sidered equally important. In Mr. Taylor's own words, 'Scientific Management fundamentally consists of . . a certain philosophy which can be applied in many ways, and a description of what any man or men may believe to be the best mechanism for applying these general principles should in no way be confused with the principles themselves.' But certain parts of the mechanism now advocated by the organizing engineers are of great importance because they seem to be necessary to the application of the principles and because one of them in particular is opposed by many employees as competent, in their judgment, to produce indirect results harmful to their productive group.

"Scientific Management aims to produce at least five results, all of which must be produced before such management can be said to be established, and for their production specific devices must be employed.

"First-Industrial processes must be reduced to units before scientific observation and experiment are possible. The most important device for this purpose, the time study, aims to reduce the operations of workmen to fundamental motions and to ascertain, for example, the shortest, longest, and average time required for each motion. From experiment with these data a standard time for the performance of each operation is derived.

"Second-This standard time in which a given operation is to be performed having been ascertained, it must be set before the workman as something to strive for. To accomplish this the device of the task, sometimes called standard time, is used. With each order which goes into the shop is advice concerning the average time which should be required to produce each unit of product and which represents the standard of efficiency.

"Third-The workman must be instructed how to achieve this standard. He must have at hand a sympathetic, expert director who is teacher rather than boss. The device of functional_foremanship is intended to effect this. The functional foreman teaches all the workmen who have to perform a given function, e.g., set a tool in a lathe, exactly how to perform that and no other function. He is an expert workman become teacher. The foremanship of Scientific Management, therefore, requires in a given plant as many foremen as there are functions to be performed there. The foreman of the usual organization, on the other hand, is the boss of all the men in a

given room with respect to all functions performed there. He may be expert in one or more of the functions, but seldom all, and too frequently considers himself driver rather than teacher. This foremanship requires in a given plant as many bosses as there are departments.

"Fourth-Scientific Management aims to relieve the workmen of responsibility for determining how a process is to be performed, especially if the method is one which may be exactly, i.e., scientifically, determined, and to leave him free for the development of manual dexterity. This is accomplished by the planning and routing room, a managerial department which works out and sends with each production order precise specifications for the operation. If it be an assembling job, for instance, the parts to be assembled, their relative positions around the workman at the beginning of the job, the order in which they should be brought together, etc., are specified. The workman does not need to plan; he proceeds at once to performance.

"Fifth-The workman must be inspired to accept the new methods; to strive to acquire dexterity in carrying out specifications sent him. Workmen, like managers. like any other large body of men, have fixed habits from which it is difficult to turn them. How inspire the workman to make the change? The result is accomplished by a differential wage system, a device which gives him at once. in a way perfectly obvious, a share of the increased productivity, instead of compelling him to wait for the slower, less obvious, redistribution of shares which would work out under the usual system of payment by the hour or day. These differential wage systems vary, although they are in principle the same, primarily according to the proportion of the increased productivity apportioned to the workman. One system gives the workman, say 30 per cent., of the increased returns; another gives him practically all.

"It is neither the philosophy nor the interesting mechanism of Scientific Management which has aroused such wide-spread interest; it is the story of its astonishing results. In Mr. Taylor's own words, workmen 'are receiving from 30 per cent. to 100 per cent. higher wages daily than are paid to men of similar caliber with whom they are surrounded, while the companies employing them are more prosperous than ever before. In these companies the output, per man and per machine, has on an

average been doubled. During all these years there has never been a single strikc among the men working under this system. In place of the suspicious watchfulness and the more or less open warfare which characterize the ordinary types of management, there is universally friendly co-operation between the management and the men.' Strong as it is, it must be said that on the whole the testimony of the executives of plants so managed corroborates this statement."

The first impulse of every banker who hears or reads an exposition of Scientific Management, and whose first assumption is that any importance the matter may have for him is the application of its principles to the organization of the routine of his bank, is to reply: "The application of these principles in a bank is impossible; such results as are here described have already been effected in the banking field." Such a reply is also the immediate response of nearly every business man, but those who have been bold enough to try the application of the principles of the new philosophy of management, and reasonable enough to be careful and patient in their application, have been led from one gratifying surprise to another. But I am inclined to believe the banker to be more nearly. right in his instinctive reply than any other business man. The mechanical operations and the routine of banking are possibly the least complex and the most precise to be found in the whole realm of business, and empirically there has grown up a most exact and economical mechanism for their performance. Therefore, while something more might be accomplished in the organization of banking routine by the application of the principles described-enough, perhaps, to solve the immediate problem of a country bank which finds itself confronted by the necessity of employing another clerk; or of a metropolitan bank which finds itself cramped for want of adequate room-I do not believe that the importance of Scientific Management to the banker is to be found in that direction.

The banker may, however, make much of the principle of the scientific selection of the worker. The routine of banking is considered so simple that, except with respect to a few very general characteristics, the banker is not very exacting in the qualifications which he demands in those whom he employs. May there not be a certain temperament, yet to be defined, which makes for efficiency in the work of a bank? May there not be a psychology of bank work?

Might not experiments be made along this line, and certain principles to guide in the selection of clerks established? I know of one bank which is experimenting with its clerks and with applicants for positions along this very line; its immediate aim is to determine a normal time-reaction between seeing a column of figures and recording them accurately with a pen or registering them accurately on an adding machine. It finds a difference in individuals due undoubtedly to a difference in temperament. A prominent manager has recently said: "The psychology of advertising has lately been coming to the front. The psychology of industrial workers is still a great field for research. The vocational schools will not perform their true function properly until they come to a better knowledge psychologically of the mental and physical requirements for different kinds of work, and are able by tests to determine in which their pupils are likely to be successes or failures."*

The banker might do well also to apply in his business that principle of Scientific Management which demands the progressive and scientific training of the worker. In this connection also the simplicity of banking routine has caused indifference. Those banking problems beyond the performance of routine operations require the keenest mind, the most constant observation, reading and thinking, and the soundest judgment. There is a great distance to be traveled by the young man who has become efficient in routine operations before he can become efficient under larger responsibilities of the business. There is possibly no business in which the conduct of routine work counts so little towards training for higher positions. One of the pathetic sights in the business world is that of the bank clerk approaching middle agestill a mere clerk on a clerk's salary-because he has had no experience to give him grasp of the large and complex problems of bank management. Insight into such problems does not come from the performance of ordinary routine clerical duties. The banker should offer to every clerk the opportunity for growth by organized progressive instruction within the bank, or what would be more economical and more efficient. by relations with institutions which aim at something higher than instruction. in the mere routine operations of a bank. The banking community would be richer in efficient service.

Henry P. Rendall: Addresses and Discussions at the Conference on Scientific Management, p. 134.

The great importance to the banker, however, of this new philosophy of management, is to be found, not to applications of its principles directly in the conduct of the banking business, but, as I suggested at the beginning, in its application to other businesses, mercantile and manufacturing. I have called your attention to the fact that where reorganization according to these principles has been effected, striking economies have resulted. These economies have made possible larger profits, and they have also made possible, or have rather been made possible by, higher wages. They have also made possible in many instances lower prices to the consumer. In the long run that must be the principal result. Every firm enjoying such reorganization enjoys also an advantage over its competitors. I am told that one firm, which ten years ago, because of severe competition was in a serious condition financially, is now receiving from its competitors suggestions that it absorb them. This is a firm which within ten years has been completely and wonderfully reorganized. I cite the case to illustrate the danger to every banker's client who "knows his own business too well to profit by new methods" and is indifferent to such awakenings as is presented in Scientific Management.

To guide such clients by wise counsel and sometimes by kindly proddings is the privilege and the responsibility of nearly every banker. Many a manufacturing 'or mercantile concern is coming to take its banker in as a sort of silent, advisory partner, and many a banker is coming by investments to be directly concerned in local institutions. To such bankers is offered an unusual privilege and responsibility. There is nothing more wholesome for a concern than kindly criticism from outside itself, and that concern's banker is just far enough outside to see with another eye than does the manager, and just far enough inside to be able to offer suggestions without impertinence.

One of the most successful bankers I know assumes such responsibility. He is a precise. almost austere man, SO careful about the conduct of his bank that among a certain class of business men he has the reputation of "not being accommodating": yet in spite of the apparent austerity and lack of affability he does the largest banking business in a community well supplied with banks. The solid business men of the community respect him, for they know that his genius has entered into the organization of many prosperous institutions.

Money Trust Resolutions Adopted by New York State Bankers

The New York State Bankers' Association adopted the following resolutions.

"WHEREAS, The New York State Bankers' Association has considered the recent request made by a committee appointed by the Federal House of Representatives for information respecting dealings between banks and their customers involving a disclosure of transactions generally regarded as confidential, therefore be it

Resolved, That this Association deprecates the unfounded assertion that any bank in this State is opposed to proper investigation by the duly constituted authorities, or to the disclosure to them of any and all dealings; that this Association has always urged and does approve the most rigid scrutiny by proper visitation, as well as the strict enforcement of all laws pertaining to the conduct of banking business;

Resolved, That it is the sense of this Association that both the Federal and State banks are conservatively and well conducted, and that the supervision provided by existing laws, is adequate; that Federal and State officials have complete power of inquiry and have at all times information in respect to any and every transaction in any bank; and that the principle that dealings with customers shall be deemed confidential, and information in respect thereto shall be withheld until due process of law, or the consent of those whose interests may be prejudiced shall first be obtained, is proper and wise.

Resolved, That the interests of those engaged in and representing the great industrial and financial affairs of the country are conserved and promoted by a scrupulous enforcement of the established usage of withholding any disclosure to third parties, except when compulsory, and that hasty criticism or ill-advised attacks upon the long settled practice of banks, tends only to disturb business relations and to injure the merchant and the manufacturer.

Resolved. That this Association advocates and demands the strictest fidelity and the most rigid regard for law on the part of those charged with the high trust of conducting banking business, and urges that no changes in the law shall be proposed without opportunity for deliberate and careful consideration by the representatives of the banks who are deeply interested in a sound and conservative monetary system, and in prudent and adequate limitations upon their administration."

The word "trust" is perhaps the most sorely misused in the language. Leaving out of consideration the rough handling to which it has been subjected by demagogues and others in connection with combinations of capital and industry, we may well be impressed by the multitudinous uses to which this same word has been put in making up the names of financial enterprises.

Since the formation of the "New York Life Insurance & Trust Company" one hundred years ago, and that of the Farmers Loan & Trust Co. a few years later, there has been a disposition to throw in the word "Trust" as a part of the corporate name of a new banking institution, largely as a sort of verbal make-weight, in order to give sound and substance to the title of the bank. Such combinations as "Bark and Trust Company," "Trust & Banking Company," "Savings & Trust Company" became very popular in States where no special laws had been enacted on the subject, though nine times out of ten the institution bearing such a name was a commercial bank pure and simple and did not pretend to carry on any fiduciary business.

These conditions have obtained particularly in the South, where the corporate trust business has been until recently but little understood, and the banking laws did not provide for a special incorporation of trust companies as such.

In some Southern States a large number of corporations have been chartered under the General Companies Act, without any supervision of the State Banking Department or obligation to make returns to any State official, yet styling themselves "Trust Companies" and under that name carrying on all kinds of business, such as real estate speculations, selling stock in new enterprises, building and loan schemes, and even the flotation of mining and oil shares. These latter companies must of course not be confused with the legitimate banking institutions, many of them large and successful, which use the word "Trust" in their

corporate name without carrying on a fiduciary business; but the existence of these bastard trust companies serves to illustrate the general confusion into which the use of the word had fallen, especially in the South, up to within very recent years.

These conditions have naturally obscured the growth of real fiduciary business in the South, which has of late been truly remarkable. To familiarize the public with the advantages of the incorporated trustee over the individual trustee has already required a patient campaign of publicity on the part of a few progressive trust companies; and before this familiarity shall become at all widespread, several more years and a great deal more money will have to be spent in missionary work.

Among the Southern institutions that have rendered conspicuous service in this egard may be mentioned the trust companies of Louisville, New Orleans and Richmond. The trust company idea has long had a firm foothold in Baltimore, so that this city hardly comes within the scope of the present article. Of recent years two or three active trust companies in Atlanta and Savannah have been carrying on a campaign of education that has been productive of gratifying results.

The growth of corporate trustee business has naturally been more rapid than that of individual trusts. Large issues of bonds and stocks which until recently would have been centered in the office of some New York or Boston trust company now bear the counter-signature of various Southern trust companies as trustee or transfer agent. The tendency in this direction is augmented by the increased holdings of public utilities and other securities in the South where formerly they were held almost entirely in the Eastern States. Some of the Southern trust companies have trust departments for corporation stocks that are quite as efficient and nearly as elaborate as the similar department in Eastern institutions.

Southern companies are still confessedly

far behind in the volume of personal trusts, as compared with the older financial centers. Persons of large means combined with leisurely instincts are not plentiful in the South. It is to such persons that the trust company must look for the so-called "live" trusts which are such a source of profit in the East. The importance of cultivating this class of business, which is founded on the twin sub-structure of confidence and efficiency, is only just beginning to be realized by the Southern companies.

All things considered, the progress that has been made in the purely fiduciary aspect of trust companies in this section has been of recent years quite considerable. This end of the business is in its infancy, but the outlook for further growth was never so bright. There are a few dangers and pitfalls, however, mainly incident to the rapid industrial expansion of a prosperous people, that trust companies in the South as well as in newer sections of the West should studiously guard against.

First of all they should remember that a trust company is not a promoter of new enterprises. It may, with proper restrictions, advance funds to responsible persons for the development of proven industries; but such risk as may be incident to the industry should be borne by parties other than the trust company. There should in all cases be an ample margin of security between the trust company and any fluctuations or depressions of trade or errors of management. Better a succession of small profits on seasoned securities and gilt-edge collateral loans than the chance of a big clean-up or a grand fizzle on some attractive looking deal.

In this class may be mentioned the almost irresistible tendency of some institutions to speculate in vacant and unimproved real estate. Few propositions are so alluring as the real estate sub-division in the edge of a growing town, yet very few indeed are more certain to feel the effects of even a trivial financial stringency. At such times, with the trust company's funds tied up in unmerchantable land, its position is hazardous indeed.

It is generally agreed among the best informed financial students that the real estate investments of a commercial bank should be limited to the building which it occupies and those of a trust company to such building and perhaps a few well chosen parcels of income producing property not too far from the business center.

This brings us to the second danger con

fronting a trust company in a rapidly developing neighborhood—namely, that of salting down too large a proportion of its resources in unsalable real estate notes, based all too frequently on inflated values. Good first mortgages on real estate at not exceeding sixty per cent. of a fair appraised value are undoubtedly very choice investments for any financial institution except a National bank. But even these mortgages should not be purchased in a quantity so large as to absorb an undue proportion of the trust company's liquid assets, and it is needless to add that they should be scrutinized with great care before investing.

The evils of inside speculation, overborrowing by directors and trustees, and similar improprieties, are common dangers which are to be studiously avoided by all financial institutions alike, and therefore may be covered by the general statement that while such practices might merely curtail the business of a commercial bank they are positively destructive to that implicit confidence on which the fiduciary business of a trust company is based.

Total resources of the trust companies, State and savings banks in the State of New Jersey amount to $388,642,159.15. This amount represents an increase of $27,250,358.54 over the total resources of last year.

Frank W. Blair, president of the Union Trust Company of Detroit, Mich., has been appointed by the United States District Court auxiliary receiver for the Pere Marquette Railroad Company.

The Waterloo Loan & Trust Company of Waterloo, Ia., reports deposits of $222,013, capital $250,000, surplus and profits $55,924. Benj. J. Howrey is president.

Boston Brevities

Wallace B. Donham, vice-president of the Old Colony Trust Company, has been elected president of the board of directors of the Massachusetts Employes' Insurance Association which is organized under the Workmen's Compensation act to furnish insurance to employees.

Governor Foss has signed the bill authorizing the Boston & Providence Railroad Corporation to issue $8,000,000 bonds for electrifying main line and other improve

ments.