and mine structures of all sorts, the town site and the necessary buildings for warehouses, stores, and dwellings; they are engaged in the driving of main and lateral entries, the projection of work throughout the area to be mined, and all the calculations, map making and blueprinting necessary to a comprehensive record as the work progresses.

Engineers in this industry can ard do specialize. There is the civil engineer, working with property lines and surveying outside and inside the mine; the mechanical engineer, who supervises the operation of machinery; the chemical engineer, engaged in the analysis of materials and coal; the preparation engineer, looking after the cleaning and preparation of coal; and the safety engineer, whose efforts and skill are directed to the safeguarding of life and limb, the prevention of accidents, by every means possible, including educational programs in safety for the workers themselves.

2. In the performance of these duties, the engineer is answerable to management, and is actually a part of management, junior management, if I may so designate them. Upon the engineer there devolves an intimate connection between the executives above him, the other supervisory forces, and the working force he spends the major part of his time directing. This is true to the extent that the making of decisions affecting the operations and costs, in general policies and safety matters, is a part of the duties of the engineer, and he speaks directly for management and as a part of management in making these decisions. His managerial ability is a subject of his training and constant experience. Engineers have always considered this their place in the organization of the personnel engaged in operating a coal-mining plant. Their material rewards are in proportion to their energy and experience in such managerial capacities, and not alone for the engineering proficiency they show.

It is the engineer's province to so manage the department wherein he acts as to bring about the most efficient production of coal at the lowest cost per unit; to the greatest degree possible, devise, provide, and enforce the best safeguards for the health and safety of the workers; and in every way assist in obtaining the best return upon the investment in the enterprise, all with the knowledge that his reward, as well as that of the workers, will be in direct proportion thereto.

3. Engineers are agents of the employer. Preparation engineers and combustion engineers resolve disputes between producer and consumer relative to preparation and quality of coal furnished; production engineers have acted in wage negotiations between the employer and the worker, and in disputes at the plants with the workers' mine committees.

The engineer advances directly to assistant manager, manager, and general manager-top-flight executive positions-primarily by reason of his managerial

ability.

It is a practice of many components of the coal industry in West Virginiaand this society fosters and encourages this procedure to sponsor scholarships for high-school graduates throughout the coal-mining fields for education and training at the school of mines of West Virginia University. This not only encourages an interest in our profession, but is a prudent program to keep this industry supplied in the future with efficient mining engineers, and potential executives. The new Mineral Industries Building at our University at Morgantown, among the most modern and best equipped in the Nation, is dedicated to and in use for the technical training of all classes of engineers.

4. To be arbitrarily classified as a part of the labor force and an increment of collective bargaining, by an interpretation of the Labor Relations Act which we regard as empirical, may easily force engineers against their will to become a part of a labor union wherein they would be a minority having no effective voice in shaping the policies determined upon by the leaders of such union, be it the United Mine Workers of America or any other. Our society objects, as a class of highly specialized technicians, to being thus taken and forced to bargain along with a class of workers for whom the Labor Relations Act was initially intended. We have observed the methods of the unionization of the working force not only in the coal-mining industry but in other industries. Once inducted into this union, or any other union, the engineer loses his individuality, and he loses that essential part of his professional character wherein his initiative counts for such a great part of his usefulness in his supervisory and managerial capacity. He would be simply "leveled off" into a general classification, his personal merit submerged-unless, perhaps, he might be used as a spearhead and a yardstick for the measurement of demands upon the management of which he is a very part. The engineer would lose his usefulness in that sphere of his professional capacity devoted to supervisory and managerial work; his services would not be

sought; his advancement be retarded; the business in which he is engaged would suffer by loss of morale, and the exercise of authority by him regarded as perfunctory only.

Upon all these considerations, the society adopted the following resolution: The West Virginia Society of Professional Engineers believes that all of the provisions of H. R. 2239, the measure under consideration by this committee, will effectuate the purposes for which they are designed, and we unhesitatingly endorse them. But more especially do we ask this committee to retain that provision pertaining to executive, administrative, professional, or supervisory employees applicable to all industries-as not only a distinct benefit to our engineering profession in all industry, but a protection to the working forces whose immediate endeavors in the everyday production of the Nation must necessarily be under the supervision of those with whom they are in closest contact and who understand their problems sympathetically, as well as having a knowledge of the requirements of the industries they all serve. The paramount interests of the country will be best conserved by the passage of this measure. Respectfully submitted.

The CHAIRMAN. I should also like to insert in the record an address by Donaldson Brown, vice chairman of the General Motors Corporation, on the subject, Industrial Management as a National Resource, an address delivered on March 18, 1943.

(The matter referred to is as follows:)

INDUSTRIAL MANAGEMENT AS A NATIONAL RESOURCE

(Address by Donaldson Brown, vice chairman of General Motors Corporation, before two hundred and fiftieth meeting of the conference board, Thursday, March 18, 1943, at the Waldorf-Astoria Hotel, New York, N. Y.)

In these days when the very foundations of human institutions and of Govern ment are shaking under the impact of the greatest disaster of all history, it is only natural that we wonder about the future. We wonder what obstacles there will be in the path returning, when the war is over, to the system of free competitive enterprise as we have known it in this country. We know there are those with a defeatist attitude who are ready to accept as inevitable the loss of those institutions and principles which have made this country great. We know there are those who would want to change the order of things, and to abandon the form of constitutional democracy under which we have lived and, as a nation, prospered. Some who would change the political, social, and economic system are actuated by prejudices of long standing and revolutionary instincts. Öthers are actuated by idealistic motives aimed at improving the status of the so-called underprivileged.

We have been shocked recently by the report issued by the National Resources Planning Board, and submitted to Congress with the implied approval of the President. It is to be presumed that the recommendations embodied in this report, seeking a high degree of socialization of industry and extended Government control, derive from an idealistic viewpoint with sincerity and honesty of intentions. The post-war plan proposed has the avowed purpose of improving human relationships within industry and contributing to the welfare of the individual-a cause to which we all subscribe and which has been conscientiously served by enlightened industrial management.

American industry has demonstrated its ability to meet the situation of the Nation's wartime production requirements. That ability has derived from the experience, skill, and know-how of coutless human individuals trained in the school of American industrial management. The welfare of all of society in this country depends upon a perpetuation of this integrated structure of productive force, which perpetuation can be realized only by the conservation and development of industrial management as a national resource during and after the war. In the time allowable I am not going to attempt to deal with the broad aspects and principles concerned in the field of industrial management. The very foundations upon which industrial management rests, and the things for which it stands, are threatened, strange to say, by those who seek to improve human relationships within industry and to improve the welfare of the individual. There is tragic irony in the fact that exactly the opposite would be realized if we were to succumb to some of these theories of central economic planning or "what have you." Human relationships within industry and the welfare of all of society would be

shattered in the course of time. It is to this matter of human relationships alone that I address my remarks, basing them primarily on my twenty-and-odd years of experience with General Motors.

As I speak of industrial management I am not thinking of that top group of men who, concerned with a given industrial enterprise, have the final and inescapable responsibility in the conduct of its business in the competitive field. Actually, every person engaged in a given enterprise is called upon to perform a managerial function, or at least to perform a function that is directly serving the purposes of management. Top management must determine upon the course of policy and purpose in the broad sense. Actions on the part of those below result in serving the interests of consumers, investors, and fellow employees, when conducted on a plane of common understanding of purpose and in the spirit of contribution. Promotions in the natural course are forced upon those who exhibit comprehension and understanding, and who have the ability to assume ascending responsibilities of higher positions on the managerial ladder. Factory workers, as well as those others on the lower levels of industrial employment, represent the raw material from which managerial ability will be drawn in the progressive course of events.

In short, it might be said that industrial management represents a continuing and progressive process of education, in which teacher and student each learns from the other. If this attribute is removed there will be the loss of industrial efficiency, the devastating effect thereby to our whole economy, and the sacrifice of potential opportunities to millions of people engaged in industrial pursuit. Incidentally, it is not the top flight of industrial executives as personalities of today who will suffer most if the props are cut from under our system of free competitive enterprise. Rather, it is the younger men-the men who will no longer have the benefit of the educational process which prepares them for higher levels of authority.

This educational process I speak of might be described as a system of two-way flow in managerial human relations. This two-way flow has proved itself the only effective way by which suitable consideration of facts can be brought to bear on policy formulation, and at the same time assure common understanding of purpose in the course of required adherence to determined policy. The downward flow consists of authority stemming from a combination of responsibility for administration of established policy and for the exercise of personal judgment in the existing situation. The upward flow consists of those questions, facts, and opinions arising out of actual experience, and allowed to exert proper pressure on policy formulation.

Throughout, from factory worker, clerk, and so on up through the lines of supervision to top management, there must be this two-way flow of ideas and attention to managerial policy for the simple reason that the executive head of an enterprise of any size cannot himself direct the detailed activities of the worker at the bench, in the office, or in the field. Executive direction, therefore, must be decentralized through delegation of managerial authority down the line in graduated steps and in accordance with responsibilities as they may be designated.

It is of the greatest importance that delegation of authority go hand in hand with the assignment of corresponding responsibility, because the complexities of modern industry make it almost impossible for top management to lay down a pronouncement of policy in terms sufficiently explicit to eliminate the need for the broad exercise of judgment on the part of those who have to attent to actual execution. The judgment of these men, in the light of their more intimate, direct knowledge of existing conditions, is indispensable.

Everything in the field of industrial management depends upon and revolves around human impulses and human relations. Therefore, dependence is placed upon the two-way flow not merely for the sake of efficiency but also for the vital part it plays in developing the self-reliance and potentialities of the individual. Even if it were possible to eliminate the need for individual initiative through cut-and-dried directives from an infallible superior, the effect upon the character and the spirit of the human beings involved would be tragic. In our human frailty we need encouragement, an occasional pat on the back, the solid satisfaction of individual accomplishment, and proper recognition of a job well done. Surely, if all those upon whom society is dependent for the production of goods and services were to become mere automatons those priceless ingredients of a free society-self-reliance, pride of workmanship, and individual initiativewould be destroyed. Compulsion would take the place of leadership. Political intrigue would replace efficiency. Expediency would usurp the throne of sound judgment. Granting that we are all mortal beings-with the faults and weaknesses of human nature-I still hold unalterably to my faith in the dignity and worth of the individual.

We must recognize, however, that no institution or organized group can be free from authoritative direction, nor can its objectives be realized without obedience to properly constituted authority. But the nature of authority varies between wide limits. Germany's authority is the artibrary whim and fancy of Adolf Hitler. The authority of the United States is that body of law, established by constitutional processes, which implements an ideal and imposes upon every public servant and every private citizen certain courses of action which are presumed to be in the public interest. It is obvious, therefore, that freedom of action must be within the framework of law.

Similarly, in the field of industrial management, freedom of action must be within the framework of policy. The authority over any given industrial enterprise is that of policy, based on a balanced consideration of the interests of the investor, the employee, and the consumer. It is this balanced consideration that

must shape policy and exercise control over the actions of the entire personnel. Everyone, from the president down, must conform to the policy which is a direct reflection of this balanced consideration.

Thus it is seen that there must be recognition at all organization levels of superior authority, and an established scope of responsibility and authority, step by step, so as to minimize lost motion in attention to the problems of the business. The situation sought in this regard is that each individual in managerial position shall have conveyed to him an understanding of policy and purpose of management as they relate to his duties. Of course, in the complexities of life in which we live, none of us can enjoy a complete comprehension of policy and purpose that is in the minds of those engaged in broader fields upon whom our destinies are dependent. Problems exist embracing coordinated and balanced consideration of factors beyond the scope of our individual experience and understanding. Therefore, in the range of industrial management, there must be instilled in the minds of all a spirit of faith in the constructiveness of purpose on the part of those in superior authority. This spirit of faith must be engendered by force of example and by results accomplished. On this plane, and within the limits implied, each individual executive (from the foreman on up, as it pertains to the manufacturing operation) must be encouraged to exercise judgment and individual initiative to the full limits of the prescribed responsibility and authority of any given managerial position. This means that, to the extent that it is made possible by common understanding of policy and purpose, each executive must extend to his subordinates that latitude and freedom of action which will inspire enthusiasm and understandable exercise of individual initiative.

Similarly, the factory worker himself should be encouraged in the exercise of individual initiative in attention to his duties, on a plane of understanding and thus requiring the minimum of supervision. With this, however, the responsibility and authority of the factory foreman must be recognized and accepted.

Recognition of the factory foreman's authority is essential because it is he who must interpret management's purpose to the employees under him. The foreman enjoys the advantages of direct personal contact with the employees under his jurisdiction, and he alone is in a position to convey up the line, to his superior, his intimate understanding of the personal and human considerations involved in the field of industrial relations, thus influencing the formulation of policy. Interference with the natural functions of the factory foreman, clogging the normal channels of authority and preventing this two-way flow in the exercise of supervisory duties, has inevitably a most serious effect upon the efficient conduct of any business.

Since there is complete mutuality of interest as between the capital and labor engaged in any given enterprise, management, despite its clear responsibility in serving the interests of the capital employed, cannot properly fulfill its responsibilities to capital without serving the interests of all concerned, including the factory worker. In order to serve the mutual interests involved, therefore, management must obviously maintain proper jurisdiction over the factory worker, as I have said. I depart here somewhat from the theme of my talk in order to touch briefly upon a perplexing problem: Unionization at its present stage of development in this country stands seriously in the way of a wholesome and constructive exercise of management's responsibilities, which interference works, in the long run, to the detriment of the factory worker himself. General Motors has expressed its belief in the principle of collective bargaining when applied in a constructive manner, and when there is understanding and acceptance of the mutuality of interests involved. I refer, of course, to the principle as pertaining to factory workers, and I can hardly conceive of the abandonment of collective bargaining in American industry. But surely there is much to be sought by way

of improved conditions under which the relations between capital and labor can be carried forward on a plane of better understanding, and where the inherent and inescapable responsibilities of management are better understood and accepted by_labor leadership.

In recent years much has occurred to impede the ability of industrial management to maintain discipline and efficiency on the part of labor. I have mentioned as an essential managerial principle the delegation of properly prescribed authority and accompanying responsibility through a series of steps from the top down. This integrated process of managerial action is rendered difficult when those working under the jurisdiction of the factory foreman are diverted from the natural path of recognizing delegated authority-authority which must be exercised on the part of the foreman as an essential function of management.

I hope it may be understood from what I have said that, as to every industrial executive and supervisor, the position occupied contains the requirements of a dual function: on the one hand, involving exercise of individual initiative contending with considerations of policy and purpose; and, on the other hand, individual initiative in attention to the problems of administration. This leads to the sifting of facts into two categories; first, those which can be resolved into formulation of policy within the limits of appropriate exercise of individual initiative on the part of the person dealing directly with the problem; second, those remaining facts calling for consideration and treatment on the part of higher authority. In other words, there will flow up the line the filtered concentrate of facts and circumstances to be weighed on the scales of policy consideration.

I have attempted to demonstrate the need for a reflection of the viewpoint of the man who is closest to the problem, and to whom the "filtered concentrate" of current problems has come up, in order that these problems can be taken into account and properly evaluated in terms of the human equation. It is, therefore, the first essential of industrial management to extend every possible encouragement to the exercise of individual initiative; not alone to those at the top who must see to it that business properly serves the mutual interests of stockholders, consumers, and employees, but also to those all along the line, thereby establishing a plane of common understanding and generating loyalty to a common purpose. In connection with the desire on the part of some who would change our system, the theory is no doubt influenced by misunderstanding of so-called big business and a mistaken fear that big business handicaps the development and opportunity of the individual. The truth is that the future of any big business depends upon the exercise of individual initiative and personal development on the part of its younger men far more even than in the case of a small business, and the very nature of big business insures that the opportunity to accept increased responsibility is ever present.

General Motors is an example of big business. Time does not permit me to describe our form of organization, but I would like to touch upon the lengths to which we go in encouraging and safeguarding the exercise of individual initiative and the development of potential capabilities. Fundamentally it takes the form of what we call "decentralized operations and responsibilities with coordinated control." This philosophy of management was determined upon more than 20 years ago and has been adhered to ever since. Had the corporation not maintained this form of organization, which has developed such a high degree of managerial ability and know-how, the magnitude of its contribution to the war effort would not have been possible. Also, it is undoubtedly true that this same managerial ability and know-how, engendered from the same philosophy of decentralized operations and responsibilities, will be of equal consequence when the post-war period presents the problem of reconversion to peacetime production with minimum interruption of employment.

General Motors could accurately be termed a free-enterprise system within the free-enterprise system. The formulation of corporation policy within the framework of which freedom of action can be exercised corresponds to the body of law within the framework of which all industrial enterprise is carried on. Obviously, those who determine over-all policy in the corporation could exercise their authority arbitrarily, just as the administration in Washington, with legislative and constitutional sanction, can impose the will of Government, while failing to recognize facts and circumstances which require consideration in serving fundamentally the interests of the Nation. It is particularly significant, in the instance of General Motors, that arbitrary power of central authority has never been exercised, even though ability to do so and a full sense of over-all responsibility has existed at all times.