Another cause is contained in the borrowing program which we have reviewed. The heavy borrowings have given rise to an increasingly heavy interest charge. According to Sr. Elysio de Carvalho, whose figures of new annual borrowings were given above, p. 461, the total foreign capital invested in Brazil was in 1917, $2,000,000,000.1 Of this sum $577,240,000 is the foreign debt of the federal government (December 31, 1917), and $301,116,376, the foreign indebtedness of the individual states and municipalities (December 31, 1916); the remainder, or $1,122,000,000, representing private investment. The annual interest charge on the federal foreign debt is about $30,000,000, but owing to the funding agreement, which did not end until August, 1917, only $11,993,506 was paid in 1917. Interest on all other foreign capital ($1,423,000,000) at 5 per cent equals $71,150,000; the total interest charge in 1917 was thus about $83,144,000. When this sum is added to the imports ($216,319,000), we have a total of outgoings from Brazil of about $299,463,000, as against $290,993,000 of exports. The favorable trade balance of $74,674,000 (shown on p. 460) is thus converted into a deficit of $8,470,000. Had the full interest charge on the federal foreign debt been paid, the balance would have been much more unfavorable.

To sum up the discussion of Brazilian exchange, the suspension of specie payments by the act of December, 1914, the large emissions of inconvertible paper money since that date, the sudden shutting-off of the large annual inflow of foreign capital by the outbreak of war, which brought upon Brazil the full burden of the interest charge these factors, combined with the serious shrinkage of the exports of coffee and rubber and the

1 of the total amount $1,750,000,000 is European. Of this $705,000,000 is English, and $600,000,000 French. Pan American Magazine, November, 1918, pp. 20 et seq.

consequent failure of the export trade to expand, as it has done in other countries, brought it about that whereas in the other countries exchange rose remarkably, in Brazil the level of exchange during the war was considerably below the level of pre-war years.

JOHN H. WILLIAMS.

HARVARD UNIVERSITY.

POSITIVE CONTRIBUTIONS OF SCIENTIFIC

MANAGEMENT

THE ELIMINATION OF SOME LOSSES CHARACTERISTIC OF PRESENT-DAY MANUFACTURE

SUMMARY

I. Introduction, 466.-II. Mechanical or Impersonal Aspects, 471.— A. Increased Production, 471. B. Decreased Cost, 473. - The Use of Equipment, 475. — The Use of Labor, 477. — Material Control, 477. - Routing, 479. — The Regularizing of Production, 481.-C. Improvement in or Maintenance of Quality, 482.-D. Speedy Production and Accurate Delivery, 483. — E. The Power and Stimulus of Knowledge, 484. III. The Human Factor, 487. — A. Industrial Peace, 489. – B. High Wages, 490. — C. Proper Working Hours, 492. — D. Conditions of Work as Related to the Health and Well-being of the Worker, 493.-E. Selection, Fitting and Training, 496.-F. Free Scope for Individual Initiative and Opportunity for Advancement, 498. — G. Reduction of Labor Turnover, 500.-H. A Spirit of Coöperation and Confidence, and a Feeling of Security, 501.

I. INTRODUCTION

TODAY, when present and impending conditions are trying men's souls and forcing a weighing in the balance of their past achievements in so many directions, it seems appropriate and important to make at least a partial appraisement of the contributions of scientific management to the field of industrial problems. It may be well, however, at the start to look back briefly over the successive stages of its development in order to arrive more fairly at a true estimate of its present value, and to enable a correct forecast of its potential worth as a means for the adjustment of present and future social and economic problems.

As long as the early discussions and the evolution of the science were confined within the bounds of the American Society of Mechanical Engineers, the public knew little of what was taking place. This was as it should have been, for the early papers which stimulated discussion and really crystallized and forced the concrete statement of principles and methods, later served as the substantiation of the most potent claim of

1

scientific managers namely that scientific management is not a theory evolved on paper by a more or less practical dreamer, but is the result, tho as yet imperfectly expressed, of carefully worked out solutions evolved by far-sighted and eminently practical managers and engineers to meet everyday problems. Such theory as has been developed was preceded long years by sound practice.

With the Eastern Rate Case hearings in 1911, however, came the second stage, the public awakening; and immediately succeeding it came a flood of popular articles, extravagant claims, and vehement denials. There was a mad scramble on the part of various owners of industries (possessing a lamentable lack of understanding as to what this new movement really was) to secure this " panacea," and of course an equally eager readiness on the part of incompetent and frequently unscrupulous charlatans to supply the demand. It is safe to say that had not such abundant evidence of the real value of the fundamental principles, properly applied, been available during this period, the inevitable

1 Towne, "The Engineer as Economist," Trans. A. S. M. E., vol. vii, p. 425; Towne, "Gain Sharing," ibid., vol. x, p. 600; Halsey," A Premium Plan of Paying for Labor," ibid., vol. xii, p. 755; Rowan, "A Premium System Applied to English Workshops," Proc. Inst. of Mech. Eng., March 20, 1903, p. 203; Taylor, "A Piece Rate System," Trans. A. S. M. E., vol. xvi, p. 856; Gantt, "Bonus System for Rewarding Labor," ibid., vol. xxiii, p. 341; Taylor, "Shop Management," ibid., vol. xxiv, p. 1337. Gantt, "Graphical Daily Balance in Manufacture," ibid., p. 1322; Barth, "Slide Rules as Part of the Taylor System," Trans. A. S. M. E., vol. xxv, p. 49; Dodge, "A History of the Introduction of a System of Shop Management," ibid., vol. xxvii, p. 720.

reaction would have been much more severe and of much longer duration. The fact that it was not is only another tribute to the (possibly unconscious) farsightedness of the real leaders in the movement.

For there is no question that the reaction is largely past and that we are now in the third stage. This does not mean, however, that there is not still a tremendous amount of misunderstanding as to the real significance of the movement, or even a considerable amount of active opposition. The third stage is again clearly reflected in the literature on the subject. The popular matter has dropped out pretty completely and has been replaced by an already large and constantly growing number of articles dealing, on the one hand with concrete illustrations and explanations of the actual workings of the system or of parts of it, and on the other hand with frequently altogether healthy and well-intentioned, tho unfortunately not always well-informed, attempts to appraise its true economic significance. The active and open opponents, failing to find proof of the fulfillment of their dire prophecies as to the ill effects on the workman and the heartlessness of it all, have largely been driven to a less outspoken if more insidious activity, unwittingly furnishing tremendous arguments for the extension of what they sought to kill through measures forced on misinformed legislators in a vain attempt to stop the inevitable. And incidentally, those of the

1 I refer to the anti-stop watch and premium-payment riders to the Army Appropriation Bills. Before the Committee on Military Affairs on January 4, 1917, Brig. Gen. William Crozier, Chief of Ordnance, in discussing the Taylor System at the Watertown Arsenal submitted testimony in substance as follows, Hearings before the Committee on Military Affairs, Army Appropriation Bill, 1918, pp. 955–964; see also Congressional Record for February 1, 1917, pp. 2654-60:

After the Taylor System had been in operation at the Arsenal a year or more a comparison of identical jobs showed that the men on the average did 2.7 times as much work after its development as they did before. In the machine shop where most of these jobs were done, the average increase in output was 2.2. (See decrease for this department upon abolition of premium payment, below). The work was more carefully done, of a higher quality. There had been to date of testimony, January 4, 1917, some