Chicago, June 17, 1911.
My Dear Boy:—Not so very long ago the wife of a passenger conductor, running out of a large southern city, sought the assistance of her pastor, a noted divine. She was worried by the fact that her husband was stealing the company's money. With a good woman's intuition she knew that the wages of sin is death; that sooner or later her husband would lose his job and his family its legitimate income. To her good, old-fashioned, unspecialized conscience stealing is stealing, whether called "embezzlement," "holding out," or "trouble with the auditor." The fearless evangelist shortly afterward preached a powerful sermon against stealing, and included passenger conductors in his warnings. So incensed was the conductor in question that he announced his intention of disregarding the protection carried by the clerical cloth and of knocking the minister down. When the two met his bluff was called. The conductor, not the minister, came to his knees, not in fighting, but in prayer.
Here, my boy, is a canker sore that must be cured. Do not tell me that the Order of Railway Conductors is alone to blame. Do not tell me that in the lodge room the order side-tracks the eighth commandment for the working schedule. Do not tell me that the order will expel a member for any other offense rather than for stealing. Do not tell me that our problem is harder and our revenue less because Ed. Clark, the grand chief of an order thus lawless, was appointed by Teddy Roosevelt to sit in judgment on us from the high throne of the Interstate Commerce Commission. Tell me, rather, that we, the official class, are to blame; that we must cease to dodge responsibility. We, the educated and entrepreneur class; we, the elder brothers of society and industry, cannot shift the burden.
Please do not misunderstand me. There are many honest passenger conductors. I have known them on the road and in their homes. Some there are who deserve the more credit for withstanding temptation because of sickness or extravagance in the family. There are, however, too many dishonest passenger conductors. It is not enough for a man to be honest himself. The complexities of modern life make him more than ever his brother's keeper. He must not only stand for the right but condemn the wrong. The Order of Railway Conductors must make the American people believe that it is a great moral force for honesty in all things. We, the officials, must help the conductors to bring about this happy result.
The clerk for the corner grocer will not steal from his employer as quickly as he will from a large corporation. The existence of a personal employer brings home the moral turpitude by visualizing the individual wrong committed. Coupled with this higher moral incentive is the fear of detection through close personal supervision and interest. In a large corporation we have to approximate to this condition. The corporation, an impersonal creation, is vitalized by the men charged with responsibilities. The problem of organization is to give maximum effectiveness to this vitalization, to utilize to the fullest degree the personal equations of those entrusted with authority. Many railroads have lost control of their passenger conductors because of a fundamental misconception of the principles of true organization.
On the early railways the superintendent was the only officer the conductor officially knew. The superintendent, close to the president, was interested in the revenue as well as the disbursement side of the company's ledger. If the conductor stole, if the returns were short on a day of heavy travel, the superintendent was among the first to know it, and to preserve his own reputation, and thereby hold his own job, promptly discharged the conductor. By and by some conductors graduated into superintendents. This new condition brought a new temptation. The conductor, if allowed to keep on stealing, and if favored with a run where the stealing was especially good, could well afford to whack up secretly with the superintendent. A few, a very few, superintendents yielded to this temptation. Along came the auditor with his mistaken theory that human nature can be changed and men made more honest by being put in "my department." He said, in effect, "Take this away from the superintendent, who is dishonest and busy with other things; let this mysterious specialty of conductors' collections be handled by the only honest department." So the superintendent was relieved from responsibility for making his conductors render honest returns. He soon lost interest in that feature. The roads grew, and superimposed above the superintendent came first the general superintendent, and then the general manager, both also relieved from this responsibility to which the auditor clung with jealous tenacity. The conductor probably could not have told what principles of organization had been violated. He was the first to see the easier mark the company had become, the first to profit by the serious mistake that had been made. He found that his reports were checked by office clerks hundreds of miles away and entirely uninformed as to current conditions of local travel. The superintendent and the other division officials who rode with him and knew conditions were powerless to check him promptly and effectively because his reports and returns were going to somebody else over the hills and far away. These officials, because somebody else was responsible, did not seem to care very much. So the conductor stole under their very eyes and got away with it. Anything like this which begets a wholesale contempt for duly constituted authority is demoralizing to general discipline. The labor unions are not alone to blame for the spread of insubordination.
All men are students of practical psychology, whether conscious of the fact or not. The conductor found that to hold his job he must do well those things for which the superintendent and the division officials were responsible. So the bigger thief the conductor became the more careful was he about other duties. He was a crank on train rules, perhaps, or made courtesy to the public his watchword. All of this stood him well in hand. Sooner or later the spotter caught him and the auditor requested the general manager to order his discharge. When this got down to the superintendent or the trainmaster the conductor was called in. Instead of being berated for a thief, if he acknowledged the corn, the conductor was discharged, half sympathetically, half apologetically. The division official would have resented the imputation of harboring or encouraging a thief. To him the conductor was an efficient, faithful employe, meeting all requirements of service. If the conductor failed to please somebody else it really must be the fault of that somebody or the system. This feeling was not unnatural, since the detection came through a discredited channel, the spotter. Rare are the circumstances where secret service should be necessary. There is something inherently wrong in any system which has to gain routine information by indirect methods. The detective should not be necessary for checking the good and the bad alike, but only for following up those who become manifestly bad or notoriously corrupt. The most efficient system is that where open checking and inspection are so thorough that temptation is diminished by the ever-present thought of prompt and sure detection. This desirable condition cannot obtain where the system makes such important officers as the superintendent and the trainmaster unconscious attorneys for the defense, sometimes openly advocating reinstatement of a thief. On the contrary, from its impersonal nature, a corporation must be so administered as to gain the moral effect of every available force for right, to secure the help, however small, of every person connected with the administration. Views of composite efficiency must converge at a point sufficiently near to be of practical value, not so remote as to be of only theoretical interest. No system is perfect. Under any conditions the very size of a railway necessitates a trifling allowance for peculation which creeps in. This can, however, be reduced to a negligible quantity.
So completely has the old system broken down on most railways—there are a few exceptions—that it has become a farce. It is a sad commentary on organization that many roads are giving the passenger conductor up as a bad job and putting on expensive train auditors who usually are really not auditors, but collectors. They are called auditors probably because they are under the auditor. It is a principle of organization that the staff as such should never command the line. The staff reviews, inspects, audits, studies, advises, suggests and, perhaps, promulgates, but should never execute, except as a representative of the line, the latter being responsible for the results of operation whatever the operation may happen to be. The accounting department is a staff department. When it was given charge of a line function, fare collection, a principle was violated. Ultimate failure of the system was therefore certain and inevitable. The train auditor proposition fails to recognize this underlying cause. It further violates principle, intensifies the evil and wastes more money by increasing the number of staff men doing line work. Its direct effects are vicious and its indirect effects are demoralizing to discipline. How can the young flagman have due respect for his superintendent or other official when he sees the train auditor come to the rear platform and demand to see the pass of the official? If he is an old flagman it is a little hard for him to see why he himself or his friend, the old station agent, might not have been given this new job with its fine pay. Like his superintendent the flagman may have been in the service twenty or thirty years. The train auditor, only last week a country hotel clerk, mayhap, flashes on them both as a would-be superior being from a better world. Neither of the two can become very enthusiastic in helping the train auditor to protect the company's revenue.
It is an awful reflection for the conductors to meet, that, although the railroads of this country are now spending hundred of thousands of dollars for train auditors, they are more than getting it back from increased collections turned in. Is not this more of a condemnation of the old system than a justification of the new? Whether or not the train auditor enters into collusion with the conductor, the former soon learns how easy it is to beat the system. When he does break loose he will be more reckless than the conductor. The latter probably had to work for years as a freight brakeman and a freight conductor to get where he is, and if he loses out may be too old to begin all over again. The train auditor gets his appointment too easily to value it very highly. Offsetting this is the fact that the train auditor is more amenable to some discipline because, as yet unorganized, he can not rely on the support of a labor union to secure his reinstatement. The auditor also has the advantage of examining character from a wider range of selection in choosing his train auditors. The train and engine services have been so badly over-specialized, as I shall show you some other time, that our choice is restricted to men whom the trainmaster happened to hire as extra brakeman years ago. These slight advantages in favor of the train auditor system have been given undue weight. We are all too much inclined to dodge responsibility, to take the course of least resistance and to pass it up to the other fellow. The company pays the bill.
The railways of this country are wasting hundreds of thousands of dollars every year by failure to make the conductors do their honest duty. I would like to have you immortalize yourself by saving your company its pro-rata share of this economic waste. The American people at heart are honest, and barring a few dishonest traveling men who short-fare conductors and train auditors with cash, will in the mass support you and the Order of Railway Conductors in any intelligent movement for honesty. On the other hand, if the people at large get an idea that you are omitting to use all the moral forces at your command they will organize some more special commissions to handle another part of your business for you. Do not let the people get the idea that where passenger fare stealing flourishes, freight claims increase because some freight crews are robbing box cars, and expenses increase because some officials are grafting.
If I were your president I would ask authority of the board of directors, a staff body, to say, as a line officer, to you, also of the line, that as chief operating official you are the only passenger conductor with whom the executive and staff departments will normally deal; that your tenure of office depends quite as much upon your ability to prevent stealing as to prevent accidents. To the auditor I would say that he is responsible for certifying to the integrity of all components of your operations by proper examinations after the fact; that he has access to all your accounts and records; that he has no direct authority over any operating men; that all his instructions must be in general terms duly approved by the proper executive. Then he would be a real auditor instead of a chief accountant. We would not have to call in the public accountant to do our real auditing. You would be a real general manager.
Assuming that the proposition is up to you, then say to each division superintendent that he is the only conductor on the division in whom normally you will be personally interested; that the conductor will send either the original or a duplicate of every report made by him to the superintendent's office, addressing it impersonally, "Assistant Superintendent." Let the superintendent understand that he and his assistant superintendents when riding over the road on duty at the company's expense must openly check the train just as they check train orders. Pitch it on the high plane of self-evident routine duty for duty's sake, above any thought of underhanded spotting. Give the superintendent as many assistant superintendents and clerks as he may need. Do not let him employ specialists for this one simple component of operation. Have him bulletin train earnings by conductors that the dear women may help the cause by sewing society discussion. Let him have the community understand that some explanation is expected from a get-rich-quick conductor. By this time it will dawn on the superintendent and his assistants that their jobs depend upon the prevention of stealing. Their unconscious sympathy with the thief will vanish. Because they are close enough to the proposition to give practical attention they will prevent stealing.
I am aware that passenger conductors often run over more than one division. This presents no serious practical difficulty, although for many other good reasons also it is better, when practicable, for conductors not to run off the division. Pullman conductors run from their home district over the districts of several of their superintendents.
You and the auditor will have to work out the details as to the necessary bureau in your office, depositaries for money, interline relations and numerous other propositions which usually become self-suggesting when the broad working principles are established. You may, perhaps, need another assistant general manager for this work. You will not have the trouble a general manager in Mexico once did. His assistant general manager sold out, it is said, to the conductors. These conductors, mostly Americans, were an enterprising lot. They are also said to have bought the detective agency that was employed to check them up.
On some runs where the conductor is busy with numerous train orders you may find it better to make the head brakeman a collector, but never let him be a specialist independent of the conductor.
Affectionately, your own,
D. A. D.
Omaha, Neb., June 24, 1911.
My Dear Boy:—You tell me that you are conducting labor negotiations these days. As I understand it, all the old grievances have been merged; after eliminating all demands introduced for trading purposes it is simply a question of more money. This simplifies the proposition. The union gets all that it can and the general manager gives up only what he must. Simple, but barbaric. Such innocent bystanders as the public and the stockholders may get hurt in the process, but that is part of the penalty for being innocent bystanders. We are in a transition period. All the hot air fests that you are now holding are probably necessary to blow the chaff away from the wheat. Sooner or later the irrevocable law of supply and demand must operate to place the whole matter of the compensation of labor upon a more scientific basis. At present it is rather the strength of the particular union than the relative justice of its demands.
Our predecessors of two generations ago did many fine things, but they overlooked some basic propositions. Suppose that fifty or sixty years ago when a brakeman expected to be promoted to a conductor they had said: "Fine, my boy. You have the ear-marks of a conductor. You understand, of course, that we have no conductors who cannot run an engine. We will arrange, without money loss to you, for you to fire two or three years. When you assure us of your ability to run an engine we will begin to commence to talk about making you a conductor." Later on a man with this splendid all-around training could have specialized along the line of his greatest aptitude. We would not see freight tied up in terminals waiting for firemen, with a board full of extra brakemen. There would be an elasticity of assignment that would work out for the good of all concerned. We would not have the fireman straining his back to shovel fifteen or twenty tons of coal while a different breed of cat, a brakeman, rides on the fireman's seat and forgets to ring the bell when the train starts.
We blame the unions for expensive lack of interchangeability of function. The fault lies at the door of the official class. The master mechanic said: "This is my man." The superintendent, and later the trainmaster, said: "This is my man." This pleasing tenacity for so-called individuality left the company out of the reckoning. The company got it where the chicken got the axe, sweet Marie. It did not take the men long to respect the plane of cleavage which the officials had projected. So we have a number of unions with conflicting demands rather than the more enlightened self-interest of a larger body. I know that it has been fashionable to play one union against another, but the day of this is nearly passed. Just how it will all work out I do not know; perhaps it is too late to expect amalgamation. Perhaps it will come of itself when the Firemen and Enginemen absorb or replace the Brotherhood of Locomotive Engineers, and when the Trainmen outlive the Order of Railway Conductors. Whatever the cause and whatever the existing conditions the result is plain. We have a number of forces operating to restrict the output of capable men. The economic machinery of society at large is therefore out of balance. You cannot blame the artisan, skilled or unskilled, for guarding the entrance to his craft. It is human nature, and it is right. The debatable ground, however, is as to where the entrance of the public at large should be to prevent the matter being over-done. No one labor organization can expect, in the long run, to be given preferred consideration over another; neither can the labor unions, comprising only a small percentage of the country's population, expect indefinitely to dominate society at large.
It is useless to expect to accomplish much in the way of increased elasticity of labor as long as railway officials, through so-called departments, insist upon narrowing and specialized rigidity. Such reforms to be effective must begin at the top. It will all come out in the wash, but in the meantime the laundry bills are disproportionate and may place cleanliness far beyond godliness.
General Sherman, one of the versatile geniuses developed by our great Civil War, once said that most men consider the immediate at the expense of the remote; that a few like himself were handicapped by considering the remote rather than the immediate; that really great men, like Grant, derived their title to greatness from an ability to balance the immediate and the remote. All men are more or less a product of conditions and environment. The railroad official of to-day lives from hand to mouth—the hand of expediency to the mouth of rapid-fire results. When more roads are like the Pennsylvania in having the stability which admits of intelligent, far-seeing, actual control by directors and executive officers, it will be easier. The banker, from his condition and environment, dreads a war or a strike more than the famine and the pestilence. The former two seem to him to be avoidable, while the latter may be visitations of Providence.
A strike, like a war, is a terrible thing to contemplate. A surrender to principle and violation of the broad laws of true altruism can be even more terrible. Last year when the Pennsylvania, backed by its directors, called the bluff of the Trainmen, there was hope in many a breast that a lesson would be learned; that the rights of the community at large would be vindicated as against the unreasonable demands of the powerful few. How quickly did the Trainmen find an excuse to back down! Their friend and adviser, the late Edward A. Moseley, shrewd and scheming, once told them that their best weapon is a threat of a strike and not the strike itself. By and by the bankers will learn these lessons and bargaining will be scientific and altruistic as well as collective and coercive.
Perhaps you are thinking that, like the minister who lectures the members present for the non-churchgoing of the absentees, I am taking too much of this out of you. We all know, as do the labor leaders, that no general manager ever went through a long strike, successful or unsuccessful, without ultimately losing his job. The directors start out with the best intentions of supporting him. As the struggle grows fiercer, the temporarily reduced earnings have a refrigerating effect on their feet. This cold storage is reflected by a message to the brain that the poor Mr. General Manager is so unfortunate; that he lacks tact. "He is so rash. He jumps right in. We told him he might go out to swim and hang his clothes on a hickory limb. We cautioned him, as all prudent mothers should, not to go near the water." Everything in this world costs something, and nothing is more expensive than an unjust peace, a peace which leaves out of the reckoning the rights of the body politic.
One of the hopeful signs of the times is the opposition that the labor unions have offered to the exponents of so-called scientific management. Already our critics are giving indications of becoming our allies as against the hard-headed, selfish opposition of labor unions to progress. This will serve to help show the public our problems in their true light. All that we need ask is a fair hearing, and ultimately the calm judgment of the American people will decide aright.
I have no quarrel with the labor union, as such. Were I in the ranks I would belong to a union and give it my loyal support. Monopoly and combination of capital beget as a corollary a labor trust. You and I are powerless to eliminate the effect of such natural, economic forces. We can, however, help control the effect of these forces, preferably by reason. There are so many of the primal instincts and passions still extant in human nature that at times diplomacy exhausts itself and falls back upon the protection of forces offensive and defensive, active and passive.
You see that it is merely a phase of a general problem that a disproportionate amount of your time is taken up by affording an opportunity for delegates to make their lodges believe they are earning their per diem and expenses. What matters it to the locomotive engineers if their importunities cause scant attention to the unspoken rights of your clerks and trackmen? Why not figure out just what proportion of your time the different organizations are entitled to, shut off senatorial courtesy and limit debate accordingly?
Whatever you do, have your division superintendents present at your negotiations. Do not flatter yourself that your own wonderful ability will enable you to take a sound position on every question that may arise. Such deliberations are staff work and, unlike line administration, are not a one-man function. The final decision should rest with you, but in the meantime get all the light you can. Under the unit system the superintendent can be thus spared from his division to help save the company money because there is always a competent man to perform his duties, and a provision all along the line for automatic successions to meet just such incidents of service. It should be as easy for a chief assistant superintendent, familiar with the routine, to assume the superintendent's regular duties any day as for the second dispatcher to work the first trick. When your mechanical assistant conducts his shop negotiations, by all means insist that he direct the superintendent to send in each mechanical assistant superintendent to assist in the conferences.
One reason that the labor situation has gotten away from us is because the matter has been handled on too large a scale. The tendency has been to consider the abstract possibilities rather than the concrete effort. A superintendent of a 140-mile division once recommended approval of an application for increase in wages of his milk train crew, because the men on the next division were getting as much for running only 105 miles. Investigation showed that his men were on duty less than six hours, of which the total time consumed in handling milk cans was a trifle over an hour. Each general manager is inclined to believe that his men will get the worst of it as compared with other roads. He has been inclined to yield when he should have been firm. The further away from the concrete local conditions the negotiations can be conducted the more vulnerable are the officials. The labor leaders know this, and the more divisions or the more roads they can bunch in a single negotiation or arbitration the more unwieldy becomes the proposition and the greater the gain for labor. This condition of things was partly inevitable, is now partly avoidable. Uniformity may be deadly. Standardization can be run in the ground, as was shown when a West Virginia agent of the Chesapeake & Ohio painted his wooden-leg orange color with maroon trimmings.
Affectionately, your own,
D. A. D.
Chicago, July 1, 1911.
My Dear Boy:—One of the easiest things to measure, because definite in terms and limited in quantity, is money. The things which money may represent are hard to measure because often intangible and indefinite. The money account may or may not reflect efficiency in performance. Have we not been grasping at the shadow of money at the expense of the substance, effect? Consider, if you please, the working of a bank, perhaps the corporate institution in whose efficiency the public has the greatest confidence. In a small country bank one man does all the work. Later he requires a clerk or a bookkeeper. As the bank grows there are self-suggesting divisions of labor along such well defined positions as teller, paying or receiving, cashier, vice-president, president, etc. In the first place, the same man handles the money and its written representations, the accounts. When we reach the stage of having both a teller and a bookkeeper, the one is a check on the other, because of a difference in point of view. I do not understand that a bank considers its bookkeepers more honest than its tellers or vice versa. The bookkeeper came along to check the teller, not because of such marked variations in humanity, but because of the volume of business. There was more than one man could do.
The large corporations, including the railways, seem to have followed governments into a fundamental fallacy in the matter of money and accounting. Because, now and then, in spite of safeguards, a trust is violated and money embezzled, a remedy is sought by segregating in administration all activities having to do directly with fiscal affairs. The ultimate effect is dwarfing to administration and fatal to maximum composite efficiency. In a compact establishment like a department store or a large manufacturing plant, the closer contact of the departments concerned minimizes the evils of this segregation. The operations of a government or of a railway extend over so much territory that such close contact is impossible. The result is that our bookkeeper is too far away from the paying teller. The bookkeeper then arrogates to himself fancied qualities of a superior being blessed with a rectitude born of the guardianship of money. Yes, we must have the transactions of one man checked by another more or less disinterested. This is not alone a question of integrity, but concerns the failings of the human mind. The more conscientious and careful the engineer the more does he desire a check on his own calculations by competent persons. We accept the estimates of the engineer, swallow them whole sometimes. We tell him to go ahead and blow in the company's money or credit to accomplish a desired result. This is because we have confidence in his professional ability. When it comes to one of the components of his constructing work, the disbursement of real money, a lay function, we balk. We say to him, this is so different that your vouchers and checks are worthless until mulled over by a distant circumlocution office. This office, it is true, has no first hand, practical knowledge of what you are doing, but because this is money we feel safer by imposing such a check. When the bookkeeper sat in the same room, like a bank, and checked the engineer, this was a good working hypothesis. Did we not outgrow it long ago? We trust the engineer to hire a thousand men, to incur a legal obligation for us to pay them. Why send the pay-rolls several hundred miles to be checked by a lot of boys? Why not let the engineer disburse, subject to a real check, after the fact, by a competent disinterested inspection of his work?
The same general line of reasoning applies to all the activities of a railroad. We endeavor to insure integrity by disbursing only through the central offices of the auditor and the treasurer. By the same reasoning a large bank would keep its customers waiting at one window because only one teller would be allowed to pay out money. A bank can count its cash at the end of a day, but it can never tell exactly what remittances its correspondents have in the mail. A railway's money is even more in a state of unstable equilibrium. All night long some of its ticket offices and lunch counters are open. All night long cash fares are being collected on trains. The exact amount of money on hand at a given moment is only an approximation. This is natural from the characteristics of a railway. It would be a hard matter to stop every train and determine the exact location of every freight car, at home or earning per diem, at any particular moment of time. We can, however, approximate sufficiently closely to the conditions to serve all practical purposes.
Tremble not at my coming, Clarice; I would not push the auditor off the pier. Rather would I put him on the band wagon and let him blow a bigger horn. Is not accounting one of several components of operation of which collection and disbursement are yet others? Why not frankly admit that a railway is too unlike a department store to put all the cashiers and bookkeepers on a single floor? Why not interweave accounting with operation? Why not make such operating units self-contained, as experience may prove wise and practicable? Some of the best roads in the country now have division accounting bureaus in order that the superintendent may keep his operating expenses in hand. The next step must be a division disbursing officer. A pay-roll and certain kinds of vouchers, including some for claims, must become cash without the worthless certification of the general office.
Returning once more to the bank for inspiration and for light, do the bookkeepers of a chain of associated banks report to a head bookkeeper in a central office in a distant city? No, each bank is a self-contained unit under the president or a manager. The policy is dictated, the methods are prescribed by a central authority. Efficiency, integrity, and uniformity are insured by inspections and audits by competent experts free from local affiliations.
What is going to become of the accounting department? Why, the accounting department is going to be absorbed by the operating department. From the ashes of the ruins there will arise a department of inspection or efficiency which will do the things that the so-called auditors are now helpless to accomplish. Some of the men in this new department will be recruited from the earnest officials and clerks of the accounting department of to-day. These men fail to attain the result they so loyally desire, not from their own limitations, but from the fallacy of the system under which they work. They deal with accounts—mere symbols; with money, a representative. Their work, to be effective, must deal with things, and above all with men. Audit is extremely important, but not all-important. Audit is a component part of a larger activity, inspection. The word inspection on railways is unfortunately and improperly associated with the thought of secret service and underhanded spotting. True inspection is as open as the day and as welcome as the evening. The earlier station agents resented the creation of the traveling auditor as a reflection upon their integrity. The station agent of to-day—and as a class what splendid, honest men they are!—welcomes the traveling auditor, because his visit means a clearance. The public accountant had a long fight for recognition of his legitimate function, first in England and later in this country. To-day he is established and is desired by the general accounting officers of railway corporations.
Following the public accountant comes the efficiency engineer. While one inspects conditions, the other audits accounts. By an easy process of evolution the two positions sooner or later merge into one. The volume of business may warrant segregation, however, into component activities. Sooner or later the final certificate must include inspection of men and things as well as audit of accounts.
We, the railways, are big enough to have our own efficiency engineers. This is a distinct function for the staff as contra-distinguished from the line. Efforts, more or less crude, to introduce special staff work have signally failed on a number of railways. The underlying cause has been a violation of the principle that the staff can never as such directly command the line. The temptation of the special staff men, call them inspectors or efficiency engineers, if you please, is to become meddlers. They are so enthusiastic for the cause that they desire to save the country and reform the road all on the same day. The men who succeed at special staff work are those who stick to the principle enunciated. An inspector, because he is a staff officer, should never give an order.
The coming new department of inspection or efficiency, like all innovations, will have its troubles. One of the temptations will be to build up an office full of clerks to check a lot of unnecessary reports. The head of the department, whether he be called general inspector or vice-president, will have to remember that untrained persons do not necessarily become endowed with superior intelligence and professional acumen by the privilege of personal contact with him and assignment to his department. To be successful his department will consist of a corps of highly trained inspectors of official rank and experience, capable of first hand dealing with things and men. The tendency of both inspection and audit is to become perfunctory. One remedy, found efficacious by the Army, is definite and periodic rotation from the line positions. The law of the survival of the fittest will bring out those all-around men who can succeed in both line and staff. The superintendent who has been detailed as an inspector for a year or two will return to a division with a broader view and will be a better superintendent. He will not resent the inspection of his division by the other department, because conscious of the fact that the inspectors are at least his equals, and perhaps his superiors, in experience and rank. These inspectors will certify not only that the money has been honestly and legally expended, but wisely and efficiently as well. While an absolute essential, honesty is not the only component requirement of good administration. The one road on which good intentions are standard ballast is not as yet telegraphing its accidents and its density of traffic to the Interstate Commerce Commission.
Affectionately, your own,
D. A. D.
Chicago, July 8, 1911.
My Dear Boy:—You write me that your work is heavy, that your territory is extensive, that you wish to divide it into two districts each under a general superintendent. If your president follows his usual practice and asks my advice it will be summed up in four letters, "d-o-n-'t." For years I have been seeking in vain for a general superintendent's district with an entirely satisfactory administration. I know many strong general superintendents. The trouble is not with them, but with the system. Organization is a series of units. These units get out of balance when they are defective or incomplete. There is usually withheld from the general superintendent some such vital process as car distribution, on the specious plea that such activity is so different it can be more cheaply handled by some higher office. If the organization unit is created it must have the same full chance for life and development as the rest of the offspring. A principle in organization cannot be violated with impunity any more than in other branches of science.
The average general superintendent's office is a great clearing house for correspondence. Few matters receive final action and many are passed along to the general manager's office. The resulting delay usually does more harm than good. On the other hand, since we all like to feel that we are highly useful, the general superintendent, or his chief clerk, is unconsciously dwarfing the initiative of superintendents by requiring references to him of matters that should receive final action at division headquarters. If you do not believe it, check up a few general superintendents' offices and study the processes. I am not referring to jurisdictions where a general superintendent is required by charter or other legal requirements. I have in mind districts which are arbitrarily created by ill-considered executive mandate.
The general superintendent starts out with a brave determination to get along with a small staff. Sooner, rather than later, human nature asserts itself; he feels that my man can be more useful if he is on my staff. He builds up a larger staff with an inevitable retarding bureau of correspondence. He perhaps has a $200 traveling engineer finding fault with the division performance of the $300 superintendent.
Sometimes a general superintendent is located at a large city under the theory that the importance of the metropolis demands an officer of higher rank. There are various ways to skin a cat, and the method we have seen is not necessarily the only solution. The Pennsylvania handles successfully large cities like Cincinnati, Cleveland and Chicago with a superintendent who has the authority of a general agent.
The unit system of organization, because based on sound fundamental principles, solves several vexatious problems. Among these is this matter of general superintendents' districts. Under the unit system every assistant should have his office of record in the same building with the head of the unit. For example, it is a violation of good organization to give a district passenger agent the title of assistant general passenger agent with an office of record at a city away from the general offices. If such outlying office of record is necessary, and it sometimes is, a complete unit should be segregated under a head with some such distinct title as district or division passenger agent. This does not, however, preclude having an assistant reside in the outlying city and maintain his office of record at the general office in the same file with the head of the unit.
If I were you I would appoint enough assistant general managers so that you can have one reside at each point where you have dreamed district headquarters are necessary. Give him a business car and a stenographer, but let him understand that his office file is a part of yours. Let him live on the road as a high class traveling inspector, superior in rank to the people he is inspecting. He is your staff officer with line authority available for action when in his judgment circumstances so require. He can obtain all necessary information from the files at division headquarters or by telegraphing your office. Your chief of staff, the senior assistant general manager, will promulgate instructions, while this traveling representative, like a trainmaster on a division, will see that they are carried out. When he finds it necessary to give instructions he should promptly notify your office, that the record may be completed and confusion avoided. He can do all this without becoming bureaucratic, without putting the company to the expense of a great circumlocution office maintained under the feudal notion of his royal importance. Railroad administration suffers from too many offices and instructions, not from too few. The best officials, and the best train dispatchers, give the fewest orders. It is a qualitative rather than a quantitative proposition.
The moral effect of the presence of an official cannot be discounted. We need more officials and fewer clerks. The railways are over-manned, because they are under-officered. The great mistake of the past, due to crude conceptions of organization, has been in creating offices rather than officials.
The same line of reasoning applies to the handling of outlying terminals on a division away from a dispatcher's office. The old idea has been to locate a trainmaster with an office at such points. The moral effect of his presence is unquestionably good. The objection is that he must necessarily be on the road much of the time, and the train crews are handled by a clerk. Duplication results because most of the correspondence and records have to be referred to the superintendent's office. The Union Pacific has found it better under the unit system to have an assistant superintendent reside at such important terminals. His office, however, is located with the superintendent, which encourages travel back and forth, just what is desired, and discourages sitting in an office and carrying on correspondence which can better be looked after by the chief of staff in the superintendent's office. The train crews are under the immediate direction of the yardmaster when in the terminal, and of the train dispatcher when on the road.
The railroads of this country have suffered from rigidity in administration. The unit system permits an elasticity of assignment to take care of conditions as they come along. For example, your non-resident assistant general manager can, if desirable, chaperon three divisions when movement is heavy, and four or five, if you please, during the dull season. You can on short notice throw all assistants to the most exposed points. A non-resident assistant superintendent can likewise be sent to an exposed district. A permanently located trainmaster requires an official circular to have his jurisdiction extended, and if suddenly ordered away can leave only a clerk to represent the company. A railway has an ever-present firing line. The more mobile the official force the more promptly can weak portions be reinforced.
A striking violation of the unit principle in organization is to have the master mechanic report to the division superintendent in transportation matters and to the superintendent of motive power in technical matters. This is a half-way attempt at divisional organization which lacks the courage of conviction. Better have a straight departmental organization with its divided authority and expensive duplication than thus to straddle the question. If the division is to be a real unit, it must be complete and self-contained. The lack of balance in this attempt at divisional organization comes from the fact that units are mixed. The superintendent of motive power, a general officer with jurisdiction over the entire road, is a member of the general manager's staff. He has a rank and value superior to that of a divisional officer, the superintendent. The poor master mechanic is often puzzled which superior to please. His natural inclination will be toward the man higher up, the superintendent of motive power. Again, it is difficult for any three men to agree upon what are technical matters. The chief of staff method is not applicable to this phase of the problem, because units have been mixed. The master mechanic and the superintendent of motive power are not components of the same integral unit. The unit system of organization requires a superintendent of motive power to transact all business of record with the office of the superintendent of the division, a component unit of the general jurisdiction. The senior assistant general manager and the senior assistant superintendent, each, as a chief of staff for the head of his unit, decides promptly in the absence of the head of the unit, what matters are sufficiently technical to demand the attention of a particular official. Clear-cut, definite and prompt action is possible, with proper checks and balances, because units are not mixed. The governor can introduce a balance without throwing the administrative machine out of gear to avoid stripping its cogs. The splendid personal equation of railroad officials often serves to carry an illogical organization in spite of its fundamental defects. Similar violations of scientific principles in material things would cause bridges to collapse and locomotives to break down. The showing made by the railroads is a tribute to the administrative ability of their officials rather than to their knowledge of organization. The Pennsylvania a half century ago, and the Harriman Lines in more recent years, are said to be the only roads that have made comprehensive studies of the science of organization. Both of these great railways are prepared to stand the test of time. Both will grow stronger as the years roll by. So feudal is the conception of organization on most railways that the essential elements of self-perpetuation are sadly lacking. Fortunately their traffic strength is so great and our country develops so fast that errors due to preconceived misconceptions and personal caprice are covered up by increased earnings. One encouraging sign is that railway officials have ceased to be quite so cocksure of themselves and are seeking the underlying reason for the faith that is in them. True science ever finds its vindication in impartial inquiry and intelligent investigation. The world advances by definite steps rather than by leaps and bounds. Do not lament the fact that some roads are groping ahead only to occupy the abandoned organization camps of the Harriman Lines. Be thankful rather that they have moved forward at all, that though lacking in faith they are coming to a position admitting of enlarged perspective.
Affectionately, your own,
D. A. D.
Los Angeles, Cal., July 15, 1911.
My Dear Boy:—How many miles of road should one division superintendent handle? Like the old lady's recipe for pie crust, it all depends. Some superintendents in the east with two hundred miles handle as much business as do their western brothers with a thousand. As a matter of fact mileage has little to do with the question. On the ideal division the superintendent is in the middle with territory extending one freight district in each direction. If he happens to be at a hub he can comfortably handle several freight district spokes, which will increase his mileage accordingly. Under such a condition the advantages of a seemingly large mileage are numerous. The superintendent can run his power wherever most needed. He can hold back at the farther end of one district cars that he knows the connecting district cannot possibly load or unload for several days. He can preserve a balance which is impossible when jurisdictions divide at the hub. In the latter case each superintendent hurries freight to the end of the division to avoid a paper record showing delay on his territory. The result is that the next man has terminal indigestion because he has been fed too fast. Therefore, divisional jurisdiction should, when possible, change at an outlying district terminal away from a large city. This avoids the added complication due to industrial switching, suburban trains, restricted area, etc., etc. A congestion of cars is often caused by a congestion of jurisdictions. You may avoid the one by diffusing the other. Several roads in the country have saved heavy expenditures for larger terminal facilities by more scientific organizations.
The amount of mileage a superintendent can economically handle depends, then, for the most part upon the location of his headquarters. Such location in turn admits of no hard and fast rule. Cities and towns spring up and industries develop quite regardless of the limits of a hundred-mile freight district and a speed of ten miles per hour on the ruling grade. A railroad usually begins and ends at a large city which is either a seaport or a gateway. It is normally better to locate a division superintendent at such beginning and ending city. He can then handle its terminals and the one or more diverging freight districts. His division should include the terminal at the farther end of such districts, to afford him opportunity both to hold back stuff whose inopportune arrival might congest the more complicated terminals at headquarters and to relieve such terminals promptly by movement outward. In other words, owing to his important terminals this superintendent should have less mileage than his country brother who would be in the middle between the second and third districts.
Some roads try to solve the problem by giving the superintendent the first and second districts with headquarters in the middle. If in such case the general offices happen to be at the initial point they soon ignore the superintendent and do business direct with his terminal subordinates. When this condition becomes intolerable, one of two things usually happens. Perhaps the superintendent's office is moved to the first terminal where it really belongs. Thereupon he loses full touch with his freight crews on the second district, which is left out in the air. The other attempted remedy is to appoint a superintendent of terminals reporting direct to the general offices. The difference in viewpoint thus legalized may cost the stockholders much money. To the terminal superintendent the trains are always made up on time and the power and road crews are seldom ready. To the division superintendent the trains are seldom made up on time and the power and road crews are always ready. Much energy of both officials and their offices as well as that of the general superintendent and his office is then directed to holding useless post mortems and negotiating unnecessary treaties of peace. Remember, my boy, that typewriters exert no tractive power and explanations move no cars. Self-preservation is the first law of nature. We must so organize that this law will operate to keep the company into clear, not to put some other fellow in the hole. All of these questions are largely matters of opinion. After working with every kind of terminal organization all over the country, your old dad believes that the best is to have a division superintendent at the big terminal with an assistant superintendent in direct charge of and responsible for such terminal, the superintendent controlling every diverging freight district to include the next terminal.
It should always be remembered that a large terminal demands preferred consideration, because owing to restricted area its problems are intensive and expensive. A dispatcher has a hundred miles or more over which to keep his trains apart, while a yardmaster finds his engines bunched within a mile or two. Again, if the cost of terminal switching does occasionally happen to be reflected in a freight rate, the genial gentlemen of the traffic department are prone to recommend its absorption. I believe as a broad proposition that the management of railroads is more scientific than that of most modern industries. I would not like, however, to file much of their terminal operation as an exhibit. A majority of the switch engines in the United States have one superfluous man in the crew. This is partly because so few operating officials have sufficient practical knowledge of switching to go out and intelligently handle a crew all day. If you don't believe this, make some time and motion studies of switching. Compare the relative performance of your yard conductors. The tasks of road conductors are relatively so well defined that comparison of individual performance is not so difficult. The intense conditions of a terminal complicate such differentiation as among yard conductors.
Another factor of prime importance in determining the size of an operating division is the location of train dispatchers. The dispatcher's table should always be considered an integral part of the superintendent's headquarters offices. The train sheet is perhaps the best record on a railroad. It is never fudged by being made up in advance. It is a history usually unimpeachable because it is so close to the actual transactions which it records. It deals with the essence of railway operation, train movement. Few are the important records on a railway that do not derive their primary data from the train sheet. The sheet may be graphic, like a daily time card chart, or may be cut up into card strips, as under the A B C system. In any form, it is a fundamental of operating history.
The number of dispatchers to which a division is limited is, like the number of miles, variable. With headquarters at the hub, one superintendent and one chief dispatcher may comfortably handle three or four sets of dispatchers. An outlying division with thin traffic may require only one set of dispatchers. When it becomes necessary to locate a set of dispatchers away from division headquarters, it is time to appoint another superintendent and create a new division, perhaps with only a light staff of all 'round officials. So important is the train sheet and so much of vital, human interest centers around a dispatcher's office, that the far away superintendent must refer much correspondence to this detached portion of his office. The result is expensive circumlocution and a lack of human touch. The superintendent has in effect become a general superintendent too far away from real things. A trainmaster or a chief dispatcher is really carrying the responsibility of a superintendent without the title and authority necessary for smooth administration. I know several railways that are fooling themselves into the belief that they are saving money by having one superintendent for two dispatching offices. One of them has five superintendents and ten dispatching offices, really ten divisions in fact, if not in name. By a logical arrangement of territory these ten dispatching offices could be consolidated into seven division headquarters and the road operated in seven divisions. In these days of overtime and complex working schedules, a timekeeper should check the time slips against the original train sheet, not against a copy, a transcript or an excerpt. A division accounting bureau handling all that it should handle has also much other use for the train sheet.
Second only in importance to the train sheet as a record, and with which it should be closely related, is the conductor's car and tonnage report; what the men call the wheel report. This important report made by a division man is sent to a remote general office in disregard of the responsible head of such division, the superintendent. The result is that a distant authority, the superintendent of transportation, is telling the superintendent that certain cars are being delayed on the latter's division. This profuse correspondence is often foolish, because meantime the cars have actually gone. Some roads now have a carbon copy of the wheel report made for the use of the accounting department. Why not send this carbon to division headquarters and let the division accounting bureau make up the ton miles and the car miles, subject to proper check after the fact? Why not have the office of the superintendent know so much about the cars on his division that he will tell the general offices that certain cars are being delayed on his division for lack of motive power, loading or disposition, conditions which, perhaps, the general office, with its larger view, can remedy? This would also permit, when desirable, the checking of the agents' car reports against the conductors' reports. The more closely to actual transactions we can do our checking the more intelligent should be the process and the smaller its volume.
I wish that you would come out here and see the Southern Pacific run its monthly supply, pay and inspection train. Before coming, re-read my letter to you on the subject some seven years ago. I know of no place where the idea has been better carried out. Ideas seldom originate with any one man. They seem rather to float around in the air. They are pulled down by those who happen to erect lightning rods or like Benjamin Franklin to fly kites. To vary the metaphor, do not laugh at people who ride hobbies. Sometimes they ride well enough and far enough to demonstrate that the hobby is a real horse. Then it is the turn of the horse to laugh.
Whenever I see an announcement that a division has adopted the telephone for train dispatching, I always feel that there should be an accompanying apology for being several years behind the times. For years progressive young railway men advocated the telephone only to be assured by old-time dispatcher officials of the unwisdom of such a course. Time and practical tests have shown that not only is the telephone practicable for dispatching, but it actually makes operation safer because of the increased human touch. Whenever and wherever we can replace a specialist with an all 'round man we are gaining.
The first train dispatching is said to have been done by Charles Minot when a superintendent on the Erie in the early fifties. So seriously was the matter taken that only the superintendent himself could issue a train order, even though this involved calling him out of bed. Hence the foolish feudal custom of signing the superintendent's initials to all train orders. It soon developed that a regular dispatcher was necessary. Accordingly, a conductor, a man who knew how trains were practically handled, was taken off the road and brought to the superintendent's office to dispatch trains. Stop off at Port Jervis, N.Y., some time and in a local hotel see the portraits of some of these old Erie dispatcher-conductors, their dignity being protected by the tall beaver hats of the period. The dispatcher not being a telegrapher, he wrote out his orders and handed them to a young operator to send. This operator was a bright fellow, who, by and by, graduated into a dispatcher, able to send his own orders and often to do the work previously requiring both men. Too often it has happened that the experience of the new dispatcher, a telegrapher specialist, was limited to the office end, with no firsthand experience in train service. The telephone, fulfilling the immutable laws of evolution, will take us back to first principles. The dispatchers of the future will graduate from the train, engine and yard service, through the dispatcher's office to higher official positions. The man who gives the order will be a man who has once carried out such an order himself. The man below will obey the more cheerfully and the more intelligently because of increased confidence in the man above.
When the record is made up by the future historian, with that discriminating perspective which time alone can give, high will be the place accorded the railroad officials and employes of America. The military, the pioneers of civilization, the forerunners of stability, have their periods of enervating peace. Transportation, the first handmaiden of progress, is in active attendance every day of the year. Those who worship at her shrine and follow her teachings must lead the strenuous life and love the voice of duty. The splendid, virile performance of the past, handicapped often by crude facilities and forced expansion, must and will be eclipsed under the intense, trying conditions of the present and the future. In no profession more than in ours is there eternity of opportunity.
Affectionately, your own,
D. A. D.
Salt Lake City, Utah, July 22, 1911.
My Dear Boy:—Supplies and purchases are a feature of railroad operation illustrating the tendency to overcentralization through overspecialization. Please notice that I say supplies and purchases; not as some roads do, purchases and supplies. Is not "supply" the broader term, including "purchase" as a very important component? If we happen to make some of our supplies from our own scrap, a question of supply and accounts is involved, but not necessarily one of purchase. The volume of work involved in purchasing for a large railway may be so great as to warrant the segregation of the purchasing function.
Among the best purchasing bureaus in the United States are those of the Harriman Lines. As I understand it, their able director of purchases does not, as many people suppose, scrutinize all requisitions. Each of the eight vice-presidents and general managers has his own purchasing agent, who, under the broad policy of local autonomy, buys many articles as best he can. Those large items which experience proves can best be bought for all by the director of purchases, are so purchased under blanket contracts. For those items the local purchasing agent becomes an ordering agent. The point of it all is that no iron clad rule is laid down. Because some items can best be purchased in bulk, it does not follow that local administration should be hampered by requiring all items to be so procured. Instead of a narrow, rigid rule, there is a broad policy enunciated which permits the discriminating judgment of experience, to decide questions on their individual merits under the ever-changing conditions of service.
When railroads are older similar broad treatment will be accorded other features of operation as well as supplies and purchases. Broad policies and individual judgment will gradually supplant attempts to decide questions in advance in accordance with preconceived notions of probable conditions.
The evolution of the so-called store department on most railways has been a striking instance of one-sided development. A railway exists to manufacture and sell an intangible commodity, transportation, not necessarily to carry either a large or small stock of material and supplies. The purchasing agent tells us in good faith how much money he has saved the company by time spent in driving good bargains. He is not in a position to know how many men have been worked to poor advantage, or have been idle, while waiting for proper tools, materials and supplies. Such features of economic waste are not always the fault of the purchasing agent. The general storekeeper and the local storekeeper, ambitious for low stock records, may hold down their requisitions. It is so easy to say that a telegram will bring a cylinder head or other spare part to the desired point. If meantime a big locomotive has been out of commission in a distant roundhouse for two or three days and a light engine has been sent to protect the run, there is nothing in the store accounts to reflect this needless expense. The individual batting averages are high, but some way the team is not winning games.
One of the fallacies introduced by the store people is that the user of material cannot be trusted with its custody, because he will carry too much stock, due to an exaggerated view of future necessities. This mistaken theory is carried to the extent of denying to the division superintendent the custody of fifty shovels to be used by the emergency gang of fifty men which it is entirely within his province to order out to clear the road. The men he can command. The shovels, without which the men are useless, he must beseech from a storekeeper receiving, perhaps, one-third as much salary as himself. Of course, in an emergency, the superintendent takes the shovels, anyway. As I said before, it is a pretty poor system that breaks down in an emergency. The test of a system is an emergency. I confess my inability to see that being a user of material necessarily makes a man more indifferent to the company's interests. Perhaps it is the same habit of mind that causes me to deny greater rectitude to the man in the accounting department.
The user of material has undoubtedly been careless in many cases. Will he not become more careless if relieved of responsibility and informed that he cannot be trusted? When children err, the wise parent does not disown them. From his fund of riper experience, he helps them by impressive teaching to gain a proper viewpoint. Similarly, the general storekeeper should control the superintendent and teach the latter the most economical handling and use of material and supplies. Control is comparatively valueless without authority. This authority can be most effectively conveyed by rank. The general storekeeper should not be a keeper of a general store. He should be a general officer, under the general manager, superior in rank and pay to the division superintendent. Instead of the superintendent being relieved from responsibility, he should be held to a greater accountability. The reformed and reconstructed bandit often makes a relentless police chief. The despised user of material under proper organization becomes the zealous conserver and protector.
The general storekeeper, like the chief mechanical officer, should be located in the same building with the general manager. There is no more reason for locating either one at a store or at a shop than there is for locating a general superintendent in a switch shanty near a yard. General officers must see the whole property and maintain a balance among its component units, which are normally operating divisions. If I were you, as between your purchasing agent and your general storekeeper, I would appoint the most experienced an assistant general manager, so that his office file can be logically and consistently consolidated with your own. The other of these two men I would make purchasing agent with a distinct title and a separate office file, because of his large volume of business with outside persons. Such assistant general manager would be in effect manager of supplies and purchases, the trained expert seeing the whole problem of operation and deciding normally what material and supplies the company needs. Under such assistant general manager, would be the purchasing agent, a staff officer, specializing on the technique and psychology of bargaining. Such assistant general manager, as a line officer, would be his own general storekeeper and would hold division superintendents responsible for the stores on their respective divisions. His work would be co-ordinated with that of the other assistant general managers by the chief of staff, the senior assistant general manager.
The organization thus outlined would preclude the necessity for the usual perfunctory approval of requisitions by the general manager. The assistant general manager for supplies would normally put the final approval on requisitions. Large or exceptional items the general manager would approve. When differences of opinion developed among the interested assistant general managers as to the relative ultimate economy of different mechanical or structural devices, the general manager would be invoked to give a decision that really would be worth something, because made after considering different viewpoints. Under the old order of things, the superintendent of motive power or the chief engineer is tempted to seek the ear of the general manager on the latter's best natured day to put over a requisition for some pet device. So sporadic is the comprehensive consideration of requisitions, so perfunctory is the usual approval, that the general manager frequently tells his purchasing agent not to take the former's approval too seriously, and to hold up approved requisitions about which the latter is doubtful. This is another species of unconscious administrative cowardice which attempts to put on the subordinate the burden of responsibility for a departure from the normal. True organization and administration demand normal procedure by subordinates. At normal speed, the administrative machine should run well balanced. When the speed becomes great enough, higher authority should be a governor brought into action more or less automatically. Telling a subordinate habitually to question the acts of his superior has the same cheapening effect as unchecked disregard of block signals. It puts higher authority in the undesirable attitude of exploiting a fad, or an over-worked system, rather than of demanding reasonable compliance with proper and logical requirements.
Have we not overdone the matter of low working stocks? Is it not more expensive for a railroad to carry too small a working stock of material and supplies than one too large? Is not the problem too extensive to warrant very rigid comparisons as between different roads? Like the average miles per car per day, does not the equation contain too many variables to admit of a very exact solution? Can we compare effectively the dissimilar conditions involved in climate, distances from producing and distributing centers, character of predominating traffic, etc.? Are not some records for seemingly low economical stocks based upon the fallacy that it costs the company nothing to ship and reship its own material? Where would these records land if company material carried a freight charge of, say, 5 mills per ton per mile? Is it not more economical to handle numerous items of supply in carload lots regardless of average monthly consumption? Have we given due weight to the concealed items of expense in arriving at conclusions as to the cost of handling company material and supplies?
Two of the best-managed roads in the country, the Pennsylvania and the Big Four, had no stores departments the last time I inquired. At the other extreme, we find the Santa Fe and the Lake Shore carrying their departmental system to their stores in an intensified form. In between—that happy medium which I mentioned to you—stand the Harriman Lines with division stores under the division superintendent, who in turn as to supply matters is under the general storekeeper or other chief supply official, the latter already having in some cases the title and status of an assistant general manager. The man in direct charge of the one general store which is allowed each general jurisdiction is called a storekeeper. The underlying conception is that railroad stores are maintained to help make the wheels go around, that all supply activities should be concentrated upon the most economical manufacture and sale of transportation.
This brings us to another phase of the problem. Frequently a railroad as a plant is adequate to manufacture more transportation than it can sell. The other fellow is getting too much of the competitive business. Investigation often shows that railroad solicitors can sell a shipper no freight or passenger transportation, because his salesman receives no orders from the railroad's purchasing agent. The industrial bureau of a traffic department works to create new business which is fostered by discriminating freight rates. Yes, I stand up and use the word "discriminating," because, when properly understood, it implies intelligence and science, and is therefore one of the finest words in the language. This good work of the traffic department in creating wealth and developing industrial communities in territory local to a particular road may be largely lost to that road because its purchasing agent, consciously or unconsciously, fails to exercise proper and legitimate discrimination in the performance of his important function.
At first blush, in these days of doubting insinuation and hysterical aspersion, when a railway official is often denied the presumption of possessing common honesty, when the burden of proof is to show him as having average rectitude, such a statement may be construed by distorted minds as a plea for subtle forms of rebating. Tenuous as may seem the line here between right and wrong, it can in a given case be readily determined. Too often apparent complexities are only the result of an abstruse contemplation of abstract possibilities. Give honest, fearless, practical treatment to each concrete case as it arises, indulge more in inductive reasoning which predicates laws upon facts, not facts upon laws, and complexity gives way to common sense. Transportation is the most exacting, the most diversified, the most far-reaching of commercial and industrial activities. It follows then, under the law of the survival of the fittest, that those who can survive in the art and science of transportation must be the fittest of the fit. In their hands can safely be left the solution of these difficult problems.
After three years of satisfactory experience with division accounting bureaus, the Harriman Lines have extended such activities to include the division stores. This is done by moving the division storekeeper, his accounting and correspondence clerks, to the division superintendent's office in order that division records may be consolidated in one file and division accounts in one bureau. A division material-on-hand account is included. The necessary issue clerks, foremen, etc., are left at the storehouse, which is often a mile or two from the superintendent's office. Another avowed object is to get the division supply people closer to the train sheet, to give propinquity a chance to develop love, and to counteract that we-are-so-different feeling which comes on many railroads, not only in the spring, but under all signs of the zodiac. The logical development on divisions of considerable volume of supply business will be to make the division storekeeper an assistant superintendent. This method of store accounting is relatively closer to real transactions, especially where the division supply train is used, than might be supposed. On the Hill lines, the store accounting is done in the general auditor's office, perhaps one or two thousand miles from the store itself, a decidedly long range proposition. Which policy is better is of course a question of opinion. A man's views on organization and methods are largely a matter of temperament and association, just as his politics and religion depend usually upon heredity and environment.
Affectionately, your own,
D. A. D.