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come the Poles, of whom there are about 310,000, and to whom should be added over 150,000 Russians, Czechoslovaks, Serbs, and other Slavs. Polish immigration has been organized by big employing interests in France and is in the nature of contract labor. The Italians come largely in the guise of tenants and settlers, and they are so numerous in the southern departments that a local observer compares their incoming to 'a new Roman conquest of Gaul. . . . They are a State within a State. The men come first, obtain regular employment, and buy or hire on the share tenancy system a bit of abandoned land. They return to Italy for their families and settle down as French farmers.' It is doubtful, however, whether they will be able to maintain their Italianità, despite Mussolini's vigorous effort to keep Italy's swarming brood under his own wing.

The children go to the French schools, and their cultural and religious affinity to the Southern French facilitates their absorption. Moreover, like the bulk of the laboring class, they are not enthusiastic Fascisti.

A correspondent of Corriere della Sera, perhaps speaking in the interest of Italian landlords, is inclined to belittle this movement and to doubt its advisability. He says: "The capacity of Southeastern France to absorb our agricultural workers has been vastly exaggerated. We hear it said that there is room in these departments for a hundred thousand or even three hundred thousand more Italians. But where are houses to be found for so many new settlers? Certainly no one thinks of building cottages for them at present, and such tenements as are available are cramped, unsanitary, and inadequate.'

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WHY AMERICA PROSPERS1

EXTRACTS FROM THE BRITISH ENGINEERS' REPORT

BY BERTRAM AUSTIN AND W. FRANCIS LLOYD

[WE print below salient paragraphs from the confidential report upon American prosperity made by two well-known British engineers to their association. It records the results of their investigations of some seventeen of our leading engineering-plants, supplemented by visits to several banks and technological institutions and interviews with leading business-men.]

AFTER a careful examination of the general conditions obtaining in the country, we have come to the conclusion that the present prosperity can be traced to the adoption of, and strict adherence to, a few cardinal principles in the management of industrial enterprises. While the chief credit is given to the American manufacturer for this prosperity, several other factors have undoubtedly contributed, among which may be mentioned the good prices obtained for crops, the low debt burden and low general taxation, the improvement in the banking-services to the community, and the far-sighted policy of the Government in not allowing a credit expansion based on the gold influx, thus preventing the rise in the general level of prices anticipated by Europe.

America has hit upon the secret of prosperity owing to the fact that the scarcity of labor forced her, out of sheer

1 From the Review of Reviews (London Liberal bimonthly) February 15-March 15

necessity, to adopt time- and troublesaving devices, but in many quarters in Great Britain American prosperity is attributed to the wealth of her natural resources, her considerable home market, and the influx of gold.

Exhaustive inquiries and observations disclosed the operation of a uniform policy of industrial management based on some fundamental principles. Among the more important of these principles the following emerged:

1. It is more advantageous to increase total profits by reducing prices to the consumer, at the same time maintaining or improving quality, with a consequent increase in the volume of sales.

2. The productive capacity per capita of labor can be increased without limit according to the progress made in time- and trouble-saving appliances.

3. Rapidity of turnover makes for small capital requirements, both funded and working capital - that is, the capital required for shop space (including equipment) and the finance of work in progress.

4. It is better that labor should be rewarded by wages bearing some relation to output, the amount of the wages earned by any one man being in no way limited. Contrary to the general belief in Europe, high wages do not necessarily mean a high level of prices. It is to the advantage of the

community that the policy of industrial management should be directed toward raising wages and reducing prices.

5. It is important that every possible attention be paid to the welfare of employees.

6. A free exchange of ideas between competing firms should be advocated.

7. The success of an enterprise is, in a large measure, dependent upon a strict adherence to the policy of promotion of staff by merit and ability only. 8. Research and experimental work are of prime importance to progress.

9. Elimination of waste is an essential factor in the attainment of national prosperity.

With the progress of invention and with the greater reliability and accuracy of machines it is very clearly realized in America that no limit can be set to the output which can be attained by one man. It therefore becomes important to keep in close touch with inventions and improvements in machinery and after satisfactory trials to adopt the improvements with the least delay. Since this is such an important factor with American manufacturers, what appears to European industrialists to be ruthless and wholesale scrapping of plant is nothing more than a normal means of progress. Depreciation charges therefore figure largely in the accounts of an American manufacturing business. We would illustrate this by mentioning the case of the Allied Chemical and Dye Corporation, whose real estate, plant, mines, and equipment are valued at $153,000,000. During the year ending December 31, 1924, this corporation allocated no less than $81,400,000 to depreciation, obsolescence, and the like. Incidentally we may add that the corporation in the same year paid an eighty-per-cent dividend on its common stock, and has, during the last three or four years,

freed itself of its prior charge obligations. It was mentioned to us, by the president of this corporation, that it was often found to be more advantageous, when scrapping plant, to abandon the buildings and machinery rather than to incur the expense of dismantling.

With the constant introduction of new machinery the productivity per capita of labor is being steadily increased, and this point alone is of supreme importance in the examination of the causes that have led to America's prevailing prosperity.

We would mention, as an illustration of what has been accomplished in this direction, that at the Power Station of the River Rouge Plant of the Ford Motor Company one man only is employed to control the stoking of each battery of four coal- and gas-fired boilers which raises steam for 70,000 horsepower. A further instance is afforded by the Colt Patent Firearms Manufacturing Company, where, in one of the shops, one man attends to eight milling machines for small parts. Again, at the Lincoln Motor Car Company, Detroit, one shop containing seventy-eight machine tools is operated entirely by twenty-two men. This number includes the necessary supervision and inspection. To turn to an entirely different type of business, we noted, while going through the whole organization of the First National Bank at Boston, that a clerk in the metal-currency department was able, by means of a machine, to count and pack into five-dollar cartons four thousand dollars' worth of ten-cent silver-pieces an hour. Throughout the organization we noticed no member of the staff making handwritten entries of any description, calculating and ledger-posting machines being universally employed.

Developments in time- and trouble

saving appliances are mainly in two directions

1. In the invention of machines to do more accurate and skilled work.

2. The increased use of conveyors and other mechanical means for reducing the amount of labor required for handling.

It is accepted in America that the higher the wages labor is able to earn the better it is for the community as a whole, since it enables the workingman to raise his standard of living. Better wages enable him to obtain a few of the comforts of life, and these stimulate his desire for more comforts, and even luxuries. The logical outcome of this state of things is that he is incited to greater effort in his productive capacity.

Any rise in the standard of living provides a country with an increased home market, the importance of which should not be underestimated. Primarily the wealth of a country depends upon the productivity per capita of its population. Therefore the adoption of any means tending to increase the productivity per capita will, ipso facto, increase the national wealth.

We have attempted to show how the application of this principle is of advantage to the community. Turning to the employer, it is fairly obvious that if his men are paid a wage bearing some relation to their output, together with a clear understanding that no limit will ever be placed on the actual weekly earnings of any one man, an incentive to work is provided of no mean importance, since it reduces the need for supervision and it encourages the men to use their ability in the direction of devising more efficient shop-methods and eliminating waste. Nothing but the greatest harm can be done by cutting the piece rate, once established for a particular job, as this immediately destroys the confidence of the men in the employers and proves that

the employers do not desire to see higher wages. From the men's point of view they are in a position to increase their own earning in accordance with the aptitude they possess. We may mention that all the workmen we observed during our tour appeared to be happy and contented, and were not by any means rushed in their work.

The application of this principle in America is responsible for concentrating the energies of both management and labor upon the same objective. The identity of interests thus established leads to an improvement in the relations between employer and employed and results in close coöperation between them for the benefit of the enterprise. The General Electric Company, at Schenectady, has a Works' Council composed of a body of workmen and officials elected by secret ballot. Meetings are held once a month, when all questions relating to shop methods and practice, rates of pay, hours of labor, welfare, and other items are discussed. The chair is taken by the general manager.

When the above state of affairs is firmly established in a business the employees clearly understand that the raising of wages forms part of the policy of the employers aiming at larger profits through increased turnover. Conversely, any organization of labor which has for its policy the restriction of output or the raising of wages without regard to output aims a direct blow at the prosperity of industry and therefore of the men themselves.

We were much impressed by the consideration given to the question of the welfare of the workmen at the various plants we visited. Safety devices and the increased hospital services have resulted in a marked diminution in absenteeism on account of injuries and sickness. The pro

ductivity per capita is so high that a great loss is suffered by the employer when a man is absent. In a large number of works, also, the management ensures that the men obtain the best procurable meals and household provisions at the minimum prices. Provision stores are seen at many works, and they are operated on a profitless basis. At the Ford plants men of all grades find it economical to make their entire food-purchases at the stores provided in the works. Incidentally, the Ford employees obtain as much as they desire for their midday meal for fifteen cents. It is significant that the turnover of the Ford provision stores is no less than $9,000,000 per annum.

Again, it is very general for every member of the staff to have a steel locker for his clothes and other belongings for safety and cleanliness during the day. So much attention has been paid in America to the desirable attributes of cleanliness, comfort, safety, and light that we were agreeably surprised to see the very congenial sursoundings in which the men work. We may instance the boiler-room at the River Rouge Plant, Detroit, where the floor is not only spotlessly clean but is even highly polished, while the stokers themselves wear white-cotton suits and white-canvas shoes. At the same plant even the blast-furnace operators worked in perfectly clean and dustless surroundings.

No dust from grinding machines or emery wheels is allowed to enter a workshop, but is withdrawn from the machines by draft tubes. The sawdust from woodworking machines is disposed of in the same way. We were surprised to find the extent to which the maximum possible window-space was utilized in the design of shop buildings.

Attention to the welfare of employees builds up an esprit de corps in

the organization and provides it with a 'soul.'

The Americans have never believed in the theory that executive ability is inherited. In every case, before substantive promotion is made ability must be definitely proved. On the other hand, when mistakes are made, or lack of functioning ability is shown, there is no hesitation in reducing in grade or removing the incompetent. It is easier to remove a man who does not efficiently control the machinery than to remove the machines; there should, therefore, never be any hesitation in dealing with an inefficient member of the staff. Since it is contrary to American practice to retain elderly men in executive positions, one is not surprised to find, in industrial America, that the majority of responsible positions are held by comparatively young men. The retiring-age is much earlier than is the case in Great Britain. We find in the larger American organizations that almost complete control is vested in one executive head by the board of directors. The appointing of this head is the chief function of the board.

This policy eliminates, to a large extent, favoritism in the appointment of members of the staff. The great responsibility vested in the executive head ensures that the best men are selected for the respective positions. Since the members of the staff fully realize that promotion can come only as a result of ability and efficient functioning, there is a complete absence of manoeuvring and intrigue to gain or retain good positions. Internal strife and waste of time are in consequence absent. The further waste of time and effort in dealing with criticism, prompted by lack of knowledge of the facts, is also avoided by the complete authority vested in the executive head. A prominent business-man

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