The large wage had other results. In 1914, when the first plan went into effect, we had 14,000 employees and it had been necessary to hire at the rate of about 53,000 a year in order to keep a constant force of 14,000. In 1915 we had to hire only 6,508 men and the majority of these new men were taken on because of the growth of the business. With the old turnover of labour and our present force we should have to hire at the rate of nearly 200,000 men a year—which would be pretty nearly an impossible proposition. Even with the minimum of instruction that is required to master almost any job in our place, we cannot take on a new staff each morning, or each week, or each month; for, although a man may qualify for acceptable work at an acceptable rate of speed within two or three days, he will be able to do more after a year's experience than he did at the beginning. The matter of labour turnover has not since bothered us; it is rather hard to give exact figures because when we are not running to capacity, we rotate some of the men in order to distribute the work among greatest number. This makes it hard to distinguish between the voluntary and involuntary exits. To-day we keep no figures; we now think so little of our turnover that we do not bother to keep records. As far as we know the turnover is somewhere between 3 per cent. and 6 per cent. a month.
We have made changes in the system, but we have not deviated from this principle:
If you expect a man to give his time and energy, fix his wages so that he will have no financial worries. It pays. Our profits, after paying good wages and a bonus—which bonus used to run around ten millions a year before we changed the system—show that paying good wages is the most profitable way of doing business.
There were objections to the bonus-on-conduct method of paying wages. It tended toward paternalism. Paternalism has no place in industry. Welfare work that consists in prying into employees' private concerns is out of date. Men need counsel and men need help, oftentimes special help; and all this ought to be rendered for decency's sake. But the broad workable plan of investment and participation will do more to solidify industry and strengthen organization than will any social work on the outside.
Without changing the principle we have changed the method of payment.
CHAPTER IX
WHY NOT ALWAYS HAVE GOOD BUSINESS?
The employer has to live by the year. The workman has to live by the year. But both of them, as a rule, work by the week. They get an order or a job when they can and at the price they can. During what is called a prosperous time, orders and jobs are plentiful. During a "dull" season they are scarce. Business is always either feasting or fasting and is always either "good" or "bad." Although there is never a time when everyone has too much of this world's goods—when everyone is too comfortable or too happy—there come periods when we have the astounding spectacle of a world hungry for goods and an industrial machine hungry for work and the two—the demand and the means of satisfying it—held apart by a money barrier. Both manufacturing and employment are in-and-out affairs. Instead of a steady progression we go ahead by fits and starts—now going too fast, now stopping altogether. When a great many people want to buy, there is said to be a shortage of goods. When nobody wants to buy, there is said to be an overproduction of goods. I know that we have always had a shortage of goods, but I do not believe we have ever had an overproduction. We may have, at a particular time, too much of the wrong kind of goods. That is not overproduction—that is merely headless production. We may also have great stocks of goods at too high prices. That is not overproduction—it is either bad manufacturing or bad financing. Is business good or bad according to the dictates of fate? Must we accept the conditions as inevitable? Business is good or bad as we make it so. The only reason for growing crops, for mining, or for manufacturing, is that people may eat, keep warm, have clothing to wear, and articles to use. There is no other possible reason, yet that reason is forced into the background and instead we have operations carried on, not to the end of service, but to the end of making money—and this because we have evolved a system of money that instead of being a convenient medium of exchange, is at times a barrier to exchange. Of this more later.
We suffer frequent periods of so-called bad luck only because we manage so badly. If we had a vast crop failure, I can imagine the country going hungry, but I cannot conceive how it is that we tolerate hunger and poverty, when they grow solely out of bad management, and especially out of the bad management that is implicit in an unreasoned financial structure. Of course the war upset affairs in this country. It upset the whole world. There would have been no war had management been better. But the war alone is not to blame. The war showed up a great number of the defects of the financial system, but more than anything else it showed how insecure is business supported only by a money foundation. I do not know whether bad business is the result of bad financial methods or whether the wrong motive in business created bad financial methods, but I do know that, while it would be wholly undesirable to try to overturn the present financial system, it is wholly desirable to reshape business on the basis of service. Then a better financial system will have to come. The present system will drop out because it will have no reason for being. The process will have to be a gradual one.
The start toward the stabilization of his own affairs may be made by any one. One cannot achieve perfect results acting alone, but as the example begins to sink in there will be followers, and thus in the course of time we can hope to put inflated business and its fellow, depressed business, into a class with small-pox—that is, into the class of preventable diseases. It is perfectly possible, with the reorganization of business and finance that is bound to come about, to take the ill effect of seasons, if not the seasons, out of industry, and also the periodic depressions. Farming is already in process of reorganization. When industry and farming are fully reorganized they will be complementary; they belong together, not apart. As an indication, take our valve plant. We established it eighteen miles out in the country so that the workers could also be farmers. By the use of machinery farming need not consume more than a fraction of the time it now consumes; the time nature requires to produce is much larger than that required for the human contribution of seeding, cultivating, and harvesting; in many industries where the parts are not bulky it does not make much difference where they are made. By the aid of water power they can well be made out in farming country. Thus we can, to a much larger degree than is commonly known, have farmer-industrialists who both farm and work under the most scientific and healthful conditions. That arrangement will care for some seasonal industries; others can arrange a succession of products according to the seasons and the equipment, and still others can, with more careful management, iron out their seasons. A complete study of any specific problem will show the way.