My Life and Work
remote possibility. The rolling stock of the road consisted of about
seventy locomotives, twenty-seven passenger cars, and around
twenty-eight hundred freight cars. All of the rolling stock was in
extremely bad condition and a good part of it would not run at all. All
of the buildings were dirty, unpainted, and generally run down. The
roadbed was something more than a streak of rust and something less than
a railway. The repair shops were over-manned and under-machined.
Practically everything connected with operation was conducted with a
maximum of waste. There was, however, an exceedingly ample executive and
administration department, and of course a legal department. The legal
department alone cost in one month nearly $18,000.
We took over the road in March, 1921. We began to apply industrial
principles. There had been an executive office in Detroit. We closed
that up and put the administration into the charge of one man and gave
him half of the flat-topped desk out in the freight office. The legal
department went with the executive offices. There is no reason for so
much litigation in connection with railroading. Our people quickly
settled all the mass of outstanding claims, some of which had been
hanging on for years. As new claims arise, they are settled at once and
on the facts, so that the legal expense seldom exceeds $200 a month. All
of the unnecessary accounting and red tape were thrown out and the
payroll of the road was reduced from 2,700 to 1,650 men. Following our
general policy, all titles and offices other than those required by law
were abolished. The ordinary railway organization is rigid; a message
has to go up through a certain line of authority and no man is expected
to do anything without explicit orders from his superior. One morning I
went out to the road very early and found a wrecking train with steam
up, a crew aboard and all ready to start. It had been "awaiting orders"
for half an hour. We went down and cleared the wreck before the orders
came through; that was before the idea of personal responsibility had
soaked in. It was a little hard to break the "orders" habit; the men at
first were afraid to take responsibility. But as we went on, they seemed
to like the plan more and more and now no man limits his duties. A man
is paid for a day's work of eight hours and he is expected to work
during those eight hours. If he is an engineer and finishes a run in
four hours then he works at whatever else may be in demand for the next
four hours. If a man works more than eight hours he is not paid for
overtime--he deducts his overtime from the next working day or saves it
up and gets a whole day off with pay. Our eight-hour day is a day of
eight hours and not a basis for computing pay.
The minimum wage is six dollars a day. There are no extra men. We have
cut down in the offices, in the shops, and on the roads. In one shop 20
men are now doing more work than 59 did before. Not long ago one of our
track gangs, consisting of a foreman and 15 men, was working beside a
parallel road on which was a gang of 40 men doing exactly the same sort
of track repairing and ballasting. In five days our gang did two
telegraph poles more than the competing gang!
The road is being rehabilitated; nearly the whole track has been
reballasted and many miles of new rails have been laid. The locomotives
and rolling stock are being overhauled in our own shops and at a very
slight expense. We found that the supplies bought previously were of
poor quality or unfitted for the use; we are saving money on supplies by
buying better qualities and seeing that nothing is wasted. The men seem
entirely willing to cooperate in saving. They do not discard that which
might be used. We ask a man, "What can you get out of an engine?" and he
answers with an economy record. And we are not pouring in great amounts
of money. Everything is being done out of earnings. That is our policy.
The trains must go through and on time. The time of freight movements
has been cut down about two thirds. A car on a siding is not just a car
on a siding. It is a great big question mark. Someone has to know why it
is there. It used to take 8 or 9 days to get freight through to
Philadelphia or New York; now it takes three and a half days. The
organization is serving.
All sorts of explanations are put forward, of why a deficit was turned
into a surplus. I am told that it is all due to diverting the freight of
the Ford industries. If we had diverted all of our business to this
road, that would not explain why we manage at so much lower an operating
cost than before. We are routing as much as we can of our own business
over the road, but only because we there get the best service. For years
past we had been trying to send freight over this road because it was
conveniently located, but we had never been able to use it to any extent
because of the delayed deliveries. We could not count on a shipment to
within five or six weeks; that tied up too much money and also broke
into our production schedule. There was no reason why the road should
not have had a schedule; but it did not. The delays became legal matters
to be taken up in due legal course; that is not the way of business. We
think that a delay is a criticism of our work and is something at once
to be investigated. That is business.
The railroads in general have broken down, and if the former conduct of
the Detroit, Toledo & Ironton is any criterion of management in general
there is no reason in the world why they should not have broken down.
Too many railroads are run, not from the offices of practical men, but
from banking offices, and the principles of procedure, the whole
outlook, are financial--not transportational, but financial. There has
been a breakdown simply because more attention has been paid to
railroads as factors in the stock market than as servants of the people.
Outworn ideas have been retained, development has been practically
stopped, and railroad men with vision have not been set free to grow.
Will a billion dollars solve that sort of trouble? No, a billion dollars
will only make the difficulty one billion dollars worse. The purpose of
the billion is simply to continue the present methods of railroad
management, and it is because of the present methods that we have any
railroad difficulties at all.
The mistaken and foolish things we did years ago are just overtaking us.
At the beginning of railway transportation in the United States, the
people had to be taught its use, just as they had to be taught the use
of the telephone. Also, the new railroads had to make business in order
to keep themselves solvent. And because railway financing began in one
of the rottenest periods of our business history, a number of practices
were established as precedents which have influenced railway work ever
since. One of the first things the railways did was to throttle all
other methods of transportation. There was the beginning of a splendid
canal system in this country and a great movement for canalization was
at its height. The railroad companies bought out the canal companies and
let the canals fill up and choke with weeds and refuse. All over the
Eastern and in parts of the Middle Western states are the remains of
this network of internal waterways. They are being restored now as
rapidly as possible; they are being linked together; various
commissions, public and private, have seen the vision of a complete
system of waterways serving all parts of the country, and thanks to
their efforts, persistence, and faith, progress is being made.
But there was another. This was the system of making the haul as long as
possible. Any one who is familiar with the exposures which resulted in
the formation of the Interstate Commerce Commission knows what is meant
by this. There was a period when rail transport was not regarded as the
servant of the traveling, manufacturing, and commercial publics.
Business was treated as if it existed for the benefit of the railways.
During this period of folly, it was not good railroading to get goods
from their shipping point to their destination by the most direct line
possible, but to keep them on the road as long as possible, send them
around the longest way, give as many connecting lines as possible a
piece of the profit, and let the public stand the resulting loss of time
and money. That was once counted good railroading. It has not entirely
passed out of practice to-day.
One of the great changes in our economic life to which this railroad
policy contributed was the centralization of certain activities, not
because centralization was necessary, nor because it contributed to the
well-being of the people, but because, among other things, it made
double business for the railroads. Take two staples--meat and grain. If
you look at the maps which the packing houses put out, and see where the
cattle are drawn from; and then if you consider that the cattle, when
converted into food, are hauled again by the same railways right back to
the place where they came from, you will get some sidelight on the
transportation problem and the price of meat. Take also grain. Every
reader of advertisements knows where the great flour mills of the
country are located. And they probably know also that these great mills
are not located in the sections where the grain of the United States is
raised. There are staggering quantities of grain, thousands of
trainloads, hauled uselessly long distances, and then in the form of
flour hauled back again long distances to the states and sections where
the grain was raised--a burdening of the railroads which is of no
benefit to the communities where the grain originated, nor to any one
else except the monopolistic mills and the railroads. The railroads can
always do a big business without helping the business of the country at
all; they can always be engaged in just such useless hauling. On meat
and grain and perhaps on cotton, too, the transportation burden could be
reduced by more than half, by the preparation of the product for use
before it is shipped. If a coal community mined coal in Pennsylvania,
and then sent it by railway to Michigan or Wisconsin to be screened, and
then hauled it back again to Pennsylvania for use, it would not be much
sillier than the hauling of Texas beef alive to Chicago, there to be
killed, and then shipped back dead to Texas; or the hauling of Kansas
grain to Minnesota, there to be ground in the mills and hauled back
again as flour. It is good business for the railroads, but it is bad
business for business. One angle of the transportation problem to which
too few men are paying attention is this useless hauling of material. If
the problem were tackled from the point of ridding the railroads of
their useless hauls, we might discover that we are in better shape than
we think to take care of the legitimate transportation business of the
country. In commodities like coal it is necessary that they be hauled
from where they are to where they are needed. The same is true of the
raw materials of industry--they must be hauled from the place where
nature has stored them to the place where there are people ready to work
them. And as these raw materials are not often found assembled in one
section, a considerable amount of transportation to a central assembling
place is necessary. The coal comes from one section, the copper from
another, the iron from another, the wood from another--they must all be
brought together.
But wherever it is possible a policy of decentralization ought to be
adopted. We need, instead of mammoth flour mills, a multitude of smaller
mills distributed through all the sections where grain is grown.
Wherever it is possible, the section that produces the raw material