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Author: 
 
 Hydraulic society 
 
 Title 
 
 "Management and the 
 high cost of living" 
 
 Place 
 
 [New York] 
 
 Date 
 
 [1919] 
 
Q4•9^^^l3^-p^ 
 
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 262 
 H99 
 
 Hydraulic society • 
 
 "Management and the high cost of living" as 
 developed at the meetings oi" the Hydraulic 
 society and the Compressed air society, Septem- 
 ber 2 5-26, 1919 at Lafayette hotel, Buffalo, 
 N. y. jNow York, 1919, 
 
 cover-title, A-D, 44-H, 26-C-32-C numb. 1. 
 
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 "MANAGEMENT AND THE HIGH COST OF LIVING" 
 
 as dsvelopel at the meetings of 
 
 THE BYDHAULIC SOCIETY 
 
 and 
 
 THE COMPRESSED AIR SOCIETY 
 
 September 35-36, 1919 
 
 at 
 
 Lafayette Hotel, Buffalo, N. Y, 
 
1)2.G2. 
 
 H99 
 
 Columbia ©nitietfttp 
 m%€tlpoflrt»$ork 
 
 LIBRARY 
 
 School of Business 
 
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 (A) 
 
 "MANAGEMENT AND THE HIGH COST OF LIVING" 
 
 'r 
 
 THE HYDRAULIC SOCIETY 
 President - C, W. Pank, 
 
 Vlce-Pres't, Fairbanks, Morse 
 & Co., Chicago* 
 
 THE COMPRESSED AIR SOCIKTY 
 President - George Doubieday, 
 
 President, XngersolLRand Co«i 
 New York, 
 
 Offices of the tuo Societies: 
 
 30 Church Street, New York, 
 
 After November 1, 1919; 
 
 450 Fourth Avenue, New York* 
 
 C* H, ROHRBACH, 
 
 Secretary. 
 
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 (B) 
 
 ttiemhPTft of^^1•>?i^^^i^® c^^®. recipients of thifi record who ace .not 
 Slscussions a lilf'^^/tl''^^ ^^ it«tify the participants in the 
 gi?en b^lS? ^^^ present at the two meetings is 
 
 i 
 
 f 
 
 \ 
 
 THE HYDRAUL IC SQCT1«:TY . SEPTEMBER 25, IQ7 Q 
 
 Anderson, L, B. , Sec. & Treas*, 
 
 Advance Pomp & '-ompressor Oo*. 
 Battle Creek, Mi.ch. 
 
 Cone, J. D*, AssU. Cxen»l, Salee Manager. 
 
 A« S. Cameron Steam Punp Works, New York^ 
 
 Emeny, F. J^, Chief Engineer, 
 
 The Deming Co*, Salem, Ohio 
 
 Fishwick, E. T*, General Sales Manager, ' 
 
 Worthington Pump and Machinery Corp., New York* 
 
 Gardner, J* W,, President 
 
 Gardner Governor Co%, Quinoy, 111* 
 
 Hall, R. £•, Vioe President, 
 
 The Goulds Manufacturing Co., Chicago* 
 
 Hartlieb, d. F., Vioe President, 
 
 Piatt Iron Works, Dayton, Ohio* 
 
 Heermans, T* M. . Hydraulic Departrrent, 
 
 Allis-Chalmers Manufacturing Co., Milwaukee, Wis* 
 
 MoHugh, A. L., Chief Engineer, 
 
 The Goulds Manufacturing Co., Seneca Falls, N* Y. 
 
 Newton, N, A*, Sales Manager, 
 
 National Transit Pump & Machine Co., Oil City, Pa. 
 
 Nye, R* G*, Production Manager, 
 
 Buffalo Steam Purtgp Co., Buffalo- N, Y. 
 
 Pank, C* W., Vioe President, 
 
 Fairbanks, Morse & Co., Chicago. 
 
 Peterson, A. G., Sales Manager, 
 
 Buffalo Steam Pump Co., Buffalo, N, Y* 
 
 (B) 
 
 n ' 
 
 > 
 
 ass: 
 
> 
 
 Raynolds, W. M,, 
 
 Worthington Pump and Machinery Corp., Holyoke, Mass 
 Wall, J, W«, Secretary 
 
 Gardner Governor Co., Quincy, 111. 
 
 Watson, H. L., Sales Manager 
 
 DeLaval Steam Turbine Co.. Trenton, N. J. 
 
 Wendt, Edgar F. , 
 
 Buffalo Steam Punp Co., Buffalo, N. Y. 
 
 Wendt, H. w., Treaanrer 
 
 Buffalo Steam Punp Co., Buffalo, N. Y, 
 
 West, E. D., General Sales Department, 
 Fairbanks, Morse & Co., Chicago. 
 
 Wltroer, R, C., General Managsr, 
 
 Blake Pump & Condenser Co., Fitohburg, Mass. 
 
 I 
 
 \ 
 
 THE COMPRESSED AIR snnTITTV - SE PTEMBER 26. ; ^Q]g 
 
 Albin, L. D., General Sales Manager. 
 Ingersoll-Rand Co., New York 
 
 Blackwood, A, E,, Manager, 
 
 Sullivan Machinery Co., New York 
 
 Copeland, P. K., President, 
 
 Sullivan Machinery Co., Chicago 
 
 '^^"'p?;^^** Manager Compressor & Engine Sales Division. 
 Chicago Pneumatic Tool Co., Chicago «*vi8ion, 
 
 Feldbftsh, H. A., 
 
 worthington Punp & Machinery Corp., Cinolnnati 
 
 Gardner, J. w.. President 
 
 Gardner Governor Co., Quincy, 111, 
 
 Jones, F. H., Vice President 
 
 Worthington Pump and Machinery Corp., New York 
 
 Eiefer, R. A., Manager 
 
 Gardner Governor Co., New York 
 
 Miller, H. H., Manager Laidlaw Sales, 
 
 Wbrthington Punp and Machinery Corp. , Cincinnati 
 
 -C- 
 
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 t 
 
 Chicago Pneumatic Tool Co., Chicago 
 
 ^^"ml/ch^r- ^'^^fSer Engine Department 
 
 Allie^Chalmers Manufaoturiag C?" m;aukee 
 
 ^^°^Buf; c^' ^^°'^*^'y-Trea8urer 
 Bury Compressor Co., Erie, Pa. 
 
 ^^11 n 'J* W., Secretary 
 
 Gardner Governor Co,, Quinoy, 111, 
 
 Walsh^ H. T«, General Salea ManAc«,. 
 Sullivan Machiner J Co f,"aifa|o 
 
 t 
 
 Of Ht Rohrbaoh, Secretary 
 
 30 Church Street, New York 
 
 after November 1, 1919: 450 Fourth Avenue, 
 
 New York 
 
 ^ 
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 (D) 
 
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President Pank: Gentlemen, I think that the Plan and Scope Committee 
 and the Secretary have planned something — the President has not 
 been taken into their confidence* The heading appearing before 
 me is ■•Management . • I find that the Plan and Scope Committee 
 and the Secretary are certainly managing the Society* So, 
 Mr, Secretary, perhaps you can enlighten us as to what *' is ex- 
 pected under this heading* 
 
 Secretary Rohrbach: Mr. Chairman and Gentlemen, a month or do ago 
 the Plan and Scope Committee of the Compressed Air Society had 
 a meeting, at which time Mr# Jones brought up what he thought 
 would be a very good topic for our next meeting; and your Plan 
 and Scope Committee agreed with him that it was a live topic for 
 discussion. I christened it "Management and the High Cost of 
 Living", 60 as to have a concrete heading for our program. 
 
 TERMS DEFINED 
 
 In tsilking the proposition over, Mr« Jones and Mr# Albin 
 defined the business situation today as being one where there 
 are really three partners in every Individual business* 
 
 First, there is, of course, "Capital" — capital is getting 
 a certain return which, in most cases, has been augmented by war 
 conditions and the subsequent train of high prices, so that, as 
 a general proposition, looking at the industrial situation as a 
 whole, you will find that the return on capital has gone up 
 relatively as much as general living expenses have gone up. 
 
 The next division or partner they defined as "Labor"—- 
 meaning by that all parts of the personnel of an organization 
 that come under the daily wage plan of payment. Labor, as the 
 ^J®^)Js^ion we have just had and as can be seen from the news of 
 the day, is getting its own, and some may think more than getting* 
 its own« 
 
 The third partner is the remaining personnel, not included 
 under "Labor", and which we have termed "Management " • That takes 
 in everybody not already covered, from the office boy up to the 
 President. 
 
 However, as this problem is being considered nowadays by 
 students of the subject, and economists, a fourth partner is added. 
 that is, the "Public", 
 
 The Committee on Industrial Relations of the Conmunity Council 
 or New York City, for example, had a meeting last week, and a 
 representative of the public on that Committee was some wellknown 
 laay in New York City, who according to the published accounts, 
 offered three out of the five resolutions that were passed 
 relative to profit-sharing and giving the public and labor a 
 voice in the management of business. 
 
 1-H 
 
suffPe^ tJ thf pt^J^?/*^*!? ^^^^ " *^s unanimously decided to 
 »)!ff !;*!LJ President that the Community Counolls offered the 
 
 S^iL fi^;*i7!»,^?^i'^®!?*f^"y ^o^ evoking oo-operation in 
 doing away with industrial unrest in the country. 
 
 «rnM«™'*/J!!J Tv °P®f^ °l "*^® public", in Connection with this 
 ?i ?i! i^fcJ^ the point brought home very forcibly, in t^ing 
 l?«o L^^!^if!f ♦? * }"Se corporation, last week, that it ^ 
 iil? exaStii^SiS^iJ^^J^ *^^ division of profits. 'l don»t know 
 i^olo^ t^?^ how big his company is, but he showed me his pub- 
 a;™«??s?^ t^v®"®?®®* *°' ^^* y®^'' ^»^io^ Indicated profits of 
 
 ?onv ?„*^«i^J^ ^^''^ °' ?®" million dollars and the Government 
 
 «?«L?!|\?f *^at over six million dollars for war taxes. So 
 ?t« fiL! fr.^i??-''^''' as represented by the Government, is getting 
 iit li^lLc i?® profits of business, and really does not need 
 
 ^L,^2o J5®v**^°? ^^ *^® proposition as we have started out to 
 discuss it here today. 
 
 H>,ar.<^^'^>i? ^^^^^^ to the Community Council's plea for profit- 
 ?he pJ^L^*r!".°^?^*^^ '^'^ ^^^'' i*^ *hi« particular ciise after 
 tMn?^Tf^!?* took out over six million dollars, it left some- 
 Si L^«JLr®*"'4^^°" dollars and judging by the size of 
 
 inLftif * 7 ?^* *^® oonpany must certainly have a pretty big 
 1?J« S«5? ^c ^^^""^ ^r** inventory to be able to produce a profit 
 v«,,%?r' I S^POse It was thirty or forty million dollars, if 
 i^«n if^ V,* fair return to capital on an investment of thit sort, 
 ^?VSS«f5 ^^* ?^*2®.^*.^* "°* "^r® *^^^ Six percent, there is 
 !SJvo,o ^^f*.^®!* !° divide, among probably 5000 or 6000 
 Sit f?;„^t?«J iLi^^* °?® 5^ °^y different angles coming into 
 JS«v ^Ji^,^* ^'^ **f* People do not take into consideration when 
 i?«inM«r«5 Pf of "-sharing, which is done so often from the 
 Viewpoint of dividing up sometbflii .else's profits. 
 
 tion "^Ic^^fi!* President of the Illinois Manufacturers' Associa- 
 m«S2'ii* 4°^»^^°,*,!'^^^®^ ^^^ discussions very aptly as "College- 
 ?K iSJ^ ; ,^<i«f *^at title i^e has published a pamphlet on 
 Jhf J^f^i^^^ situation, in which he brings out quite forcibly 
 rJ?«>f!? f®"" consideration of "Management" in business, and its 
 relative inportance in the scale of indxistry. 
 
 aliv Slinfr "S^^ Cost of Uving" hardly needs to be specif ic- 
 hor!^ ^®^^?®^' ^eryone is acutely familiar with it and has first 
 hand knowledge of what it implies. 
 
 Piar, ^l c^** ^S ***? proposition as it had been outlined by your 
 done ?«r »^® Committees: "What can be done, or what is bJiJg 
 8itmti?n?" ^^'°®'' ' *''*^^' *° "'*®* *^^® ^^Sh cost of living 
 
 SCOPE OF TNVESTIGATTn?J 
 
 a el Jul a ^^?L!^® *4^S ^"^^^ ®°'"® concrete basis, I sent out 
 r««if««i*LJ®**®' ^'^ questionnaire to about thr4e hundred 
 representative concerns in all branches of industry throughout 
 
 3>H 
 
A.^ 
 
 t 
 
 the United States, so as to get as general an expression of 
 opinion on the subject as possible. To help you get a better 
 understanding of the answers that I have gotten on this thing, 
 I want to read you this letter. (Reads) 
 
 *The outstanding feature of business today is the industrial 
 relations situation — in many industries it is coming to the 
 point where the manufacturer is seriously considering shutting 
 up shop or turning the plant over to the workers. 
 
 «But in the heat of the striiggle to meet the ever increasing 
 demands of "Labor*, what is being done for "Management", under 
 
 which term is included that vast body of workers clerks, 
 
 stenographers, bookkeepers, salesmen, and on up to, in many cases, 
 the higher executives of an organization- — who, unorganized, and 
 in sharp contrast to the wage workers, have been "left at the 
 post", so to speak: who are suffering severely— -and, as a rule, 
 uncomplainingly in the effort to make ends meet; who are wit- 
 nessing the humiliating spectacle of seeing even the most ordin- 
 ary forms of manual labor being paid far in excess of what trained 
 
 brain workers can command are they to be left to work out their 
 
 own salvation? 
 
 "Do business men want to drive the right arm of "Management" 
 into the folds of organized labor? Already there are signs 
 
 pointing in that direction witness the report of a recent 
 
 strike of newspaper men in Boston, and the meeting which it is 
 said has been held in New York to consider organizing some of the 
 classes of office help. 
 
 "Some of the manufacturers in the twO national trade organ*-* 
 izations which I represent are keenly interested in the solu- 
 tion of this problem, and I earnestly request your help to the 
 extent of replying to some or all of the questions on the ac- 
 companying sheet* 
 
 w If you are interested — and every manufacturer is vitally 
 interested in the answer — -I will be glad to send you a siommary 
 of the information that may be developed. " 
 
 (QUESTIONNAIRE) 
 
 »'l. TShat forms of bonuses, profit-sharing, stock ownership, or 
 other special monetary considerations, do you practice, and how 
 much is thereby added to the income of the salaried employes. 
 Stated in percentages of 1914 incomes? 
 
 "3. Do you help these employes in any other ways, such as making 
 loans to them so that they can make an initial payment on a home, 
 and thereby reduce their rental expense; or for the discharge of 
 doctors* bills, funeral expenses, or similar burdens which tend 
 to lower their efficiency through worriment; giving them the bene- 
 fits of wholesale buying, etc.? 
 
 3-H 
 
"3. Considering only regular salaries or ooznpensation, what 
 average percentage of increase over 1914 figures are you paying 
 to Managers of Sales, Finance, and the higher Executives? 
 
 "4# To their Assistajits, coming within the Executive Class? 
 
 If 
 
 5. To Salesmen? 
 
 f 
 
 "6. To general office workers, clerks, stenographers, bookkeepers, 
 etc#? 
 
 "It is sincerely hoped that you will not consider these 
 questions as being an attempt to pry into your business family 
 affairs, but will give them due consideration in a patriotic Co- 
 operative attempt to help a large number of your fellow busi- 
 ness ment • 
 
 One of the answers criticized the first paragraph of my 
 letter as being too pessimistic. Yet only last week the New York 
 papers published an account of a large jewelry manufacturing con- 
 cern (Groldsmith, Stern & Company) having offered to turn their 
 plant over to the workers* The workers had struck for higher 
 wages, which Mr# Goldsmith absolutely could not grant because 
 his sales had been made six months ahead, on the basis of pro- 
 duction costs that had been agreed upon with the men and as a 
 compromise he offered to turn the plant over to them, but they 
 refused to accept it which goes to show that my statement is 
 not very much overdrawn. 
 
 With reference to the third paragraph of my letter, the 
 papers quite recently have published reports to the effect that 
 the bank clerks in New York have organized a union and are 
 formulating demands upon their employers, with the alleged threat 
 of a strike if the supposed demands are not granted. 
 
 The questions you will note were of a rather personal nature, 
 and it was to be expected that a good many concerns wo\ild not 
 see their way clear to answer them and probably others did not 
 have the time. But the response really has been remarkable. 
 
 For example, I have a letter here from a concern that is 
 the leader in its branch of industry, which says: '•Your letter 
 was referred to at a recent meeting of our Board of Directors 
 and had the interested attention of the members present. ^ 
 
 There were quite a number of cordial replies, /many of them 
 gave, as fully as they could, just the information that I asked 
 for in this questionnaire. To enable you and the concerns to 
 whom a copy of this record will be sent to give due weight to 
 the data I have collected, I will give the names of those who 
 have replied* They are as follows: 
 
 4-H 
 
f 
 
 H. M. Wallis, President, J.I.Case Plow Works Co*, Racine, Wis^ 
 J. C. Hobart, President, The Triumph Electric Co., Cincinnati, 0» 
 George H. Barbour, President, The Michigan Stove Cot of Detroit 
 C* L. Sebring, President, The Sebring Pottery Co*, Sebring, 0. 
 £• T. Bedford, President, Corn Products Refining Co*, New York 
 Geo* W. Gair, President, Robert Gair Company, Brooklyn, N« ¥• 
 Arthur T, Davenport, General Manager, Sweet-Orr & Co. Inc., N» Y, 
 Frank L, Severance, Treasurer, Irving-Pitt Mfg. Co., Kansas City 
 Chester E* Rahr, Vice President, The Fiintkote Co», Boston, Mass.. 
 Ernest E, Bell, Vioe President, The Hydraulic Pressed Steel Co. 
 
 Cleveland, 0% 
 F« H. Dodge, Director of Sales, Burroughs Adding Machine Co., 
 
 Detroit, Mich. 
 Tt F. James, General Sales Manager, Brovm Shoe Co*, St« Louis, Mo. 
 m ^^^^ Asst. Treasurer, The American Thread Co., New York 
 Wt H. Cameron, Manager Industrial Relations, Eastman Kodak Co*, 
 
 Rochester, N. Y. 
 Ht E. Squier, Dept. of Education, Ford Motor Co*, Detroit, Mich. 
 Burt Bros. Philadelphia, Pa. 
 Wf Wt Anderson, Office Manager, Thomas Maddock^s Sons Co. 
 
 Trenton, N. J. 
 Chast Molloy, Manager Industrial Relations, The Solvay Process 
 
 Co., Syracuse, N. Y. 
 W. I. Clark, Service Director, Norton Conqpany, Worcester, Mass. 
 
 C. L. Rossiter, Underwood Typewriter Co., New York 
 
 F. M. Stowell, President, The Northwestern Knitting Co.iji 
 
 „ _ _^ Minneapolis, Minn. 
 
 Ht D. umittlesey. Vice President, The Sherwin-Williams Co., 
 
 -,, ^ ^ Cleveland, 0* 
 
 Edward Prizer, President, Vacuum Oil Co., New York 
 
 Paul H. Nystrom, Sales Manager, International Magazine Co., N.Y. 
 
 i# N. Haugbton, Secretary, The Haughton Elevator & Machine Co., 
 
 T v tn ^ Toledo, Ohio 
 
 J. E. Frederick, Secretary, Kokomo Steel & Wire Co., Kokomo, Ind. 
 
 ^. R. Shepard, Vice President, General Baking Co., Boston, Mass. 
 
 publi?ti^^^^^^ ^^^^ ^^^^ ^^ *^^ discussion to the following. 
 
 n>rof it-sharing in the United States" published By the Department 
 of Labor • Bulletin No. 308 
 
 "Abrief account of the Education /^rk of the Ford Motor Company" 
 published by that Company under date of Dec. 13, 1916. 
 
 ••Profit-Sharing Plan" Bulletins published by the Underwood 
 Typewriter Co* 
 
 ■The Text of the Larkin»Sompany's Offer to Its Enployees" pub- 
 lished in Printers' Ink issue of Sept. 18, 1919. 
 
 5-H 
 
r- 
 
 I- 
 
 H. M. Wallis, President, J. I .Case Plow Works Co., Racine, Wis, 
 J. 0. Hobart, President, The Triumph Electric Co., Cincinnati, Ot 
 George H* Barbour, President, The Michigan Stove Co. of Detroit 
 C* L. Sebring, President, The Sebring Pottery Co., Sebring, 0, 
 E. T, Bedford, President, Corn Products Refining Co%, New York 
 Geo. W, Gair, President, Robert Gair Company, Brooklyn, N« Y. 
 Arthur T, Davenport, General Manager, Sweet-Orr & Co. Inc#, N, Y, 
 Frank Lt Severance, Treasurer, Irving-Pitt Mfg. Co., Kansas City 
 Chester E* Rahr, Vice President, The Fiintkote Co#, Boston, Mass.. 
 Ernest E. Bell, Vioe President, The Hydraulic Pressed Steel Co. 
 
 Cleveland, 0. 
 F« H. Dodge, Director of Sales, Burroughs Adding Machine Co., 
 
 Detroit, Mich. 
 T, F. James, General Sales Manager, Brown Shoe Co., St# Louis, Mo. 
 m ^^^* Asst. Treasurer, The American Thread Co., New York 
 Wi H. Cameron, Manager Industrial Relations, Eastman Kodak Co., 
 
 Rochester, N. Yt 
 H* E. Squler, Dept. of Education, Ford Motor Co., Detroit, Mich. 
 Burt Brost Philadelphia, Pa* 
 W, W. Anderson, Office Manager, Thomas MaddockU Sons Co. 
 
 Trenton, N« J. 
 Chas. Molloy, Manager Industrial Relations, The Solvay Process 
 
 COf, Syracuse, N. Y. 
 W« I, Clark, Service Director, Norton Company, Wtorcester, Mass. 
 C, L* Rossiter, Underwood Typewriter Co., New York 
 F, M. Stowell, President, The Northwestern Knitting Co. 91 
 rj r^ nf^^ Minneapolis, Minn. 
 
 H. D, Whittlesey, Vice President, The Sherwin-Williams Co., 
 _,, ^ ^ , Cleveland, 0. 
 
 Edward Prizer, President, Vacuum Oil Co., New York 
 Paul H. Nystrom, Sales Manager, International Magazine Co., N,Y. 
 it N. Haugbton, Secretary, The Haughton Elevator & Machine Co., 
 T IT TT Toledo, Ohio 
 
 J. E. Frederick, Secretary, Kokomo Steel & Wire Co., Kokomo, Ind. 
 ^. H. ^hepard, Vice President, General Baking Co., Boston, Mass. 
 
 v^4^®ff^®^^®® ^®^® ^^^® ^^ *^^ discussion to the following 
 publications: ^' 
 
 •nProf it-sharing in the United States" published By the Department 
 of Labor • Bulletin No. 208 
 
 "Abrief account of the Education/t?rk of the Ford Motor Company" 
 published by that Company under date of Dec. 12, 1916, 
 
 "Profit-Sharing Plan" Bulletins published by the Underwood 
 Typewriter Co. 
 
 "The Text of the Larkin^gompany^s Offer to Its iinployees" pub^ 
 lished in Printers' Ink issue of Sept» 18, 1919. 
 
 5-H 
 
Profit Sharing Plans described by George W* Perkins at a meeting 
 of the National Civic Federation of New York on Sept. 11, 1919. 
 
 "College Made Utopias and Labor Ifardst" published by Dorr E. Felt, 
 President, Felt & Tiprrant Mfg. Co., Chicago, June 34, 1919. 
 
 Proctor & Gamble Company's Plan described in Printers* Ink issue 
 of March 37, 1919 and the October, 1919, number of the American 
 Magazine. 
 
 The So|/ay Process Oo.^s Pamphlet on Profit Sharing, Pensions, 
 Mutual Aid and ^Ifare Works, published Jan. 1, 1915* 
 
 ♦Salaried Men and High Living Costs" by E^ T. Bedford, President, 
 Corn Products Refining Co., published in New York Times 
 Aug. 17, 1919. 
 
 NOTE: 
 
 The following additional references may prove helpful 
 to anyone desiring to go further into the subject of 
 profit sharing, bonuses, etc.: 
 
 ••The Other Side of Profit Sharing" 
 Miller, Franklin, Basset & Co. 
 August 1919. 
 
 by %!• R. Basset, President, 
 published in "System" for 
 
 Articles by James A. Farrell, President, U. S^ Steel Corporation, 
 and Boyd Fisher, published in "System" March and April, 1916* 
 
 The Hilo Varnish Corporation Plan - Printers* Ink 
 Dayton Engineering Laboratory Co.Plan » " 
 
 Sears, Roebuck & Co. Chicago 
 
 Consolidated Gas Co., N. Y. 
 
 Endicott, Johnson & Co. ,Endicott,N.Y. 
 
 Morris & Co., Chicago 
 
 S, W. Strauss & Co., N.Y, 
 
 American Woolen Co. Home Building Plan 
 
 3/B7/19 
 6/19/19 
 
 Plans reviewed at 
 vario\is times in the 
 New York limes and 
 other papers. 
 
 It would hardly add to the interest of the discussion 
 if I read the letters that I have received, with the exception of 
 one or two oases where the writeifehave been apparently students 
 of the subject. As a matter of record, and for convenient future 
 reference, I will incorporate in the report those letters that 
 have contributed to the fund of inf^jmation that I have collected, 
 
 No doubt most of you have seen the advertisements that 
 the Hydraulic Pressed Steel Company ran in "The Saturday Evening 
 Post", in which they advocated a sq\iare deal and the need for 
 co-operation between Capital, Labor and Management. I have re- 
 prints of them here, if anyone should want to look at them* 
 
 6-H 
 
w.^,. 
 
 r 
 
 Mr* Bell, Vice President of that conoern, TRfhom I happen 
 to know, wrote me that it would be pretty hard for him to go 
 into details such as I have asked, but as he and his co-workers 
 have gone at the root of the entire industrial relations problem, 
 and as it is patent that they are on the right track in their 
 efforts to solve it, any expressions from them deserve our most 
 careful attention. I am therefore going to take the liberty or 
 reading Mr. Bellas letter, believing that he will not object to 
 my doing so, even though it does reveal some rather intimate 
 Hydraulic family matters. (Reads) 
 
 •To go into details of the questions which are suggested in 
 your communicat:.on of August 30th would make a volume. To recite 
 the experiences of the Hydraulic, develop the thinking which has 
 been done on the part of Hydraulic management and support the 
 conclusions which have been reached, would mean another volume. 
 
 •Personally, I should likdt very much to help you in con- 
 nection with the questionnaire. The Hydraulic Company would like 
 to help you, but your questions cover a very broad scope of opera- 
 tion, and one of the difficulties in connection with attempts 
 and failures to meet this situation is due to the fact that so 
 many firms try to do the material thing without taking into con- 
 sideration the psychology of the problem and the necessary educa- 
 tion of both factors - those who invest their money and those 
 who invest their labor - to a full appreciation of the rights, 
 the worth of each other, their dependence uqpon eaeh other and the 
 element of human eqxiity and justice, which must prompt everything 
 which is done in this connection in order to make it a success. 
 
 •In an attempt to cover your questions briefly, workers in 
 the Hydraulic are divided into three classes - those who invest 
 their capital, those who invest their brains and those who in- 
 vest their brawn. Those who invest their brains, and these in- 
 clude all who through right thinking and the application of bet- 
 ter thinking to their work can increase profits, that is, dovm 
 to the unit bosses in the shop, are sharers in the profits. Ihey 
 all have opportunity to purchase Hydraulic stock, and their share 
 in the profits may be used in payment for this .stock or not, just 
 as the individual may elect, but it is simply impossible, Friend 
 Rohkbfech, for me to go into this whole problem by letter* There 
 is bonus, profit sharing, there is opportunity for stock owner- 
 ship, which adds from 50 to 100^ to the salary income of the 
 managerial and operating class . r^ ^..^ * . 
 
 •Regarding Question No. 3, there is a Mutual Benefit Associa- 
 tion which takes care of sick benefits, death benefits, doctor 
 bills, funeral expenses, and has a Building and Loan adjunct from 
 which employes can borrow in the purchase of homes. 
 
 •It would mean reference to our Accounting Department and 
 considerable figuring to determine an accurate answer to your 
 third question. 
 
 •Sales managers, salesmen, office workers, clerks, stenog- 
 raphers, bookkeepers, etc., are all included in the distribution 
 of profit bonuses. 
 
 •Trusting that this may help you, but with full knowledge 
 that it cannot help you very much without getting the true spirit 
 of the proposition in the minds of every institution who takes 
 work of this character, I would refer you for further information 
 
 7-H 
 
to the reprints of copy which has recently appeared in some of 
 the popular weeklies over the signature of The Hydraulic Pressed 
 ftteel Company, and to an interview with our President, Mrt James 
 E. Foster, which appeared in the issue of Printers' Ink under 
 date of July 31st • 
 
 Yours very truly, 
 
 (Signed) Ernest E* Bell, 
 
 Vice President- • 
 
 There was also a very comprehensive letter from a large 
 eastern manufact\irer who criticised the pessimistic tone of my 
 communication^ He also has evidently made a study of the problem 
 of h\iman relations in business, and has contributed thoughts of 
 such value that I will read his communication to you. (Reads) 
 
 "I will attempt a general reply to yours of the 30th ult#, 
 but the brevity with which I am compelled to write will result 
 in rather a superficial summary^ 
 
 "I do not believe that there is a single instance where 
 industrial relationships between the executive and production 
 forces have awakened serious thought on the point of turning a 
 plant over to the iiorkers for operation* There are such happen- 
 ings in far-eastern Europe and leanings to the idea have appeared 
 in southern Europe^ but in this country there are not four in- 
 stances where the experiment has been tried, and in these cases 
 the workers held office and position on the basis of the satis- 
 factory showing they made to the investors. I consider your 
 first paragraph needlessly pessimistic on the social situation. 
 "No«l You refer to the demands of the factory worker and the 
 wage paid the producer as compared to the salaries of. the men 
 and women holding managerial and clerical positions. Herein, it 
 strikes me, you have undesignedly condensed the whole problem of 
 labor, and in reply I submit that were it possible for the exeeu- 
 tives of the business to draw as close to the factory operatives 
 as they do to the forces of their general offices they would soon 
 establish a kindlier relationship throughout and a better under- 
 standing on the part of the factory workers as to what, in jus- 
 tice to business, they can expect it to standi From what is here 
 stated, you can infer whether I think Management is paid too 
 little or Production too much. Every employer has got to answer 
 according to the showing of his own pay-roll and be helped to a 
 clear vision of it by the sort of atmosphere prevailing in his 
 organization. In our factory, we give bonuses on occasion, and 
 have found stock ownership the least desirable method of reward 
 except in the executive branches. The pay-roll is systematically 
 studied and, coincidentally, production is likewisst 
 "No. 3 We have a benefit association, through the medixim of which 
 employees may make loans for such emergencies as arise in life 
 and sufficient at times to take equity in a dwellings We main- 
 tain a restaurant at a loss of approximately five thousand dol- 
 lars per year, employ a trained nurse in a well-equipped dis- 
 pensary, and a physician and an oculist are in attendance at 
 
 8-H 
 
stated hours- Every employe, after one year's service, is cover- 
 ed under our Group Life Insurance Policy in aji amount equiva.Tent 
 to one yearns wages • 
 
 "NO* 3 The increase in the salaries of the Managers of Sales 
 and Managers of Production over 1914 averages 70%. 
 
 "No. 4 Their assistants and those holding higher positions in 
 the correspondence and purchasing departments, 75^« 
 "No* 5 To salesmen the advance over 1914 was 75?b. 
 "No. 6 To the clerical staff of the general office, varying ad- 
 vances, being from 50fo to 100^, according to ability, term of 
 service and position. Those who left our organization for em- 
 ployment elsewhere did so through ambitious notions and with the 
 idea of striking out independent ly# They regarded their training 
 as the best asset. 
 
 ■I cannot answer all your questions as fully as I would like. 
 Indeed, I do not think figures do much to elucidate a question of 
 this sort* So long as production is commensurate with salary, 
 the wage is a secondary consideration, and our people are being 
 educated to realize this. The psychological intolerance of em- 
 ployees who are slow producers by their fellows who realize that 
 production means money to them adjusts working conditions automat- 
 ically. • 
 
 NOTE: The remaining letters which were commented upon by the 
 Secretary are quoted below, in full, with the exception 
 of one or two who had asked that their remarks be not 
 published* 
 
 In view of the confidential nature of much of the informa- 
 tion disclosed, it is deemed necessary to withhold the names of 
 the writers, and the order in which they are given in no way 
 agrees with the listing of the names on a previous page. 
 
 "A" "Every employee that we have in these plants draws a bonus 
 of ten percent every five weeks. 
 
 "We have no welfare schemes except the Mutual Benefit Associa- 
 tion which is open to every employe. It takes care of various 
 funeral expenses also some doctor^s services etc., as well as 
 sick benefits. In your third question I should say * out 40>, 
 the same to number four and to number five that varies and they 
 are on a commission basis and their earnings run about double. 
 Number six is apparently the same as number three." 
 
 "B" "In your letter of August 30th you ask for answers to ques- 
 tions on several subjects mentioned. 
 
 "To the first would say that we have no arrangements that come 
 directly under this head, but in answer to clause 3 we do have, 
 "^e are always glad to do what we can to assist any of our 
 employees to enable them to secure homes* We do not go into the 
 payment of doctors* bills direct but every person in oyr employ 
 if married is insured in the Equitable Life Assurance Society for 
 $500.00 in case of death. Single persons are insured for 1300.00, 
 
 9-H 
 
we paying the entire premiume. We have ajiother organization that 
 takes care of thera in a different way in case they are sick or 
 injured. 
 
 "In answer to the third clause. The list of salaries, wages 
 ^A flfn^^^^S ^^ ^^^ largely increased during the years 1918 
 and 1919. It includes not only the manufacturing end but the of- 
 iice as well, not taking in the executives, but covers 5 and 6 
 clause. 
 
 "Our business is not like the automobile business. It does 
 not present the margin of profits it gives- We try to consider 
 ail of our employees as members of the family and treat them as 
 nicely as we can and give them all the benefits we can, " 
 
 ■C" 
 
 "Answering yours of the 30th, we are pleased to submit to 
 you, the Information requested:- 
 
 "#1. With 
 sharing plan is 
 
 the exception of factory labor, a bonus or profit 
 
 ^ in force with our employees, the maximtim distri- 
 
 ?+v°*v^?^'^*^"S to 10% of the employee's salary in accordance 
 witn the length of time they have been in our employ. This and 
 a comnission basis for the salesmen, and other plans in force 
 ^»lf:.®*^^^y ^ called a profit sharing plan. The Company is 
 ambitious to extend this sort of plan. The Company makes it 
 r«f^ S^ f*® employees, to some extent, to own stock in the 
 company. Basic salaries, drawing accounts, etc. are probably 
 raised from 35% to 50% over 1914. 
 
 ^,- ,"#3, There is no legitimate way we know of in which we 
 would not help any employee of thla Company who has been with 
 us long enough for us to become acquainted with their attitude 
 ana loyalty. 
 
 *#3. Twenty-five to fifty percent, 
 "#4. Twenty-five to fifty percent. 
 
 TQ,- **^* ^^1 salesmen work on a straight commission. Since 
 x»i* many of our salesmen who were then working for two thousand 
 dollars per year, are probably making from ten to twenty thousand 
 
 Q^-;i I ^^' ^®f^' ^^°^ "^i*'*' **^ey must deduct their expenses, 
 ^me of our salesmen this year have made even more, so the in- 
 ♦« ««f 4.?^^ to salesmen is estimated to average from one hundred 
 is ^ hlSn^,'^^^^^''®"*' "^^ interesting fact along these lines 
 an^^ont 7^^^ ^^® ®^® manber of dalesmen that we had in 1914 
 J?rni!i„ f^^ o^f.t'usiness is from ten to twelve times as large, 
 hive S^ inS$r^?f *J^* * flexible basis by which the salesmen 
 S Ln opportunity to earn without limit, is a great developer 
 of men. This must apply to all organizations. 
 
 •#6. Estimated from twsnty-fige to fifty percent. 
 
 ohx,,* "COMMENTS. We are thorough believers in a bonus, profit 
 sharing or any other arrangement which will allow the employees 
 
 10-H 
 
 I I 
 
I 
 
 to }^«o^per« We have by no means reached what we Xi»<»w to be the 
 proper sltxiatlon 9lb tu.r a.« ^nua, profit eharlnga stock ownership, 
 etc* are oonoerned. It is our belief that n^ concern can prosper 
 vrtiose employees do not prosper witn iz, In fact> actiaal prosper- 
 ity could not exist without all connected being justly prosperous. 
 
 ••Your questionnaire regarding the salaried man and the high 
 cost of living has been referred to this Department! We are very 
 glad to give you what infor»ation we have* To some of your ques- 
 tions I regret that more definite information cannot be given^ but 
 you will appreciate the limitations imposed by a large organiza- 
 tion such as our*8. 
 
 "The following answers are numbered to Correspond with 
 your questions: 
 
 •*!• The Company pays to all employees a yearly Wage Dividend 
 amounting to 2j% on the average. A special wage bonus was paid 
 during the war and now has become incorporated with the regular 
 wage* This varies between 10 and 15^. A stock ownership plan is 
 now being put into effect • Just what percentage this will add 
 to the employe's wagk or salary cannot be estimated. 
 
 "Due to the special bonus and Wage Dividend the salaried 
 man's wage is at present between 13 and 15^ higher than it was 
 in 1914, This figure is independent of regular wage increases* 
 
 "S* No regular program has been in effect for helping the 
 salaried employes in matters of housing, wholesale buying etc* 
 Special cases were, however, taken care of by the Company, A 
 aystemlzation of this welfare work is now under way* . 
 
 "St To the specific question regarding the percentage of 
 increase for various positions and types of work I can only give 
 you a general answer. These positions have received increases de- 
 pending entirely upon the productivity and increasing values of 
 the person. Hence, there is such a variation in the various in- 
 creases that I could not give you even a representative percent- 
 age, nor would an average have any meaning whatsoever." 
 
 "Wfe have your letter of the 6th inst, and our experience 
 confirms your statement that there is a widespread interest at 
 the present time in industrial relations work* We are pleased 
 to answer the specific questions asked in your circular letter 
 ox August 30th as follows:- 
 
 "(l) We are sending you under separate cover a copy of 
 our pamphlet "A Brief Account of the Educational Work of the 
 Ford Btotor Company", You will note in this that our plan places 
 a share of the profits in the bi-weekly pay envelope of every 
 employe after a probationary period of one month. The eligibility 
 of an employe to receive a share in the profits is determined 
 not through the grade of work that he does but through his per- 
 sonal habits and life. In other words, the oorapany reserves the 
 
 11-H 
 
right to withhold profit sharing from any Indlvidiial who is using 
 it in a detrimental manner in order that we may bring to his 
 attention the mistake that he is makings The minim\jun rate of 
 v5t00 per day established when the plan was inaugurated Janv.£.7v 
 13, 1914 was increased to $6t00 per day the first of January ci 
 this year. 
 
 "C3i No. 
 
 *(3) There is no established basis of compensation for 
 executives and we are accordingly not in position to give you a 
 comparison in this class that would be of value to you. 
 
 ■(4 J Same as No. 3 
 
 "(5) We have no salesmen. 
 
 •(6) The rate for general office workers has been increased 
 approximately thirty per-centt" 
 
 "1. Bonus plan now under consideration - wages advanced 
 
 on work over 1914 100^^ 
 
 •2t Yes. 
 
 •3. 50 to 75?t 
 "4, 75% 
 "5. 75^ 
 "6. 75% " 
 
 "Your letter of the 30th ult. was referred to at a recent 
 meeting of our Board of Directors and had the interested atten- 
 tion of the members present. 
 
 "While we are disposed to answer your inquiries as made and 
 lend assistance to your undertaking in every possible way, it , 
 will be difficult for us to be specific in the matter of percent- 
 ages* 
 
 "We have not failed to recognize the inportance of satisfy- 
 ing our Managing ajid Clerical Staffs during these critical times 
 and our payrolls have Increased very considerably. 
 
 "Taking your inquiries in the order made: 
 
 "1. Bonuses have been paid the higher salaried members of 
 staff, approximating 20^ per annum. 
 
 "2. On application, if an employe is in need of financial 
 assistance and circumstances warrant our assisting him, 
 he is so favored. 
 
 "With an eye to the general welfare, a store has been es- 
 tablished, financed by thia Company and run by a club organized 
 by employees. The store furnishes maiiy necessities to em- 
 ployees at cost. 
 
 "3. Approximately 45-l/2^. 
 
 "4, Same as No. 3. 
 
 13-H 
 
^5. Approximately 40^, 
 
 "6. Approximately 45^ to 50^* 
 
 "As already intimated we are interested in the subject you 
 are dealing with and trust the foregoing may serve you# We shall 
 be glad to have you send us, when summarized, a report on the 
 results of your xmdertaking, that we may learn how the problem is 
 being met by others*" 
 
 "H" 
 
 "Your letter of inquiry dated September 6th, 1919, deals 
 with a subject which is of the greatest importance, and it is a 
 pleasure to us to communicate whatever we can that will enable 
 the Society to compile a comprehensive summary. 
 
 "For several years our Company has set aside funds for the 
 assistance of employees along the lines mentioned in your* 
 questionnaire of August 30tht These funds we have foiond to be 
 best administered through a committee composed of the employees 
 themselves. This Committee is known as our Welfare Board and has 
 full power to make loans as well as give other assistance to 
 employees. 
 
 "Concerning your remaining questions, we havenU compiled 
 any detailed information as to the increased compensation for 
 the specific positions which yo^ mentiont In general, we know 
 that the average increases we have made vary between 30 and 50 
 per cent. This information is probably not as specific as you 
 want but I give it to you for what it is worth* 
 
 "We here will certainly be interested in the summary of 
 information which you prepare and shall look forward to receiv- 
 ing a copy, " 
 
 "I" 
 
 "Reply to your letter of the 30th has been delayed owing to 
 my absence and pressxire of other matters, 
 
 "Answering the questions you ask - 
 
 "1. For some years we have had a participating salary arrange- 
 ment with our heads of departments and a few others, the amount 
 so distributed depending upon the net profits of the business and 
 aaoounting on the average to better than 10^ of the 1914 Incomes . 
 The above Is applied to factory heads of departments as well as 
 office* 
 
 "3. While having no general plan, the management has always 
 taken an interest in the welfare of its emplpyees and endeavor 
 to be helpful to them in the solving of any of the general bur- 
 «f!??ff ri^^.f"^ ^"y manner which, as it is brought to the manage- 
 ment's attention, it could be done. Many times it has been alone 
 the lines mentioned of payment of doctors' bills, funeral expenses 
 
 13-H 
 
and at other times the assistance in securing of home, wholesale 
 buying, etc.^ this latter particularly since the watt 
 
 »3* 
 
 "4. 
 
 •6. 
 
 About 33-/l/3^» 
 
 About 50 /i< - 
 
 About 33-i/3^. 
 
 About 30^^ with further increases in contemplation. " 
 
 fijii 
 
 ■In reply to your letter of August 30, in which you outline 
 some questions which you would like for us to answer, I shall 
 attempt to do so briefly, 
 
 "l. We have a profit sharing plan which goes to the heads 
 of department?, which ii^creases their earnings from twenty to 
 eighty percent, according to the responsibility of the position 
 they hold; the executives, cf course, getting a larger percentage. 
 This Profit Sharing is payable in Common S^cck in the Company, 
 
 *3. We asGl.st any employe in our coi/ioany in buying Common 
 Stock in the cor.'^any, which makes them interested and also gives 
 them a savings account which they can build up and receive an in- 
 come from. We allow them to ma.co a nominal initial payment and 
 90 much every three to six liionihc, 
 
 "3t I would consider thao we are paying our Managers of 
 Sales, Finance J Production, and the hjghei- executives an increase 
 in salary of about 50 per cent over 1914 figures. 
 
 ••4, Off-hand, I would say they are receiving forty to fifty 
 percent more than they received during 1914* This refers to 
 assistants coming within the Executive Ciacs* 
 
 ■5. Our salesmen are fiu;uied on a ^orcmicaion basis; thereby, 
 their earnings are refiulatec^ by the volume of their sales. They 
 show by far the largest increase in anouiAt of earnings of any of 
 the employes connected vvith the company 
 
 "6. I would estimate that we are paying our General Office 
 help an average of 33-1/3 to 50 percent more than in 1914. 
 
 •I should like to have a summary of the information you 
 have gotten along this line. If •'.here is anything further you 
 should like to know, I shall be only too glad to furnish it^« 
 
 ■I will answer your questions in the order in which they 
 are numbered in your letter. 
 
 •!. Our bonus system to sa?.ari3d emplo^^ees is as follows: 
 The corporation first takes from the profits 5fo interest on their 
 total investment and of the remairder 10^ is given to our salaried 
 employees. Last year this amount represente'd about lOf^ of the 
 employees^ yearly salary. 
 
 14-H 
 
V 
 
 ^invppfVn^L^^^^.K^''^^^*^®''^ Willing to make loans to our em- 
 ployees to help them out in any emergency. 
 
 "3« Average increase 75^ to 100^» 
 
 ■4, Average increase 75?& to 100^. 
 
 ••5, Average increase 75% to 100^, 
 
 •6, Average increase 75?& to 100^. 
 
 t,^., r.l^^*'^^^'^ ^® pleased to receive a summary of the information 
 you get in response to these questions." 
 
 «r Atw ii'^^l "^ bonuses, profit sharinga, stock ownerships 
 or other monetary considerations to our employees. 
 
 «i- '^® v^^® * benefit fund from v»hich we make loans to em- 
 
 ll^rif !?L^r ^" financial need. This fund is obtained by the 
 
 ?« J .ov^^K^"®! ^* J^educed prices to our own ettployees, that 
 
 obk7Lf ?r, JkT *° P^y ^^ * °°Py ^°^ 25^ magazines and all funds 
 ODtalned in this way are turned into the benefit fund. 
 
 fefinv^r?!?^^*'*®^^^'--®® *° °^^^°® workers-clerks, stenographers, 
 £5 nn^fffl etc. -average nearly 50^ higher than in 1914. We 
 iJj n? Itit^ organization at that time, so there is no possibil- 
 me to d«SiJ!!fno <^0"'P«i3«n in that line. It isn't possible for 
 
 eL?Lr!!^^2® ''^^^ ^^^ *^^®" Pl*°® ^n *^e other classes of 
 employees that you name. 
 
 a«^ «i!5-.?°5® l^f* *^^® information may be of some help to you 
 
 •M" 
 
 ♦« ,. "^plying to your circular letter of August 30th. piir reply 
 to your questionnaire will probably not be of much asliftlnJe tJ 
 
 our fa«?orrL^ firm of Consulting Engineers at work reorganizing 
 to glve^J reS?S! ''''''^ ^^ "°* sufficiently advanced 
 
 were l^Jri,,^* ?h Jo-f^rly used bonus and premium systems, which 
 7^5L wf ?*®'^ "^"^""^"S the war period, Neither are in effect 
 pewIrmaSe^ eventually, to establish bonus for Individual 
 
 ft«mr»..J!f?f* 3 - We come under the Ohio State Insurance Act. which 
 
 ■Ans, i - Probably lo^ to 25^. 
 ■Ans, 4 - Probably 25% to 50^ 
 
 15-H 
 
fQ 
 
 V 
 
 ''Ane* 5 - 25fo to 
 •'Ans, 6 - 35fa to bOfo^ 
 
 ••Your favor of August 30th, is at hand with several questions 
 whioh we are pleased to answer as follows: 
 
 "Referring to question No, 1; we have never done anything 
 along the line of such distribution as you mention in this ques- 
 tion, except to make a voluntary distribution at Christmas time* 
 This is not a guaranteed distribution, nor is any amount sett it 
 depends upon the business of the year, and is made on a percent- 
 age basis of the wages or salary drawn by the employee during tne 
 year. 
 
 "Referring to question No. 3; we have not done anything 
 regularly along the line of advancing moneys to employees. We 
 have, however, in some instances helped an employee "to buy a 
 house, and intend to continue this with any employee of the 
 right character, 
 
 "Referring to questions No. 3, 4, 5 & 6; we would say that 
 these increases have ranged anything from 25 to 70?b according 
 to the merits of the work and, mostly, due to necessity thru 
 increased cost of living over the years since 1914, 
 
 "We would be very glad to hear from you as to the information 
 that you collect in tabulated form, and trust you will not fail 
 to send this to us." 
 
 "0" 
 
 "It has been our policy to take care of our salaried em- 
 ployees in a big broad way and to n^\e their claries liberal 
 based upon all costs of living. We look upon o^^ salaried em- 
 ployees as being very valuable assistants, and this is always 
 considered when wage adjustments are made." 
 
 up 
 
 "No.l 
 "No. 3 
 "No, 3 
 "No. 4 
 "No. 5 
 "no. 6 
 
 None 
 No 
 87fo 
 92^0 
 
 57% 
 
 "We desire to express ourselves as in thorough sympathy 
 with the movement which you are planning, to bring about better 
 conditions as to compensation paid office workers generally. 
 
 "The present situation is a shame and a disgrace and 
 should be remedied without further delay. 
 
 16-H 
 
r 
 
 "It is a subject that we have given a great deal of con-* 
 sideration, and we can say frankly that we are not at all satis- 
 fied with the answer we have made to your question No.6^ but it 
 is a matter that is having serious consideration and will be 
 remedied very shortly in our establishment. 
 
 ■We do not believe in any plan of bonus or profit sharing, 
 or any other consideration calculated to take the place of wages 
 Employees should be paid what they can earn, based upon the pur- 
 chasing power of money today, and we are seeking to follow this 
 policy in our plan of management. 
 
 ■We shall be very glad to have a report from you when your 
 survey has been completed, and if in the meantime we can serve 
 you further, please do not hesitate to let us know. ■ 
 
 tQt 
 
 ■TI7e acknowledge receipt of your favor of the 30th ult. and 
 advise that we do not employ a profit sharing or bonus system, 
 second we aid and assist in securing homes or help in time of 
 trouble where necessary; third the increase is approximately 
 lOO^t This includes all of the various classes which you have 
 mentioned^ ■ 
 
 •ton 
 
 R' 
 
 we 
 
 ■In response to your circular letter dated August 30th, 
 enclose herewith a categorical response, and am very much 
 
 interested in seeing the summary of the replies you receive* 
 
 ■This problem is most perplexing. Any analysis we have 
 been able to make fail to give ms any satisfactory solution. Ar- 
 bitrary increases to even approximately adjust living wage would 
 put us out of business, and yet it is upon these people we are 
 dependent for the very bone and sinew of our business, and we 
 hope that the investigation you are making will give us some 
 light • •* 
 
 ■l. We have no specific bonus rate but have distributed 
 approximately 10^ of their annual salary to our executive em- 
 ployees and clerical assistamts. This would probably represent 
 about 13^ to 145& of the 1914 compensation. 
 
 ■2. We have no prescribed method to meet this condition, 
 but are making special exceptions in each case as they may arise, 
 recognizing that home ownership metkes a better employee. 
 
 ■3. No increase whatever* 
 
 ■4. Varying from lOfc to 15fo. 
 
 ■5. The compensation to salesmen depends entirely upon the 
 selling price of the article, either on a commission or straight 
 salary basis their earnings are parallel to the amount of the 
 sales, and the added volume of business has increased their 
 compensation 50>. 
 
 17-H 
 
■6, From 30^ to 20%, " 
 (Secretary's remarks continued) 
 
 A w J The Underwood Typevnriter Co. send me pamphlets cover- 
 ing their Profit Sharing Plan, and as it is in print and has been 
 described in the Public Press, I think I may mention their name 
 in connection with a description of it. Their plan, in effect, 
 is, or has been for the last three years, as follows: 
 
 or,^ A* 4^ After providing for regular depreciation charges, taxes, 
 and dividends of 7% on the preferred and 6% on the ciammon stock 
 * ,4 company, 20% of the remaining net surplus is turned over 
 to five Trustees, who deposit it with a Trust Company and open 
 cL^onwi *? ^^® °''^'^" °^ ®^°^ employe who has been with the 
 
 rt? ?^L?L*"° ^f^'® °f "*°^®* ""*« division is made on the basis 
 or length of service, viz: 
 
 5 parts to those employed 5 years or more 
 
 years 
 a - - ' * 2-3 years 
 
 -4^„+ , tl ^^2^ !i® *^® deposits of an employee reach a suffi* 
 
 ci«!^Lf^ ^** the Trustee will invest it in Common Stock of the 
 T'?«^^^*!°v4'*^^°^.'^m® "^"^^ f^°°^ certificate is issued and de- 
 ia«^ V il ^^"^' ^^^ Treasurer's dividend checks are issued to 
 each holder quarterly. 
 
 n« «.^4.,, V*® ^^ inducement for an employe to retain his stock, 
 an extra bonus was given during the first two years the plan 
 r+Lj °P®'a*io'i* e<l^l to the amount of the dividend on the 
 V.fi^JL^^T'l''^^' o^°^ ^^^^» " «as announced that the distri- 
 r^i™r!*-^n ^! ^" ^^"^"^ ^*°*^^' i^ obtainable, or the U. S. 
 t?L ^!?i ^J"^' °' ^*^' ^"'^ ^ *^e stock was earning substan- 
 ii 4r.^I;^ ^^' no extra credits would be given on it, but as 
 IS ;^»?^ ir ^^L^**! retention of the bonds, an extra amount of 
 
 t1ent\'lJ\?lTJilfr'Son"L\'"^'°^^^^ ^" ''""""^^ ^' ^^^^ ^^° 
 
 «f +K^ * ^} ^^ further provided that any enploye who sells any 
 
 Sill be^5?=L^f-^''5%^^^*'®'^ *° ^^"^ "^'is'^ ^^^ Profit Sharing Plan, 
 will be discontinued from sharing in the profits for one year. 
 
 to the etolv !?f^?>,!"p®'"P^°y® ®^'®' ^^ ^3 permitted to subscribe 
 his Snus anS hI5, .5?'"^^''? ^'^ additional amount, not exceeding 
 tionrJrft'm^^f deductions from salaries to pay for such subscrip- 
 aj SI Jfor^Jf..!? amomitB as the employe may elect. Interest 
 to his IreSt! ®^°^ employee annually on the total amount 
 
 bulletin Jh»^pl^®*^"^ ^^® operation of the Plan in a recent 
 Sr diaJjiStiS'^^"^ announces that it has paid to the Trustees, 
 lor distribution among the enployees, as extra compensation, 
 
 18-H 
 
J393.000 for 1916^ J327, 000 for 1917 and ^SVe.OOO for 1918. or 
 in round numbera, 5l,0C0,00C for the three years. During the 
 same period the employes subsoribed to stock having a total value 
 of over a quarter-million dollars, and a total of over 11.000 
 loa^^l *£/*°°^ y^^° issued to them in these three years.' Over 
 93^ of this stock is still in its original hands, 3^ was sold for 
 Sickness and other good reasons, and 6% on account of employes 
 leaving the Company. 
 
 .. ^ , "^^ point that is worthy of note here is that some of 
 the stock distrjtutions of the sort referred to above are doubt- 
 less made from Treasury Stock - instead of a ^vithdrawal of cash. 
 •pjf.^y'^^-''"v i^ capitalized, and remains to strengthen the business 
 This is substantially what is advocated by George W. Perkins, and 
 IS the plan tnat has been adopted by some Companies, with which 
 he is connected and which has proven very successful with them. 
 
 ««^*4 4. * ^ile tlie Ford Motor Company's method of apportioning 
 profits to salaried workers is not mentioned in the letter vthey 
 sent me, it is described in a pamphlet on Profit Sharing which 
 the Government published in 1916. 
 
 rt4«i^«^ 4 ^^"^fu *^® original Ford plan, salaried workers were 
 ^ 3i !v .° *^^®® classes. First, those who were paid $175.00 
 ?Ao° Jh:,«"«i?rnA s®°o"'i» *^ose whose salaries were ^75.00 and 
 less than $175.00 a month; and the third class ran over ^^30. 00 
 and less than ^75.00 monthly - there are probably not many in 
 this class today. 
 
 rnT.«.=,™a>M??Q??T®5S"®"**^ pamphlet states that for "last year" 
 (presumably 1915) 79 executives in the first class got $313,000, 
 
 mLf?^^^''^S® °^ ^^'^^^ ^2500 each; 340 employes in the inter- 
 ?n ih!%° f '^oeived ^367,000 or about |l500 each; and 1050 
 in the lowest class got $346,000, or roughly ?350. each. 
 
 oai = ,.4«.« ^^^^ *^®'® ^^ nothing to show the total amount of 
 
 IS avprLrJ^v. *».®''®fl**^''®^ ^" *^® highest class, if we strike 
 an average for the other two classes and compare the profit re- 
 
 iJ!^L ?v,* percentage basis, it woiold appear that Ford has fol-1 
 i«ot T.:i!o?® ®2°^^°"S manufacturers that a study of the sub- 
 ^?Sfitr*^^!i ^^ ^^''^"S the largest proportionate share of 
 l^llll «? the executives and higher salaries men to whom the 
 st^??^?v 1 ^^u^'^V^ largely attributaftie.And that is sub- 
 stantially what Mr. Felt claims in his pamphlet. 
 
 a bnnu« r,i^®.^°^'^^ Process Co. has both a profit sharing and 
 ?anS lr?m^h?2/P^'^*i?'^- ^'"^^^^ ^^^ former the participants 
 intf thrp^ °?i®^ executives down to sub-foremen and are divided 
 chief executlvf.^;- ^" *!»« Senior Class are included only the 
 Clals ?he ciTff ^^''®f^ t"^ °^^^^ teohnioa:i men; in the Junior 
 deS^tments aif ti^°*''"^''^^ assirtanto. the foremen of important 
 ClJss aS otS«ra ?f T""^ irnpcrtant office men; and in the First 
 v-iass are others to Junior clerks and sub-foremen. 
 
 19-H 
 
The Seniors receive three times, and the Juniors twice 
 as much as the First Class. The Directors of the Company elect 
 the members of each participating class and each participant has 
 a formal contract with the Company, which fixes the basis of the 
 participation and the obligation of both parties. 
 
 There is also a bonus system, v^iich is not contractiaal, 
 and does not depend upon the profits, the amotint to be distri- 
 buted being decided upon by the Directors each year# This applies 
 to all employees who are not members of the participation classes, 
 the distribution ranging from 2$ for two years^ to 6^ for 10 or 
 more years ^ continuous service, of the salary earned dxiring the 
 preceding year, and is paid in a lump sum. 
 
 There is also a pension fund, maintained by the company, 
 and a Sick Benefit Society to which the men and the Company con- 
 tribute equal amounts. Aside from this, the Company has always 
 paid hospital expenses, and specialists' fees in the case of 
 injured employes t 
 
 SUMMARY 
 
 A summary of the replies received, discloses that tinder 
 the first question, "Profit-sharing, Bonuses, etc.", out of 25 
 replies, 4 have absolutely nothing of this kind; 3 are silent on 
 the subject, having answered me in a very general way; and 19 
 are either considering or have some sort of bonus or profit-shar- 
 ing plan now in operation* 
 
 On the second question, as to what other help they gave 
 their employes: Out of the 85 there are 3 who give no help of 
 any kind, 4 were silent on the subject, and 19 give the employes 
 various sorts of help as are outlined in these letters. 
 
 Then when it came to the more personal questions of 
 Compensation, on the third question: "What percentage of increase 
 over 1914 salaries do you pay your executives, managers of sales, 
 
 production, etc.?" out of 35, 8 did not submit any information; 
 
 3 were indefinite, said in a general way that their employes were 
 helped largely and liberally; only 3 say that they have given no 
 increases whatever to their executives since 1914, That leaves 
 13 who report increases anywhere from 10 to 100 percent. I 
 averaged up the 13 I could only average by the number of con- 
 cerns reporting, not having anything to show the actual number of 
 executives who are affected by the situation. But, based on the 
 figures given me, it shows an average increase to executives, over 
 1914 salaries, of 55 percent, 
 
 0^ ^he fourth question, asking for the same information 
 with relation to assistants or minor executives, the proportion 
 was the same: 8 gave no information, 3 were indefinite, and only 
 1 said that he had made no increases; 14 have granted increases 
 
 20-H 
 
running from 10 to 100 percent, and those, figured i» "the same 
 way, show an average increase of 56 percent* 
 
 The fifth question relates to the increase in compensa- 
 tion to salesmeni Out of the 35, 9 did not submit any informa- 
 tion, 2 were indefinite, and 14 said that the sales forces were 
 increased from 25 to 1,000 percent • I did not use the 1,000 
 percent because it is such an unusual case that I thought it 
 would hardly show a fair average figure. But, putting that con*- 
 cern»8 figure in at 300 per cent, it would give an average in- 
 crease to salesmen of about 80 per cent on the 1914 figures. 
 That is probably true because in many cases the sales forces are 
 on a commission basis; and even though a salesman's percentage 
 of commission has not been changed at all, the fact that most 
 products are selling for anywhere from 50 to 200 percent higher 
 thstn in 1914, would automatically increase the salesmen's re- 
 turn accordingly^ 
 
 The last and sixth question relates to increases for 
 general office helpt Only 6 did not submit any information at 
 all on that question, 2 were indefinite, and 17 said that the 
 increases ran from 12 to 100 per cent; the average there would be 
 50 percentt 
 
 CONCLUSIONS 
 
 Now, of course, you gentlemen are at perfect liberty 
 to think these things over for yourselves and talk t]^em over, 
 but, as I have had these papers for some days and have had a 
 little more opportunity to study them than you have had, I just 
 wanted, before sitting down and letting you go ahead and talk, 
 to give you my conclusions in the matter which 1 merely present 
 for what they are worth and which perhaps may form some basis 
 for discussion. • 
 
 First of all it is manifestly impossible to formulate 
 any set rule for solving this problem for any particular in- 
 dustry or any particular business. You can see from the nature 
 of the replies that the qonditions under which different busi- 
 nesses are operating today vary so much that each man has to 
 solve the problem for himself. 
 
 Second, factory workers and salaried men require 
 different treatment. There is a difference in training, en- 
 vironment, habits of thought and habits of action, between the 
 two classes, which I think demonstrate the need for a difference 
 in handling. Most of us know what the ^"^orker wants — you see it 
 expressed every day in fresh demands; and as a rule he wants it 
 coming to him every week in the weekly pay envelope. 
 
 Some of the concerns who have written me seem to have 
 adopted profit-sharing in the form of distribution of stocks to 
 
 their factory employees but I think that that is rather in 
 
 the nature of an experiment, and I do not believe that the mat- 
 ter has been carried on long enough and by enough companies to 
 
 31-H 
 
show that It is really a permanent solution of the industrial 
 situation, 30 far as the factory worker is concerned. 
 
 The same might be said of bonuses '^^°\^'^?J^^^L°J!°'' 
 ftf twice a vear. and althotigh some concerns seem to have oeen 
 sScoessful with these plans the history of Profit-sharing and the 
 Jvidenle KiJen in the Government's pamphlet on the subject, is all 
 lgi?nSttlem as a permanent factor ^^ **^%«"S*i°SeS« rlaUza- 
 time as the factory worker has been educated to a ^**«' J!^JJe 
 tion of the part he plays in the economics of the ^oj^J. J^J^J® 
 employer in turn has learned that the introduction of the human 
 element in dealing with his men is a vital necessity to the 
 successful conduct of his business. 
 
 But as one concern brought out in its letter, you are 
 
 all much closer to the salaried man, much o^^^^f *2v*S®h?t are 
 your offices and on your staff; you know what JJ^ thoughts are, 
 and you can reason with him; and I do believe **^^t the salaried 
 class can be taken care of. The most Pf^o^^oal solution of the 
 situation, it seems to me, where there is sufficient income in a 
 concern to permit it would be: 
 
 First. - to have standard rates for each Position or 
 each class of work, based on the 1914 value of the <iollar, not 
 aTsalaries are today, and subject only to s^oh increases as are 
 usually made after an employe has been in a Po^i^ion long enough 
 Ul^come more proficient and to deserve a grater return^ and 
 let his main incentive to getting more salary be through a pro 
 motion to a place higher \q). 
 
 Second, - to make a reasonable, temporary Jllowance, 
 such as one or tw of these companies say they have been doiJ|' 
 to meet the present abnormal living expensef '^ifj °°Sch iould 
 ate with the rise and fall of commodity ^»iYt?An« rJasert ?hem- 
 eventu&lly be dispensed with as normal conditions reassert tnem 
 
 selves. 
 
 Third. - to give the salaried worker a share in the 
 profits, along the lines of the Un<ier*ood Typewriter plan, or 
 the llrkin ulan v«hich company is located here in Buffalo. I 
 wSSl^likJ llTv mlcfto S^ow'what the Buffalo pec^lethink^of 
 
 -ry^?»5y! LThl IJSnr^^nlf reTr|a K^^ 
 The principal features of the plan are as follows. 
 
 Assets of the Company on Jan. 1, 1919. were stated to 
 have been well in excess of'^fSCOOO.OOO, with no Good Will Ac- 
 coSt included. It is proposed to organize S"®* °°^°^f i^""* 
 S?S $30,000,000 first Preferred Stock (all of which goes to 
 
 present owners) and $30,000,000 Second Pr«f«"jJ.J"* °°S|?3°Lcl 
 which only 3lO.000.000 will be issued now (to Pr^^ent owners ana 
 ImpSyeS the remainder to remain in the Treasury to be issued 
 
 33-H 
 
fJr'°iJi"?„J*! !^5® *? °°'®' profits retained in the busires 
 ;fL^!!-ty*y'® development, and for gale to employes linder 
 
 tain conditions. 
 
 oer- 
 
 -.r' 
 
 in TQiQ. K?f ^l^ ^J|^®"®<^ Stook shall p«.y a divijjoa oi js 
 
 ie n?i?i.5L^" ^!^' ^K^"" ^^2^' ^"'i 7^ thereafter. It shctli" 
 oK=?f "5^*^ ^! *** assets, and oumulative as to dividends, but 
 S« io??L !J^f^f,' partictpate in the profits of the CoinpaAy. 
 TJe voting privilege shall be with the common stock, provided 
 iJniho i^®J®"®^ dividends are defaulted for 12 consecutive 
 paid Si. " """^ """^ ^^^° ''''^^ ""*^^ *^® dividends are 
 
 1920 «^nH J®*S"^ Preferred Stock shall pay a dividend of SjS in 
 i?t2r^?« f-^^r^^^^®""' ^^^ «^*11 ^ preferred as to assets 
 areon^v nftfM. If®''^®?,* 1""^ cumulative as to dividends, which 
 S?rt T+^-?f?n®v.^'^®^ *^^ ^^'^* Preferred dividends have been 
 paia. It shall be issued only under the following conditions: 
 
 Stork- m„=i-^L°^^® of dismissal or voluntary Withdrawal, linploye 
 cJSS«.^^ ^ deposited with the comi|M«Byfor purchase aid the 
 fn exchan^I nf I ^*^'S* i" °^"^J wi^ix months* note; or by 
 the CoSj^f %$ .?®*°"^ Preferred Stock,p the purchase price of 
 CnLf«^^" ?*°^^ J° ^® ^^''^^ e^°^ year by the Directors. All 
 
 sSe a? fir^i^i^'^^lf""'^ Jy i^^ ^^"P^'^y «^^11 ^« subject to rilis- 
 sue at the discretion of the Directors. 
 
 ft^ ♦^ = ^ Common Stock shall not be sold except to the Oompany 
 Snt L« J!'?^ eligible to hold Common Stock. Dividends shall 
 TeLlntnlM^ annually, nor shall they exceed 50^ ?f Se pKf its 
 feJred Stocks r °''® ^®*' payment of dividends on thS Pre- 
 
 ««a^^ 4.^ 4°' *^! $10,000,000 Common Stock to be issued it is pro- 
 «n *? *K if3«e to each Charter Employe an amount proportioned 
 
 ??ml«^h^i^°' H^"^ °^ *^® ^*^^y ^^l^'y as of jLuary 1? 1919, 
 «i^!%i? /?f ""^ of employment, less three years. The result will 
 
 S r.i5?«J'*^i^'^^°£ ^*e°^ *° ^« ^s^^®**' I« determining the years 
 ifs? e^?o4™^^ ^it t\^^l ^ reckoned from the beginning of the 
 i«f>>!^^y3^*,?^*^ *5® Company, except that if interruption 
 JfSn^^^ du^olding of public office, for educational p?epara- 
 U^X. o^ marriage (if women) the time shall be merel? deducted. 
 gfrSd. *®^i°^ o^ illness, the interrx;5)tion shall be dlsre- 
 
 . „ , After the amount to be Issued to Bnploye Stockholders 
 
 S?ocik'«Lf?*r'"J"^'*'/^^ remainder of the .1^i0^oSo!oOO OomSJn 
 Stodk shall be issued to the present owners of the business? 
 
 w&a R ri*itS^^l^^^ anploye shall be one who on January I, 1919, 
 
 sSvtce ind i^f^^rfS °* ^Se> had completed three years 'of ' 
 service, and was not then a stockholder. 
 
 ^oo-4„^ Eteployes under 21 years of age, or not citizens, will 
 receive their apportionment of stock uSd^r this plan as soon as 
 
 33-H 
 
the disability is removed; provided that aliens shall apply for 
 citizenship within six months of the publication of this plan or 
 within six months of their employment, and shall prosecute their 
 claims without delay. 
 
 Any Eligible Bnploye Stockholder (determination of 
 Eligibility is described in a subsequent paragraph) and any 
 present Employe-Stockholder may purchase Common Stock yearly to 
 any amount equal to 305^ of his yearly salary, provided that the 
 Directors have appropriated sufficient stock for this purpose, 
 otherwise the sale shall be on a pro-rata basis* 
 
 After payment of Preferred dividends the remaining 
 profits shall be distributed by the Directors as follows: 
 
 (a) For the purchase of Common Stock on deposit, assigned 
 by retiring employes, 
 
 (b) For temporary use in an unusual expansion of/business, 
 which shall not exceed 30^ of the total profits of the year. 
 The total reserve not to excead Z0% of the capital stock out- 
 standing. 
 
 (c) For the dividend on the Conmon Stock to be paid quarter- 
 ly during the Aasuing year* 
 
 (d) For the retirement of Preferred and Second Preferred 
 Stock (which are callable at any time on 50 days* notice with 
 the option to First Preferred stockholders of taking Common 
 Stock in exchange) and for the purchase of Common Stock offered 
 by present owners* 
 
 The remainder of the profits for the year shall be 
 distributed in Common Stock at par to Eligible Employes for that 
 year, and preiB^nt owners of the business pro rata to average 
 salary of the previous year* 
 
 Eligibility to profit sharing shall be determined as 
 follows: On January 1, 1930. lists of Charter Employe Stock- 
 holders, and other employes who have since qualified, shall be 
 made up, sub-divided into convenient groups at the home office 
 and branches* 
 
 These lists shall be passed upon by the Directors and 
 employes, each person on the several lists to be voted upon by 
 all persons on such list and every person receiving the approval 
 of 90^ of the persons in his group (and presumably also the 
 Directors) shall be considered an Eligible Stockholder for 1919, 
 and to this list a share of the profits shall be distributed in 
 the form of Common Stock as previously noted*, - 
 
 New lists shall be made in the foregoing manner each 
 year, with right of appeal by anyone failing to receive the 
 requisite vote and an opportunity is given for the publication of 
 
 -34-H 
 
charges against stoh a person^ The Directors may declare a per- 
 son a permanently Eligible Employe Stockholder after he has re- 
 ceived the unanimous vote of his group for three successive 
 elections t 
 
 Upon disability following 35 years service, or after 
 reaching the age of 65, either voluntarily or at the discretion 
 of the Board, an employe may retire. He shall then deposit all 
 hie stook with the Oompany, under the following plan: 
 
 That which he has purchased will be treated as stock 
 under the Voluntary Withdrawal procedure previously described. 
 
 Upon that which he has obtained by virtue of being a 
 Charter Employe or through subsequent stock dividends, the Com- 
 pany shall, if a fund has been created for the purpose, pay bfo 
 
 annually, in addition to the usual dividends, durihg the whole 
 
 • I -, - •. - ' ' - . • * • ■ ■ * '. 
 
 installment perioa, without reference to the fact that the owner's 
 interest is dirainiching. Dividends may be reduced to pro rata 
 of unpaid remainder at death of owner, or may be continued in full 
 during the life or years of minx)rity of a legal dependent, or un- 
 til the shares are liquidated* Dividends shall be reduced to pro 
 rata of unpaid remainder if the law provides the Employe with an 
 industrial pension .Stock liquidated under this plan shall revert 
 to the treasury for re-issue. 
 
 No cognizance is taken of the gainful occupation of a 
 retired stockholder whose income therefrom does not exceed 50^ of 
 his salary during the last year of his employment. 
 
 The Company may grant a similar plan of liquidation, 
 at its option, to one employed less than 25 years, leaving for 
 retirement. 
 
 In case of death of an Employe Stockholder the Company 
 "^f]^vi^ ^^® discretion <*aXl the stock as in case of voluntary 
 withdrawal, or it may proceed with the heirs of the deceased in 
 the same manner as with the retiring employe* 
 
 (Secretary resiomes discussion) 
 
 The Directors of the Larkin Company acknowledge that 
 the success of a busine^ss does not depend merely upon good will 
 and equity, but that it depends upon oepital, raanagemont, and 
 intelligent human endeavor* Thf^y have evolved the plan to de- 
 Iv ?5^-''^^!'^^y' citizenship, eelf-interest in tho Companv, induce 
 thrift and provide for the future. It aljo seems to after a 
 eeiuuion of the old age proposition, with which a good many em- 
 ployers are striiggling. and which is the dread of every oon- 
 80ientio\jid salaried ivorker. 
 
 Finally, to a man who declares that there are no profits, 
 
 35^H 
 
I if?oulcL say that I do believe, from what little I know of these 
 things and from my study of hiiman nature, that he would get 
 sufficient additional enthusiasm, sufficient self-interest from 
 the employees, who would regard themselves as part o^vners in the 
 btiainess, so that there would be profits that he could divide 
 with them. 
 
 Now, that presents the data that I wsis able to get* 
 
 Unfortunately the speakers whom we had plsmned to have had 
 
 other engagements: They were called down to New Orleans to 
 
 attend the Convention of the Associated Advertising Clubs of the 
 
 •orld and could not be present; otherwise we had expected to 
 
 have students of the subject like Mr. Bell of the Hydraulic 
 
 Pressed Steel Co., and some others here to discuss this matter 
 with you. 
 
 President Pank: As I said in the beginning, before 
 Mr. Hohrbaoh spoke, I had no idea what the plan of the Plan 
 and Scope Committee was. I now realize that they have opened 
 up a very large subject, a very-many-sided subject, ajid I have 
 enjoyed hearing Mr. Rohrbach's ideas, some of which I cannot 
 concur in, being on the other side probably of that many-sided 
 
 subject. I have been also interested in hearing the expressions 
 from the others. 
 
 Next, probably, to the direct labor question there is 
 
 nothing more puzzling just now than to know how to retain the 
 
 interest, the enthusiasm and the loyalty of employees, in these 
 
 times when some of us are making money, yet perhaps not making 
 
 as much as we are credited with, after the Government gets 
 
 through with us. I think it would be very desirable if we 
 
 might have a discussion, I donH know how many members of the 
 
 Society have put into actual practice any of these schemes 
 
 that come under the head of "fixed bonuses**, "percentage of 
 
 profits", "stock sales at reduced price", "pensions", "sick 
 
 iS'^l^fl^HHinr^fK^^ benefits",. and so on; but I do realize that it 
 IS a subject that is engrossing the attention of a great many 
 
 of the companies 1 know in the case of our own company that 
 
 we are giving it very serious thought, and my only fear in con- 
 nection with that company is that they will decide upon something, 
 without as grave deliberation and consideration as it sho\ild have. 
 
 Mr* Gardner, you being next to the Secretary In geo- 
 graphical location, have probably absorbed some thoughts that 
 you wish to voice. May we hear from you? 
 
 Mr. Gardner: It is a subject that I think nearly everyone 
 is giving more or less thought and attention to. Just what is 
 the right plan, is a question. You find men who have given it 
 a great deal of thought who differ radically. But that it is 
 wise to do something I think there is no question. 
 
 Our concern has given a bonus to the employes at the 
 end of the year, our idea being, as much asanything, that it 
 might help to hold our labor. If they did not stay until the end 
 
 26-H 
 
of the year they did not participate in the bonus; and only for 
 as many months as they had been jn continuous service do they get 
 it. We nave had an old-age pension for many years, but no sick 
 benefits on trying that we seemed to be in hot water continual- 
 ly; committees were out constantly, and some men would not play 
 fair« 
 
 We have sold the men stock. One of the peculiar things 
 about it is that we have never been able to interest the Iron 
 Moulders Union in any stock proposition, notwithstanding that 
 the value has increased an^mhere from 50 to 100 percent. The 
 unions evidently do not favor the proposition of going into 
 partnership with their employers. 
 
 1 think that with the trend of the times we should all 
 give thought to the subject and approach it gradually, and it 
 will work out its own solution. 
 
 President Pank: Mr. Fishwickl 
 
 Mr. Fishwick: I would say, speaking only for the sales de- 
 partment of our company, that we have had under consideration 
 for the past year the evolving of some plan which would mean 
 additional compensation beyond their salary. The company has, 
 for the past three years, given a quarterly bonus to all salaried 
 employes of 10 percent j so that, with the increases that are 
 regularly made in salary, it means that there has been possibly 
 an average increase throughout the entire organization of 40 
 percent, in the salaries of the sales force since 1914. 
 
 However, the whole problem seems to me to be the dif- 
 ference between educated and uneducated self^-interest; you touch 
 every man through his pocketbook when he works for another. We 
 see uneducated self-interest in the mass or class movement de- 
 scribed as •'unionism", where no man is interested in what the 
 other man does excepting he gets something out of itt The 
 educated self-interest, I would oay, comes from the knowledge 
 and perception of all of the elements that go to make up business 
 
 today ^tiot alone business but our human life from which a 
 
 man becomes, if he is fairminded, increasingly able to differen- 
 tiate between other men and to allow to some men, fairly and with- 
 out prejudice, a higher wage than himself. 
 
 So far as the sales force itself is concerned, I think 
 there is no question but what we are coming to a point where 
 they are going to be participators in the orofits. Mv own idea, 
 the one which I have been forced to after studying both the mat-* 
 ter of straight ccmmiscion and the matter of moderate or mini* 
 mum salary, plus coronission on all sales, has swung around now 
 to the matter of a f\xed salary, basad upon the times, tne im- 
 portance of the position, and the ability of the man, his length 
 of service and one or two other items, plus a percencage on his 
 
 excess sales that excess to be detei-mined by arriving at an 
 
 average, agreed upon with the sales department as a fair average 
 
 37-H 
 
or b\isine3S for the section in ^-vUioii -hio mdii works, and befng 
 paid to the branch office, to be distributed to the individual. 
 
 My idea in that is that it should be done that way in 
 order to prevent the keen personal competition which would come 
 rrom paying only on personal sales, which would promote, from 
 my own experience, a lack of co.-operation that would be fatal in 
 a large organization. That is as far as we have gotten. I think 
 that we have increased our sales 'averages of compensation 40 
 percent, during the war period* In addition to that there has 
 been last year a Christmas present which we do not count in as 
 salary or as an increase. So that I feel that the concern has 
 fairly met the increased cost of living. 
 
 ^4 4.-p* -> ^^ ^ agree with a number of those who say that the 
 5i i^ ^ ^® ^^® largely to the cost of high living rather 
 than the high cost of living, because I think, taking the con- 
 census of those reports that have been read, that 55 percent, 
 will average fairly close to the CJovernirient index of the in- 
 creased cost of living. 3o that the American employer, as a 
 whole, has not been derelict in his duty but has done a fair 
 amount toward alleviating trhe distress which might come from lack 
 or increase or lack of compensation to meet the rapidly increas- 
 ing prices. 
 
 President Pank: Mr. Hall I 
 
 Mr. Hall: As far as oui^ Company is concerned, we have made 
 a straight 10-per-cent bonus for the last two years to the 
 salaried employees, right down the line. The Company now is al- 
 so studying a new scheme for a bonus proposition which has not 
 yet been worked out— I don't know just what the plan will be 
 because it is not far enough advanced to say. 
 
 The real secret of. the 'fevhole matter, to ray mind, 
 18 that we must keep the men who are working for us in the right 
 mental attitude, not only from the salaried stctndpoint bfit from 
 the standpoint of man to man and treatment of the man as a co- 
 *?Iv L"*^^^ *^® company; let the man understand that his part 
 with the company is an itsportant part. If he is not capable of 
 Handling the part <vhich has been assigned to him, do not keep 
 him but get somebody who will be interested. But if he has a 
 place in your organization, make that place seem an important 
 piaoe to him, and keep up his interest in what he is doing. 
 
 „ ,„,^ "^f* °^" ^e io'^e by personal touch, in the smaller 
 
 companies, it seems to me; but even in the large companies it 
 
 ;!J^f^ *^® "^^ specially by contact through the heads cf the 
 
 l«f'*2«nh i^^A ^* °^^^y ^* '^'^ through the heads of departments, 
 i^^ff"^!!^ 5 °^.* aepartraent be in c3ose touoh with each man 
 of ?if t m£n ITV ^®* ^^'^ ^® familiar with the family conditions 
 ♦L* K ^ * -is far as he can, so that that man will feel that 
 
 ia in trn„HT!'' ^^"^ 't °'^^ ""^°'" ^® °*"'- SO to for sympathy if he 
 iSt th«+^?^®\°''\"'^° °*'' *^^^ o^-^ ^i3 affairs wixh hims and 
 let that department head show that personal interest in the man 
 
 38-H 
 

 that will make the man vvant to huatle anl keep up the interest 
 which Lie should have in t^e organization. 
 
 The point whioh I have found ^vorks out well in handling 
 men only in the sales department, o^^ course, is this: When- 
 ever a man is sent out on a trip, it may be a long trip or for 
 two or three weeks, I Invariably ask that man "Is there any 
 personal reason why you cannot leave at this time and be out of 
 the city, away from home?" It may be he would have a sick child 
 or 'rtfe. Unless he goes out with his mind entirely clear and bent 
 
 on business he cannot give you the resiats he ought to have. If 
 he is frank with you he will tell you whether he can ot cannot go.* 
 If he cannot go, it is up to the man who has charge of him to 
 arrange to have him go some other time, and have somebody else 
 go in his place. That merely illustrates what we can do in 
 handling the men. I think that that is of quite as much value 
 as the money end of the proposition. That is the thing which 
 will bring the heads of the organization in closer touch with 
 the men working with them, to ray mind, to bring about results 
 which will be most satisfactory. 
 
 1 cannot say anything further for our company in this 
 matter because we have nothing to offer in the way of any jpian. 
 
 Possibly later we may have something that will be more concrete. 
 
 Mr. McHugh: Mr. Hall left out an additional 7-1/3 per 
 cent, bonus we had last year% 
 
 Mr. Hall: Yes, that is true. A 7-1/3 per cent* bonus came 
 out at Ohrlstmas time. 
 
 President Pank: Mr. WatsonI 
 
 « 
 
 Mr» Watson: The custom with our Coraimny has been, on 
 salaried employees, to make certain percentages of increases, 
 yearly; In addition to that, for the last three years, we have 
 had a 10-per-oent bonus; but we found that a great many of our 
 employees, in considering their compensation, if they should get 
 an offer from somebody else, very rarely took into account that 
 bonus, therefore about two months ago we decided that the best 
 thing to do would be to make that bonus in the form of an actual 
 increase in salary, so that they were sure of getting lt% 
 
 The department heads receive cash bonuses and also 
 stock bonuses- — all department heads are stockholders in the 
 Company, stock being given to them in the form of a gift. T' 
 Regarding ou* outside sales organization, we do not have many 
 direct offices, but those offices are run on a profit-sharing 
 scheme. We consider a district office exactly the same as we 
 would a dealer, and any profits made in that office over the cost 
 of running it, are credited to the office and a certain percent- 
 age of them is distributed to the employees* That has worked 
 very very well outside; it has kept the men all satisfied, and 
 they have had good returns for their work. 
 
 39-H 
 
President Pank: Has that distribution been 
 of the relative salaries? 
 
 on the basis 
 
 Mr« ^atson: Ye8« 
 
 President Pank: No distinction as to service? 
 
 Kr-i Watson: I might say that up until just a short time 
 ago the manager only partioiiDated in that distribution but that 
 that has now been extended to take care of the employees in the 
 office* The manager himself got a certain percentage of the 
 profits of the office* 
 
 MTt Fishwick: All heads of departments in our company are 
 given stock. Instead of cash bonuses, at Christmas* I omitted 
 to say that. 
 
 President Pank: Mr* EmenyJ 
 
 Mr. Emeny: I donH know that I have any report along that 
 line* This seems to have developed more along the line of re- 
 viewing sales conditions. Our Company does not have any outside 
 sales offices. Our custom in the executive or office part of the 
 plant has been to take care of the employes in the way of in- 
 creases of from 5 to 10 percent at different times throughout the 
 year, depending on the condition of the times; and that total 
 raise has been very material^ probably between 60 and 75 oer 
 cent, since 1914. 
 
 In the shop, our men themselves maintain an insurance 
 organization, which gives a death benefit and also, in case of 
 sickness, after six days* sickness they participate in a benefit, 
 a certain amount each day. 
 
 During wartime, when patriotism ^vas at its height, our 
 men had a drum corps of a pretty fair size, and from that be- 
 ginning they got the shop interested and arranged to rent quite 
 a large building in the torn which had a very good dance-hall 
 all made up, formerly controlled by a German Organization, which 
 went out of business. The Company takes care of the rent and 
 assists in maintaining it. We find that that is a very good 
 thing for our employees; it gets them together and ties those 
 in the shop, in a way, to the management* While it costs us but 
 very little, it all Tvorks toward bringing about loyalty on the 
 part of the men, and the social feature is well worth while. 
 
 That is about all that we have done. We are of course 
 eonsidering, like everybody else, some further development of the 
 iii#n"»jis plan or some other profit aharing scheme, ^ve do not know 
 what as yet* 
 
 President Pank: Mr # Reynolds! 
 
 Mr* Rftynolds: As far as bonus goes in the shop it does not 
 
 30-H 
 
r 
 
 seem to work out very tyell; It is ziot appreoia-^^^J the men 
 would rather have it in a straight ^age. 
 
 Mr. SishT7ick: The bonus proposition I donH think worked 
 out very well, applied in the shop* 
 
 Mr* Raynolds: You have to have your foremen with you, and 
 
 the foreman has to see that the employes are satisfied; he has 
 
 to get in personal touch with the em]^ioyes and see that they 
 are satisfied. 
 
 Mr. Gardner: We haven't a foreman in our en^^loy who is 
 
 not a stockholder in the company not that that is compulsory, 
 
 but they avail themselves of the opportunity; and they are try- 
 ing to get more. 
 
 President Pank: Mr. HeermansJ 
 
 Mr. Heermans: I donH know about any contemplated plans, 
 as far as our Company is concerned, but. for the last three years 
 they have been paying the salaried employes 10 percent, bonus. 
 That was dropped a month or two ago, and they have put through 
 a flat increase of 10 percent. That is the only thing that has 
 be^n done to take care of the salaried employes aside from 
 regular raises or increases made from time to time. The shops 
 maintain their own mutual benefit association, and the company 
 helps them out; the men contribute so much from their wages into 
 a common fund, and they have their own organization to administer 
 it. 
 
 President Pank: That is purely a mutual organization? 
 
 Mr. Heermand: Yes. 
 
 President Pank: Mr. Cone J 
 
 Mr. Cone: My company, to my knowledge, never has given any 
 bonuses or Christmas pieoonts or anything like that; they have 
 treated everybody very nior^ly about salaries. The first of July, 
 every year, the list ie gone over, and practically everybody 
 
 gets an increase the idea being that a man either gets fired 
 
 or gets an increase on that date. To thor.e who are capable of 
 the enlightened self-mterept that Mr. Fishwick speaks of, I 
 think they rather like to get all that they are going to get 
 from the company in the form of a salary, because then they can 
 spend it as they pleare. ?,f there are associations and things 
 like that, the company is really holding out some of their 
 compensation and spending it for them: I think that it contri- 
 butes to a man^s self-respect if he is allowed to spend his own 
 salary. 
 
 The salesmen that we have get a small salary, and 
 
 i 
 
 V 
 
 commission on everything that they sell; 
 sales get over a certain amount. 
 
 31.-H 
 
 we do not wait until the 
 
1 
 
 V 
 
 V 
 
 President Pank: Thank yout Mr. Wendtl 
 
 Mr. H. W. Wendt: We have not worked out anything up to 
 the present time, but the matter has been under consideration 
 sinoe I have taken over the organization alone, I was firmly 
 convinced once upon a time that it was the proper thing to do 
 to divide \q) and pass out stock at a certain time* I thought at 
 that time that I wanted to go so far as to include every man in 
 the organization. The further I have gone into it, the more 
 
 I have listened to discussions in different places I have not 
 
 only talked with different manufacturers but with the labor 
 
 leaders one labor leader said to me "Don't you ever get the 
 
 damn-fool idea into youy head that you want to r)as8 out stock to 
 your wrkmenj if you -/ant to keep your men contented you want to 
 
 pass that stock out to them in the weekly enirgriope" and I think 
 
 he is right - the more I think of it, the more I believe that 
 
 the way to keep peace and harmony in the organization is to 
 make that envelope as big as you can make it. 
 
 True, it does not tie a man to your organization out- 
 side of the pay envelope. If he gets a stock interest, it earns 
 something, but later on it may not earn anything; and when it 
 starts to show no earnings, I am afraid we are going to be up 
 against it, we who do pass out the stock. So that I am on the 
 fence, I don't know which way to jump. I want to jump, and I 
 want to jump in a very short time, because 1 have been talking 
 this for a long time. 
 
 iB have advanced salaries and have tried to keep pace 
 with the times. I don*t know what our percentage of increases 
 woiUd be, exactly; I have never looked upon it from a percentage 
 basis at all; but we have undertaken to go along with the people 
 who are in responsible positions and advance them. I agree with 
 Mr. Cone here that if a man is not entitled to an increase he 
 is entitled to do something else; he is either of greater value 
 to you each year or else he ought to get out and somebody else 
 ought to take his place. A man standing ctill is like a manufactur- 
 ing institution standing still™ oan^t stand still, has to move 
 one way or the other. If your factory is not increasing or ex- 
 panding, it is on the decrease. Which way do 3^ou want to go? 
 You want to increase. That is what we have always aimed for, and 
 what I am going to aim for, to increase the earning capacity of 
 the organization. You have to keep peace and harmony among all 
 of them, from the assistant managers right down to the sweepers. 
 
 There is a benefit association at the Buffalo plant 
 that has been in operation a great number of years and that pays 
 sick and death benefits. I take a little interest in it, and when 
 
 I lind that their burden is getting a little troublesome last 
 
 year they had a number of deaths, and I found out ^/hat their bank 
 balance was ana I had the Company write them out a check to re- 
 instate their amour.t, so txiat they would be financially in good 
 
 standing not but what they are financially in good standing, 
 
 for the reason that they have a surplus which I keep advising them 
 
 33-H 
 
 li 
 
 ! i' 
 
 \i 
 
not 
 
 to touch - it l9 a nest-eegg ctnd I want it to increase. 
 
 r 
 
 V 
 
 \ 
 
 T ^ I '^'■*®* *^^^ *^® plans of our company are going to be, 
 I don t know, and I think nhen .-e get right Jown to it that I 
 won t have as much voice in the matter as my men will, that is, 
 
 iLTo°fef th "^° ^"" interested in the game; I think I am go- 
 ing to let them practically settle the situation. I believe 
 
 of*«fnnv^K^^^- *° participate in it. I don't want any giving 
 tLim ti^^ "-^.T: Soing to earn anything; I don't want to 
 that f L ? capitalization of this company to such an extent 
 ca«h. T Lfi^'i''^ them a lot of -vater and not giving them real 
 t?S\l Tl\l^ S^''® ^^^"^ something that is right. I am afraid 
 ^n^%; ^! ^ ®^ 1?*"? °^^®^ *^^^ s*°°^ proposition is misleading, 
 and it is going to have its effect sooner or later upon the work- 
 n^^Ia :>,^ not going to be in that class and when that thing 
 
 ^Itt ^f^*^? *^®'' ^^® Soing to have a dollar for every dollaria 
 worth that is presented to them, 
 
 n«ao+4^« ^,"^°"1*^^?°^ *^ ^ °an say anything further on the 
 ah«f,+ ?i?I T^:4 Rohrbach wanted to know what Buffalonians thought 
 
 tnS+J^n^ .fe*J^?*P^^?', ^° *®1^ y«^ *^e truth, I don't know 
 anything about it. I know they have a proposition over there 
 with which they are holding their organization intact, and they 
 are working and making money; but what their scheme 4s and how 
 It 18 panning out in the way of compensation, I don't know. 
 T L ^^^^i^fv'^^f^^^'^ ^^^^ ^ gather, without speaking knowingly. 
 T ^„^f !?® inpression that their wage rates are very low. 
 I may be entirely wrong in that, however. 
 
 President Pank: Mr. Anderson! 
 
 in«tit»;4«!?'^?f2®"' ^'aturally, what can be done in a small 
 «t?tv;Ji^Ji Hv® °"'^® "^Sht not be possible in a larger in^ 
 mni^^ ^?' with many employes. But I personally supervise the 
 St + fnr, «^*-^*'^!^ ^"'^, ^^Ses in ray plant, and with only one ex- 
 f?;i2 n * 2"® ^^^ *^^®^ "® ^°^ a raise in pay in my office 
 deaJrfi^^L ♦vr^''?* J ^° ''°- ''^^ until a man gets sick to 
 ^nflfof ^P^Qt^i^g to happen and for the boss to come around 
 have Sin %hv!.^^^; ^ f^^^® ^^"'- Sometimes I have had men who 
 
 o?Ir Is J o;f®Tf^^^®f ^" ^ y®^'^' ^""^ I t^i'^^- tliat my labor turn- 
 over is as sffictll as in any plant in our town. 
 
 mPTita ar-o L??®^*? it that my foremen and the heads of the depart- 
 Sf the niv tl«t^^°Sf*^®^ ^'^^^y ^°* a^^ t^®" to discuss the matter 
 
 I gJ do^^^oler miMiro^^°.^^? '^^\^'' ^'^^^^ departments. When 
 D.«++<T^X X^ ^- payroll, as I do frequently, and I see a man is 
 
 fecoiS! ■ a^d If H.°' ^vhatever the ainSunt may be-.-I look "rmy 
 record and if I finct that the man is not gettjna sufficient 
 
 ??^h?er?m/^^" '^"J^^' ^^^°^ ^ ^«>'- frof this^eSrd jrtwo 
 pJsUion II li^l ?^ ^^^^ * "^^^^^ members, I try to put him in^ 
 position 80 tnat he can earn uorepay for them, or let him go. 
 
 Without meaning to display any egotism, let me illus- 
 
 33-H 
 
 
 1 
 
V, 
 
 trate what I am trying to do to solve this labor proTDOsition: 
 i^^^i^® * young man on a roustabout's job, whose pay was not 
 very xarge, and who was j-zor king as though there was no hope in 
 ill l^ K-,®^^**° ^^°' ^on^y. did you ever stop to realize who 
 now?" ^°^^ "°* earning any more than you are earning 
 
 f^-ro™?! ^^^h "f®^l' '^o» ^^^* I suppose the superintendent or 
 1? T^s'earniS\%!- ^ ^"''"^ ^"^ '' ^^ ^^<^ ^* °- ^^^ -^^ '^^^^ 
 
 h,i+ sL*^^*^' "There is nobody in the world to blame for that 
 
 £v ih^L^^^' ^""^ ^"T" J^®""® ^^ ^ ^<=^ ^o^*^ 35 cents more a 
 SX Sn+ho$^«y°^'- a'^^-that there is another one for 50 cents, 
 
 youraeii m a position to earn that?" 
 
 "Well, but I don't know how, Mr. Anderson." 
 
 inat Ji^* Zl ^t^^ ^^'^ °^^ *^^"S. You are painting pumps, for 
 
 woxK, wny wouldn't it be a good idea ^'or vou to naint thn=o 
 
 ?SS?erL"?o'Sf ff °"' ^^^^ ^^* y^^^ Sen*wh^n'you*gerthose 
 ?elSv «A»^$ ° ^^® foreman and tell him 'Mr. Williams. I am 
 
 these SartfnL""*" ^?^^ ^° ^°'' *"<i *»e «ill ten you to tSe 
 these castings over nere and put them over there---and when you 
 
 ILn^rio tSf'l castings do it just as quick II yoS canfand 
 tj So!" °''^"^'' *"^ *^^^ ^^^ ^*^** y°^ want somethinrmore 
 
 2S ?hrWc^''^%°''®-5^ ^^'e^^ ^^ll^'^ '^o acted 
 
 it bSt «^^ «\ f ^fu"^ nothing to the foreman about 
 
 and ^LZ I ri i"tJje factory about two weeks later, 
 
 go\'ng'°Se\^Ss1mo1?inJi|)?°^*^^^^^ ''"^ figuratively 
 I asked the foreman, "Is Tommy going to take a vacation? - 
 "He seems to be in a hurry", I said. 
 
 He answered: "no. he i«n«+. t w^-i* ^ 
 with Tommy; something hal Ht U^l don't know what's the matter 
 my time trying to thfnv^f^^^J. Into him; I am spending most of 
 that what I "fve him ?s Sniia^?^\^°5 ^^"^ *° ^ ^^^Sse I know 
 have to haveilJetSnJ^d reaS? iTAUr'^^ '^^' ' ^'^^ 
 
 "Then you consider Tommy a valuable man?" 
 "Yes, he is one of the best men in the plant today," 
 his pa"J?"* ^""^ ^°^ ^^^"S to do about it; axe you going to raise 
 
 "Well, r thought I would after a little while. " 
 
 34-H 
 
V 
 
 and break ur?htr^?^i''^ *t^®* ^°"^y Set -veary of well doing, . 
 and thtnl ?t 4«i^/i^ .S^^^^i^^^^-^^-' '^""^ ^^ ^^^^ ^i^^ ^^ sit down 
 
 welk or th« ipfv f^-l^^^^v.?"^ "^"'^ y°^ ^o 1* now - not next 
 ?o Ihe^^gLning c1'?Sis^feeJf-^ *^^'' ^"" "^^^ ^^ Retroactive 
 
 "All right, I'll do that." 
 
 in the T>laS**a!^^.S**°^^*°"®v°^ *^® ""^s* valuable men we had 
 in the plant, so far as his ab^lWAV ^ ^ things was concerned. 
 
 the time hL^nli^'^K ^*^*e">®"* viust a little while ago: That 
 cive irthpf. ?"^ r^v"" ^^^ "®^ ™*^° "^"^S® business have got to 
 ff ?hiL=^i''J°°^^?*'?!^^ °^ *^yi^S to pay attention to t lot 
 ofhir Sfn ^o J^® 2"*,^^^® *^^* P^* ^^e™ si^re and big before 
 Sen L ?;krnj^*i?°r ^^^^Pl^^ ^^^ problems with fheir own 
 
 they are thln??^/«^*^ ^^^ ^"°'' ^^^* ^^^^ ^^® ^oi^^g ^^^ ^1^* 
 that ta sJl^ ^ ^'""^ reading about. I rather think that 
 
 the stoofc ^ Tf^l^ f'^'^K® '"'^w? ^*^* '^®"'^* ^" «^ SO°d many ways about 
 an int^rplt 11 "*" buys his stock and, pays for it he has got 
 ?n iJ^,^ Jo ! ""V^l °^? ^^^^ i^ y°^-^ gi^e it to him. I have seen 
 t^.7..T *?*\8tocks given away, and they have never appealed 
 ImJlofiS^f^L*'' ^^' recipients. But if you have a man in your 
 employ whom you are carefully watching and encouraging to do 
 
 hit^trjL^?//^?* '°'* °^ ^ way, Vu are bound ?! make a 
 evLv nL ?n/5>,^® ^^T"^ r^^ ""^^ watching him, and if there is 
 
 hliii? lr?^!^®?^®i^P^t^ ^^*° ^^^ envelope an increase in pay- 
 he will work for that. Just the same as you and I did. 
 
 inrr +h=.-i- =^>,f®®^ !° emphatic about these matters that I am extend- 
 T L^^l^^^!''® ^^ "y activities more and more as time goes on; 
 ooSt o^^f *^ "^^^ *^e men feel that in their adversity they can 
 So^rac? lU L'^l'' \"'^" who sold his home a few days ago In a 
 ^nl5 ♦«' '^"'^.^f °^^^ to nie and said that he wanted to get the 
 
 ?f that «SJi!?^ ^f*^®^ ^?^'^' ^« "^"^^-i '"y h«lP *° dispose 
 Until +h« K V* I n®ver knew anything about contracts, so I 
 
 were S^vJn! ,^^^^ ^'^ ^f'"'"^ °^* ^^** ^^^^^^ ''®r« "'en in town who 
 ISd hS^i f.^»^'^''^.°°^'^''*°^^* ^^** ^^11°^ unloaded his contract 
 
 openef up ?or SS! ^"''^' '^ *^' ''""^^ '^"^'^^^ *^« °»^^""«1« ^ 
 
 havinP an SeidiJSr ?f^ ^ T^^ ^" *^® ^^P®^ ^^"* °"® °* 9ur men 
 Bh« ?L *« 5 !'i 4° '^^® ^'^^ ^^ ^'®r ^y an automobile, and 
 tit Jf?^J2 ^° ;^°r-^® hospital. I seno for that mn to com4 to 
 o-Jn^ ;^;^i«*l?'^ ^ gave him a check and told him he had been a 
 v»r?H+^ ?\^^^ '^ and that we wanted to help him out in his ad- 
 
 sSe thing. ^ "^^ ^^^* * °^^^^ ^y '^®^*^' ^"<^ ^ "^^"^ *^® 
 
 =/s»^>,+ *- i. ^^^f helped men invest in the Company when they 
 sought to buy stock, and negotiated loans for them at the bank 
 
 35-H 
 
 I 
 
 I 
 
That is ^hv the V J^^ ? ^5''°" *^® '"^"^y entirely from the firm. 
 i*Ti 18 wny they paid for tnelr stock outright, 
 
 earnines that^S^mf^^hf ^^K^'^ ^^''^ ^'^^^ ^i^e percent, of the 
 two yelrs oJlv ^ ™^\^^^f ^" * °^«=^' ^e have done that for 
 bJnus has been'anrt T^^^^S^''^ ^°- ^ suppose, but I think the 
 by the labor 1^^ °^ tabooed, a.Ttbo it has been really tabooed 
 
 men*?hemse'?ve 'lill'a'So'nSs 'and *S^ "^^ tne„>eelves; I ?hink $he 
 $75.00 or lion on fw- pC^" f ' ^"*^ '^^^'^ ^^^ S-^^ *^«ro a check for 
 good. *100-00 at Christmastime it makes them feel pretty 
 
 I have had^men^L^! *^^* Personal relationship is concerned: 
 were doing th?n«nhJ?^ii^ "^ fJ *° •• °^^*^i" individuals who 
 benefit Sf the f?rm I,!^®^ °''°^* "°* *°' *^^* ^e^^ not for the 
 I had establiahli ' ? 5®^^ oecause of that friendly relation 
 anS can »BiU" i,d -W T^ ^ff^J^*" *° ^o i:nto the factory 
 boys I know rof^?^-^! ! ^"$ ^^^ *^® ^®^* o^ "^^e names of the 
 «Sn who ha J* h. J. ^^J®'' '^^^ ^ ^'®"* °'-'* *here, »nd there was a 
 
 Sy foreman -SL ?ni^"^ ""^ ^ "^^^^^ *°' ^^ '^^^*«- I sai<i to 
 drill?" ' ^^"^ *''® y°^ eoing to keep tUat man on that 
 
 to save mriiff^^t *'-?'^' } °^'''* P^* another man on that drill, 
 « save my life, that will turn out as much work as he does." 
 
 a nan"wSo Ss^S^t^o^'' ^ ^^^-^ demonstrated several times that 
 
 otSe? fellow tf?p.nff °? ^ *^-^^S ^y ^°"S service, usually an- 
 
 that ho vever Jool t2«> ^l'"''^ ^"""^ ^?®^ ^^''^^'* ^* seems to n.e 
 
 tc do as quickl? a*^l^t'^1'^°^**'^* ^^^^^' *h« *»^i"S for you 
 drill an,i ,^+ if possiole is to get that fellcw off that 
 
 Sg ip ?o him.-' ^^-^^^^^^^e else wiiere he has soue new li?e open- 
 act upon anybJdv^? aLJLfi'xf ^^^^^T'^^*®^*^'"®^ ^ foreman won't 
 tool- Joom where L IS f -ion--and he put that man into the 
 But he S' thorough! v"?. if M^""^ t ''^'' department of our work, 
 never round tiJkin^^oJJi^hi®^ ^^"^^^ ^l ^^^ P°?*' "ever absent, 
 titled to a change! factory, ^fcy wasn't that man en- 
 
 The 
 
 whole thing comes back, so far as 1 
 
 can see, to 
 
 sser(s%-3ii?^?d--- -^ -- .ujd acrin^ej 
 
 Sr;eS°in?o a oorLr-Sntn hp'hf-"^*'i "?1 ^'^^* '^"^^l ^e is 
 
 corner, uxitx] ae haa :o do it as a matter of salve, 
 
 35- -H 
 
flr^J^hrLkefalrilnd!"* " ^''''^'"^^^ ■ » ^^ S"3 the 
 
 re 
 
 r.«,.=«Iff; ?• *• *'en<i*- I would like to relate something on this 
 personal contact proposition. 
 
 t4n« »afl ir^h4f*^f^^^^ * superintendent of a large organiza- 
 m^ rt ^^ 5^® °^^^f?' ^"^ * ^"*1® bell rang from the general 
 B^JJ^^tw ^hf"?^f ^ ^"^°^' ^"^ ^« ^^« called in thefe. 
 
 th«v tonv ?J^^^ ^f^ ^ illustration of electric trucks and 
 
 J« JL,!k ^ "f" ^^ **^^ ^°^ "^^^ ^sing an article of that kind 
 hS f^?H ^T? ™°^\alO"g' He looked at them for a rtoment, and 
 
 and wa?k Irn,^n)? J^ ^•^.£°°'! '^^^^^ S®* ^^ °^* ^^ your'chairs 
 kSw wiL f«^J- *^-°"2v *^^^ factory once in a while, vou would 
 ti^n «J!L L^°^"^.°v ^^^®' y^'^ ^^^e 20 or 35 of those in opera- 
 tion every day, and have had for two years. My resignation is 
 in your hands. GooddayJ" (Laughter.) ^^ iavion is 
 
 „^. . That goes to show what personal relation is. You have 
 
 got to get out and know what is going on. There are in many of 
 tnese factories managers who are good chairwarmers, and they 
 don't know what is going on. I think I am getting to be that 
 way myself, (laughter)--! have not been down to the pump shop 
 for four weeks, ^ 
 
 President Pank: Mr. McHugh.' 
 
 discussion •"m^'hJ?®^® ^^ ''?* ''^^y "^^^ ^ °°^l>i ^^^ *<^ *his 
 S^^n^^o ' Mr. Hall has explained what The Goulds Manufacturing 
 Co^any'8 part zs doing with reference to bonuses. We have not 
 
 f SnJf^^^^^^^i^.^''*'' ^^"^'^ ''^^^ ye*- '^e have recently built 
 L^°l?i*^' ^"'i^^ave a trained nurse. The men have mutual 
 benefit associations. 
 
 President Pank: Mr, NewtonJ 
 
 o* o-.^'V^f''*°"/ ^' Company has no system about the bonuses 
 f *v * T^J *® ^^^® "^^e substantial increases in the wage rate 
 in the office and shop. We have a sick-benefit society that pays 
 so much for sickness and death; and the company meets then with 
 an equal amounc of what the society pays, we have given no 
 
 wH«h ;v,r+ ^r® ""^^ ^''fJ' suggested that they buy it we sometimes 
 
 vash that they nad. Our payments to o^t salesmen, thev are on 
 a straight salary and a commission, which seems very satis- 
 
 President Pank: Mr* Hartliebl 
 
 Mr* Hartlieb: Outside of increasing the salaries of all 
 those on the salary list in the office and paying them bonuses 
 01 io percent, fcr the last two or three yearc, ^ve have not done 
 much although vye did drop the bonus system about three months 
 ago and paid a flat increase of 10 percent; no stock bonus or 
 anything of that sort. We do some welfare v^ork to a certain 
 degree, 
 
 37-H 
 
President Pank: 1 hesitate to call on Mr. West- because 
 he may tell r.e some things I ought to do. (Laughter.) 
 
 Mr. West: I would advise you not to call on me. 
 
 President Pank: Mr, Peterson,' 
 
 Mr. Peterson: I haven't anything to add. 
 
 A member: You might call on Mr. Nye. He has not spoken yet 
 
 President Pank: I tried to follow the line, and I forgot 
 Mr. Nye, 
 
 Mr. Peterson: We 
 might just say that. 
 
 are on a straight commission basis; I 
 
 Mr. Anderson: I would like to tell you how nicely sometimes 
 these personal-tbuch matters ^loik out, nhen things seem to be 
 iv !" i^°P®^®^^ position. In our plant the operations are such 
 that the men who attend to the enginesring room have some test- 
 ing of pumps. Somehow or other one of these men had called for 
 help from the foreman, and the foreman had not given it to him 
 in just the right way or at the time. They got disputing and 
 alter a, little it got all over the factory that these two fellows 
 were at loggerheads; finally the superintendent notified me that 
 the boys had got scrapping, and that "one or the other of them 
 nas got to quit." I sent for the one man to come to the office 
 ?f°2^C*^^- *!" o'clock; then I sent word by another messenger 
 to the otner fellow that I '/anted to see him at ten o'clock, 
 T oo^>.° «n??; " happened that the engineer got in there first. 
 i saia, bill, sit down and .vait a minute, I have got something 
 here I want to do. " When the foreman came in and saw Bill, it 
 
 T ».„+ *^^5?^^^?^„^*^'Jl* ^ ^^^'^' "Sit clown, I have something here 
 i want to imisn." For a minute it was very quiet. What went 
 tnrough those two men's minds I haven't any idea of. I suppose 
 they thought there would be some fur and feathers right there. 
 J-inally I got through scribbling on something that wasn't import- 
 ant, and I turned around and said "Boys, you are nothing but kids 
 
 grown old a .nan is just a boy grown up and you have been 
 
 making mountains out of molehills"; I eaid. "Bill, you are a 
 good workiaan, and I appreciate it; yon have been here quite a 
 long time; we look upon you as one of the fa5:ily; but you know 
 that Charlie is the foreman of this shop, and he is in charge, 
 and that whatever we do >ve must do through him, and whatever you 
 do you must do through him. Now, Bill, I don't want to hear 
 HP^ ^^r-Sle^^^ing about your troubles or what haiDpened. " I said, 
 onarlie, I don't want to hear your storv; but I vrant vqu two to 
 
 fS^° V ^"° -" ^'"'" *^^ '"^^^ ^0'^ "o tho ether end of the shop, 
 and when you get do>m there mmd you must not dispute about 
 
 lyl^l i?!:-, ""! ^^""P^y ^^y *N°*- <^harl3e, I want to understand 
 i»«^7n ii5*-^\v*^^3®"' ^"^"^ *^® ^*^-er -Well, Bill, what do you 
 wantr When the fellows saw those men coaing out of the office 
 walking down there arm in arm, after they had been quarrelling 
 ♦vr^-^fi^ \®^°^ °*^®^ names, they knew something had happened. 
 that those boys were together. I was anxious to find out how 
 
 38-H 
 
the thing went, so I went out in the factory later on and kind 
 
 f T,r ^f?"""^ a little bit— and there they were, talking just 
 js^pleasantly as if nothing had happened, and the thing wai ill 
 
 President Pank: Good.' 
 
 Th6r«"l;p^2'^?f^°"L ?*"** ^? ^^^* ^ '"e^^ ^y "personal touch". 
 f^llL^ \L " ""^f ^'^ *" institution who can do thatj maybe the 
 itltT'^i. V si^frintendent , the efficiency man, welfare man or 
 
 &'n| thos^Singsr"* ^'"' ^^"' ^"^ ^^^ '^^^^^ ^^°^^^ ^^ -^°- 
 
 than I^'th^^^fhi ?'f''^' .!®^H ^^^^ discussion has gone much further 
 reason I^^SL" "^^'u^' ^* '^^^ ^''^ ^^^^ interesting. The 
 Sah t/ !^^^°''®'' ^''.' ^®^^ ^'=^« because I was reall? selfish 
 enough to want to explain what we (our Company) were doing. 
 
 is rr^nn^r>Jl^* ^It^^t^^ ^?°^® °^ Salesmen's compensation, as he 
 iatS?J?iv th r*^ the sales organization, and as I am also, 
 
 a Seat L!? nf°r^\f^''^K*'^ "^"*' ^ ^"""'^ ^^^"^ "^ experiencd 
 Lt WH f^ s^ .?'^°''^^®.'''^*'' *^® matter of salesmen. They are 
 w«\.«f^. v^^"^^®' ^° ^^^ ^^ "their loyalty is concerned; but 
 we have to keep up their interest. . 
 
 *«o+ +1, "^^ system that we have worked out and have had in ef- 
 +k!L °^"^^^* ^'^^ ^^^®s organization generally for the last 
 lirt,t r"*' and certain parts of the organization for six or 
 
 eight years well, how time does fly' It is more than that 
 
 on fhfi^oi^^ 1903---has been a strait^ht salary and a percentage 
 Ss Sean f^f^^'^'^T^^ !^^^'' '^^^ variation from most systems ^ 
 his own mlnf^^r ^ ""S* ^®* V^ minimum; the salesman really sets 
 ^^.l^^TJ^ '^' ^® ^^""^ ^ '^^sis ^^ which -;e start a man, and 
 inf^f .f^ ^^^""^ °^ ^^^^' ^^^* ^"'^ 191S' -^hen salesmen were want- 
 8S^w^^^tPnH^^!?^*^^''^^y ^"^ ^^'^ ^'°* ^^^^ *° "'^^e any increases; 
 ?S«r.rJ^^ ^ ^^^ ?^^" ^''^^ *^e entire or ganization^and left 
 
 rP«TSS . ! ^^""f salary and paid them this bonus well, it is 
 
 the allar? In^'''^' "" ^^^^-^ «^'^-<^s. A certain numbel o^ JLes 
 over aid Ih^,^f tFt""^" constitutes the minimum; on tne sales 
 Sn a Smhfn^+L ^1 "^ P^-^ ^^^"^ ^ percentage. So that they are 
 ?L of^o^^ *^°" ^^''^'^- co^ensation and percentage basis. In 
 l^L°tll ^^,so™e men the ocrpensation has gone qSite high; we 
 
 anrpe^cent^pf ?S-f ?h:'^"^' ^"'^'^'f ^ ^ood deal 2ore in f alary 
 hav«^A^n^H f ! '®" managerTs salary amounted to - some 
 of our br!?.^''-^"' ^'^^' *° ^^"^ thousand dollars. The managers 
 Sf ?ne pro?it of %'h t^^ ^^'^ "" ^ percentage basis,- a percentage 
 bv Mr llf-nl" i th^t^'^o^^se, very similar to whAt vas outlined 
 oy Mr. Watson. So tnat tnere is no difficulty there. 
 
 Dlannin^ «J^ ^^""^ *^!®^ ^^ recognize this principle, and are 
 eaJHaS ^Jn ^^"^ ^-^ """^ ^^^ °^* ^^ ^^^ ^^ possible: That 
 resSlHrom Ms Jn'^t^^^ Participant in the profits that may 
 fZ tlri^T^l individual effort, we paid a bonus in 1917 at 
 tae end of t^e year, of five percent on every one's salary except 
 
 -39-H 
 
those ?/ho were on a contingent conpeneation basis, which includes 
 the managers and salesmen, as I have just described; they of 
 course were participants all the time, they got a percentage of 
 the profits and also a return on the sales. Last year we paid 
 10 percent bonuses. 
 
 In analyzing this thing 1 must necessarily look at it 
 largely from the sales standpoint, but inasmuch as it has been 
 very largely thrashed out in our meetings during the last three 
 months, I v/ill say this: There are three grades of employees. 
 I am now expressing a personal opinion. I agree with Mr. ^7endt. 
 The workman as a rule is not appealed to by a bonus or by sell- 
 ing or giving him stock; he is appealed to by something that comes 
 into his envelope at the end of the week or on payday. That goes, 
 to a certain extent, beyond the strictly production man; it goes 
 into the minor salaried employes the same way. Their outgo is 
 too close to their income to be appealed to by that sort og a dis- 
 tribution. !*•• will put it perhaps oetter this way: 
 
 It depends upon the length of the vision of the employe* 
 To those who are able to lock beyond today ^s pay envelope, either 
 by their natural inclination or by the press of their own im- 
 mediate circumstances, — ' to those men who have the long vision 
 the opportunity to buy stock at a price somewhat less than the 
 market price appeals; their vision carries them to the point where 
 they desire to save money, and they think more of the declining 
 years than perhaps do the younger workmen. So I think you will 
 find that in the long run there will be a differentiation between 
 those two grades of employes. 
 
 I think one speaker rather decried, possibly, the 
 contributions to societies, etc. We have a pension fund, which I 
 have explained to some of you, and ^vhich is quite elaborate 
 and extensive. We have two systems: One covers the salaried 
 employes, whether in the sales office or the factories, includ- 
 ing of course foremen and superintendents. 
 
 Everybody in this class contributes to this fund three 
 per cent of his monthly, annual or ^veekly pay, which is deducted 
 from it. The cornpany contributes a like amount to that ftind, 
 
 engages so to do as a matter of fact it has contributed more; 
 
 80 that cur pension fund now amounts to about half a million dol- 
 lars. We retire men, optionally, after a certain age at 60, 
 
 optionally, and at 65, corapujT.eory. That carries death benefit 
 in this way: If he does not live to be 60, or has not arrived 
 at 30 years* service, he does not get the pension; so we have 
 a death benefit: At five years* service it covers six months' 
 ei-alarvV- ^ • ' y seven years' service, a whole 
 
 year's salary. Should he die at 59 and has been in the company 
 43 years, he would get domble the amount he contributed to the ' 
 fund, with interest adaed. Any emj^loye leavin^ the company, 
 whether dismissed or leaving of his own volition, has returned tc 
 him the full amount of his contribution to the pension fund, plus 
 simple interest, I think four percent. In the meantime he has 
 had the insurance. 
 
 40-H 
 
Mr. Anderson: Does that begin immediately upon association': 
 
 from hiriocJjr^^^n^ J""' ^" ^"^^^^^ ^ "«^i°^l certificate 
 doctor. ' ^"^ ^^ ™® ^^® ^°* satisfied, then from our own 
 
 exa»ina?!onr* ^^^^'°'" ^* ^^ "°* eligible, due to the medical 
 
 When tJrpe^nSLn'?;;Ad Sl^S? lltT^Z/'f'''^' f' ^^ ^"^^°y«- 
 that employes on our\avrn?^ .J ?.®^£®'^* ^® ^^^ "°* require 
 kicked out in case th?J^H?H ^?°"^^ ^*^il^ examination and be 
 fund is a trS8?!!!a« r.i?/°^P^'^- ^^ ^® feel that that 
 arate from the com^Ly's assets 1?°*^ *^" fund^sentirely sep- 
 vested. It is adrainister^rt hi^^ * Z^ ^ separate fund in- 
 employees of the coS^anv U^J^""® trustees, all of course 
 is no part of the cSanv.o o ^^f^ ^^® ^®"i°r employes, and it 
 fund if a t?u8t and SJt^ ! ^^^^^ ^* ^^^' "^^ feel th4t that 
 ticlpation in tha? til^cJ "^ ^^""^ ""^ ^^Sht to admit into par- 
 
 dra/upJn"ii? wh?\ar^dr;i?riiUle%f ^^fn,'?. ^ ^ ^^^^^^<^ 
 we have had plentv nf TZ^a^Z '^ r-^^^-"-® contribution to it. So 
 
 they are englged todL K?^®^ ''*'° ^^^^ ^^"^ *"rned down! If 
 that they mStf pass rohvaL^r ^^P^y^^ ^^^^^^ the understanding 
 tlcipate in the'^pensLn fu^d !?^Sv*^°" ^f^^"" ^^^^ °^" P«- 
 their employment ceases. ^ '^ ""^^ ^^^^ i* we see that 
 
 pass 
 
 the'pe^s'ion'^uS? '^^' '"^'^ ^"*° ^^^^^ employ who do 
 
 not 
 
 examinf?iJn'?Jr''?he-*peSn'?Jnd ^%°r*i"f«"* on passing the 
 fund applying to ^he^ llltlVdrntk . ""^ described the pension 
 
 not contribute^!? Jn%St^tSpi°" ^^^d for workmen. They do 
 tions as I have luJt deSriSf^ ^"^ subject to the same regula- 
 Certain length of lervicrin^'^.°°''^f''^''S ^^^eir eligibility 
 
 at. The a«.?uSt of t^rplnSJn ifdJti^ f^".'!?^' tSey may arrive 
 their service. We takP thf ?2« L*^^®-*"^"^^ ^^ *he length of 
 interrupted serviL Sf. ^^^^^^^ °^ continuous servici,- 
 with us'^fiJe ^elis and LaJes^^^^J; ''°" instance, if a man is 
 come back again, he is ab^o?,%^,/°^^''' ^"^^^ *^^ decides to 
 are concerned, he starts n^i^!^^-°^* ^ ^^- ^^ ""^^ ^i'^e years 
 number of years by 5JJ aSd th«f J"* ^f" "« multiply the 
 average salary fo^ th^'nSJin,^f .f°'''"^ *^' Percentage of his 
 his pension. We have a Ifmi? n/l? ^^r""^' ^""^ *^* ^«°o°>es 
 
 explain on the thlorv Ji«t thf ^*'°^? ^^^ ^'^"^' if I may 
 
 oeived compensation oPmorethaSti-fr^^'^^^t^ ^^^^^ have re- 
 tion to make some savings theS«iH'^* ^!?°'^'* ^*^® ^^en in a posi- 
 care of themselves in thliroTr.r ^S'^ '^''^ Prepared to taki 
 tribution to tne pension finSfl«^liV^n^ instance, my con- 
 cent of the maximm of 14 SSo lio^S*°° * ^t''''' ^^^"^ ^ Per 
 salary check. Should I ar??vra!?A2.* "°?*L^^ deiuctiifrom my 
 -xn in the em.lcy of th^-c^Ji^nl l'^ig\^^e^S\?Ji\\--,o/ 
 
 41-H 
 
.43 years; multiplied by 2, that will be 86 percent. At that 
 time I will have contributed to the pension fund during a period 
 of about 15 years, and we make a deduction of 1 percent for 
 eaoh year that the employe has not paid to the fund» That was 
 to try and equalize things so that those men who had not con- 
 tributed to the fund up to the time it was started wo\ild not be 
 on exactly the same basis as those who started and contributed 
 all the time to the fund for the fiUl 30 years. None of them 
 contributed to the fund before it started, but they get credit 
 for the full number of years of service, hence a deduction of 1 
 percent. I have a deduction amounting to ^.ZO^o, making about 
 80>, net, and I will have therefore a pension of about $3300. 00, 
 That is the way it works out. 
 
 We also provide that should an employe become incapa- 
 citated to work because of illness or injury, after 15 years' 
 service, he may be voted a special pension the amount of which 
 will, of course, depend upon his circumstances. That of course 
 is an elaboration of the pension fund. 
 
 The title that Mr, Rohrbach gave to his address was 
 "Management and the High Cost of Living", with particular refer- 
 ence as to whether there had been proper regard for the toorgan- 
 ized part of an organization. 
 
 Mr, Anderson: I wonder if anyone has had any experience 
 with group insurance. That seems to be a matter that is being 
 pushed by the old-line companies. Has anybody tried that? 
 
 A Member: There are 
 which they spoke of that. 
 
 some letters Mr. Rohrbach read in 
 
 President Pank: We have not tried that. We donH carry 
 our own fire insurance, but we carry all our liability insurance 
 ourselves, and we have a specific fund for that for which we set 
 aside what would be the premiim required to take care of it. 
 That is becoming an asset all the time. We found in our factory 
 that by carrying our own insurance it brought about a very much 
 better system in the factories for the protection of our workmen. 
 T 4.v?^f®f ^^®^^ is a good deail of group insurance being ^ne. 
 i think it is a very w^se provision, if the conii^any do not feel 
 that they can carry that themselves. 
 
 }^ response to your suggestion about beating the 
 lellow to It, Mr. Anderson, as Mr. Wes'l; can testify from long 
 experience: I do not pretend to know how to handle labor such 
 as Mr. Wendt, Mr. Nye and Mr. Gardner spoke of, because I have 
 not had the experience; it has not been in my division to handle 
 that class of labor; but I do know, in handling the other class 
 or men, that it is a very wise thing to keep in touch with your 
 payroll. I used to have this rule: A man never asked me for a 
 
 raise m salary more than once he asked the first time, and 1 
 
 explained my principle absolutely, that I was watching the payroll 
 
 ?hat T ^,,?i^K®^^ t?.^2? ^'^®' ^^^^ something might possibly happen 
 that I would be a little remiss, but when he came to the oon- 
 
 42-H 
 
^^l!^^°"^**^^* ^® ^^^ worth more money if 
 ?i ?/S^"4*®'^ ^i* weeks and hadn^t'sJt 
 llx^ivi\K^ resignation, because I^wo 
 
 ea me for an increase in salary and alt 
 got it Tinder presgure anH ««+ v ^ ; 
 
 he set that down in hi* 
 ten more meanwhile, then 
 uld never be more than 
 right up with him and per 
 if he came to me and ask- 
 it, he would feel that he 
 
 was deserved; and he 
 I have got very few 
 
 touch: The lack of ?hlt ?« ^^^''L ''°''l keeping in personal 
 estimation, that is mor! i!/''f^^^^y *^^ O"® fundamental, in my 
 Situation than anythrn^%Ife^°*'?'*'^^ ^$^ *^« P^^««"* industrial 
 employers of labor. Of co^rll'^K®*'^ f^^" *^® standpoint of the 
 from the standpoint of the emJiolof^® ^^Y® ^®®" °*^®r conditions 
 had tremendous effect upon U^ ^ri^T^B^f^"' «*<=• ' ^^at have 
 -—and they have run more ^r.l\r. . \ ^® ^^""S®^ organizations 
 has been llss and iJss Jf th? ^^""^ to larger organizations there 
 
 on the right trac\'f.SL°Joi1ef 0^2?"?^ Jo^^JffacJ^^Jyf^^ ^'^^^^^^^^ 
 
 ay present °S5tie8''ig^J^laGt^thJ^^'^''^ *!?*" anything else in 
 through others, for the sa?e o?^L.^**^^^ ^'^^^ obliged to act 
 organization; I cannS ee? fr, 5/*?°^^^^'^® *"^ ^o^ *^s sake of 
 like. If I so to a h;.ff^ t^ ^® °^°^® personal touch as I would 
 oipline if 'l^Sere ?o Jndertake'lo tl TT^" ^^^olutely upset'^Sx^? 
 talk with him about his cJnditin^o^ ^ 2"! °^ ^^^ "^^ there to 
 work; then the manLer «^n?H^^+^' ^^"* ^^^ ^® ^^^Is about his 
 so keenly that Ki le?? St LnTr"\*° anything. I feel that 
 appointed a manager to taVP mv ^P^i^' ^^^re I was manager, and 
 oany friends in 1?^ L?ui« L7n^i^°^?*^^-®' ^^^^^ I have k great 
 
 quently, if oSy to nlay gS? f dff iL^^'^Jf '''f *° ^^*^^^ ^^'- 
 two years 1 did not o-o L^+kI' l^^^ "°* return frequently; for 
 
 to the Club tni fcol^ersef ?here'w!^h^Mm' bJi'"' ^^^^'^ ^^"'^ 
 fairness to him, to ^et Iwav f ^«m /k * ' P^cause I wanted in 
 
 whom I had hiiek. rfL ZLil^.^^^J organization, everyone of 
 fortunate who caA <ret Jnt? ff®** deprivation, and the man is 
 
 to tell the othS flliow l£!'^r"*^ 12'"''^' '^® ^««* I can do is 
 personal touch? ^^^' ^® °"Sht to do when he is not in 
 
 request •from%'hrfactiri%?r^Jhr?Jr^/*^^^'' '^° °*" Set a 
 the thing he does not win t ^f^ ^"^ he wants, ratner than for 
 
 you know the thoughts rhai*«T.?H ®r?' ^" °*^«^ '^^'^' *hat if 
 in the factory? Kheruiinn <^^^f*rioaliy opposed to your own 
 a Channel opeJ'that 2rin^^°\°J^^°*',J^« JJ^^S t° do is to ha^ 
 thing you want them to d^ wSpn^^! * ^"^2* the maiiager to do the 
 ask for something ent?r??y dS^ren?. **^^ °^ ^*°*' ^^^^ "^g^* 
 
 President Pank: Very true. 
 in some%uSh'[ns?;ncesr^^'^ *^^"^ *^^' ' ^*^« ^^^'^ successful 
 
 -43-H 
 
T thi^r "^v"* ^^^* ^ *^^"^ **^ere is a difference in handling, 
 wn^v »i*K 4 r! ^ different situation and a different class to 
 woric with in the sales organization than in the factory. 
 
 Mr, Anderson: Oh, yes, 
 
 n«t*>J''^!^'*^"* ^^^y- "^^^^ ^« ^^y T say that I do not feel com- 
 petent to say anything on the factory side, 
 
 Drettv'',;norJho*o ^ "^^^^ ^^^ ^^^ ''« h*^e i" o"' pension plan 
 in exLr^t J« ^^® arrangement as you, although we do not have 
 tervi^^ h*i : and we have 3 percent, a year f§r each year's 
 Xn Re?'on?i 7S ^^""^ f* "? *° ^^'^/^ years; in other words, one 
 last ten v«Ll ^I'^'T^' "^ ^^^ average annual earnings for the 
 xast ten years, w© do not limit the amount we earn. 
 
 rulin^rof*^o5r It^V- ^® °J *^® ^^^«* "6" "^0 oarae under the 
 fraction Lo^f pension system was a man who had served 49 and a 
 
 oS B^Sd asJpH ?h%°^ °"^ vice-presidents, and the chairman of 
 man) we 'vat?p fho*"^* f? a special favor to him, to the chair- 
 casi: Jntil JJ «hn,n5^i^°^^^°" °^ *^« pension rule in that man's 
 it would i: J® ^*^°"^? ^^^« completed his 50th year. He thought i 
 The Herein? rf.L''-°t ^^^S^ to have him complete his 50th year 
 have 19 Der«p;/ i^.'°^5^* $4,000. pension for him, but he had to 
 pen^iJn ?KSt felJo^*'^' '"^'°' ^''' ^'"^ ^^^' ""^^^"^ the actual 
 
 draw wo^f Sl'S?lmaIel%1JjS.S?""* '' "^"^^ ^" ^"^^°^^ °^^ 
 
 throuJrhif?if«^"«n^ '^i^L^^ P" y®^'- That pension continues 
 ^arougn nis life, and at his death onn-hAif t.ho «*r,<=<«r. ^«^*««.. 
 
 to his widow, so 
 
 long 
 
 death one-half the pension continues 
 as she remains a widow. 
 
 44-H 
 
COMPRESSED AIR SOCIETY MEETING 
 September 36^ 1919 
 oOo 
 
 After the Secretary had preeented the data he had 
 collected, 8ubstam;:;ally as recorded In the minutes of The 
 Hydraulic Society meeting^ and as shovm on pages 1-H to 26-H 
 herewith, the following discusaion took placet 
 
 Mr» Jones: Wbuld it be possible, Mr. Rohrbaoh, for you to 
 reduce those letterc, without too much labor, into a schedule 
 which could be written up and sent to us? 
 
 The Secretary: Yes, Mr. Jones; it is just a question of 
 whether to copy each letter or to give a digest, or summary of it* 
 
 Mra Jones: 1 think we have all got this proposition before 
 usv Most of us have to put these various schemed up to our 
 Executive Board, or to the people who are going to take the final 
 action, and they like to see what other people are doing; and it 
 seems to me that the more information of that sort we can get, 
 the more It will help us* 
 
 Ui. Albin: Our President has had one of his men gathering 
 that kind of information for a year. 
 
 The Secretary: How would it do to insert in the record 
 the names of the concerns from whom replies have been received, 
 then the letters could be copied in the record without 'identify- 
 ing them with the names of any particular con5)any? 
 
 Mr« Jones: I think that is very good. 
 
 Urt Albin: Send us whatever data you have* 
 
 « 
 The Secretary: The concerns who have written me are very 
 ttuch interested in the subject t 
 
 Mr* Wall: You would be doing a good thing in distributing 
 that information. 
 
 STOCK OWNERSHIP BY EMPLOYES 
 
 Mr* Reynolds: Is the Underwood stock actually issued to 
 the employes? 
 
 The Secretary: The stock is actually issued to them, and 
 
 36-0 
 
r 
 
 as an inducement for the empj^oyes to hold the stock, the Company 
 gave an extra dividend for the first two years equal to the 
 regular dividend to all men who still were holding their stocky 
 They also have a rule prohibiting a man from selling his stock 
 without the consent of the trustees under a penalty of not shar- 
 ing in the distribution for the succeeding year, or for the 
 current year. 
 
 Mr. Reynolds: Those are all inportant points, 
 
 Mr# Jones: That stock probably has to be bought on the 
 market, because very few companies would carry unissued stock in 
 the quantities that would be needed under such a plan, 
 
 Mr, Copeland: I was reading, last night, an article by 
 George W, Perkins on the desirability of a stock issue to em- 
 ployes as against a bonus* 
 
 Mr# Jones: Our people had to go out and buy on the market 
 the stock that they have distributed* 
 
 The Secretary: The advantage of distributing profits in 
 the form of stock is that in times like these a Company is some- 
 times pretty well tied up on resources, and can probably use 
 the money in the business that is tepreeented by the profits and, 
 therefore, they are building up a reserve by capitalizing the 
 profits instead of making a cash distribution, 
 
 Mr, Albin: They are also building- \5> a dividend liability, 
 
 Mr, Copeland: After the dividend has been paid, there is 
 a certain amount of surplus turned into stock, and if this re- 
 mains in the business it gives them a continuing interest, 
 
 Mr, Albin: We practically followed Perkin*s scheme of 
 stock distribution. In the office or management class the stock 
 was kept, except in oases where a man severed his connection with 
 the company, but the rank and file of the shop employes acted 
 very differently, A very large percentage of those people turned 
 their stock back and never completed their payments, 
 
 Mr, Reynolds: They always will do that. They do not want 
 to be partners, 
 
 Mr, Copeland: We sold our stock to our employes at par, 
 and our only provision has been that anyone who sold the stock 
 
 ??. ^v?!^^^ set an opportunity to subscribe again, and practical- 
 ly nobody has let his stock go, 
 
 o^^^i^^Iv.^?^?^-''^' "^® anybody found that a workingman wants 
 stock; that he considers it of value? 
 
 Mr, Copeland: We have. 
 
 37-0 
 
Mr# Reynolds: 
 in cash every week. 
 
 My iopresslon is that he wants his dividends 
 
 Mxt Jones: Have ^you not got, Mr* Copeland, up in your 
 factory at Claremont a little different element than the most 
 of \is have in our factories that are in or near big cities? 
 Haven •t you an element that is born and raised there largely 
 and vrtio are a little more inclined toward thrift and investing 
 their savings? 
 
 Mr, Copeland: We have just had a surprising experience. 
 We have not analyzed it yet* At the last offering we had 
 relatively more subscribers among our Chicago employes than we 
 did among our Claremont employes. 
 
 Mrt Albin: It worked the other way with us. 
 
 Mr* Copeland: I expected it to work the other way and 
 cannot account for it yet. We have had to limit the men to five 
 shares each ~ the offer was so largely oversubscribed that we 
 limited them to five shares. If anybody wants to pay for it on 
 the twenty-payment plan we let them do sOj paying them interest. 
 I cannot help but think that all these things are intangible* 
 You cannot tell until a crisis comes, but I am optomistio 
 enough to think it helps* r 
 
 Mr» Reynolds: The trouble is that the men do not want to 
 share in your losses if any should develop. If you were sure 
 that you were always going to pay dividends, that would be all 
 right, but you have lean years and capacity years. The lean 
 years usually predominate, and the workingman is not willing to 
 share that loss and if the stock falls in value or does not pay 
 dividends, he thinks he has been buncoed. He wants his dividends 
 paid and he mistrusts your bookkeeping and everything else. 
 
 The Secretary: A study of the pamphlet that the Government 
 has issued, in which they investigated a number of cases, seems 
 to indicate that that is the general result of stock-ownership 
 schemes and bonuses; that they are a failure as far as the shop 
 element is concerned. 
 
 them. 
 
 Mr. Copeland: I think that is where we have to eliminate 
 
 The Secretary: The Proctor & Gamble Company of Cincinnati 
 are about the most successful in that respect of any concern I 
 know. They have a very liberal stock o^vnership plan that has 
 been in successful operation for many years, but most concerns 
 as a rule, do not find it a success in the plant. 
 
 Mr* Jones: With respect to the Larkin plan, I should feel 
 in that case that if an employe paid any real money for that 
 stock, he was buying a highly speculative stock for good dol- 
 lars. If it is given to him, it is a different proposition. 
 
 38-C 
 
The Secretary: It is given to him as a stock dividend now 
 and then hereafter a share. of the profits will be given appar- 
 ently out of the treasury stock* 
 
 Mr. Reynolds: Just like any other stock dividend; after it 
 is issued it shares in the profits. 
 
 J^T. Jones: But this stock seems to have little or no basis 
 in its assets* 
 
 Mr* Reynolds: But it is the same kind of stock, is it not? 
 
 «4. ^i'^nn'^^?^®* ^^* '^^^y issued the Preferred Stock for sub- 
 stantially the total valuation of the plant* 
 
 Mr, Reynolds: I see. This is camraon stock that is dis-^ 
 tributed* 
 
 Mr, Jones t Yes, and it participates only in the sucoess 
 or the company. It has no assets behind it, 
 
 BONUSES 
 
 t 
 
 -<*h if' '^°i|®f • ^^^^ has been the experience of the members 
 with respect to boniises? 
 
 cnr.no!f«' • ^yf°l<^; ^^^ Company, along with practically every 
 
 wa? Inrf 2>,I^ii''^''^®^,f^!^^^^^*'®^ ^ ^"^8 system during the 
 
 r ?A+^7 I?^?? "® abolished about thirty days ago, to get rid of 
 
 ?he ipSnn?*°^^rP'"f *^^* ^* involved, and idded the aSounrto 
 the regular rates of pay, 
 
 upon comDll5?nn^«? ^ ^^ 7^® originated gave a ten percent . bonus 
 aSa?t«r^;ri^ °^* y®^""^ service. This was paid in part each 
 ilrl tf K?"^ ^ employe who did not remain a full year ibst a 
 
 ?he\fbor'?uSoT;. '' """ "°' '^'P '""°'' ^°''^^^^' '- ^'^-?"e 
 
 ..amo "^i. "^o^es: Our Company's experience was practically the 
 
 sSp^ relliy Sok^if ?" S^' *^e.°"^y *^^"S *^^^ the me^ in the 
 bonSLrare\i?«^ T ^^ ^^f "^^^^^ ^^^ envelope, and 1 know that 
 oonuses are being dropped in a great many cases. 
 
 hij^h oJ^t^n?"?^*??* ^! ^"^ ''^^ established to help meet the 
 pefmanenJ oLiJ^J"^ ^"^ ^% *^^* ^^^^^ *o ^e practically a 
 
 Srpur?ntr??r sa?ar?es. °'"^""^ ^'°'^^^ '^"^ " "^^^^ ^ ^^^^ 
 
 8hop8"b^t°Sv«^?'„.°"^'^°'^^"y v*'^^®^ °"* ^ ^°"^s plan in the 
 b^§Sie^\f^^^Hnno;7r?heTw?^d ^?a?^^'* °^^^ ^^^* '' 
 
 39- C 
 
n* 
 
 We still have a modified form of the system in effect^ 
 by which a bonus is given at the end of the year to anyone who 
 has put in special efforts. A certain lump sum is voted for this 
 purpose, the distribution of which is in ray hands, and no one else 
 knows the basis upon which it is made% 
 
 Mr« Reynolds: Our Conpany has a limited profit sharing plan 
 in effect, the amount of which varies according to the Company's 
 dividend rate. The division is made among certain enployes in 
 the offices euid shops upon whom really depends the ability of the 
 Conqpany to make a profit. It is called our Class "B" Fund and 
 has amounted to approximately 14^ of the salaries paid the 
 participants. 
 
 Mrt Jones: We are all tip against the proposition of taking 
 care of the salaried employes in some form or other and I be- 
 lieve the solution is some scheme by which they will share in 
 the profits, although not on a fixed basis. 
 
 Mr. Reynolds: In the past, we were always able to get a 
 
 lot of the young fellows out of the shop into the office but 
 
 we cannot get them to come now. They get twice as much money in 
 the shop* 
 
 Mr. Jones: The rates have gone up faster there than in the 
 more desirable salaried positionst Of course, the answer to 
 this fftiole situation is in the future. I cannot but believe 
 that we are going to drift into a time when there has got to be 
 some change. How it is going to come about, I cannot tell; but 
 we all know that our success in this country is largely wrapped 
 up in the export business. We have got away be^'-ond the point 
 where we can absorb all we produce. We have got to ship in the 
 neighborhood of about three billion dollars worth of material 
 abroad yearly. Well now, we are not going to ship any three 
 billions with the prices we are having to get now, as soon as 
 the countries abroad can resume productions, and they are re- 
 suming very rapidly. I think Germany will be underway very 
 shortly. These things you read in the papers about her disor- 
 ganization are all fakes. I have reports from Germany that her 
 industries are running very smoothly. It looks like the moment 
 we have fully supplied the demand (LA this country as, though we 
 were going to come up pretty suddenly against a condition that 
 it is going to be hard for us to solve, 
 
 MTf Copeland: But we have got to pay these people enough 
 to live on and give them a chance to save some money. 
 
 Mr. Jones: DonH you think we are going to approach one 
 or two years in which the manufacturer has got to be satisfied 
 with very poor returns? We are not going to be able, as I see it, 
 to decrease the wages first. That is going to be the last thing . 
 Do not decrease the wages first. We have got to meet competi- 
 tion abroad. We have got to meet it if we want to get rid of 
 our surplus, and if we do not get rid of our surplus we are go- 
 
 30-C 
 
r» 
 
 JSSno? b^m^^n Jf°*5'^®® ^* seventy per cent, therefore profits 
 cannot be maintained as at present, 
 
 hill- «o I^» '■'■"' "'^l.''^ course, we have not approached that yet. 
 but we are approaching it rapidly, >- yo*-. 
 
 Mr« Reynolds: When you say "rapidly", what do you mean? 
 Mr. Jones: Probably in 1930. 
 
 PENSIONS 
 
 for «m.^i^fj®^^v"®®'* "*^® *^"y «>^ *^e members any plan for pensions 
 for employes who grow old in the service? 
 
 it sinJe 1914^^""^* '^^ ^^""^ ^ definite pension plan. We have had 
 is endJd?^"^^^"^®''* ^^"^ ''®*"® *^® "®" ''*^®" *^®^' usefulness 
 
 serviSp'o?^!!^?* '^^^^^^^ ^^^"^ ^^ option of lengthening their 
 thSs! We^iri^f;. ^^^ ^^ ^°^*^" °"« °^ ^^°«^ intanfible 
 cidef? insSrScef ^ ^^^ expense. We also carry our Iwn ao- 
 
 more vain^Ml^J?! ' ^*,ftrikes me that a pension system is really 
 ?Se'oSrmin veJy ^Sh!'"'^*^'"^' ^' '' ^^'^^^^^ *^^ ^^^^^^ ^^ 
 
 that hp'hS"!^* I* appeals to a man after he becomes fearful 
 lltlA^ w ^"^J^A^ P°^"* ''^^^ ^i« services can be easily dis- 
 
 reached.' ^^''°^'^^' ^°' ^^ '^^s not at all until that period is 
 
 be t£lk cSriJ^'^theLlira^er ^ ^''^""°' *^"* *'^^ ^^^ 
 
 uercentla^^^^fJ!'^? ''^^^ "^ "^ ^^* * definite payment, a certain 
 d? So? h!v« L*^^'^^^^^y ^°' ^ certain period ot time; so you 
 SoSll pay! ^"««*io» i" your own mind as to what penlion you 
 
 reaches'thf aL S*Sr,*J® Fairbanks-Morse Company, after a man 
 reacnes tne age of 60 he can voluntarily retire. 
 
 Mr, Copeland: We have a voluntary system, too. 
 Mr, Wall: Do the emjiloyes contribute to it? 
 
 31-C 
 
 V 
 
Mr, Copeland: No. 
 
 Mr, Wall: At the Fairbanks-Morse Co. the salaried vvorkers 
 do amd the wage workers do not contribute. 
 
 « 
 
 Mr. Copeland: We patterned ours after the American Telephone 
 and Western Electric Conqpanies plans, modified to suit our con- 
 ditions. 
 
 Mr. Albin: The Fairbanks-Morse Co. puts in dollar for dol- 
 lar whatever the employe pays in, they put in an equal amount. 
 
 Mr. Pressinger: The employes remain with you because they 
 cannot withdraw what they have put in# 
 
 Mr. Reynolds: I think the law would give them that. 
 
 . . ^J^^* Jones: They would only be withdrawing one-half the funds, 
 II the employes pay in half and the company puts in half. The 
 Insurance Lav/s would give them that. 
 
 v^^' *^11* Three percent, per annian on four thousand dollars 
 is the highest any man would pay wi+ii the FcdrbtokAeMorse Co. 
 
 Mr. Copeland: We carry our own accident insurance. 
 
 Mr. Wall: Do you carry any group insurance? 
 
 Mr* Copeland: No, but we carry our own accident insurance, 
 ana the accident companies tell us, now and then, what an awful 
 risk we are taking; but it is very much cheaper and we have the 
 privilege of settling with our own men. With the old insurance 
 schemes you usually have a fight and they pay as little as they 
 can. On the whole it works out very well. 
 
 Mr. Jones: You always felt they did an injustice and you 
 were paying for it. 
 
 Mr. Copeland: Yes, and it male it very hard for one of our 
 
 superintendents to collect evidence for the insurance company, 
 
 to enable them to beat the man. That is the way the thing worked 
 out . 
 
 The Chairman: Does that conplete everything you have to 
 present on this subject, Mr. Secretary? 
 
 The Secretary; Yes. 
 
 sav -h^! S^^^n""."! ^^^^' ^ ***^"^ ^ spea^ ^or iall of us ^^en I 
 say tnat Mr. Rohrbach has uncovered a vast amount of valuable 
 iniormation. He will present summaries of it and give us some- 
 oj T^,i^ think oyer and digest at our leisure. That is the plan 
 as I understand it. 
 
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 TITLE