 
 way. Scientific observation and scientific methods are sub- / 
 stituted for the rule of thumb, for practices hallowed by 
 age and tradition ; and waste, whether of time or of effort 
 or of material, is eliminated. The whole realm of sciencej 
 i is brought to the aid of the humblest workman. Instead 
 of letting him trudge alone in darkness and afoot through 
 a sandy road, he moves as on a bicycle by daylight over as- 
 phalt pavement. 
 
 (a) Gantt (Work, Wages and Profits, pp. 30-31). 
 "We can never be certain that we have devised the best and 
 most efficient method of doing any piece of work until we have sub- 
 
 Digitized by Microsoft® 
 
23 
 
 jected our methods to the criticism of a complete scientific investi- 
 gation. Many people who have been accustomed to seeing an oper- 
 ation performed in a certain way, or to performing it in that way 
 for a number of years, imagine they know all about it, and resent 
 the intimation that there may be some better way of doing it. Any- 
 body, however, who carefully analyzes the sources of his methods 
 will find that the mass of them are either inherited, so to speak, from 
 his predecessor, or copied from his contempoiaries. He will find 
 that he knows but little of their real origin, and consequently has 
 no ground on which to base an opinion of their efficiency." 
 
 (6) Gantt (Work, Wages and Profits, pp. 34-36). 
 
 "The first condition is an investigation of how to do the work 
 and how long it should take. The fact that any operation, no matter 
 how complicated, can be resolved into a series of simple operations, 
 is the key to the solution of many problems. Study leads us to the 
 conclusion that complicated operations are always composed of a 
 number of simple operations, and that the number of elementary 
 operations is often smaller than the number of complicated opera- 
 tions of which they form the parts. The natural method, then, of 
 studying a complex operation is to study its component elementary 
 operations. Such an investigation divides itself into three parts, 
 as follows: An analysis of the operation into its elements; a study 
 of these elements separately; a synthesis, or putting together the 
 results of our study. 
 
 This is recognized at once as simply the ordinary scientific method 
 of procedure when it is desired to make any kind of an investigation, 
 and it is well known that until this method was adopted science made 
 practically no progress. The ordinary man, whether mechanic or 
 laborer, if left to himself seldom performs any operation in the 
 manner most economical either of time or labor, and it has been 
 conclusively proven that even on ordinary day work a decided 
 advantage can be gained by giving men instructions as to how to 
 perform the work they are set to do. It is perfectly well known 
 that nearly every operation can be, and the actual work is, per- 
 formed in a number of different ways, and it is self-evident that all 
 of these ways are not equally efficient. As a rule, some of the meth- 
 ods employed are so obviously inefficient that they may be discarded 
 at once, but it is often a problem of considerable difficulty to find 
 out the very best method. 
 
 To analyze every job and mark out instructions as to how to 
 
 Digitized by Microsoft® 
 
24 
 
 perform each of the elementary operations requires a great deal of 
 knowledge, much of which is very difficult to acquire, but the results 
 obtained by this method are so great that the expenditure to acquire 
 the knowledge is comparatively insignificant." 
 
 (c) Gilbreth (Record, p. 3416). 
 
 " I am frank and glad to say that this subject has become so ex- 
 ceedingly interesting to me that not only from the standpoint of 
 interest, but from the standpoint of actual profits and benefits to 
 my business, I am spending one day in every two weeks in some shop 
 where there is scientific management. I am learning my trades all 
 over again. I find the way I have always done has been wrong, and 
 I am of the opinion that any new problem that comes up that has 
 not been attacked by the laws of scientific management, is wrong, is 
 bungled, and is very badly bungled." 
 
 (d) Scheel (Record, pp. 3334-3336). 
 
 "Mr. Scheel. One of these new looms, in fact four of them, had 
 been studied by a man especially deputed to do that work; that is, 
 a time study had been made. 
 
 Mr. Brandeis. What were the qualifications of that man who 
 made the time study? 
 
 Mr. Scheel. He was the best man available; the best man as 
 to experience; he was a college graduate, and also a graduate of 
 Stevens Institute, who had been with the Brighton Mills in their 
 mechanical department up to that time, for two years, I think. 
 
 Mr. Brandeis. When you say he studied the operation of that 
 machine, describe exactly what he did, what studying means. 
 
 Mr. Scheel. In his case, I think studying meant, as the machine 
 was being operated by a very good man, seeing what the difficulties 
 were that prevented that man doing better work than he was doing. 
 
 Mr. Brandeis. You say, what the difficulties were in determin- 
 ing how that man could do better than he was doing? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. How long did it take for this expert to study 
 that simple operation? 
 
 Mr. Scheel. I think he spent a month, taking his notes, getting 
 his readings, getting together his ideas regarding what the difficul- 
 ties were, and thinking how he could remove them. 
 
 Mr. Brandeis. That is, he spent one month in the study of that 
 particular operation? 
 
 Digitized by Microsoft® 
 
25 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. And what was it that he did, and why did it 
 take him a month to study that operation? Was he studying any 
 improvement in the operation itself? 
 
 Mr. Scheel. No. 
 
 Mr. Bbandeis. What was he trying to do, during that month 
 that he spent his time on that study? 
 
 Mr. Scheel. He was trying, in the first place, to remove diffi- 
 culties. 
 
 Mr. Brandeis. That is, to eliminate obstacles to progress in the 
 work? 
 
 Mr. Scheel. Yes; and also to determine what physical motions 
 the man went through, what the reasonable times were for each 
 part of each of those motions, and what interferences there were in 
 the way of the machine time itself. That is, what was prevent- 
 able, plainly, and what was not preventable." 
 
 7. Scientific Management Demands Records of 
 Industrial Performance 
 
 Scientific management recognizes also that due appre- 
 ciation of the actual results of effort must be based upon 
 actual knowledge ; and such knowledge is an essential con- 
 dition to the best performance. The current record of the 
 accomplishment of each individual, of each machine, and 
 of all material is an indispensable factor in scientific man- 
 agement. Without such a record the tyranny of the fore- 
 man, and all the discord which attends it, is inevitable. 
 Without such a record justice to employer and employee 
 is impossible. Without such a record waste cannot be 
 eliminated. Without such a record no firm basis exists for 
 progress in the individual or in the establishment. 
 r Possessing such individual records, each performance is *- 
 then compared with the standard determined through an- 
 alytical study. _J 
 
 Digitized by Microsoft® 
 
26 
 
 (a) Gantt (Work, Wages and Profits, p. 64). 
 
 "Not long ago a large contractor in New York, who had been 
 studying methods of handling his workmen efficiently, spent some 
 time on one of his large excavating jobs. He provided a sufficient 
 number of buckets so that each man was always shovelling into a 
 bucket by himself, and kept track of the buckets filled by each man. 
 At once the number of buckets that came out of the hole was doubled." 
 
 (b) Scheel (Record, p. 3329). 
 
 " Mr. Beandeis : And what result is there in respect to the method 
 of stores keeping? 
 
 Mr. Scheel. It involves the use of a systematic way of order- 
 ing materials; the use of the requisition from the man that wants 
 the article on the purchasing agent; the use of a certain form on 
 the part of the purchasing agent when he orders that material; the 
 notification of the man that makes out the requisition when the 
 article is received, so that he may pass on its quality before payment 
 is made; and a notification of the accountants that the item is 
 ready to be paid. 
 
 Mr. Brandeis. Then there is in this system of stores keeping an 
 exact assimilation of the treatment of materials to that which has 
 been common in the case of the treatment of money, and the vouch- 
 ers for all the money expended? 
 
 Mr. Scheel. I should say so, yes. 
 
 Mr. Beandeis. So that, in determining at any time the materials 
 on hand, instead of taking an inventory, or making a personal inspec- 
 tion, there is merely an inspection of the record to determine what is 
 there?" 
 
 (c) Scheel (Record, p. 3330). 
 
 "Mr. Scheel. The method of time keeping makes provision for 
 exact knowedge, on separate time cards, of operations — several 
 cards for several operations by the same person, if they take place 
 in one part of the day. 
 
 Mr. Beandeis. And each card, then, each day, is a record of 
 what the man has done, and what the cost of it is, in wages? 
 
 Mr. Scheel. Yes. 
 
 Mr. Beandeis. So that, combining the material, the stores keep- 
 ing and the time record, there is in the business, at hand, a daily 
 balance showing the exact condition of the business, the exact ex- 
 pense up to that time of the operations which have been performed? 
 
 Mr. Scheel. Yes. 
 
 Digitized by Microsoft® 
 
27 
 
 (d) Gilbreth (Record, pp. 3408-3409). 
 
 " Mr. Gilbreth. The first thing to be done, I should say, although 
 there are a great many routes leading to this same place, is to sepa- 
 rate the work of each man so that his output can be recorded sepa- 
 rately, so that the square deal may be given to that man who is 
 really doing the business. You make an incentive then for each man 
 to do his best, and if he is rewarded in accordance with his effort, 
 that is but one of the many schemes whereby this system is founded 
 on fair play to the workman. Record the output of each man 
 separately. Of course the man that hears this for the first time 
 will say, " I know a case where you cannot record each man separately 
 because there are four men pulling on a rope." That is no reason 
 why you should not record the rest of them separately. I know of 
 no shop where the scientific management has gone down and reached 
 the last man. It is a case of percentage. If you can get 90 per cent 
 of your men on this system instead of 80 per cent, it is a great deal 
 better than the 80 per cent basis. That is the first step. Place 
 your men so that their output can be measured separately and 
 measure it separately so as to give the square deal to each man. 
 That is the first step." 
 
 (e) Gilbreth (Record, pp. 3410-3412). 
 
 " Mr. Gilbreth. First of all, we separated the men so that their 
 output showed up separately. 
 
 Commissioner Proutt. Just how did you do that — by giving 
 each man a certain number of brick, or how? 
 
 Mr. Gilbreth. That question you have asked, Commissioner 
 Prouty, is a very leading question. It took us a long time to answer 
 that on the work. We could not measure the output of each man 
 separately for a long time. But in the process of scientific manage- 
 ment that fact was prophesied, that we would be able to do it as 
 surely as the position of one of the outer planets was prophesied by 
 mathematics. We furnished our men with eighteen bricks in what 
 we called a packet for the want of a better name. That packet 
 consisted of a tray with four slats, two this way and two this way, 
 for handles. I got the idea for that from Mr. Taylor and Mr. Gantt 
 in the matter of handling pig iron at the Bethlehem Steel Company. 
 They found after long experiments that ninety-two pounds was the 
 best unit.for handling pig iron. If that is true of pig iron and the 
 
 Digitized by Microsoft® 
 
28 
 
 laborer makes no use of the material he carries, it must be true also 
 of brick. So we arranged to have the packet that would best handle 
 ninety-two pounds of brick. We counted the empty packet. We 
 could do it no other way, and I assure you that we were weeks learn- 
 ing that simple fact. We had to knock off all business and put a 
 man specially trained in science to discover how to measure the 
 number of bricks of each man. Every workman, every brick man 
 and foreman on the job, gave it up as being impossible, and that 
 illustrates particularly well the difficulties encountered in this thing, 
 and if you do not know more about your work than the best mechanic 
 you can get it is not scientific management. This eliminates the 
 old practice of safely leaving the conducting of work to a good fore- 
 man or a good superintendent. The new management consists of 
 taking the best superintendent you can get, at any price, together 
 with other scientists, and sitting down together and getting the 
 best way, and putting it in writing, then measuring the output of 
 each man and paying him a wage unheard of before. You cannot 
 drive that man away from your job with a club when he once begins 
 to get his bonus." 
 
 8. Scientific Management Demands Standardized 
 Methods and Equipment 
 
 Scientific management seeks to ascertain and apply in 
 every process the best attainable methods, practices, tools, 
 and machines. It necessarily follows that all must be 
 standardized. There is but one best way; and it is es- 
 sential for the standardization of tools and machines that 
 they be all in perfect condition. Any variation from the 
 best, be it in kind or condition, is certain to interfere with 
 the regularity of production, in quantity and quality and 
 also to render untrustworthy such tests of relative effi- 
 ciency as have been established. 
 
 (a) Gilbreth (Record, p. 3409). 
 
 " The second step would be to establish standards, standard tools. 
 Go into Mr. Dodge's shop and you will find a man cannot use any 
 
 Digitized by Microsoft® 
 
29 
 
 tool he wants. He has to use the standard tool, for they know what 
 is better for him than he knows himself. The secret of this whole 
 thing is that they have brought together the best men from the 
 ranks, from the colleges, from the board of managerial experts, and 
 they have all gathered together and put all this thing in writing, 
 and that is the standard, and each man must use that standard. 
 He must do it in no other way. He must use that standard. They 
 provide a very good way for these better improvements to come in 
 all the time and supersede the others." 
 
 (6) Emerson (Efficiency, p. 79). 
 
 " The standard study has increased the average life of belting more 
 than six-fold; has reduced belt failures to one-sixth of what they 
 were, and has decreased the known cost to less than one-seventh." 
 
 Scientific management of course recognizes the possi- 
 bility and desirability of such changes in methods, prac- 
 tices, tools, and machines as will tend to advance the art; 
 but no change should be adopted except as the result of 
 careful consideration by those most competent to deal with 
 the subject. 
 
 9. How Scientific Management has Increased the 
 Efficiency of the Individual 
 
 Wherever the principles of scientific management have 
 been applied, greatly increased efficiency of men has been 
 attained. The following are a few examples: 
 
 (a) When applied to the simple operation of loading by hand a rail- 
 road car with pig iron, the performance of the individual worker increased 
 from 12J^ to 47 tons a day. 
 
 (&) When applied to shovelling coal, it doubled or trebled the per- 
 formance of the shoveller. 
 
 (c) When applied to machine shop work, it developed in certain 
 operations, increases in production, ranging from 400 to 1800 per cent. 
 
 (d) When applied to bricklaying the day's accomplishment rose from 
 1000 to 2700 bricks. 
 
 (Gilbreth: Record, p. 3410.) 
 
 Digitized by Microsoft® 
 
30 
 
 (e) When applied in the manufacture of machinery, 75 men in the 
 machine shop with 20 in the planning department do two or three times 
 as much work as 105 men in the machine shop did under the old 
 methods. 
 
 (Hathaway: Record, p. 3059.) 
 (/) When applied in the manufacture of cotton goods, it increased the 
 output a hundred per cent. 
 
 (Scheel: Record, p. 3377.) 
 
 10. How Scientific Management Increases the Efficiency 
 of Plant and Equipment 
 
 Under scientific management the same analytical study 
 is made of the possible accomplishment of each part of 
 the plant and of each individual machine, as it is of the 
 individual worker. Analytical study is made to determine 
 what performance is possible under the best conditions 
 and to eliminate every obstacle to full performance so as 
 to secure the full utilization of every part of the plant 
 and equipment. In most cases the increased productivity 
 of the individual workman carries with it increased pro- 
 duction of plant and machinery. Every problem incident 
 to plant and machinery receives close study, — for in- 
 stance, the arrangement of plant and machinery so as to 
 reduce all unnecessary movements of men and material 
 or machinery ; equalization of equipment as well as stand- 
 ardization of equipment. A common incident of the in- 
 troduction of scientific management is the discovery that 
 a plant supposed to have been inadequate proves to be 
 over-equipped. 
 
 (a) Scientific management applied in the manufacture of ma- 
 chinery, increased the capacity of the plant over 150 per cent. 
 
 (Hathaway: Record, p. 3058.) 
 
 Digitized by Microsoft® 
 
31 
 
 (6) Emerson (Efficiency, pp. 59-62). 
 
 "A head of staff to plan, direct and advise as to everything apper- 
 taining to the adjustment of structures, machines, tools, and other 
 equipment to the work in hand. There is very little difference 
 between good handling of equipment and good handling of men. 
 The rules that apply to the one case will generally apply to the 
 other. Much has been learned about the proper care of men from 
 methods evolved for the care of equipment, and much has to be 
 learned about the care of equipment from methods evolved for the 
 guidance of men. It is not to be forgotten that in the human organ- 
 ism the whole is incapacitated by a seemingly slight injury to a 
 single part. No man will work efficiently with a cinder in his eye, 
 or a splinter under his nail. Neither will a plant work efficiently if 
 little things go wrong. Single items of equipment are often of very 
 great perfection, whether a Corliss engine or a twist drill, but from 
 twist drill to general design and equipment of plant everything is 
 usually wholly out of relation and balance. Recently, in conse- 
 quence of staff organization, it was found necessary to relocate over 
 three-quarters of all the machines in two large and fairly modern 
 plants. Each machine had been doing good work by itself, and no 
 one looked further; but the moment its relation to other machines or 
 to the progress of the work was investigated, the conditions at once 
 appeared impossible and unbearable. This relocation of machines, 
 together with other staff reforms, has resulted in an increase of out- 
 put of 40 per cent without additional men for equipment. The high 
 officials of every railroad point out the glaring defects of early loca- 
 tion or equipment — the fact, for instance, that among 1600 loco- 
 motives owned by one road there were 250 different types, instead 
 of 6. The earlier builders had no staff advice. 
 
 This staff line in charge of the use of equipment also extends down 
 until it is within reach of the worker. An example will show both 
 the nature and the effects of staff organization. A staff was organ- 
 ized on a transcontinental railroad to advise generally as to the 
 care and operation of shop machinery and tools. The duties of the 
 staff, which extended from the vice-president's office downwards, 
 were: 
 
 a. To secure suitable machines and equipment. 
 
 b. To give them the best possible care. 
 
 c. To give the workers advice and directions as to how to use 
 the equipment most efficiently. 
 
 Digitized by Microsoft® 
 
32 
 
 The expense of maintaining shop machinery and tools on this 
 railroad, for the year 1903-4, was $487,171; the unit cost in relation 
 to output was $10.31. On a competing and largely parallel rail- 
 road, working under similar conditions, the cost in the same year 
 was $487,150, and the unit cost, $9.55. As a result of staff activity 
 and control on the first road, by the year 1906-7 total costs had 
 fallen to $315,844, and unit costs to $4.89, but on the other road, 
 where line organization was not supplemented by staff organization, 
 the total costs rose to $638,193, unit costs remaining virtually con- 
 stant at $9.81. This saving in expenses of $322,000 was brought 
 about by a staff costing less than $10,000, and the $10,000 is included 
 in the $315,844. 
 
 One subdivision of this maintenance problem was the care of 
 belting. This had cost (for maintenance and renewals) at one of 
 the main shops about $12,000 a year, and it was so poorly installed 
 and supervised that there was an average of twelve breakdowns 
 every working day, each involving more or less disorganization of 
 the plant in its parts or as a whole. With the authority of the vice- 
 president and in conjunction with the general purchasing agent, 
 the whole subject of belting was taken up. A few general rules were 
 laid down: 
 
 a. That there should be accurate and continuous records of 
 installation, repairs, and breakdowns. 
 
 6. That the installation and care should be delegated to one 
 trained specialist with full authority and responsibility. 
 
 c. That the quality of the installation and operation should be 
 very high. 
 
 The worker in actual charge of belts, a promoted day laborer, was 
 given standards, and took his directions from a special staff foreman, 
 only one of whose duties was knowledge as to belts. The foreman 
 had received his knowledge and ideas from the general chief of 
 staff, who had made belts a special study, and this general chief of 
 staff had been inspired and directed by a man who had made a nine 
 years' special study of belts and who was the greatest authority in 
 the world on the subject. The belt foreman had as much of this 
 knowledge at his call as he could absorb, but he in turn was in imme- 
 diate contact with each individual belt, with the machine it was 
 on and with the worker using the machine. The chief of staff learned 
 as much from the belt foreman as the belt foreman learned from the 
 chief of staff. The belt foreman learned as much from the machinists 
 
 Digitized by Microsoft® 
 
33 
 
 as they learned from him. The cost of maintaining belts fell from 
 $1,000 a month to $300 a month, the number of breakdowns declined 
 from twelve each working day to an average of two a day, not one 
 of them serious, and even the few breakdowns were due almost 
 wholly to originally defective installations, such as narrow pulleys, 
 which it was impossible to remedy without unjustifiable expense." 
 
 11. How Scientific Management Increases the Efficiency 
 
 of Material 
 
 Under scientific management the same study is made 
 and care taken to secure fxill utilization of materials as of 
 men and machines. Scientific methods are pursued to 
 determine what materials are best fitted for the particular 
 purpose and what their proper cost should be. Only such 
 materials are supplied. The material is guarded with the 
 same scrupulous care as the money with which it is bought. 
 Ledger accounts are kept for each article; whatever is 
 needed must be vouched and accounted for and the 
 material account be balanced as accurately as the cashier 
 balances his daily cash account. Thus what is on hand 
 is always known by the accounts ; and waste either in pur- 
 chase or in use is avoided. 
 
 (a) Emebson (Efficiency, pp. 62-63). 
 
 " A head of staff as to materials, their purchase, custody, issue, and 
 handling. Subsidiary materials are only too often purchased on 
 the basis of price per pound rather than on basis of cost per unit. 
 This is inevitable, since no one is able to give the purchasing agent 
 any standard as to cost per unit. After materials are purchased, 
 they are frequently given such poor custody that they deteriorate 
 or disappear before being used. They are still more often issued for 
 extravagant and wasteful use. The economical handling of materials 
 is a special art. 
 
 In a large steel plant, staff control of handling material reduced 
 
 Digitized by Microsoft® 
 
34 
 
 the cost of handling per ton from $0,072 to $0,033, and increased the 
 number of tons handled per man per day from 16 to 57. Here again 
 was the same kind of staff organization, calling down from the top 
 all the most valuable knowledge in the world as to this one subject, 
 working up from the bottom from actual daily contact with changing 
 conditions. 
 
 There is no logical difference between money spent on materials 
 and money spent for labor. A brick wall is a combination of labor 
 and of material. Every issue of material, every issue of labor, 
 should be standardized in advance and checked; the same system 
 of accounting and distribution should be used for both labor and 
 material." 
 
 (b) Emerson (Record, pp. 3546-3547). 
 
 " Commissioner Pkouty. What do you mean by 'inefficiency of 
 material'? 
 
 Mr. Emerson. Engineers know very well, and have determined 
 how much horsepower you ought to get or how much water you 
 ought to be able to evaporate from a pound of coal. If you are using 
 a great deal more coal than that there is an inefficiency. There is an 
 ideal result which you ought to get which would be a horsepower 
 from one-fifth of a pound of coal. The highest attainment they ever 
 get is a horsepower from a pound. That is a very high ideal. If 
 you find people are using either eight or nine or ten pounds of coal 
 per horsepower, it measures a certain amount of inefficiency com- 
 pared to the practically attainable. That is an illustration. The 
 fuel is the largest single item of expense, so that a large amount of 
 this saving might be from the fuel. That is the second way of de- 
 termining this waste. The third was the comparative methods. 
 All railroads are efficient in certain directions. They are tremen- 
 dously efficient in certain directions. Each railroad has some particu- 
 lar spot in which it is more fortunate perhaps than other railroads. 
 Taking the different railroads of the country and visiting them and 
 investigating them and finding out that one had an efficient way as 
 to maintenance of locomotives, another as to maintenance of cars, 
 that a third had an efficient way as to maintenance of shop machinery 
 and tools, and the fourth had an efficiency as to maintenance of track; 
 and taking all these different bright spots that the railroads had 
 evolved through the special genius of the men connected with or in- 
 terested in those particular departments, you get a third standard — 
 
 Digitized by Microsoft® 
 
35 
 
 a standard, for instance, let us say of six cents a mile as being an 
 adequate amount on the average to maintain locomotives, or a stand- 
 ard of thirty-five dollars as an adequate standard to maintain cars." 
 
 12. What Labor Gains from Scientific Management 
 
 A. FINANCIAL GAINS ~~-> 
 
 Under scientific management the employee is enabled 
 to earn without greater strain upon his vitality from 25 
 to 60 per cent and at times even 100 per cent more "than' 
 under the old system. The larger wages are made pos- 
 sible by larger production; but this gain in production is 
 not attained by " speeding up." It comes largely from re- 
 moving the obstacles to production which annoy and ex- 
 haust the workman, — obstacles for which he is not, or 
 should not be made, responsible. The management sees 
 to it that his machine is always in perfect order. The 
 management sees to it that he is always supplied with the 
 necessary materials. The management sees to it that the 
 work comes to him at proper times, with proper instruc- 
 tions and in proper condition. The management sees to 
 it that he is shown the best possible way of doing the job; 
 that is, the way which takes least time, which takes least 
 effort, and which produces the best result. Relieved of 
 every unnecessary effort, of every unnecessary interrup- 
 tion and annoyance, the worker is enabled without greater 
 strain to furnish much more in production. And under 
 the exhilaration of achievement he develops his capacity .^ 
 
 1. Increased Pay 
 
 (a) In the Brighton Mills the earnings of wages were thus in- 
 creased from 45 to 75 per cent above the prevailing day rate. 
 
 (See Scheel: Record, pp. 3341-3368.) 
 
 Digitized by Microsoft® 
 
36 
 
 (b) In the Tabor Manufacturing Company the wages of the men 
 were increased on an average from 25 to 30 per cent. 
 
 (See Hathaway: Record, p. 3027.) 
 
 (c) In the Link Belt Company the earnings of the men range 
 from 25 to 35 over the generally prevailing wage. 
 
 (See Dodge: Record, p. 3137.) 
 
 (d) Hathaway (Record, pp. 3056-3058). 
 
 "Mr. Brandeis. Taking a man at an individual machine, how 
 much does he do under the new system as compared with what he 
 did under the old system? 
 
 Mr. Hathaway. That is rather difficult to answer, but in gen- 
 eral — 
 
 Mr. Brandeis (interrupting). I mean what particular work of 
 producing results? 
 
 Mr. Hathaway. In general, it ranges anywhere from three to 
 five times the work formerly done. On some machines it is greater 
 as to gain, and on some others there is gain but not so great. 
 
 Mr. Brandeis. The average would run from three to five times? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. That much greater than what they used to do 
 under the old scheme? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. Is that attributable in large part to his working 
 harder, or is it attributable to other causes? 
 
 Mr. Hathaway. He does not work any harder than he formerly 
 did. He works more efficiently, however. 
 
 Mr. Brandeis. And he works more efficiently why? 
 
 Mr. Hathaway. Formerly, when we started a job, he had first 
 to frequently hunt up the foreman to find out what he would do 
 next. Then he might have to hunt up his materials and get them to 
 the machine. After that he had to decide how the job was to be done 
 and look up his own tools for it. He had to grind his own tools and 
 all of the things that we now do in the planning department for him 
 he had to do himself to a very large extent while his machine was 
 standing idle. As it is now, the machine runs along on other work 
 while we are making preparations for his job ahead. That is one 
 reason. 
 
 Another reason is that our machines are in better shape, we fur- 
 nish the men with better tools, better implements and tools, that are 
 put in condition for us and kept in condition for him. 
 
 Digitized by Microsoft® 
 
37 
 
 Mr. Brandeis. Then you show him how to do it? 
 
 Mr. Hathaway. Then we show him how to do it. 
 
 Mr. Brandeis. Taking that particular work that a man does of 
 three to five times as much as he did under the old system, you have 
 got to set against that the fact that you have these twenty different 
 persons who are undertaking by way of planning or otherwise, in- 
 struction or otherwise, to enable him to do it? 
 
 Mr. Hathaway. Yes." 
 
 2. Promotion. 
 
 Gantt (Record, pp. 3462-3465). 
 
 "If I may add here, this instructing of these men rapidly leads to 
 a number of them coming to the front. We get from our men who 
 have been taught, men who have worked at routine work according 
 to their own ways for years, and who have never thought of investi- 
 gating anything better, — we get from these men, when we begin 
 to instruct them, and they have the inspiration of the higher grade 
 man who is helping them, and not driving them, the material for 
 more responsible positions. We find that those men come forward 
 with suggestions that will help the whole thing along, and they 
 become instructors. We get our best instructors from the men who 
 have been instructed by us. And invariably, in plants where I have 
 been, where they have told me that they did not have any good men 
 in their plants, after we began this system of management, good men 
 began to crop up all around, and in a comparatively short time we 
 had our positions filled with far better men than they ever thought 
 they had there. ^ 
 
 T Giving the man a chance, giving him inspiration, makes a man ^ 
 l^. out of him, instead of a machine. He has the same joy and pleasure 
 in his work that the man in the higher position has in his. He has 
 his individual record, as was shown to you on those charts, and he 
 does not like to see a red mark against him. He wants it all black. 
 It gives them an influential feeling among themselves. They feel 
 some importance. I have known, in one case, where these people 
 who had become bonus workers formed a little society among them- 
 selves, and it was quite exclusive; nobody who could not earn a 
 bonus was allowed to join. (Laughter). 
 
 Mr. Brandeis. How is it in shops as to avenues of promotion? 
 Do people have a chance to rise up? You spoke of one particular 
 promotion. 
 
 Digitized by Microsoft® 
 
38 
 
 Mr. Gantt. I might give one particular promotion, which I 
 think is one of the most striking cases that I have had anything to 
 do with. When I began to do some work with the Brighton mills, 
 five or six years ago, I do not remember exactly how long it was, 
 there was in their shipping department a man named Kelly who 
 understood what I was talking about, and who, in a very short 
 time, saw what we were trying to do, what we were driving at. He 
 had been foreman of the shipping department for fifteen years, 
 during which time superintendents of that mill had come and gone, 
 one after the other, and during that time they had not had any 
 single superintendent who was a really satisfactory man. 
 
 In a short time Mr. Kelly was promoted from the position which 
 he held to another one, and then to another one, and within three 
 years or about three years he was superintendent of the mill; and he 
 is a most excellent superintendent. I want to say that but for this 
 system of management it is probable that he would have been there 
 another fifteen years without being promoted to the position of 
 superintendent. I have no reason to believe there would have been 
 any change. 
 
 We have had that same thing in another plant, a very large plant, 
 the Sales Bleacheries, where they told us that they did not have 
 any competent and capable man in the place. When we got this 
 work going, we found competent and capable men developing all 
 along the line. And now, I venture to say, they will never, as long 
 as the present management or the people in authority there con- 
 tinue, have to go outside for another man to do anything. They 
 have them all there. I do not mean that they will not have to bring 
 in young men, but I mean that they will not have to bring in men 
 from outside to fill important positions. The men are growing up 
 to those positions, in every direction, within the plant." 
 
 B. SOCIAL GAINS 
 
 The social gains of the workingman from scientific man- 
 agement are greater even than the financial. He secures 
 the development and rise in self-respect, the satisfaction 
 with his work, which in almost every line of human activ- 
 ity accompanies great accomplishment by the individual. 
 Eagerness and interest take the place of indifference, both 
 
 Digitized by Microsoft® 
 
39 
 
 because the workman is called upon to do the highest 
 work of which he is capable, and also because in doing 
 this better work he secures appropriate and substantial 
 recognition and reward. Under scientific management"! 
 men are led, not driven. Instead of working unwillingly 
 for their employer they work in co-operation with the 
 management for themselves and their employer in what . 
 is a " square deal." — ' 
 
 (a) Gantt (Work, Wages and Profits, pp. 171-172). 
 
 "The workman who has become master of something takes pride 
 in his work and soon distinctly improves in personal appearance. 
 The improvement is so universal and so marked as to be always 
 distinctly recognizable, and is much more than can be accounted 
 for by the increase in wages which enables him to dress better. 
 
 This improvement is even more marked in girls than in men, for 
 the girls invariably acquire a better color and improve in health. 
 In one case the girl bonus workers formed a society and adopted a 
 badge which they all wore. Only those who could earn their bonus 
 were eligible. This incident is a little thing of itself, but it shows 
 the feeling that comes with the mastery of some subject. They 
 know what they can do and are proud of it. This consciousness 
 of efficiency, — this knowledge that they have succeeded and can 
 do it again, puts the worker in a different class from those who go 
 along day after day watching the clock, and doing just enough not 
 to get discharged. 
 
 The task gives the worker a definite object to strive for, causes a 
 certain amount of mental exhilaration, and invariably increases 
 the keenness of the perceptions. 
 
 From our task workers we frequently get instructors and some- 
 times investigators. From our investigators and instructors we get 
 an ample supply of superintendents and foremen. The foremen 
 and superintendents trained under this system have proved far more 
 successful than any it was possible to hire." 
 
 (6) Gantt (Work, Wages and Profits, p. 116). 
 
 " The general policy of the past has been to drive, but the era of 
 force must give way to that of knowledge and that the policy of 
 the future will be to teach that to the advantage of all concerned." 
 
 Digitized by Microsoft® 
 
40 
 
 (c) Scheel (Record, pp. 3374-3376). 
 
 "Mr. Brandeis. Have you observed in connection with this any 
 change in the attitude of the men or women in the employ of your 
 company, or of their general demeanor in relation to their work and 
 their attitude toward it? 
 
 Mr. Scheel. I think quite decidedly so, in several departments. 
 
 Mr. Brandeis. And in what respect have you observed such a 
 change? 
 
 Mr. Scheel. In the spinning department we have all noticed 
 that with the introduction of a scientific way of measuring work 
 and of paying for it, there has been a change in the spirit of the help 
 from one of a sort of hidden desire to do as little as possible, perhaps, 
 and take advantage of every excuse and every reason for failure to 
 do anything, to a search for real reasons why results are not possible. 
 It has seemed to us that the individual worker has always been pretty 
 high in efficiency as to himself. When there is a day pay, it seems 
 to us that the operative showed a pretty good degree of efficiency, 
 for he did as little as was convenient for him in order to keep on 
 getting that rate. However, when we so do things that by making 
 his efficiency coincide with the firm's measure of efficiency, he is 
 willing to do whatever is necessary in order to get the added reward. 
 
 Mr. Brandeis. It has been said in regard to some of the work 
 which, I believe, had reference to work in your mill, that it became 
 fashionable to work instead of to shirk work. 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. Were there any instances of that, and are you able 
 to show from any of these charts how there came a change in respect 
 to the fashion of working or not working on particular days or times? 
 
 Mr. Scheel. I think that is shown in the filling winder sheet. 
 
 Commissioner Lane. What page is that? 
 
 Mr. Scheel. That is opposite page 168. At the beginning it 
 took a number of days, as shown by the red spaces at the beginning 
 of the line, for new operatives to come up to the bonus. Those that 
 came on last, all of the last four, made a bonus on the first day. 
 
 Mr. Brandeis. That is, at first it took a long time before they 
 could get into the spirit, perhaps, or whatever it was that enabled 
 them to do it? 
 
 Mr. Scheel. Yes. 
 
 Mr. Brandeis. And later they caught right on to the moving 
 train and made it quickly? 
 
 Digitized by Microsoft® 
 
41 
 
 Mr. Scheel. Yes. You will notice at the beginning of the sheet 
 that a good many of the red spaces are Mondays; that is, that the 
 Mondays are shown to be days when efficiency suffers, and that 
 toward the end of the sheet that is not true to the same extent. 
 
 Mr. Bkandeis. How was it about work on Saturdays? Was 
 there any marked change in that, or in any other room, in respect to 
 the work on Saturdays? 
 
 Mr. Scheel. On the spoolers sheet, opposite page 172, Saturday 
 being a short day and the day when the cleaning up was done, that 
 was the day when the spoolers did not bother much to make the 
 bonus? 
 
 Mr. Brandeis. Did that fashion change? 
 
 Mr. Scheel. Yes." 
 
 (d) Gilbreth (Record, pp. 3417-3418). 
 
 "One point I would like to bring out this morning in the interest 
 of the consumers or the workmen or the employes or any one you 
 want to think of, is the fact that this is not a slave-driving scheme. 
 It is a scheme whereby, on the other hand, a man has the joy of 
 achievement, the same joy in a modified form that a football player 
 feels when he runs down the field and beats the others. These men 
 are not driven. They do work harder than they do before. Scien- 
 tific soldiering is entirely eliminated, and there is nothing better 
 for the morals or physique or anything else of the workman than 
 eliminating scientific soldiering — and it is a science, gentlemen, 
 you have no idea of. (Laughter.) " 
 
 C. AIDING THE LESS COMPETENT 
 
 Scientific management recognizes the right of those less 
 expert in the work to advance to greater efficiency, and 
 the importance to the employer of training his workmen 
 to be competent. It therefore provides through the most 
 practical teachers for careful training of men to work in 
 the best manner and to develop habits of industry instead 
 of letting " the devil take the hindmost " and exposing 
 the less competent to the probability of discharge. It sup- 
 plies instruction, and offers to the teachers special incen- 
 
 Digitized by Microsoft® 
 
42 
 
 tives if they succeed in bringing up the hindmost. The 
 teacher is as prominent in scientific management as in 
 the armies of Prussia and of Japan. 
 
 (a) A striking illustration of this proposition is furnished by the prac- 
 tices of the Brighton Mills. After the best conditions for weaving had 
 been determined, the work of instructing the individual weavers was pa- 
 tiently entered upon ; practically a month and a half was spent by a 
 scientifically trained expert and the gang boss in training three weavers. 
 Not until they had been trained was the instruction of others under- 
 taken; and even after all have been trained, the gang boss never has 
 under him more than twelve men. Not only the weavers, but the gang 
 boss receives a bonus. His bonus is six cents a day for every man who 
 gets a bonus; but he receives the additional incentive for bringing up 
 the hindmost by an increase of his bonus to ten cents a man if all twelve 
 receive a bonus. 
 
 Besides these teachers there are three inspectors in the weaving and 
 finishing rooms, who in a sense are teachers; and in addition in this 
 mill, which has only about 600 employees, there are six investigators 
 who "are engaged in investigating problems in various departments 
 of the mill, all the time studying and working in the training of work- 
 men to bring them up to the standard." 
 
 (See Scheel: Record, pp. 3336-3367.) 
 
 (b) Gantt (Work, Wages and Profits, pp. 109-110). 
 
 "Under former conditions, the foreman hesitated to teach the 
 workman for fear the latter might learn as much as he knew and 
 possibly get his job. Under the new conditions, the man who knows 
 is paid for teaching others as much as he knows, and the others are 
 paid a bonus for learning and doing what they are taught. It is this 
 feature of the task and bonus system that has enabled us not only 
 to obtain, but to maintain permanently, such satisfactory results. 
 The expert workman who becomes a good teacher soon makes his 
 services valuable, for, by his assistance, we can often make the 
 average efficiency of the shop even greater than his best efficiency 
 was before we began to study the question of efficiency. He learns 
 to remove obstacles which stood in his way when he was a simple 
 workman, and often becomes an expert also not only at removing 
 these obstacles, but at developing better methods to avoid them." 
 
 Digitized by Microsoft® 
 
43 
 
 D. THE BONUS 
 
 The money reward for the individual workman's high 
 accomplishment is ordinarily and probably most effec- 
 tively distributed by means of a bonus system; but while 
 the bonus system is rather a common incident of scientific 
 management, it must not be supposed that the bonus sys- 
 tem is scientific management. The bonus system is apt 
 to do far more harm than good when it is applied other- 
 wise than as a part of the system of scientific management. 
 Apprehension by labor of the bonus system when intro- 
 duced except as a part of scientific management, is well 
 founded. On the other hand, the bonus system under 
 scientific management has proved itself to be perhaps the 
 most appropriate method of securing to labor its proper 
 reward and perpetuating full co-operation between em- 
 ployer and employee. 
 
 When applied in connection with scientific manage- 
 ment the bonus system has always these features, among 
 others : 
 
 Gantt (Work, Wages and Profits, pp. 110-111). 
 
 " 1. — A scientific investigation in detail of each piece of work, 
 and the determination of the best method and the shortest time in 
 which the work can be done. 
 
 2. — A teacher capable of teaching the best method and shortest 
 time. 
 
 3. — Reward for both teacher and pupil when the latter is 
 successful." 
 
 E. PIECE WORE 
 
 It must not be supposed that the introduction of the 
 piece rate system is scientific management, or even an 
 approach to it. On the contrary, the existence of the piece 
 rate system often proves the greatest obstacle to the intro- 
 
 Digitized by Microsoft® 
 
44 
 
 duction of scientific management. Under scientific man- 
 agement the increase of wage is coincident with reduction 
 in cost, — but under the Erie piece rate system the in- 
 crease in wages was attended by reduced performance. 
 
 (a) Stuaet (Record, p. 2815). 
 
 The piece rate system was introduced on the Erie after a great 
 struggle at a cost of about five million dollars (Record, pp. 2738, 
 3764). Its introduction was later followed by increase in wages, 
 with this result: 
 
 "Mr. Wadhams. What has been your experience with respect to 
 an increase of wages having any effect upon economic advantage to 
 the railroad? 
 
 Mr. Stuart. There is no increase. 
 
 Mr. Wadhams. You get no more work than you did before? 
 
 Mr. Stuart. Not as much. 
 
 Mr. Wadhams. So that, from the point of view of the railroads, 
 you consider the increase in wages as a total loss? 
 
 Mr. Stuakt. Yes; absolutely." 
 
 (b) Emerson (Record, pp. 3531-3534). 
 
 "Mr. Brandeis. Would you state what the relation is, as you 
 understand it, between the piece rate system and the system of 
 bonus reward? 
 
 Mr. Emerson. Both of them are forms of efficiency reward. 
 We have always found, wherever we have been, that piece rates 
 were one of the greatest obstacles to the introduction of scientific 
 methods. Wages in my opinion depend on three matters. The 
 compensation of the workman depends on three different elements. 
 He is firstly entitled to his day rate, whether he works or not; that 
 is, because he comes and puts himself at the disposal of his employer. 
 The employer has a right to ask what the equivalent will be of the 
 wages that he is paying the man. If that man gives more than the 
 usual equivalent or more than the equivalent that may be even 
 scientifically determined, that is the individual merit of the man 
 and he should be rewarded accordingly. I therefore always try to 
 keep these three matters entirely distinct. 
 
 The first one, that of the rate of wages, is absolutely open to indi- 
 vidual or collective bargaining. The question of equivalent can 
 
 Digitized by Microsoft® 
 
45 
 
 only be determined by scientific experts. Either the man who 
 pays the wages or the man who receives the wages is competent to 
 determine what the equivalent is. The third point, the extra com- 
 pensation that should be paid to a man for his special, individual- 
 ized effort, is again open to collective bargaining. The reason we 
 find piece rates a great stumbling block in our way is that in the 
 first place they disregard the first principle; they do not guarantee 
 to the man a fixed rate. The second reason for finding them a 
 stumbling block in our way is that an efficiency record should be 
 based on standardized conditions, standardized operations, and 
 standardized reports, and to the great number of different principles 
 should be applied first, before you are in a position to put in an 
 efficiency reward basis. If, in the absence of the application of these 
 principles, you wish to establish piece rates, it is absolutely necessary 
 to make that rate high enough to give the man a living wage. In 
 order to get the piece rate in, that rate is made usually very easy 
 and very high. After a man has worked for a while and has him- 
 self to some extent standardized the conditions and standardized 
 the operations, and when the management has to some extent stan- 
 dardized conditions and operations, it is found he is getting an entirely 
 unreasonable rate of compensation. He has not put forth addi- 
 tional effort, but these other elements have come in to make the 
 task very easy. Then the management immediately has recourse 
 to the principle of cutting the rate, which leads the workman to 
 retaliate by standing pat. You have then that element of standing 
 pat on the one side and of cutting the rate on the other side, that 
 does not accord at all with scientific management. 
 
 The third trouble with the piece rate system is that it puts the 
 responsibility up to the man instead of putting it up to the manage- 
 ment. They have put in a rate and told him, "You go ahead; it is 
 up to you; you turn out all you can. We wash our hands of the 
 matter." The consequence is we do not have what I would call 
 scientific management in the piece rate shops. 
 
 That is the reason I have always been opposed to it. I consider 
 it the greatest stumbling block that I encounter, and we also always 
 ask as a favor, as a first step toward improved scientific manage- 
 ment, that the piece rate basis shall be abolished, and that the men 
 shall be put back on day rates." 
 
 Digitized by Microsoft® 
 
46 
 
 (c) Gantt (Record, pp. 3740-3744). 
 
 " Mr. Gantt. In the piece work system, pure and simple, we find, 
 in most places where I have seen it in operation, that there is no 
 special effort made to supply the men with the work when they want 
 it. The man may have to wait for something. The foreman, for 
 instance, does not feel that it is up to him; does not feel his responsi- 
 bility to help that man; and if the man is delayed about something, 
 he says: "Well, I will attend to you after a while." 
 
 Commissioner Prouty. Yours is a system of team work, and his 
 is a system of individual work? 
 
 Mr. Gantt. Absolutely. Ours is a system of team work; and the 
 poorest man on the team is to be helped by the man who knows 
 more than he does. That is the essential difference. 
 
 And when we obtain knowledge of the best way in which a thing 
 can be done, that knowledge is recorded. Mr. Kent showed you 
 those instruction cards. That much knowledge can never go back. 
 We have taken that little step — it may not be the best that has been 
 done in the country, but it is the best our expert could devise; and 
 that is recorded, and everybody on our list is taught that. The 
 Canadian Pacific Railroad is preparing to send those instructions 
 over the lines into their shops, as soon as they can get a proper list 
 of standard tools in those shops, and see how much good they can 
 do. We try to bring everybody up to the standard, and gradually 
 to raise the standard, and bring everybody with it. We do not raise 
 the standard by a jump, but gradually, so that everybody can reason- 
 ably get up to it. We do not find that one man can do a job in half 
 an hour, say, and then turn around and say that all of the other men 
 must immediately do that job in half an hour, when the other man 
 may have been taking two hours for it. We consider that that would 
 be manifestly unfair, and absolutely wrong and unjust to the men. 
 If that piece of work can be done in half an hour, it is possible for the 
 expert to show the men, to teach them, how to do it. In the vast 
 majority of cases, if the man is a normal man, he comes up to our 
 expectations and becomes a better man as a result, — a very much 
 better man. He has more self-respect, and more reliance on himself. 
 Mr. Brandeis. Taking this very matter of the piece rate, that 
 Commissioner Prouty refers to, if a man, for instance, had been 
 earning, ordinarily, $2 a day, at a given number of rates, represent- 
 ing perhaps ten pieces of this work, then, if he makes eleven pieces, 
 he gets $2.20 and if he makes twelve, he gets $2.40 and the like. I 
 
 Digitized by Microsoft® 
 
47 
 
 understand your bonus system is a system by which the man has a 
 limit, by making the effort, which means largely by following the in- 
 structions; he would get, not $2.20, $2.40, $2.60, or $2.80, but would 
 make the goal every time, if he worked right. He would either get 
 $3 or $2 or $4 a day, or whatever the rate might be. 
 Mr. Gantt. That is not exactly it. 
 Mr. Beandeis. That is it in part, is it not? 
 Mr. Gantt. Partly. The difference is this. That we do not al- 
 low a man to work piece work — we do not take the green man, at 
 the start, and ask him to work piece work, but we take the green 
 man, and give him the day's wages, until we can teach him how to 
 earn this higher rate, how to come up to this standard; and then, 
 when he has reached this standard, we give him his additional 25 
 or 30 per cent, and then, whatever he does in addition to that he gets 
 in proportion. 
 
 Mr. Beandeis. That is, he gets a piece rate, as it were, after he 
 has reached the new standard; then he gets a piece rate? 
 
 Mr. Gantt. In other words, it is different work for the unskilled 
 and for the skilled. When the man becomes skilled, becomes practi- 
 cally in the expert class, you might say, then we pay him piece work; 
 but we teach him how, first. 
 Mr. Beandeis. Yes. 
 Mr. Gantt. And we help him. 
 
 Mr. Beandeis. And there is no limit to what the man can get? 
 Mr. Gantt. No. 
 
 Mr. Beandeis. When he gets into the bonus class, a man can go 
 just as much higher as his ability will permit; and it is actually your 
 experience that men do go very considerably higher? 
 
 Mr. Gantt. Yes. If we find men who are capable of going very 
 considerably higher, we do not cut their wages, and thereby drive 
 them out of the shop, but we say: "Here is a man that would make 
 a good investigator for us. He is the man we are looking for," and he 
 is the man we put on the study of these problems. We make him a 
 teacher. If he is so much better than the rest, we make him a teacher. 
 The result is that we get the benefit of those best men for our teachers 
 and instructors, which improves the condition of our shop. 
 
 Mr. Beandeis. This is so, is it not, that the management having 
 assumed the responsibility, itself by a proper management to bring 
 the man up to the bonus class — 
 Mr. Gantt. Exactly so." 
 
 Digitized by Microsoft® 
 
48 
 
 13. What the Employer Gains from Scientific 
 Management 
 
 The employer gains not only reduced labor cost due 
 to greater productivity of the workingman, but also those 
 great incidental benefits which flow from improved ser- 
 vice, as from greater celerity and greater punctuality in 
 completing work. The employer gains much from the 
 lessened need of plant and equipment which follows its 
 fuller and uninterrupted use. He saves in interest and 
 taxes, and in depreciation charges. He saves in reduced 
 stock of materials, raw and in process. He saves in a les- 
 sened strain upon his credit. 
 
 (a) When applied to construction of buildings, the labor cost was re- 
 duced about one-half. 
 
 (Gilbreth: Record, p. 3424.) 
 
 (b) Even when applied in a business which, under the old method, had 
 been most progressively managed for years, and thoroughly systema- 
 tized, the introduction of scientific management produced the following 
 remarkable results in different processes and operations, which are 
 designated by letters. 
 
 Saved In direct Saved In overhead charges. 
 
 labor. (Labor and general shop expenses.) 
 
 A 12 per cent 26 per cent 
 
 B 74 78 
 
 C 16 30 
 
 D 2 18 
 
 E 31 43 
 
 F 35 45 
 
 G 36 46 
 
 H 28 17 
 
 I 16 4 
 
 J 28 11 
 
 K 37 28 
 
 L 37 10 (increase) 
 
 M 34 24 
 
 N 63 81 
 
 (Towne, Record, pp. 3319-3320.) 
 
 (c) Gantt (Record, pp. 138-139). 
 
 "The fact that under this system everybody, high and low, is forced 
 by his co-workers to do his duty (for some one else always suffers 
 
 Digitized by Microsoft® 
 
49 
 
 when he fails) acts as a strong moral tonic to the community, and 
 many whose ideas of truth and honesty are vague find habits of 
 truth and honesty forced upon them. This is the case with those in 
 high authority, as well as those in humble positions, and the man 
 highest in authority finds that he also must conform to laws, if he 
 wishes the proper co-operation of those under him." 
 
 (d) Scheel (Record, p. 3377). 
 
 " Mr. Brandeis. It appears, Mr. Scheel, that a very large amount 
 of money must be spent in the aggregate by your company in paying 
 these various men who, under different names of gang bosses and in- 
 spectors and investigators, are doing the instructing of the workmen, 
 and others again who are keeping these extensive records of the 
 daily performances. Has that money been expended profitably, so 
 far as returns to the company are concerned? 
 
 Mr. Scheel. Yes." 
 
 14. What the Consumer Gains from Scientific 
 Management 
 
 Experience in trade has shown that except where there I 
 is a close unregulated monopoly, the public always secures 
 some part of the benefit gained by reduced cost of pro- 
 duction. The reduced selling price comes, ordinarily, not 
 as a voluntary concession, but because the demand of the 
 consumer for lower prices proves irresistible in competi- 
 tive or publicly regulated businesses, whenever the cost of , 
 production falls materially. -J 
 
 Hathaway (Record, pp. 3027-3028). 
 
 Thus in the Tabor Manufacturing Company selling prices fell 
 ten to fifteen per cent in the last few years, while the general tendency 
 of prices was upward. 
 
 The same was true of the Link Belt Company. 
 
 Dodge (Record, pp. 3137-3138). 
 
 "Mr. Brandeis. It does not pile up because the price of your 
 article has been reduced? 
 
 Digitized by Microsoft® 
 
50 
 
 Mr. Dodge. Yes. 
 
 Mr. Brandeis. By ten or fifteen or more per cent? 
 
 Commissioner Lane. Why have you decreased the price of your 
 article? 
 
 Mr. Dodge. I think we have never solved this problem. As we 
 are reducing costs, we have never been able to keep from giving 
 that away to our buyers, because so many of our contracts are based 
 on cost. 
 
 Mr. Brandeis. Then, without or in spite of the effort that you 
 might have made to retain the profit which has come to you, or 
 which has come generally from the introduction of this scientific 
 management, it has been divided between the workingman who has 
 gotten an increase ranging from 25 to 35 per cent over the generally 
 prevailing wage, as you understand it — 
 
 Mr. Dodge. As I understand it, yes. 
 
 Mr. Brandeis (continuing). And a part of it has come to the 
 Link Belt Company? 
 
 Mr. Dodge. Yes, sir. 
 
 Mr. Brandeis. And a part of it has gone to the public, which 
 has exacted a lower price? 
 
 Mr. Dodge. And did n't say thank you, either. (Laughter.) " 
 
 Gantt (Record, p. 3498). 
 
 "Mr. Gantt. I do believe that if the time comes when all industries 
 get onto this basis, you will find a continual reduction in costs and 
 under proper conditions a continual reduction in selling price, and 
 consequently a continual reduction in the cost of living. Conse- 
 quently, everybody would be benefited without an increase of 
 wages." 
 
 15. The Introduction of Scientific Management 
 a Process 
 
 The introduction of scientific management is of course 
 a process, not a single act, and a process in which the 
 element of time necessarily plays an important part. 
 
 Digitized by Microsoft® 
 
51 
 
 1. Obstacles to be Overcome. 
 
 The men now employed must be taught the science; and 
 what is even more difficult with most persons, must be 
 taught to accommodate themselves to new ideas. While 
 the difficulty in dealing with human nature is great, the 
 chief obstacles to be overcome are not with the laborers and 
 mechanics, nor indeed with the labor unions, but with 
 those in authority. It is the foreman and assistant fore- 
 man, the superintendents and assistant superintendents, 
 the managers and assistant managers, who present the 
 greatest obstacles, men with pride of opinion, who feel, 
 unwarrantably, that the introduction of a better system 
 involves a criticism of themselves ; subordinate officials who 
 see their power diminished by the assumption of respon- 
 sibility on the part of the management; and men with 
 petty authority, who regard the appearance of the effi- 
 ciency engineer as an intrusion upon their domain. 
 
 (a) Gantt (Work, Wages and Profits, pp. 130-132). 
 
 " Among the obstacles to the introduction of this system is the fact 
 that it forces everybody to do his duty. Many a man in authority 
 wants a system that will force everybody else to do his duty, but 
 will allow him to do as he pleases. The "Task and Bonus" system 
 when carried out properly is no respecter of persons, and the man 
 who wishes to force the workman to do his task properly must see 
 that the task is properly set and that proper means are available for 
 doing it. It is not only the workman's privilege, but his duty, to 
 report whatever interferes with his earning his bonus, and the loss 
 of bonus soon educates him to perform this duty no matter how dis- 
 agreeable it is at first. We investigate every loss of bonus, and place 
 the blame where it belongs. Sometimes we find it belongs pretty 
 high up, for the man who has neglected his duty under one system 
 of management is pretty apt to neglect it at first under another. He 
 must either learn to perform his duty or yield his place, for the pres- 
 sure from those who lose by his neglect or incompetence is continu- 
 ous and insistent. This becomes evident as soon as the task ar.d 
 bonus gets fairly started, and the effect is that opposition to its ex- 
 
 Digitized by Microsoft® 
 
52 
 
 tension develops on the part of all who are not sure of making good 
 under it, or whose expert knowledge is such that they fear it will all 
 soon be standardized. The opposition of such people, however, is 
 bound to give way sooner or later, for the really capable man and the 
 true expert welcome these methods as soon as they understand 
 them." 
 
 (&) Gantt (Record, p. 3469). 
 
 " Mr. Gantt. The principal obstacle is that it makes every man 
 attend to his job. As a matter of fact, almost everybody wants to 
 have the other fellow attend to his job and let him do as he pleases; 
 but this system of management is such that the workman forces his 
 foreman to do his job, the foreman forces his superintendent, and the 
 superintendent forces the manager. 
 
 Co mm issioner Prouty. You find the general obstacle is with the 
 management, with the owner of the business? 
 
 Mr. Gantt. As a rule." 
 
 And yet, with the exercise of patience and tact, these 
 difficulties, however great, can be and have been overcome. 
 
 Gantt (Work, Wages and Profits, p. 132). 
 
 "The fact that the task and the bonus enable us to utilize our 
 knowledge and maintain our standards, and that the setting of 
 tasks after a scientific investigation must necessarily not only in- 
 crease our knowledge but standardize it, brings to our assistance the 
 clearest thinkers and hardest workers in any organization. Our 
 greatest help, however, comes from the workmen themselves. The 
 most intelligent soon realize that we really mean to help them ad- 
 vance themselves, and the ambitious ones welcome the aid of our 
 instructor to remove obstacles that have been in their way for per 
 haps years. As soon as one such man has earned his bonus for sev- 
 eral days, there is usually another man ready to try the task, and 
 unless there is a great lack of confidence on the part of the men in 
 the management, the sentiment rapidly grows in favor of our task 
 work." 
 
 2. Finding Better Methods. 
 
 Time is not only an important element in the mere in- 
 troduction of scientific management, but much time must 
 
 Digitized by Microsoft® 
 
53 
 
 necessarily elapse before the full benefit of scientific man- 
 agement can be attained. For progressiveness is of the 
 very essence of scientific management; and the effort must 
 be constantly made to seek with an open mind a better 
 method of performing every operation. That involves 
 intensified observation, research, and study into a territory 
 largely unexplored. 
 
 3. Great Gains in Short Time. 
 
 But although the largest benefits from scientific man- 
 agement cannot be secured for many years, very substan- 
 tial gains can be secured in a short time. 
 
 (a) Gilbreth (Record, p. 3407). 
 
 "I tell you it will reduce your costs the first day you put it in. 
 If you can spend the $25,000 Mr. Towne did, and have all of those 
 refinements, as in a permanent mill under one cover, as Mr. Scheel 
 testified, you are going to have still greater benefits; but who can 
 afford in work outside, in contracting, as in my work — I can tell 
 you about my work and not about any other — who can afford to 
 spend $25,000 before he gets started? I do not know of anybody. 
 We can give you those economies the first day if you take scientific 
 management, and I urge you, gentlemen, to accept the invitation 
 of Mr. Dodge of the Link Belt, and the invitation of Mr. Gantt and 
 Mr. Scheel." 
 
 (b) Emerson (Record, pp. 3559-3561). 
 
 "Mr. Brandeis. You have stated that these great economies 
 were possible. In your opinion are large economies obtainable 
 within a relatively short time? 
 
 Mr. Emerson. There are certain economies which would take a 
 very long time to accomplish. There are others, by far the largest, 
 that it would take some time to accomplish, because it would depend 
 upon the process of education. There are other economies in which 
 results could be obtained in a comparatively short time. As I 
 mentioned on the Santa F6, the management they attained half 
 the result between what they were doing and what I thought was 
 an ideal performance, in two years' time. 
 
 Digitized by Microsoft® 
 
54 
 
 Mr. Brandeis. Speaking generally, how do they go about the 
 attaining of these economies? 
 
 Mr. Emerson. We never paid any attention to attaining economy. 
 The only thing we paid any attention to was the attaining of effi- 
 ciency, feeling absolutely certain that economy would result as a 
 by-product. 
 
 Mr. Brandeis. How would you go about attaining efficiency? 
 
 Mr. Emerson. We brought with us, or ascertained from any 
 sources that were available, by investigating, by past knowledge, 
 by performing elsewhere, certain standards. We compared those 
 standards with results actually being obtained. We then investi- 
 gated all the conditions that resulted in this inefficiency of attain- 
 ment, and we proceeded to eliminate the obstacles in the way. 
 
 For example: when I first went with the Santa Fe I knew that 
 belting could be and can be maintained for 14 per cent of its first 
 cost; that is, belting that is used in the shops. When we collected 
 the records, we found that the cost of maintaining belting was 100 
 per cent of its first cost. 
 
 Mr. Brandeis. You mean the annual cost? 
 
 Mr. Emerson. The annual cost. If you had fifteen thousand 
 dollars worth of belting it was costing fifteen thousand dollars a 
 yeat to maintain it, when it should cost in the neighborhood of 
 about two thousand dollars. 
 
 Having that standard, and having the records showing the cost, 
 we went to work to eliminate the causes of loss. We asked, in the 
 first place, that they should give us the best belting made, without 
 regard to cost. We wanted quality and not cost. We paid, in fact, 
 five per cent above the market prices for the privilege of rejecting 
 any belting that did not prove satisfactory. We next asked that 
 the belting should all be put in the hands of one man, who should 
 have exclusive charge of it, instead of allowing men that did not 
 know much about it to repair their own belts on over-time. The 
 third instruction given to the man was that he should have no belt 
 failures; that is, that he should repair his belts before they broke 
 down, and not afterwards, just as on a railroad you keep bridges 
 maintained and do not wait for a train to go through the bridge 
 before you build it up. As a result, we reduced belt failures by this 
 method. The belt failures were reduced from 300 a month down to 
 50, and the cost dropped from 100 per cent down to the 14 per cent, 
 which was the standard. Incidentally, we did not delay the machines, 
 
 Digitized by Microsoft® 
 
55 
 
 and we had more output and better satisfaction from our belting. 
 That same method was applied straight through every shop, to 
 machinery and tools and locomotives, and right straight through 
 the whole thing." 
 
 16. Scientific Management and Labor Unions 
 
 The claim has been made that scientific management 
 and labor unions are inconsistent; that the organization 
 of labor presents insuperable obstacles to the introduc- 
 tion of scientific management in railroads and other in- 
 dustries where unionism is potent. This claim, we believe, 
 is wholly unfounded in fact. i 
 
 (a) Collective bargaining is alike an important func- 
 tion under scientific management and under the old 
 system. — * 
 
 Gantt (Record, pp. 3495-3496). 
 
 " Mr. Bkandeis. But it is, as Commissioner Clark has pointed 
 out, perfectly possible, and indeed very probable, that there would 
 always be two sides to the bargain? 
 
 Mr. Gantt. Yes, sir. 
 
 Mr. Bkandeis. Because you would have to fix the terms where 
 the bonus would begin, and the amount of the bonus, and therefore 
 collective bargaining in the sense of having a union to represent the 
 workingmen, would not be so frequent perhaps in its application; 
 but it would be just as necessary and just as beneficial in its opera- 
 tion as it is to-day, only under a system which, instead of producing 
 friction and hostility, would produce the opposite; is not that so? 
 
 Mr. Gantt. I believe that is so. 
 
 Mr. Brandeis. And where, further, Mr. Gantt, operating under 
 a system, the parties could come together with the knowledge of 
 facts scientifically ascertained on which to reason out and base the 
 conclusions that should come from that collective bargaining? 
 
 Mr. Gantt. I agree with you entirely. There is one thing 
 which I have found throughout all my work: when the real facts 
 were known, when each side stopped bluffing against the other, 
 there was but little difficulty in coming to a proper agreement. 
 
 Digitized by Microsoft® 
 
56 
 
 The reason why we do not have an agreement usually is because 
 
 the two parties do not understand each other. 
 
 Commissioner Clark. Other people have found the same thing." 
 (See Emerson: Record, pp. 3531-3532, quoted above, pp. 53, 54.) 
 
 (b) Unionism does not prevent the introduction of 
 scientific management. It is true that unions, in some 
 trades, have bitterly opposed the introduction of the piece 
 rate or the bonus system without scientific management, 
 just as other unions have opposed the day rate system 
 without scientific management. And very intelligent 
 labor leaders have from time to time objected — and ob- 
 jected properly — to ruthless methods of " speeding up " ; 
 but, as shown above, " speeding up " is not scientific man- 
 agement; nor, as also shown above, is the piece rate 
 system, with or without a bonus, scientific management. 
 
 It will always require tact and patience to introduce 
 radically new methods, whether the persons to be affected 
 are organized or unorganized workers or are those " higher 
 up." Tact and patience are essential to the introduction 
 of scientific management in any business. But the experi- 
 ence of those who have been engaged in the introduction 
 of scientific management in various businesses, in some 
 of which closed, in others of which the open shop prevailed, 
 clearly establishes that unions have not presented any 
 obstacle to the introduction of scientific management, as 
 soon as the nature and purpose of the changes proposed 
 were understood and the good faith of the management 
 was apparent. 
 
 (a) Gilbreth (Record, pp. 3401-3402). 
 
 "Your Honors, in answer to that first question of whether or not 
 this scientific management can be applied to unionized shops or so- 
 called closed shops, I wish to say that we have always made it a 
 point to deal with unions by preference. In some localities where 
 our work exists there are no unions, and in some cases there will 
 
 Digitized by Microsoft® 
 
57 
 
 be union men and non-union men on the same job; but we have 
 always made it a point to give preference to union men and union 
 conditions. 
 
 We find that the men, as soon as they understand this, are very 
 heartily in favor of it. There is no opposition whatever from any 
 union man as soon as he knows what it is. Sometimes there is op- 
 position from one of the foremen or an entire union during that 
 period that they think there is a new game being sprung on them. 
 They naturally are suspicious under the long period of wrong treat- 
 ment that has come to them for generations, but they seldom act 
 during that period. They never have acted on my work during that 
 time, and by the time that they have finished considering what they 
 will do they are converted and as a body are the best allies we have 
 in installing scientific management." 
 
 (6) Williams (Record, pp. 3431-3433). 
 
 "Mr. Brandeis. You are the manager of the Manhattan Press 
 of New York? 
 
 Mr. Williams. Yes. 
 
 Mr. Brandeis. And in that press you have introduced some of 
 the principles of scientific management? 
 
 Mr. Williams. Some of them. 
 
 Mr. Brandeis. And you have introduced some of these principles 
 in departments of your press, which is practically a closed shop? 
 
 Mr. Williams. One department, yes. 
 
 Mr. Brandeis. And that is the — 
 
 Mr. Williams (interrupting). The press room. 
 
 Mr. Brandeis. And the press men's union in New York is a very 
 strong union? 
 
 Mr. Williams. Very strong. 
 
 Mr. Brandeis. In introducing these principles, you have intro- 
 duced among others, the principles of the individual daily record of 
 the men? 
 
 Mr. Williams. Yes. 
 
 Mr. Brandeis. And also the principles connected with it of pay- 
 ing the man a bonus who has reached the standard? 
 
 Mr. Williams. Yes. 
 
 Mr. Brandeis. Will you state whether or not, Mr. Williams, you 
 have been confronted with any difficulties or obstacles on the part of 
 the unions to the introduction of these principles of scientific manage- 
 ment? 
 
 Digitized by Microsoft® 
 
58 
 
 Mr. Williams. None but what, as soon as the men got confidence, 
 would disappear. They do not believe it. They cannot understand 
 that you are really wanting to pay them extra money; as soon as 
 they can once get that through their minds, you have no trouble at 
 all. We had to hold up the bonuses — I don't know just how long, 
 but certainly three to five weeks — before they would take them. 
 We kept putting them in the drawer, and finally some of them got 
 brave enough to take them. We had a scheme of paying them which 
 was one of my own ideas. We did not pay the bonus with the pay. 
 We paid off on Friday, and we paid the bonus on the following 
 Wednesday. One of the fellows said to me: "Those few extra dol- 
 lars that we get on Wednesday come along about the time that we 
 are hard-up, and they are better than the whole damn pay roll, that 
 we have to take home. (Laughter.) " 
 
 (c) Gantt (Record, pp. 3461-3462). 
 
 "Mr. Brandeis. Mr. Kent testified to the introduction by you 
 in the Canadian Pacific shops at Angus of some parts of the prin- 
 ciples of scientific management. Do you happen to know, definitely, 
 of the attitude of the union there, or the union officials, to the work? 
 
 Mr. Gantt. About a year after we began that work, Mr. Vaughan, 
 who has charge of it all — he is assistant to the vice-president 
 in charge of operating — said he had a very interesting session 
 with a committee of the labor union; and he had told them that he 
 had a piece work system that could not be cut. They felt very 
 •skeptical, but they listened to what he had to say and went away; 
 and they have never made any comment since. They are apparently 
 entirely satisfied. I have not heard that they have ever said any- 
 thing about it since. 
 
 Mr. Brandeis. Mr. Gantt, is not this one of the things that 
 happened: That they asked him what he was doing, and he said 
 he was getting a very high-priced man to teach them to do the work 
 easier? 
 
 Mr. Gantt. Something like that; something in that line; that 
 he was getting the best man he could to teach those people to do 
 the work easier. That is what we are working at. We are trying 
 to find the easiest, and the easiest is usually the best, way of doing 
 the work, and then teaching those who would not normally learn 
 that method, — teaching them and helping them to apply it." 
 
 Digitized by Microsoft® 
 
59 
 
 (d) Kent (Record, pp. 3442-3443). 
 
 "Mr. Brandeis. Will you state what you found to be the atti- 
 tude of the officials in charge of the work there toward the system, 
 so far as the introduction of it was concerned? 
 
 Mr. Kent. One of the foremen said that if they went back to 
 the old method of doing things, he would quit his job; that he would 
 not stay there. 
 
 Mr. Brandeis. What did the superintendent say? 
 
 Mr. Kent. Why, he was most enthusiastic. His labors were 
 considerably lightened, it seemed, and he was able to give more 
 attention to the actual planning of the work of the shop. 
 
 Mr. Brandeis. Do you know whether that shop is an open shop 
 or a closed shop? 
 
 Mr. Kent. It is a union shop." 
 
 (e) Hathaway (Record, pp. 3064-3067). 
 
 "Mr. Brandeis. What is the attitude of the men in your shop 
 towards this work? 
 
 Mr. Hathaway. The men who work in our shop under this 
 scheme seem to be perfectly satisfied and contented with it. We 
 have had some men who have left our employ for a time and worked 
 under the old conditions, who were always very desirous of coming 
 back to us. After they once work under this scheme and under- 
 stand it, they seem to prefer it to the old scheme. 
 
 Mr. Brandeis. Has there been at any time any complaint or is 
 there any complaint in your shop that the men are being speeded up 
 or made to work harder? 
 
 Mr. Hathaway. No, none that I have heard. 
 
 Mr. Brandeis. Your shop is situated in what might be called 
 the machinery manufacturing district, is it not? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Brandeis. You are surrounded by quite a number of manu- 
 facturers? 
 
 Mr. Hathaway. Yes, there are a great many. 
 
 Mr. Brandeis. How many machinery manufacturers? 
 
 Mr. Hathaway. There are five or six large representative con- 
 cerns, among them the Baldwin Locomotive Works, which, of course, 
 is of itself much greater than all the rest of them together. 
 
 Mr. Brandeis. The Midvale Steel Company? 
 
 Mr. Hathaway. That is some distance from us, but in the same 
 
 Digitized by Microsoft® 
 
60 
 
 city. Right in our immediate neighborhood there is William Sellers 
 & Company, Harrington & Sons, the Newton Machine Tool Works, 
 and there are a few smaller concerns, but those are the principal ones. 
 
 Mr. Brandeis. At the time last spring of the general strike in 
 Philadelphia, what was the attitude of the men in your shop as 
 compared to what it was in the surrounding shops? 
 
 Mr. Hathaway. We had one man who joined in the sympathetic 
 strike or general strike, whereas Baldwin's had some 2,000 or more, 
 I believe; William Sellers had about from one-half to two-thirds of 
 their force; Newton Machine Tool Works had practically all of 
 their men out; Harrington had most of their men out. We had 
 one man out. 
 
 Mr. Brandeis. Did you yourself make any effort to retain the 
 men? 
 
 Mr. Hathaway. No. 
 
 Mr. Brandeis. At that time? 
 
 Mr. Hathaway. No. 
 
 Mr. Brandeis. Is it absolutely true that the action of the men 
 in remaining, all except that one out of seventy-five, was entirely of 
 their own motion? 
 
 Mr. Hathaway. Yes. 
 
 Commissioner Prouty. Is your shop a union shop? 
 
 Mr. Hathaway. Our shop is an open shop; we have some union 
 men and some non-union men. 
 
 Mr. Brandeis. How is it with regard to these other shops you 
 have spoken of? 
 
 Mr. Hathaway. They are all in the same fix. 
 
 Mr. Brandeis. They are all open shops? 
 
 Mr. Hathaway. Yes. 
 
 Mr. Trandeis. They are none of them closed shops? 
 
 Mr. Hathaway. I think in Philadelphia there are practically no 
 closed machine shops. I do not know of any. 
 
 (/) Kendall (Record, pp. 3436-3437). 
 
 "Mr. Brandeis. In the Plimpton Press, which is a printing and 
 binding establishment, complete, you have certain departments in 
 which there are a number of union men? 
 
 Mr. Kendall. We have. 
 
 Mr. Brandeis. And have you, in those departments, met any ob- 
 stacles on the part of the unions to the introduction of those features 
 of scientific management which have been applied? 
 
 Digitized by Microsoft® 
 
61 
 
 Mr. Kendall. We have met with no obstacles whatever; but 
 the same attitude which applies to non-union employees has also 
 applied to the union employees. The average American workman, 
 in fact the average workman of any country, appreciates lack of 
 trouble. Scientific management does away with his trouble. The 
 bonus feature is an additional help, and the union and the non- 
 union men are welcoming these features which do away with their 
 trouble, and are also welcoming the bonus features." 
 
 (g) Emerson (Record, pp. 3558-3562). 
 
 " Mr. Brandeis. In your effort to improve the efficiency of various 
 concerns, has the question come up for consideration as to any diffi- 
 culties or obstacles presented by the workmen themselves and par- 
 ticularly by the labor unions? 
 
 Mr. Emerson. Occasionally that question has come up. On the 
 whole, that has not been our difficulty. 
 
 Mr. Brandeis. What difficulty has there been? 
 
 Mr. Emerson. The difficulty has been generally in persuading the 
 management to take the necessary steps to bring about the results. 
 When I say "management" I mean somebody above the ordinary 
 workman. It might be the foreman or the superintendent, or it 
 might be the general manager. It might be anyone that is in the line 
 above the workman. " 
 
 17. Scientific Management Applicable to all Businesses 
 
 Experience has already demonstrated that the princi- 
 ples of scientific management are general in their applica- 
 tion, and can be introduced into practically all businesses, 
 and all departments of any business. They have been 
 successfully applied in private competitive businesses, like 
 machine shops and factories, steel works, and paper mills, 
 cotton mills and shoe shops, in bleacheries and dye works, 
 in printing and book-binding, in lithographing establish- 
 ments ; in the manufacture of typewriters and optical in- 
 struments, in construction and engineering work, and in 
 establishments not commonly regarded as business, and 
 
 Digitized by Microsoft® 
 
62 
 
 recently to some extent they have been introduced by the 
 United States Government into the manufacturing de- 
 partments of the Axmy and Navy. 
 
 The application of these principles has been no less suc- 
 cessful in the field than in the shop. They have been found 
 applicable alike to the most skilled and to the most un- 
 skilled labor, to conditions where men work in large num- 
 bers together in a single factory, and where they are more 
 widely scattered. 
 
 They have been applied in businesses of great complex- 
 ity, in which the articles manufactured differed widely, 
 as well as in businesses where the work is largely repeti- 
 tive, and this result would seem to follow necessarily 
 when one considers what scientific management is — thati 
 
 ' is, what the main principles are which compose it : namely, 
 preparedness ; separation of planning from performance ; 
 the analytical study of every operation, with a view to 
 determining the best possible methods, tools and machin- 
 ery; the management thus performing its proper func- 
 tion, — of enabling the work to be done under best possi- 
 ble conditions ; and the keeping of a current record of 
 the efficiency of men, equipment, and materials. 
 
 L*"~ The evidence produced as to the value and general 
 applicability of the principles of scientific management 
 was deemed by the Commission to have been so conclu- 
 sive, that upon the suggestion of the acting Chairman 
 we refrained from calling additional witnesses to this 
 point. 
 
 "Commissioner Prouty. Mr. Brandeis, you can hardly add any- 
 thing to your case by calling the representatives of some other in- 
 dustry and showing these same principles have been applied there. 
 It is perfectly evident that if they have been applied in one case they 
 can be applied in another analogous case. If the railroads were to 
 show, in answer, some facts which tended to prove that they could 
 
 Digitized by Microsoft® 
 
63 
 
 not be applied to railroad operations, then you might desire to go 
 further; but it seems to me you have made out your case now as far 
 as it can be made out. If you have anybody who can show this 
 method has been applied to railroad operation, he would be a mate- 
 rial witness." (Pp. 1387-3388.) 
 
 "Commissioner Clements. ... Of course this thing could be 
 carried on and on almost indefinitely with respect to different lines 
 of business. 
 
 Mr. Brandeis. It could, indeed. 
 
 Commissioner Clements. And when you have shown that fact, 
 and what you have done with respect to several kinds of business, and 
 the details of it, so far as it may be helpful to any extent, does not 
 that illustrate the possibilities in all lines of business just as well as 
 if you were to call them in other cases? 
 
 Mr. Brandeis. It does to my mind absolutely, but I did not 
 know that others, who had given less consideration to the subject, 
 might be so ready to accept the conclusion which we ourselves have 
 formed. I will endeavor to act upon the suggestion of the Com- 
 mission." 
 
 (Mr. Clements was then sitting as Chairman during Commissioner 
 Knapp's absence.) (Record, pp. 3389-3390.) 
 
 18. Scientific Management is Applicable to Railroads 
 
 No good reason can, it is believed, be alleged why scien- 
 tific management is not applicable to most departments 
 of railroads. 
 
 (a) Towne (Record, pp. 3292-3300). 
 
 "Mr. Brandeis. Have you considered, Mr. Towne, at all, the 
 question of the possibility of economies in connection with railroad 
 operation? 
 
 Mr. Towne. I have often given it casual thought, in connec- 
 tion with my general interest in this great subject; and since this 
 investigation commenced, and my attention as President of the 
 Merchants' Association of New York was directed to the shippers' 
 side of the case very strongly, I have given a great deal of thought 
 to the effort to see how my experience in industrial management 
 
 Digitized by Microsoft® 
 
64 
 
 and manufacturing might indicate to me the possibilities of similar 
 results in the field of railroad management. 
 
 Although I confess to no experience in that field, I have had the 
 same opportunity that any citizen has to come in contact with it, as 
 a business man and otherwise. In addition to that I have a pretty 
 large acquaintance among railroad men and have frequently dis- 
 cussed with them the problems that they are working out in this 
 direction, so that I have some general knowledge; but none that I 
 pretend to class as expert knowledge. 
 
 Mr. Brandeis. However, have you any opinions or suggestions 
 on the subject which you think would be of value to the Commis- 
 sion or might possibly be? 
 
 Mr. Towne. Why, it seems to me that there are almost as great 
 possibilities for self-help on the part of the railroads as there are 
 and have been proved to be on the part of manufacturing industries. 
 
 They have a great many problems that are similar, and some 
 that are identical. Take the case of their machine shops and re- 
 pair shops, which are quite a large element in their organization and 
 in their total outlay. They have precisely the same conditions as 
 exist in any machine shop or car-building shop which is devoted 
 to a similar work of a general kind. 
 
 I have no doubt whatever that the systems which are being so 
 successfully developed now, in many private establishments, for 
 increasing the efficiency of machines and of men, in machine shops 
 and foundries and wood-working establishments, can be utilized 
 and availed of in the corresponding shops of the railroad companies, 
 especially the large ones. 
 
 Commissioner Lane. Do you know that they are not? 
 
 Mr. Towne. I imagine that they are being availed of in some 
 places and to some extent. I should doubt, exceedingly, that they 
 are availed of widely, or else, from my general reading in engineering 
 matters, I would have known something about it; and I doubt 
 whether, in any case, they are availed of as fully and effectively 
 as they are in some private establishments. For one reason, the 
 incentive is wanting. The railroads are not operating, in this respect, 
 at least, under the competitive conditions which private industries 
 are, and they lack the stimulus which the private establishment 
 has, and sometimes has acutely, as my own did in the years after 
 1893 — the stimulus to take up and study and solve problems of 
 this kind. The men who are responsible for the management of 
 
 Digitized by Microsoft® 
 
65 
 
 these particular railroads that I have been speaking of have little 
 or no pecuniary interest in it, and their superior officers have none 
 except of the general character of their responsibility to their next 
 higher officials and to the stockholders. But there is not the same 
 sense of acute personal, direct responsibility that there is in a pri- 
 vate corporation, and especially in a corporation where the chief 
 owners are the chief managers. 
 
 The experience that has been gained under conditions of that 
 kind, which are the most favorable conditions, is open to the rail- 
 roads for study and for approbation and utilization, if they see fit 
 to seek it and avail of it. 
 
 But I see other directions in which, it seems to me, the railroads 
 are far behind the times in these matters, and in several directions. 
 One of them is in the effort to utilize modern mechanical skill and 
 ingenuity and experience in every productive industry that I am 
 familiar with, and I know something about quite a number of them. 
 Inventive ability and experience have developed wonderful changes 
 in the last twenty-five years, in the last ten years, in the substitu- 
 tion of better machines, machines that are largely automatic in 
 many cases, and in the more intelligent application of human labor, 
 even to machines which are unavoidably not automatic. 
 
 In every mechanical industry there is a constant effort to study 
 this problem, and to achieve further success in it. In fact, I think 
 most people who have been in touch with it feel that, with all the 
 wonderful things that have been accomplished, we have only made 
 a beginning, and that greater results are surely before us in the 
 future. 
 
 On the part of the railroads, I fail to see any corresponding effort. 
 I do not see that the railroads have awakened to the existence of 
 these conditions, so far as their employment of manual labor in 
 the performance of the work of the railroads is concerned. And 
 manual labor constitutes a very large part of the expenditures of 
 every railway, in the handling of freight, of baggage, of the manipu- 
 lation of traffic, and so on — ■ it is all manual labor. And as to the 
 cruder parts of it, the railroad companies to-day are employing the 
 same means of utilizing manual labor as the Egyptians did, or would 
 have done if they had had railroads in those days. 
 
 Commissioner Lane. Will you be a little bit more concrete on 
 that proposition? 
 
 Mr. Towne. I will. To take a somewhat minor example: All of 
 
 Digitized by Microsoft® 
 
66 
 
 us citizens who have to travel on the railways are unpleasantly 
 familiar with the crudity of the systems employed at present, or 
 lack of system, in handling passengers' baggage. We know how our 
 baggage is maltreated and damaged, and any one who will think of 
 it for a minute will see that there has not been the faintest effort to 
 apply modern mechanical appliances to the handling of baggage, 
 except in a few of the great terminals where they do use an elevator 
 to hoist it from one level to another. The witness who preceded me, 
 Mr. Dodge, has made it the business of his life to design conveying 
 machinery, and there are four or five other large establishments 
 and many smaller ones in this country who make that their sole 
 business, designing and building machinery for the conveying of 
 materials of all kinds. It is a surprise to me that they have not 
 taken up this problem, on their own initiative; but I am quite sure 
 that any or all of them would be glad to take it up on the initiative 
 of the railroad companies, and endeavor to find methods for handling 
 baggage mechanically, at least in the larger terminals, if not in the 
 smaller stations. 
 
 Whatever may oe possible in the way of handling baggage me- 
 chanically, a vastly greater field exists in the possibilities of handling 
 freight mechanically. It is done already, by some of the great coal 
 carriers, and to some extent, in the handling of coal, and in a few 
 eases that I have seen, in the handling of sand, materials that will 
 flow, like sand and coal. But no effort has been made that I know 
 of, to apply mechanical methods to the handling of the vast volume 
 of merchandise which the railroads handle at every terminal, onto 
 their platforms, from the platforms to their cars, back again from 
 the cars to the platform, and from the platform to the truck, or what- 
 ever else it is carried away in. Millions of tons of material, taking 
 the country as a whole, are moved every day, and moved by the 
 crudest kind of labor. I am absolutely sure, as to some cases — I 
 believe in a great many cases — probably in all of the great termi- 
 nals, that mechanical appliances could be successfully availed of, at 
 least for some part of that work; probably for a great part. But, so 
 far as the public knows, no effort has been made in that direction 
 whatever. 
 
 I see another field, drawing an inference from my own experience 
 as a manufacturer, in which I believe that the railroad companies 
 have not gone far, and some have not ventured at all; and that is in 
 what has come to be known, under the nomenclature of this modern 
 
 Digitized by Microsoft® 
 
67 
 
 scientific industrial system, as functional management. I can illus- 
 trate or explain that in a few words, best by reference to a factory or 
 workshop of the average kind and size. 
 
 Under old conditions, what was sometimes referred to as the 
 military system prevailed, in which the foreman or superintendent 
 of each department or room was responsible for everything done in 
 that room, — the discipline, the adjustment of wages, the allotment 
 of work, the instructions to the workmen as to what they were to do 
 and how they were to do it, the inspection of the product of the 
 workmen, and, in fact, everything pertaining to the management 
 of the work in that room was concentrated in the hands of one per- 
 son, possibly having some assistants. 
 
 Under the functional system, on the contrary, the management 
 of one room will be covered by four, five, six, and in some cases even 
 ten different persons, the responsibility of each of whom runs on 
 functional lines. One man will have to do with the employment of 
 help. Another with the adjustment of wages and piece rates; an- 
 other with the allotment of work, its distribution to the different 
 men and machines; and another with the ascertainment of labor 
 costs, and so on. The functional system, where it has been availed 
 of intelligently, is proving itself over and over again to be the sounder 
 system of the two. It is in line with the specialization in all of the 
 sciences, in medicine, in law, and so on, that a man who devoted his 
 whole time to one single line of study or research or work becomes 
 more skillful and expert in that than if he attempts to diffuse his 
 labors over a multitude of operations. That higher or intensified 
 skill results in the ascertainment of better methods; much to the 
 operation in the plant where the functional system is in use. 
 
 We can see that if the railroads are not already fully availing 
 themselves of the functional system, there must be a very great op- 
 portunity for them to do so. They could do that in their office work, 
 in their great central administrative offices, which each one of the 
 large systems has to maintain, and in the subordinate offices, which 
 many or most of them maintain at other points, and throughout the 
 operative system, wherever a large number of men are gathered to- 
 gether under one control and for a combined result." 
 
 (b) Emerson (Efficiency, p. 80). 
 
 "Railroad practice has many standards, chiefly those of specifica- 
 tion, of construction, and of times for passenger trains. No railroad 
 
 Digitized by Microsoft® 
 
68 
 
 has ever determined any cost standards either for maintenance or 
 operation of equipment, maintenance of way, or consumption of 
 fuel, yet there is no railroad in the country on which each one of 
 these cost standards could not be determined in a very short time 
 and with very close accuracy, at a cost equal to the saving effected 
 in a single month." 
 
 (1) Maintenance of equipment, consuming about 20 
 per cent of all operating expenses, involves conditions in 
 machine shops, locomotive and car shops and yards, similar 
 in large measure to those under which scientific man- 
 agement has been most successfully applied in private 
 businesses. 
 
 The fact that the Atchison, Topeka and Santa Fe Rail- 
 road and the Canadian Pacific Railroad Company have, 
 to some extent, introduced principles of scientific manage- 
 ment in their machine shop and locomotive shops with good 
 results, is an illustration of this. 
 
 (a) Emerson (Efficiency, p. 80). 
 
 "When each unit of locomotive repair is standardized, the sum of 
 the units shows a cost between $0.03 and $0.06 a mile for mainte- 
 nance. The actual average costs on the railroads are between $0.06 
 and $0.12 — therefore twice what they ought to be. The standard- 
 ized cost of maintaining freight cars is as low as $30 per annum. 
 Actual average costs run from $45 on some roads to over $100 on 
 others." 
 
 (b) Emerson (Record, pp. 3540-3542). 
 
 " Commissioner Prouty. Proceed, Mr. Brandeis. 
 
 Mr. Brandeis. If you desire, I can read from this book, " Meth- 
 ods of the Santa Fe," the figures for the different years, which may 
 perhaps answer some of the questions which you have asked the 
 witness in regard to the effect during a period of years. 
 
 This is on page 37 of Mr. Going's book. 
 
 Repairs and renewals to shop machinery and tools. 1902 to 1903 : 
 Total charges, $401,809; cost per locomotive, $306.96; cost per 
 tractive unit, $9.0136. 
 
 Digitized by Microsoft® 
 
69 
 
 1903 to 1904: Total charges, $487,170; cost per locomotive, 
 $339.96; cost per tractive unit, $.0132. 1904 to 1905 : Total charges, 
 $486,620; cost per locomotive, $334.68; cost per tractive unit, $.0127. 
 
 1905 to 1906: Total charges, $367,474; cost per locomotive, 
 $225.03; cost per tractive unit, $.0081. 
 
 1906 to 1907: Total charges, $315,844; cost per locomotive, 
 $176.35; cost per tractive unit, $.0060. 
 
 1907 to 1908: Total charges, $290,809; cost per locomotive, 
 $157.11; cost per tractive unit, $.0053. 
 
 In other words, between 1903-4 and 1907-8 the repairs and renewals 
 to shop machinery and tools dropped from $487,170 to $290,809; the 
 cost per locomotive from $339.96 to $157.11 ; and the cost per tractive 
 unit from $.0132 to $.0053. 
 
 Mr. Going says at page 58 in his book: 
 
 "The table below shows the economy in the labor account for 
 engine repairs over a five years' period." 
 
 He then goes on to detail that in the fiscal year 1902-3 the labor 
 cost was $2,362,000; the number of locomotives owned was 1309, 
 and the cost per engine was $1,804. 
 
 In the fiscal year 1903^ the labor cost was $3,000,122, the number 
 of locomotives owned 1433, and the cost per engine $2,094. 
 
 In the fiscal year 1904-5 the labor cost was $3,336,963, and the 
 number of locomotives owned was 1454, and the cost per engine was 
 $2,309. 
 
 For the fiscal year 1905-6 the labor cost was $2,739,195, the num- 
 ber of locomotives owned was 1633, and the cost per engine was 
 $1,677. 
 
 In 1906-7 the labor cost was $2,800,250, the number of locomo- 
 tives owned 1791, and the cost per engine was $1,564. 
 
 In 1907-8 the labor cost was $2,763,825, the number of locomo- 
 tives owned was 1851, and the cost per engine was $1493. 
 
 In other words, the cost per engine drops from $2,309 in 1904-5 
 to $1,493 in 1907-8. 
 
 Commissioner Peouty. That is the labor cost? 
 
 Mr. Brandeis. That is the labor cost, yes, sir." 
 
 (c) Emerson (Record, pp. 20-22). 
 
 " Railroad repair shops throughout the country do not show 50 
 per cent efficiency on an average as regards either materials or labor, 
 A case observed was as follows: 
 
 A foundry made, for a railroad shop, big cylinder bushings. These, 
 
 Digitized by Microsoft® 
 
70 
 
 after being machined in the railroad shop, weighed about 375 pounds, 
 but the original casting weighed 1,780 pounds. It took three days to 
 remove 1,405 pounds of cast iron. It should have taken less than 
 one day if the rough bushing had weighed only 600 pounds. The 
 difference in result is reduced to financial expression in the following 
 table: 
 
 Comparison of Costs 
 
 As made Standard 
 
 Weight, rough 1,780 600 
 
 Cost per pound $0.04 $0.04 
 
 Total cost $71.20 $24.00 
 
 Labor 3 days 1 day 
 
 Cost of labor, $3.00 per day $9.00 $3.00 
 
 Machine charge, $2.00 per day ... . $6.00 $2.00 
 
 Overhead charges, $2,00 per day. . . . $6.00 $2.00 
 
 Total cost $92.20 $31.00 
 
 In this same shop the most efficient men were checked up and 
 found to average only 60 per cent in actual output, compared to 
 realizable standards. At the end of two years of persistent effort many 
 of the best men were brought up to 110 per cent efficiency, but there 
 were still men as low as 10 per cent as to actual output compared to 
 reasonable standard — the same standard on which others realized 
 110 per cent. 
 
 In another big locomotive shop, a careful study of the machines 
 which had been in operation for 20 years showed that the location of 
 75 per cent of them would have to be changed, so as to facilitate the 
 orderly, effective, and economical progress of work from one to the 
 other. This and other eliminations of wastes doubled the output, 
 with less labor costs. 
 
 In consequence of general shop inefficiency and operation ineffi- 
 ciency due to similar causes, locomotive repair costs, on Western 
 railroads, run from $0.08 to $0.12 a mile; yet a most efficient superin- 
 tendent of motive power on a large transcontinental road succeeded 
 in dropping to $0.05 and had only touched the high spots, his well- 
 considered opinion being that $0.04 was reasonably attainable. On 
 another transcontinental road, repair costs per mile were dropped 
 from $0.1374 to $0.08 by persistent effort, but when the efforts were 
 relaxed expenses immediately rose to $0.17. They should have come 
 
 Digitized by Microsoft® 
 
71 
 
 down to $0.06. Eastern and Southern roads, with their small en- 
 gines, better coals, and better waters, are not to imagine that they 
 show any higher efficiency. They are on the whole worse. 
 
 A leading eastern road established piece rates in its car shops and 
 then limited the earning power of the men. When there was a sud- 
 den demand for increased car repairs, the limit was taken off and the 
 men doubled their earnings. Then the limit was put back. The 
 large Eastern roads have signally failed in attempts to increase the 
 efficiency of their repair shops. 
 
 In a leading Southern shop many men were receiving 12-hours pay 
 for 3-hours work." 
 
 (d) Kent (Record, p. 3442). 
 
 " Mr. Brandeis. Will you state what you found to be the attitude 
 of the officials in charge of the work there toward the system, so far 
 as the introduction of it was concerned? 
 
 Mr. Kent. One of the foremen said that if they went back to the 
 old method of doing things, he would quit his job; that he would not 
 stay there. 
 
 Mr. Beandeis. What did the superintendent say? 
 
 Mr. Kent. Why, he was most enthusiastic. His labors were 
 considerably lightened, it seemed, and he was able to give more at- 
 tention to the actual planning of the work of the shop." 
 
 (2) Maintenance of way consuming nearly 20 per cent 
 of the total operating expenses of railroads, involves con- 
 ditions in many respects similar to work done by con- 
 tractors, and to field work done in connection with other 
 private businesses. 
 
 (a) Emerson (Efficiency, pp. 80-81). 
 
 Standards of maintenance of way vary, but innumerable assays 
 of actual work show a maintenance-of-way labor efficiency of scarcely 
 more than 30 per cent. 
 
 (b) Towne (Record, pp. 3202-3303). 
 
 "I think there was one other point, Mr. Brandeis, if you will al- 
 low me to add to this somewhat long answer to your innocent ques- 
 tion: The previous witness has explained, I believe, what is known as 
 
 Digitized by Microsoft® 
 
72 
 
 time-study, which is a very modern, recent invention. There were 
 spasmodic attempts to understand and utilize it a good many years 
 ago, but it was not intelligently understood and utilized until within 
 the last few years. It has been shown by Mr. F. W. Taylor and Mr. 
 Gilbreth and others that the use of the time-study system, which is 
 the application of brains to manual operations, will produce results, 
 not merely in the operation of intricate machinery, but equally in 
 the performance of the simplest operations, such as the handling of 
 pig iron, the handling of coal, the laying of bricks, and so on. 
 
 The railroads are immense employers of unskilled labor. They 
 use it in their construction work, in the maintenance of tracks, the 
 laying of ties and of ballast and of rails, and in all of the repair work 
 in their terminals and stations and of their stock; and, as far as I 
 know, with a few exceptions, the exceptions being chiefly in the re- 
 pair shops of the railroads, no effort has been made, or no test or 
 experiment has as yet been made, to ascertain the extent to which 
 time-study may be utilized in railroad work, to intensify production, 
 with the result, as it is proved in industrial operations, of simultane- 
 ously reducing cost and increasing the wages of the workmen." 
 
 (c) Gilbreth (Record, pp. 3416-3417). 
 
 " Mr. Brandeis. From your own experience in your particular 
 business of contracting and building and construction, what part 
 of railroad operations or constructions could you speak of with per- 
 haps the authority of experience as to its applicability there? 
 
 Mr. Gilbreth. Any hand labor, shoveling, picking, lifting, or 
 carrying of heavy weights in their thousands of applications, whether 
 it is the loading of freight or unloading of freight or any of those 
 things. We have seen the art of shoveling, which we used to con- 
 sider consisted of handing a man a shovel and seeing that he worked. 
 We have seen that they have now established certain standards 
 before we pass the shovel to the man, and by so doing we can get him 
 to do three times as much work. I have seen cases, I know of cases 
 that I have seen with my own eyes where it was nine times as much 
 work with very little more effort on the part of the workman." 
 
 (3) Transportation consuming about 50 per cent of the 
 total operating expenses of railroads, involves operations 
 in which it is clear that scientific management would pro- 
 duce large results. For instance : 
 
 Digitized by Microsoft® 
 
73 
 
 (a) The cost of fuel is on all railroads a large per cent 
 of the total transportation expenses. It has been demon- 
 strated that, by proper instruction, fuel consumption 
 could be reduced at least one-half. 
 
 Emerson (Efficiency, p. 81). 
 
 Staff determinations with a dynamo car showed that 1,000,000 
 B. t. u. in the coal were amply sufficient to furnish power to move 
 a 1,000-ton train one mile. The actual coal charged to locomotives 
 always contained more than twice as many, often three times as 
 many, B. t. u. 
 
 Emerson (Record, pp. 3551-3553). 
 
 Mr. Brandeis. You spoke, Mr. Emerson, of the fuel bill being a 
 particularly heavy bill, and I understand as affording a special oppor- 
 tunity for economy. Have you made any particular study or obser- 
 vation on that subject? 
 
 Mr. Emerson. Yes. 
 
 Mr. Brandeis. What? 
 
 Mr. Emerson. On the Santa Fe we set up a system of records, or 
 we had them set up for us, so we could utilize them, showing how 
 many pounds of fuel they used per thousand train ton miles, freight 
 train ton miles, and the average for the whole road was at that time 
 261 pounds. We started in then, by various suggestions and hints 
 that were given to various officials, to see if we could not bring that 
 fuel consumption down, and it did slowly come down. I think it 
 ultimately reached 239 pounds. 
 
 We sent a young man up to the Chicago, Milwaukee & St. Paul to 
 investigate their fuel records, which were among the best in the 
 United States as to practices in the use of fuel at that time, and we 
 found they averaged in the neighborhood of 175 pounds of fuel con- 
 sumed. So we came back, and more or less set up as a provisional 
 standard the 175 pounds. 
 
 About that time the superintendent of motive power wrote to me 
 that a dynamometer car running on the road showed a record of 80 
 pounds. I ridiculed the record. I was skeptical. I would have to 
 be shown. I checked up the fuel records and knew that 80 pounds 
 was not a likely figure at all. That letter of mine was sent to this man 
 that was running the dynamometer car and he wired back: "Mr. 
 Emerson is the party we have been looking for. If there is anything 
 
 Digitized by Microsoft® 
 
74 
 
 the matter with our record, we want to know how to improve 
 them. Please send him here at once, or one of his representatives, 
 to check us up." That called me very nicely, so I put one of my 
 assistants, the same man that had been making locomotive studies, 
 on the run out of Chicago, and told him to find out by actual weight 
 just exactly how many tons of coal were necessary to move a thou- 
 sand tons a mile. His report came back 78 pounds. I said, "Try it 
 over again." I think the next time it was 81 pounds. He made three 
 tests of that kind. By that time I was convinced that the dyna- 
 mometer car man knew what he was talking about. I then went in 
 person and spent some time with that car, and I found that it was 
 actually consuming, on the most careful tests possible, in the neighbor- 
 hood of 80 pounds, as against the average that was checked up of 
 from 260 pounds down to 240 pounds. 
 
 (b) The terminal expense, particularly the loading 
 and unloading of cars containing shipments in the less 
 than car load lots, presents perhaps the most burdensome 
 of all expenses of railroading. Nearly everywhere on 
 American railroads the methods of loading and unloading 
 pursued are substantially the same as those used in the 
 days of the Pharaohs. 
 
 (See Towne, above, p. 75.) 
 
 (c) The purchase, care and use of materials and the 
 utilization of plant present also wide fields for the appli- 
 cation of scientific management. 
 
 (d) The avoidance of the terrible delays and irregu- 
 larities in freight transportation offer a large field for in- 
 creasing efficiency with incidental economy. 
 
 19. How Railroads can Co-operate to Reduce Costs 
 
 Railroad operation presents an especially favorable 
 opportunity for co-operation through the introduction of 
 scientific management. 
 
 Digitized by Microsoft® 
 
75 
 
 The fact that the railroad business is subject in its ac- 
 counting to the orders of this Commission, makes it pos- 
 sible for the Commission to require that each company 
 ascertain and report to it the simple ultimate unit costs of 
 each operation in every department of the road. The 
 further fact that the railroad business is largely non- 
 competitive makes it proper to publish these costs, and to 
 give to each railroad the benefit of knowing the lowest 
 elementary unit cost of each operation attained by any 
 railroad, and how it was attained. The ascertainment of 
 the ultimate unit cost is necessary before an instructive 
 basis of comparison can be had. The knowledge that the 
 average annual cost per locomotives of repairs, renewals 
 and depreciation on one railroad is $3832.37, and on an- 
 other is $2709.27, would be a very unsafe guide for deter- 
 mining the relative economy of operation on the two rail- 
 roads. The conditions on the two railroads, and standards 
 of renewal and depreciation may vary so that the company 
 expending the greatest sum may actually have conducted 
 its locomotive use and repair more economically than the 
 railroad expending less. What is needed as a basis for 
 comparison are the ultimate unit costs ; the cost of turning 
 a wheel, the cost of laying a tie or rail under particular 
 conditions, and even that relatively simple operation must 
 again be analyzed and separated into its ultimate simple 
 elements. 
 
 The attainment by each railroad, for each operation, of 
 the lowest cost attained by any railroad for that operation, 
 would not, however, satisfy the demands of scientific man- 
 agement. To attain only the best that has been done pre- 
 sents rather the beginning than the end of economies which 
 scientific management contemplates. With the ascertain- 
 ment of the lowest existing costs the study must be made 
 whether there are still waste time and effort involved in 
 
 Digitized by Microsoft® 
 
76 
 
 the best existing method of performing that particular 
 operation, and of eliminating such waste when determined. 
 And when that shall have been done, there will still remain 
 the wide field of research for a better way of doing the 
 same thing. 
 
 The railroads have combined to maintain rates. There 
 can be no proper objection to their co-operating in reduc- 
 ing costs — co-operating with a view to dividing among 
 themselves the great task set by scientific management ; the 
 task of investigating how in each operation in each particu- 
 lar department greater efficiency can be attained, and how 
 costs can be reduced; and then imparting each to each of 
 the others the results of such investigations. 
 
 (a) Towne (Record, pp. 3000-3002). 
 
 "I see an opportunity for the railroads, also, to avail themselves 
 of another thing, in which they have the advantage over private 
 establishments, and that is by the adoption and utilization of a well- 
 planned scheme of comparative statistics. If all of the railroads were 
 keeping their accounts upon a common system, at least as to the more 
 important of their operations, and if those accounts were made 
 interchangeable, each railroad would have the advantage of learning, 
 from month to month, what all the other railroads were doing, and 
 of seeing how near the head or how near the feet of the procession his 
 own system was. There would be a rivalry, a stimulus to each one 
 of them, to know the direction in which their management was less 
 efficient and economical than in the average or the best; and to try 
 to catch up with these who were ahead, and to learn how they had 
 reached these better results, and to attain the same end. 
 
 The railroads can afford to exchange information of that kind, 
 because they are not directly competitive; whereas the private 
 establishments exist under conditions of such intense competition 
 that none of them can afford to open its books and records to its 
 neighbor or its competitor and show how its economies have been 
 attained, and therefore put the competitor into position to utilize 
 those without any reciprocal compensation. As a matter of fact, 
 no such interchange of information exists in competitive business. 
 
 The railroads could have that. I believe that, by availing of a 
 system of comparative statistics and interchanging that information, 
 
 Digitized by Microsoft® 
 
77 
 
 the railroads would derive incalculable assistance in studying the 
 effects of that system, where they exist, and in improving their 
 methods of management throughout. 
 
 (6) Emerson (Record, pp. 3564-3565). 
 
 Mr. Bbandeis. Is there any way you have to suggest to the 
 Commission as to how the railroads collectively, or the railroads 
 indirectly, through the Commission, could contribute largely to the 
 reduction of cost of operation? 
 
 Mr. Emerson. I think we have a splendid example of the kind 
 of work that ought to be done in the Department of Agriculture of 
 the United States. If an attempt should be made by every farmer 
 to put on his own staff of specialists as to the growth of crops, he 
 would find it very difficult, he could not do it; he could not find the 
 specialists; he would find the burden very heavy. The Department 
 of Agriculture collects the experiences of men all over the United 
 States, and, for that matter, all over the world, and places those ex- 
 periences at the disposition of those farmers who want to make use 
 of them. Not only that, but they send out men to instruct communi- 
 ties and to instruct districts, to show them how it can be done. They 
 pick up certain farmers who become models for their own community, 
 and other farmers can imitate them. 
 
 The trouble in studying the records of the railroads as presented to 
 the Commission is that they do not rest on what we call funda- 
 mental units. The figures at the top are accurate, but when you 
 go further down you get into a fog, and you find you are in absolute 
 uncertainty. It is one of the most difficult things in the world, for 
 instance, to find out what mileage a locomotive has made. In the 
 earlier reports the train mileage, I believe, is reported. It is not the 
 locomotive mileage. On certain roads they count the train mileage 
 as locomotive mileage, or sometimes the accredited amount of one 
 hundred miles a day. Some railroads do not keep the records. So 
 that what is needed is that there should be reliable records and a 
 reliable exchange of information and opinion and instruction as to 
 these fundamental units that go to build up the cost of the opera- 
 tion of a railroad. 
 
 Mr. Brandeis. And there should be, should there not, Mr. 
 Emerson, a publication of those records under the control and direc- 
 tion of the Interstate Commerce Commission, so that the public, 
 through its authorized representatives, might aid and assure them- 
 
 Digitized by Microsoft® 
 
78 
 
 selves of the correctness and the use of that information, with a 
 view to the reduction of cost, an operation in which the public is so 
 largely interested? 
 
 Mr. Emerson. I believe that is largely the practice of the Agri- 
 cultural Department, except there it is voluntary, I believe. 
 
 20. Eliminating Graft as a By-Product 
 
 There is a persistent belief current that graft prevails 
 to a large extent in the administration of many of our 
 railroads. The recently discovered gross frauds on the 
 Illinois Central (one of the railroads supposed to be well 
 managed) is only an example. The investigation made 
 by this Commission in 1906 into the " Discrimination and 
 Monopoly in Coal and Oil," reported to the House of 
 Representatives under date of January 25, 1907, disclosed 
 such graft among officials of the Pennsylvania Railroad 
 Company (page 26) under the administration of its great 
 President, Mr. Cassatt, and likewise on the Baltimore and 
 Ohio Railroad Company (page 28). 
 
 The frequent publication of unit costs of all of the rail- 
 roads would be a great deterrent to graft. It would 
 afford a practical means for disclosing, particularly in 
 connection with the purchase of supplies and in construc- 
 tion work, the existence of excessive costs which are nearly 
 always an incident of graft. A like publication of speci- 
 fications and costs of work done under contract would 
 conduce to the same end. The huge size of most of our 
 railroad organizations makes such complete and intelli- 
 gent publicity an essential condition of freedom from 
 graft. 
 
 Scientific management, including a skillful application 
 of the bonus system, would aid in the elimination of graft 
 in ways other than publicity. By giving to various classes 
 of employees a financial interest in securing particular 
 
 Digitized by Microsoft® 
 
79 
 
 low costs as was done by the Brighton Mills, the graft 
 of any employee would injure his fellows as well as the 
 company; and the self-interest of the other employees 
 would afford the railroad the best protection. 
 
 Scheel (Record, p. 3373). 
 
 " Mr. Brandeis. What had been the attitude of the men in one 
 department toward any lack of efficiency in the other departments? 
 
 Mr. Scheel. The critical spirit in one department against the 
 performance in a preceding department has grown quite gradual 
 where it affects the performance in the succeeding department. In 
 other words, if the weave shed is going to suffer because of the poor 
 performance of the filling winders, friendship does not any longer 
 stand in the way of the management hearing of such incorrect work 
 on the part of the filling department. 
 
 Mr. Brandeis. Then is it or not a matter of more or less frequent 
 occurrence that the men themselves will come to the management 
 and call attention to obstacles or defects which prevent the free and 
 uninterrupted flow of work through the mills? 
 
 Mr. Scheel. I think so, yes, much more so than before." 
 
 21. Railroads are not Scientifically Managed 
 
 It is, no doubt, true that some of the railroads are 
 competently managed, so far as that can be done under 
 the old methods. Other railroads, while not managed 
 competently as a whole, are no doubt managed compe- 
 tently as to particular departments, divisions, or opera- 
 tions. But so far as appears in evidence, scientific man- 
 agement has not been introduced into any department of 
 any railroad operating within official classification terri- 
 tory. None of those, persons who have been most care- 
 fully following the subject of scientific management have 
 ever heard of any such introduction. 
 
 (Towne: Record, p. 3294.) 
 (Kent: Record, p. 3449.) 
 
 Digitized by Microsoft® 
 
80 
 
 No railroad operating within official classification ter- 
 ritory has even made the claim that it had introduced the 
 principles of scientific management. And we submit that 
 in view of the following notice given by us at the close 
 of our evidence on the subject of scientific management, 
 it would not be open to any railroad to claim now that 
 it had introduced scientific management. 
 
 " Mr. Brandeis. May it please your Honors, as we understand the 
 situation, in view of the evidence that we have introduced, we sup- 
 pose the burden of proof to remain upon the railroads, if this question 
 of their need is at all to be considered, to show that they have at- 
 tained, by means of scientific management, the possibility in econ- 
 omies in operation which we believe do not exist. 
 
 So far as we are advised, there is not, within official classification 
 territory, any railroad which has adopted methods of scientific man- 
 agement in matters relating to maintenance of way, or maintenance 
 of equipment, or to the handling of freight, transportation or terminal. 
 
 Perhaps I ought to say that certain information was given me in 
 confidence to the effect that upon one railroad, in one small part of 
 that railroad, in one department of it, certain principles of scientific 
 management have been introduced, with the same excellent effects 
 in the way of economy which our witnesses have testified to. As that 
 information was given in confidence, and as it ha& only come to me 
 very indirectly, I have not thought it proper to call it otherwise to 
 the attention of the Commission. 
 
 But if the claim is made on behalf of any railroad in official classi- 
 fication territory that it has instituted principles of scientific manage- 
 ment, obtaining, therefore, the economies possible to which we have 
 called attention, then I ask, in the first place, the privilege of exam- 
 ining, in a proper manner before an examiner (because I suppose this 
 Commission would not have the time to permit me to do it) — I ask 
 the privilege of examining before an examiner of this Commission 
 the operating man or men of that railroad that makes such a claim. 
 And I ask, in the second place, for the privilege of having our ex- 
 perts go into the shops, if shops they be, or otherwise to go where the 
 work is done, and have access to the records of such railroads, with 
 the view to determine whether or not, upon such inspection and 
 assay as an expert only is competent to make, that claim has any 
 
 Digitized by Microsoft® 
 
81 
 
 foundation in fact; in order that we may, not only through an ex- 
 amination of the operating men themselves, but also through that 
 expert examination to be made by our experts who have examined 
 the premises, the methods and the accounts, report to this Commis- 
 sion what the facts are." 
 
 22. Scientific Management does not Involve Large 
 Capital Expenditures 
 
 The economies introduced by railroads within the last 
 fifteen years — straightening curves, reducing grades, 
 strengthening road beds and bridges so as to permit the 
 use of large cars and engines, and purchasing these — 
 have been attained only through large expenditures of 
 capital. The economies incident to scientific management 
 are attained, in the main, without additional capital in- 
 vestment. The introduction of scientific management 
 would involve new expenses, mainly in the employment 
 of new classes of labor; and their employment would be 
 attended by the elimination of others. Indeed, the econo- 
 mies incident to scientific management, instead of calling 
 for new capital, dispense to a large extent with the neces- 
 sity of new capital. Many of the economies result from 
 a fuller use of plant and equipment, and in the carrying 
 of smaller stocks of materials. One of the commonest 
 incidents of scientific management is the discovery that 
 a plant believed to have been inadequate for the business 
 undertaken proves to be too large or over-equipped. 
 
 (a) Gantt (Record, pp. 3475-3476). 
 
 " Mr. Gantt. Is it or not one of the incidents that you find in the 
 introduction of your work that manufacturers have over-equipped? 
 
 Mr. Gantt. In many cases the manufacturers have over-equipped 
 their plants without knowing what capacity they can get out of the 
 individual machines. They have never studied the capacity of 
 individual machines, completely and fully. 
 
 Digitized by Microsoft® 
 
82 
 
 Mr. Brandeis. And it is one of the important incidents, I under- 
 stand, of your system that the machine is rated and the capacity of 
 the machine is considered, and the cost of it, as constantly as the 
 cost of labor, of the individual man? 
 
 Mr. Gantt. We take the individual machine and find out what 
 its limitations are, what its capacity is. We frequently find a ma- 
 chine which has been built by a very good builder that has some 
 weak point in it. By fbdng that weak point, putting in a steel gear 
 where we have a cast iron gear, for instance, >ve can double the out- 
 put of that machine or in many instances increase it 50 per cent. 
 We go on under the full development of this system to keep on find- 
 ing out what the limitations of that machine are until we make per- 
 haps a half dozen changes in it and get it up to its highest capacity. 
 The most expert man in that work is Mr. Barth. He has devoted 
 himself especially to that. He has made great improvement in many 
 machine tools." 
 
 (b) Gantt (Record, pp. 3474^-3475). 
 
 " Mr. Gantt. Yes, sir. With regard to that, I would like to say 
 this: We have spent a tremendous amount of money in developing 
 machinery and we have spent very little money in developing men. 
 If we should spend one-tenth the amount of money we have spent 
 in developing machinery to develop men, I firmly believe we would 
 double the average efficiency of the whole country. That is belief. 
 Of course I cannot prove that. But I am firmly of the conviction 
 that if we should spend one-tenth the amount of money and energy 
 we have spent in developing machinery in developing men, we would 
 raise the whole standard tremendously. 
 
 Mr. Brandeis. Is it a fact that in none of the business with which 
 you have been connected, have you found, however great the expendi- 
 ture upon instruction, that in every case however great it was it 
 proved to be profitable? 
 
 Mr. Gantt. I have found it is the most profitable investment 
 that any manufacturer can make, to instruct and develop his work- 
 men. I might go further and say that a great many manufacturers 
 are beginning to realize that and they are doing quite a little in that 
 regard." 
 
 Digitized by Microsoft® 
 
83 
 
 23. Saving $1,000,000 a Day 
 
 The estimate that at least $1,000,000 a day could be 
 saved by the pursuit of methods of scientific management 
 was first made by Mr. Harrington Emerson. 
 
 It is submitted that, with aggregate operating expenses 
 by the railroads in 1908 of $1,669,938,717, of which $1,035,- 
 437,528 was for labor, this estimate appears moderate. 
 
 Mr. Emerson states how he arrived at his conclusion. 
 
 (a) Emerson (Record, pp. 3543-3551). 
 
 " Mr. Brandeis. You have been quoted, Mr. Emerson, as stating 
 that in your opinion, by the introduction of proper efficiency system 
 or scientific management, the railroads of the United States could 
 effect an economy of perhaps $300,000,000 a year, or not less than 
 $1,000,000 a day. 
 
 Mr. Emerson. That is correct — that is, I have been quoted as 
 having stated that. 
 
 Mr. Brandeis. Is it your opinion that that is the fact? 
 
 Mr. Emerson. At least that. 
 
 Mr. Brandeis. And in which of the departments of the railroad 
 operation is it that large economies can be effected, in your opinion? 
 
 Mr. Emerson. In all the departments except traffic. The effi- 
 ciency of the traffic by my standards is very high; that is, the 
 efficiency of expense in the traffic departments. 
 
 Commissioner Prouty. Just what do you mean by the traffic 
 departments? 
 
 Mr. Emerson. That is one of the classifications, one of the five 
 classifications, is it not? 
 
 Commissioner Prouty. You mean the traffic department as 
 classified by the Interstate Commerce Commission? 
 
 Mr. Emerson. Yes. 
 
 Mr. Brandeis. Would you state to the Commission on what you 
 have based your estimate that so large an economy in operation is 
 possible? 
 
 Mr. Emerson. There were four different ways of attacking the 
 
 Digitized by Microsoft® 
 
84 
 
 problem. The final conclusion is a comoosite from the results ob- 
 tained by the four different methods. 
 
 First, the long experience I have had in investigating intimately 
 American shops all over the country had led me to realize that cer- 
 tain inefficiencies existed in different classes of labor, inefficiencies 
 due to the absence of proper standard methods. These inefficiencies 
 averaged fairly well over the whole country. They averaged fairly 
 well in all businesses. Taking those inefficiencies as my judgment 
 determined them and applying them to the bills for labor and for 
 material in the railroads, I arrived at a certain result, which aggre- 
 gated in excess of $300,000,000. That was one way of getting at it. 
 
 Another way of getting at it was to take — 
 
 Commissioner Prouty (interposing). Let us see if we under- 
 stand that. Did you take the amount of the payroll in those depart- 
 ments and say that there was ten per cent actual inefficiency in this 
 labor and subtract ten per cent from the amount of the payroll? 
 
 Mr. Emeeson. No, I took the report, for instance of 1908 — 
 
 Commissioner Prouty (interposing). I do not mean that ten per 
 cent was the figure you used, of course. 
 
 Mr. Emerson. I understand. The total labor bill for 1908 was 
 $1,035,000,000. That covered all of what I classify as personal ser- 
 vices as distinguished from materials and capital charges. Those are 
 the three elements of expense. These are classified as to different lines 
 of operation. I put an efficiency opposite each one of these classes, 
 based on my general knowledge, that would have applied to other 
 business as well as to the railroad business, and, as you state, mul- 
 tiplied it and arrived in that way at an estimate of the inefficiency 
 of labor. 
 
 Commissioner Prouty. And that was over $300,000,000? 
 
 Mr. Emerson. Oh, no, not for the labor alone. 
 
 Commissioner Prouty. Do you remember how much it was for 
 labor alone? 
 
 Mr. Emerson. In the neighborhood of $240,000,000, I think it 
 was, for labor alone. 
 
 The next plan was to take the divisions as provided for by the 
 Interstate Commerce Commission, and using such knowledge as I 
 had in my experience, to check up the different operations like loco- 
 motive repairs, car repairs, shop machinery and tools, and track 
 work, and to take each item of the total bill for all the railroads — 
 
 Digitized by Microsoft® 
 
85 
 
 $1,667,000,000, I think, for that year — and place opposite those 
 items the inefficiency subdivided as to material and labor, and arrive 
 at another estimate. 
 
 Commissioner Protjty. What do you mean by "inefficiency of 
 material"? 
 
 Mr. Emerson. Engineers know very well and have determined how 
 much horse-power you ought to get, or how much water you ought to 
 evaporate from a pound of coal. If you are using a great deal more 
 coal than that, there is an inefficiency. There is an ideal result which 
 you ought to get which would be a horsepower from one-fifth of a 
 pound of coal. The highest attainment they ever get is a horsepower 
 from a pound. That is a very high ideal. If you find people are using 
 either eight or nine or ten pounds of coal per horsepower, it measures 
 a certain amount of inefficiency compared to the practically attain- 
 able. That is an illustration. The fuel is the largest single item of 
 expense, so a large amount of this saving might be from the fuel. 
 That is the second way of determining this waste. The third was the 
 comparative methods. All railroads are efficient in certain directions. 
 They are tremendously efficient in certain directions. Each railroad 
 has some particular spot in which it is more fortunate perhaps than 
 other railroads. Taking the different railroads of the country and 
 visiting them and investigating them, and finding out that one had 
 an efficient way as to maintenance of locomotives, another as to 
 maintenance of cars, that a third had an efficient way as to mainte- 
 nance of shop machinery and tools, and the fourth had an efficiency as 
 to maintenance of track; and taking all these different bright spots 
 that the railroads had evolved through the special genius of the men 
 connected with or interested in those particular departments, you 
 got a third standard — a standard, for instance, let us say, of six 
 cents a mile as being an adequate amount on the average to maintain 
 locomotives, or a standard of $35 as being an adequate standard to 
 maintain cars. 
 
 Mr. Bhandeis. Freight cars? 
 
 Mr. Emerson. Freight cars. Some months ago, when I was ad- 
 dressing the Railway Club in Pittsburg, I stated this standard of 
 $35 per car. Mr. Turner of the P. & L. E. was the spokesman 
 of the opposition. He said they had been long waiting to get a chance 
 at me, and the chance had now come; that they were tired of asser- 
 tions of this kind being made, that they were from Missouri and the 
 
 Digitized by Microsoft® 
 
time had come for a show down. He said: "Mr. Emerson states $37 
 a car. I want to know where he gets his facts and what right he has 
 to get up any standard of that kind." I told them about a number 
 of roads that had attained that, and the next day I went around to 
 see Mr. Turner. I said, "Turner, what does it cost you to maintain 
 your freight cars?" 
 
 He said, " I do not know. I never figured it out that way. I have 
 always figured it by the mile and not by the freight car." I said, 
 "Can you find out very easily what it is?" He said, "Yes." So in 
 the course of half an hour his chief clerk brought in the figures, show- 
 ing their cost of maintenance per car was $31.01. (Laughter). I very 
 much regretted that I had not known that fact at the time they had 
 me on the stand before the Club. 
 
 In the same way as to maintenance of locomotives. I think the 
 records of the Pittsburg and Lake Erie are probably among the 
 model records of the United States. In checking them up I found Mr. 
 Turner had accomplished the maintenance of his locomotives, that 
 are heavy power, for somewhere between $1200 and $1500, one of 
 the lowest records I know of in the United States. 
 
 That is the third way of ascertaining standards. That means 
 you can apply haphazard that standard to any road. It means it 
 gives you a general average on which you can base a conclusion. 
 That method checked up with the other two methods in revealing 
 losses aggregating not less than $300,000,000. 
 
 The fourth method was in particular. In connection with the 
 work of the Sante Fe we made an investigation or scientific investi- 
 gation, of which you have heard from the other gentlemen on the 
 same system. I took the costs as they were. I finally found out why 
 those costs were, what losses were occurring, and what could be done 
 by the management to eliminate those losses. We set up as a standard 
 of measurement, because you have to have some unit or measure- 
 ment, what has since been called the road unit. The road unit is a 
 combination of the locomotive mileage with its weight on driver. If 
 you take the locomotive alone, it may stand in the roundhouse for a 
 whole year and would have no repairs. If you take the mileage 
 alone, it might be a light locomotive running a number of miles, and 
 that would not be a fair measurement; but when you combine the 
 mileage the locomotive makes in the course of a year with its weight, 
 you have a unit that at least in some respects is better than the 
 unit of either the single locomotive or the locomotive miles. 
 
 Digitized by Microsoft® 
 
87 
 
 Using that unit, we found in the fiscal year ending 1904 the cost 
 of locomotives had been $101 per road unit as an average on the 
 whole system. By investigating the matter and inducing the man- 
 agement to put in various scientific studies, that was reduced in the 
 next year to $78, and in the third year to $74. At that time I pre- 
 sented to Mr. Kendrick an exhaustive study of locomotive opera- 
 tion, covering eighteen hundred locomotives and all their records 
 for five years, as to all the different divisions and the different causes 
 and the different items of expense. It was probably one of the 
 most complete statements of locomotive operation that was ever 
 made. I did not make it myself. It was made for me by one of 
 my assistants, and with the assistance particularly of the statistical 
 department. He could not have done anything if he had not had 
 access to the vast accumulation of statistics that had been collected 
 for use by that department. 
 
 Mr. Brandeis. You mean the statistical department of the 
 Santa Fe? 
 
 Mr. Emerson. Yes, the statistical department of the Santa Fe. 
 I stated at that time, in final report, that I saw no reason why the 
 Santa Fe should not be able to maintain its locomotives for fifty 
 dollars per road unit. That was thirty-three per cent lower than 
 they had attained at that time. I am still of that opinion. 
 
 That was the fourth method. The same system was applied to 
 other items of locomotive work. Taking up those four methods, 
 they all of them gave me substantially the same result, within 
 $30,000,000 or $40,000,000 of each other." 
 
 (c) Emerson (Record, pp. 3563-3564). 
 
 " Mr. Brandeis. Then your estimate as to the absence of efficiency 
 and of the possible saving is based upon the assumption and belief 
 and deduction that in the very large part of the service this high 
 efficiency attained in the Chicago-New York trains is absent? 
 
 Mr. Emerson. That is correct. I have studied the comparative 
 records of the leading railroads of the United States and tested them 
 by the unit standard cost. I have been in the shops of a great num- 
 ber of different railroads, my assistants have been in the shops of 
 nearly all of the important railroads of the United States, either 
 visiting them or working in them, so I have a very fair knowledge as 
 to the extent in the past. At the present moment I do not know, but 
 
 Digitized by Microsoft® 
 
up to the last year I know what the condition was in the various rail- 
 road shops of the country. 
 
 If I find that the unit cost of performance is high on a railroad, I 
 conclude that one of two things is true: either that they do not have 
 the methods of scientific management, or that there is an undue 
 number of dependent sequences. It is due absolutely to one of those 
 two things." 
 
 24. The Commission should Undertake an Independent 
 Investigation into the Application of Scientific Man- 
 agement to Railroads. 
 
 We respectfully submit that in no event ought the Com- 
 mission to approve the proposed increase in class rates 
 without making an independent investigation into the pos- 
 sibilities of applying scientific management to railroads. 
 We believe that the evidence already adduced will convince 
 the Commission that such application is possible, and that 
 it would result in the huge economy indicated. But, even 
 if the evidence does not carry to the Commission that full 
 conviction, it certainly is sufficient to create a reasonable 
 ground to believe — particularly in the absence of any 
 evidence from the railroads to the contrary — that the in- 
 troduction of scientific management in railroads is pos- 
 sible, and that its introduction would be attended by great 
 savings. If there is reasonable ground to believe this, the 
 railroads have failed to sustain their burden of proof, that 
 they need increased rates. 
 
 Towne (Record, pp. 3303-3305). 
 
 " In answer to the latter part of your question I would say this: 
 That I am not here as an opponent of the railroads. I am not here 
 to oppose the proposed increase of freight rates. I do not know 
 whether the railroads should have it or not. If they are entitled to it, 
 they ought to have it. But I see this fact, as a manufacturer; that 
 
 Digitized by Microsoft® 
 
89 
 
 whereas, in other industries, when we are confronted by too close 
 an approximation of our income to our expenditure, competitive 
 conditions rarely if ever permit us to open the interval to the point 
 which will cover a fair profit by putting our prices up. Our com- 
 petitors will not permit of our doing that. We have to meet the com- 
 petition, and therefore we are compelled to look within for the 
 remedy, — not to pass the burden on to others, but to face it our- 
 selves, and find some way of relief. We have done it — I am not 
 speaking of my own case only, but of manufacturers generally — we 
 have done it again and again, successfully, on a great scale in hun- 
 dreds of thousands of cases; and it is one of the many illustrations 
 of what is commonly understood as a blessing in disguise. 
 
 Under the stress of necessity, we have learned how to do things 
 better and more efficiently, more economically than ever before, and 
 thereby have made our plants and our capital more productive than 
 they otherwise would have been. 
 
 Speaking from that experience, and from my general knowledge 
 of such matters, not as an expert railroad man, I venture the opinion, 
 and with confidence, that if the railroads will apply these modern 
 methods of intensified management, scientifically planned and effi- 
 ciently carried out, they will thereby affect economies that will aggre- 
 gate many times in money value to them the benefit they would 
 obtain from the proposed increase in the freight rates." 
 
 But aside from this failure of the railroads to maintain 
 their burden of proof, we submit that the Commission 
 ought, before allowing any increase of class rates, to fully 
 investigate the subject of scientific management on its own 
 behalf. Such a course is in any event desirable because 
 much valuable evidence would be available to the Commis- 
 sion which is not available to us. This is particularly true 
 because there are witnesses directly or indirectly connected 
 with railroads particularly competent to testify on the 
 subject, whose appearance at our instance would have been 
 treated as an act of hostility to the railroads with whom 
 they are affiliated or on whom, in large measure, they are 
 dependent. An investigation undertaken by the Commis- 
 sion would secure this testimony and would also afford 
 
 Digitized by Microsoft® 
 
90 
 
 the opportunity of full inquiry into the existing practices 
 in railroad operation, and among other things, into certain 
 -experience in scientific management made by one of the 
 railroads which has not presented any evidence on this sub- 
 ject, and as to which we were not in a position to make any 
 disclosure to the Commission without breach of confidence. 
 
 Digitized by Microsoft® 
 
91 
 
 CONCLUSION 
 
 This investigation has developed clearly that the rail- 
 roads to meet any existing needs should look not without, 
 hut within. If their net income is insufficient, the proper 
 remedy is not higher rates resulting in higher costs and 
 lessened business, but scientific management, resulting in 
 lower costs, in higher wages and increased business. If 
 their credit is impaired, the proper remedy is not to apply 
 the delusive stimulant of higher rates, but to strengthen 
 their organizations by introducing advanced methods 
 and eliminating questionable practices. Thus they will 
 maintain credit by deserving it. 
 
 Let the railroads heed the judgment recently expressed 
 by a wise and impartial observer: 
 
 " The distrust of American railways by the people at 
 large is not due primarily to over-capitalization, to over- 
 charges, to undisputed instances of overbearing adminis- 
 tration, or to over-swollen fortunes made from unjust if 
 not illegal manipulation of railway properties. The dis- 
 trust is founded upon the belief that in the past railway 
 men as a class have not sought the truth with a determi- 
 nation to act upon it, but have fought the truth regarding 
 the social and economic relations of the railway. Railway 
 managers of the type which Mr. Willard represents to-day 
 cordially accept the principle of Government regulation, 
 the abolition of rebates, the withdrawal of the railways 
 from the practice of legislative lobbying, and the enforce- 
 ment by law of the use of safety appliances, such as air 
 
 Digitized by Microsoft® 
 
92 
 
 brakes and couplers on freight trains. But all these re- 
 forms when they were first introduced were persistently 
 and bitterly fought by many, if not most, of the influ- 
 ential railway men of the country. Is it surprising that 
 the public should wonder whether it may not be necessary 
 to force the doctrine of efficiency upon the attention of 
 the railways by some external authority like that of the 
 Interstate Commerce Commission, just as it has been nec- 
 essary to force upon their attention by legislative author- 
 ity the desirability of regulation, of the abolition of 
 rebates, and of the extension of safety appliances? " 
 
 Digitized by Microsoft® 
 
Digitized by Microsoft® 
 
Date Due 
 
 Byo^" 8 ^ 
 
 iSSEOffi 
 
 JAN ii .1982 
 
 ^PR3jNG 
 
 4~4W 
 
 zm**tf**rz 
 
 Cornell University Library 
 HE 1621.B8 
 
 Scientific management and railroads; bein 
 
 3 1924 002 677 114 
 
 Digitized by Microsoft® 
 
PROPERTY OF LIBRAFfY i __> r 
 
 NEW YORK STATE S&CL ^2J 
 
 INDUSTRIAL AND LABOR RELATIONS 3 : 
 
 CORNELL UNIVERSITY 
 
 Digitized by Microsoft®