Henry Ford

“ One angle of the transportation problem to which too few men are paying attention is this useless hauling of material. If the problem were tackled from the point of ridding the railroads of their useless hauls, we might discover that we are in better shape than we think to take care of the legitimate transportation business of the country. In commodities like coal it is necessary that they be hauled from where they are to where they are needed. ”

“ Lawyers, like bankers, know absolutely nothing about business. They imagine that a business is properly conducted if it keeps within the law or if the law can be altered or interpreted to suit the purpose in hand. ”

“ We have as yet made no special efforts of any kind and the railway has not been set up as a demonstration of how every railway should be run. It is true that applying the rule of maximum service at minimum cost has caused the income of the road to exceed the outgo--which, for that road, represents a most unusual condition. It has been represented that the changes we have made--and remember they have been made simply as part of the day's work--are peculiarly revolutionary and quite without application to railway management in general. ”

“ The men who know railroading have not been allowed to manage railroads.
In a previous chapter on finance were set forth the dangers attendant upon the indiscriminate borrowing of money. It is inevitable that any one who can borrow freely to cover errors of management will borrow rather than correct the errors. Our railway managers have been practically forced to borrow, for since the very inception of the railways they have not been free agents. The guiding hand of the railway has been, not the railroad man, but the banker. ”

“ Our communities ought to be more complete in themselves. They ought not to be unnecessarily dependent on railway transportation. Out of what they produce they should supply their own needs and ship the surplus. And how can they do this unless they have the means of taking their raw materials, like grain and cattle, and changing them into finished products? If private enterprise does not yield these means, the cooperation of farmers can. ”

“ Instead of operating under the rules of common sense and according to circumstances, every railroad had to operate on the advice of counsel. Rules spread through every part of the organization. Then came the avalanche of state and federal regulations, until to-day we find the railways hog-tied in a mass of rules and regulations. With the lawyers and the financiers on the inside and various state commissions on the outside, the railway manager has little chance. That is the trouble with the railways. Business cannot be conducted by law. ”

“ Too many railroads are run, not from the offices of practical men, but from banking offices, and the principles of procedure, the whole outlook, are financial--not transportational, but financial. There has been a breakdown simply because more attention has been paid to railroads as factors in the stock market than as servants of the people. Outworn ideas have been retained, development has been practically stopped, and railroad men with vision have not been set free to grow. ”

“ It was a little hard to break the "orders" habit; the men at first were afraid to take responsibility. But as we went on, they seemed to like the plan more and more and now no man limits his duties. A man is paid for a day's work of eight hours and he is expected to work during those eight hours. If he is an engineer and finishes a run in four hours then he works at whatever else may be in demand for the next four hours. If a man works more than eight hours he is not paid for overtime--he deducts his overtime from the next working day or saves it up and gets a whole day off with pay. ”

“ Nothing in this country furnishes a better example of how a business may be turned from its function of service than do the railroads. We have a railroad problem, and much learned thought and discussion have been devoted to the solution of that problem. Everyone is dissatisfied with the railways. The public is dissatisfied because both the passenger and freight rates are too high. The railroad employees are dissatisfied because they say their wages are too low and their hours too long. ”

“ If a coal community mined coal in Pennsylvania, and then sent it by railway to Michigan or Wisconsin to be screened, and then hauled it back again to Pennsylvania for use, it would not be much sillier than the hauling of Texas beef alive to Chicago, there to be killed, and then shipped back dead to Texas; or the hauling of Kansas grain to Minnesota, there to be ground in the mills and hauled back again as flour. It is good business for the railroads, but it is bad business for business. ”

“ Business was treated as if it existed for the benefit of the railways. During this period of folly, it was not good railroading to get goods from their shipping point to their destination by the most direct line possible, but to keep them on the road as long as possible, send them around the longest way, give as many connecting lines as possible a piece of the profit, and let the public stand the resulting loss of time and money. ”

“ We need, instead of mammoth flour mills, a multitude of smaller mills distributed through all the sections where grain is grown. Wherever it is possible, the section that produces the raw material ought to produce also the finished product. Grain should be ground to flour where it is grown. A hog-growing country should not export hogs, but pork, hams, and bacon. The cotton mills ought to be near the cotton fields. ”

“ As new claims arise, they are settled at once and on the facts, so that the legal expense seldom exceeds $200 a month. All of the unnecessary accounting and red tape were thrown out and the payroll of the road was reduced from 2,700 to 1,650 men. Following our general policy, all titles and offices other than those required by law were abolished. The ordinary railway organization is rigid; a message has to go up through a certain line of authority and no man is expected to do anything without explicit orders from his superior. ”

“ When by skilled management the net revenue became large enough to pay a considerable dividend upon the stock, then that dividend was used first by the speculators on the inside and controlling the railroad fiscal policy to boom the stock and unload their holdings, and then to float a bond issue on the strength of the credit gained through the earnings. ”

“ The same is true of the raw materials of industry--they must be hauled from the place where nature has stored them to the place where there are people ready to work them. And as these raw materials are not often found assembled in one section, a considerable amount of transportation to a central assembling place is necessary. The coal comes from one section, the copper from another, the iron from another, the wood from another--they must all be brought together. ”

“ When railroad credit was high, more money was to be made out of floating bond issues and speculating in the securities than out of service to the public. A very small fraction of the money earned by the railways has gone back into the rehabilitation of the properties. ”

“ The minimum wage is six dollars a day. There are no extra men. We have cut down in the offices, in the shops, and on the roads. In one shop 20 men are now doing more work than 59 did before. Not long ago one of our track gangs, consisting of a foreman and 15 men, was working beside a parallel road on which was a gang of 40 men doing exactly the same sort of track repairing and ballasting. ”

“ The men seem entirely willing to cooperate in saving. They do not discard that which might be used. We ask a man, "What can you get out of an engine?" and he answers with an economy record. And we are not pouring in great amounts of money. Everything is being done out of earnings. That is our policy. The trains must go through and on time. The time of freight movements has been cut down about two thirds. A car on a siding is not just a car on a siding. ”

“ The locomotives and rolling stock are being overhauled in our own shops and at a very slight expense. We found that the supplies bought previously were of poor quality or unfitted for the use; we are saving money on supplies by buying better qualities and seeing that nothing is wasted. ”

“ There is scarcely a railroad in the United States that has not been through one or more receiverships, due to the fact that the financial interests piled on load after load of securities until the structures grew topheavy and fell over. ”

“ But it will not register its full effect on the transportation situation and upon the cost of living until it is done more widely and in more kinds of materials.
It is one of nature's compensations to withdraw prosperity from the business which does not serve. ”

“ The delays became legal matters to be taken up in due legal course; that is not the way of business. We think that a delay is a criticism of our work and is something at once to be investigated. That is business. ”

“ The railroads in general have broken down, and if the former conduct of the Detroit, Toledo & Ironton is any criterion of management in general there is no reason in the world why they should not have broken down. ”

“ It crosses most of the large trunk lines and it is a road which, from a general business standpoint, ought to pay. It has paid. It seems to have paid the bankers. In 1913 the net capitalization per mile of road was $105,000. In the next receivership this was cut down to $47,000 per mile. I do not know how much money in all has been raised on the strength of the road. I do know that in the reorganization of 1914 the bondholders were assessed and forced to turn into the treasury nearly five million dollars--which is the amount that we paid for the entire road. ”

“ They live on rules. The bankers took finance out of the hands of the managers. They put in lawyers to see that the railroads violated the law only in legal fashion, and thus grew up immense legal departments. ”