"The autocrat at the lunch table,"

Foreword

That which is written in the pages of this book, under a title half borrowed from Holmes' famous "Autocrat of the Breakfast Table" is not "made up out of whole cloth." It is taken in large part from actual conversations which have been held over many a different lunch table during the last year. In fact, some of the reported conversations have been written out by certain supply men, who, if their names were mentioned, would be recognized as being among the successful leaders in the business of manufacturing equipment and appliances for the railroads. Some of the theories advanced are held by hard headed business men. In the characters presented no one special individual has been in mind, and the president and others mentioned are purely fictitious characters. There is a possible exception, however, as regards the junior and senior vice-presidents, to whom I feel greatly indebted for their suggestions and encouragement in writing this series of lunch table talks many of which have appeared in the columns of the Railway Review. I would also like to express my appreciation for the many suggestions and ideas received from a very large number of my friends in the railway supply business. B. V. C.

June First

Nineteen Fifteen

at Chicago

I. Were They Dishonest Castings

AND WHAT IS DISHONESTY

ANYWAY?

Not that the lunch table of the railway supply man is unusual, but the fact that it is usual, and that the "autocrat" still lingers in the memories of most of us, is perhaps sufficient excuse for making use of the creation of Holmes which was familiar to the last generation and which is something that is also familiar to the present day generation.

I thought of Holmes in our last discussion at the lunch table, and particularly of the following expression: "I find the great thing in this world is not so much where we stand as in what direction we are moving. To reach the port of heaven, we must sail sometimes with the wind and sometimes against it, — but we must sail and not drift nor lie at anchor."

We are generally all of us at lunch these days, because there is nothing in particular to call us away. The president was there, and the vice-president, and general sales manager, and our mechanical expert. I quoted the lines from Holmes before we ordered our lunch, but they were seemingly forgotten in the strenuous effort of deciding what we wanted to eat. This deciding what to eat sometimes presents a good deal of a problem. There are days when the bill of fare looks entirely wrong, and I just had it in mind to theorize a little on this particular matter, wondering in my own mind just what made the bill of fare look so entirely different some days from what it did on others. Was it the bill of fare — was it our mental attitude, or might it be our physical condition ? Is it better to eat things toward which we feel inclined, or does the wise man reason the matter out logically and feed his physical being in a scientific manner? Is such a topic of conversation at a lunch table more conducive to digestion and assimilation of food than a discussion of the war^between those who cannot agree?

I wondered if Holmes, because of undue modesty, had felt that he was an autocrat at the breakfast table forty or fifty years ago, or whether he used that word because he felt that he was not an autocrat. One is not always sure of his position, even after having given time and thought to the study of the question in hand. I did not speak of all this at the lunch table; I was just thinking about it while the general sales manager was keeping the waiter waiting while he made a careful selection from the menu card. He is always slow at the lunch table, exercising the greatest care in arriving at a decision as to what he is to eat. I have often

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wondered if his two hundred and plus was the result of this deliberation and care, or whether the avoirdupois was the result not of the physical but rather of the mental attitude of the man.

At any rate, when he had finally given his order, he remarked that he thought Holmes was entirely right as regards the railway supply situation at the present time — "we must sail and not drift nor lie at anchor." The fact that orders are not numerous just at the present moment is no excuse for lack of progress with the manufacturer of railway supplies, because progress did not entirely indicate the getting and filling and shipping of orders, but something more than that. Right now we ought to be extremely busy with what he termed "missionary work." He did not look at the president, and went on with rather a lengthy dissertation on the value of advertising even a little more strenuously right now than when orders were coming with greater frequency. He saw a good many ways of spending money which he felt would increase the efficiency of the sales organization and permit them to take advantage of better conditions when they came.

I felt very much like agreeing with him and saying so, but I saw that our president was listening very carefully, and by virtue of the fact that he is president of the company, having reached that position through his own efforts and not having inherited the job, I felt as though I would like to hear his side of the story, from his viewpoint and from his experience. But our president is a wonderfully good listener. I have often wondered whether his listening ability was not responsible to a large extent for the big success of the company. The man who does a large amount of listening learns a great deal from other people, and the man who does a large amount of talking becomes imbued with the fact that he knows a great deal, of course thinking this may prevent learning any more. I must confess that I have often felt that one's belief in one's own knowledge is a valuable asset, as every man needs to believe in himself; but, on the other hand, possibly it is sometimes better to believe you know fewer things and have that belief founded on fact.

The president evidently would not talk; he would listen. I knew the vice-president would not say anything until we got around to automobiles, and the mechanical expert was strangely silent for a man who is ordinarily talkative, and I thought I knew the reason. They have been having some trouble on the X. Y. Z. Railway with the last shipment of our appliances, and the mechanical expert was only just home from that road, tired out in body and soul, and mentally exhausted, in an effort to make the right tiling fit in the wrong place — one

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of those old stories of where we had given the railroad the thing that they needed, but they had not applied it as it should have been applied. It would have been easy enough if we could have admitted that we were in the wrong and made a shipment that was right, but we were right and not wrong, and the other fellow was wrong; he was our customer, and naturally we had to handle the matter with a good deal of care. It is somewhat of a ticklish job to explain to a man that he is in the wrong and has made a mistake, and at the same time make him feel pleased at your telling him so.

The waiter was unusually slow, — one of those waiters you sometimes find who seems to have a faculty for getting in wrong in the kitchen, and after being delayed there, is painfully deliberate in his movements in serving. It seemed to be up to me to do the talking. Of course the natural thing to do was to talk about the war; but I hated to do that, and as a compromise I made the suggestion that war was not so different from business, — that business was war, and that while we did not shoot our competitors with machine guns or stab them with bayonets, we did try to starve them to death by keeping them from getting any orders. Still no remarks from the president. I could see that he felt that there was nothing new in such a state-

(ii)

ment, and was wondering if I was going at an old fact from a new angle.

However, I felt that inasmuch as I was started, I might just as well continue. If war is business, and business is war — that is in principle, if not in detail, how is it possible that "honesty is the best policy" in business? Even the sales manager looked tired when I switched off in this direction, and I knew why. He is a great believer in a lot of those old quotations that we used to copy off when we practiced the Spencerian System of writing in the old copy books. I could just feel his attitude, and I started after him and gave my ideas of business principles right then and there. If "honesty is the best policy," why are we not honest with our competitors and tell them how we figure our manufacturing costs, what we put in for an overhead, and when we put in a definite bid, why don't we tell them what it is? Instead of that, what do we do? We try to mislead them as to our shop costs, fool them as to our sales expenses, mislead them as to any quotation which we have made. Why, we go even further than that. We do just what is done in war — we send out spies. So does the other fellow. Of course, we don't shoot the spy when we find him, but we make life just as uncomfortable for him as the law permits, and by hook or crook we get all the information we can from the other

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fellow. "Oh, but that isn't what is meant by 'honesty is the best policy/ " I could read in the sales manager's face without hearing him say so.

I have my own opinion as to "honesty being the best policy." It isn't always, and I proceeded to say so, although lunch was served just then and I could not do my full duty by what I had ordered and still keep up a running conversation to support my own theory. However, I told the sales manager, and called him by name when I got to talking, and explained to him that I felt that in business, as in fighting, honesty was the best policy so far as your own side is concerned, — that I believed most thoroughly in honest dealings, in loyalty and co-operation among members of a single business corporation or in groups of business corporations which were friendly each to the other because conditions naturally made them friendly. You cannot run a successful business without honesty, — that is, without honest dealings toward your associates and employees. However, with your competitor it is another proposition.

"What about your customer?" queried the president, who had, by keeping quiet and attending to eating, gotten as far as a cigar.

"Well, you remember that order from the A. B. C. Railway," I replied, "where they insisted on having some castings that weighed thirteen pounds more than we thought was necessary."

The president simply nodded, and I went on.

"You know that we tested out those castings very carefully and fully satisfied ourselves that the castings, if made thirteen pounds lighter, would be more serviceable, — would be stronger, and would better fill the requirements than if they had on the extra metal. The extra metal simply constituted an element of weakness. We sold them the castings according to their specifications, but events have justified our position that a lighter casting would have been more serviceable."

"And there is a place," interrupted the sales manager, "where the mechanical expert might better have stayed at home. It took me a week to get those fellows on that railroad smoothed down to the point where they would sign an order for what they wanted. It is our business to give the buyer what he wants, and that is the basis for successful business."

I looked at our mechanical expert, as I was anxious to hear what he was going to say. However, he said nothing, and we left the lunch table without the question decided. I said to the president as we walked out: "If 'honesty is the best policy,' should we have shipped that road dishonest castings because that is what they wanted?"

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"Were they dishonest castings?" he asked, and that is a question. What is honesty anyway? Is it a thing absolute or relative, or is it what we might more property call "progressive?" Are things which were dishonest yesterday honest tomorrow — or what is the answer?

II. Operating A Business Has Its Limits And Limitations

The president had been off for a trip to New York, the sales manager had been sitting up nights with the only possible order in sight, and the vice-president, mechanical expert, and myself had been going from the roof to the cellar of the plant to see where we could reduce operating costs when we had any excuse for operating.

This explains why there hasn't been any lunch table for a week or so, so far as we are concerned. Naturally we were anxious* to learn from the president how everything was in New York City; how they are feeling down there. Somebody had told me a day or two before that the brokers and stock exchange people were clerking in the department stores. The man who gave me this information handed it out in a way to intimate that if this was the case, and he was sure of his facts, the country not only was going, but had gone "to the dogs." I told them what I had heard, and the president remarked in his terse way that while New York was a great financial center, it was what it was because of the financial greatness of the nation as a whole.

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The general sales manager seemed to be pretty sure that business was going to come back, on the theory that having reached the bottom of things, there was no further room to move in that direction and would therefore have to move the other way, "But," said the vice-president, "doesn't it strike you that we in the railway supply business have not only reached the bottom, but we are sort of bouncing up and down on the bottom, and if we keep it up much longer we will be likely to break through?"

This certainly was pessimism, long drawn out, ^nd I suggested that we might tell the waiter what we wanted and let him hurry us a good lunch, and perhaps we wouldn't be so pessimistic after we had had something good to eat. I don't know what earthly reason a man has for being pessimistic when he is connected with a good business institution which has been declaring dividends for a good many years, and who has always been well treated, and knows his concern is going to go on and do business if anybody does, and it is a certainty that the end of all things has not reached us as yet.

After we had finished the dessert and gotten as far as the cigars, the president said that he wanted to hold up on every expenditure from now until after the first of the year. He didn't want to permanently curtail expenses, but for the next coupie of months we could be planning on what we might spend and see if we could not arrive at some way of spending less money and getting more for it. He remarked that he thought the wise man was the one who didn't mourn over conditions but set himself to work to adjust his business to present conditions and make the best of them. I felt myself that that was a pretty good way in which to look at it, and that whatever the future might be, there was an ever-present necessity of handling our business to the best possible advantage right now, especially in view of the uncertainty as to just what is in front of us for the next few months. Personally, I cannot help but feel, and I said so, that business is going to return by spring. I have claimed all along that if we got by October without a panic it meant that business was gradually to improve. We have just about reached the limit on the "slide down the hill," and if we haven't any further to go, and if we can wiggle through the valley without everybody getting panic-stricken, we are going to begin the climb of the hill toward better business in the immediate future. We are not going to get up high enough to realize that we are getting higher until some time next spring. There are a whole lot of men in the railway supply business who are figuring and getting ready for orders now, with the expectation that these or-

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ders will be realized before long. There must be some good reason for it, and I said to the president just as we left the table:

"Don't you think that this is just about the situation: We have reached the bottom in the railway supply business and are bound to go up because we cannot go the other way? Don't you notice in the papers that have been antagonistic to railroads a growing spirit of fairness in asking that justice be given them, and has not the pendulum of public opinion been swung just about as far as it is going to swing as regards this antagonistic attitude toward the railroads, and don't you feel that it is swinging back? Another thing: Isn't the general public beginning to realize very thoroughly that the railroads have had about all the doctoring and surgery that they can stand and still live? The average American citizen wants the railroads to live because he knows that it is to his own selfish interest, and there seems to be a very general feeling that we have gone a little bit too far in operating upon the railroads. It is all right to take out a man's vermiform appendix, remove a tumor, saw off his legs to save him from blood poisoning, but we are not going to be able to take out his heart or stomach or cut off his head in an attempt to patch him up, without running some chance of having the patient die on our hands. It seems to me that in the last few weeks the American people have come to a pretty full realization of the fact that this is just about what they have been attempting to do with the railroads, although we might grant for the sake of argument that the railroads needed a surgical operation and we went into it with the idea of benefiting their health and ultimately our own, and not for the purposes of vivisection."

Our president is a pretty conservative man and has had a long experience in the railway supply business. I therefore felt complimented when he said that he was inclined to believe that I was right in my viewpoint. "Only," he said, "it is a very difficult matter to determine just how soon the railroads and the manufacturers who supply them with appliances will feel the changing and changed attitude of the American public towards its railroads ; but I feel that the change has come."

III. It Is Up To The Business Man After All

Personally I do not approve of cigarette smoking, and I don't use them. Still that is a matter I have to decide for myself, and it is none of my business if the sales manager wants to use them, and he does. The other day while we were ordering our lunch, being minus a cigarette, and not being able to borrow one from any one at our table, he got up and circled around the room until he was able to secure the loan of one cigarette from an acquaintance. This caused the remark from the mechanical expert in our party that certainly the railway supply business was down to the last gasp when the sales manager found it necessary to walk through a public dining-room to borrow one cigarette. The good point about it was that the condition of the railway supply business was at least taken cheerfully and good naturedly by the party.

I had been to a club luncheon the day before, where an eastern manufacturer had made a talk on the patent laws of this and foreign countries, and I was so interested in the subject that I lost no time in acquainting those at the table with what I had heard.

The speaker referred to had said that the American manufacturer, when he secures a patent on his product in Europe, is compelled to manufacture that product in the country in which he secures the patent. Our patent laws in this country do not require the patentee to manufacture here. This gives foreign goods an advantage.

In Germany the manufacturers of that country are organized into an association whereby, when an American manufacturer attempts to sell in Germany, they combine together to produce these goods below the cost that the American manufacturer can possibly sell them. It also is a law in Germany that goods sold in that country must be labeled in German, "Made in whatever country they come from." This same law obtains in England. Goods must be labeled where they are made.

In France, he stated, he talked with manufacturers, and they invariably do not carry their buildings on their books. When he asked them why they did not do this they told him that the buildings were built by their grandfathers, and should not be charged to their business — that they hadn't cost them anything. They charge only overhead and labor to the cost of goods. They also get labor for about half what we have to pay for it.

Another point that he made was that foreign workmen are a great deal more economical than

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American workmen. In both Germany and France the workmen, instead of wearing expensive clothing, as our workmen do, sometimes even wearing a white collar, these foreign workmen wear a long tunic, which is very inexpensive.

His most interesting statement was that the American manufacturer is fast coming to the same conditions as the railroads of this country. High taxes, increasing wages, our poor tariff, which affords no protection to the American manufacturer, and other increasing expenses, are bringing these conditions about. His plea was for an awakening of the business men, to take part in the election of business men to Legislature and Congress, and to see that laws are framed by men who understand manufacturing and business conditions better than do the present politicians and lawyers who constitute the lawmakers.

When I had gotten this far, and was talking about business men for Congress I was interrupted by the vice-president, and patent laws were forgotten. (When it comes down to anything like this our vice-president can forget lunch and forget to eat it; in fact, get into about the same condition that Ulysses described in the Odyssey, when he told of Land of Lotus Eaters — how people going there forgot home and friends and country. So was our vice-president. It was no use — any attempt to make him eat was in vain. The position he took, to the best of my recollection, was about as follows : He said that the time had come when business men — real business men — should take hold of legislative matters in earnest. He thought there were very few "Lotus Eaters" in Congress at present — that most congressmen never forgot home and friends, particularly their "voting" friends, whom they keep so constantly in mind, that they devote comparatively little time to economic thought and study bearing upon those legislative problems for the solution of which they were (supposedly) sent to Congress.

He believes that most business men feel a very genuine interest in sound, constructive legislation, and would welcome the appearance of business men of experience in Congress, especially as members of the House of Representatives; but that, as individuals, business men are rarely moved to take the initiative in such directions, and probably never will be to any material extent, until the business world, as such, is aroused to the point of action toward this desirable end.

The president interrupted him to say that he for one was pretty nearty "aroused to the point of action toward" almost anything that would give an honest man a chance to earn a living.

The president went on to say that only through

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concerted action, and with the strong, open support of an organization comprising the general business interests of the country, could such a thing be accomplished. To that end, he referred to the various chambers of commerce and trade bodies of the United States who now carry their activities to the threshold of Congress, and pertinently asked: Why not within Congress? Naturally, there seemed to be so many complications, so many difficulties to be overcome, that I asked him a number of questions, to which he had ready answers. But at this juncture, and despite of the business depression, he claimed to have a business engagement, so our little party dispersed with the understanding that we would renew the discussion at our next luncheon together.

He lingered long enough, however, to say that if socialism is to be controlled, if sanity and wisdom are to characterize legislation affecting business, and our industrial and commercial structure is not to suffer further serious impairment, then it is squarely up to the business men of the country to so determine.

And the more I think about it the more I think our vice-president is right. And then the more I think he is right the more I think he is the right man to go to Congress. And if the time ever comes when we send representatives to Congress in the true sense of the word "representative," we are going to send a man of his type.

Let's do it — why not?

IV. Selling Cheaper Appliances

AND SELLING APPLIANCES

CHEAPER.

"Sausage and buckwheat cakes and hot mince pie for me," said the sales manager as he came in late and sat down at the table.

"Rainy weather doesn't seem to agree with you," I remarked, "or are you going around to see somebody this afternoon and getting up courage by that kind of a lunch?"

"Getting up courage?" he remarked, "I am trying to get my courage back. Say," and he turned to the mechanical expert, "what is the actual cost to us, I mean without any frills tacked on to it, of building our No. 8 machine?"

The mechanical expert got out his little note book, and on the back of an envelope began figuring.

"$73.18," he said after a minute.

"Does that include overhead and sales expense?" asked the president.

"It includes an overhead, but no sales expense," was the reply.

"Well, then, that is not the cost. We have to employ salesmen in order to sell our product, and we must put on the sales expense, as it is just as much a part of the actual cost as the material."

"Well, never mind," said the sales manager, "I

just saw B of the Railway, and he says

he has figured out the actual cost of our No. 8 machine and it amounts to about $65.00."

"That is what it amounts to on paper," remarked the vice-president, "but we have been making those machines for twenty-four years and we ought to know by this time what the actual cost of them amounts to."

"Well, what am I going to do about it?" said the sales manager. "We can sell that machine for $65.00 or we can pass up the business."

"Well," said the mechanical expert, "we will build a machine that looks like that one, and that apparently will do the same work, and it won't cost us over $55.00, overhead, interest on investment, sales expense, and dividends, all added in. It will do the work for several years, — with some repairs occasionally. Then, at the end of ten years, the repair expense, I should judge, will be about forty dollars more than our No. 8 machine, which, with reasonable usage, requires no repairs in ten years."

"The very rigid economies which are now being practiced by the railroad companies," I remarked, "have undoubtedly been the cause for the very sub-

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stantial reductions in operating and maintenance costs of the railroads. Such policies pursued by purchasing agents have undoubtedly been the means of bettering financial statements. This is a temporary benefit, but I believe we will have to pay the price for such temporizing later on. Of course, from one way of looking at it, the careful investigation of prices has undoubtedly resulted to the benefit of the railroad companies, but this benefit has not been an unmixed good. There is this in connection with the matter, however, that there is a danger that with this wave of low-price buying there may be an aftermath of inferior quality of goods supplied."