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Commercial Organizations
Commercial Organizations
Their Function, Operation and Service
A Compilation of Material from the Proceedings of the
National Association of Commercial Organization Secretaries and its Predecessors
American Association of Commercial Executives,
and the Central Association of
Commercial Secretaries
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With an Introduction by |
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Paul T. Cherington |
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Edited by |
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William George Bruce |
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r— -*=:<^vVi/> Ji |
THE^ BRUCE PUBLISHING COMPANY
MILWAUKEE, WISCONSIN
Copyright 1920
by the
Bruce Publishing Company
DEDICATION
This work is dedicated to that type of Ameri- (•aii, so abundantly found throughout the land, who gives unselfishly of his time, thought and effort for the wellbeing of his fellowmen; who, through the medium of the modern commercial body, promotes the economic, civic and social progress of his community; who daily gives ex- pression to the highest aspirations and motives of citizenship; who, through constant interest and concern in his home town contributes a real man's share towards maintaining the prestige, power and prosperity of a great nation.
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PREFACE
The literature devoted to or*>auized community promotion along economic and civic lines, as exemplified through local commercial bodies in the urban centers of the United States, has been found to be extremely meagre and unsatisfactory. For the most part it has been fragmentary in form and has provided nothing in the way of a comprehensive and helpful treatment of the subject.
With the growing tendency on the part of communities towards material and social progress through collective effort this dearth of instructive literature has become increasingly manifest. The theorist, it is true, has spoken variously and voluminously on the subject, but the man who has travelled the road of experience in this domain has thus far remained silent. iVt least his voice has not gone beyond a limited range to that larger constituency which stands ready to listen and profit by his counsels.
The lessons afforded by actual service have been exchanged by commercial secretaries in somewhat restricted circles. But, here authoritive voices have enunciated the fundamentals that must be observed, the methods that must be employed, and the results that may and can be achieved. Splendid studies have been made by those actively identified with successful commerce bodies, but their observations and conclusions have thus far remained imbedded in the routine of convention proceedings, and hence have not been readily accessible to the larger class of students in this field of activity.
They have brought guiding principles and policies into bold relief, constructed the organization machinery to its last detail, outlined the mode of its operation, and established the relations that must be observed by the active factors and forces. They have touched the mainsprings of organization success, and created the modei-n commerce bod}^ as defined and interpreted in American urban centers.
The National Association of Commercial Organization Secretaries and its two pre<lecessors, the American Association of Commercial Executives and the Central Association of Com mercial Secretaries, have during the past decade produced a
7
series of documents which constitute a valuable contribution to the helpful literature on the subject. They cover the entire range of commercial organization eli'ort and constitute the first- hand expressions of those who have served actively and effi- ciently in a secretarial or directive capacity.
Those who have been actively identified with this field of work are not unmindful of the fact that while fixed ideals and standards have been evolved, further refinements and defini- tions must follow. They are also conscious of the fact that while a solid foundation has been laid, the super-structure is subject to further amplification and such orientation as may express the aspirations and ambitions of their projectors. True progress implies constant and incessant effort in the direction of better things.
In compiling and editing the mass of manuscripts submit- ted to the editor a line of inclusion and exclusion was rigidly drawn. Many of the earlier manuscripts, although meritorious as such, had in the light of newer conceptions and experiences, become obsolete. The trivial was discarded, the substantial was preserved. Every document was weighed as to its value in giving momentum, direction and effectiveness to organiza- tion and secretarial service.
The manuscripts as a whole, however, proved so rich in acceptable material that it was not difficult to select a series of articles covering practically every phase of commercial or- ganization labors. In their entirety they form the first com- plete and authoritive work on the subject.
There are hundreds of commercial organizations that render service in an intermittent and spasmodic manner, others that have been lulled into a state of lassitude and indiffer- ence, and still others that lead an aimless and useless exist- ence and live in name only. These require inspiration and guidance in order to awaken them to their own task and mis- sion.
Thus, it is confidently believed that this volume which addresses itself to those engaged, as well as those desiring to engage, in commercial organization effort, will serve as a stimu- lus to wholesome community promotion and serve as a helpful and dependable textbook on the machinery and methods that must be employed.
The Editor.
CONTENTS
Introduction
PART I. Essentials of Efficiency and Character- istic Activities.
PART II. Methods of Organization and Operation.
PART III. Qualifications and Self-Training of Sec- retaries.
TABLE OF CONTENTS
PART I
Essentials of Efficiency and Characteristic Activities
Page Introduction 15
Chapter I.
An Eflficient Commercial Organization.
Wm. George Bruce 25
The Essentials of an Effective Organization.
James A. McKibben 30
The Commercial Organization in Town or Small City.
J. P. Hardy 34
The Chamber of Commerce in the City of "Average."
Joseph F. Leopold 37
Chapter II.
The Relations between Civics and Commerce.
O. B. Towne 42
Chapter III.
Industrial Development by Chambers of Commerce.
Glenn A. Bowles 50
Industrial Development of the Small Town.
Wm. S. Millener 55
The Proper Place of Industrial Development in the Work of Com- mercial Organization.
Ralph H. Faxon 5S
What is an Industrial Survey?
A Student 62
Factors in Securing Factories.
J. F. Carter 70
Industrial Survey of the City.
Emmett Hay Naylor 77
Chapter IV.
Agricultural Activities.
Major H. V. Eva 86
Agriculture and Commercial Organization.
Committee 88
The Commercial Organization Relation to the Back Country.
Hon. D. F. Houston 92
11
12 TABLE OF CONTENTS.
PART I— (Continued) Chapter V. Page
Traffic and Transportation Bureaus.
Frank Barry 09
Transportation Prol)lems— How Shall They Be Dealt With?
D. P. Chindblom 102
Chapter VI.
Organization Service for Retailers.
Lee H. Bierce 113
Chapter YII.
Plan for Temporary Exhibitions.
John M. Guild 119
Chapter VI 11.
Conventions and Publicity Bureaus.
L. II. Lewis 134
City Publicity.
Carl Dehoney and Thorndike Deland 139
Chapter IX.
The Mission of Trade P^xtension Journeys.
Wm. George Bruce 143
Trade Extension Through Excursions.
Walter S. Whitten 146
Short Trips from a Jobbing Center,
E. H. Clifford 147
Trade Extension Trips — Methods and Results.
Leroy M. Gibbs 150
Chapter X.
Charity Endorsements.
Howard M. Strong 160
Chapter XJ.
Commercial Arbitration.
T. C. Huff 168
Chapter XII.
Chamber of Commerce of the United States.
Merle Thorpe 180
TABLE OF CONTENTS. 13
PART II
Methods of Organization and Operation Chapter Xfll. Page
Democracy as a Factor in Chamber of Commerce Membership.
Howard B. Strong 193
Chapter XIV.
The Best Method of Sustaining and Increasing Membership.
Byres H. Gitchell 197
Membership Development and Maintenance.
G. W. Lemon 221
Elements of Membership Conservation.
Robert B. Beach 226
Membership Methods in Small Organizations.
J. P. Hardy 234
Sustaining the Interest of Members.
James A. McKibben 236
Rebuilding an Organization.
Paul V. Bunn 239
Chapter XV.
Keeping Before the Public.
Wm. B. Wreford 246
Advertising Methods of Commercial Organizations.
Fred C. Butler 248
Promotional Effort and the Public Press.
Adolph Boldt 257
Keeping the Members Informed.
James A. McKibben 260
Organization Bulletins — Their Hits and Misses.
G. W. Lemon 265
Some Dangers of House Organs.
G. W. Lemon 269
News Value in Organization Publicity.
H. F. Miller 271
Chapter XVT.
Some Problems of Organization Finances.
Carl Dehoney '. 275
Budgets for Commercial Organizations.
A. Heath Onthanlf 278
Organization Costs and Results.
Geo. W. Gillette 290
Chapter XVII.
When to Hold and How to Conduct Meetings.
Major H. V. Eva 301
Conservation of Committee Energy.
S. Christy Mead 306
14 TABLE OF CONTENTS.
PART II— (Continued) Page
Stimulating Organization Machinery.
John M. Tuther 317
The Technique of Organization Administration.
Robt. AVadsworth 323
Chapter XVIII.
Annual Reports — Their Form and Value.
Don E. Mowry 339
Chapter XIX.
Methods of Recording Minutes.
James A. McKibhen 342
Methods of Keeping Records of Members.
Robt. B. Beach 350
Forms, Records and Financial Accounts.
Committee 353
Filing Systems for Chambers of Commerce.
S. Christy Mead 373
PART III
Qualifications and Self Training of Secretaries Chapter XX.
The Qualifications for the Secretary.
Wm. George Bruce 389
Chapter XXI.
The Most Helpful Secretarial Literature.
Roland B. Woodward 396
Chapter XXII.
What Education is Doing for Secretarial Efficiency.
Prof. Wm. A. Scott 408
The Universiity and the Secretary.
Prof. Edward D. Jones 417
Conscious Training for Chamber of Commerce Secretaries.
Prof. Paul T. Cherington . .'. 427
Secretarial Efficiency from the Standpoint of the College.
Prof. Alf . L. Smith 430
Chapter XXIII.
How to Fail as a Secretary.
Munson Havens 435
Chapter XXIV. "
The National Association of Commercial Organization Secretaries.
Wm. George Bruce. 450
INTRODUCTION
The Field of Chambers of Commerce Chambers of Commerce — American and Foreign
By PAUL T. CHERINGTON
The chamber of commerce as it occurs in the United States is not exactly like any type of organization found in any other country. The American type of organization may be best de- fined in somewhat the following terms : A voluntary organiza- tion of business 7nen approaching the problems of the com- munity from the business angle.
The three characteristic features of the American organi- zation by this definition are: (1) the fact that the organiza- tion is of a voluntary character, (2) the fact that it is dealing primarily with community i)roblems, and (3) the fact that it approaches these problems from the business rather than from the social or any other side. Orgjanizations of this type, in other words, clearly have their roots in the established busi- ness interests of the community although much of their work is concerned with what are really civic affairs.
American chambers of commerce clearly are not an entire- ly new creation. They have developed out of previous types of organizations and while their present activities are not commonly engaged in by European chambers, many of their most prominent features are directly drawn from organizations of quite a different character either in this country or in Europe. For this reason it may be well to look for a moment or two at some of the characteristic features of some of the European tvpes of organizations of business men. It is largely from these that the forms of the American organization came.
The French Originals of the Chamber of Commerce
The chamber of commerce in anything like its modern form apparently was of French origin. In the reign of Henry IV. in the latter part of the 10th Centuiy, there was established what was known as the Superior Chamber of Commerce of France. This was of the nature of a temporary official commission and
15
ie,r,.c.c ; / ' % INTRODUCTION. /
apparently had merely investigatory powers although its field of operation covered both commerce and manufacturers and geographically it was supposed to investigate in foreign countries as well as in France. About the same time the mer- chants of the City of Marseilles formed an independent volun- tary organization for representing the commercial interests of their port. The purjjoses of this organization evidently were very closely akin to what afterwards developed into the chamber of commerce as it is now known in France. Under Louis XIII, in the year 1G16, the General Chamber of Commerce of France was established as a permanent organization under the direc- tion of Richelieu. The powers of this body were expanded in 1664 by Colbert and later in 1700. With this last expansion of the General Council of Commerce there also grew up local chambers of commerce in eleven important commercial centers in France, all of them being established during the first few years of the 18th Century.
These chambers of commerce were all temporarily abol- ished, Avith all other corporations, by the Decree of 1791. But shortly afterwards twenty-two organizations, based on the old plan, were formed in the principal cities of France. These have continued to exist in approximately the same form up to the present time although they were considerably modified by sub- sequent laws in 1806, 1820, 1832, 1851 and 1908.
In brief, the French chambers of commerce are small bodies Avith not less than nine nor more than twenty -one mem- bers, with the exception of the Paris Chamber of Commerce which has forty members. These members as a rule are chosen by the merchants of the community, some of them voting as individuals, while others vote by trades. At present there are one hundred and forty-three chambers of commerce in France and forty-four organizations knoAvn as consulting chambers of arts and manufacturers.
Generally speaking, it is the task of these small elected committees of the merchants of the various cities to supervise the public aspects of commercial activities in their vicinity. Wherever there are stock or produce exchanges the chambers of commerce have charge of them. They also issue export certifi- cates, credentials for commercial travelers and prepare lists of produce prices which are issued by the organizations. To a certain extent the maritime laws and regulations in the more
INTRODUCTION. 17
important ports are administered by. these organizations. Chambers of commerce moreover may be granted concessions for carrying out public works such as the construction of mari- time ports, docks, and inland waterways and similar enter- prises. Among the lines of activity undertaken by the French chambers are the operation of all public warehouses, the opera- tion and control of bonded warehouses, the operation of condi- tioning houses in the textile trade, and conducting of testing stations for arms and ammunition, the loading and discharging of maritime freights, the maintenance and conduct of commer- cial high schools, the operation of public libraries and reading rooms, supervising or in some cases the actual conducting of telephone service, while a few operate commercial museums.
The regular form of organization for the French chamber includes a president, one or two vice-presidents, a secretary and treasurer. Also there is ordinarily a salaried business sec- retary and a salaried staff of clerks. Usually the larger cham- bers meet twice a month although the smaller ones meet less frequently. The local chambers always have free access to the ministers of the government without intermediaries and they are given, by the laws creating them, a semi-official standing which makes them useful in an advisory capacity in relation to the central government at Paris.
In supervising the work of the chambers the Minister of Commerce is assisted by a committee known as the Superior Council of Commerce and Industry consisting of two sections of thirty members each. Thirty-four of the members are appointed from among the presidents of the chambers of commerce while the remaining twenty-six are senators. This body is consulted freely by the government on all matters in which the com- mercial relations of the country come into contact with the government, such as in the construction of the tariff, and other commercial legislation, in the. drafting of commercial treaties and in the drafting of laws concerning emigration, coloniza- tion, and kindred subjects. There is a permanent consultative committee of this larger body which is virtually on call at any time.
The French type of chamber is thus apparently a sort of executive committee elected by the merchants of the commu- nity having supervision over some of the important commercial activities of the communitv. It also has direct contact with
18 INTRODUCTION.
the central government by means of the organization made up partly of chambers of commerce presidents and partly of senators.
Two Types of Organization in Switzerland
The French type of organization has been quite closely copied in Switzerland although the organizations in Switzer- land have drawn some of their characteristics from the Guilds Merchant of former times. Some of the SavIss organizations which formerly existed, however, were completely reorganized in the early part of the 19th Century and these reorganiza- tions Avere closely modelled on the French system.
There are to be found in Switzerland two distinct classes of organizations, those that are entirely independent and those that are organized under state auspices. The independent or- ganizations are more like the English voluntary type of or- ganization and are of a more strictly unofficial character than are those under state auspices. There are seven of those or- ganizations, located at the principal commercial centers of Switzerland, which are directly descended from the old com- mercial directorates or similar organizations which existed be- fore the general introduction of the French system. These or- ganizations are permitted to charge fees for legalizing certain classes of certificates and some of them are granted subsidies by the cantonal governments in return for expert advice on economic matters.
There is a central chamber of commerce known as the Swiss Chamber of Commerce which receives a subsidy from the central government. This has a total of fifteen members, has its headquarters in Zurich, and its main service is to give ad- vice when required.
The official chambers of commerce in Switzerland are three in number and they are mainly concerned with the con- duct of the trades or businesses which are most conspicuous in the regions Avhere they are located. The cantonal chamber at Berne for example has three sections, one for commerce and industry, another for crafts and the trades, and a third for the watch industry.
The Swiss commercial and industrial organization is a federation composed of sixty-two organizations and the Swiss Chamber of Commerce is an executive committee of this body.
An important feature of the work of the commercial or-
INTRODUCTION. ly
giinizations of Switzerland is the maintenance of continuation schools of applied design. A school of this sort, for example, at Saint Gall is operateil by the chamber of commerce. The Saint Gall Chamber also operates a savings bank, and other institutions for the benefit of employees of local factories.
German Official Chambers of Commerce
In Germany it is dilt'icult to draw a line between the com- mercial and industrial organizations. The three olticial desig- nations employed with reference to organizations of this kind are (1) the Fachverband, which is a group of manufacturers or producers in any one trade or group of trades, (2) the Zweckverband, which is an organization of manufacturers or merchants for the attainment of definite ends as for instance discussion of the tariff or important commercial treaties, and (3) the Zentralverband, an association of commercial organiza- tions of national scope.
Chambers of commerce exist in all German states with the exception of three of the small principalities. In all there are something like 150 organizations in Germany, 90 in Prussia, eight in Bavaria, eight in Oldenburg, nine in Posen, five in Saxon}^, seven in Hesse, and from one to four in various other political divisions of the country.
Most of the German chamber's of commerce are official institutions, although they show quite a little variation in the details of their organization. Most of the chambers of com- merce of Germany are modelled on the French type of organi- zation. In Prussia, for example, the oldest organizations were those in the Rhenish province, ceded to France in 1801. In those regions chambers of commerce were established in Cologne, Crefeld and Treves during the first five years of the 19th Century. A number of Prussian chambers were formed from 1820 to 1825 under the name of merchants' organizations. This is true of some of the large organizations in the Empire. There was another period of activity from 1830 to 1848 when numerous chambers were created. And following the War of 1870 new regulations governing these bodies were passed and many of the chambers were reorganized.
Generally speaking the German organizations are similar to those already described in France although some of them collect trade taxes. In some instances a surtax may be levied
20 INTRODUCTION.
for the needs of the chamber of commerce, these taxes being levied by the municipal and district authorities at the request of the chamber of commerce.
Voluntary Chambers in England The British chambers of commerce are entirely voluntary organizations. Unlike the organizations on the continent, the chambers of commerce in the United Kingdom operate with scarcely any government regulation or restriction. Almost any business man in the community is entitled to become a mem- ber of a chamber of commerce by placing his name upon the waiting list Avhich is passed upon by a special committee, and in practically every instance membership is purely voluntary. Tlie oldest organization in the United Kingdom dates back to about the third quarter of the 18th Century, and the London Chamber of Commerce, one of the largest of all, was not estab- lished until 1881. There are in all about 125 organizations of this kind in the United Kingdom and in most cases they are not particularly important or influential bodies, although in the large towns they have considerable influence.
The Origin and Works of American Chambers of Commerce
The American organizations are more nearly like those of England than any of the continental bodies. The Chamber of Commerce of the City of New York, in fact, dates its charter back to King George and may be regarded as the connecting link between the British and American types of chamber of commerce.
The chamber of commerce as it exists today in the United 8tates is derived from two seijarate sources. The first of these was the old board of trade established in many of the important American cities for the purpose of supervising trading activi- ties of one kind or another.
The most common form w^as the board of trade operating the produce or grain exchange. Notable among these is the Chicago Board of Trade, Avhich, while its by-laAvs provide for a Tvide variety of activities, is most commonly known as the super- visor of the chief future-trading board in the American grain trade. Trading bodies of this kind exist in Baltimore, Boston, Minneapolis, Milwaukee, St. Louis, Cincinnati, and elsewhere. In some instances they still continue their separate existence
INTRODUCTION. 21
as trading bodies pure and simple. Still others of them have been merged \\'ith organizations having a wider Held of activity. In one case after another these organizations, starting primarily as supervisors of trade, found themselves drawn into the con- sideration of commercial problems of a wider character; and finally they were confronted w^ith the necessity for attacking more or less purely civic problems. In this way what started out to be a strictly trading body found itself sooner or later taking on civic activities involving the development of a con- structive community program.
The other type of organization common in this country was the taxpayers' organization of citizens which originally began with the idea of protecting the business men of the city against unduly aggressive activities on the part of municipal authorities, or for protection against some other immediate or remote abuse. Many of these sooner or later developed into Avhat w^ere known as "boosting" organizations which, particu- larly in the middle west, assumed the function of advertising the merits of the community in all material things. Activity in soliciting industries to relocate in their cities became one of the common lines of work for organizations of this kind, and this or some other similar undertaking soon brought these en- thusiasts to see that, if their community were to be pushed in its industrial development or commercial growth as fast as they sought to push it, it must have substantial ability to justify the claim made for it. By this process this type of organization also found itself facing the necessity of working out a con- structive community program.
The Modern American Type of Chamber
About ten or fifteen years ago it became apparent in many of the more aggressive communities of the country that these two types of organization, one of which had started from the strictly commercial side, and the other from something more nearly like a citizens' union organization, were both brought to the same point of intelligent direction in working out a con- structive progi-am for the community. Out of this situation grew the modern form of commercial organization whose ac- tivities under ordinary circumstances are quite as much civic as commercial.
The definition of this type of organization as a voluntary
22 INTRODUCTION.
organization of business meyi approaching community problems from the business angle ajjpears, therefore, to suggest with rea- sonable accuracy the work lying before the typical modern American chamber of commerce.
It is its task, in the interests of the community as a whole and vicAving the problems from the business man's point of view, to take a definite position in regard to public movements and tendencies. The essential features of this attitude toward public questions in the case of all organizations of this type which are skillfully conducted, may be summed up as follows : ( 1 ) To interpret wisely and disinterestedly all movements and tendencies in the development of a community which have to do, either directly or indirectly, with the business interests and the civic welfare of the community. (2) To prevent the distortion of any such movements by any other w ho, either as selfish propo- gandists, or from any selfish motive whatever, undertake to misuse the poAvers of the community. (3) To make sure that every movement or tendency of the business life of the com- munity moves along lines of constructive progress.
This program, while it may seem rather general, is capable of being interpreted concretely in the case of almost every con- ceivable community problem.
To summarize the place of the American chamber of com- merce in the community as compared with that of the European organizations, it may be said that in this country the chamber of commerce is the one body in the community responsible to the community at large for the proper business interpretation of civic developments, while in European cities the small com- mittees of business men serve as the official interpreters of all commercial developments for the central government, rather than for the community at large.
PART I.
Essentials of Efficiency
and Characteristic Activities.
23
CHAPTER I. Essentials of Efficiency
An Efficient Commercial Organization By WILLIAM GEORGE BRUCE
The currents of activity which characterize the American urban centers of population, and which are essential to their material and moral welfare, now include as a fixed factor cer- tain defined promotional efforts. These efforts, while assuming various forms and extendini;' into several directions, have for their ultimate object the achievement of that efficiency, public and private, which makes for better community life in all its essential features.
It has here been asserted that the agencies for such a result or condition are already in existence and constantly at work; that individual initiative and enterprise, the established educational and moral forces, government and law — are all designed to achieve the ends to be attained. Granted that this be true, it still remains for some generic force to give cohesion to the several elements and invest the promotional possibili- ties of the whole with momentum and direction.
The hopes and aspirations of the community in this direc- tion, and the promotional effort arising out of them, cannot be entrusted to purely private auspices or to public authority. Each travels in its own orbit. The local government is restrict- ed by law to certain functions. The single individual is ab- sorbed in his individual pursuits with its limitations of influ- ence. The scope then lies between the function of the indi- vidual and the local government — a collective effort which transgresses neither the power of one or the function of the other.
There must then be a force in which many individuals give a part of their time, a part of their thought and a part of their effort, and each throw into the scales his spare effort and his
25
26 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
influence with those of the others. It is this collective influ- ence, this combined thought and action which must be shaped into an efficient piece of machinery.
Thus, the recognition for concerted action along distinc- tive lines for the welfare of an entire community has found its best expression in the modern commercial organization.
The Essence of Promotion
While a discussion on the essentials of an efficient com- mercial organization must concern itself with the machinery of the siame, it must bear in mind the immediate and ultimate purposes for which the same is constructed. In fact, the con- struction of a piece of machinery must be governed by the uses for which it is intended. It must be simple in mechanism, economical in operation and efficient in production. The ma- chine is only an incident to the product and, therefore, merely the means to an end.
A commercial organization constitutes the machinery through which certain results are to be achieved. Efficiency is exerted in the degree that it performs a service expeditiously and well. The quality of the product or kind of results to be obtained must determine the size, strength and character of the machinery.
We must then deal Avith the results to be achieved before we can successfully devise the method and manner of achieving them. Wliat are the end and essence of the results to be ob- tained? The answer is embodied in a few words, namely, in a condition which spells a progressive, prosperous and patriotic community.
Government and Commerce
The earlier conception of a commercial organization pro- vided for business promotion only. The civic idea was excluded as irrelevant to its purposes. Then came the realization that there is a relation between government and commerce, that the growth of industry and commerce rests upon conditions and environment, which, in part at least, are under governmental direction or influence.
We must all agree that the relation between government and commerce is an important one; that laws and regulations
AN EFFICIENT COMMERCIAL ORGANIZATION. 27
may protect or injure industrial or commercial pursuits, and that, therefore, statesmanship must be in touch with the course and the usage of business. That being true, it also follows that there is a vital point of contact between the commercial organization and the local city administration, the state ad- ministration and the national administration. Statesmanship must not only be in touch with the public pulse, but it must also employ the judguient of business on problems of a purely economic character.
The function of government is to protect and to regulate. It has no special promotional function. But government re- quires that stimulus whicli springs from a wholesome public sentiment. The commercial organization must radiate its in- fluence over a wide circle. It must touch government as well as commerce; it must stimulate action, both promotional and corrective, in the direction of efficienc}^, higher standards and nobler ideals.
Economic and Civic Advancement
The mission and purpose of the modern commercial organi- zation is primarily economic and civic in character. All pro- motional effort in its field falls under these two classifications. They may concern themselves with the commercial and indus- trial advancement of the community, or strive for greater effi- ciency in local government, but the basic purpose of all effort is for material and social betterment.
The time Avhen a commercial organization was recognized solely as a promoter of commerce and trade, or of transporta- tion and industry, has gone b}^ The interrelation between business and government, between industrialism and social con- ditions, has come into full recognition.
There are those who have more recently come into the work who hold that in the last analysis the sole function of a com- mercial organization consists of the awakening of a civic con- sciousness. I combat this idea. The promotion of material advancement is primary and fundamental. It forms the basis of civic progress. At best, the economic and civic efforts must go hand in hand. One contributes to the advancement of the other.
Commerce Precedes Culture
It was not until the Phoenicians of old established them selves as prosperous traders that their wonderful art in shaping
28 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
the precious metals began to develop. It was not until the mer- chant princes of Venice brought gold and treasures to their shores, that the art and poetry of its people began to assert themselves. It was when the Hanseatic league brought pros- perity to the ports of Germany that the literary and scientific rise of that country was assured. It was during the Elizabethan period when the merchant came into his own, that the poetry and literature of England assumed strength and beauty. It was then recognized that trade precedes culture.
Civic progress then can no more constitute the sole aim and purpose of commercial organizations than can economic ad- vancement. The two are so closely interlinked that their pro- motion must be simultaneous and reciprocal.
The promotion then of the economic growth and stability of the community is primary and leading. All the higher aims and purposes in our civic and social life are predicated upon ma- terial foundations. The family must have an income to meet the necessities of life before the conveniences and comforts can be thought of. There must be bread and butter upon the kitchen table before there can be a phonograph in the front parlor. What applies to the individual family, applies to the collective city.
The American city must find its sustenance in trade, com- merce and industry. Out of the fruits of these she must gain that strength which enables her to reach out for higher and nobler ends. A forest of blazing factory chimneys, a row of thriving business blocks, a fleet of laden ships or a train of freight cars precede the construction of a theatre, the estab- lishment of a zoological garden, the erection of a monument, or the building of a fine boulevard.
There must be enough taxable industrial and commercial property before there can be any thought of public improve- ments. Comfortable homes and their equipment, schools and churches, must first be earned by somebody. The factory, the farm, the office, and the store are the scenes where the hand and brain produce that which makes possible the better things of life.
The very complexities of our commercial, civic and social conditions render all our activities interdependent, one rely- ing for its development upon the character of the other. The
AN EFFICIENT COMMERCIAL ORGANIZATION. 29
march of progress must embrace all lines of liiiman activities in order to complete and harmonize the efficiency of the whole. Thus, it becomes clear that the modern commercial organi- zation has a twofold mission and purpose. It must promote the material advancement simultaneously with j)romoting the civic, moral and educational progress of the community.
Directing Collective Effort
The modern commercial organization is limited in its use- fulness only b}" its financial ability and the intellectual powers of its executive officers. Its operating assets, like those of any business enterprise, consist of money and brains. This implies a plan of organization that will ensure an adequate revenue and elevate into leadership men of vision, of judgment and of ac- tion. The income must be commensurate with the size and im- portance of the city. The executive family must reflect the best type of citizenship.
The membership must consist of business and professional men who command the respect of the general public. The lead- ership must be entrusted into the hands of men who enjoy the confidence of the membership. The actual labors of the associa- tion must be assigned to the executive offices and committees.
The efficiency of an organization rests primarih^ upon an accurate understanding of what the city really is and what it may be ; its needs and its possibilities, the opportunities for progress afforded through inherent qualities, environment and geographic location.
Second, in agreeing upon principles and policies and in choosing the men that can set them into action, focusing public attention to desirable accomplishment of certain ends and pur- poses, and in crystallizing public sentiment in their behalf.
Essentials of Efficiency
In reducing my discussion to fixed conclusions I hold that an efficient commercial organization is one that:
First — In membership and leadei^ship is truly representa- tive of the best citizenship, and reflects the highest impulse and the noblest aspirations of the community.
Second — That holds to principles which recognize the fundamentals of truth and honor; policies which embody con- sistency, discretion and judiciousness; methods which imply tact, skill, and the exercise of comnnm sense.
30 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
Third — That is organized as to a division of duties and re- sponsibilities, the assignment of directive powers and the es- tablishment of principles and policies so as to ensure the largest measure of service.
Fourth — That constitutes itself into a clearing house for the ideas, thoughts and suggestions of its constituency for the cominunit3^'s welfare, subject them to a sifting process, and re- duce the acceptable and feasible into form and action.
Fifth — That recognizes expert know ledge and executive power in secretarial service and stands ready to compensate such service in keeping with professional service rendered in other fields of activity.
Sixth — That has a complete grasp of its own powers and limitations, an understanding of the commercial and industrial opportunities and the civic and cultural possibilities of the community.
Seventh — That appreciates the advantage and disadvantage of location, of environment, of physical characteristics; that ]*ecognizes errors and shortcomings in the economic, civic and social life of the community; that understands its traditions, tendencies and temperamental peculiarities.
Eighth — That, in the pursuit of desirable ends, has a clear conception of the possible and the impossible, of the obtainable and the unobtainable, the feasible and infeasible, and constantly sees the danger line of overactivity or unwise inactivity.
Ninth — That fearlessly directs and focuses popular at- tention to gross public evils, and the corrective means to be employed, to desirable and needed improvements to be made, or to advantageous projects to be realized, and
Tenth — That sets about intelligently and energetically to crystallize public sentiment towards the accomplishment and achievement of its ends and purposes.
The Essentials of An Effective Organization
By JAMES A. McKIBBEN
A good many business men — possibly the majority of them — if they were asked to specify just what you should do in order to make the members of an organization interested in it, would say "make the organization efficient.'- "Do things."
THE ESSENTIALS OF AN EFFECTIVE ORGANIZATION. 31
"Efficiency" is the watclnvord of successful business. The members of iin or<»anization can not be expected to have a sus- tained interest in it unless they are proud of it; and successful business men can not be proud of an organization unless it is doing efficient work.
One of the fundamentals absolutely essential to a sustained state of in teres tedness on the part of members is, I think, an efficient organization. But, if an efficient organization is one of the things essential to a live and continuing interest on the part of members, it should be recognized that it is only one of the essentials. There are a number of other things just as fundamental.
Other Things Essential
The primary requisite to sustained interest seems to me to be a realization and understanding on the part of its members of what the organization is and what it is trying to do.
"But," some of you may be inclined to say, "the members of course understand that. That was explained to them when they were asked to join, and they understand it perfectly." My experience has been that not one man in ten, when he joined the cliamber, had grasped or understood the fundamen- tal difference between a trade organization and an organization such as most of us represent, which is working for the ad- vancement of the commercial and industrial — and perhaps, also the civic — interests of the community as a whole. My experi- ence has also been that after the management of an organiza- tion has done everything it possibly can to bring about an understanding of what the organization really is and is try- ing to do, there will be at least one out of every ten who does not understand that it is not a trade organization, and who never will.
Why This is of Importance
And it is fundamentally important that your membei*s should understand that your organization is not a trade or- ganization. The primary purpose of a trade organization is to benefit pecuniarily the people engaged in that trade — and to do it quite irrespective of the effect on people not engaged in that trade. Its success or failure is measured by the extent to which it pushes the interests of each individual member, as a
32 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
separate entity from the rest of the community. Not so in the case of the general organization working for the advancement of the welfare of the whole community. Its path of duty may or may not coincide with the path of duty of an organization representing exclusively the people engaged in any one particu- lar trade — it may, in fact, be that the thing which is for the benefit of the business community as a whole, and which it is. therefore, the duty of the general representative organization to work for, is against the interests of some one trade.
The motive, the field of work, the deciding factors, the methods, of the two are entirely different; and the point of view, the attitude of mind, the test by which your member will in his owTi mind decide whether you are or are not an efficient organization, and the amount of interest which he can be in- duced to take in work to promote the prosperity of the whole community, will be entirely different, depending upon whether he has the trade organization point of view or the other.
Now, the natural point of view of a business man is the trade organization point of view; and unless he understands clearly and definitely the real field of work and primary pur- pose of your organization he will measure its success or failure by the trade organization yardstick — and if your members use that yardstick, you are pretty certain to have a lot of dissatis- fied, disgruntled members.
And their inclination to take the trade organization point of view is not in most cases, I believe, due so much to a lack of public spirit as to lack of appreciation of the fact that you are not doing business on the trade organization plan.
An Illustration
Perhaps I can best make clear the essential difference be- tween the two, and the effect of getting a real understanding of the difference, by relating an incident which actually hap- pened in the early days of the reorganization of the Boston Chamber.
One day a rather prominent merchant came to see the president, and said: "I have been asked to join the Boston Chamber of Commerce, and I thought I would come and see you about it. What I want to know is this : I have been try- ing for two years to get the pavement in front of my store
THE ESSENTIALS OF AN EE'FECTIVE ORGANIZATION. 33
changed. If I join the chamber, will the chainl>er help me to get it changed ?''
Now, his proposition presented in definite, concrete form, the trade organization point of view, which is that the sum total of the duty of the organization is to help any particular member to get anything done which he thinks will benefit him pecuniarily in his business. I had never heard that point of view stated in such a clear-cut, straight-out-from-the-shoulder way as that, and I listened with a good deal of interest to see what the answer would l3e.
"Well, Mr. F ," the President said, in answer,
"frankly, I don't know whether we will or not. If you think the pavement in front of your store ought to be changed, and will write me a letter about it, I will see what our committee on municipal affairs thinks about it; but its answer will de- pend entirely upon whether it would be for the benefit of the people of Boston as a whole to have that pavement changed. In other words, if it is for the benefit of the city as a whole that the pavement be clianged, we will try to get it changed: and, if it is for the benefit of the city as a whole that it should stay as it is, Ave will oppose its being changed ; and, as a matter of fact, we will favor its being changed or oppose its being changed just as quickly whether you are or are not a member of the chamber. What you suggest is not what we are in the business for."
And then he spent two or three minutes telling his caller the kind of things which the chamber was formed to promote, and ended by saying that it was evident that in working for the kind of things he had enumerated, the organization would be working to promote the interests of the great majority of busi- ness men; that if by working for these things they were pro- moting without a single exception the private interests of each individual member of the chamber, they would be very glad of that fact; and that if by working for the things which he had named they happened to be working for something which was against the private interests of some individual member, they regretted that fact — but that it was clearly the duty of the organization to go ahead, regardless of that, and work just as hard a^ possible to get it done. That conversation gives you a clear-cut statement of the two points of view.
34 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
And what was the effect on the apparent^ selfish, grasping, hardheaded business man, who came in so thoroughly imbued with the trade organization point of view? Did he get angry? Not in the slightest. Bringing his fist down on the desk, he said: ^'By George, that's right. I never understood the idea before. I will gladly join and help.'' He sat down and signed an application. But that was not all. Tliat man had seen a new light — he had been converted — and he went out and, with- out being asked by anybody to do it, secured and sent in five applications of other men within a week.
The Commercial Organization in the Town or Small City
By J. P. HARDY
For the purpose of determining wherein the problems of small cities vary from those of larger communities, and to what degree size accentuates this difference, I have divided the cities into three groups as follows: Cities of 200,000 and over are designated as Class A. Cities of not less than 75,000 nor more than 125,000 as Class B. Cities of less than 75,000 as Class C. Five cities in Class A with an average population of 360,000. Five in Class B with an average of 98,000, and thirty-seven in Class C with an average of 30,000 have furnished the informa- tion on which this paper is constructed. Before entering on a general discussion of the subject it will, I believe, be both in- teresting and instructive to compile and analyze the answers received to the questions.
Best or Most Unique Achievement
Question No. 1 : What is your best or most unique achievement for the past five years?
The answers to this question varied to such an extent as to mal^e it necessary to tabulate them before attempting their analysis.
Answer Class A Class B Class C
Improvement of City government 12 9
Securing New Industries 10
Adjusting of Transiportation rates 1 5
Campaign for Membership , 1
Organized Retail Merchants 1 1
Note: — ^l^'his paper is based upon a questionaire designed to reveal char- acteristic small town activities and the expressions of the small town secre- taries.
THE COMMERCIAL OROANIZATION IN THE SMALL CITY. 35
Answer Class A Class B Class C
Organized Agricultural Development 1 3
Built Public Buildings 113
Adjustment of Insurance rates 1
Trade Extension Tour 1 1 Promotion of Chautauqua Exposition of
Industrial Show 5
Civic Improvements 0
Elimination Fake Advertising 1
Improvement of Service of Public Service Corp 1
Securing Conventions 1
Re-organization of Chamber 1 C
Parks and Playgrounds 5
Good Roads 2
Charities 1 2
Extension of Transportation facilities 1 3
Educational Promotion 1
Remembering that one and one only achievement was asked for, it is interesting to note that in answers received from forty- seven cities, twenty distinctive achievements are recorded as worthy of note. It is fair to presume that during our five- year period, embodied in the question, many other notable results were achieved hy all the cities Avho record answers to this question. Some index, therefore, of the ambition and purposes of cities in general may be gleaned from these an- swers. It will be noted that the size of the city bears evidently no relationship to the importance it attaches to any one of the accomplishments recorded ; for those noted by Cities of Classes A and B are also recorded by those of Class C.
Dividing the answers received into three subdivisions, namely. Industrial, Commercial and Civic, we find that in the small cities:
Twenty -one relate to Industrial Achievement.
Four relate to Commercial Achievement.
Forty relate to Civic Achievement.
AVhile one achievement only was asked, some cities record- ed two or more, which will account for the fact that sixty-five answers are returned by thirty-seven cities.
Kinds of Promotion Emphasized Question 2 : What kind of promotion do you emphasize most? Industrial and Commercial only Industrial and Civic only Commercial and Civic only
Answer Class A
All three equally 2
All three mostly civic 2
All three mostly industrial
|
2 |
|
|
1 |
|
|
3 |
|
|
Class B |
Class C |
|
3 |
14 |
|
2 |
6 |
|
\ |
3 |
36 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
Class C
Civic only 3
Industrial only 3
Commercial only 2
Industrial and Commercial only 2
Industrial and Civic only 1
Commercial and Civic only 3
An analysis of these figures indicates that in all classes of cities the preponderance of effort is laid on civic activities. In the small cities it appears that efforts along one line only, while exceptional, are evidently, confined to cities in this class only; larger cities in both Classes A and B are indicated as engaged in all three forms of association activities.
A closer study of the answers to this question shows that in small cities stress is laid on the commercial or industrial phase of association work, as they happen to be located in agri- cultural or manufacturing localities. The only exception to this rule being in those cities located in agricultural districts, in which the association has interested itself in agricultural development; in such cities surely they may be credited with industrial as well as commercial activity on the theory that every farm is a factory.
Large Town vs. Small Town Problems
Question 5: What do you regard as the most distinguishing difference between- the large and small town problems?
As this question calls for an expression of opinion and not of necessity of experience, I shall not tabulate the answers by classes. So many and varied were the answ^ers that I have concluded to quote from a selection only, as follows :
"Siz?s of issues involved."
"Problems larger but not more numerous."
"Benefits more apparent in smaller towns, making it easier to get co- operation."
"In small towns men know one another so well that they often fail to harmonize."
"Work easier in large city."
"More direct service required in small city."
"Large cities have large problems unknown to small cities ; small cities many problems which large cities have already solved."
"The large city must employ heroic measures to correct evils resulting from lack of city planning when they were small; small cities must give citizens vision enabling them to prepare for the big city of the future."
"Finance is the difference, the little city usually lacks the big fellorw who will Invest and await results."
"Problems proportionately the same ; finance the little city's difficulty."
"The attitude of membership to organization."
"The problems are largely identical — the machinery for w^orking them out naturally more limited in the small city."
THE CHAMBER OF COMMERCE IN THE CITY OF "AVERAGE." 37
"The knocker's knock is not so keenly felt in large cities as in gmall."
"Large cities place emphasis on the word better — small on the word Mgger."
"In large cities the association duties are specific and definite, while in the small city they are variable and general."
"The small city problems are more personal."
"In the large cities, that is in cities of say a quarter of a million i)opula- tion or more, the man of large affairs considers himself a permanent resident and citizen of the community in wliich he lives, and, therefore, takes an active interest in the work cf the city's commercial organization. Practically all of his business affairs are in the city in which he lives, and he is, there- fore, interested in its commercial progress.
"In the smaller cities, the same type of men do not give the same atten- tion to local affairs and, as a result, the work of commercial organizations in such cities is left very largely to men who cannot be properly classed as c:m mercial leaders. This is due to some extent, I believe, to the fact tliat the men of big affairs in these smaller cities are more deeply concerned in the affairs of the larger communities near at hand and they consider the civic and commercial problems of their own community too unimportant for their attention. This statement is, of course, not true with respect to every big man in Fmall cities, but it is true with respect to many. As a natural result the large city organization has the advantage of the advice of the most suc- cessful business men of the city ; men of ripe experience and sound judgment ; men w^ho have the means to properly finance the projects which are determined to be for the best interest of their organization or community. The small town organization on the other hand is often obliged to be content with the advice of men of limited ability, experience and means. These men may have large ideas, but they often lack the influence and means through which to translate their words and plans into deeds."
The preponderance of evidence elicited by the foregoing twelve questions is to the effect that the problems of the small city are practically the same as those of the large cities — as far as concerns the problems tliemselves — the distinguishing dif- ference between the tAvo being, that in small cities the questions of finance and service b}^ organization members is much more acute.
It seems to be pretty well established that the efforts, aims and ambitions of associations in small cities cover the Avhole field of association work.
The Chamber of Commerce in the City of '* Average"
By JOSEPH F. LEOPOLD
This new city named "Average" was founded somewhere in the United States in July, 1917, and has grow^n but little since. It is neither an industrial nor commercial community, neither high-brow watering place nor mining camp, but a mix-
38 EFFICIENCY AND CHARACTERISTIC ACTIVITIES
ture of all in proper proportion as built from the information furnished by some seventy-seven of the secretarial craft. The city of ^^Average" is just 19,000 in population and its Chamber of Commerce has an annual income of $4,100.00, with a gradu- ated scale of membership fee from fl.OO to f 300.00 per year and about 155 members in good standing.
In other words, "Average'^ is just the information from small cities over the whole United States ranging from 2,500 to 50,000 population "boiled down." Each of these cities re- quested for information owns and operates in some fashion a commercial organization. Their organization incomes stretch from $75.00 per annum to $75,000 per annum, but the annual income of "Average" is only |4,100, showing that many of the cities smaller and larger, too, than "Average" are very inade- quately financed.
It would be unfair to try to explain in detail what the small town organization could do without first giving a mo- ment to the secretarial wail that comes practically as one voice in answer to the questionaire citing the small town handicaps as compared A^dth the city larger than 50,000, which, in this statement, is classed among the larger communities. Let us sum up some of the handicaps :
First: The small town usually has New York ideas com- mercially and Pittsburgh thoughts industrially.
Second : The income is small, the secretary is poorly paid, with but scant office help, if any.
Third : There are no bureaus in charge of expert indus- trial managers, publicity men, etc.
Fourth : The small town chamber of commerce members usually think in terms of dollars rather than units of com- munity betterment.
Fifth : Small income curtails bulletins, etc., with resulting small interest and consequent poor committee service*
For the sake of convenience, and to skeletonize the mass of information received so that the results might be seen at a glance, the accomplishments are listed under headings in the order of their importance. It is interesting to note the simi- larity of work and the lines of endeavor most generally attempt- ed; also, a measure of accomplishment in all lines in accordance with the income of the organization, rather than in accordance with the population, location or special type of city.
THE CHAMBER OF COMMERCE IN THE CITY OF "AVERAGE." 39
f>.
7.
8.
1. Kctail Worfc— 62.
Credit Bureas, Trade Tours, Collection Bureaus, Buy-at-home Campaigns, Dollar Days, etc.
2. Industrial Promotion — 59.
By Bonus, etc.
Helping Local Industries,
Bidditig for New Industries.
3. Civic Improveme^it — 44.
Health and Welfare of Public, Parks, Playgrounds, Government, Public Nursing, Rest Rooms, Comfort Sta- tions.
4. National — 43.
Largely Red Cross,
Liberty Bond,
Garden Work,
Recruiting,
Patriotic Demonstrations, etc.
5. Agricultural — Fartn Agent — 42.
Increased Acreage, Better Farming Condition, Bringing Farmer and City to- gether. Picnics.
Municipal Improvement — 19. Water, Sewers, Buildings, Streets, City Planning, etc.
Advertising and Charities In- vestigation— 18. Classifying Advertising — Eliminating Fraud in Both, Federation of Charities.
Good Roads — 17. Tvocal Highways, State, Main Market and National
Highways, Permanent Road Building, Auto Club Work, Signs, etc.
9. Publicity and Conventions — 15. Magazine, Newspaper,
Mall, etc.
Bulletins, Information
Bureau Conventions.
10. Traffic Worfc— 13.
Passenger Service, Freight Service, Freight Rates, Claim Collection, Auditing, etc.
11. Special Features — 12.
Buying Own Home, Bringing in Outside Attrac- tion, Musical Programs, Entertainment of National Figures.
12. Legislative Matters — 9.
City,
State,
National.
1.3. PuMic Utility Work— 4. Traction Work, Fights on Gas and Electric
Rates, Express Rates and Service on
All Public Utilities, Telephone Mergers.
14. Surveys — 3.
Social, Industrial, Health, Sanitary, etc.
15. Employment Bureau — 3.
Local, State.
16. Leadership — 4.
General Work.
17. Labor Disputes — 3.
Mine, Factory and Other Labor Troubles.
18. Financial Work — 2.
Raising Large Funds for Special Purposes.
19. Against Industrial Promotion —
(Residence Section.)
20. Oet-Together Lunches.
Weekly, Bi-monthly, Monthly, Special, etc.
40 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
A hurried glance here shows plainly that five particular activities are uppermost in the small town mind; namely, re- tail affairs, industrial promotion, civic improvement, agricul- tural development, and national matters. Municipal improve- ment, advertising and charities investigation, good road work, special features and legislative matters follow next in impor- tance. In other words, it shows what the town of "Average'' is doing and not what it can do. ^
Some of the organization endeavors are peculiar to some particular community, and, of course, are not subject to debate here. The question of labor disputes is also a line of activity that is limited to certain cities and to the whim of fate. Traffic work requires skilled men and extra income. It is desirable and always needed. Employment problems, legislative matters, public utility affairs, various kinds of surveys and special finan- cial work are all subject to certain contingencies of necessity and frequently are not usable lines of activity for a period of a year or even more.
Leadership is never enduring and requires continuous in- jections of spirit along its hypothetical backbone to make it actual, concrete and visible. Five and one half years of study on my part have made me believe that a chamber of commerce is conMriictivc leadership in community matters and that regu- lar, well outlined and prepared lunch programs are the surest and quickest means to the end. With leadership assured, all else is easy. And following come the four fundamentals of com- munity organization activities in a definite way.
Retail affairs are not only important, but are showing vast strides under the capable leadership of intelligent commercial organizations. Retail affairs touch usually the pulse of the membership and the hip pocket of the most influential citizens in the community, and where rests his pocket book, there rests his heart and interest. Trade expansion, credit rating, collec- tive advertising, cooperative deliveries, and other chamber of commerce stimulants have done and will do wonders toward standardizing retail business.
Interdependent with retail affairs is industrial develop- ment. Business men are responsible for the usual cry for more factories and the secretary, lucky enough to be hired in a town that some manufacturer wants to get into, is made for life. Factory grabbing has been reduced to a business basis, but is
THE CHAMBER OF COMMERCE IN THE CITY OF "AVERAGE." 41
far from being solved. Small towns especially are reaping harvests in industrial development. The reason is plain and not to be denied. The wise manufacturer wishes to get into new territory with more easily satisfied labor, all other condi- tions being considered equal. Small cities should and wall continue to strive for industrial development. It shows big re- turns quickly and is the most popular of all chamber of com- merce '^results."
"Civic improvement'' is the wish and desire of all good citizens. Each individual and neighborhood suggestion reaches the wide awake commercial organization. The result is or- ganized activity on a community need and a stride taken in city betterment. The growth in number of parks and play- grounds, the better sanitary and living conditions, public com- fort stations and rest rooms, clean city government and an in- creasing standard of citizenship can be traced in many small cities to the influence of organized effort in community bodies.
Agriculture is the all-important problem of this and every other era of history. Small towns are especially fitted to pro- mote and develop all things agricultural. By getting expert farm demonstrators where none now^ exist, by preaching the doctrine of better farming conditions, by helping to find mar- kets for crops and labor to harvest them, by relieving the farm- er's mind of the bogey that all urban dwellers are crooks and instilling a feeling of dependence in the agriculturalist — much has been accomplished for the farm and farmer, and the end is not yet. Most of the credit is due the small town and much to the small town chamber of commerce.
Such w^ork is the work in the small town. Such is the ac- tivity of "Average." It is good, but not good enough. We need more money to spend and more for full time, trained sec- retarial executives. We can't blow^ hot and cold. We can't practice law and run a chamber of commerce. The secretary of "Average" is only about half-twined. He's still part in- surance man, laTN^er and newspaper man. Yet he has done wonders.
CHAPTER 11. The Relations Between Civics and Commerce
By O. B. TOWNE
Text books on civil government define civics as applying to those laws, methods and systems which administer the affairs of government. In a more technical sense the definition refers to the governmental and judicial functions of cities. Usage, however, has measurably broadened the meaning of the term, especially since the development of the commercial organization idea. Dictionaries of standard merit accept the broader inter- pretation, and tlie definition now includes altruistic and wel- fare work and the humanizing of commerce, as well as civil government.
We accept the theory- of the definition, but in meeting the civic and commercial requirements of the day, we find actual limitations and danger lines which puzzle even the most ana- lytical mind. Where does civic work leave off and commercial work begin? Where does commercial work leave off and civic work begin? Where does civic work leave off and politics begin? Is there benefit accruing to the others when emphasis is placed on any one of the three? What are the opinions of secretaries and other business and professional men, who have been long in the field? What are the facts?
A city reflects the ideals of its citizens. This is true in commerce as well as in civics, although it will be more appar- ent in civics. The standards of community life are boldly im- printed on every department of community activity.
It is true that many communities have developed and grown rich without paying the least attention to civics. But a community without civic develojjment remains at a stand- still and commerce will eventually blight, if not decay. Com- merce may make civic development possible in a pronounced degree, but civics in return makes commerce human instead of mechanical, thus making permanent commercial progress
possible.
42
THE RELATIONS BETWEEN CIVICS AND COMMERCE. 43
In speaking of commerce we have three things in mind. First, manufacturing; Second, distribution; Third, community values.
The hardest thing in commerce is to find the man who can most successfully manage the affairs of industry. But, there are those who can. Their experiences in civics are interesting in the extreme. They have learned that it is commercially profit- able to keep machinery well repaired and protected, rather than to neglect it and when it thus becomes useless, replace it with new. They have also learned that it is commercially profitable to protect the factory employee, to keep the quality of his ef- ficiency at a high degree, rather than to drive him to the break- ing point and then replace him with the untried and the un- trained. But it takes a man wdth a mind and spirit tuned to the civic idea, to see this and to profit commercially thereby.
It has proved true that an employee who is well fed, who lives in decent sanitary surroundings, with the beautiful in nature and art to encourage and inspire him, will turn out more perfect Avork, more of it and with less wear, tear and waste, than will an employee, whose surroundings engender low ideals of honesty, poor health, immorality, debauchery and otherwise impaired ability to render even fifty per cent effi- ciency in service.
Important problems of manufacturing are contentment, health, clear minds, skill and efficiency among the employees. Those business men who have made the experiment show", by the increased output of their plants, that there is net profit in emphasizing the civic end of industry.
In Germany, civic effort is a great feature of community life. Dusseldorf business men, cooperating with the city gov- ernment, previous to 1913, contributed $64,000 a year to parks and 1110,500 a year to theatres and orchestras, in order that the people of that city might see and hear the best in music and the drama for their inspiration and thinking, and not be compelled to seek pastime in cheap beer gardens with debauch- ing entertainments amid degrading surroundings. And a busi- ness man of Dusseldorf said in 1913, when speaking of this remarkable fact, "It is a business investment which yields net profits to the manufacturers, and to industry."
We find the same condition true in Frankfort, Munich, Cologne, Hanover, Mannheim, Ulm and many other cities in
44 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
the German Empire, as well as in many cities of France, Italy, Belgium, Sweden, England and Austria.
In all the European cities mentioned great attention has been paid to housing conditions for the employees, for the very obvious reason of keeping them in good health, in pleasant sur- roundings and in a contented frame of mind.
An enlightened, well-housed, healthy, and a mentally, morally and physically clean buying public, with an eye ac- customed to the beautiful in nature and in art, is going to buy better goods, and do it more intelligently, than will a public of the opposite status. Not only will it buy better, but it v/ill buy more, because less will be squandered for the degrading things of life. The market for the retailer will, therefore, be more de- sirable and more secure. Civics Avill also mean net profit to him.
But what of community values? Property values are de- termined by two things — commerce and civics. The business location and business utility of a piece of property determine, to a very large ext-ent, its market value. But civic improve- ments, such as jjarks, boulevards, schools, civic and commercial centers, good fire and police protection, improved streets, sewer and water, gas and electric lights will increase the value of that same property, many times. This is especially true of resi- dence property, for the elements of convenience and environ- ment have greater influence on the value of residence property than business property. The effect in all instances is direct.
Concerning the extent to which a commercial organization may legitimately interest itself in civic affairs and the danirers encountered in this work, a vital consideration is the nature of the commercial organization. In some of the older eastern cities, the commercial organization devotes itself almost entire- ly to commercial matters, to the exclusion of civics. This is due, largely to the age of the cities in question, together with the fact that the commercial organization in its present status is of comparatively recent origin. Manj^ of the older cities of the east have had purely civic organizations for many years. These are sectional, for a single civic w^ork, for the permanent beauti- fication and maintenance of specific residential districts, or for community wide improvement. The board of trade, from which the present commercial organization has sprung in these same cities, was purely a commercial body and has not been tolerated in the civic field.
THE RELATIONS BETWEEN CIVICS AND COMMERCE. 45
The dangers to any voluntary organization, such as is the average commercial body, are from an internal rather* than from an external source. Its main problem is in keeping its membership intact while it establishes itself in the community. Dangers from without usually serve to knit, more closely to- gether, the component parts of the organization.
The reason for and strength of a commercial organization lie in its ability to serve the community. The only danger which need be considered is that which impairs this ability. The danger, although it may come from m,any sources, is but a single danger — internal disruption.
A commercial organization must avoid participation in re- ligious controversies ; it must not take sides in keenly partisan political campaigns. It must avoid advocating the cause or candidacy of any individual or group; using its influence ex- clusively for the commercial interest of an individual or group of business men ; interfering with or opposing, directly, officials of constituted authority; any tendency toward exclusiveness ; technicalities; taking sides in capital and labor controversies; taking credit for the work of other organizations; interfering with or openly opposing the operations of old established civic bodies ; being impractical, shallow and unprepared in its civic promotional work ; allowing politics, religion or factional in- terests to creep into the organization and influence its conduct and the election of its officials.
The manner in which questions of principle may bring the commercial body too near the danger line of politics, the actual status of the organization in the community will be one factor, and the relation of the principle in question to the commercial and civic activity of the body will be the other. The status of the organization in the community must be constantly main- tained and improved. The same thing is true regarding the commercial and civic activity of the body.
"Public questions of principle," according to Mr. Bowers, of elamestown, "are the very elements of political platforms upon which men differ, and in that possible difference of opin- ion lies the danger to commercial organizations."
William George Bruce of Milwaukee, on the other hand, writes: "Political parties have their adherents; candidates have their friends. Both adherents and friends may be mem- bers of the commercial organization. To exert partisanship
46 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
here means to invade the field of practical politics and the domain of opposing political parties and organizations.''
Questions of principle touch a community when they treat of governmental safety, justice, commercial equity, humanity and posterity. When public questions become any less broad in their scope they pass into the twilight zone and cease to be questions of principle.
Many differ over the line of demarcation between civics and politics. To me, it appears that the purpose for which the commercial body is formed has a great deal to do with this whole matter. A commercial organization has as its general purpose seiwice along commercial and civic lines. It has no legally established position in the governmental affairs of the community and, therefore, may not trespass on those grounds with impunity, except in the spirit of service to commerce and civics.
The policy of the useful commercial organization must be constructive in every sense. To be constructive, it cannot be partisan even in the slightest degree, for partisanism strikes at the one vital spot in the organization — internal cohesion, and implies a destructive policy towards the tenets of its oppo- nents.
Mr. Bruce of Milwaukee, says, "The line of demarcation between civic activities and political activities, drawn by com- mercial bodies, must lie between ante-election campaigning and post-election cooperation, between selfish partisanship and un- selfish non-partisanship, between party preferment and commu- nity progress and welfare."
While this is true, it does not go far enough. In the words of Lucius Wilson of New York, "The duty of the commercial organization is to teach the people to think." He did not say think rightly. If he had, he would have assumed that someone in the community knew which was the right way to think and had the authority to dictate. No one may dictate unless so authorized by the law or by the people. No one is so authorized in the, commercial organization.
The line of demarcation between wholesome civic activi- ties and dangerous political controversies lies in the attitude and conduct of the commercial body itself when dangerous political questions are involved. In wholesome civic activities, the organization is seeking to serve the whole community along
THE RELATIONS BETWEEN CIVICS AND COMMERCE. 47
the line of civic and commercial affairs. If the organization is impartially constructive in the assistance it renders the public to help that public solve each problem on its merits, it can go to almost any extent in its activities.
The phases of commercial organization work which come entirely under the head of civics are numerous. To a well bal- anced and wisely governed commercial body the field for civic activity is very broad. Much of it, however, comes under the head of commercial civics, for it has to do A\ith those phases of governmental and humanitarian effort which increase or de- crease the profits of commerce.
The line of demarcation between commercial and civic af- fairs is not so difficult to define, even though civics has a great influence on commerce. J. P. Hardy of Fargo, believes "it is parallel to the line that marks the difference between policy and administration.'' He gives this definition with special ref- erence to the science of government. Mr. Bruce of Milwaukee, enlarges the scope of this definition, however, when he writes: "The line of demarcation places pay-roll and profit on one side, and the physical and moral well-being of the community on the other." INIr. Gumm, of Fort Worth, sums it all up in one word. "Dividends.'' Mr. Nelson of Bingha;mton, says: "Business Profits."
To my mind the line of demarcation may be found by de- termining the direction of the activity. Is it toward, or is it away from commerce? If the direction of the activity is toward commerce, either directly in trade promotion, increasing divi- dends, transportation of freight or manufacturing, or indirectly in the improvement of streets and housing conditions and building good roads, it may be said that the activity is purely commercial. If, on the other hand, it is humanitarian welfare work, and does not touch commerce either directly or indirect- ly in matters of business, nor affect commerce even through civil authorities, it may be said to be purely civic.
But how about those commercial organization activities which may not belong to either class? There are exceptions to all rules, of course, but it is a question whether the number is very large and also whether a detailed analysis of the ultimate purpose and effect of the activity would not determine pretty accurately the exact direction of it as regards commerce.
There is general unanimity of opinion among secretaries
48 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
regarding the dependence of commercial success and progress upon good government, but the extent of that dependence is variously estimated.
Mr. Bruce of Milwaukee, says : ^^Good government means to afford that freedom of action and that protection to life and property which enables the merchant, the manufacturer, the mechanic and the professional man each to perform his allotted part of the world's work.''
Howard Strong says : "Good government generally means an all-around square deal for everybody.''
The reason for government in the first place indicates a certain degree of responsibility for the success and progress of business. Governments and laws are established primarily that the right to life and livelihood may be enjoyed in a reason- able degree of peace and security.
The commercial organization is composed of volunteers with a wider common ground of understanding. The member- ship is made up of business men with a common purpose and, hence, with a wide field of common interests. This organiza- tion is not established by law for administrative purposes. It represents the collective citizen in thinking out and promulgat- ing plans, methods and projects for today and for future gen- erations. When it speaks it can only speak in an advisory ca- pacity, in so far as the city administration is concerned, and when it acts it can only act in a cooperative capacity. It can only guide, direct and lead the people in their progressive thinking and assist them to co-ordinate their efforts to secure justice and equity while solving the problems of the times and place.
In discussing the possibility of the commercial organiza- tion being drawn into legislative matters of city, state and na- tion, two things should be considered: First, who will specifi- cally set forth the business and civic needs of our community as a whole, if the commercial body does not? Second, should the general civic and business interests of the community sit calmly back and leave the laws, which vitally affect their affairs, to the judgment of the legislators, who as a rule, are from small communities, when in the halls of legislation, of city, state and nation, private interests, private institutions and special or- ganizations are rampant, seeking favors and special privileges?
Commerce has been the football of politics almost from the
THE RELATIONS BETWEEN CIVICS AND COMMERCE. 49
founding of the government. It has been the party issue in almost every national campaign for a century. Few business men have had a word to say about it all. Business men should have something to say in the affairs of the state and nation. They should have more to say about the real business end of the local government. Commerce and civics, which every effort is being put forth to improve — should be heard from, directly, when laws of vital importance to both are to be enacted. They should be represented at the hearings and conferences, but more especially, they should be represented in the membership of the legislative body itself.
Good civic conditions and good citizenship advertise a com- munity. The greatest source of desirable publicity is a citizen who is in love with his city and has tangible reason for that affection. Not only does it advertise his community, but it advertises the community spirit of the place. It advertises its industry, its general business affairs, its community life.
There is one other consideration on which too much em- phasis cannot be laid. A community, in w^hose development special emphasis has been laid upon civics, is loyal and patri- otic to itself, to the state and to the nation. The very nature of the civic work done proclaims that fact. There is tlie ideal to defend; there is the contented home life to protect; there is the organized whole to uphold. All these have their commercial value. Although they do not appear in figures in the final balance of the average commercial institution, who can say that there is in them any less commercial value because of that fact?
CHAPTER III. Industrial Activities
Industrial Development by Chambers of Commerce By GLENN A. BOWERS
The effort of coramercial organizations to attract indus- tries to their cities is almost universal. Three broad groui)s of members in particular concern themselves with industrial development activities; retailers who are interested in an in- creased purchasing power of the city; manufacturers who are aware of the advantages which result from the concentration of a large number of industries ; and general members who look to a larger, more prosperous and more active city. Because of these interests, commercial bodies have for many years made efforts to attract new industries and to assist in various ways industries already located in the cities which they represent.
The broad policies of industrial development, unless de- termined in an arbitrary manner, rest upon a knowledge of industrial conditions. To acquire this knowledge, eonimon practice has had to undertake a comprehensive survey of all social and economic factors which affect industry. Some of the points which it has been found profitable to include in a survey of this kind are outlined very briefly in this paper. The policies which organizations have followed may be put into two groups: (1) The creation of conditions favorable to industries, both those already in the city and those which may be induced to come; and (2) The offer of special inducements to new indus- tries. Offers of special inducements are given especial atten- tion herein, with only casual mention of those conditions which favor industrial growth.
Industrial Surveys
• Industrial facts which would be of value in one city might naturally be unimportant in another. The detailed outline of a survey must, therefore, be left for local determination. In general, however, an investigation of this sort might include such subjects as are listed under the following principal groups :
50
INDUSTRIAL DEVELOPMENT BY CHAMBERS OF COMMERCE. 51
1. Existing industries: Nature, number, output, etc.
2. Market possibilities: Quantity and kind ol* manufactured material
shipped into vicinity, quantity and kind of unfinished products and raw materials shipped elsewhere for further numuf acture ; de- termination of accessible markets, extent to which accessible markets have been developed, location of competitors, etc.
3. Raw materials: Cost, length of haul necessary, kind produced in
vicinity, etc.
4. Transportation facilities : Number of lines, distances to markets,
rates, traffic bureau organization and work, terminal facilities, warehouses, means of transfer, etc.
5. Environment : Nature of industries, efficiency of city goivernment,
character and supply of labor, housing conditions, educational in- stitution, etc.
6. Manufacturing costs : Power, labor, raw materials, etc.
7. Banking facilities : Number and size of banks, nature of investments,
extent of local market for industrial securities, etc.
Two Types of Organization Activity
The two broad policies adopted by organizations to attract industries, as was suggested above, apparently turn upon this question: "Are your efforts confined to the creation of condi- tions favorable to industries?'- In some organizations, the policy is to confine their activities, either entirely or practically so, to the creation of conditions favorable to industries. On the other hand, many organizations have adopted the policy of offering special inducements to secure new industries. Other organizations make no effort whatever to attract new indus- tries.
Those organizations which confine themselves to the crea- tion of favorable conditions do so largely on the ground that industrial gro^^i;h depends upon fundamental economic condi- tions, regardless of special inducements and artificial condi- tions. Those organizations Avhich offer special inducements do so for one of tAvo reasons: (1) They believe that industries may honestly need aid, financial or other, in order to develop or expand, and that money spent to aid these industries will be returned indirectly through improved business conditions; (2) Although they may disapprove of the principle just stated, they feel that it is necessary for them to follow the practice in order to compete with other cities which give such inducements.
Creation of Conditions Favorable to Industries
"Conditions favorable to industries'' appear to be corollary to those groups given above in outlining a general survey. Ac-
52 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
tivities aimed at the creation of more favorable conditions may, therefore, be grouped as follows:
.1. Efforts to diversify industries by promoting improved local con- ditions.
2. Improvement of marketing conditions by advertising, by attracting
trade conventions, by entertainment of buyers and providing fa- cilities for display to buyers, by broadening market through bet- ter freight and express service, etc.
3. Improvement of raw material conditions by making possible in-
creased production in vicinity, by providing adequate storage space, by giving attention to freight rates, etc.
4. Improvement of transportation facilities by establishment of adequate
traffic bureau service, by providing adequate terminal facilities, warehouses, good street conditions, etc.
5. Improvement of civic conditions, housing, schools, entertainment, rea-
sonable food prices, efficient management of physical plant of city, etc.
6. Lowering of manufacturing costs by development of cheap power, by
providing expert advice foir managers, by developing industrial tracts in convenient relation to railroads and city, etc.
7. Improvement of banking facilities.
These are activities which organizations liave undertaken in efforts to improve local conditions. The list is by no means complete and is intended merely to be suggestive.
Offer of Special Inducements to New Industries
Many kinds of si)ecial inducements may be offered to pros pective industries. In general, however, they may be placed into six main groups : Bonuses, cash and indirect ; credit guar- antees; secured loans; loft buildings for small industries; and stock or bond purchase.
Bonuses: Cash. A cash bonus is merely a payment of money to a concern in return for locating its plant in the city offering the bonus — in other words, the city buys the industry from which it expects to get an indirect profit. This practice has had extensive use in the past but is now in disfavor in most organizations.
Bonuses : Indirect. The plan of giving indirect bonuses in the form of free sites, tax exemptions, moving costs, free rents, low water rates, etc., is the same in principle as the cash bonus plan, but apparently differs considerably in application. Free sites is the most popular form of indirect bonuses. In some instances the gift is made directly by land owners or real estate operators in the expectation of increased values accruing to land adjacent to newly developed areas. Donations of land
INDUSTRIAL DEVELOPMENT BY CHAMBERS OF COMMERCE. 53
may, therefore, be more freely secured than an outright gift of money to a factory, or credit endorsement and stock subscrip- tion in which the return is less certain and the benefits more re- mote. Tax exemptions are granted in but few cities.
Credit Guarcmtees. Much criticism has been directed against banks for their conservative policy toward industrial loans. One reason for this conservatism may be the lack of expert knowledge about industrial management on the part of bank officials. It is not the practice in this country, as it is in Germany, to have among the officers of a bank a man skilled in industrial affairs. In a number of cities, commercial or- ganizations have attempted to supply this expert knowledge to banks and to offset all other objections to industrial loans by guaranteeing to banks loans made to approved industries. Typical provisions of this plan are :
1. Subscriptions for specified amounts are made with the understanding
that losses suffered will be prorated among the subscribers.
2. From 10% to 20% of the amounts subscribed shall be paid in to
form a contingent fund before tlie plan begins to operate.
3. Subscriptions paid in shall be deposited with banks which agree to
make loans to industries upon approval of duly authorized rep- resentatives of the subscribers.
Secured loans. In most cases of credit guaranty, the sub- scribers are secured to the extent of the physical assets of the concern aided. Organizations may, however, extend credit to industries direct, with or without credit. The results of a ques- tionaire here show that while some organizations offer special inducements, a larger number grant loans to industries only upon security. A few organizations grant loans without se- curity. The plan is simple and further comment is not neces- sary.
Loft htdldings for small industries. In a number of cities in which desirable factory space is limited, loft buildings have been financed by commercial bodies or by associations formed among their members. The aim of these organizations is to provide buildings equipped with modern industrial appliances for the use of small industries which could not otherwise ob- tain such facilities. In many cities, even antiquated factory space is difficult to find. Without adequate factory space it has been hard to secure new industries which could not afford to construct and occupy an independent plant.
This activitv is not necessarily a "special inducement."
54 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
In some cases, it may be more 'properly the "creation of condi- tions favorable to industries.'' However, the facts that private capital has not provided such facilities and that commercial organizations have been forced at times to finance the undertak- ing, warrant the mention of loft building construction as a special inducement. It is the usual practice to charge a reason- able rental for space in these buildings, to cover all expenses and yield a fair rate of interest on the investment.
Stock or bond purchase. The final group of special induce- ments includes the purchase of stocks of new industries, or of established industries seeking to expand. Some organizations offer special inducements, others purchase stocks or bonds in concerns which show promise of success; some approve legiti- mate stock issues to citizens after investigation, others refer stock issues to citizens without approval. Again a number of organizations will have nothing to do with stock or bond propo- sitions but attempt to se€ure new industries through other special inducements or economic advantages.
The industrial enterprise must be independent of the com- mercial body but close cooperation may exist between them. A selected group of men should be charter members. "One of the fundamental essentials to the success of a financing plan is that the unit of efficiency should be kept in mind in selecting the members." The following requirements should be insisted upon:
1. Members should be financially able to assist in the underwriting of enterprises endorsed for promotion.
2. Members should be prominently identified with industrial or other enterprises in the city.
3. Members should understand and be in full sj-mpathy with the plans and purposes of the company.
4. Members should be willing to contribute time and judgment to the investigation of projects which the board of directors approve as worthy.
5. Members should have experience in some field of activity that will enable them to assist in determining the advisability ocf promoting any enter- prise under investigation.
Prior to investment in an industry the board of directors shall first decide whether a project is worthy of investigation. The board then appoints a committee of members especially qualified to make the investigation. Members receive just com- pensation for their services. If it is deemed advisable, expert services may be employed by the board to assist the committee. Incidental to the work of the company, a thorough survey is to
INDUSTRIAL DEVELOPMENT OF THE SMALL TOWN. 55
be made of the city and vicinity to secure a complete analysis of ever}' industry, including full data as to its sources of ma- terials and its products.
Industrial Development of the Small Town
By WM. S. MILLENER
Notwithstanding the fact that many of the foremost think ers in commercial organization work hold that commercial bodies should give first consideration to civic improvements, and less attention to trying to secure new industries, the fact remains that the average commercial organization in the small town still devotes considerable time and effort to securing new industries.
In order to learn something of the methods and progress of other to^ATis, over 100 questionaires were sent out. The data upon which this paper is based was secured from the replies received from eighty-four secretaries, located in towns ranging
Editor's Note: — No subject which has come within the range ci com- mercial organization effort has received greater attention than that which deals with the securing of new industries. At the same time no subject with- in the range of organization purpose has undergone greater modifications.
"We want new^ factories !" was the sole slogan of many of the commercial organizations a decade ago. Many were organized for no other purpose, and secretaries were employed for no other duty than to secure factories. Their tenure of office depended upon the measure cf success they attained.
The offers of bonuses in the tvay of sites, buildings, stock subscription, remission of taxes, etc., etc., were of a most generous nature. The reaction, however, set in when the failures by far outnumbered the successes. It was tjhen discovered, too, that the success €f an industrial enterprise involves more than bonuses, gifts and exemptions.
It was learned that a manufacturing enterprise must take into considera- tion accessibility to raw materials, facilities for distribution of the finished product, and an adequate supply of the right kind of labor. And above all things, the business management must be capable and honest. Much money has been sunk in enterprises where one or more of the elements here enumer- ated have been lacking.
While the average commercial body is no less ambitious to secure new industries, it has become more circumspect in securing them. It no longer makes factory getting the sole object of its existence or employs a secretary solely for his factory getting ability. It inventories its own ecnditions and environment, measures its opportunities, and establishes more nearly the c'ass of industries that could thrive within its borders.
The commercial organization of today has also come to the realizatlcn that the first essential is to make the city worth while as a place to live in. The schools must be good, the streets clean, the drinking water pure, the parks attractive, etc., etc. The city must be sanitary, afford recreational facilities and public utilities if labor is to be attracted.
56 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
in population from 10,000 to 100,000, and scattered over thirty- two states. The average population of the towns reporting is 59,252, having commercial organizations averaging 641 mem- bers, and an average income of |1 4,-406.00.
Industrial Committee
The answer to the question "Do you have an industrial committee to investigate and negotiate with prospective indus- tries?" indicates that, almost without exception, these towns refer the investigation of industrial questions to a standing committee. Answering the question "Do you have a guarantee fund?" 71 towns answered "No." One town answered "Planning to have such a fund.''
■ Williamsport answered "No longer. Guarantee fund aban- doned."
Williamsport was a pioneer in the guarantee fund move- ment. When this plan was first devised it was thought by many that at last a w^ay had been found to solve all of the prob- lems of substantial industrial growth of both established and new industries. Since this plan was devised in 1900 and aban- doned in 1914, after having been copied or modified by a num- ber of cities, it may be best to briefly refer to it, and the reason for its abandonment.
The Williamsport plan was essentially^ a subscription of credit by responsible local business men. Under this plan, the local banks agreed to furnish money to such industries as might desire to negotiate a loan on the endorsement of three attorneys- in-fact, representing the subscribers to the fund. Subscrip- tion contracts to this fund ran for a period of five years. Copies of the contract and certificates of the action of the subscribers in electing the attorneys-in-fact were filed with the banks, and the attorneys were authorized to endorse for the whole, or any part of the fund.
Before such endorsement was made, applications by bor- rowing firms for aid were required to be approved by the direc- tors of the board of trade. How^ever, the attorneys-in-fact had the power to refuse the endorsement, even when it had been approved by the directors of the commercial organization. If, at maturity, the applicant failed to meet the obligation, the subscribers to the fund were supposed to pay the amount due, each subscriber being liable for a pro rata share only, of the indebtedness.
INDUSTRIAL DEVEI^OPMENT OF THE SMAX,L TOWN. 57
This guarantee of credit was conservatively given, and when given was protected by sufficient security, so that with but a few exceptions there were no losses. The few losses that were sustained were paid by a few wealthy men, usually mem- bers of the board of directors, and there Avas never any assess- ment on all of the subscril)ers to the fund.
In this city, credit was only extended to industries that found some difficulty in negotiating a-loan from a bank. The result was that the credit of any concern so helped was material- ly injured, and it was more difficult for it to secure accommo- dations from local banks without the same sort of endorsement. Believing that ultimately it was detrimental rather than help- ful to the manufacturer who secured a loan under this plan, the same was abandoned.
Commercial organizations are business concerns, and the same tests of good business should be made to apply. It is a question of bargain and sale, securing the goods, if they be needed, at the best possible terms for your city.
The only way that a commercial organization can be of assistance to established industries is to provide a business atmosphere in the whole community that will produce general conditions, such as stabilizing labor, which, in turn, will pro- vide the opportunity for industrial growth, if the industry is well placed and capably managed.
Small Town Development
In the final analysis of industrial development of the -small town, whether it be in making conditions favorable to indus- tries or in offering either direct or indirect special inducements, the greatest factor for success is the standard of the human element back of the movement. Every movement needs its leader, its optimistic, determined, public-spirited man with a vision, who will give freely of his otvti time and influence others to give of theirs, working for the good of all. Such is the work of our commercial organizations, the building of men and inter- esting them in all the ramifications of community betterment and industrial development.
There is no set rule which can be laid down for the guid- ance of all, but the conclusions reached in studying this ques- tion are:
1. That it is unwise to offer a oasb bonus to secure the location of an in- dustry.
58 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
2. That desirable factory locations on one or more railroads should be con- trolled, either directly or indirectly, by the commercial organization, to prevent undue land speculation and the retarding of normal industrial growth.
3. That commercial organizations, either directly or indirectly, should pro- vide suitable facilities for small manufacturers in a loft building or in- dustrial building, that could be sub-let at a reasonable rate, having all the conveniences of low power, shipping facilities, etc.
4. That the possession of a fund for investment in industrial securities is no guarantee of wise industrial development.
5. That more thought should be given to ways and means that make it pos- sible for established industries to grow and expand, than should be given to efforts to secure the location of new industries.
6. That when the best conditions for manufacture and the proi^er housing of employees of established industries are sufficiently developed, new indus- tries will seek you, rather than you having to seek them.
7. That satisfactory industrial development will come to every small town when these things have been done, for, in the doing of them, the human elements, organization and cooperation, will have been brought to the high- est point of development, and all community problems may be solved with despatch.
The Proper Place of Industrial Development in the Work of a Commercial Organization
By R. H. FAXON
Cities do not grow — they are made I And yet, industrial- ly, there are notable examples of cities which have not been made, but have gTOwn. There are cities where every natural law of industry has apparently been violated or has failed to work. Such cities are fortunate indeed, and yet they do not disprove the rule. They are, rather, the exception. There is, for instance, no special reason why Battle Creek should be a cereal center ; Detroit a motor center ; Grand Rapids a furniture center; or Ncav England the center of the textile industry or of shoes. Yet the last- named examples emphasize the more great- ly the rule that cities are made and do not merely grow. But that the supply of material is an overwhelming incident, is illus trated by the growth of the textile industry in the South, where cotton grows, and by the shoe industry in St. Louis, near the leather-production center.
Therefore economy of location and proximity to raw ma- terials do not always determine the location of industry.
As a premise, the five things that really count in industrial work, or factory location, are : Labor, transportation, materi- als, money, and market.
PLACE OF INDUSTRIAL DEVELOPMENT IN ORGANIZATION. 59
Labor is the element often considered most important. A labor market has in the past been deemed essential to successful industrial development. Yet it may be accepted that, outside of certain peculiar or isolated cases, labor will go where industry begins its work.
Transportation is an important factor, yet not an absolute essential. We find, on analysis of conditions, that Grand Rap- ids still remains an important furniture center, despite the al- most total lack of Northern timber and the distance from which it has to secure its supply. Massachusetts, far removed from hides and leather, save by importation under more recent legis- lation, continues to specialize on the shoe and leather business; and its raw materials of cotton are a long distance from the place of production.
Transportation also takes into consideration the haul of the finished product as well as the raw material ; but in this era of intensive development surrounding so-called ^^centers;'' with the existence of successful tariff, freight, or transportation bureaus, jealously guarding the territory of these ^^centers;" and with national advertising creating a countrywide if not international demand for many products, the distance the product has to go is found to be no insuperable barrier.
We next come to money outlay. Included in that is capi- tal, most important, and its procurement; the question of sal- aries and wages, matters of taxation, including war and other governmental revenues and taxes; credits, and the amounts necessary to procure materials and to equip industrial institu- tions. A further treatment of this essential will be found later.
As to market, the world is the market of any staple product. There is little barrier. Coming myself from an inland city, small in comparison with the great industrial centers, unde- veloped as it is industrially, and not known to fame as a manu- facturing community of renown, I could name you at least a half dozen products which go to not only the length and breadth of the land, but into foreign countries as well. How much more marked this is in a hundred other communities !
The Man and the Market
Into the term "market" go many things, which include production, sales, advertising, management, etc. Without these, the word "market'' is not embrasive. And here, again,
60 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
we find the importance, the potency, of The Man Behind ! Someone's vision, someone's strength of character, someone's strict integrity, someone's administrative genius, must go into the product from its inception to its final lodgment with the consumer, else we have not suitably defined the word ^'market."
There can be no royal road to industrial success in any community. Seldom can any wholesale industrial development be attained. If a community starts to develop some one indus- try, it makes it the better for others in that line, and, ultimate- ly, the community develops thereby. The success of one man attracts the attention of another in the same line. The labor market is thus created, and the community sort of specializes on that line. Like attracts like. Soon the community becomes famous as of one thing. But the best balance is maintained, of course, by a careful study of the things most adapted, the nearby source of raw^ material, the small market that may first be developed, and the kind of men that may be massed for in- dustry in general.
It is a starting point to other things. It may be accom- plished by an industrial secretary, or by a general secretary, or by a committee, or by a bureau. It matters not so long as it be done. When it is done and done right, then the organiza- tion is in shape to do more industrial work intelligently.
The safest and surest way to get an industry is to discard all the Avellworn methods, study the local situation thorough- ly; take the local survey and ascertain as above indicated the institutions and products of the community, the lack, and the need, and then make a systematic effort to build up a new line or a weak line. The opportunity wdll come — it never yet failed to pass the door of any community, and only may be intercepted by an alert and sane community organization. An invitation to a concern that seeks to remove for proper reasons ; the sub- mitting of a brief that is sensible and practical and shows rates, market, labor conditions, distribution, and general community relations toward industry, and, most of all, a digiiified, sensible desire on the part of the community to have the industry in its midst, will do more than anything else ever invented to bring it. And every one thus brought and successfully looked after and follow^ed up is an assurance of more to come in the future.
We have been preaching civics in our commercial organi- zations for the past few years. Indeed, it may be said that
PLACE OF INDUSTRIAL DEVELOPMENT IN ORGANIZATION. 61
civics occupies nearly one-half the average community organiza- tion effort. We assume there may be no successful contradic- tion of this assertion. The best business application of that fact lies in its relation to industry*. For instance : we may lay it down as axiomatic, regardless of woeful lack in so many places, that if it is best for the community to have parks and boulevards and lighting and paving that is worth while, and playgrounds and comfort stations and a clean, wholesome sur- rounding, it is doubly well for industry to receive its share of such modern civic improvement and betterment.
Housing, industrial welfare, the pension system, the recog- nition of the man factor in industry, the facilities in the factory which the office and the home enjoy, the bonus system, the re- fectory, the clubs and all that, are not a waste in overhead: they are a definite investment and a part of the institution outlay. They produce results, just as the ordinary civics pro- duce results in the general citizenship.
An Industrial Survey
An industrial survey, a carefully planned, thoughtfully figured out, homegrown affair, which would not go above the heads of a committee or a board, and which would not be con- fusing in its multiplicity of details, should be provided. Such a survey might feature cardinal points as follows:
Business and Administration — Name and character; date of establishment; names of officers, directors, etc., especially including engineer and works manager ; physical value of plant.
Plant — Location and physical layout ; number of buildings, and whether owned ; surroundings, as to density of population, isolation, etc.; character of building construction; floor space; insurance; fire; heating facilities; water supply; power; ele- vators and safety devices ; clubs ; telephones, etc.
Production — Seasonal periods; equipment; routing and follow-up system; organization membership; principal materi- als used ; principal articles manufactured ; direct marketing or through jobbers; branches; catalogs, etc.
Labor — Accessibility; closed or open; history of experi- ence ; manner of settlement of trouble ; workmen ; clerical force ; can women replace men if necessary; manner of payment; bonus ; overtime ; nationality, etc.
62 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
Transportation — Trackage, trucking arrangement, etc.; trunk lines accessible ; switching facilities ; water use, if any.
Then it would be wise to include some addenda as follows :
Laboratory data ; disposal of products as to area and man- ner of shipment, especially if express is used; list of principal competitors ; railroad service, as a general factor ; use of traffic bureaus ; materials used, source, etc. ; heat, light, power, w^ater ; taxes, etc. ; by-products and waste.
As to the proper place of industrial development in a com- mercial organization, speaking directly and briefly to that one point: There are, generally speaking, in community organiza- tion work as systematized today, four great subdivisions. They are: Organization affairs; public affairs; industrial affairs, and civic affairs. Each is co-ordinate. Each bears its proper proportion of importance in organization work.
What Is an Industrial Survey?
BY A STUDENT
The term "surve^^" has been borrowed from the science of sociology. It has been expanded, however, until the expression *^an industrial survey" has come to mean anything from a card index of industrial cities to an elaborate investigation of the industrial resources of the community.
As a point of departure it might be well to define more or less definitely what is meant by industrial survey in this dis- cussion. For purposes of argument we may use the term as including any attempt to deter miyie and list the factors hear- ing on the industrial prohlems of the community. Three ques- tions at once present themselves: (1) What are the factors bearing on industrial problems? (2) What is the purpose for Avhich they are to be listed? and (3) What are the industrial problems of the community?
The main difficulty in industrial surveys as conducted by chambers of commerce is that they are apt to be carried on from the viewpoint of "social values" rather than from the view- point of the manufacturers' ledger.
Let us illustrate: There is a certain pork-packing estab- lishment in the East which has an elaborate system for collect- ing hogs in the Mississippi valley. This system costs thousands of dollars a month to operate. The firm also has a system of
WHAT IS AN INDUSTRIAL SURVEY? 63
education for its employees on which it spends a great deal of money. Every part of the factory is carefully planned, and expenses are watched at every turn. The market is carefully studied and the marketing system worked out by the company is designeil to secure the largest return possible from the entire output. After all this care has been exercised and all this ex- pense laid out, the company figures its profits on all the animals it kills at considerably less than one-quarter of one cent a pound. All the savings and all the advantages over the com- petitors secured by careful thought in the planning of the manu- facturing and marketing steps may be wiped out by a little carelessness anywhere along the line. For instance, in the cut- ting room the whole profit margin may be wiped out by care- lessness in cutting the sides into their two main parts — backs and bellies. There is a strip through the middle of each side which belongs equally well with either type of product, and if the price of backs is high of course there is an advantage in cutting the backs wide and getting the greatest possible amount of backs out of the sides, and vice versa. The point, however, is that carelessness in this one detail within the plant may off- set the results of an elaborate system for making savings) in production or distributing costs.
This illustration may make it clearer than the bare state- ment can, what is meant by dealing with the industrial and commercial factors of the community- from the point of view of the manufacturer's ledger. In many instances, every pos- sible advantage which the community can offer must be turned to account. But such advantages as labor supply^ nearness to market, immunity from strikes, or even cheap power, in the manufacturer's mind only work out into figures representing minute fractions of a cent per unit of product. It is clear, there- fore, that what may appear to be great advantages in a com- munity may be either largely, or entirely, ott*-set by apparently trivial factors. At the same time it is clear also that certain apparently trivial factors may make up for deficiency in what might be called natural equipment.
This idea of viewing resources from the standpoint of the manufacturer's ledger helps us to explain also some of the ap- parent contradictions between the results of surveys and the actual experience of communities. For instance, if we viewed the resources of Detroit in perfectly cold blood the probabili-
64 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
ties are that we should never pick that as the location for the greatest automobile center in the United States. What appar- ently happened was that certain forceful and constructive per- sons undertook the establishment of automobile factories there, and the personal influences were strong enough to counteract what natural disadvantages there might have been. Illustra- tions of the same thing might be found in the case of such mat- ters as a minor change in a freight rate. There are instances also where the mere passage of time with the resulting depreci- ation of property has been sufficient to modify the larger and apparently more powerful factors in the location or operation of an industry.
Factors Bearing on Industrial Problems
With this point in mind it is possible to get some idea of w^hat type of factors it is necessary to consider in an industrial survey. Strictly speaking, there is nothing short of omni- science that would be entirely satisfactory as equipment for conducting an industrial survey. There is no feature of the civic, social, commercial, or political life of the community w^hic^h might not have a bearing on industrial location and op- eration. The main difficulty is not to find factors which ought to be listed, but to select those factors the listing and observa- tion of Avhich will be of use. It perhaps needs no demonstra- tion that an industrial survey may very quickly clutter itself up with the mere volume of detail accumulated, so that it will be of absolutely no use to anyone.
Two common errors in making such a survey may serve to sum up the general principles underlying the process of selec- tion of material factors in the situation. The first of these is the error of duplicating work already done. For example, one industrial survey which closed its eyes to the existence of a very full housing survey already available in the community, undertook to cover incompletely the ground which had been thoroughly covered by the housing survey, instead of go- ing through the housing survey and selecting and indexing such material as would be useful. Another case may be cited where several thousand dollars were spent in supplementing material on the statistics of employment on tbe theory that the state statistics on the subject were incomplete. After three years' work material was collected which was perhaps more
WHAT IS AN IXDUSTRIAL SURVEY? 65
detailed than the state-s figures, but a portion of what had been collected was two or three years old and the value of the sta- tistics was seriously impaired by the minuteness with which the survey had been conducted. In their present form the sta- tistics may be more valuable from a scientific point of view, but they Avill i)robably be no more useful to the manufacturers than are the state figures.
When large appropriations are not available, and when a large staff cannot be used for conducting the survey within a very short time, one of the most important steps is the determi- nation of what material already exists concerning the more conspicuous factors, and a careful indexing of the data Avhich, while they may have been collected from an entirely different' point of view, may be extremely useful in specific cases.
A second common error is that of regarding the industrial survey as being an end in itself. Its chief usefulness is in making easy of access facts which will help the manufacturer to judge intelligently the suitability of the community for his purposes. A survey, therefore, is never an achievement; it is always merely a tool.
It is even a question w^hether a separate survey from the industrial point of view is what is wanted in most instances, and not an index of the significant industrial factors brought out in either a general civic survey, or the surveys covering specific parts of the equipment and conditions of the commu- nity.
With this point in mind it is evident that no satisfactory general schedule of factors to be considered in an industrial survey can be made. What would apply in one community would not be pertinent in another, nor would the same lists be equally valuable in the same community for two different in- dustries at the same time.
The Purpose for which Factors are Listed The second question is what is the use to be made of the listed factors bearing on the industrial problems of the commu- nity. For the sake of emphasis let us repeat the answer to this which has already been given. An industrial survey is not intended to take the place of the brains of a manufacturer. Its task is to help him to ascertain some of the factors useful in the process of reaching a decision whether to locate or to remain in a community, or to modify his present equipment or methods.
3
66 EFFICIEXCY AND CHARACTERISTIC ACTIVITIES.
As in the case of the factors to be considered so in the case of the method of listing, no formula for a survey can be laid down. In fact, in many instances, the most useful form of sui-vey con- ceivable is not strictly speaking a survey at all, but is rather, as has already been intimated, a card index of material in existence. But whether the survey takes this form or a more elaborate one there are certain general features which may be worth consideration.
In the first place, the index ought to be in such form that the material is always in process of expansion and correction. An industrial survey which is in final form is in most cases no longer of any use. In the second place, one of the most con- 'spicuous features of the survey should be reference to compiled sources and to sources in the form of well-informed men who may be expected to supply material and suggestions on the factors under consideration. The third essential should be availability of the material for use without the guidance or in- terpretation of anyone, even the secretary himself.
Aside from these features there is little that is common in the problems of compiling and indexing the material bearing on the industrial problems of the community. How detailed the material is to be will vary with almost every case which it is planned to serve. What standards are to be set up for the in- clusion and exclusion of material, also, will be matters impos- sible of satisfactory solution according to any general formula.
The chief objection to any such statement of the case as this is the rather sweeping one that by the application of such standards one might as well have no separate industrial survey at all. Except as a matter of convenience, and as a tool for the saving of time and effort, this is entirely true ; but even after it has been gi-anted that the survey is merely a device for making accessible material already in existence there is still a large usefulness for it. Certainly in most cases there is a wide gap between dependence on the general information of the secre- tary, and having available an index of this kind for use in get- ting facts about the industrial situation.
What are the Industrial Problems of the Community?
The third question is, what are the industrial problems of the community. As has been intimated there probably is no industrial problem absolutely separate from all the other prob-
WHAT IS AN INDUSTRIAL SURVEY? 67
lems of the community, but there certainly are questions which arise, the bearing of which is mainly industrial.
For example, I have before me specimens of analyses of the industrial and commercial resources of the communities pre- pared for four different types of purpose: (1) An analysis of a specific industry for the purpose of determining the facts con- cerning a restricted number of features of that one industry; (2) A special survey of a certain portion of the resources of a community for a specific purpose ; ( 3 ) A general survey of the community for the purpose of bringing out a specially selected group of facts; (4) A general inventory for general reference.
The fii*st of these — an analysis of a specific industry for the purpose of determining the facts concerning a restricted num- ber of features of that one industry — is the simplest and easi- est sort of survey to conduct. The ends aimed at are specific and the material to be collected is not so diffuse that it cannot be readily handled, For example, in the city of Rochester, a few years ago, a state committee met for the purpose of investi- gating conditions in the factories in Rochester. The testimony taken at this time was made the basis of sensational new^spaper articles concerning the length of hours and some features of organization in the clothing factories of Rochester. The cham- ber of commerce undertook to ascertain the actual facts of the case. A committee was appointed for the purpose, and the committee worked with diligence and with absolutely even handed justice, and made a presentation of the situation which corrected man}- of the misrepresentations in the newspaper article, and for the first time made available the real facts of the case.
Such a survey as this confined to a single industry, and covering a concrete group of problems necessarily is much more satisfactory and tangible in its results than a general survey can be, but, of course, the number of surveys of this sort would have to be multiplied almost indefinitely before they would be of great value in any general examination of the industrial con- ditions of the community.
The second type of survey — a special survey of a certain portion of the resources of a community for a specific purpose — is comparatively simple also, but it is very difficult to con- duct such a survey and keep it on a thoroughly practical and scientific basis. An example of a sui*vey of this kind w^ould be
68 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
the examination of the resources of a city for the purpose of determining in a general way its adaptability to, say, an ex- pansion of the steel rolling industry there. The general facts of course may be ascertained Avithout difficulty, but when it comes to the real concrete factors in the situation one is con- fronted with the difficulty of presenting the real inside infor- mation, such as would be necessary from the standpoint of the manufacturer's costs of operation. If, for instance, there should be one or two successful steel mills in the city, none of them would be willing to give up its inside figures for the encourage- ment of the location of new industries. If, on the other hand, there were no steel mills there, almost any figures would neces- sarily be conjectural.
The third type of general survey for the purpose of bring- ing out a specially selected group of facts is extremely useful as an adjunct to social service or to civic investigations. A good example of this Avas a survey made a few years ago in the city of Cleveland which brought out certain facts about the in- dustries of the city which liad not been available before. Notable among these was a collection of facts about gaps in the indus- trial activities of the city. It was found, for example, that in some instances the finished product of certain Cleveland estab- lishments was the raw material for factories located elsewhere, and that there were no factories of the second type in the city. On the other hand, it was frequently found that Cleveland in- dustries were going elsewhere for semi-manufactured materials which apparently could be produced quite satisfactorily in Cleveland.
The following quotation from the report of the committee conducting this survey — which, by the way, was not called a survey but merely a report on progress in industrial develop- ment— will indicate something of Avhat the survey revealed :
Radiators :
Thousands are used in Cleveland and its immediate vicinity annually, none are made here, and foundry iron goes to consumers here cheaper than at the points where radiators are made.
Woolen fahric and xrool yarn:
Cleveland is one of the greatest centers for the production of women's clothing and knit goods ; ahout $8,000,000 worth of woolen fabrics is used by Cleveland manufacturers annually, of which only a small portion, in a few grades, is woven here ; and no yarn is produced here.
Machine tools :
Some are made in Cleveland, but many of the tools most generally used
WHAT IS AN INDUSTRIAL SURVEY? 69
in our scores of machine shops must be bought directly or indirectly from outside producers. Automobiles :
Cleveland is one of the largest makers of automobile parts, but exiwrts a large proportion of them to Michigan, where they are assembled into the cheaper machines, turned out in large quantities, with acres of fac- tories and thousands of mechanics. We produce high-grade cars, but why not also the cheaper cars in larger volume, thereby siwelling our own industrial prosperity?
This ^survey became the starting point for a long series of more detailed investigations by the chamber and led eventual- ly to the formation of the Industrial Development Company which has for its object assisting in the financing of new en- terprises and the undertaking of what is referred to as a thor- ough, exhaustive survey of Cleveland and adjacent territory to secure complete analysis of every industry including full data as to its sources of materials and its products.
The type of survey which thus fits into the existing studies of conditions in the city, but undertakes to view them primarily from the industrial point of view is in many respects the most useful and suggestive type of all.
The fourth class of survey which has been referred to as an inventory of general reference has already been discussed as a convenient means to the end of working out the industrial problems of a community. There are certain secretaries whose grasp of the details of their own community is more useful for practical purposes than any survey could be, but at the same time there is very grave danger in the secretary's assumption of familiarity with facts concerning which his real knowledge is extremely limited and vague.
From what has been said it may be gathered that I have some doubts about the value of a separate industrial survey to be conducted by a commercial body duplicating the work of civic or social surveys already in existence. On the other hand, I am convinced that it is unfortunate for secretaries as a whole to have at hand for general use no more really specific and re- liable information about their city than is commonly available. In every community there certainly ought to be somewhere, either at the chamber of commerce or in some other place, a collection and a carefully prepared index of such written or other material as is available in the way of reliable facts about the industrial and commercial equipment of the city. More- over, even small organizations might well turn their attention
70 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
to the preservation and maintenance of what might be called a current catalogue of some of the more obvious industrial and commercial factors. For example, maps of the city showing at a glance insurance districts, tax rates, passenger transporta- tion facilities, available industrial locations and similar facts ought to be a part of the equipment of each commercial organi- zation office. The following list of some of the concrete types of material collected for a surve^^ conducted in Minneapolis contains some suggestions which ought to be of value to any secretary, and which are much more useful for i^ractical pur- poses than a great deal more detailed material hid away in a file:
Compilatioii of lists and maps of available factory sites both improved and unimproved, together with full description of the same with regard to size. location, character of buildings, proximity to labor supply and transportation facilities, insurance rates on stock and machinery, etc.
Preparation of more than one hundred maps, charts and tables showing various phases of industrial development.
Analysis of industries to show which are declining, which are stationary and which are advancing, together with the reasons therefore.
Preparation of maps showing localization of various classes of industries.
Preparation of maps and charts showing principal distributing centers for local industries.
Analysis of trade tendencies in local territory to discover changes in industrial relations by which local establishments may profit.
Back of these the amount of detail would depend on the resources of the organization, but material of this kind ac- curate enough for most cases can be obtained Avithout great cost, and in most instances, the collection of the really inti- mate and detailed material can better be done by individuals than by any organization undertaking to have a universal knowledge on hand for everybody.
Factors In Securing Factories
By J. F. CARTER
The main factors of factory efficiency are labor, transpor- tation, materials, investment, markets and location. While some of these are primary essentials, others are only apparently so.
Let us examine location as a factor. For instance, the furniture factories are located in and around Grand Rapids, while the mahogany and Circassian walnut are imported through New Orleans and New York, and the red gum and
FACTORS I^^ SECURING FACTORIES. 71
oak grow natively in the extreme south. Raw materials must travel far out of the way to be manufactured in Grand Rapids and shipped to the center of population. There is here an evi- dence that the economy of location is not decisive. Hence, it would seem that there is some other factor which has a bearins:.
Detroit is an automobile center; New Orleans is a burlap bag center; eastern Massachusetts is a shoe center, and Grand Rapids is a furniture center. A few years ago some men start- ed a shoe factory in St. Louis, and another was started as soon as the tirst one showed signs of success. Today St. Louis rivals l>oston, and men have no fear of making shoes in St. Louis. It has been but a few years since some brave fellows in a little town in North Carolina invested their local money in a furni- ture plant — today High Point is the furniture center of the southeast.
Within two years there have been many "Made at Home" exhibits and expositions and campaigns held in the larger cities of this country. The newspaper comments and publicity and some of the letters of the commercial bodies in those cities cried aloud against the shame of their people buying goods outside of town when they were made in their own home city — at the lack of patriotism of the people of "our town'' in purchasing the goods made in a competitive city.
The Factor of Chief Importance
It Avould seem, really that after a study of the whole field, after a few years' review of the situation, first studying the ele- ments of economic location and comparing the conclusions with the actual location of factories, manufacturing of almost any article is successful in almost any part of the country.
The man is the real factor in successful manufacturing. It is the human element that counts, and which is left out of the calculations of commercial secretaries.
This does not argue that there is nothing to be gained from the study of economics of location, nor that we should not try to influence some of the furniture factories to leave Grand Rapids by proving that the combination of the five great ele- ments of economic location are more favorable to the furniture manufacturer at New^ Orleans than at Grand Rapids; nor that Kansas City should not try to lure the woolen mills of the east by showing them that the combination of the ^ye great elements favors Kansas City as against any of the New^ England loca-
72 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
tions. But, here it is clear, that when nothing is added to these economic arguments by the cities which are so economi- cally situated, factories are not seen moving to them in great numbers, while factories of various kinds are moving to those cities which are advertising themselves in a big way, and grant- ing concessions to plants.
Little attention need be paid to some items : For instance, as calculated against the total production of a factory, the average percentage paid out in power is slightly more than two- tenths of one percent ; pow er that includes cost of fuel, or cost of production of power of any kind, or cost of renting power of any kind. Taxes, even including the internal revenue charges, amount to less than two-tenths of one percent.
Here and there we find a factory which uses large amounts of power, and, in such cases, it might be well for the commer- cial secretary to find ways and means of reducing the cost of power, or of exhibiting to the prospective manufacturer what low cost is to be found in his particular city. But, as a general rule, it applies in far the greater number of cases, the cost of power and taxation has a very small bearing on the total busi- ness done. Many manufacturers may talk of taxation, but when the tax bill is paid it figures as a very small part of the total expense.
Going further through the census figures, we find that salaries amount to 5.1 percent of the value of the product turned out in the average factory, and that wages amount to 18.6 percent of the total.
Some Other Important Items
Then Ave approach the real crux of the situation — the ma- terials amount to 63.8 percent of the total manufactured prod- uct, and by "materials" the census bureau has specifically stated that it means the materials used in manufacture, plus the mill supplies used by the factory, plus the container of the product.
The "miscellaneous^- item forms 10.5 percent of the total value of manufactured products; this miscellaneous item in- cludes rent of offices and buildings, exclusive of factory, and in- cludes rent of machinery, royalties, use of patents, insurance, ordinary repairs of buildings and machinery, advertising, trav- eling expenses and all other sundr^^ expenses. This item also includes the taxes and revenue charges.
B^ACTORS IN SECURING FACTORIES. 73
Now, there comes the question of transportation of the manufactured goods to the market, and there are no figures given on the question. It would help us a great deal were we able to know this.
May I revert for a moment to the much-talked-of topics of taxation and fuel, and call your attention to the fact that the percentage paid out in salaries (without mention of wages) is more than twelve times as great as the items of taxation and fuel combined? Yet, commercial secretaries will use their efforts in arguing taxation and fuel items, when the manufac- turer himself can wipe out all the ground he gains by the mere payment of a little salary to someone who might be useless to the plant.
In discussing this item of fuel : Why is it that secretaries will discuss the price of coal per ton? Coal is not valued by the ton by a good manufacturer. What he is looking for is coal with heat units in it, and the chances are that he pays more when he buys a low-priced coal, than when he buys a high-priced coal, for in the latter case he is getting a coal with heat units which are available with the least destruction of his boilers or grate bars, or waste of time to bis firemen in dumping ashes. Coal is good or bad or indifferent. It should be analyzed, and each manufacturer should buy that coal which gives him minimum-priced horsepower. He should figure his coal by the horsepower hour, just as he buys his electricity from a public utilities corporation by the kilow^att hour.
The Influence of Market Problems The item of "market" is one of the important factors in locating a factory, or a branch plant. "Market" certainly is not composed of the population of the city or its state. "Mar- ket" is all that territory which can be reached in competition with any other center of manufacture of the same article. Com- merce is the movement of things from the place where they are abundant to the place where they are not. "Market," viewed from the standpoint of an industrial location, is all that terri- tory to which the manufacturer can go on an equality with his competitor. "Market," to the largest extent, is bounded by the line of demarkation of comparative freight or express rates, the comparison being between the proposed location and some competitor or several competitors. That is, "market" for agri- cultural implements for a proposed factory at Houston, is pri-
74 EFFICIENCY AND CHARACTERISTIC AC^TIVITIES.
marily that territory into which the Kansas City and Moline manufacturers of implements can not go as against freight rates applying out of Houston. In brief, any argument offered hj the industrial secretary as to markets, must be based very largely upon freight rates applying on the particular com- modity.
However, if it can be shown that the combination of cost items are lower at Houston than at Kansas City or Moline, the territory broadens slightly and goes beyond the freight rate line of demarkation. This is drawing a very fine line on the work of the industrial secretary, and Ave find very few of them who come to a discussion of cost items with any degree of defi- niteness or accuracy.
In thus attempting to define "market," I have assumed that the factor}' shall make a piece of goods in which there is compe- tition, such as cigars, candy, caskets, paint, gas engines, etc. There are some commodities, of course, which have little com- petition and which travel far beyond any territory bounded by freight rate lines.
One point I wish to drive hard upon is this: that "mar- ket" is not present merely because a certain commodity is not made in a city. For instance, there is no paper factory at El Paso — and this can never be taken as an argument that the "market" at El Paso forms a reason for the location of a paper plant.
The Matter of Money Outlay
One of the major elements in economic location is known as investment or "Money Outlay." It is my impression that just here lies one of the chief factors in securing factories. I am opposed to the bonus, unalterably opposed to it. "Money outlay" includes the cost of the site, the improvement of that site and its approach, the cost of building materials, the bank credit facilities, the licenses, corporation laws and costs, ease of obtaining additional subscriptions to stock, ease of selling bonds or other securities, and like items. And, of these, the factor which arises often is a combination of cost of site, credit facilities and stock subscription. It is not the big manu- facturer with plenty of capital who is seen before our commit- tees in an effort to locate — ^it is, rather, the small man who has worked himself up from a degree above zero and who is in search of help after proving to himself that he is deserving of it. He
FACTORS IN SECURING FACTORIES. 75
wishes to have more money behind him, wishes to be given a strong push along the highway which he has been following, and he seeks that place where the i^eople are willing to give him the necessary aid. We speak now, of course, of the legiti- mate, honest manufacturer.
This does not rise out of an attempt on the part of run-down plants, or poorly-operated plants, or poorly-managed plants to get enough money from someone to head off its creditors for a period. There comes a demand for local investment from some of the very best managed plants — plants which are perfectly solvent and which have, for quite a time, been paying good divi- dends.
It is a \ers^ easy matter, however, to be tricked, and it is also a ver}^ easy matter for a commercial secretary to criticize others for not putting in their money to help the city gain new enterprises. The average man seeking factories for his city has probably not lost a large proportion of his own money by ven- turing in other people's enterprises, else he would not be so prone to find fault with his own townspeople for being slow in making investments in divers plants Avhicli he may have inter- ested in locating.
There are several ways of raising money for the prospec- tive incoming factor^'. One is by direct solicitation of stock subscriptions among the townspeople or members of the com- mercial organization for each separate plant; another is by the raising of a fund which shall be used in making such in- vestments; a third is by the adoption of a guarantee plan for backing the credit of the manufacturer ; and another is the sub- division plan. It may well eliminate that plan which demands that the secretary go about tlie city in an effort to interest a dozen individuals in an enterprise — getting one located in that vi^ay, and then proceeding on the same line for the second. This is a very weak plan, just as is that one by which a meet- ing of citizens is called and voluntary subscriptions to stock are asked. It works once or tAvice and then fails. The sub- scriptions are made on a basis of patriotism and not on a basis of investment.
The Attitude of the Banks.
The guarantee plan, by Avhich the manufacturer borrows money at a bank and has a special list of subscribers standing back of his note, does not appear to be a good one. Cities that
76 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
have tried it will not employ the guaranty plan again. Boston is a very fine evidence of this. Boston is willing to state that the guaranty plan was a failure in that city. It does not af- ford an opportunity for anyone but the manufacturer and the banker to profit. The bank makes its interest on the loan and is secured by having prominent men of the community endorse the paper ; the manufacturer is given the chance to make money manufacturing or to experiment on other people's money, him- self having whatever chances there are to win, while, if he loses, the citizens of the community are given the bag to hold.
A Fund for Industrial Development Then there is the fund of cash for the purpose of investing in securities of a factory. A fund of $400,000 is raised by popu- lar subscription, and a call for the payment of ten percent in cash is made. The ten percent is placed in bank. We now have a factor}" approach us. It looks good; we investigate; it still looks good, and we have the committee make an investigation ; it continues to look good, and the investment is made. The money is either borrowed from the bank, putting up the cash payment as collateral by promising to leave it on deposit, or the cash fund itself is used and a second call for ten percent is made for use in the next factory. So on we proceed until the entire fund is exhausted. What is the result? Some of those plants will fail, others succeed, and a third group will hold their own, shoAving neither progress nor retrogression. The invest- ments, as investments, will go the way of that sort — the divi- dends from the paying plants will not take care of the losses of those which fail to pay. Of course, it must be understood that we are discussing this entirely from the standpoint of in- vestment— forgetting the good which the plants do for the city by their employment of labor.
The Industrial Sub-division There have been several industrial subdivisions in towns and cities of this country, some operated as private enterprises and others operated by commercial bodies without profit. Such industrial subdivisions as a rule have been successful. The reason is that investment is obtained for a group of plants without asking the townspeople to invest directly in the stock of the factory and thus have a reasonable chance of losing; that the townspeople invest in a piece of land, by the growth
FACTORS IN SECURING FACTORIES. 77
of the town in a natural manner and by the forced growth of the particular section by the location of factories, they have a much better, almost certain, chance to realize their investment, with the additional chance of profit on the land adjacent to the factories.
It becomes necessary, of course, for the industrial secre- tary to Avork out a plan of industrial subdivision which will contain the greatest numl>er of advantages for the various fac- tories, such as street car transportation for labor, several spur tracks from different railroads, the installation of water, gas, electricity, telephone service and sewerage. An active indus- trial secret aiy could build a model industrial center if he so desired, thus giving advertising to his city which is of consider- able value beyond the mere location of the plants.
Since the investment of money or the granting of conces- sions has brought about such plans as the guaranty, the ex- emption from taxation, free sites, and investment companies, all of Avhich have had serious disadvantages and drawbacks, the industrial subdivision, operated without profits to any pri- vate person, is the method which will get the greatest support from townspeople and Avhich will solve the question of invest- ment and granting of concessions to plants.
The industrial secretary should have his own survey in liand, and should know more especially the class of factories which would have the least chance at success and those which would have the best. Among the leading factors in securing factories advertising is first, and the second factor is the ease of obtaining help for the honest manufacturer who is solvent and can show that he wdll succeed with more capital behind him.
The five great elements of economic location are primarily those which a manufacturer should study closely before trying to change, but the two mentioned are those which an industrial secretary should study before he will be successful in locating plants. To some cities factories have a tendency to drift — to others they must be attracted.
Industrial Survey of the City
What it Involves, and the Results to be Expected By EMMETT HAY NAYLOR
The preparation of the municipality for industries involves making a complete industrial survey. This should be done by classifying all the present industries of the cit}^ as to their products, volume of business and financial standing. All freight rates, shipping charges (by water or rail), should be analyzed. The housing conditions of the employees should be investigated. When all these facts are gathered together, then a careful study should be made of the situation with the knowl- edge at hand. If there is any industry already in the city Avhich needs financial aid or proper management or other need- ful direction, it should be assisted. By all means, the in- dustries already located in the city should be assisted first, before any new ones are sought. If the freight rates are not satisfactory, they should be adjusted. If the housing condi- tions and home advantages are not desirable, they should like- wise be rectified. In this analysis should be determined the weak spots in the industrial life, and they should be strength- ened.
Then the question will arise, ^'What does the city want as regards new industries?'' It is never safe for any city to have one product. The industries of the municipality should be di- versified so that in time of depression of one article, the others will maintain an equality of business activity.
Another question that should arise is: "What industries is the city most fitted to take care of as regards the locality of the city?'- A city should guarantee high profits to the manu- facturer by natural advantages — a net profit greater than would be possible in any other city for this particular product.
Also, in considering the industrial situation, and in bring- ing new industries to the city, labor conditions and the possi- bilities of strikes should be in every instance regarded.
When we consider that the average gain from year to year in urban population for the United States was 35 per cent and that the average gain in manufacturing for the United States was 81 per cent, it is plainly manifest that the factories supply prosperity to the cities. In the New England district, we find the payroll and net factory cash spent through the regular
78
INDUSTRIAL SURVEY OF THE CITY. 79
channels of stores, banks, realties, etc., amounts to about |1200 for every family, city and country, while in the South, West, Southeast and Soutlnvest, it reaches about |150 per family. If the same proportionate factory business be located in a city of 100,000, it would mean an increase of some |20,000,000 spent yearly in that city, or some $1000 more for every family.
Now, when the city has been placed in a position to invite new industries to it, and has no needful industries of its own, and it has been determined what class and kind of new indus- tries are desired, we go to our next step.
Solicitation of New Industries
The solicitation of new industries may be done in two ways : the indirect or receptive manner, and the direct or aggres- sive manner.
The indirect or receptive manner, is by advertising. Mu- nicipal advertising for industries does pay for the commercial organization that has unlimited funds to spend in such, but for a commercial organization to have only a small campaign of advertising, with little or no money to devote to it, is a loss. The advertising of the municipality for industrial purposes will bring in a great many replies w^hich will be chiefly chaff, but among them there may be one or two kernels of pure wheat. The commercial organization, hoAvever, always should have on hand all up-to-date information as regards wages of labor, freight rates by rail or Avater, power rates, light rates, rentals for workmen, cost of fuel, available raw materials, etc. Such literature as is sometimes foisted upon the public by munici- palities, showing delightful scenes and written in fine descrip- tive power, makes pleasant reading, but the average industry wants to know definite and vital facts. Fine illustrated book- lets showing the city as a good place to live in, and to do busi- ness in, are desirable, but facts and figures of a business nature are more essential. A card system should be established by the commercial organization by Avhich all available factory sites, buildings for rent, etc., should be kept up-to-date and on hand for immediate and ready replies. On this card should be the following information : Size of lot, location, size and character of building, space available, light, for heavy manufacturing, for light manufacturing, kind of business desired, elevators, power, railroad facilities, sale price, rental and the name of owner and agent.
80 EFEICIENCY AND CHARACTERISTIC ACTIVITIES.
The industry applying for information and assistance from the commercial organization should be told exactly the position of that commercial organization as regards new industries, so that there may be no misunderstandings and no waste move- ments in going after something which in the end will mean noth- ing. The assistance of the railroads sliould be sought in fur- nishing information to commercial organizations, as it is as much their business as anyone's to bring new industries into the city.
The direct or aggressive method, is to concentrate on the particular kind of industry that is desired for the city. It is bet- ter to go after one or two than to give a great broadside by a whirlwind advertising campaign and be indifferently effective. Through the press clipping bureaus and hj other means, a sec- retary can keep constantly in mind labor conditions in other municipalities, where fires, etc., have taken place, and if he sees there an industry which he thinks should be better located in his city, he can then go to them with a proposition at the time of their trouble, and they may consider a change. In this he has to be the diplomat, in becoming acquainted with the offi- cials of the company and suggesting to them the possibilities of a change. It is never wise to talk to an old and established in- dustry about moving their entire plant to another city. It is better to talk to them about establishing a branch plant in your city and then eventually you may get the entire industry. If, however, the secretary cannot make a personal visit, he can at least Avrite a letter which is full of personality and sincerity, but which contains convincing facts. If there is one "DON'T'' that I would suggest, it would be DON'T USE CIRCULARS. They are a waste and a quasi insult. If the industry is worth going after, it is worth at least spending two cents on in a per- sonal letter.
Investigation of New Industries
In the investigation of the ncAV industry, judgment and analytical work must be used. This is the part of the indus- trial committee of the commercial organization. The thing to beware of in the new industry is the bonus-hunting, the fly-by- night concern which wishes to come to your city, raise money, do manufacturing there for a while, and then move on to the next municipality. The woods are full of tramp industries the same as they are full of tramp individuals looking for a hand-
INDUSTRIAL SURVEY OF THE CITY. 81
out. And if they come to your city and locate and then fail, they leave industrial scars which are hard to eradicate. No city is desirous of the reputation of being the '^home of industrial failures."
And yet, one must not be too independent as regards the consideration of new industries. All merit some thought. For instance, a man once came to a city in New England with a new kind of biscuit. He invited some of the so-called progressive citizens to his room in the hotel and there demonstrated to them his proposition. He squeezed some dough through a sieve, made it into a cake, baked it in a charcoal oven, and then served it to them mth sugar and cream. In a self-complacent manner they informed him that it might be all right for invalids, but that the average person would not eat that baled hay. He was a man without money, but he had a good product. Somebody with a vision saw it, and he is now manufacturing shredded w^heat biscuit at Niagara Falls, and you all know the result.
In the city of Spring-field, Massachusetts, a w^orld cham- pion bicycle rider, suggested the possibility of having bicycles run by motor, and was called a day dreamer. But at last he interested some parties, and now he has one of the largest in- dustries in the country. These two examples show that no matter what the man's idea is, there doubtless may be some practical, saleable value in it, for you never can tell what the public will buy. And yet, on the other hand, you have to w^atch out for the visionary patentholder, who has an article which never could sell, but who comes to you and wants to organize a company and himself with no business ability at all, to be- come manager of it. I would suggest that the average new in- dustry be tested by the following questions :
1. Is the article which they manufacture useful? Is there a demand for it?
2. Has the company proper and efficient officers?
3. Is the company capitalized sufficiently to carry on the business in a satisfactory manner?
4. Has it a clear and definite business policy?
5. Does it strive for a high perfection in manufactured product?
6. Is its business and manufacturini? or.2:anization satisfactory, and has it a complete system of accounting?
These facts should all be procured, and, furthermore, a complete report from Brad street and Dun should be had as to the business and as to the integrity of the officers. The com- pany should also be asked to place in the hands of the commit-
82 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
tee a certified auditor's report of its accounts and a certified appraiser's report of its machinery and other material assets.
The question should also be carefully considered as to ex- actly Avhy this industry wants to come to your city. Of course, if 3 ou are soliciting the industry, the question does not arise, but if the industry comes to you, there must be some reason for it, and there's many a chance for an ulterior purpose to creep in here. If the industry is established in the city, all of these reports and facts should be kept carefully on hand by the secretary for reference and the progress of the industry for two or three years recorded.
With the approval of the new industry, we come to our fourth and last step, the
Location of New Industries
In the first place, no commercial organization can consist- ently consider itself a stock promoting organization. It may be able to promote nine industries and have them successful, but the tenth industry might fail and thus spell dissatisfaction and ultimate disorganization to the commercial body. All that the commercial organization can do in this regard is to endorse an industry highly, and say to its members — "We have investi- gated this industry and have found it to be desirable for the city.'' But, there are four definite business methods by which a commerce body may locate new industries, and they are by forming independent companies working under the advisement of the board of directors of the commercial organization. These four methods are :
1. The Industrial Holding Company Plan.
2. The Industrial Loan Plan.
3. The Real Estate Development Plan.
4. The Nursen^ Plan.
The Industrial Holding Company Plan is brought about by organizing a holding company of certain citizens of the commu- nity who will use the resources of the company for the purpose of stimulating old and new industries in the community. The company does not give bonuses, but properly invests its re- sources. The company is organized and incorporated for the benefit of its stock holders and for the promotion of the pros- perity of the community. All the stock is subscribed by the citizens of the municipality. The capital of this company should
INDUSTRIAL SUKVEY OF THE CITY. 83
be large enough to permit the compan}^ to do comprehensive work. Under the genei*al corporation laws, when one-half of the stock is subscribed the company may do business. The company can be formed in the city by either a general canvass, by a mass meeting, or in any manner that seems best suited to the temperament of the citizens.
Now, when some new industry has been investigated and found desirable, it is brought to the city, and it is necessary, let us say, to have ?50,000 additional capital. The directors of the industrial holding company are thoroughly satisfied that the new industry is a good investment; they call upon all the stockholders pro rata to buy stock to the aggregate sum of $50,000 and with the understanding that the industrial hold- ing company shall have representation on the governing board of the new industry. In this manner, |50,000 is invested, not given, to the new industry. The dividends on the $50,000 are paid to the treasurer of the industrial holding company and are pro rated to the individual stockholders of the industrial holding company after paying any incidental expenses for the operation of the said industrial holding company. In organ- izing the company and in securing stock, it is well to bear in mind that no subscription shall be called for until the new industry is endorsed by the directors of the industrial holding compam^ ; that not more than a certain percentage of the capi- tal stock shall be called for within a certain period of time; and that no subscription shall be in force until at least one- half of the capital stock of the industrial holding company has been subscribed. The industrial holding company should be empowered to purchase bonds from any incoming industry, which it endorses, or to furnish funds on long time loans, to purchase securities, and to do everything necessary to the loca- tion, establishment, maintenance and operation of the indus- trial enterprise. The industrial holding company can, if it wishes, organize its own industries and operate them with its own capital. The secretary of the commercial organization should be secretary of the industrial holding company.
The industrial loan plan simply involves a credit or en- dorsement of loans for industries which are in need of addi- tional funds for the larger development of their business. This is done by calling a mass meeting of the citizens or a commit- tee meeting, as you will, and organizing a loan company. The
84 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
affairs of the company are in the hands of three or more trus- tees whose duty it is to carefully investigate the matter, ascer- tain the amount of loan desired, what security is offered, and the general merit of the proposition. If the trustees approve, they will go to the bank in which the loan is to be placed, make out the notes or mortgages, have the proper officials represent- ing the industry endorse the notes or sign the mortgages and then sign the papers themselves as attorneys-in-fact for the signers of the guarantee fund. The banks notify the trustees, at the same time they notify the officials of the industry when payments on notes or mortgages are due. In case of loss, the banks notify the trustees, who in turn, call upon and collect from each subscriber his share of the loss. The applicants are often found among people outside of banking credit, but as the risk is high, the loans are generally kept small.
The next plan is the real estate development plan. It pro- vides that a group of citizens may get together and open up a certain tract of land for development purposes, offering special inducements to industries recommended by the industrial com- mittee of the board of trade or chamber of commerce to locate there. The plan secures an industrial fund for the city without calling for outright subscriptions, but by giving real value for any moneys secured. There is danger, however, under this plan that the real estate developers, in their desire to make money, will let any industry come into the city, and, therefore, it should be understood that no industry will be allowed on the tract which lias not been thoroughly investigated and approved by the industrial committee of the commercial organization. The advantages of this plan are that it gives the municipality an industrial fund in real property. It segregates the factory district of the city; it stimulates the municipality to develop along proper city planning lines as regards factories, and it offers great possibilities as regards satisfactory housing condi- tions and pleasant, healthful environment.
The last plan is the nursery plan. There are many indus- tries which are too small to occupy large plants, but which will eventually grow. These industries should all be housed in one building known as the Industrial Building, and there allowed to incubate. The building, of course, should be constructed with good railroad facilities, proper lights, air, and modern manu- facturing requirements and conveniences. A great many cities
INDUSTRIAL SURVEY OF THE CITY. 8.">
have already constructed such buildings and find no difficulty at all in renting space to small industries which are investi- gated and found to have possibilities of future growth.
* » * *
To summarize briefly then. The municipality must be properly prepared by a survey, so as to have all conditions satis- factory for procuring new industries. New industries must be solicited by either the indirect method — through advertising — or by the direct method — personal and individual solicitation. All industries should be carefully investigated by the industrial committee, and if recommended, turned over to the industrial holding company. They caii then be properly financed and located, but if there is no industrial holding company, they can be provided for by the industrial loan plan, the real estate de- velopment plan, or the nursery plan.
There is every reason to believe, however, that the indus- trial holding company plan is the solution, since it is possible for the company to lend credit to incoming industries by finan- cing its loans in the company's own funds either through the purchase of industrial bonds or making loans outright.
The industrial holding company plan is better than the loan company plan because its subscribers invest and secure dividends, whereas in the loan company plan, merely low in- terest is obtained. The risk is equal in both plans. An indus- trial holding company can also handle the real estate develop- ment plan, can construct a building for infant industries and can do all when once a new industry is found desirable for the municipality.
The great purpose, or purposes, of the commercial organiza- tion is to build up the industries of the city by the most economi- cal, efficacious and business-like methods possible. And every city, citizen and member will praise and support that organiza- tion which has this one of several purposes and accomplishes definite results.
Some may say that the commercial organizations should build up their cities and let the industries come of themselves, but I sincerely feel that definite action should take place in procuring new industries and that when all is said and done, the commercial organization exists, first and foremost, for the building up and increasing of the industrial life of the city.
CHAPTER IV.
Agricultural Activities
Commercial Organizations and the Farming Element By H. V. EVA
The functions of a commercial organization may be stated in general as the promotion of the commercial, industrial and civic welfare of the community it is organized to serve.
The question is, how far should agricultural development enter into carrying out these functions? There can be but one answer : First, all things come from the ground. There have been no skeptics in the history of the world on the truism that man must eat to live. A community also must eat to live, and the community's food supply has an important bearing on develop- ment.
The more immediate question today is hoAV far should the commercial organization enter into this work? Let me give you two different viewpoints. One is expressed by the secretary of one of the most efficient organizations in the country: "It would indeed sound strange if we were to tell you that as an organization we do not devote any time to the subject of agri- cultural development, because^ all of our prosperity comes from the ground ; but as a matter of fact we do not have a committee on agriculture, and we have never felt the necessity of taking an active interest in this subject. This perhaps needs an ex- planation." The explanation is that he thinks the agricultural college in his state is very satisfactorily doing the work of im- proving agricultural conditions.
Another executive states that his organization was not organized for agricultural development. It was organized for the purpose of advertising the city, securing new indu*^tries, conventions and advancing the interests of the city generally so far as possible. However, in the conduct of a campaign it learned the truth that a prosperous and progressive city must be backed up by a prosperous and progressive farming region. The result was enthusiastic and effective work in the field of agricultural development.
COMMERCIAL ORGANIZATIONS AND THE FARMINC; ELEMENT. 87
In this day of cooperation and interdependence no man, no bnsiness, no community may stand alone. We must look about us, confer with and work with our neighbors that we may solve the problems that touch us all. Therein lies the foundation for commercial organization work and every movement in which men work together.
The problems of the farmer and the city business men are intimately related. The problems of the city and the county surrounding it have a similar relation. The commercial organi- zation that endeavors to confine itself to the problems that can be seen from its office windows is, in my judgment, making a serious mistake.
Among the factors entering into industrial development is the cost of living. In the family of the wage earner food takes a greater percentage of the family income than it does in the family of the average salaried man or business man. Food costs have a greater bearing on the wages of mechanics than on the salary of tlie executive. Accordingly, the man with capi- tal to invest considers the food supply and its effect on wage when considering a location for his factory.
Every city that pretends to be a distributing center must have a market. A city is large and important in proportion to the size and importance of its distribution area. Within the distribution area of a large city will be found smaller cities of various grades of size and importance, each with its own distribution area — circles within a circle. Obviously, the pros- perity of the people and the towns within its distribution area is of vital importance to every city. If its own food supply is not involved — if there is plenty of production to supply it with- out expensive transportation, it still may turn its attention to production for other markets, and the serving of those markets so as to bring the greatest prosperity to the producers.
How should the commercial organization show its interest? I am going to quote here the experience and accomplishments of one organization. In this particular cit}^ some twelve years ago a commercial club was organized. At that time everyone believed that the city was surrounded by barren waste. Through the whole upper part of the state the lumberman had cut his swath, leaving millions of acres of pine stumps, trees he scorned, tangled brush and branches. Underneath was a soil rich in agricultural resources, but few^ would believe it.
88 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
For several years the commercial club talked agriculture. It called upon the world to take notice of the rich surroundings and obtained no response. Then they started out to prove their statements. They engaged a practical, scientific farmer and made him agricultural superintendent. He got out among the few farmers. He made displays at county fairs and land shows. He conducted experiments. He interested the state college of agriculture and the county. It gradually climbed in the esti- mation of those who had been skeptics. Today its position is assured. They did not stop when they had proved their state- ments, but went to the state legislature and obtained an appro- priation for a state demonstration school. They went to the legislature again and obtained the passage of a bill empower- ing counties to make appropriations for county agents, and ap- propriating an amount from which the state would make similar appropriations when the counties had qualified. The result is that this state now has 35 county agents in the field.
A commercial organization should most emphatically take an interest in agricultural development in the country around it. The degree of activity should be based upon local condi- tions. Study your county. If the actual work of instruction is being done by the state agricultural college or some other agency, get into touch with it and see if there is not something you can do to help. Your ability to deal with problems of road building, the straightening out of marketing tangles and the extension of farm credits is far ahead of the ability of any mere educational agency. Whether your problem is one of settle- ment, increased production, conservation or marketing, you need a scientific agriculturist to work among the farmers.
Agriculture and Commercial Organizations
*(EXTRACTS FROM A COMMITTEE REPORT)
It is a plain and self-evident fact that there are very few
commercial organizations so situated that they cannot do great
good for their cities and communities by an effort to help solve
some of the many problems of the producers of farm products.
There are few states where the yearly value of farm products is
not greater than that of all its manufactured products, and
♦Committee: — W. E. Holmes, Chairman; Bruce Kennedy, H. V. Eva, L. B. Dunham, Carl J. Baer.
AGRICULTURE AND COMMERCIAL ORGANIZATIONS. 89
when one considers that agriculture is only beginning to be rec- ognized as a science, the modern farmer, both as a scientist and business man, it is easy to see that the great majority of com- mercial organizations can deal with no more vital subjects than those presented to the individual, or organization, who will study the needs of the contiguous rural communities.
Doubtless every commercial secretary in the country ap- preciates, at least to some extent, the wonderful work that has been and is being done by the United States Department of Agriculture and by the agricultural colleges of the various states; but the most casual investigation A\dll show that in a great majority of the communities where practical work is be- ing done along the line of educating the rank and file of farm- ers to the latest and most scientific ideas the initiative has been taken by the business men of the towns, only a compara- tively few of whom are land owners.
Especially to those of us who have spent some years on the farm the reason is obvious; but the fact remains that the average farmer resents the insinuation that the "town man'^ can tell him anything about farming, forgetting that the busi- ness world is filled with thousands of "farmer boys" who have had an opportunity to study and to observe the application of modern ideas, men who can see w^here their fathers failed, through lack of instruction, to practice methods that are today revolutionizing agriculture and adding immeasurably to the wealth of the country.
Movement for Diversified Farming
A movement in the South that is of significance, is the campaigns of education for diversified farming supported and fostered by commercial organizations.
For a great many years, the agricultural energies of this section have been devoted to growing cotton almost exclusive- ly. As a result of the one-crop system, the soils have deterio- rated and it has become the custom to buy practically all food- stuffs from other states. It is said that in Alabama, during the year 1914, the people sent money to other states for foodstuffs ?6,000,000 more than the total value of the state's cotton crop. This money purchased corn, oats, wheat, hay, potatoes, and other foods, despite the fact that it has been demonstrated that
90 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
these crops can be grown abundantly in Alabama and the other states of the South.
The necessity' for growing more foodstuffs was forced upon the minds of the farmers by the sharp drop in the price of cot- ton/folloAving the outbreak of the war in Europe. The market fell from around fourteen cents to six cents and farmers, who had planned to buy foodstuffs from the West wdth cotton at fourteen cents, had to suffer the consequences of their own folly. They could not pay their debts and had no money to buy corn, hay and potatoes, which they should have grown.
It is no light task to undertake changes in lifetime customs of a people, but this work was shouldered by several commer- cial organizations of the South and reports indicate surprising- results already. Whirlwind campaigns were made in Texas, Arkansas and Alabama. Scores of speakers, men of expert knowledge, were sent throughout these states. Their work Avas given enthusiastic support by the newspapers and business men and was followed by carefully prepared pamphlets and book- lets treating of grain growing, cattle, hogs, sheep and chickens. In mam^ counties permanent organizations were perfected.
Another result of this campaign of education is shown in the fact that packing houses, flour mills, and grain elevators are being established at hundreds of commercial centers in the South. All over the South farmers are organizing for coopera- tion in growing and marketing grain, livestock and vegetables. Commercial organizations have blazed the way for these new conditions.
A distinct service has been performed by chambers of com- merce in the way of developing and improving rural life and in cultivating closer relations between the city man and his country neighbor. Rural communities have been organized for social development, excursions have been made into the country by business men, farmers have been invited to join commercial bodies, and rest rooms and market exchanges have been pro- vided at commercial centers.
But the people of the east and the middle and central west where land values are high, are also Avaking up to a realization that the farmers must change their methods. A prominent official of the United States Department of Agriculture recent- ly said to a member of your committee :
"If the present high land values in many sections of the
i AGRICULTURE AND COMMERCIAL ORGAXIZATIONS. 91
country are to be maintained it will be only by the introduction of improved methods of agriculture, and the tirst lesson to learn is to make the farm fully support the family, after which the farmer can begin to figure on profits. It is almost a crime for any farmer to buy his ham and bacon, or potatoes and butter in town, but thousands of them are doing it."
There certain!}- is food fOr reflection in the statement of Bert Ball, secretary of Crop Improvement Committee, Chicago, that in no community Avhere an agricultural adviser is at work was the initiative taken by the farmers ; it always has and prol>- ably always will remain with such organizations as we have the honor to represent to lead in the campaign of education which must precede the employment of such experts.
The Farm a Factory
There are so many pliases and angles to the subject under discussion that one hardly knows which is the most important and interesting; but if one were to attempt to sum up briefly the statement contained in the many replies received to the questionaire sent by your committee to two hundred secre- taries, in all parts of the country, it w ould probably be in these words : "The coi^imercial organization w^hich does not concern itself with local agricultural problems and conditions is asleep at the swdtch."
"AYe consider every farm in our trade territory as a fac- tory, producing materials absolutely indispensable to the life of the human race," says one secretary. "It is a singularly fortunate fact that the farmer produces no ^finished products,' in other Avords, that with the exception of vegetables and fruits (which the average farmer does not produce to sell) and of eggs and hay, practically everything grown on the farm — corn, wheat, rye, barley, cotton, cane, hogs, cattle and sheep — must come to the city as *raw materials,' to be prepared for consump- tion, these various processes furnishing employment to an in- finitely larger army of laborers than was required to produce the raw materials."
A bulletin recently issued by one of the great harvester
manufacturing companies says:
The opportunity of the town lies in the country. The country can get along without the town, but no town ever has been or ever will be perma- nently prosperous where the land is poor. The town is built on farm prof- its; on what farmers produce in excess of their home needs. Towns are the
92 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
natural evolution and outgrowth of necessity — places to store and distribute the world's surplus products through the channels of commerce. There is' but one road to permanent city building — that road leads to the farm. Business is so sympathetic, so sensitive to crop production, that the forecast of a poor wheat or corn crop affects the markets of the world. When the harvest fields smile, to\\Tis wax fat, and factories increase the pay roll. Corn, wheat, and hay, beef, pork and poultry — these are the soil builders, the home builders, the builders of great cities.
The old fashioned chamber of commerce, with its cash bonuses and free factory sites, is rapidly passing away. Instead of grabbing business from each other, towms are beginning to look to the country, out into the fields of growing corn and wheat and hay. Here lies the opportunity — for the great city, strange as it may -seem, is out in the country, hidden in the fertility of the soil. A successful hay campaign will bring factories to the town. Hay means beef and pork, which beckon the packing house and storage plant. More corn means cereal mills, glucose factories, starch factories. Flour mills locate in wheat-producing sections. Creameries follow the dairy cow, and the truck patch calls for the canning factory.
Let us have more chambers of agriculture and commerce and fewer "com- mercial clubs." Let us create wealth from the opportunities at home, and not subtract it from other communities
"No country can be richer than its lands,'' saj^s another secretary, who adds : "From the soil comes our food and cloth- ing; all other human needs are subordinate to these. Food is the chief material of life — its production is the most important occupation. In the hard school of experience we are slowly learning the lesson of real business economy — the greatest les- son of all time — that of feeding ourselves. Should commercial organizations interest themselves in these problems? !» should sav thev should.''
The Commercial Organizations' Relations With the "Back Country"
By HON. D. F. HOUSTON
It was my fortune not many months ago to have an op- portunity to speak to the chamber of commerce of one of our thriving cities. I had made some study of its problems and progress. I had certain views as to its relatioris to the sur- rounding country and the direction of progress. Before speak- ing, I asked if some one Avould not tell me what made the city, and the answer came — "the back country" — and this I knew to be true. I then innocently observed that, of course, as prudent business men, they had taken steps to inform them-
COMMERCIAL ORGANIZATIONS AND "BACK COUNTRY." 93
selves of the needs and problems of the back country, of the best ways to foster a balanced agriculture and to promote its well-being; that their bankers had intelligent views as to the credits which should be extended and for what ; that they had taken pains to see that good roads radiated into tlie country districts; and, that they had assisted the fanners in solving their difficult problems of marketing and distribution. I then asked if they would tell me what had been done; and a deep and significant silence pervaded the room. This is one of many experiences and could be duplicated in many parts of the Union. That there should be a change, or that the change which is beginning to appear should be rapidly made, you will agree.
What, then, is to be done? Obviously, first of all, a new attitude must be assumed and a sense of responsibility, even on the basis of enlightened selfishness, must develop. Business men and. business organizations must join the other great ele- ments in society and become effective students of agricultural problems and efficient instruments in bettering rural life. The problems are exceedingly numerous and sufficiently difficult to tax the best thought of the best men of the Nation.
With all the progress made — and the progi^ess has been rapid and vast — there continue to be many interesting and urgent problems of production. There is much to be done for soil improvement, for plant and animal breeding, for the eradi- cation of diseases, for improvement of cultural methods, for better farm management, and for better utilization of labor throughout the year. The Nation is losing hundreds of millions of dollars through diseases which can be controlled or eradi- cated, and under better conditions the meat supply of the Na- tion can be greatly increased with reasonable profits to the pro- ducers and distributors. That this is essential may be sharply indicated by the mere statement that while in the last fifteen years we have gained 24,000,000 of people, the number of our beef animals has decreased 6,000,000, sheep 10,000,000, and hogs have increased only 11,000,000.
Not less important, and even more urgent, are problems of distribution. It is one thing to produce commodities and an- other thing to distribute them economically and profitably. There can be little doubt that in this phase of his enterprise the farmer has been at a marked disadvantage. He has been without banking machinery to serve his particular needs as
04 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
the merchant and manufacturer are served ; without established standards for staples for use in market transactions and with- out systematic knowledge of the markets themselves; without ability to command the requisite transportation facilities ; and without the requisite contact with the machinery of distribu- tion. No one can estimate the losses arising because of these defects. Many drawbacks exist because the farmers' opera- tions, as a rule, are on a small scale. The average cultivated farm in the Nation is 75 acres, and in some sections only 35 acres. This points to one conclusion, that cooperation for not only marketing, but also for production, is essential in the in- terest of the producer as well as of the consumer.
But even if each farmer were an efficient producer and community arrangements were developed for efficient market- ing, the problems would not have been solved. There is much that individuals and groups of individuals may do in every community. In fact, they must always do the larger part. Self-help Avill be the rule in the future as it has been in the past. Nevertheless, there are certain undesirable and unjust conditions which no amount of private effort can overcome. Such conditions legislation alone can correct.
In the field of production, national and state agencies for a number of years have been rendering effective service, but, to the second half of agriculture involved in distribution, no systematic attention had been given or provision made up to two and a half or three years ago. Even the economists of the Nation had shown a singular indifference concerning prob- lems in this field. They had been busily studying the econom- ics of industry, banking, transportation, public debts, inter- national payments, corporation finance, economic theory, and the economic systems of the medieval and ancient world, but a mere handful had shown any appreciation of the difficulties which vexed the six million farmers of the Nation in spite of their knowledge of their strivings against them. In the minds even of the few there were grave doubts as to the lines that in- quiries should folloAv and as to the possibility of securing re- sults within a reasonable time.
Some Recent Federal Legislation
But things have moved rapidlj^ An office of markets to make investigations in all directions was organized in 1913,
COMMERCIAL ORGANIZATIONS AND "BACK COUNTRY." 95
was rapidly extended, and today possesses a large trained per- sonnel with a budget of approximately a million dollars. It has accumulated a great mass of valuable information, and has extended aid to farmers and communities in many directions and particularly in the tield of the marketing of perishables through a market news service. Certain of the investigations of the office will require time. Many facts must be secured and conclusions reached before effective action can be taken. But certain things needed to be done. It was not necessary to await a long course of inquiry to begin doing them. The present generation needed service. A program was marked out and has been completed, in large measure, by the enactment of singularly carefully framed legislation. The national banking law was so amended as to permit banks to lend money within safe limits on farm mortgages and to recognize the peculiar needs of the farmer by giving his paper a maturity period of six months. The Federal Farm Loan Act was passed, creating a banking system to reach intimately into the rural districts, to operate on terms suited to the farmer's needs under sympa- thetic management, to introduce business methods into farm finance, to systematize and to reduce the cost of handling of farm loans, to place upon the market mortgages which will be safe investments for private funds, to attract into agricultural operations a fair share of the capital of the Nation, and to lead to a reduction in interest rates. Then there were enacted the Cotton Futures Act, providing standards for cotton, for the supervision of the operations of the exchanges, and for placing the trading in cotton on a sounder basis ; the Grain Standards Act, to establish standards for grain, to remedy certain in- justices and undesirable practices; and the Warehouse Act, providing for licensing bonded warehouses and making pos- sible an easily negotiable warehouse receipt, the better stor- age of farm products and the more orderly distribution of farm products. Not less important for farm operations is the Federal Aid Road Act, excellently conceived to safeguard the expenditure of ?1G0,000,000 arising under the act over the five- year period, and certain to secure better results from the 1280,000,000 or the equivalent now annually expended in the Nation for good roads.
Preceding these measures Avas the Agricultural Extension Act, one of the most significant educational measures ever
96 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
adopted bv any government. Its terms you are familiar with. Like the road act, it provides for a very significant thing, for cooperation between expert state and federal agencies. It undertakes to bring home to the people the best scientific and practical knowledge bearing on production and distribution. It provides for the most effective way of disseminating knowl- edge, the old way, through personal contact. It will reach its full development in 1922-23, when there will be expended under its term from state and federal funds alone |8,680,000 in the direct education of the farmer and his family, and probably from other federal and state community funds from three to four millions more. With increased local support this will permit the placing in each of the 2,850 rural counties of the Nation two county agents, in most cases a man and a woman, with the assistance of district supervisors, all working with the aid and direction of the great forces of the land grant col- leges and the Department of Agriculture.
What Organized Work Involves
I have indicated these problems, this legislation, and this machinery for the very simple reason that if you undertake to cooperate in agriculture, you must know what you are coop- erating in and for, the conditions under which work must be done, the machinery through which it must be accomplished, and to suggest to you, and through you to business men, that these things must be assiduously studied if efforts are to be effective. Obviously, you must know the problems and the forces if you are to work intelligently. One of the great prob- lems confronting us is how to educate the business man and secure his effective participation. The department and the land grant colleges are frequently embarrassed by ill consid- ered and unwise proposals from individuals and business or- ganizations ; and not infrequently friction and ill-feeling is en- gendered. The business man is occupied with his immediate concern and no effective plan has been devised for reaching him. The metropolitan press has not yet fully conceived the part it might play in this great field. Agricultural activities are important but furnish little of the stuff commonly regard- ed as news, and it is seldom that you find on staffs of city papers men either interested in these matters or possessed of the requisite training to discuss them. Is there not suggested
COMMERCIAL ORGANIZATIONS AND "BACK COUNTRY." 97
here a liigh opportunity for the useful direction of your ef- forts and influence? It is especially essential that the busi- ness world should have at least a sympathetic appreciation of the difficulties under which the farmers of the Nation labor and a basis for forming an intelligent judgment on construc- tive and remedial economic and legislative proposals. One of the discouraging things is the resistance by many business in- terests, based clearh' on ignorance, to greatly needed and sound legislation. Many of the discussions in the metropolitan press and in the trade journals of such proposals are frequently, to say the least, not creditable to them or helpful to their read- ers. I might refer, for instance, to current discussion of the Farm Loan Act and the Federal Aid Road Act. I have seen very few adequate discussions of either of these measures in the larger dailies, and have seen much that was misleading and distorted. I need not suggest that if we are to have gov- ernment by public opinion, facts must be presented, be fairly interpreted and correct conclusions courageoutsly faced, no matter where they may lead or what prejudices they may run across.
What Commercial Organizations Can Do
Looking at the matter more narrowly, there are many things that commercial organizations aild business men may well consider. Each urban community might well, in coop- eration Avith leaders in the surrounding districts, undertake a careful surve}^ for the purposes of better production and better organization. It may assist in the securing of a good county agent where there is none and effectively cooperate with him. Business men and business organizations may help work out better wholesale and retail markets for farm products, farmers' community buildings may be planned and established, and good roads radiating into the back country may be promoted to mutual advantage. Bankers in many parts of the country may be brought to see that by their wise use of credit will be de- termined the question whether or not the rural districts shall have a well-balanced, prosperous agriculture. Not a few of them are learning the lesson, and in some states the banking associations have intelligently and effectively organized state committees, composed of a member from each county, for the betterment of rural life. A peculiar opportunity is afforded for the sympathetic and constructive assistance of the banker
4
98 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
and the business man in connection with the inauguration of the Farm Loan Act and the formation of local associations, and in the furtherance of cooperation among farmers for the bet- terment of production and marketing.
Another thing you in particular can do. Lack of stability and uniformity in agricultural conditions is one of the explana- tions not only of unsatisfactory financial arrangements but also of inadequate marketing facilities. Even after we have done the best we can for marketing and finance, there will be difficulties growing out of rapid agricultural changes, of shift- ing of population, in short, out of the continued pioneering of the Nation. Certain results expected from financial or mar- keting studies and legislation can be secured only with a stable and balanced agriculture. Some of the most pathetic failures arise in regions where farmers have settled under alluring in- ducements. Not infrequently they find novel conditions and dif- ficulties of production, but more frequently difficulties of mar- keting through lack of planning or through remoteness from markets. Much of the responsibility for such misfortune lies at the door of the real estate agent and of the town which is overanxious to build itself up. Obviously, some sort of re- sponsible oversight and direction would be desirable and help- ful, and I can think of no agents better adapted to render as- sistance in this direction than the membership of this body. False advertising and lack of provision or of previous planning is shortsighted in this field as in others, and in the long run defeats the objects and ambitions of the advertisers.
CHAPTER V. Traffic and Transportation Bureaus
By FRANK BARRY
Transportation is a vital factor in commerce and produc- tion. This fact is now recognized by all commercial organiza- tions of importance which conduct transportation bureaus in connection with their activities.
Prior to 1887 the railroads of the country were operated without governmental regulation. Rates charged were gener- ally based upon "what the traffic would bear and move.'' Rules and regulations were dependent only upon th^ volition of the carrier and the influence that the shipper could exert. As a result, preferential rates and discriminations were rife.
The enactment of the law to regulate commerce, February 4, 1887, was intended to establish the right of the shipping public to reasonable charges for transportation, equal rates to all and adequate service by common carriers. For a brief period beneficial effect resulted. Time and the courts, however, modified the operation of the law and nullified the powers that were supposed to have been vested in the Interstate Com- merce Commission.
After persistent effort by organized shipping interests of the country, continuing for about four years, the Interstate Commerce Law was substantially amended on June 30, 1906, and subsequently on June 18, lt)10, so as to give the commis- sion definite powers of regulation.
With this effective governmental regulation of common carriers came a realization of the advantage, if not necessity, of a traffic organization or bureau, as an integral part of the commercial association, to guard the lawful rights and promote the interests of the shipper.
Prior to 1006 but few business organizations conducted traffic bureaus. Since that time there has been a large and rapid increase in their number. Today practically every pro- gressive commercial and manufacturing organization of im- portance has its transportation department.
99
100 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
At first the railroads did not look with approval upon these associations, deeming their existence and action an undue in- terference with the business of the carriers. Gradually this feeling has been overcome, until most railroads consider the industrial traffic bureau a valuable assistant and auxiliary to their work, affording cooperation in transportation matters which could not otherAvise be obtained, and saving the rail- roads a vast amount of labor and expense in furnishing neces- sary information required by shippers.
The evolution of the traffic bureau has been gradual, and accomplished upon lines adapted to the ideas and necessities of many communities and individuals.
Business organizations in the larger communities have generally provided strong, efficient traffic bureaus under the management of capable men, who usually have had long ex- perience in transportation. Cities of 200,000 or more popula- tion, requiring extensive service, are able to afford the neces- sary financial support for a strong traffic bureau, while cities of smaller population have been obliged to "cut their garment according to the cloth" and feel that they are not justified in employing a high salaried manager with clerical assistance necessary to afford comprehensive service.
The cost of maintenance of a traffic bureau in about 120 cities of the country having a population of 100,000 or more, varies from about |5,000 to $40,000 per annum, and averages 110,000.
Owing to the varying conditions and the methods adopted for maintenance of traffic bureaus, also the differences in na- ture of the service required, it would be difficult to classify or draw comparisons between the various associations operat- ing in commercial and manufacturing centers.
In some of the larger cities, the traffic bureau is main- tained entirely at the expense of the business association, and all members are entitled to the entire service afforded by the bureau. In others, the expense of maintenance is borne in part by the members who most need the service, who pay for its support annual dues of from |50 to f 100 per year, or are willing to pay a larger assessment, as a contribution, and the deficit in cost of operation is made up by appropriation from the parent organization.
In other communities the traffic bureau is made self-sus-
TRAFFIC AND TUAN>I'UKTATION BI RE^UR ' ' UOl
taining, its expense being borne entirely by the* membership, and its accounts being kept separate from those of the parent organization.
There are almost as many different methods of financing traffic bureaus as there are associations with which they are connected.
The service afforded by traffic bureaus differs according to the desires and needs of the community. This service may be classified as individual in character, or for the benefit of the member, and in general, affecting the interests of the commu- nity.
It is customary for all freight bureaus to maintain a tariff* file, to afford service in the quotation of rates and routing of shipments, tracing of delayed shipments, advice with regard to claim matters, dcHrisions of the Interstate Commerce Com- mission, the state commission, decisions of the courts and ad- vice regarding many questions that arise in traffic matters. Switching rates and rules, electric line express and parcel post rat^s, passenger service, rates and rules, steamship rates and service, as well as export facilities, are also within the scope of the traffic bureau's work.
Other traffic bureaus undertake to check and audit freight bills, though this has been found impracticable in many in- stances Avhere attempted, owing to the volume of the service, the expense of employment of necessary clerical force, and the unprofitable results. Where this service is afforded there is usually imposed an additional charge beyond membership dues, based upon the fee of about two cents per expense bill checked, or a commission of from 25 per cent to 50 per cent for the amount of overcharge discovered and collected.
Some bureaus undertake to collect for members' claims for overcharge and loss and damage. Others act in such matters in an advisory capacity.
Most traffic bureaus handle complaints, conduct or assist in classification and rate adjustments in behalf of members, and perform a very valuable and highly appreciated service in this field. Tariff issues are carefully scrutinized and members kept informed as to changes that may interest them.
Traffic bureaus in the larger communities perform a very useful function in conducting cases affecting the interests, of the community before governmental agencies, the Interstate
» ^' 102^ '^' • EF^tCTENCY AND CHARACTERISTIC ACTIVITIES.
'Commerce Commission, the state commission, and local au- thorities. They also strive to promote local transportation facilities such as through merchandise car loading, the enlarge- ment of local stations, the conduct of stations, teaming, electric railway and motor truck service.
Many of the larger industrial concerns throughout tlie country now conduct a traific bureau in their own interest, and Avhile such concerns are frequently members of the traffic bureau attached to the local manufacturing or industrial as- sociation, the details of necessary traffic service are attended to by their own bureau.
Traffic bureaus and departments throughout the country have generally become allied and cooperate with each other through membership in the National Industrial Traffic League, which, through its various committees, and united action in transportation matters, has accomplished many benefits for the shipping public.
Transportation Problems — How Shall They Be
Dealt With?
By D. P. CHINDBLOM
The commercial organization that is ambitious to exert the greatest possible influence in the community cannot afford to delegate these important questions to another body or to com- pete with it.
The commercial organization has in its membership, if it is truly representative, tlie very men who must back the traffic organization that is entitled to recognition as representative of the community. This is an unnecessary duplication and often results in a divided community. The commercial organization should be able to deal with these questions in a manner that will make the other agency unnecessary, avoid the duplication and unify the community.
There is need for handling these questions in a construc- tive way and on a sound economic basis. Selfish aims and tem- porary advantages bring no permanent result that is beneficial to the community. This does not argue that an exclusive traffic organization is not capable of such a view. A real commercial
TRANSPORTATION PROBLEMS. 103
organization, properly advised, will deal with every question in that manner.
The fact that so many other problems of the commercial organization that arise cannot be properly handled without proper information on transportation is another reason for handling transportation questions within that body. We have in mind the pertinent example of the location of new indus- tries.
Finally, the reasons for a separate traffic organization are really tAvo : The failure of the commercial organization to take up this Avork, or its failure to truly represent the community and get its support. The latter situation is a real challenge to the existence of the commercial organization.
Relation of the Traffic Department to the Organization
A discussion of how to deal with transportation problems within the commercial organization would not be complete without a consideration of the relation that the traffic depart- ment should have to the entire organization. This question only arises when there is such a separate department in charge of a traffic manager, commissioner, etc., and merits careful atten- tion.
On this question let us speak frankly in the interest of the cooperation that must exist in order to get the best results. The traffic manager who measures up to the requirements is a man of special training and technical information gained by years of experience and application to the study of these questions. Naturally, the more qualified he is the more he is certain to have very definite opinions on the problems that come to him. The secretary, however, is the executive re- sponsible for the general administration of the work of the entire organization and supervision of every department.
What is often needed is mutual recognition of the qualifi- cations and position occupied by the other. The traffic man- ager can get much assistance in securing support for his sug- gestions by keeping his secretary informed and by working with him. At the same time the secretary is in a much better position to successfully direct the work of the organization, secure necessary data, and fortify himself in dealing with his officers and membership by consulting with the traffic man- ager. This proposition is workable.
104 EFFICIENCY AND CHARACTERISTIC ACTIVITIES.
Cooperation with the Carriers
Cooperation with the carriers brings up one of the impor- tant and difficult questions for the organization. It is a mat- ter 01 regret that there has been too little cooperation in the past and too much antagonism. The fault has been a mutual one. Shippers have not always been willing to admit when they were wrong. On the other hand, the carriers have not been as frank as they might have been.
The commercial organization should endeavor to secure an increasing desire on the part of the carriers to inform the ship- per and confer with him, and to develop a greater willingness on the part of the shipper to be convinced that the carrier is sometimes right.
It Avill always be a fact that the commercial organization will be recognized as more definitely representing the shipper than the carrier, because the carrier serving many communi- ties cannot have that intimate interest in a particular commu- nity that the shipper has. It is the duty of the commercial or- ganization to see that this local interest of the shipper is exer- cised in a fair and reasonable way.
When an agreement cannot be reached nothing has been lost by frankness and discussion. If there is a willingness to cooperate, conflicting views can be presented to the properly authorized tribunal for decision in a much better spirit of honest difference of opinion.
We are told by both shippers and carriers that nothing is gained. The answer is that nothing is lost, and certainly noth- ing is accomplished by refusing to cooperate.
What the carriers can accomplish by securing the coopera- tion of shippers has been recently demonstrated in the matter of car efficiency. Without tariff restrictions voluntarily a large increase in the heavier loading of cars has been secured.
Appointment of the Transportation Committee
To properly deal with transportation problems the appoint- ment of the transportation or traffic committee is an important matter. The members ought to be business men big enouglv to see the problems of the carrier as Avell as those of the shipper — men not afraid to acknowledge when the carrier is right, and with courage to insist upon a solution of their problems when thev are risrht.
TRANSPORTATION PROBLEMS. 105
It is not necessary or helpful that representatives of the transportation companies should serve on these committees. As a practical matter, submitting any problem to a committee so constituted means that the shipping members and the carrier members will confer among themselves and the meetings of the committee will only be joint conferences. We may as well be frank al)out the situation, appoint the committee of repre- sentatives of the shippers and then have all the joint confer- encces desired, in fact, insist upon them.
Educational Work
The work of education is an important one and should in- clude the general public, as well as the membership and those employees of the membership who directly handle their trans- portation mattei-s. It is deemed helpful to accept every oppor- tunity offered to reach the public outside of the organization in an etfort to get as wide as possible a dissemination of infor- jnation. The opportunities for doing this with transportation problems are not as numerous as with more popular subjects, nor do they lend themselves as well to this method of handling.
The real work is witli the membership. It is important that they be informed as to what your problems are and the solu- tion proposed. This is accomplished through your publica- tions, circulars and the public meetings of your organization. Particularly in public meetings there is room for more discus- sion of transportation questions.
There is an important educational work to be done with the transportation committee. The committee must be