,libraries7 ,barbara ,weinstock ,lectures on ,the ,morals of ,trade ,,higher ,,education ,,and ,,business ,,standards4 ,by ,,willard ,,eugene ,,hotchkiss4 ,,creating ,,capital3 ,,money-,,making ,,as ,,an ,,aim ,,in ,,business4 ,by ,,frederick ,l4 ,,lipman4 ,,is ,,civilization ,a ,,disease8 ,by ,,stanton ,,coit4 ,,social ,,justice ,,without ,,socialism4 ,by ,,john ,,bates ,,clark4 ,,the ,,conflict ,,between ,,private ,,monopoly ,,and ,,good ,,citizenship4 ,by ,,john ,,graham ,,brooks4 ,,commercialism ,,and ,,journalism4 ,by ,,hamilton ,,holt4 ,,the ,,business ,,career ,,in ,,its ,,public ,,relations4 ,by ,,albert ,,shaw4 ,,higher ,,education ,,and ,,business ,,standards ,by ,,willard ,,eugene ,,hotchkiss ,,director ,,of ,,business ,,education ,,at ,,the ,,university ,,of ,,minnesota ,,boston ,,and ,,new ,,york ,,houghton ,,mifflin ,,company ,the ,riverside ,press ,cambridge #aiah ,,copyright1 #aiah1 ,,by ,,the ,,regents ,,of ,,the ,,university ,,of ,,california ,,all ,,rights ,,reserved ,published ,march #aiah ,,barbara ,,weinstock ,,lectures ,,on ,,the ,,morals ,,of ,,trade ,this series will contain essays by representative scholars and men of affairs dealing with the various phases of the moral law in its bearing on business life under the new economic order1 first delivered at the ,university of ,california on the ,weinstock foundation4 ,,higher ,,education ,,and ,,business ,,standards ,last summer1 when we reached ,california for a year's sojourn1 we had the good fortune to secure a house with a splendid garden4 ,a few weeks ago1 after the early warm days of a ,california ,february had opened up the first blossoms of the season1 our little five-year-old discovered that the garden furnished a fine outlet for her enterprise1 and she soon produced two gorgeous--,i will not say beautiful--bouquets4 ,barring a certain doubt about her mother's approval1 she was well satisfied with her achievement1 she felt a sense of completeness in what she had done--and well she might1 for she had not left a visible bud4 ,there is a strong tendency to go at business the way ,helen went at the garden4 ,she knew what to do with bouquets2 raw material for making them was within her reach2 what more natural than to turn it1 in the most obvious and simple way1 into the product for which it was designed4 ,from her standpoint such a procedure was entirely correct--she was making bouquets for herself and her friends2 every one in her circle would share the benefit of her industry4 ,whenever in the past business enterprise has proceeded from a similar viewpoint1 we have stood aside and let it proceed2 it was not our garden2 we were quite willing to take the rle of disinterested spectators4 ,recently we have discovered that it is our garden2 we have learned that we are not disinterested2 we now see that business plays a large part in the life of every one of us4 ,that being the case1 we assume the right to question its processes1 its underlying policies1 and its results4 ,we are gradually coming to think of business in terms of an integrated and unified national life4 ,we desire the national life to be both wholesome and secure4 ,what the public really wants from business1 then1 is a contribution to national welfare1 and it has become convinced that1 by taking thought1 it can make the contribution more certain and more uniform than it has been in the past4 ,many business men share this view2 with varying zeal they are trying to work out standards of organization that will insure the kind of regard for general welfare which the public has come to demand4 ,this is the new idea in business2 it has already taken deep root2 but it needs to be further developed4 ,we have the difficult task of reducing an idea to a practical working plan4 ,how shall we go about it8 ,fortunately the idea itself contains a hint for further procedure4 ,a new attitude in business must be coupled with a new attitude in public policy4 ,when my enterprising child made an onslaught on the garden it would have been easy enough to punish her2 but it is doubtful if mere punishment gets very far in a case of that sort4 ,unless we can teach the child to enjoy the garden without destroying it1 the restraining influence of punishment will be no stronger than the memory of its pain or the fear of its repetition4 ,this memory of the past and fear of the future usually wage a most unequal contest with the vivid and alluring temptation of the present4 ,but should not the child be restrained8 ,as far as necessary to protect the garden1 and perhaps also to make her conscious of an authority in the world outside of her own will1 yes--but that is not the main task4 ,the main task is to educate her1 to develop an understanding of the garden1 to get her in the frame of mind in which she will derive her greatest enjoyment when she cultivates it and sees it grow1 and when she restricts her picking to a reasonable share of what the garden produces4 ,in the actual case before us1 the child was after quick and easy results1 the only kind she could comprehend2 she was unable to look upon the garden as a living thing whose life and health must be preserved to-day in order that it may yield returns to-morrow and next week4 ,analyzed with adult understanding1 her essential fault was a failure to get beyond immediate results and to view the garden from a long-time angle4 ,we ought not to expect her to do this now1 but we do expect her to do it when she is grown up4 ,we expect in time so to educate her that she will be able to think of the garden in terms of permanence and growth and to make an effective use of it from that standpoint2 and this same education in long-time effectiveness is what we want in business4 ,business standards must be discussed from the standpoint of efficiency1 but efficiency needs to be interpreted4 ,we may as well admit at the start that the efficiency ideal is not entirely in good repute at this moment4#a ,if ,i may import an expression from ,england1 we have been somewhat fed up with efficiency during the recent past and the ration has been rather too much for our digestion4 #a ,at the time this was written1 in the spring of #aiaf1 it will be recalled1 the ,german war machine for nearly two years had been demonstrating its efficiency2 the ,allies had not yet matched it1 and we did not like the work that efficiency was doing4 ,away back in the eighties1 before the dominance of business in ,american society had been questioned1 efficiency1 as the term was then understood1 had a place among the elect2 it was the intimate associate of business success4 ,then came the muck-raker1 and with him came also anti-trust cases and insurance investigations4 ,we turned our attention to labor outbreaks1 to graft prosecutions1 and to land steals4 ,we talked about malefactors of great wealth4 ,we even became interested in ,schedule ,k4 ,and so1 during the first decade of the new century a whole train of revelations1 incidents1 and phrases tempered our regard for business and brought many business practices under the ban of law and hostile sentiment4 ,efficiency was in bad company and suffered in reputation4 ,but efficiency was able to prove an alibi2 we were told that the thing which posed as efficiency was not efficiency1 but special privilege1 and we were again persuaded of the great service a regenerate and socialized efficiency could render4 ,just at this point came the outbreak in ,europe2 efficiency was again caught in bad company1 and we began to hear such phrases as the moral breakdown of efficiency1 efficiency1 a false ideal1 and others of similar import4 ,in an article bearing the title1 ,moral ,breakdown of ,efficiency1 published in the ,century for ,june1 #aiae1 it was maintained that pursuit of efficiency had led and was still leading civilization on a downward path4 ,in addition to the reputation of keeping bad company1 efficiency has to bear the odium of many foolish and inefficient deeds performed by its self-appointed prophets4 ,the quest for efficiency has called forth in business a new functionary known as the efficiency expert4 ,many of these men have done a vast amount of valuable work1 but many others have not4 ,while the real expert has been raising the level of business organization1 the others have been piling up a large wastage of poor work and lost confidence4 ,but these are side issues4 ,the main fact stands out above them4 ,we have been steadily adding to the burdens on industrial and commercial equipment2 even more have we increased the stresses and the strains on human life4 ,a devastating war is now suddenly taking up the slack1 and the slow and painful task of making the world efficient must be hastened in order that society may bear the load4 ,in these circumstances we need not apologize for making efficiency the main support of business standards4 ,nor need we assume1 as does the author just cited1 that the efficiency ideal in any way conflicts with the ideal of moral responsibility and service4 ,of course1 if we reflect1 the abstract and impersonal thing which engineers define as the ratio between energy expended and result obtained has no moral quality in itself4 ,whatever of morality or lack of morality the word efficiency calls forth is given to it by the manner in which the terms of the ratio are defined4 ,it is for society to make the definitions4 ,society may determine the forms and the limitations under which it will have business energy expended1 and it may decide what are the social ends toward which it will have business effort contribute4 ,guided by wise social policy1 efficiency and service go hand in hand4 ,since business is subject to control by society1 it follows that the efficiency factors in a particular business1 in a whole industry1 or in business generally1 must adjust themselves to the decisions that society has made1 and they must also take account of decisions that it may make in the future4 ,and these decisions are not all recorded in the law or even in the vague thing we call public opinion4 ,laws and opinions of particular groups1 group morality1 individual morality1 even inertia1 and a long list of more subtle and often capricious reactions are channels through which social purpose finds expression4 ,it is worth our while to consider how these reactions may affect practical administration4 ,no reflection is needed to see that in proportion as business men fail to take account of forces outside the business1 in that proportion they are likely to miscalculate the results of business policies4 ,striking examples of such miscalculation are found in the experience of ,mr4 ,george ,m4 ,pullman back in the nineties1 and of ,mr4 ,patterson1 of the ,national ,cash ,register ,company1 a decade later4 ,each of these men1 with apparent good faith1 undertook to surround his laborers with conditions of physical1 mental1 and moral uplift1 and each undertook to do it as an act of paternal bounty4 ,each of them1 as far as we can judge1 expected appreciation1 gratitude1 and increased efficiency4 ,but they failed to take account of the group consciousness of their laborers2 they did not know what the laborers were thinking2 and because the laborers were thinking something different from what the employers thought1 policies intended to arouse gratitude aroused instead resentment and a strike4 ,but there are many things besides too much paternalism that may result in a strike4 ,another concern of international dimensions and one whose officers1 ,i can vouch1 are men of high character and public spirit1 also found itself confronted with a strike in #aiaj4 ,this was a highly organized business4 ,for years its sales department had tried to seek out the highest grade of talent1 and the result was a selling and distributing organization that was the model and the envy of competitors4 ,but questions of employment seem to have gone by default1 the general policy being confined to a sincere but vague good-will toward employees and acceptance of things as they were4 ,the issues of the strike were issues with which we are all familiar4 ,on the workers' side1 grievances and no workable machinery for redress2 result3 organization1 concerted group action1 force4 ,on the other side1 there was a personal readiness to hear grievances1 coupled with insistence on the ancient right of the employer to conduct his own business in his own way1 without interference from employees or the public4 ,after weeks of deadlock the strain of a distressing situation1 losses from the interruption of business1 regard for public opinion and the opinion of friends1 combined with their own desire to do the right thing1 induced the employers1 probably against their best judgment1 to recede from their position4 ,an agreement was made providing for increased wages1 standardization of piece-work1 a preferential shop1 and appointment by the firm of a person to hear grievances and to coperate with a representative of the union in securing redress4 ,the union in this case was fortunate in being represented by a high-minded man who was a real statesman4 ,the firm selected a trained economist as labor expert1 and he soon had an employment department in operation4 ,together these men and their colleagues have kept peace in the concern and have developed and expanded the machinery for settling disputes into a model of industrial-relations organization4 ,some four years after the strike the business head of the firm testified in a public hearing that he should scarcely know how to conduct his business without the organization which now obtains for dealing collectively with labor4 ,he also in the same hearing expressed the view that a large employer is a trustee of the public1 responsible for the measure of public welfare in which his business results2 and this man1 remember1 is not a reformer or even a radical1 but just a successful business man4 ,in this bit of labor history there were1 no doubt1 many fortunate but uncontrollable factors which1 otherwise combined1 would have brought a less happy result4 ,but two things stand out3 first1 the laborers listened to wise counsel--they were well led2 and second1 the employers1 when they consented to make an agreement1 gave the plan adopted their genuine support4 ,combining good citizenship with business sense they were able to understand the new social influences that make the formulas of #ahhj a poor gauge of efficiency factors in #aiaj4 ,they are now enjoying the benefits of their willingness to learn4 ,the effect of social forces is seen under different circumstances and from an entirely different angle in the present halting policy of ,american railroads4#b ,here1 in addition to other social elements in the question1 is the fact of definite government control4 ,this circumstance has accustomed railway managers to look at both the internal and the public factors in their success4 ,a number of years ago1 before ,mr4 ,justice ,brandeis became a member of the ,supreme ,court1 he pointed out1 as many others have since done1 that the railroads were looking too much to the government factor1 and too little to the economy and effectiveness of their own internal administration4 ,even though we concede this point1 it is still clear that the highest efficiency of our railroads must wait upon a clarification of policy with respect to the great social fact affecting railway operation--the fact of government control4 ,we may not approve the precise manner in which the railroads respond to this fact1 but obviously they cannot be efficient and ignore it4 #b ,referring to the situation early in #aiaf when this sentence was written4 ,examples1 ranging all the way from accepted and enforceable legal restrictions to the interplay of the most subtle group sentiments1 could be multiplied at will to bring out the presence of the social factor in efficiency standards4 ,were it not that internal business policies1 on the one hand1 and public policy toward business1 on the other1 are so frequently vitiated by failure to reckon with the probable reactions which a particular measure will call forth1 ,i should not retard the discussion to emphasize a point so obvious4 ,but though the presence of social factors is obvious1 how to measure them is not obvious4 ,general principles that bear on a specific case are hard to locate and difficult to apply4 ,even the broad lines of social and business policy are not always clear1 and the probable trend of future policy is still less clear4 ,just what are the principles that are being worked put in order to determine the forms and the limitations under which business energy shall be expended1 and how do they differ from those followed a generation ago8 ,take the other side of the efficiency ratio3 toward what results are we trying to have business energy directed8 ,again1 what are the instruments with which society is enforcing its purpose8 ,how effective are they1 how effective are they likely to become8 ,finally1 what bearing will this social effectiveness or lack of effectiveness have on standards of business efficiency for the generation about to begin its work8 ,even though we cannot answer these questions to-day1 we have1 to-day1 the task of educating the generation that must answer them4 ,more than this1 the education we provide for the generation about to begin its work will determine1 in no small measure1 the kind of answers the future will give4 ,it is1 therefore1 of great importance that in our ideals and our policies for educating future business men we should try to anticipate the social environment in which these men will do their work4 ,we are in the habit of speaking of the present as a time of transition--the end of the old and the beginning of the new4 ,in a very real sense every period is a period of transition4 ,society is always in motion1 but that motion at times is accelerated and at other times retarded4 ,clearly we are living now in a period of acceleration--a period which must be interpreted not so much in terms of where we are1 as of whence we came and whither we are going4 ,this means that we cannot hope to prepare an educational chart for the future without understanding the past4 ,in our study of business we are always emphasizing the long-time point of view1 and we fall back upon this convenient phrase to harmonize many discrepancies between our so-called scientific principles and present facts4 ,on the whole1 we are well justified in assuming these long-time harmonies1 but it will not do to overlook the fact that many important and legitimate enterprises have to justify themselves from a short-time viewpoint4 ,of more importance still is the fact that in this country enterprises of the latter sort have predominated in the past4 ,this circumstance has a very marked bearing on the nature of our task1 when we try to approach business from the standpoint of education4 ,there are strong historical and temperamental reasons why nineteenth-century ,americans were inclined to take a short-time view of business situations4 ,our fathers were pioneers1 and the pioneer has neither the time1 the capital1 the information1 the social insight1 nor the need to build policies for a distant future4 ,the pioneer must support himself from the land2 he must get quick results1 and he must get them with the material at hand4 ,every one of our great industries--steel1 oil1 textiles1 packing1 milling1 and the rest--has its early story colored with pioneer romance4 ,the same romantic atmosphere gave a setting of lights and shadows to merchandising and finance and most of all to transportation4 ,whether we view these nineteenth-century activities from the standpoint of private business or of public policy1 they bear the same testimony to the pioneer attitude of mind4 ,considering our business life in its national aspects1 our two greatest enterprises in the nineteenth century were the settlement of the continent and the building-up of a national industry4 ,in both these enterprises we gave the pioneer spirit wide range4 ,with respect to the latter1 industrial policy before #aijj was summed up in three items3 protective tariff1 free immigration1 and essential immunity from legal restraints4 ,this is not the place to justify or condemn a policy of laissez-faire1 or to strike a balance of truth and error in the intricate arguments for protection and free trade2 nor need we here trace the industrial or social results of immigration4 ,we need only point out that the policy in general outline illustrates the attitude of the pioneer4 ,the thing desired was obvious2 obvious instruments were at hand--immediate means used for immediate ends4 ,from his viewpoint1 the question of best means or of ultimate ends did not need to be considered4 ,in building our railways and settling our lands the pioneer spirit operated still more directly1 and in this connection it has produced at the same time its best and its worst results4 ,the problem of transportation and settlement was not hard to analyze2 its solution seemed to present no occasion for difficult scientific study or for a long look into the future4 ,the nation had lands1 it wanted settlers1 it wanted railroads4 ,if half the land in a given strip of territory were offered at a price which would attract settlers1 the settlers would insure business for a railroad4 ,the other half of the land1 turned over to a railroad company1 would give a basis for raising capital to build the line4 ,with a railroad in operation1 land would increase in value1 the railroad could sell to settlers at an enhanced price and with one stroke recover the cost of building and add new settlers to furnish more business4 ,in its theory and its broad outline the land-grant policy is not hard to defend4 ,the difficulties came with execution4 ,we know that in actual operation the policy meant reckless speculation and dishonest finance4 ,we know that no distinction in favor of the public was made between ordinary farm lands1 forest lands1 mineral lands1 and power sites4 ,we know that the beneficiaries of land grants were permitted to exchange ordinary lands for lands of exceptional value without any adequate quid pro quo2 and we know that there were no adequate safeguards against theft4 ,wholesale alienation of public property was intended to secure railroads and settlers1 but the government did not see to it that the result was actually achieved4 ,speculation impeded the railways in doing their part of the task1 while individuals enriched themselves from the proceeds of grants or withheld the grants from settlement to become the basis of future speculative enterprises4 ,all this seems to show that in execution at least our policy from a national standpoint was short-sighted4 ,careful analysis and a more painstaking effort to look ahead might have brought more happy results4 ,and how about the railroads from the standpoint of private enterprise8 ,a railway financier once described a western railway as a right of way and a streak of rust4 ,the phrase was applicable to many railways4 ,deterioration and lack of repairs were1 of course1 responsible for part of the condition it suggests1 but much of the fault went back to original construction4 ,it was the wonder and the reproach of ,european engineers that their so-called reputable ,american colleagues would risk professional standing on such temporary and flimsy structures as the original ,american lines4 ,poor road bed2 poor construction2 temporary wooden trestles across dangerous spans--everything the opposite of what sound engineering science seemed to demand4 ,why did not the owners of the roads exercise business foresight to provide for reasonably solid construction8 ,what seems like an obvious and easy answer to all these questions is that both the ,government and the road were controlled in many cases1 as the people of ,california well know1 by the same men1 and these men were privately interested4 ,as public servants or as officers of corporations they were supposed to be promoting settlement and transportation2 as individuals they were promoting their own fortunes4 ,this result was secured by the appropriation of public lands and the conversion of investments which the public lands supported4 ,that this sort of thing occurred on a large scale and that it involved the violation of both public and private trusts is fairly clear4 ,public sentiment has judged and condemned the men who in their own interests thus perverted national policy2 and we approve the verdict4 ,but it is not so easy to condemn the policy itself or to indict the generation that adopted it4 ,looking at the matter from the standpoint of the nation1 it was precisely the inefficiency and the corruption in government which augmented the theoretical distrust of government and made it unthinkable to the people of the seventies1 that the ,government should build and operate railways directly4 ,the land-grant policy entailed corruption and waste1 of course2 but what mattered a few million acres of land6 ,no one had heard of a conservation problem at the close of the ,civil ,war4 ,resources were limitless2 without enterprise1 without labor and capital1 without transportation they had no value1 they were free goods4 ,the great public task of the nineteenth century was to settle the continent and make these resources available for mankind4 ,this task it performed with nineteenth-century methods4 ,from our standpoint they may have been wasteful methods1 but they did get results4 ,in its historical setting1 the viewpoint from which the task of settlement was approached was not so far wrong4 ,when we examine the counts against the railroads as private enterprises1 we find that the poor construction1 which from our point of vantage looks like dangerous1 wasteful1 hand-to-mouth policy1 is only in part explained by the fact of reckless and dishonest finance4 ,i am advised by an eminent and discriminating observer that the distinguished ,italian engineer to whom ,argentina entrusted the building of its railroad to ,patagonia1 produced a structure which in engineering excellence is the equal of any in the ,united ,states to-day4 ,but the funds are exhausted and the ,patagonia railroad is halted one hundred and fifty miles short of its goal2 there are no earnings to maintain the investment4 ,the reaction of high interest rates on the practical sense of ,american capitalists and engineers has made operation at the earliest possible moment and with the smallest possible investment of capital the very essence of ,american railway building in new territory4 ,actual earnings are expected to furnish capital1 or a basis for credit1 with which to make good early engineering defects4 ,all this1 of course1 is but another way of saying that the criterion of engineering efficiency is not perfection1 but good enough4 ,this distinction has placed a large measure of genuine efficiency to the credit of ,american engineers1 and it explains why ,americans have done many things that others were unwilling to undertake4 ,it is a great thing to build a fine railroad in ,patagonia1 but ,i am sure we all rejoice that the first ,pacific railroad did not have its terminus in the ,nevada sagebrush4 ,the standard of technical perfection set by the ,italian engineer did not fit the facts4 ,it is not the failure to attain his standard but the failure to measure up to a well-considered standard of good enough that stands as an indictment against ,american railway enterprise4 ,viewed in historical perspective the business environment of the pioneer appears to have been dominated by two outstanding facts3 one1 seemingly inexhaustible resources2 the other1 a set of political and economic doctrines which told him that these resources must be developed by individual initiative and not by the ,state4 ,the faster the resources were developed the more rapidly the nation became economically independent and economically great1 and since they could not be developed by the ,state it is not strange that private initiative was stimulated by offering men great and immediate rewards4 ,these rewards have encouraged individuals and associations of individuals to aspire to a quick achievement of great economic power1 and their aspirations have been realized4 ,such achievements have been a dominating feature of our business life1 and we have regarded them as an index of national greatness4 ,abundance of resources1 if it did not make this the best way1 at least made it an obvious way1 for the nineteenth century to solve its business problems4 ,from our vantage point we can see that serious mistakes were made4 ,when we set the foresight of our fathers against our own informed and chastened hindsight their methods appear clumsy and amateurish4 ,but in the main they did solve their problems3 they gave us a settled continent2 they gave us transportation and diversified industry4 ,we now have our garden and the tools with which to work it4 ,if the pioneer allowed the children to pick flowers and in some cases to run away with the plants and the soil1 he did not fail to develop the estate4 ,our inheritance from the pioneer is not only material but psychological4 ,the pioneer attitude of mind has made a real contribution to our business standards4 ,the very magnitude of our enterprises1 the fact that we have had to develop our methods as we went1 our success in approaching problems that way1 have given us a confidence in ourselves and a readiness to undertake big things without counting the cost4 ,this readiness is a large1 perhaps a dominant1 factor in our contribution to world progress4 ,it is not an accident that the greatest problems of mountain railway building have been met and solved by ,american engineers1 or that they have carried a great railroad under two rivers to the heart of our greatest city4 ,these in a private way1 and the ,panama ,canal in a public way1 are typical of ,american engineering enterprise4 ,as with engineering1 so with general business4 ,our pioneer managers did not lack imagination2 they were not afraid to undertake2 they were not constrained by worry lest they make mistakes4 ,they made many mistakes4 ,some were corrected1 others ignored1 but many more were concealed by an abundant success4 ,the pioneer could afford to do the next thing and let the distant thing take care of itself1 and in large measure he escaped the penalties which normally follow a failure to look ahead4 ,substantial forces have tended to keep the pioneer spirit alive4 ,if some resources have been depleted1 other resources have been found to take their place4 ,scientific discovery1 invention1 and the development of technique have placed new forces at our command4 ,products have been multiplied1 but the demand for products has multiplied faster4 ,we have been able to continue offering men great and immediate rewards for the development of new enterprises4 ,as labor was needed1 our neighbors have continued to supply it4 ,the result is that our business has continued to go ahead without being too much concerned about the direction in which it was going4 ,business has eagerly appropriated the results of science without itself becoming scientific4 ,the difficult way of science makes slow progress against the dazzling rewards of unbridled daring4 ,so many strong but untrained men have been enriched by seizing upon the immediate and obvious circumstance--there has been so little necessity for sparing materials or men and so little penalty for waste--that we have developed a national impatience with the slow and tedious process of finding out4 ,along with our technical and business enterprise1 with the courage and imagination of which we are justly proud1 a too easy success has given us a tendency to drop into a comfortable and optimistic frame of mind4 ,imagination1 intuition1 power to picture the future interplay of forces1 courage and capacity for quick action--all these qualities are as essential to-day as they ever were to business success4 ,the pioneer environment reacting on our native temperament has given us these qualities in full measure1 but it has also given us a habit of doing things in a hit-or-miss fashion4 ,our very imagination and courage applied to wrong circumstances and in perverted form have often borne the fruit of national defects4 ,there is a strong inclination to assume that the old approach to problems will bring the same results that it did in the past1 and to forget that we are living in a new world4 ,the problems confronting the pioneer were not the problems we face to-day4 ,it requires great ability to draft a prospectus2 in many of our greatest enterprises drafting the prospectus has been the crucial task4 ,but a prospectus is not a going concern4 ,there is a vast difference between promotion and administration4 ,in the promotional stage of our business life we were solving problems made up of unknown quantities1 problems for which the only angle of approach was found in the formula xyz4 ,we still have and shall always have problems of the xyz type1 but if we apply that formula to a problem in which #bbd we are not likely to get the best results4 ,business may not yet be a science1 but it is rapidly becoming scientific4 ,scientific inquiry is all the while carrying new factors from the category of the unknown to that of the known1 and by so doing it is setting a new standard of business efficiency4 ,the more brilliant qualities1 like courage and imagination1 must be coupled with capacity for investigation and analysis1 with endless patience in seeking out the twos and the fours and eliminating them from the equation4 ,when it is possible by scientific research to distinguish a right way and a wrong way to do a task1 it is not an evidence of courage or imagination but of folly to act on a faulty and imperfect reckoning with the facts4 ,the person who uses scientific method takes account of all his known forces2 he prepares his materials1 controls his processes and isolates his factors so as to reveal the bearing of every step in the process upon an ultimate and often a far distant result4 ,in other words1 he tries at every stage to build upon a sure foundation4 ,his trained imagination and judgment working on known facts set the limit on what he may expect to find1 and interpret what he does find1 all along the way4 ,in so far as particular business enterprises have rested on engineering1 chemistry1 biology1 and other sciences1 a scientific method of approach has long had large use in business2 but the scientist in business has usually been a salaried expert--a man apart from the management--and it has been his results1 and not necessarily his methods1 that have influenced business practice4 ,we are now coming to understand that scientific method is the only sure approach to all problems2 it is a thing of universal application1 and far from being confined to the technical departments of business1 where the technical scientists hold sway in their particular specialties1 it may have its widest application in working out the problems of management4 ,the way in which a man trained in scientific method may determine business practice in a scientific manner finds illustration in a multitude of practical business problems1 ranging all the way from the simplest office detail to the most far-reaching questions of policy4 ,to cite an example1 of the simpler sort3 if an item in an order sheet is identical for eight out of ten orders is it better to have a clerk typewrite the eight repetitions along with the two deviations or to use a rubber stamp8 ,of course1 there are not one or two1 but many1 items in an order sheet and the repetitions and deviations are not the same for all items4 ,in practical application1 the rubber-stamp method means a rack of rubber stamps placed in the most advantageous position4 ,it requires also a decision as to the precise percentage of repetitions which makes the stamp advantageous4 ,then arises the further question1 why not have the most numerous repetitions numbered and keyed and thus avoid the necessity of transcribing them at all8 ,the rule-of-thumb approach to this kind of problem would proceed from speculations concerning the effect of interrupting the process to use the stamp1 the result of such interruptions on the accuracy of work1 difficulties in the way of necessary physical adjustments1 and many other questions that would occur to the practical manager4 ,the scientific method of approach would first inquire whether there are any principles derived from previous motion study or other investigations1 that apply to the case in hand4 ,in accord with such principles it would then proceed1 as far as possible1 to eliminate neutral or disturbing third factors and to arrange a test4 ,the results of the test would lead1 either to a continuance of the old practice1 or to the establishment of a new practice for a certain period1 after which1 if serious difficulties were not revealed1 the new practice would be definitely installed4 ,it should be emphasized at this point1 that there is a fundamental difference between investigations or tests which contemplate an immediate modification of practice and those investigations in which research--that is1 the discovery of new truths--is the sole object4 ,tests which are carried on within the business must never lose sight of the fact that a business is a going concern and that it is impracticable and usually undesirable to transform a business into a research laboratory4 ,scientific methods in business should not be confused with the larger problem of scientific business research4 ,this larger task1 if undertaken by the individual business concern1 is the work of a separate department4 ,for business generally1 it will have to be conducted either by the ,government1 or by business-research endowments4 ,the point at which1 in practical business1 research should give place to action is a question that wise counsel and the sound sense of the trained executive must determine4 ,an example of the contrast between a scientific and a rule-of-thumb approach1 as applied to a question of major policy1 is found in discussions of the relative advantages of a catalogue and mail-order policy over against a policy of distribution by traveling salesmen4 ,a few years ago the head of one of the largest wholesale organizations in the ,united ,states1 talking with an intimate friend1 expressed fear that his house1 which employed salesmen1 might be at a dangerous disadvantage with its chief competitor1 which did an exclusively mail-order business4 ,the friend comforted him with the assurance that there are many buyers who prefer to be visited by salesmen and to have goods displayed before them4 ,this fact1 he held1 would always give an adequate basis for the prosperity of a house that employed the salesman method of distribution4 ,neither the fear nor the assurance here expressed reveals a scientific attitude of mind4 ,careful analysis shows1 on the one hand1 that the mail-order policy is not the most effective means of cultivating intensively a well populated territory4 ,on the other hand1 it shows that the expense of sending salesmen to distant points in sparsely populated areas more than absorbs the profits from their sales4 ,individual concerns have arrived at these conclusions by experiment and accurate cost-keeping and have succeeded in reaching a scientific decision as to which territories should be cultivated by salesmen and which ones should be covered exclusively through advertising and the distribution of catalogues and other literature4 ,the difficulty that business men find in applying scientific method consistently in the analysis of their problems is strikingly revealed in the labor policy of the great majority of industrial concerns4 ,while many men of scientific training are dealing with problems of employment1 probably no concern has undertaken to make a scientific analysis to determine what are the foundations of permanent efficiency of the labor force which they employ4 ,this is not surprising1 when we remember how complicated is the problem and how short the time during which we have been emphasizing the human relations as distinguished from the material or mechanistic aspect of business organization4 ,to state even a simple problem of management1 like the one concerning the order sheet1 set forth above1 is to reveal some of the difficulties of analysis which characterize all subject-matter having to do with human activity4 ,this means that we should not expect results too quickly nor should we be disappointed if the first results of efforts at scientific analysis are not absolutely conclusive4 ,as soon as we recognize that business is primarily a matter of human relations1 that it has to do with groups and organizations of human beings1 we see that scientific analysis of it cannot proceed in exactly the same way as with units of inanimate matter4 ,the reaction of human relations to changed influences1 frequently cannot be predicted until the changes occur4 ,business1 in other words1 is a social science and1 like all social sciences1 must deal primarily with contingent rather than exact data2 likewise conclusions drawn from scientific analysis must in large measure be contingent rather than exact4 ,although we cannot always isolate our factors1 control our processes1 and otherwise apply scientific method1 with results as conclusive as those obtained in laboratories of chemistry1 physics1 or biology1 we need not therefore reject scientific method in favor of a rule-of-thumb4 ,we should1 however1 be suspicious of too sweeping claims based on any but the most careful and painstaking analysis of facts by persons who are thoroughly trained in the kind of analysis they undertake4 ,while a scientific approach will help in solving many problems of business detail1 the substitution of scientific method for a rule-of-thumb approach will realize its object most completely in the influences exerted upon fundamental long-time policy1 influences which cannot bear fruit in a day or a year4 ,the circumstances of our history have retarded the acceptance of a long-time scientific viewpoint in business1 but forces now at work are making powerfully for a scientific approach to business management4 ,first among these is a realization that our resources are measured in finite terms4 ,we have begun to take account of what we have1 and we are able in a rough way to figure the loss from what we have squandered4 ,the situation is not desperate1 but we can see that it may become so4 ,to insure against possible disaster in the future we need to exercise effective economy in turning resources into finished goods1 and we need to eliminate waste in the distribution and the consumption of these goods4 ,in private business the need for such economy is reflected in rising prices for raw materials4 ,in its public aspect we have labeled the problem1 conservation4 ,a second force making for a scientific approach to business is found in the beginnings of a social policy to which ,i have referred4 ,this policy is showing itself in limitations upon the way in which materials and men may be utilized and in a sharper definition of the business man's obligations to employees1 to competitors and consumers4 ,as long as resources are to be had for the asking1 while cheap labor can be imported and utilized without restraint1 and where no questions are asked in marketing the product1 there is not the right incentive to do things in a scientific way4 ,as business becomes more and more the subject of legal definition1 as the tendency grows of regarding it as a definite service1 performed under definite limitations1 and for definite social ends1 margins will be narrowed and it will become increasingly necessary to do things in the right way4 ,the scientific approach to business has made great progress during the past decade4 ,out of the hostile criticism to which so-called big business has been subjected have come several government investigations and court records1 in which policies of different concerns have been explained1 criticized1 and compared4 ,besides1 business men themselves have become less jealous of trade secrets and have shown an increasing inclination to compare results4 ,a good illustration of this tendency is seen in the growth of open price associations and in the spirit in which credit men1 sales managers' associations1 and other business groups exchange information4 ,in the same spirit1 business and trade journals have given a large exposition of individual experience and increasing attention to questions of fundamental importance4 ,more significant still has been the scientific management propaganda4 ,mr4 ,brandeis's dramatic exposition of this movement in the railway rate cases in #aiaa at once made it a matter of public interest4 ,later discussion may not have extended acceptance of scientific management1 but it has not caused interest in it to flag4 ,the movement has become essentially a cult4 ,its prophet1 the late ,frederick ,taylor1 by ignoring trade-unionism and labor psychology in the exposition of his doctrines1 at once drew down upon them the hostility of organized labor2 the movement was branded as another speeding-up device4 ,more serious than the antagonism has been the spirit in which some of the scientific management enthusiasts--not all--have met it4 ,they seem to assume that their science is absolute and inexorable1 that it eliminates disturbing factors and hence needs no adjustment to adapt it to the difficulties met in its application4 ,this air of omniscient dogmatism1 together with the disasters of false prophets1 has somewhat compromised the movement and has diminished its direct influence4 ,however1 business men have been stirred up4 ,they have become accustomed to using the words science and business in the same sentence4 ,they are in a receptive attitude for ideas4 ,the indirect influence has been great4 ,a final1 and probably in the long-run the most permanent1 influence making for the extension of scientific method in business has been the new viewpoint from which universities have been approaching the task of educating men for business4 ,prior to #aijj1 university education for business in the few universities that attempted anything of the sort was confined to such branches of applied economics as money and banking1 transportation1 corporation finance1 commercial geography1 with accounting and business law to give it a professional flavor4 ,there were also general courses labeled commercial organization and industrial organization1 but these were almost entirely descriptive of the general business fabric of the country1 and had but the most remote bearing on the internal problems of organization and management which an individual business man has to face4 ,the assumption was that a man who was looking forward to business would probably do well to secure some information about business1 but there was little attempt at definite professional training of the kind given to prospective lawyers1 physicians1 or engineers4 ,within the past few years universities have begun to undertake seriously the development of professional training for business4 ,the result has been that through organized research and through investigations by individual teachers and students1 the universities are gathering up the threads of different tendencies toward scientific business and are themselves contributing important scientific results4 ,out of all this there is emerging a body of principles and of tested practice which constitutes an appropriate subject-matter for a professional course of study1 and points the way to still further research4 ,one of the earliest results of an approach to business in an attitude of scientific research1 is the discovery that there are certain fundamental principles which are alike for all lines of business1 however diverse the subject-matter to which analysis is applied4 ,substituting the principle of likeness for diversity as the starting-point of business analysis1 has far-reaching consequences not only for education and research but for management as well4 ,first among these consequences is the fact that search for elements of likeness leads at once to replacing the trade or industry with the function as the significant unit both of research and organization4 ,if we start our study of business by separating manufacturing1 railroading1 merchandising1 banking1 and the rest1 with a large number of more or less logical subdivisions in each field1 and then try to work out a body of principles applicable to each subdivision1 we soon run into endless combinations and lose all sense of unity in business as a whole4 ,as soon1 however1 as we approach business from the standpoint of accounting1 sales management1 employment1 executive control1 and when we find that lessons in statistics1 advertising1 moving materials1 or executive management1 learned in connection with a factory1 can be carried over with but slight adaptation to the management of a store1 we at once get a manageable body of material on which to work4 ,recognition of the principle of likeness and of its corollary1 analysis by function rather than by trade1 marks perhaps the greatest single step yet taken in the development of scientific business4 ,the principle1 however1 has its dangers4 ,analysis by function implies functional specialization in research and a similar tendency in business practice4 ,without specialization there can be no adequate analysis of any large and complex body of facts4 ,with too intense specialization there is always danger that the assembling and digesting of facts1 and especially the conclusions drawn from them1 will reflect some peculiar slant of an individual or of a particular specialty4 ,the accountant does not always go after the same facts as the sales manager1 and even with the same facts the two are likely to draw quite different conclusions as to their bearing on a general policy4 ,specialization1 too1 may result in setting an intense analysis of one group of facts over against a very superficial view of other facts--or again1 an intense analysis of the same facts from one viewpoint with failure to consider them from another1 and perhaps equally important1 viewpoint4 ,unless these weaknesses are corrected1 the business will lack balance2 the work of departments will not harmonize2 there will be no fundamental policy2 goods sold on a quality basis will be manufactured on a price basis--all of which leads to disastrous results4 ,scientific method is the first article in the creed by which business training must be guided4 ,the growing necessity for critical and searching analysis of business problems1 justifies all the effort we can put forth to develop plans for training into a structure of which scientific method shall be the corner-stone4 ,but analysis is not all4 ,following analysis must come synthesis4 ,somewhere all the facts and conclusions must be assembled and gathered up into a working plan4 ,it is this task of leveling up rough places in the combined work of department specialists1 that puts the training and insight of both the executive and the director of research to the most severe test4 ,it is a mark of a well-trained executive that in performing his task he instinctively follows principles instead of trusting alone to momentary intuitions1 however valuable and necessary these may be4 ,and here it is that the second article in the creed of business training appears4 ,the executive's task is primarily to adjust human relations1 and the nature of the principles by which these adjustments are made1 determines the relations of a concern to its laborers1 to competitors1 to customers1 and to the public4 ,if the executive comes to his task without a mind and spirit trained to an appreciation of human relations1 he is not likely so to synthesize the work of his subordinates as to make for either maximum efficiency within the business or its maximum contribution to the life of the ,state4 ,the term executive in large and highly organized concerns is likely to mean the head of a department4 ,a large proportion of the department heads now in business are men of purely empirical training4 ,their horizon is likely to be limited and to center too much in the departmental viewpoint4 ,they may perhaps be able to see the whole business1 but if they do1 they will probably see it exclusively from the inside4 ,there is frequently nothing in their business experience that has made them think of the great forces at work in society at large4 ,as the bulk of business has been organized in the past1 there has been no department in which1 automatically and in the regular course of business1 a view looking outward is brought to bear4 ,if it came at all1 it was reflected back from the larger relations and the larger social contacts of the head of the business4 ,many general executives have been promoted from the position of head of department at a period in life when their habits of thought had become crystallized1 and it was not natural that they should entirely change those habits with the change in their responsibilities4 ,besides1 the economics of competition and a strong group sentiment among business men have tended to make them resist social influences which might react upon the policies of their own business4 ,superficial conclusions drawn from such experiments as those of ,pullman and of ,patterson1 to which reference has been made1 have seemed to justify such resistance and have fortified men in the belief that business and response to social influence should be kept separate in water-tight compartments4 ,more recently men have been coming to understand the fundamental defects in the ,pullman and the original ,cash ,register plans and have come to realize that even a separate welfare department may be successfully incorporated in a business1 if only certain fundamental policies are followed in its management4 ,still more significant is the view looking-outward and the consequent harmonizing of social and business motives1 which is coming in the ordinary development of business policies as a result of their more fundamental analysis4 ,perhaps the greatest step toward a fuller consideration of facts on the outside is taken1 when a business creates a separate department of employment4 ,it is hard to see how the head of an employment department can have the largest measure of success if he sees only the facts on the inside4 ,a comprehensive application of scientific method to problems of employment leads a long way into analysis of the social facts affecting the people who are employed4 ,from different angles the same thing is true in other departments of business1 notably so in the case of advertising and sales4 ,one of the most obvious outside facts which affect sales1 is the location and density of the population1 and yet it is a fact which frequently is neglected4 ,another outside fact1 which ultimately advertisers will have to consider1 is the consuming power of population4 ,they have been very keen to study our psychological reactions1 and in doing this they have undertaken the entire charge of the evolution of our wants4 ,but they have not always gone at their work from the long-time point of view4 ,sometime they will have to take account of the fact that unwise consumption impairs efficiency and depletes the purchasing power from which advertisers must be paid4 ,the next step in the scientific analysis of business is to provide for more ample analysis of facts on the outside4 ,weakness at this point explains the defects in many plans for the welfare of employees1 it explains the defects in scientific management1 mentioned above1 and it explains many other shortcomings in projects for increasing the effectiveness of business4 ,but men who approach business from the standpoint of university research are not free from the same danger4 ,in their effort to orient themselves with the business facts1 they get the business point of view and run the risk of centering attention too much on materials and material forces4 ,even psychological reactions of men and women may be analyzed from the standpoint of their mechanics1 without ever going back to those impelling motives which have their roots in the human instincts and complex social reactions of which the men and women are a part4 ,approached from the standpoint of scientific method1 the field of conflict between different interests in business and between so-called good business and good ethics becomes measurably narrowed4 ,i do not mean to give science the sole credit for achievements along this line4 ,more frequently advance in moral standards has been forced on unwilling victims through legislation1 public opinion1 or class struggle1 and then men have discovered1 as a happy surprise after the event1 that good ethics was profitable4 ,but science has done something1 and might have done still more1 if our efforts at scientific analysis had not been so often underweighted on the human side4 ,these very discoveries of harmony between wholesome practice and good business constitute a part of the body of fact of which a truly scientific method must take account4 ,when a review of all the cases in which compulsion has changed existing methods shows an almost invariable adaptation and a tendency toward better results after the level of competition is raised1 a man of scientific training immediately asks the question1 whether a fundamental law is not at work4 ,a glance at social legislation during the last century reveals some interesting uniformities4 ,every step in the development of the ,english ,factory ,acts as they stood at the beginning of the present war1 starting with the first ,child ,labor ,bill in #ahjb and ending with the ,shop ,regulation ,act of #aiab1 had been taken against the protest of the most vocal elements in the trades concerned4 ,in nearly every case investigation will show1 either that the requirements of the measure enacted fell considerably below the practice of the best concerns1 or that the whole industry was in need of some outside impulse to start it in the way of more efficient organization4 ,as long as it is permissible to employ five women and five children to tend five machines1 there is not the right incentive to make adjustments by which all five of them can be tended by one man4 ,in this country in our forty-nine jurisdictions we have been going forty-nine times over the experience of ,england and other countries1 in connection with each effort to force up the competitive level4 ,we have seemed to be quite unable to apply the most obvious lessons of experience either at home or abroad to new cases1 and yet essentially the same uniformity of adaptation has occurred here as abroad4 ,like our employer1 whom a strike impelled to adopt an advanced policy toward labor1 we find after the event that we should not know how to do business under the standards in force before the law compelled a change4 ,enforcement of the ,sherman ,anti-,trust ,law has been frequently cited as an example of unwise government interference4 ,with respect to many of the incidents of enforcements1 criticism has been well founded4 ,but the net result of that enforcement has been a much sounder body of law on the important subject of fair and unfair competition4 ,besides1 we now have in the ,federal ,trade ,commission the beginnings of an administrative organization for dealing with the whole subject of monopoly and restraint of trade4 ,and more than all this1 we have a better prospect than ever before1 of some sort of mutual respect between government and business1 and of honest coperation in working out their mutual problems4 ,it is not likely that the ,anti-,trust ,law has prevented honest men from earning legitimate profits from legitimate business service to anything like the extent which would be indicated by the vigor with which it has been opposed4 ,but even if it has1 we have received something for the price paid4 ,and so the list might be lengthened1 pure food and drugs1 meat inspection1 public service regulation1 industrial safety1 and the rest1--in nearly every case1 from a purely business point of view1 opposition1 in so far as it related to the main point of government policy1 has been a mistake4 ,refusal of the business men affected to accept a policy of regulation has tended to shut them out of the councils in making adjustments of detail4 ,this fact has hindered the government in performing a service which in most cases both the public and the business needed to have done4 ,even when we admit1 as obviously we must1 the persistence of conflict between different interests with respect to a large mass of business detail1 the fact of group influences and social control still remains an important consideration to which business analysis must give due weight4 ,there has been a large mass of business in this country1 in which the community has been unable to recognize any productive service2 it has been regarded only as a means of acquisition for those who pursue it4 ,legislation1 public opinion1 and the evolution of enforceable standards within particular business groups are tending all the while to narrow the sphere of purely acquisitive business4 ,with respect to that great mass of business which has both an acquisitive and a productive side1 these forces are gradually bringing us to an attitude of mind in which we regard gain as a by-product of service4 ,the public is also recognizing that the purpose of goods and services is to promote individual and community welfare1 and as fast as public policy to that end can be worked out1 it is carrying emphasis even beyond specific products and services to the social ends for which these products and services exist4 ,in these ways society too is trying1 clumsily perhaps1 to take a long-time view of its business and to conserve the human values that make for progress4 ,obviously it is but a partial and incomplete analysis of a business situation that omits these human factors2 a working policy that fails to anticipate their force and then to reduce the zone of conflict to its lowest limits is neglecting an important element in the definition of long-time efficiency4 ,and business men are beginning to see this4 ,a few weeks ago the manager of a large department store in ,san ,francisco was kind enough to show me his record of departmental profits for a number of months4 ,the fluctuation in relative profits of different departments month by month was apparent1 especially the fact that after a certain month several departments which had previously earned high profits became relatively much less profitable4 ,i asked the manager to explain1 and he did in this way3 ,at the time when the change occurred a new policy had been inaugurated by which employment of help had been centralized and standardized for the whole concern4 ,as a result1 when certain departments which had been decidedly sub-standard with respect to wages were brought up to standard1 they were unable to earn anything like the profits which they had previously shown4 ,without going into the question of the connection between high wages and profits1 of which this incident in my opinion was an exception1 it was clear to the manager as to me that the increase in wages in these particular departments had been accompanied by an immediate loss in profits4 ,furthermore1 the manager was unable to determine1 from figures available before and after the change1 that this loss had been directly compensated by gains in other departments4 ,in order to get his viewpoint concerning the change at issue1 ,i asked him two questions3 7#a7 ,why was he willing to make a change of such a fundamental character without being able to ascertain in advance whether or not it would be profitable8 7#b7 ,in the absence of facts that could be incorporated in the accounts1 was it his belief that the change would in time be profitable1 and if so1 how did he reach his conclusion8 ,his response to the first question revealed to me an intensely natural but nevertheless complex motive4 ,he said1 substantially1 that he was confident that standardized employment was the only acceptable policy1 from the standpoint of the general manager4 ,given the necessity of standardizing1 it was necessary for the general reputation of the business to standardize upward rather than downward4 ,he wanted his business to be regarded as one in which the best standards of employments obtained4 ,furthermore1 he added1 ,california will soon have a minimum wage law1 and ,i want this business to be well in advance of any wage standards which may be imposed by law4 ,answering the second question more specifically1 the manager recognized the advertising value of a reputation for having good conditions of employment4 ,he had discovered no tendency for general profits to diminish or for the rate of increase to be retarded more than temporarily4 ,in the absence of definite facts to the contrary he considered it safe to assume that as soon as the business should become adjusted to the new standards1 standardization of wages upward would be profitable for the business as a whole4 ,he wanted to make the change voluntarily and to commence operating successfully on the new basis in advance of competitors4 ,it is scarcely possible to discuss this sort of business situation with a progressive manager1 without feeling that he does not approach business exclusively from the standpoint of gain2 in other words1 to use the phrase of ,adam ,smith1 he is not exclusively an economic man4 ,the manager of a modern business1 on the contrary1 is a man very much like the rest of us1 and being such a man he is first of all desirous of conforming to whatever standards are in way of acceptance by that part of society in which he moves4 ,obviously1 these standards are made up of both selfishness and altruism1 with selfishness tending all the time to become more enlightened as society advances4 ,as we come to distinguish more clearly between reward for service and mere one-sided gain1 there occurs a parallel change in men's motives2 they become more sensitive to social disfavor and to social esteem and less and less willing to devote their lives to activity by which no one but themselves is benefited4 ,in this reaction of altruism with enlightened selfishness there emerges in men's minds a new concept of their own interest and a better understanding of the kind of business policy that in the long-run brings them the greatest reward4 ,of course1 this does not mean that enlightened selfish interest has ceased1 or that it will ever cease1 to be a motive force in business4 ,but there is a vast difference between selfishness untempered with other motives and selfishness eager for the esteem of one's fellows4 ,clearly it is a task of higher education to help promote response to the more enlightened motives4 ,the difficulty which even men of advanced university training have in taking full account of human factors indicates something of the nature and importance of the task4 ,the so-called scientifically trained manager tends to undervalue the human factor of his equation4 ,his analysis is likely to be overweighted on the material side4 ,when the university starts--as it is starting and should start--to train future executives1 it needs to analyze its own problem1 and take full account of the dangers against which it has to guard4 ,otherwise the training itself will be overweighted on the material side and will perpetuate the weakness that it ought to correct4 ,the greatest danger in this connection1 as ,i see it1 arises out of the distinction between the so-called cultural and the vocational point of view4 ,this distinction comes to us with a large mass of traditional authority1 and we have classified subjects and erected barriers on the assumption that the distinction is real4 ,as far as the training of business executives is concerned1 ,i am confident that the distinction is one which ought never to be made4 ,it is a great misfortune1 when young men and women who are preparing for a serious career are permitted to think of culture as a non-functioning ornament2 equally unfortunate is it for them to think of their prospective vocations as activities devoid of cultural association4 ,a few days ago a student who had already selected his profession and was anxious to be about it confided to me1 as many others have done1 how distasteful he was finding the task of working off his culture4 ,does any one really suppose that the sophomore who is working off his culture under faculty compulsion1 in order to get his college degree1 is really absorbing from his study anything which1 as the faculty assumes1 makes him a better man and yet1 as he himself believes1 contributes nothing to effectiveness in his profession8 ,or take the case of the man who devotes himself with professional earnestness to his two1 three1 or four years of college work--will he find that he has invested his time and his money on a purely ornamental luxury that has no relation to his later work8 ,the first great element of training which the university can give to future business men is a mastery of scientific method as a means of analyzing problems and synthesizing results4 ,quite as fundamental as this is the development of an intelligent and sympathetic approach to questions of human relationship4 ,only the beginning steps in the direction of business efficiency can be taken while attention is confined to the material and mechanistic side of business organization4 ,no secure basis for permanent efficiency can be established until we are prepared to go deeply into the question of human motives and to understand something of the complex reactions that come from individual and group associations4 ,without such a basis we cannot hope for a nationally effective business organization4 ,business is a form of coperation through which men exercise control over natural forces and thereby produce things with which to satisfy human wants4 ,any subject well taught1 which gives an insight into human relations or into nature and man's control over it1 will help prepare a person to deal with the intricate problem of human relations in business--that is1 if the student has studied the subject in an attitude of mind to see its bearing on what he is preparing to do4 ,the question is not so much one of too few or too many so-called culture subjects1 but rather of the attitude of mind in which all subjects are undertaken4 ,it is a question of getting such a survey of the great facts of human experience and of so pointing their significance as to enable men to approach a problem of human relationship with sympathy and something of a long-time dynamic viewpoint4 ,when this is accompanied by a mastery of scientific method1 the foundations are reasonably secure4 ,without such foundations1 secured either in college or out1 analysis of problems in a specialized business field is almost sure to be one-sided and incomplete4 ,the kind of professional training that ,i would suggest for the future business executive would be laid on the foundation of a college course of two1 three1 or four years in which the viewpoint and the varied methods of study in several diverse branches of knowledge had been thoroughly instilled4 ,when the student passed to the professional study of business he would be expected to master the fundamentals of business organization and management1 including the basic elements of subjects like accounting1 finance1 and other divisions of organization common to all lines of business4 ,all of these studies would be pursued with constant reference to the fact that business is carried on in a community in which certain public policies are enforced and in recognition of the fact that business should conform to these policies and help to make them effective in contributing to public welfare4 ,as the student advances1 the course would proceed toward greater and greater specialization1 and would finally culminate in an intensive study of some fairly narrow business problem1 pursued until the student has mastered it in principle and in detail4 ,the result of his study would be set forth in dignified readable ,english which an intelligent layman could comprehend and which would make the article acceptable for publication in a journal of standing4 ,professional study of business1 then1 should give students a comprehensive many-sided survey of business and a thorough grasp of scientific method as used in analyzing business facts4 ,it should prepare the student to think complicated business problems through to the end and to put the results of his thinking together into an effective working plan4 ,finally1 it should maintain an atmosphere in which business problems are regarded in a large and public-spirited way4 ,we are well under way with professional training for business2 but if students fail to get the general educational foundation for it1 it will not accomplish the best results4 ,if the two1 three1 or four years of college study is regarded as something purely ornamental and irrelevant1 while they are getting it1 if it fails to arouse an appreciation both of scientific method and of human values1 or if these values are thought of as something to forget when the student comes to the analysis of practical problems1 the university will not have done what it might do for the promotion of high standards of efficiency in business4 ,in all of the discussions ,i have tried to point out how emphasis in business is gradually shifting from acquisition1 to production and service2 how there are gradually evolving in business1 professional standards of fitness1 of conduct1 and of motive2 and how more and more these standards enter into the measuring of business success4 ,our educational assumptions still rest too largely on the old dollar standard of success with its well-known inferences about the blood-and-iron equipment with which that success can be attained4 ,psychologists tell us that we tend to get what we expect4 ,if we fail to create enthusiasm for the opportunity for service in business2 if we assume that young persons who enter business are going to measure their returns in dollars alone2 or if we continue to feature1 as we have done1 the break between the so-called cultural and the professional parts of the university course1 there will be danger that we shall continue to get the thing for which we plan4 ,there can be no doubt that many of our old assumptions about the relative dignity and social distinction attaching to different kinds of study1 as well as the assumption of a purely mercenary motive in business1 have impeded a wholesome reaction between higher education and business standards4 ,these assumptions have created an atmosphere--an objective and subjective attitude of mind1 a set of motives and desires1 of appreciations and valuations1 all of which stand in the way of the most far-reaching educational results4 ,so far as these assumptions can be rationally explained1 they rest on ideas that are in part mistaken1 in part exaggerated1 and in part obsolete4 ,the application of scientific method to business has created an entirely new relationship between business and education4 ,scientific analysis and social policy are establishing a new connection between the material and the human facts of business4 ,in the new atmosphere the business executive requires those fine qualities of mind and spirit1 and the ability to command these qualities for a given task1 which peculiarly it is the work of the university to cultivate4 ,in proportion as universities have vigorously undertaken this work1 and have applied scientific method to their own problem of articulating it with higher education in general1 the line of approach to professional business training has become increasingly clear4 ,among the notable developments of the past decade has been a shifting of emphasis from the training of specialists to the training of business executives4 ,as preparation for executive work comes to be generally recognized as an appropriate field for systematic professional study1 the standards that scientific method has already achieved will become fixed and better standards of business efficiency and service will emerge4 ,the ,riverside ,press ,,cambridge ,,massachusetts ,u ,s ,a