final section of: Railroad Freight Transportation (1922) by Loree, Leonor Fresnel, 1858-1940
How has it come about that we have achieved civilization - "the state of being reclaimed from the rudeness of savage life, and advanced in arts and learning"?
Geologists estimate that mankind has inhabited the earth for a period variously estimated at from one-half million to one million years, and historians discern on monuments, inscriptions and other remains of ancient peoples much evidence of the methods and conditions of life and social organization running back from the present time for more than five thousand years. Unfortunately, the writers have not developed the art of teaching history in a comprehensive fashion. Much as we know of the past, they have not made the experiences of those who have gone before a sure guide to us. And this is the more to be regretted since next to bread the most urgent need is education.
Nature is indeed a beautiful thing. Consider the glory of a sunset, the sublimity of a mountain range, the soft sweet gentleness of the babe in its crib. What shall we say of nature's ugliness? Consider the maggots writhing in a carcass; lift the fur of a wild animal and see the crawling vermin; think of it, gaunt with famine, or, past its prime, slinking through the rocks until starvation or an enemy ends its existence. Must we endure the sentimentalist, the romanticist, the neurotic, who, seeming to challenge the industrial organization, in the last analysis challenge creation? Can we not concern ourselves with doing the best we can with the means that are given us wherewith to do in this world into which we are born?
It is disconcerting to realize how little security we have won for ourselves by our age-long struggle with nature. From the vegetable kingdom we have brought into cultivation some 212 systems of plant life; from the animal kingdom into a state of domestication some 49 types, of which 42 serve as food sources; from the mineral kingdom, of the 83 known elements, about 61 have been brought into serviceable use; and of the 92 possible chemical elements, five remain to be discovered.
The average daily consumption of food necessary to support human life is a total of 3400 grams; in proportion of protein, 100 grams; fat, 100 grams; carbohydrates, 500 grams. With our habit of overeating we consume per adult man a daily average of 4,288 grams. Besides these constituents, the food contains mineral salts and vitamines, the latter food accessories that have not as yet been identified but are thought to be essential to health and growth.
Of the food consumed, only 29 per cent is net nutriment; the remainder is water, ash and inedible refuse, so that we need for our entire population more than 99,000,000 tons of food-stuffs annually. The main sources of supply, cows, pigs and wheat, provide 65 per cent of all calories. While no possible source can be neglected, the increases of the future will be most surely obtained by concentrating on these great staples. Fortunately, for the time being, the food supplies of the United States are increasing more rapidly than the population.
We now have a population of more than 105,000,000, Out people made their first settlement here 300 years ago. It was estimated in the industrial census of 1912 that the accumulated wealth of the country, including land values, was $187,000,000,000, probably substantially impaired in the mad orgy of the war, and this is but little more than we are able to produce in the space of five years. Nor has this wealth any great permanence. A study of property with the appearance of permanence seen in the railroad, and based on the tentative valuations of 55 railroads now reported by the Interstate Commerce Commission, indicates a "weighted life" of no more than 20 years, so that it is probably true that each generation, in providing for the next, must twice replace the great bulb of its wealth, as well as make the additions thereto necessary for advancing comfort and security and essential to the provision of employment for increasing numbers.
And this last is an element the magnitude of which must not be underestimated. As shown in 1912, before an additional man can be employed, his employment is conditioned upon a capital saving and investment of: $2700 for the farm laborer, $2500 for the industrial worker, $8500 for the railroad employee.
During the Napoleonic wars the white race numbered about 100,000,000 souls and was increasing at the rate of five per cent each decade; during the World War it numbered more than 500,000,000 souls and was increasing at the rate of 15 per cent each decade. And this was not at all from an increase in the birth rate but from conservation of life by police, medicine and surgery, and even more by vast increases in productivity.
The effect of this is to increase further the proportion and number of those coming into employment, and if they are not to compete for opportunity for work to the dispossession of the older and less fit among those already employed, and to the breaking down of the wage scale, new and additional opportunities must be made for them, and this is a situation that must be reckoned with by the workmen for their own preservation.
Man has found only four ways of organizing for production and these may be seen still in practice in various parts of the earth.
He organized as a hunter, and it took about five and a half square miles of land to support him. He organized as a herdsman and it took about one square mile of land to support him. He organized as a farmer, depending on his hand labor, almost without tools, and about three persons could be supported on one square mile of land. He organized in what is described as an "industrial civilization" and now in Massachusetts we are supporting 407 people to the square mile of land, assembling from the vicinage and from distant areas their means of support.
We could not support in this country under any organization that has ever been tried or given any promise of success other than the industrial organization, more than a fraction of our present population, unless they lived in the stark poverty of the Chinese, dependent upon a farming occupation, conducted with a few rude tools, reduced to hand labor and subsisting on a vegetable diet.
The activities of man in connection with material, after it has been brought into the "raw" state, that is, after it ha«s been harvested, lumbered or mined, divide along two main streams. The composition and shape of the "raw" material is changed, as when metallic iron is extracted from the ore and formed into pigs or billets, and as when, from the trunk of a tree, wood is sawed, turned, carved and assembled into a chair. The location of material "raw" or fabricated is changed by collection, transportation and distribution, as by the railroads, merchandising, etc.
These activities may be carried on by individuals, partnerships, corporations and other forms of association, and may be pursued in the narrow sense of one change only, or they may cover the whole range of changes, as from mining to marketing.
The industrial organization by which these processes are effected is organized, energized and directed by management. The enterpriser conceives a plan. The conception is basic, fundamental. He makes the necessary investigation of the field to be covered, the means essential for its execution. Unfortunately, there is a dearth in the highly specialized skill which results in prosperous business, not enough of it existing to keep all industry in a high state of efficiency; nor is it a quality that is developed by government organization or by ordinary education. For to specialized skill must be added knowledge of men and affairs, political sense, an extraordinary perspicuity and self-effacement, those qualities that make the possessors of them towers of strength and resource.
The enterpriser in his organization of industry uses in its service the two instrumentalities of capital and labor.
There is a wide distinction to be drawn between the laborer, a human being, and labor used as a verb to denote an emanation of force - the product of a heat machine, the human body. Nor is the energy generated by the human heat machine of any considerable amount. Labor may indeed be associated with intelligence; the conscious application of the mind, in every move of some industrial processes; while in others the action of the mind is largely limited to the coordination of the muscular and bony systems, the articulating parts of the body, rather than to any participation in the work itself. The phrase "labor-saving machinery" is not a misnomer. The energy furnished by the human heat machine is in this case furnished by the expansive force of steam, the coordination effected in the parts of the human body by the mind is effected by combinations of belting, pulleys, levers, screws, wedges, cranes, wheels, electric dynamos and apparatus, etc., etc.
Observations by Sir William Ramsay, experiments with men walking on a moving platform, or pumping water, calculations of the efficiency result of the intake of food, the relation of heat to power, all indicate in a well-conditioned muscular man an energy output of four one-hundredths of a horsepower.
A prominent engineer who has had much service in the West is fond of recalling, as an example of high activity, that in April, 1915, he, then weighing 175 pounds, walked from the water's edge of the Colorado River, three miles, to the Indian Village in the Grand Canyon, making the ascent of 2600 feet in 82 minutes. His energy output was .17 of a horsepower.
In May, 1920, Howard Broome, a well-conditioned athlete of great physical ability, weighing 215 pounds, ran from the sub-cellar to the cupola on the top of the Equitable Building, 120 Broadway, New York, a height of 599 feet, in eight minutes 52 seconds, producing energy during that time at the rate of .44 of a horse-power.
Relating these examples to what is known of industrial occupation, much of which is more of the character of watching and tending than of the use of generative energy, it would seem as though one-hundredth of a horse-power is a liberal estimate of the eight-hour work capacity of the human machine. So feeble is the energy output of man that he has only been able to raise himself from a state of nature by providing himself with tools, and of far greater significance, with other sources of power.
The instrument of capital has been known to us since the earliest times as a form of private property. Three thousand five hundred years ago, Abraham took his wife, Sarah, and Lot, the son of his brother, and the substance that they had gathered unto themselves and the souls that they had gotten in Haran and went forth to go down into the land of Canaan. The story goes on to say that Abraham was very rich in cattle, in silver, and in gold, and you get a good picture of the nomadic, pastoral life, and of the city life in Sodom and Gomorrah, and you find there a civilization which can be traced back through the five or six thousand years in which we grope through history. That civilization depends upon three prime factors - the institution of the family, the right in private property, and a settled social order based on justice and morality.
Capital is originally that product of labor and intelligence which, instead of being dissipated currently as produced, is saved and used either by the saver or by him put to the service of others, he looking for recompense for his self-sacrifice and abstinence to a satisfactory reward in rents, interest or dividends.
There is no difference between the dollar earned and spent and the dollar earned and saved, except that the latter has added to it certain very significant virtues, the virtues of abstinence, self-denial, foresight, and of being put to the service of others. There is no difference between the dollar earned and saved and held in the possession of the man who earned it, and the dollar earned and saved and passed on to heirs. Anyone who can appreciate, in the great industries like the railroads, the difference between a floating debt and a funded debt, will recognize the difference between money that is simply held temporarily by its owner, and money so placed by the owner that it may continue in service, passed on through inheritance. The right in private property and the right to dispose of it after death lies at the root of our civilization and are the most powerful incentives we know to the production and conservation of wealth.
The accumulation of wealth is a very slow process and the benefits flowing to the laborer from its saving by the owner and from its use by the enterpriser are but little appreciated. It is because of the superlative productivity of capital that so many of us are able to live in the industrial organization. It is of the most vital importance to the laborer himself that capital shall grow as rapidly as possible, and be made as significant as possible in the industrial relation; and no more dreadful harm could be done to the workman than to do things that prevent the accumulation of capital or prevent its employment in the industrial organization.
In this vast activity, what are the relative contributions and what are the relative rewards of the associates? The literature of the day is filled with discussions as to the "distribution of the product"; almost nothing is ever said as to the "contributing effort." I am not aware of any considerable or well considered body of information regarding the relative contributions to value by the brainworkers, the property owners and the hand workers.
The business is organized, energized and directed by management. As to the reward paid management, it can only be said that no more fatal economy could be made than to curtail the application of brains to industry, and it would be a very dangerous experiment to make any great reduction in their remuneration. Nor is it likely that the administration and clerical staff is redundant or that many could be eliminated without reduction of output.
Sir Hugh Bell states that "75 per cent of the total value of the commodities produced will have gone to pay the persons engaged in producing them."
Extremists among the labor leaders claim that the laborer produces it all. If we attach any significance to the words we use, this is manifestly impossible. Nor may we be unmindful of the rapidly changing conditions. For example, such have seen the improvements in wheat growing that the employment of the laborer has been reduced from 164 minutes per bushel in 1840 to 30 minutes per bushel in 1920; that is, the contribution made by the laborer in his labor is only twenty-three per cent of what it was eighty years ago.
Extremists among the employers claim that in many industries the laborer has become parasitic - not putting in through his help as much as he takes out in his wage; the balance of the help - the contribution of management and capital 0 having become relatively so large. If this be true, then the demand that the laborer be rewarded in proportion to his contribution to production is unworkable. For on any such basis he could not sustain life.
Neither of these views gives consideration to the fact that a significant proportion of the workmen bring to their work intelligence ranking from good to high, fine character, real courage and steadfastness, giving poise to the mass and furnishing to management recruits for essential leadership. On the one side these men have been the victims of the Trades Unions which, as Tannenbaum states, "work by cumulatively reducing economic incomes, economic ambitions and economic incentives to a common denominator, wiping out the differentials between the unskilled and the skilled," and on the other side these men have been measureably neglected by management, which has failed to provide adequate instruction and a proper measure of interest and consideration. We should work out a system of compensation reflecting the range of intelligence, character, and skill, which differentiates one man from another.
The rewards of capital are often much overstated. Significance must be given to the difference between income and spendable income. Out of the income of capital must be set aside the sum necessary to make good the years' destruction of capital, including the wasting assets spoken of as depreciation, the savings necessary for progress and the provision of plant to provide work for the increase of the industrial population; a contribution to the expenses of government, federal, state, county, city, etc., and these allotments absorb a very substantial part of the whole. Further, much of the profit never comes into the hands of the individual owner, as the investment of earnings by successful organizations in their own business is one of the main sources of industrial progress. A large part of the profits arises from professions and occupations to the production of which wage-earners contribute very little, and another part is due to special skill of management, and to partial monopoly, the excess of whose profits is not due to the workers who helped to make them. The contributions ascribed to management and capital are not to be taken as furnished solely by the enterpriser and capitalist of to-day, but owe much of their potency to the accumulated achievement of science and invention during many generations, themselves the achievements of the enterpriser and capitalist.
Capital for all its strength is characterized by extreme timidity and looks for its defence to its agility and fleetness in running, but that it has ample capacity to take care of itself a long history makes clear.
Like the arguments in the fable as to the relative value of the several parts of the body, the hands, mouth, heart, etc, from some standpoints these considerations are negligible. The fact is that all three elements: management, capital and labor are essentially necessary, that the relation is a voluntary association, and that it can be induced and maintained only upon terms that are satisfactory to each.
The number of men having the ideas, the "look-ahead," the specialized skill necessary to create or keep industry in prosperous condition, is exceedingly limited. Their ability to secure capital is much simplified by the machinery organized for its handling and by its tendency to content itself with a uniform rate of reward much as water seeks a level.
Not so simple is the securing of labor. No satisfactory methods have been instituted by management, while the organizations created by the workman are obstructions rather than aids, since they have many interests to which they attach greater value.
While the foregoing considerations may not help in determining the basis for wages further than to clear away obstacles, what they do make clear is the extent to which it is to the interest of the workmen that the volume of capital and the efficiency of management should steadily and greatly increase.
It is not feasible to raise the level of wages by raising the level of prices. If prices are increased in one industry only, it is at the expense of the others; if the rise spreads to all industries it benefits no one, while during the considerable period necessary for the adjustment there are great hardships.
The return to capital may be brought too low by taxation, or its possession rendered uncertain by alteration in the laws of inheritance, by the plundering of estates through death duties or by confiscation. The upkeep and development of the organization and plant necessary for future production may be sacrificed, as to some extent they were during the war. But these as methods of raising wages are suicidal.
The temporary raising of wages by labor union pressure is shortly reflected in unemployment. Employment by the state holds forth no promise, since the state has no power or recourse not possessed in much greater measure by competitive employers. If the enterpriser is abolished it is only to bring the worker face to face with his real employer, the consumer. It is not to be supposed that the whole of the consumers, whose interests are certainly not on the side of costly concessions, will allow industry to be manipulated against themselves. It is probable that when we get the whole picture of what has been going on in Russia under Lenin and Trotsky, there will be found very little that is attractive in the suggestion of nationalization. Under their socialistic regime every incentive that promoted prosperity or lessened adversity in other countries has been obliterated. The individual's personal interest in the fruits of his own endeavors has been wiped out; that whole play of motive and calculation, of social organization and individual ambition, on which the economic activities of the world have rested for thousands of years has been brought to an end. In its place has been substituted an organization of society spun out of the brains of a group of fanatics, and put into operation without regard to the teachings of experience. After three years' trial of this system, in a country of boundless resources, there is reported a state of destitution without parallel in the history of the world.
There remains the one hopeful way - by increasing production. The possibilities of the future should be at least as great as those of the past. The skill of management may be increased, its field of activity extended, its control strengthened. Capital can be better applied, its accumulation encouraged, its integrity assured. Labor must not waste its productive power, nor limit the maximum use of plant and machinery. Greater encouragement of skill, more facilities for promotion from unskilled work to skilled, better education, together with full opportunity for the use of all intelligence, knowledge and strength, irrespective of sex in tasks not disproportionate to woman's strength, and without insistence on outworn rules as to previous training, will promote the fuller use of the latent abilities of the race.
These improvements are indicated, not accomplished; they require time, ability and patience. Any attempt to grasp the fruits of progress before the tree that might produce them is cultivated, can only result in disappointment and failure.
The wealth of the country, more evenly divided here than in any other part of the world, was not sufficient before the war for a higher standard of living than then obtained.
If the rewards of the future are to be increased, the most important task, incumbent upon employers and employees alike, is to increase the national product.
Think on a man like Nelson. His presence was victory; he had been in a hundred fights and bore their scars. One arm off, one eye out, his scalp torn off at the Nile, his frail body racked with the agonizing pains of tic douloureux, he yet held on until at Trafalgar, he assured the safety of the British Empire for a hundred years. Think on the simple entry in the log of his flagship: "Partial firing continued until 4:30 p.m., when, a victory having been reported to Admiral Lord Viscount Nelson, K. B,, and Commander-in-Chief, he THEN died of his wound."
But as when the sun approaches the gates of morning, he first opens a little eye of heaven, and sends away the spirit of darkness, and gives light to a cock, and calls up the lark to matins, and by and by gilds the fringes of a cloud, and peeps over the eastern hills, thrusting out his golden horns, like those which decked the brow of Moses when he was forced to wear a veil, because he himself had seen the face of God; and still while a man tells the story, the sun gets up higher, till he shows a fair face and a full light and then he shines one whole day, under a cloud often, and sometimes weeping great and little showers, and sets quickly; so is a man's reason and his life.
Jeremy Taylor