industrial combinations in 1900. It is not so large as is generally supposed; but it is considerably larger to-day than when the census was taken, and it shows very striking variations in the different groups of industries. It is lowest in the lumber manufacture, where only 2 per cent. of the product was made by trusts. In the textiles only 4.4 per cent. was so made, and in the leather industries only 7.8 per cent. But in the chemical manufactures, 33.4 per cent. of the total product was trust-made; in liquors and beverages, 22 per cent.; in metals, other than iron and steel, 24.1 per cent.; and in the iron and steel industry, 28.4 per cent. Since the census year the United States Steel Corporation has been organized, and in consequence the percentage of the total product of iron and steel controlled by industrial combinations is now very much greater than in 1900, and undoubtedly greater than in any other branch of industry. An interesting exhibit connected with industrial combinations shows the actual investment of capital, as returned to the census, and the nominal investment represented by the bonds and common and preferred stock issued by them. Their actual investment in manufacturing, including the value of land, buildings, machinery, and all live assets, was $1,461,631,743, as compared with $3,093,095,868, the amount of securities issued; thus but 47.3 per cent. of the bonds and stock issued by these industrial combinations represented actual investment, such as is covered by the general census inquiry. The excess is what is commonly known as "water," and is based upon the assumed earning power of the corporations. It is not all water, however, because there are certain intangible assets, such as patents, trade-marks, "good will," etc., not represented in the census totals, and certain tangible assets, such as iron mines, railroads and steamboats, woodlands, etc., which are not directly employed in manufactures, and are therefore not included in the census return. That the public has already discounted the inflation of value represented in the difference between the two sets of figures is sufficiently evident upon a study of the quotations of the stock exchanges. The difference between the par value of these industrial securities and their value on the basis of actual investment is about the same as the difference between the par value and the market or selling value. FACTS REGARDING VARIOUS INDUSTRIES. The four mammoth volumes devoted to the census of manufactures are full of suggestive items of information about individual industries. For instance, it appears that the total production of liquors, distilled, malt, and vinous, in the census year, was 1,325,000,000 gallons, a per capita consumption of seventeen gallons. There still appears to be work for the temperance societies. Nearly ten billion ordinary toilet pins were manufactured, besides 161,000,000 hairpins, and as many more safety pins. The old conundrum,— where do all the pins go ?-is as far as ever from a satisfactory answer. The manufacture of steel pens reached 1,764,000 gross; and of lead pencils, 1,660,000 gross. Of boots, shoes, and slippers, 219,235,000 pairs were manufactured, and there were 49,979,000 pairs of rubber boots and shoes made besides; there appears to be no reason why any of our people should go barefoot. Of carpets of all kinds, 75,532,000 running yards were manufactured. Of woolen and worsted piece goods, 399,141,000 square yards were made, more than five square yards to a person; so that none of our people would seem to need to go naked. Of cotton goods there were woven the enormous quantity of 4,509,750,000 square yards, equivalent to nearly sixty square yards for every man, woman, and child in the country. Of hose and half-hose, 29,891,000 dozen pairs were made, and of knitted shirts and drawers, 15,819,000 dozen,-these two branches of manufacture representing forms of wearing apparel which less than sixty years ago were exclusively made by the women of the household. Perhaps no figures in the whole census mass illustrate more effectively than these the complete revolution in household economy which machine manufacture has brought about. It has relieved the woman of the largest part of her home duties, and thus driven her into the factory, the store, and the office. Of collars and cuffs, 121,000,000 were made in the factories, having a value of $9,000,000. Fifty years ago a factory-made collar was practically unknown. Pianos to the number of 171,000 were made in the census year, not counting organs and melodeons; and the question is, where do they all go? No better test of the general prosperity of the masses of our people can be cited than the fact that they absorb this number of pianos, an absolute luxury, in a single year of good business. Of watch movements, 2.124,000 were made, exclusive of 1,211,000 cheap, or "dollar" watches, made in clock factories. Of typewriters, 145,000 were made. valued at $5,624,000. As recently as 1872, not a typewriter had ever been marketed, and in the interval this American invention has revolutionized the correspondence of the world. Of sewing machines, 747,000 were made, exclusive of 55,000 sewing machines for factory use. Of bicycles there were made 1, 113, 000, a much smaller number than the average production of a few years ago, but enough to show that the bicycle has staying powers. Ο BY SAMUEL CABOT. To any one who looks at the present industrial situation from either a utilitarian or a hu manitarian point of view there must be much that seems most lamentable in the attitude of employer to employed, and still more in that of employed to employer. As the writer intends to give a short description of his own experiences and efforts, there are obvious reasons why he should pass by the humanitarian aspect of the question and lay chief stress upon the advantages from an economic point of view, both to labor and capital, of a more cordial coöperation. Any one who has really watched the work of the operatives in a textile mill or print works from within, and for any considerable period of time, must be impressed with the conviction that if their work were for their own individual benefit, the amount accomplished would certainly in many cases reach 30 per cent. more, and in most at least 20 per cent. In addition to this, the economies of material and the saving of machinery would also be much greater. work is paid by the day, and not by the piece, this difference would of course be more marked, but even in piecework the gains possible for an interested operative as contrasted with an uninterested one may easily exceed the estimate above. If the The writer having worked in such a mill, had these truths early proned inter him," as the negro philosopher, Uncle Remus, expresses it. It thus became a settled purpose in his mind that he would try-in case he ever had occasion to run a factory of his own-to make the employees interested in economy and thrift on their own account. This he has now been able to do; and as it has been carried on for a period of fifteen years, the plan may be said to have passed the experimental stage. In The arrangement is a very simple one. Each operative who wishes to take part in the profitsharing is required to sign a paper agreeing to give a notice of sixty days before leaving, and also to do all in his power to save expenses; and, in short, to render the business successful. consideration of this a certain proportion of the net profits-known only to the proprietor, but always the same proportion-is divided among the profit-sharers pro rata, according to their wages, during the period just elapsed. In the writer's case the profits are calculated every six months. The profits are paid-one-half in cash to the participant, and one-half is placed in a savings bank by the proprietor as trustee for the employee. If the employee dies in the service, his heirs are at once entitled to the accumulated fund in the savings bank, with interest. If the operative desires to leave the works, and gives the required sixty days' notice, the fund remains at interest two years in the bank, and is then handed over to the operative, provided he has not sold the secrets or formulas he may have learned in the course of his employment in these works. In case the employee should not keep his part of the agreement should, for instance, organize a strike, stopping work without the required notice of sixty days-his accumulated profit, which is only contingent upon his adherence to the promises made to the employer, does not come back to the latter, but is divided into two equal parts, one of which is apportioned in cash among the operatives who have adhered to their bargain, and the other is added pro rata to their funds in the savings bank. It seems to the writer that it is of great importance that the money once divided should never come back to the employer again, as otherwise it would give room to suspicion that men were discharged in order to obtain their accumulated savings. If a man is discharged for cause, the employer has the right to turn his accumulation over to the faithful men who have kept their promises. There has been-in the writer's experience-but one attempt to systematically break this agreement, an attempt early in the arrangement to organize a strike. The result was a loss on the strikers' part of a considerable sum of money and the division of that sum among those who respected their promises. The strike lasted two days, and has never been repeated, the strikers begging to be taken back on the old terms. And now in regard to the results. It is, of course, obvious that absolute tabulated figures are impossible in such a case, as much of the effect must be too subtle to be chronicled in dollars and cents. It is, however, the firm conviction of the writer that his men have given him a return upon the investment made fully equal to that which one ought to expect. The earnestness and diligence of the workmen seem much above the average, and moreover the thousand and one economies which are so important in an industrial plant are more than usually observed. In fact, from careful observation, it seems unquestionable that the advantages far outweigh the cost. The class of workmen is not above the average of those in a silk or print works, yet the savings in the bank reaches already $500 in many instances, and much more in a few. The profit distributed among the thirty-five to forty sharers averages a little over 14 per cent. of the total wages they earn, and a considerable number of them have already received more than $1,000 apiece in profits. Although the sum distributed has been over $25,000, the writer believes that the immunity from strikes for so long has been well worth the expenditure, leaving the much increased industry and economy as a profit to the employer. In many instances this system might be modified to advantage, as, for example, by allowing the operative, after a term of years, to mortgage his bank savings to the employer. He could in this way be encouraged and enabled to build a home at an earlier date than he could otherwise hope to do. Such an arrangement would be also an advantage to the employer by increasing the number of permanent workmen of experience in the neighborhood of his establishment. But many other modifications will doubtless occur to the reader, and it is not the purpose of this paper to dogmatize upon the subject, but merely to state facts and results. THE BONUS SYSTEM OF REWARDING LABOR. BY H. L. GANTT. AWARDING extra compensation for extra work has long been the practice in successful manufacturing; but the particular method of awarding a bonus above referred to is of recent origin, and fills an important need in modern systems of management. It may be briefly described as follows: Alternative ways of doing a piece of work are carefully investigated by the most competent expert available and the results recorded. The best method is determined and taught to an ordinary work man, who is awarded extra compensation in addition to his day's pay for doing the work in the time and manner specified. This method of compensation was the outcome of an attempt to introduce in complicated work equitable piece rates determined as nearly as possible by scientific methods. To understand the subject thoroughly it is necessary to become familiar with the work of Mr. Fred. W. Taylor, who was the first to apply the scientific method to the investigation of ordinary labor problems, for this system was a direct outgrowth from his work. MR. TAYLOR, THE PIONEER INVESTIGATOR. In the early eighties, Mr. Taylor, then in the employ of the Midvale Steel Company, became convinced that the scientific method of investi gation was the only means of finding the best solution to the various problems with which he found himself confronted; and, whether the problem was that of managing a machine shop or of shovelling coal, he remained firm to his convictions, and did his best to obtain his conclusions by that means. Conscious that his method was correct, he maintained his faith in the results, no matter how much they differed from previous ones, and often had the satisfaction of accomplishing what had been declared impossible. The fact that Mr. Taylor combined the knowledge and methods of the scientist with the experience of a practical mechanic, enabled him to bring to bear the scientific method on ordinary mechanical problems in a most efficient manner, and his experiments to determine the laws that govern the cutting of metals is most noteworthy, inasmuch as he not only had to investigate a problem having a large number of unknown quantities, but had to develop a method of investigation of a problem which had been declared by engineers and mathematicians alike incapable of solution. That the problem has been solved, at least in part, is evidenced by the fact that slide rules embodying the laws of cutting steel have been in practical operation for more than two years. THE OUTPUT OF MACHINE SHOPS DOUBLED. This investigation has had, aside from its main object, a most important result, for it has developed a method of making in a few hours a scientific determination of the value of a tool steel for any given purpose; this very important art has in the past been so imperfectly understood that as a rule tool steel has been sold more by the merits of the salesman than by its own. With the new ideas this condition will before long be a thing of the past, and opinions will give place to facts. Again the application of the scientific method to the investigation of ordinary mechanical problems has often disclosed facts previously unsuspected. Most notable among these was the discovery made by Messrs. Taylor & White in testing tool steel, that certain kinds of self-hardening steel had an important property previously unsuspected. By taking advantage of this property, and making use of it under a proper system of management, it is possible to practically double the output of a majority of the machine shops in the world. THE SCIENTIFIC STUDY OF WHAT A MAN CAN DO. The value of scientific knowledge to engineering and industry has long been recognized, and the great advances that have been made in this country and in Germany are due largely to the fact that such knowledge has been applied; but the idea of making a scientific study of what a and so man or a machine could do was new, complicated that few looked upon it with favor. A workman was allowed to do the best he could with the appliances he liked, and a machine or a tool was expected to do what its builders claimed for it. An effort to get more work out of a man or a machine had been made by paying for the amount of work done instead of for the time taken; in other words, by the introduction of piecework in place of daywork; but the knowledge of how much a man or a machine could do was so vague that piece prices set by records or "judgment" were invariably found to be wrong, and the attempt to change them has caused more labor trouble than all other causes combined. Eliminating, then, the method of setting piece rates by judgment" and by previous records, the method of investigation or experiment was the only one from which anything could be hoped. No two men worked exactly alike, and few used The capacity of a maexactly the same tools. chine and the best method of operating it were That there is a seldom what its maker stated. best method of doing a piece of work, or that there is a best method of operating a machine, and a maximum capacity for that machine, are not doubted, but the problem of determining them was something for which there was guide except the general principles of scientific investigation. A GREATER OUTPUT, AND GREATER REWARD, OF LABOR. no Believing firmly that if piecework is to be permanently successful the rates must be properly fixed in the beginning, and not "cut," Mr. Taylor undertook to determine by the above method the amount of work to be expected, and fixed his piece rates accordingly, with the result that men provided with the proper appliances, educated in the best methods, and given a piece rate that was permanent, have produced a greater output at The difficulty about this method is that the investigation is often long and tedious, for no permanent rate should be set until we know the best method of doing the work, and the exact time it will take a good man to do it. For financial reasons it is frequently impossible to wait for a complete scientific investigation of every condition before fixing a rate of pay, and the need of a means of making use of a partially completed scientific investigation, or of what Pieceknowledge we have, has long been felt. work will not do it satisfactorily, for it is not desirable, or even feasible, to change rates frequently, as the workman never feels settled, and is continually afraid of having his wages reduced. This unsettled feeling, which always accompanies the old-fashioned method of rate setting, is the source of the opposition to that type of piecework, and the reason why so many men prefer daywork at smaller wages. The first requirement, then, of any system aiming to take advantage of a partially completed investigation is that, no matter what other changes are made, the workman's weekly pay shall not be reduced. THE LAWS GOVERNING THE OUTPUT OF LABOR. It is a well-established fact that a man who is working at day's wages never does work to his maximum capacity, but will do so if he can be sure of earning a commensurate additional compensation. If the work is light, and does not require much physical effort, this additional amount may be as low as 30 per cent. of his day rate. If, however, the work is hard labor, and he becomes physically tired at the end of the day, he requires 50 per cent. additional to make him put forth all his energies; and if, in addition to the physical strain, the conditions under which the work is done are unpleasant, such as severe heat, he requires 70 or 80 per cent. additional to make him do his best. THE WORKING OF THE 66 BONUS SYSTEM." These facts, which have been established by history, enable us to take advantage of the results of a partially completed investigation; for, if we set for a day's work such a task as our investigations prove can be done, and offer for its accomplishment the proper premium or bonus, in accordance with the facts just stated, we shall find a very large proportion of men ready and willing to do the work in the manner and time specified in order to earn the increased pay. This, then, is the bonus system,' which was 6 first introduced by the writer in the works of the Bethlehem Steel Company. It consists of teaching an ordinary workman to do a piece of work by the best methods we can devise, and asking him to do it in the time it would take a good workman. If he accomplishes the task in the time set, he is given the wages of the good work. man; otherwise he gets simply his own day rate. Aside from the educational effect, which is most marked, the result of this is that many ordinary workmen, who lacked only incentive, promptly take their place among those that naturally have more ambition, and the general moral tone is elevated. When we write out a set of instructions according to the results of a partially completed investigation, the remaining information will, in the long run, generally be found out either by the expert who is making the investigation or the workman. In the first case, a new set of in structions is made out in accordance with the additional information and the proper bonus set. In the second case the same thing should be done, but in addition the workman discovering or devising the improved method should be given a cash compensation commensurate with the value of the improvement, which should thereafter be long to his employer. By such a system the workman is encouraged to be something more than a machine, for he is first taught the best knowledge available, and paid for learning more. THE ADVANTAGES TO WORKMEN AND EMPLOYER. Add to the satisfaction that comes with increased wages honestly earned, increase in quantity, and, as experience has shown, improve ment in quality of work at a lower cost, and we have a condition that rapidly tends toward prosperity for all concerned. As in any manufacturing establishment it is important to obtain the maximum output from the plant, it is very essential that the maximum product should be gotten from every machine, and the fact that a man loses his bonus when he fails to get out this maximum product is a very big factor in accomplishing the desired result, for he learns to take care of his machine or tools, and complains promptly if his work is interfered with. Again, those who are indirectly connected with the output, such as foremen, men who supply material and appliances, and those who repair machines, all should receiv a bonus in proportion to the number of men that produce the maximum output, and the whole makes a system that is as nearly automatic as is possible; for what is for the good of one is for the good of all, and a man who will not do his duty soon finds that he is in the wrong place. EXACT BOOKKEEPING FOR LABORING OPERATORS. This description of the principles on which the bonus system is founded gives but little idea of how it is carried out, but a very little thought shows that proper appliances for doing the work and a complete and exact system of time and Thanks record keeping are the first essentials. to the recent advances made in the art of doing such work, an exact system of keeping time, records, and costs can to-day be made a source of economy by preventing the errors and waste which always go with those methods which depend upon verbal reports and memory. It has long been the custom to keep a daily record of cash, which must balance to a cent. Modern methods require that we shall keep a daily record of labor and material, and the bonus system in its best development compels a modern system of management in that it requires that we shall at all times know the work done and to be done, and the means for doing it. Such a system requires that work for men and machines should be laid out as fully as possible the day before, which has a strong tendency to do away with delay and idleness, which are expensive alike to the manufacturer and the bonus workman. That such a system requires more organization than the ordinary shop possesses is not denied, but few realize how little such organization costs, and how many times it pays for itself in the course of a year. OUTPUT OF THE BETHLEHEM COMPANY DOUBLED. The principles above outlined were applied during the spring and summer of 1901 to the ordnance and armor-plate machine shops of the Bethlehem Steel Company, and resulted in a short time in more than doubling the output of those shops. The system is still in use substantially as introduced, and the superintendent, Mr. Archibald Johnston, in his testimony before the House Committee on Labor, February 13, 1902, makes the following statement regarding it: "This arrangement has worked very satisfactorily, both to the men and the company, for it has enabled us to get work out more quickly, and to add to the producing capacity of our invested capital; while for the men it has been a great benefit, as we have many instances of employees who have bought homes for themselves principally from their extra earnings on the bonus system, and from overtime work. The system has been a stronger incentive to industry than any other we have been able to put into effect in our plant." The cause of this result is not hard to find, for the men, realizing that their interests are being cared for, give their coöperation. |