« PreviousContinue »
idealized by Tolstoy, the cottage handicraft life idealized by Ruskin, have their allurement for an age of machinery. But actually, such a life means longer hours of work, a harder, less human life, than efficiently organized industry necessitates. It is true that the end has often been lost sight of in preoccupation with the means; masses of workers have not yet won the greater leisure, the pleasanter conditions of work, the larger purchasing power, for which the efficient organization of human labor opens the way. The benefits of our industrial efficiency have not yet been properly distributed. To be a worthy ideal, Efficiency must lose its savor of tyranny and ruthlessness and self-seeking, and go hand in hand with a true Equality and Democracy. But in this way, as an integral part of our national ideal, Efficiency can not be overemphasized.
Just what efficiency in the ordering of human relations requires is a problem at which generations to come must work. But there is one tendency in Ameriica so far-reaching in its influence on the lives of our people that it must have our immediate attention. This is the movement toward combination and centralization in business. There is no doubt that Big Business is an American ideal, and that, whatever impulses toward the exercising of power and the raking in of profits may enter in as motives, its justification is its efficiency. Already we have many splendid examples of the saving of human labor and the diminution of the price of commodities, through the formation of our great corporations or “trusts.” And there can be little doubt that the next generation will witness a great increase in this co-ordination in the business world.
That, in general, the replacement of competitive
business by closely co-operative or highly centralized business does make for efficiency is indubitable. Lack of organization means, for one thing, unnecessary duplication of plant and equipment. For example, it has been estimated by reliable statisticians thai the flour-mills of the country could grind all the wheat produced in a year in 157 days, and that the saw mills could saw all the lumber consumed in a year in 120 days. Hundreds of millions of dollars are thus wasted by competitive business. Moreover, a great deal of time and money is lost in cross-routing, in separate purchasing and keeping of accounts.
A great many economies possible to a large-scale organization are not practicable for the petty manufacturer or tradesman. The big concern finds it profitable to utilize by-products. It can buy raw materials in larger quantities, and needs to keep less material on hand than was necessary in the case of the smaller concerns it replaces. It can afford expenditures beyond the means of the smaller concerns, it can avail itself of the most expert advice, and strike out more boldly into new lines. Having many strings to its bow, it needs less to fear a single mistake, and can be more enterprising than the small-scale manufacturer or trader can usually dare to be.
The wastefulness of competition is most striking in the field of distribution, including middlemen and retailers. In almost every line we see thousands of unnecessary shops, delivery wagons, and employees. For example, several years ago a survey was made of the distribution of milk in the city of Washington, D. C. "Sixty-five dealers supplied the city, by a wasteful process of duplicating storage, pasteurizing, cooling and delivery plants; in some apartment houses substantially every tenant was served by a
different dealer. On one city block seventeen milk wagons were counted one morning, each serving one to three customers Competitive conditions made it impossible to enforce proper care of bottles. Washington was paying about $120,000 annually for milk bottles! A public service monopoly, enforcing penalties, as gas, water, and electric companies do, would save most of this. Under competition, the dealer attempting it would lose his trade to more lenient dealers . . . There was testimony of considerable quantities of milk going to waste at seasons when supply exceeded demands. Small dealers could not afford manufacturing plants to convert their surplus into butter, cheese, condensed and powdered milk. Under centralized control, the single distributor would utilize the surplus at all times." It is no wonder that it cost as much to distribute milk in Washington as to produce it and get it into the hands of the distributors.
This situation is fairly typical. A committee of the New York legislature stated, after investigation, that “under present competitive conditions it takes almost as many men to bring the dairyman's milk to the consumer as there are dairymen engaged in the production of milk, with all their employees. This is the result of the purely competitive basis upon which the business is handled."
Or take testimony presented before a recent Con. gressional committee: “The conditions of the retail merchandizing business are very uneconomical. There are two or three times as many people, in my judgment, engaged in the retail business as should be.” In a later statement, this witness said he "believed it would be nearer the truth to state that five times as many people are making a living out of the retail
shoe business as would be necessary to serve the public. This, of course, connotes that other retailing expenses are likewise excessive-rent, capital investment, insurance, fixtures ... and many more.”
One of our best-known retail merchants, Mr. Edward Filene, in a magazine article published in 1920, declares that retail distribution, as at present conducted, practically doubles the price of the manufactured article to the consumer. “There is doubtless profiteering here and there in isolated cases, but the real criminal profiteer is unscientific method-general inefficiency of organization."
In addition to this needless multiplication of equipment and effort in the process of distribution itself, there is an enormous waste in competitive advertising. Hundreds of thousands of drummers spend their energies in persuading retailers, contractors, or consumers, to buy their goods rather than the other man's. Millions of dollars are spent in advertisements in newspapers, magazines, and circulars, and on billboards. The buyers, of course, have to pay this expense. Mr. Henry
Mr. Henry Holt has recently written, , “Those who use the finer kinds of soap probably pay more for having it dinned into them to use a certain brand, than they pay for the soap itself.” And “the country probably pays more for having its elementary schoolbooks argued and cajoled and bribed into use, than for the books themselves." These are two cases of a general truth. Wary buyers avoid much-advertised articles, realizing that in buying them they will have to pay for the advertising. It is said that the cost of advertising means an overhead charge of twenty-five per cent on American industry.
The money spent in advertising is not wholly lost. It is desirable that new articles, as well as the merits of familiar articles, should be called to the attention of potential purchasers. Unhappily, competitive advertising is so widely untrustworthy in its statements that it is, on the whole, perhaps as misleading as enlightening. It works on the mind rather as a quasi-hypnotic suggestion than as a channel of information.
A more important aspect of the matter is the fact that advertising supports our newspapers and magazines. If, because of the unification of the various industries and distributing agencies, advertising were no longer necessary to draw trade from rivals, most of these dailies and weeklies and monthlies would either have to increase very greatly the subscription price or receive a subsidy. The increase in price of newspapers and magazines would be a calamity, since it would decrease the number of readers. On the other hand, their release from the need of pleasing the big advertisers would permit a great gain in honesty and nonpartisanship in presenting the news and expressing opinions. A number of our most useful weeklies, and a few dailies and monthlies, are now endowed, and so independent of advertising. But in general, the problem of efficiency in business is wrapt up with the problem of journalism, as it is with the problem of politics, and many another problem. And this tangled inter-relation of problems is one reason why social progress in this direction, as in many others, is so slow.
There are many other advantages of business amalgamation, as over against the anarchic struggle of nineteenth century business. Everyone's good ideas and methods become available for the whole business; whereas in a régime of competition, secrets are carefully guarded, patents give exclusive use of labor.