The price of inefficiency

Front matter

THE

MARTIN P. CATHERWOOD

LIBRARY

Preface

The great burden of inefSoiency, with its terrible cost, is a burden that is carried on the shoulders of each and every one of us. Whatever your income may be, much or little, increasing or decreasing, you are paying your full share in one form or another of the waste, which amounts to over ten billions of dollars annually ; a waste that means that forty cents of every dollar you earn goes for nothing.

You are paying this, the price of inefficiency, in a thousand different ways for your personal negligence in not taking the interest that you should in the business and governmental affairs of the country and in your own private concerns.

"What it is possible for you to do to reduce the frightful costs of inefficiency, what you should do and what you must do, is a question the responsibility for which you cannot escape. If you remain merely neutral, you bear the loss just as surely, since the government, city, state and national, your employer, your employees, and your friends will be all the more active in their work of reducing your resources, cheating or robbing you, both directly and indirectly, and adding to the costs due to your inefficiency as a recreant member of a government, the individuals of which must rule themselves as a body, if they are not to be ruled by bosses, minorities and combinations.

A little well directed individual effort, which will become a matter of habit, will suffice to effect vast reductions in the price of inefficiency. Even the knowledge of where the waste is, will in many cases caU forth the remedy, though in other cases entirely new principles must be called into action.

It is the purpose of this book to show where the frightful wastes are being incurred, in governmental, and industrial, social and educational affairs, to point out remedies for reducing them to a minimum or eliminating them entirely, and to indicate new principles which may often operate not only to reduce and eliminate inefficient methods, but to leave the field clear for efficiency.

It is of tremendous importance to the nation to take a stand

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for betterment. Conditions will grow worse unless they are made to grow better, and the problems which are so acute and pressing cannot be solved by parties or by statesmen, by legislators or committees, but must be solved by the spontaneous and irresistible effect of public sentiment and individual action. There is something for everyone to do, and when the extent and gravity of the situation is understood, no one will hesitate to do his part. It is the duty of those who are acquainted with the facts to make them more widely known, and in this respect the influence of the press is of the greatest consequence, and a patriotic and non-partisan espousal of the cause of efficiency on their part and a genuine and persistent attention to the subject cannot fail to be reflected in increased prosperity for all concerned. Newspapers should devote their attention systematically to the matter, treating every phase of it in a constructive way, pointing out how efficiency is to be obtained and how much it means.

Not alone will the interests of the public be served but their own as well, by increased circulation and increased advertising and by the influx of new firms with new advertising. The propaganda of efficiency will mean increased prosperity for every paper and every reader, and no editor can serve his country, his public and his paper better than by a thorough and persistent attention to efficiency.

Efficiency is not a thing reserved for the comprehension of the elect. It is not a thing to be called "scientific management" and used as a bug-a-boo ; it is, on the contrary, nothing but common sense applied to every day affairs, the doing of a thing in a better, quicker and more economical way than at present, the doing of a thing in the right way, the easy, the adept, the direct and natural way, rather than in the careless, the slovenly, the wrong and the round-about way.

Efficiency has a widespread application and may be practiced in a widespread nianner and by every one, in some form or another. Efficiency is the duty, not only of every man to himself, but of every man to his neighbor. It is a slogan that means prosperity and a watchword of honest effort and well directed energy. -

If a hundred men have a certain work to perform, week in and week out, a few of them will presently be found to execute the work with greater ease and dispatch than the rest, and of these few, one ■njill be found who, with less expenditure of energy

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and time than any of the others, accomplishes the work better. That man is the efficient man, and he has evolved the efficient method. That method should be made known to all and followed by all, and a high degree of efficiency will be the result for all. The inferior methods of the others are costly and should be discarded without delay. Those who are willing to learn wiU progress, but those who cling to their old methods and refuse to learn will fail.

This is true not only of individuals but of nations as well, and it is a criminal waste of time and resources not to adopt methods which have proved themselves the right ones elsewhere, but instead either to stick to old methods or experiment along lines which have already been gone over.

Every possible improvement should be known and considered instead of being ignored until it forces its way into use. Instead of the ready excuse when a new thing comes out elsewhere, that it is not applicable to our conditions, it should be made applicable. Merit should be sought out wherever it may be found, instead of being choked off and forced to fight its half starved way to the front.

As long as a man is satisfied that he has nothing more to learn, he will learn nothing more, but when he realizes that he is not yet the master of the accumulated knowledge of the world on his subject, he will progress. Once in the swing and step of progress, he can readily keep abreast of his competitors and apply to his own problems the results which have been and are constantly being achieved by others.

It was, at the outset, the intention to make this volume a brief exposition of certain of the more noticeable phases of inefficiency, but in compiling the data and in seeking out the underlying causes for inefficiency, new and more profound causes appeared.

It was as if an underground city of decay had been entered, avenue after avenue of inquiry presented itself and at every turn new and greater vistas of crumbling walls and tottering pillars appeared. Overhead the world takes its way, with here and there a sinking of the street or an upheaval, of the surface. Beneath, the foundations are undermined by neglect, carelessness, graft, self-satisfaction, disrespect of authority, lack of discipline, faulty education, lawlessness, suspicion, waste, squandering of resources, extravagance, crooked dealing, monopoly, indolence, superficiality and politics; a stupendous labyrinth of

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destructive forces, which mean national disaster if fundamental and comprehensive measures for correction are not undertaken at once.

As in the design and construction of a great engineering work, where the whole and its various components must be suited to the requirements to be met, so the governmental, social, economical and business organization of a country must be suited to conditions if disaster is not to be encountered.

Like a great dam which conserves enormous resources of energy in storing millions of gallons of water, so must the social structure conserve the energy of humanity and utilize it for the benefit of humanity.

Unless the dam be properly calculated, and of the right design; constructed of the best materials and erected on a firm foundation, it will soon begin to show evidence of failure ; crevices will appear, the true alignment be lost and the relief* gates jammed. Although expedients be adopted, crevices patched and reenforcements applied, if the weakness is in the original design the time will come when nothing further wiU avail, when the dam cannot be saved and when it is destined to carry death and destruction in its final collapse.

So with the social machinery of a country. If it be not rightly constructed, if the attitude of the indiAdduals to each other and to the government, and the attitude of the government toward the individual be not properly founded in mutual respect and self respect, no amount of patching can save the structure. And though the disaster may be far reaching, it will, as in the case of the failure of the dam, at least wipe out old mistakes and makeshifts, and leave the ground clear for the work of new engineers, who, profiting from experience of the past, and with sounder theory and more thorough practice, will erect a structure capable of withstanding the stresses to which it will be subjected and capable of utilizing the accumulated forces to the greatest possible advantage.

Such an improved social structure once established will, like a dam using the energy of the stored water to turn a multitude of generators, distributing energy in other forms throughout the surrounding country and stimulating its production similarly, infuse a new stimulus to the whole life of the nation, both in the present and in the future.

The great extent and deep-rootedness of the evils of the situation cannot be comprehended by the individual who does not

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take a broad and public-spirited view of conditions. It is indeed appalling when seen as a whole, and the lack of real patriotic interest in the country, taken by its citizens, is a reproach and a menace of impending disaster.

The neglect of the individual extends not only to the nation's affairs, but to his own, and it is only after a realization of how general is this condition, that the individual can be expected to see that only by a thorough readjustment of his own attitude and affairs, can he do his part in the new scheme of things that must come into existence, if we are not to descend to far more serious conditions.

That a grave situation exists cannot be denied, but that conditions may be improved is equally patent, as shown by what exists abroad, where a more advanced and efficient public opinion has found a means of enforcing itself.

It would be impossible for any one person to speak with authority on subjects so complex and varied as must go to make up a broad review of national conditions, but in every department the situation has been analysed by experts, and wherever, herein, conclusions have been advanced, they are based on accumulated experience and fortified by the highest authorities. The reports of the federal government, census reports, state and national authorities and specialists have been freely quoted, so that it is believed that in every important particular, corroboration will be found for any statements advanced.

Although it might appear that much of the matter is of a negative or critical nature, there will be found no small amount of constructive criticism, that is to say suggestions for actually remedying conditions. Americans are, unfortunately, not prone to criticism, and are much imposed upon in consequence. Their proverbial generosity and magnanimity are too much taken advantage of. A more critical spirit could not fail to have a stimulating effect, and while many of the criticisms here made might appear antagonistic if from the pen of a passing visitor, yet as the author has been a resident of some ten years ' standing, continually active in business and professional life, and has become a citizen and cast his fortunes here permanently, it will be seen that the criticisms are as of one member of a family to another, intended for the common good and for the remedying of conditions from which we all suffer alike.

The volume is not intended, however, in any way to be a comprehensive resume of American life or institutions, and any

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general conclusions should not be attempted to be drawn from it, for the many admirable, not to say unparalleled, activities of American life are but seldom referred to. The purpose of this book is not to praise nor sit in judgment nor to attempt a broad summary, but to point out defects and shortcomings which are much more apparent to one with foreign experience than to one to the manner born, defects and shortcomings which perhaps on that account have gone if not unnoticed, at least unremedied.

For the quotations made throughout the book, the author begs to acknowledge the courtesy extended by the several authors and publishers. It is through this courtesy that the author hopes to have made the book an authoritative presentation of the various subjects.

It is hoped that the work will be received in the spirit intended, that of helpful and constructive criticism, and that it will be of assistance in promoting a better understanding of the great cohesive force of social life, the fuller co-operation of individuals with each other and with the state, of the state with the individual, and of the states of the world with each other.

F. K.

March, 1913, New York City.

Contents

Pbeface V

Introduction ... xiii

I The Situation 3

Introduction

Unrest and turmoil are the order of the times, protest and animosity show themselves at every hand, and hatred and hopelessness, bitter distrust and denunciation govern our relations as classes and as individuals.

We are facing an acute but intensely complicated crisis in the existence of the nation, and the contributing causes are numerous and grave, with remedies difficult to understand and more difficult to apply. The country is like a giant, bound hand and foot and tormented on every side, in an intolerable situation but hopeless of any relief.

We confront conditions, not theories. Familiar with great prosperity and accustomed to the swing of progress, there seemed no bounds which we might not permit ourselves; and thus the awakening is all the more abrupt and severe, and the present stagnation all the more keenly felt.

A young nation with vast natural resources, the fair way ahead was free and clear, but suddenly we find that our resources have been squandered and are approaching exhaustion, that we have been betrayed by our financiers and politicians and led into the blind alley of disaster.

Though being a self-satisfied people, we are yet unable to assert ourselves at the right juncture in our own interests. We cannot kick and kick vigorously enough at the right time and place, and we are continually getting deeper and deeper into trouble. In a national crisis of this kind, the statesmanship of a country should be its guiding light, but where are our statesmen to be found? Where are our leaders who are not chiefly concerned with their own political interests. A government should be an inspiration and a guiding force, an encouragement for industry and business, but instead of exhibiting such a firm and fruitful policy, our administration is one of waste and gross inefficiency.

With statesmanship such as America should command, the dangerous shoals we are now encountering, would long ago have been avoided. With patriotic and disinterested hands at the helm of state, such dangers would have been clearly seen and

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avoided, whereas now the vessel of government is crushing first against Scylla on one side and tossed by Charybdis on the other.

The government may be charged and unanswerably charged with:

Ruining of prosperity for petty partisan advantage;

Creating industrial unrest and turmoil;

Destruction of confidence of the public in the state;

Unexampled waste of natural resources;

Gross administrative inefficiency and incompetency;

Restriction of industrial development;

Crippling business enterprises;

Neglect of agricultural needs and a failure to check enormous waste of farm products;

Sacrifice of countless lives in unregulated industrial establishments ;

Negligence in combatting industrial diseases;

Administrative self interest, waste and graft;

Inadequacy and insufficiency of the law;

Failure to cope with monopolies;

Failure to prevent adulteration of foods;

Continuance of a deceptive and destructive patent system;

Autocratic admiaistration of the post office;

Continuance of shameful pension frauds;

Promoting the spirit of lawlessness and disrespect for law;

A wrongful immigration policy.

While these are among the principal items directly chargeable to the government, a' more considerably responsibility is chargeable to its failure to take constructive action. The government is negligent in that it

Fails to modernize the constitution;

Fails to provide an adequate and proper educational system;

Fails to link the educational system with practical life through not compelling the learning of a means of livelihood on the part of every citizen;

Denies the right to work;

Fails to protect small industries from the aggression of monopolies ;

Neglects to provide a national testing plant for the promotion of manufacture;

Fails to provide industrial insurance systems for accident, sickness and old age.

Improperly develops waterways ;

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Does not cause the administration to command the respect of the public;

Does not obviate mismanagement of railway and industrial plants;

Does not cause the servants of the public to realize that they are the servants of the public ;

Fails to prevent the congestion of wealth in the hands of the few;

Fails to diminish the controversy between capital and labor;

Fails to command the respect and good will of foreign commerce ;

Fails to promote our merchant marine;

Fails to adopt a constructive diplomatic policy.

The machinery of the government and the personnel which has been evolved to administer its affairs is incompetent and inefficient. It is in a state of break down, is unable to cope with conditions which it has created and its deplorable and destructive and desperate activities are like a huge machine grinding itself to pieces. The situation is acute and demands the careful thought and vigorous action of every citizen.

Incompetency and inefficiency are not alone confined to high places; they take their noisome course through the whole body of the government.

As Superintendent of Insurance, "William H. Hotchkiss of New York, in a recent newspaper interview said : ' ' The times are out of joint.

"Never before was enlightened public service more in demand. Indeed, may we not well turn aside from insurance problems and for the moment glance at the problems with which all Americans are now concerned? Whither are we of a great republic drifting? Labor glowers and threatens an industrial war. Big business shakes with ague. Capital is dissatisfied, prosperity is checked. The people call loudly for retributory law against manager and magnate. Strong arm methods toward great corporations are in full operation in nation and state. Commercially speaking our times are out of joint. Likewise our politics. The people's legislators long since lost the people's confidence. Their executives must now exceed the written law or lose in power and usefulness. Their judges even are threatened with recall.

"Parties once potent are going to pieces as the voters rightfully gain the power to nominate their public servants. Social-

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ism — of the right or of the wrong sort — is winniag converts every day. The cloistered citizen of the kid gloved wards is beginning to have his say, while the horse block orator is haranguing an audience that may any moment become a mob."

The government, which includes not only the ever changing federal administration, and its legislative and judicial branches, and the governments of the states as well, are as open to criticism as the most outrageous of the trusts. The ensemble governments of the United States, in their mountebank struggle with conditions passed some 44,000 laws in 1910.

In the words of ex-Governor Herriek of Ohio, there were:

"Laws to regulate everybody and everything except the public expenditures of the law-makers themselves and of the various departments of the government. The great majority of men sitting in our legislative bodies are lawyers, whose natural tendency is to attempt to remedy every ill by a statute.

"The oversight of business enterprises by the government has placed on the government payrolls a vast number of officials; it has necessitated the establishment of new departments, the keeping of a mass of records and the compilation of a great quantity of statistics. All this has been done with no serious attempt to reform the antiquated expensive methods prevailing in aU departments of the government.

"The people have been so intent on placing the corporations under governmental control that they have overlooked the additional burden they are putting on their own shoulders by placing this work in the hands of officials who, handicapped by bad methods, are rendered powerless to do little more than swell the payrolls.

"It goes without saying that predatory corporations either should be brought within the law or put out of business. It is doubtless true that salutary laws have been passed regulating other corporations, but we should also apply ourselves, as a condition precedent to the government's further controlling and managing these corporations, to reforming the administration of the government. Otherwise the burdens of taxation will become unbearable, intolerable, and in the reaction which will surely follow, much of the good of the progressive legislation of recent years will be undone."

The great majority of the 44,000 laws referred to will undoubtedly be dead letters in a short time, if they ever have any effect. As dead letters they only serve to clog the administra-

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XVll tion of justice and encourage disrespect for the law. Any one of them, however, may be utilized at any moment as a means of creating confusion and for political effect, as has been the case with the Sherman law.

To such conditions, to inefficiency in office, to corruption, to graft, to neglect of the preservation of natural resources, to failure to encourage industry and agriculture, to the throttling of business, to utter disregard of public welfare we have been brought by our statesmen in their wisdom.

What it all means in dollars and cents alone may be computed, but what it means in unrest, distress, discouragement and misery is beyond any human calculation.

The principal items in the indictment of inefficiency, costs which could not be charged against an efficient government, quickly total an appalling figure, a figure which concerns vitally not alone every citizen of the country, but the world at large, for the prosperity of all civilized nations is vitally connected.

"We waste $50,000,000 and sacrifice fifty lives a year in forest fires, and have been doing it for over a generation, while in some years the loss amounts to $200,000,000 in money. In addition the young growth destroyed by fire is far more valuable than the merchantable timber burned.

We waste a billion cubic feet of natural gas daily, the most perfect of fuels; enough to supply every city of over 100,000 population in the United States.

We waste $22,000,000 a year in the manufacture of coke in lost gases; 540,000 tons of ammonium sulphate of similar value and nearly 400,000,000 gallons of tar worth $9,000,000, a total with other wasted by-products of $55,000,000.

We waste a vast sum yearly in not utilizing our deposits of peat as fuel. The value of available peat beds is estimated at thirty-nine thousand millious of dollars.

We waste 30,000,000 horsepower every year, by failure to utilize our water power. At $20 per horse power per annnum, which is below the average price, being less than one cent per horse power per hour, this waste amounts to $600,000,000. This is far in excess of the value of all coal used annually, and if this power were utilized, coal could be conserved for future uses, for heating and purposes where the power would not be serviceable.

We waste $238,000,000 in losses through floods and freshets. The most of this could be prevented by proper engineering in the erection of levees and dams.

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"We waste $500,000,000 a year in soil erosion. Through the neglect of farmers to properly work their land and to prevent the formation of gullies, the fertility of the soil is washed into the lowlands and seas.

We waste vast land resources by failure to drain swamps and overflowed areas. These lands could be reclaimed at small expense, increasing the value of the land three fold, and supplyiJig homes for 10,000,000 people.

We waste $659,000,000 a year through losses to growing crops, fruit trees, grain in storage, etc., by noxious insects, whose multiplication is largely due to careless methods of agriculture.

We waste $267,000,000 a year through the attacks of flies, ticks, and other insects on animal life. A greater loss is caused by the enormous sacrifice of human life due to mosquitoes, flies, fleas, and other germ carrying insects.

We waste $100,000,000 annually in losses to live stock and crops by wolves, rats, mice and other depredatory mammals.

We waste $93,000,000 a year in losses of live stock due to disease, of which $40,000,000 is chargeable to Texas fever, while tuberculosis, scabbies and cholera are next in importance, all of which are largely preventable if not eradicable.

We waste $772,000,000 annually in losses of income, due to industrial diseases; that is diseases which attack workers on account of the nature of their employment and the unsanitary conditions in which the work is carried on.

We waste $1,500,000,000 a year through loss of life and illness to industrial and other workers, through preventable disease, accidents and carelessness. The truth of this is corroborated by the fact that the expectation of life in Germany is ten years longer than in America.

We waste $2,503,900 a year, in the form of 1465 human lives, (using the figure $1700 as the economic value of a human life, the governmental estimate later referred to) in coal mine accidents, which are almost wholly preventable.

We waste 10,585 lives and the cost of 169,538 injuries in railroad accidents.

We waste $300,000,000 annually in the lax administration of the government itself. This is equivalent to the economic value of 176,470 lives.

We waste a considerable proportion of our vast pension expenditures of $173,000,000 due to fraudulent and undeserved pensions granted. The cost of the pension armies of Germany

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France, England and Austro-Hungary is less than $100,000,000.

We waste $25,000,000 a year In handling the mails, while the German government makes a net profit of $28,000,000 on a much smaller gross business.

The foregoing are only a few of the principal items in the price we pay for the inefficiency of our federal and state governments, as with proper administrative efforts, an enormous part of the total would be saved. There are in addition countless important items of loss, which cannot be definitely ascertained, as many unknown factors enter into them, though the losses are no less because of not being determinable in dollars and cents. The foregoing figures are the result of careful and frequently repeated estimates by conservative governmental experts, and are in each case in accord with the observations of intelligent farmers and other interested persons acquainted with conditions.

Nor do these items aggregate the principal part of the losses of inefficiency. In other branches of activity over which the federal and state governments have no control, the losses are even greater.

"We waste $250,000,000 annually in fire losses to buildings and other structures.

We waste $400,000,000 a year in the expense of the portion of city water supply used for fire fighting, in fire department charges and in distribution charges, all of which makes the loss per capita in this country ten times that of European countries, showing the grossest waste and inefficiency.

We waste $650,000,000 annually in mismanagement of railroads, of which $300,000,000 is due to personal services, $300,- 000,000 in fixed charges and $150,000,000 in supplies.

We waste perhaps a greater sum iu private manufacturing establishments. While this has not been estimated by experts, yet since the railroads of the country are valued at eleven thousand million of dollars, while the value of manufactured products exceeds seven thousand millions, and since railroad efficiency is 70% while manufacturing efficiency is but 60%, the loss in manufacturing is probably greater than in railroad inefficiency.

We waste in the careless handling of eggs, $40,000,000 a year, largely due to breakage in transportation. What the vast waste of careless freight, express and baggage handling amounts to in actual damage, besides the increased cost of packing to guard against it, it is impossible to estimate.

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We waste an enormous amount, which has not yet been made the basis of a comprehensive examination, in losses due to improper and antiquated methods of mining; in coal, copper, gold, silver and other metals and in metallurgical processes of various kinds.

We waste not less than one third of all the coa,l used lov power purposes and vastly a larger proportion in heating through failure to adopt modern machinery and methods.

We waste $25,000,000 a year by failure to adopt the potato drying process used in Germany, that proportion of our potato crop rotting unnecessarily.

We waste $12,000,000 in failure to utilize the leaves of potato and other plants, a source of profit in Germany but a total loss with us.

We waste sums which though immense, are not capable of being computed, in our slowness to adopt a great number of improvements which are available and in daily use in Europe. Potato drying is only an insignificant example of this waste.

We waste $702,000,000 a year at the lowest estimate in the failure of our workmen and manufacturers to adopt common sense practice in daily operations, a method of working the introduction of which is being greatly hampered by being called by the high sounding name of "scientific management " or "motion study."