My Life and Work
amount of money has larger opportunity to make a fool of himself.
In this first plan the standards insisted upon were not petty--although
sometimes they may have been administered in a petty fashion. We had
about fifty investigators in the Social Department; the standard of
common sense among them was very high indeed, but it is impossible to
assemble fifty men equally endowed with common sense. They erred at
times--one always hears about the errors. It was expected that in order
to receive the bonus married men should live with and take proper care
of their families. We had to break up the evil custom among many of the
foreign workers of taking in boarders--of regarding their homes as
something to make money out of rather than as a place to live in. Boys
under eighteen received a bonus if they supported the next of kin.
Single men who lived wholesomely shared. The best evidence that the plan
was essentially beneficial is the record. When the plan went into
effect, 60 per cent. of the workers immediately qualified to share; at
the end of six months 78 per cent. were sharing, and at the end of one
year 87 per cent. Within a year and one half only a fraction of one per
cent. failed to share.
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.
The periodic depressions are more serious because they seem so vast as
to be uncontrollable. Until the whole reorganization is brought about,
they cannot be wholly controlled, but each man in business can easily do
something for himself and while benefiting his own organization in a
very material way, also help others. The Ford production has not
reflected good times or bad times; it has kept right on regardless of
conditions excepting from 1917 to 1919, when the factory was turned over
to war work. The year 1912-1913 was supposed to be a dull one; although
now some call it "normal"; we all but doubled our sales; 1913-1914 was
dull; we increased our sales by more than a third. The year 1920-1921 is
supposed to have been one of the most depressed in history; we sold a
million and a quarter cars, or about five times as many as in
1913-1914--the "normal year." There is no particular secret in it. It
is, as is everything else in our business, the inevitable result of the
application of a principle which can be applied to any business.
We now have a minimum wage of six dollars a day paid without
reservation. The people are sufficiently used to high wages to make
supervision unnecessary. The minimum wage is paid just as soon as a
worker has qualified in his production--which is a matter that depends
upon his own desire to work. We have put our estimate of profits into
the wage and are now paying higher wages than during the boom times
after the war. But we are, as always, paying them on the basis of work.
And that the men do work is evidenced by the fact that although six
dollars a day is the minimum wage, about 60 per cent. of the workers
receive above the minimum. The six dollars is not a flat but a minimum
wage.
Consider first the fundamentals of prosperity. Progress is not made by
pulling off a series of stunts. Each step has to be regulated. A man
cannot expect to progress without thinking. Take prosperity. A truly
prosperous time is when the largest number of people are getting all
they can legitimately eat and wear, and are in every sense of the word
comfortable. It is the degree of the comfort of the people at large--not
the size of the manufacturer's bank balance--that evidences prosperity.
The function of the manufacturer is to contribute to this comfort. He is
an instrument of society and he can serve society only as he manages his
enterprises so as to turn over to the public an increasingly better
product at an ever-decreasing price, and at the same time to pay to all
those who have a hand in his business an ever-increasing wage, based
upon the work they do. In this way and in this way alone can a
manufacturer or any one in business justify his existence.
We are not much concerned with the statistics and the theories of the
economists on the recurring cycles of prosperity and depression. They
call the periods when prices are high "prosperous." A really prosperous
period is not to be judged on the prices that manufacturers are quoting
for articles.
We are not concerned with combinations of words. If the prices of goods
are above the incomes of the people, then get the prices down to the