My Life and Work
life. Nobody can get more out of life than life can produce--yet nearly
everybody thinks he can. Speculative capital wants more; labour wants
more; the source of raw material wants more; and the purchasing public
wants more. A family knows that it cannot live beyond its income; even
the children know that. But the public never seems to learn that it
cannot live beyond its income--have more than it produces.
In clearing out the need for charity we must keep in mind not only the
economic facts of existence, but also that lack of knowledge of these
facts encourages fear. Banish fear and we can have self-reliance.
Charity is not present where self-reliance dwells.
Fear is the offspring of a reliance placed on something outside--on a
foreman's good-will, perhaps, on a shop's prosperity, on a market's
steadiness. That is just another way of saying that fear is the portion
of the man who acknowledges his career to be in the keeping of earthly
circumstances. Fear is the result of the body assuming ascendancy over
the soul.
The habit of failure is purely mental and is the mother of fear. This
habit gets itself fixed on men because they lack vision. They start out
to do something that reaches from A to Z. At A they fail, at B they
stumble, and at C they meet with what seems to be an insuperable
difficulty. They then cry "Beaten" and throw the whole task down. They
have not even given themselves a chance really to fail; they have not
given their vision a chance to be proved or disproved. They have simply
let themselves be beaten by the natural difficulties that attend every
kind of effort.
More men are beaten than fail. It is not wisdom they need or money, or
brilliance, or "pull," but just plain gristle and bone. This rude,
simple, primitive power which we call "stick-to-it-iveness" is the
uncrowned king of the world of endeavour. People are utterly wrong in
their slant upon things. They see the successes that men have made and
somehow they appear to be easy. But that is a world away from the facts.
It is failure that is easy. Success is always hard. A man can fail in
ease; he can succeed only by paying out all that he has and is. It is
this which makes success so pitiable a thing if it be in lines that are
not useful and uplifting.
If a man is in constant fear of the industrial situation he ought to
change his life so as not to be dependent upon it. There is always the
land, and fewer people are on the land now than ever before. If a man
lives in fear of an employer's favor changing toward him, he ought to
extricate himself from dependence on any employer. He can become his own
boss. It may be that he will be a poorer boss than the one he leaves,
and that his returns will be much less, but at least he will have rid
himself of the shadow of his pet fear, and that is worth a great deal in
money and position. Better still is for the man to come through himself
and exceed himself by getting rid of his fears in the midst of the
circumstances where his daily lot is cast. Become a freeman in the place
where you first surrendered your freedom. Win your battle where you lost
it. And you will come to see that, although there was much outside of
you that was not right, there was more inside of you that was not right.
Thus you will learn that the wrong inside of you spoils even the right
that is outside of you.
A man is still the superior being of the earth. Whatever happens, he is
still a man. Business may slacken tomorrow--he is still a man. He goes
through the changes of circumstances, as he goes through the variations
of temperature--still a man. If he can only get this thought reborn in
him, it opens new wells and mines in his own being. There is no security
outside of himself. There is no wealth outside of himself. The
elimination of fear is the bringing in of security and supply.
Let every American become steeled against coddling. Americans ought to
resent coddling. It is a drug. Stand up and stand out; let weaklings
take charity.
CHAPTER XVI
THE RAILROADS
Nothing in this country furnishes a better example of how a business may
be turned from its function of service than do the railroads. We have a
railroad problem, and much learned thought and discussion have been
devoted to the solution of that problem. Everyone is dissatisfied with
the railways. The public is dissatisfied because both the passenger and
freight rates are too high. The railroad employees are dissatisfied
because they say their wages are too low and their hours too long. The
owners of the railways are dissatisfied because it is claimed that no
adequate return is realized upon the money invested. All of the contacts
of a properly managed undertaking ought to be satisfactory. If the
public, the employees, and the owners do not find themselves better off
because of the undertaking, then there must be something very wrong
indeed with the manner in which the undertaking is carried through.
I am entirely without any disposition to pose as a railroad authority.
There may be railroad authorities, but if the service as rendered by the
American railroad to-day is the result of accumulated railway knowledge,
then I cannot say that my respect for the usefulness of that knowledge
is at all profound. I have not the slightest doubt in the world that the
active managers of the railways, the men who really do the work, are
entirely capable of conducting the railways of the country to the
satisfaction of every one, and I have equally no doubt that these active
managers have, by force of a chain of circumstances, all but ceased to
manage. And right there is the source of most of the trouble. The men
who know railroading have not been allowed to manage railroads.
In a previous chapter on finance were set forth the dangers attendant
upon the indiscriminate borrowing of money. It is inevitable that any
one who can borrow freely to cover errors of management will borrow
rather than correct the errors. Our railway managers have been
practically forced to borrow, for since the very inception of the
railways they have not been free agents. The guiding hand of the railway
has been, not the railroad man, but the banker. When railroad credit was
high, more money was to be made out of floating bond issues and
speculating in the securities than out of service to the public. A very
small fraction of the money earned by the railways has gone back into
the rehabilitation of the properties. When by skilled management the net
revenue became large enough to pay a considerable dividend upon the
stock, then that dividend was used first by the speculators on the
inside and controlling the railroad fiscal policy to boom the stock and
unload their holdings, and then to float a bond issue on the strength of
the credit gained through the earnings. When the earnings dropped or
were artificially depressed, then the speculators bought back the stock
and in the course of time staged another advance and unloading. There is
scarcely a railroad in the United States that has not been through one
or more receiverships, due to the fact that the financial interests
piled on load after load of securities until the structures grew
topheavy and fell over. Then they got in on the receiverships, made
money at the expense of gullible security holders, and started the same
old pyramiding game all over again.
The natural ally of the banker is the lawyer. Such games as have been
played on the railroads have needed expert legal advice. Lawyers, like
bankers, know absolutely nothing about business. They imagine that a
business is properly conducted if it keeps within the law or if the law
can be altered or interpreted to suit the purpose in hand. They live on
rules. The bankers took finance out of the hands of the managers. They
put in lawyers to see that the railroads violated the law only in legal
fashion, and thus grew up immense legal departments. Instead of
operating under the rules of common sense and according to
circumstances, every railroad had to operate on the advice of counsel.
Rules spread through every part of the organization. Then came the
avalanche of state and federal regulations, until to-day we find the
railways hog-tied in a mass of rules and regulations. With the lawyers
and the financiers on the inside and various state commissions on the
outside, the railway manager has little chance. That is the trouble with
the railways. Business cannot be conducted by law.
We have had the opportunity of demonstrating to ourselves what a freedom
from the banker-legal mortmain means, in our experience with the
Detroit, Toledo & Ironton Railway. We bought the railway because its
right of way interfered with some of our improvements on the River
Rouge. We did not buy it as an investment, or as an adjunct to our
industries, or because of its strategic position. The extraordinarily
good situation of the railway seems to have become universally apparent
only since we bought it. That, however, is beside the point. We bought
the railway because it interfered with our plans. Then we had to do
something with it. The only thing to do was to run it as a productive
enterprise, applying to it exactly the same principles as are applied in
every department of our industries. We have as yet made no special
efforts of any kind and the railway has not been set up as a
demonstration of how every railway should be run. It is true that
applying the rule of maximum service at minimum cost has caused the
income of the road to exceed the outgo--which, for that road, represents
a most unusual condition. It has been represented that the changes we
have made--and remember they have been made simply as part of the day's
work--are peculiarly revolutionary and quite without application to
railway management in general. Personally, it would seem to me that our
little line does not differ much from the big lines. In our own work we
have always found that, if our principles were right, the area over
which they were applied did not matter. The principles that we use in
the big Highland Park plant seem to work equally well in every plant
that we establish. It has never made any difference with us whether we
multiplied what we were doing by five or five hundred. Size is only a
matter of the multiplication table, anyway.
The Detroit, Toledo & Ironton Railway was organized some twenty-odd
years ago and has been reorganized every few years since then. The last
reorganization was in 1914. The war and the federal control of the
railways interrupted the cycle of reorganization. The road owns 343
miles of track, has 52 miles of branches, and 45 miles of trackage
rights over other roads. It goes from Detroit almost due south to
Ironton on the Ohio River, thus tapping the West Virginia coal deposits.
It crosses most of the large trunk lines and it is a road which, from a
general business standpoint, ought to pay. It has paid. It seems to have
paid the bankers. In 1913 the net capitalization per mile of road was
$105,000. In the next receivership this was cut down to $47,000 per
mile. I do not know how much money in all has been raised on the
strength of the road. I do know that in the reorganization of 1914 the
bondholders were assessed and forced to turn into the treasury nearly
five million dollars--which is the amount that we paid for the entire
road. We paid sixty cents on the dollar for the outstanding mortgage
bonds, although the ruling price just before the time of purchase was
between thirty and forty cents on the dollar. We paid a dollar a share
for the common stock and five dollars a share for the preferred
stock--which seemed to be a fair price considering that no interest had
ever been paid upon the bonds and a dividend on the stock was a most