What we accomplished in our preparation for war and in getting men to the front surprised ourselves, and apparently satisfied our allies. It was accomplished by the splendid energy and tremendous resources of the American people, but nobody pretends that we showed any high degree of efficiency in doing the work. Our expenses were enormous, and we have reconciled ourselves to their magnitude by saying over and over again that nothing counted except winning the war, which in the last analysis is true; but it is also true that excessive expense not only did not help us to win the war, but rather hindered us in accomplishing this result. Our fumbling in war preparation seems to indicate that the great campaign for efficiency, which has been waged so assiduously in this country for the past twenty years, has not accomplished for us all we had led ourselves to believe. That we have increased individual efficiency and profit-making efficiency, and perhaps other kinds of efficiency, is not to be denied. That we have attained a high degree of national efficiency in the production of goods, is nowhere indicated. It took the shock of a great war to arouse us to the realization that our great prosperity was due to something other than our productive efficiency.
Yet surely the long campaign for efficiency has been honestly and seriously waged. Why, then, have our results been so meager! The answer is simple enough and plain. The aim of our efficiency has not been to produce goods, but to harvest dollars. If we could harvest more dollars by producing fewer goods, we produced the fewer goods. If it happened that we could harvest more dollars by producing more goods, we made an attempt to produce more goods: but the production of goods was always secondary to the securing of dollars.
In the great emergency created by the war, our need was not for dollars but for goods, and people who had been trained for the seeking of dollars were in most cases not at all fitted for the producing of goods. Those who had been most successful in acquiring dollars were, however, the ones best known as businessmen, and when it was thought we needed a business administration, such people, with the best intentions in the world, offered their services to the Federal Government, many at a great sacrifice of their own interests. They found, however, that for war we needed goods, and that dollars were only the means to that end. Then they found that unless people knew how to produce the goods, dollars were ineffective.
Another phase of the efficiency movement with which we are all so familiar, was the attempt to increase the efficiency of the worker, and to ignore entirely the idler, because the system of cost-keeping generally in vogue made that seem the most profitable thing to do. The case was worse than this, for not only did the system ignore the idler, but it eliminated the inefficient, absolutely ignoring the fact that both the inefficient and the idle were going to continue to live and be supported, directly or indirectly, by the workers.
The war waked us up to the fact that the world was running short of the necessities of life, and that the product of even the most inefficient was some help. The scheme for the selection of the efficient, of which much had been made, was now found to need supplementing by one for forcing the idler to work and training the inefficient.
The great difficulty of installing such a system was that the cost-keeping methods in general vogue indicated that training methods were not profitable, for trainers were classed as non-producers. In spite of this fact, however, the war emergency forced us to adopt them, and the results were beneficial. The inevitable deduction is that the cost-keeping methods in general vogue are fundamentally wrong, and that we shall continue to suffer from inefficiency until they are corrected. The great error in them is the fact that they absolutely ignore the expense of idleness. As a matter of fact, it costs almost as much to be idle as it does to work. This is true whether we consider men or machines, or, in other words, labor or capital.
This leads us at once to two natural questions :
What is our expense for idle labor?
What is our expense for idle capital?
Manufacturing concerns pretty generally eliminate idle labor as completely as they can (many times by discharging workmen who could be profitably used if work were planned for them). They cannot get rid of idle capital so easily, for it is tied up in machines that cannot be sold. The only possible way to eliminate idle capital, then, is to put it to work. The first step toward putting it to work is to find out why it is idle. As soon as this is done, means for putting it to work begin to suggest themselves. Our cost-keeping system, to meet the present and future emergency, must not content itself with charging to the product all expenses, but must charge to the product only that expense that helped to produce it, and must show the expenses that did not produce anything, and their causes. If this fundamental change is made in our cost-keeping methods, our viewpoint on the subject of production changes, with the result that we devote our attention first to the elimination of idleness, both of capital and labor.