the principles of industrial management

Introduction—Factors Affecting Prosperity of Plant—Eco-nomic Environment—Manufacturing and Distributive Policy—Organization and Management —Problems ofBusiness Management: 1 Location of

TS 156.D84

Trio principals of induslri.il ii).in,iqt.'mrnl.

i':)j-i [){).' :-\H S.l

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http://www.archive.org/details/cu31924002748543

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

D APPLETON AND COMPANY

D.APPLETONAND COMPANY

Printed in theUnited States ofAmerica

THIS BOOK IS DEDICATED

TO ITS TWO

WELL-WISHERS-MY PARENTS

Thewriterhas long felttheneed ofascientifictreatment

of industrialmanagement Hundredsofyoung menare now

inourschools and colleges intendingtoengage inthe world

clear conception of the principles underlying the successful

conduct of industrial enterprises

Thematerial in this bookis gatheredfrom manysources

Merelytomentionthepeople towhomthe authorisindebted

for data within these covers would fill several pages with names The writerhas endeavoredto give fullcredit inthetext forthe drawings, plates, and diagrams, and, unless ac-cidentallyoverlooked, allbooks andarticlesfrom which hehas

received assistance have beencited In the text, however,

there isno mention ofhis obligations toJudgeElbertH Gary

andMr.Richard Trimble,oftheUnited States Steel

C Folger,Jr.,ofthe Standard OilCompany, Mr E Collins,Jr., of the Sauquoit Silk Manufacturing Company, Mr L

A Osborne, Vice-Presidentof theWestinghouseElectricand

Manufacturing Company, andMr H.E Neise, ofthe

Amer-icanSugar Refining Company; so he takes this opportunity

tothank them fortheirmanyfavors He is furtherindebted

to his colleagues inthe departmentsof Economics and

Engi-vii

viii PREFACE

neeringoftheUniversityofIllinois,tohis formerassociates

attheUniversityofPennsylvania and Ohio State University.Professors E H Waldo and E L Bogart, his colleagues

at the University of Illinois, have been veryhelpful; the

former read all the chapters pertaining to the engineering

matters, inadditiontomanyofthe others ProfessorEmory

E Johnson, his former teacher at Pennsylvania, read the

andexpression This paragraphwould be incomplete

indebtedfor thework of preparing the manuscript for the

many suggestions as to form, expression, and selection of

wishtohave anyone but himself blamedforanydeficiencies

whichexist in thevolume, as theplanandtreatmentarehis

own

stu-dentsof accountancyas well as tothoseof general business

The accountant should have knowledge of more than the

mere methods of making entries in books and the drafting

appreciatethe kind of information which the managementneeds, andthe extent"towhichaccountingrecordscangatherthe various types of information The book iswritten togiveboththe accoimtantandthe general studentofbusiness

sci-enceofmanagement.

In teaching the subject the writer has found it

exceed-PREFACE ixingly helpful tothe instructorand profitable to the student

tohavefrequentvisitstomodern plantsandthenhave fullywritten reports presented which discuss those factors

care-whichcontribute tothe success of the enterprise or tend to

with some competent guide, and maywellbemadethebasis

ofinterestingclass-roomdiscussion

John C Duncan.

Univeesity of Illinois, Ukbana, III

December 1, 1910.

Introduction—Factors Affecting Prosperity of Plant—

Eco-nomic Environment—Manufacturing and Distributive

Policy—Organization and Management —Problems ofBusiness Management: (1) Location of Plant; (2)IntegrationandConcentration of Business; (3) Special-

GENERAL THEORY OF INDUSTRIAL LOCATION

Survey of Concentration and Localization of Industries

—

Reasons for Localization—Census Classification: (1)Materials; (2) Market; (3) Water Power; (4) Climate;(5) Labor Supply; (6) Free Capital; (7) EarlyStart-Four Primary ReasonsforLocalization: (1) Market; (2)

Raw Materials; (3) Labor; (4) Power —Importance of

THEORY OF PLANT LOCATION

Factors Other than the Ideal Industrial District AffectingSuccess of Plant—Location, Layout, Equipment—Loca-

tion with Respect to Selling, Buying, Manufacturing

—

Importance of Nearness to Labor Population, RepairShops, Banking and Credit—Considerations Affecting

xi

THE IDEAL SITUATION

and Disadvantages—Location of Plants Suited to Each

Free Land; (2) Free Building; (3) Exemption from

Taxation; (4) Stock Subscription; (5) Cash Bonus; (6)

CHAPTER V

BUSINESS CONCENTRATIONAND INTEGRATION

Concentration of Factories; (3) Integration and

By-Product Utilization; (5) Integrationand

—

Illustrations of Each Form of Consolidation ShowingTypes of Integration and Concentration Used—Deter-minationof theAdvisableTypeof Consolidation . 49-70

CHAPTER VI

BUSINESS SPECIALIZATION

Growthof Specialization—Reasons: (1) Reductionof

Sim-plification of Managerial Problems; (4) Greater Value

ofSmall Savings—Illustrationsof Methodsof Saving

—

The Interchangeable Part—Limitations to

Determination of the Typeof Plant— Two Kinds of

Manu-facturing: (1) Continuous; (2) Assembling—Classes of

Continuous Industries: (1) Synthetical; (2) Analytical

—^AContinuous Synthetical Industry ofNon-By-Product

Type —Effect upon Plant Structure— A Continuous

In-dustry of By-Product Type —^Effect upon Plant

CONTINUOUS INDUSTRIES, ANALYTICAL

Non-By-Product and By-Product—Non-By-Product Industry,

Sugar Refining—Characteristics of a Sugar-RefiningBuilding—Utilizationof Gravity—Conveying Apparatus

inFlour Milling—By-ProductAnalyticalIndustry,Meat

Packing—Steps of the Process—Ideal Layout for a

Pro-Plant Layout: (1) The Arrangement of Departments;

(2) The Building of the Plant—Direct Producing

In-dustry: Shoe Manufacturing—Ideal Layout—Indirect

Industry: ShipBuilding—TypeofMachinery and

Equip-ment Needed —Ideal Layout for a Machine Shop and

Foundry—Ideal Layout for a Ship Building

xiv CONTENTS

CHAPTER X

FIRE PRECAUTION, AND ITSEFFECT ON LAYOUT AND STRUCTURE

PAGES

InGas Works—Causes of Fire: (1) Common Hazards;

(a) The Watchman and the Time-Recorder, (b) mostats—Outside Fire Protection: (1) Water Curtains;(2) Fire Hydrants; (3) FireAlarms; (4) Fire Engines

Ther-—Safety Devices for the Protection of Life: (1) FireEscapes; (2) FireDrills 135-152

CHAPTER XI

THE BUILDINGAND THE WORKERS

Ven-tilation ; (4) Space; (5) Conveniences—Lighting: (1)

Arti-ficial Light; (5) Elimination ofShadows—Heating: (1)

Hot Air; (2) Hot Water; (3) Steam; (4) Combination

ofHotAirand Steam—Humidifiers—Schemesfor

Ven-tilation—Importance of Sufiicient*.Space—Toilet and

CHAPTER XIITHE POWER PROBLEM

Water Power—Advantages of Purchased Power—Other

FormsofPower—DirectCombustion and Indirect

Steam Engine: (1) Turbine; (2) Reciprocating—omies in a Steel Plant: (1) Making Water Suitable for

Econ-Steam; (2) Increasing Boiler Efficiency; (3) IncreasingEngine Efficiency—Comparison of Boiler Compounds

CONTENTS XV

FACES

withWater Softeners—Economizers andSuperheaters

—

TheAutomaticStoker—TheCondenser—KindsofPower

Transmission: (1) Steam; (2) Belt; (3) Rope Drive;

PART III.— ORGANIZATION AND MANAGEMENT

THE THREE TYPES OP ORGANIZATION

Duties of theIdeal Manager —Three Types of Management

:

(1) Military; (2) Functional; (3) Departmental—vantagesand DisadvantagesofEachType . 181-195

THE LABOR FORCE

Three Kinds of Laborers: (1) Men; (2) Women; (3)

Chil-dren—Male and Female Labor Compared —Children as

Employees—Classes of Labor from Standpoint of

Locomotive Works —Westinghouse ManufacturingCo

Premium; (5) Halsey and Rowan Modifications; (6)

RECORD OF THE WORKERSNecessity ofAccurate Records— Workof the Labor Bureau

:

—Necessityof Consideringan Employee'sHealth, Age,

xvi CONTENTS

—

The Form Letter—Qualifications of a Good Employee:

(1)Regular Attendance; (2) Diligence; (3) Efficiency—Time-RecordingSystems: (1) Inboard, OutboardCheck

;

(2)DropBoxCheck; (3) Call Number; (4) Distribution

Check; (5) Recording Clock—Proof of Each System's

RECORD OFRAW MATERIALS

Direct and Indirect Materials—Care of RawMaterials: (1)PreventionofWasteand Losses on Direct Material; (2)PreventionofUndue Expendituresfor IndirectMaterial

Econ-omy: (1) Market; (2) Quality; (3) Quantity; (4)

Depart-ments: (1) Purchasing; (2) Testing;(3) Receiving andStore-room—The PerpetualInventory—Arrangement of

Stock—Prevention of Waste and Loss—Requisition

Scheme—The Budget System 262-280

RECORD OF FINISHEDAND UNFINISHEDGOODS

Necessity for Record of Unfinished Goods— Two Kinds of

Manufacturing: (1) ForGeneral Stock; (2) ForSpecificContract—^Accurate RecordsofPartly FinishedGoods

—

TheProductionOrder—TheSummaryCostSheet—

Rela-tion totheProductionOrder 281-293

RECORD OF EQUIPMENT

Draw-ings and Plans; (4) Power Machinery—Arrangement

arid ClassificationofTools—RecordofPatterns—Record

of Drawings— Dewey Decimal System—Record of

InventoryforFirePurposes 294-316

LIST OF ILLUSTRATIONS

FAGB

Map of the United States Showing Value of Products of

Map of the United States Showing Distribution of the

Mapofa Portion of the City of Philadelphia 27

Mapof theCarnegie CompanyPlants 29

Map of the United States Showing Properties of

Mapof the United StatesShowing RefineriesoftheStandard

OilCompanyanditsCompetitors 60

Diagram of Cotton Manufacture 86Diagramsof TwoTypesofCotton ManufacturingPlants 90

Diagram Showingthe StepsinSteel Making 93

Planof theSteel Plant at Gary, Indiana 96

Bird's-EyeViewofthePlant ofArmour &Co Facing 112

Horizontal Boring, Milling, and DrillingMachine 129

Bird's-EyeViewofanOilRefinery Facing 136

Elevationand Planof Slow-BurningConstruction 143

AVentilationand HeatingPlan 157

Comparisonof theTime-Rate and Piece-Rate Systems 217

TaylorDifferential Piece-Rate System 226

EmersonDifferential Piece-Rate System 228

xviii LIST OP ILLUSTRATIONS

PAGE

Recording Clock with Cost Equipment 243

Daily Tiirie Distribution Ticket 247

Non-Detachable Contract Time RecordTag 250

Detachable Contract TimeRecord Tag 252

Monthly Memorandum Card Showing Efficiency of

ReportSummarizingSpoiledWorkofEntirePlantby

ChartofErrorsShowing MonthlyEfficienciesofDepartments 259

Index Record for Keeping Track of Customers and Wearing

PurchaseRecordUsedtoDetermineSourceofDefectiveRaw

RawMaterial StockRecord , 269

RecordSlipShowingAmountofGoods which PassedThrough

Combined Cost Ledgerand PartlyFinished Goods Recordfor

Goodswhich PassThrough Departmentsin Bulk 286

Combined PartlyFinishedGoods Record and CostLedger 290

Combined SalesRecordand FinishedGoods Inventory 292

Record CardofaBristol AutomaticTime Recorder 307ChartofaBristol RecordingThermometerinaHeatingPlant 309

Records ShowingOutputofMachines 311Machineryand EquipmentRecord Card 313

PlatRecordof Machinery andEquipment 315

PART ONE

THE ECONOMIC ENVIRONMENT

CHAPTER ITHE PROBLEMS

Industrial plantsand businesshousesof various kinds

grow anddecay Industries prosper in somesections of thecountry, while inothers they haveeither failed or are living

a miserable existence The censiis reports at times show

certain territoryhaving a most remarkabledevelopment in

productionwhich a decadebeforewas unknowninthefacturing world Withinthesamearea industriespass from

manu-onesetofowners to another Frequently within a

plants Great establishments, whose positions were onceimpregnableand whose influences were enormous,havelived

to see their power pass to other concerns prospering under

differentregimes

Why do industries move from one section of thecountry

toanother? Why is itthat firms in the sectionwherein theindustries are located rise andfrequently fail after having

builtup alargebusiness and established a national orevenworld-wide reputation?

The prosperityofan enterprise depends in general uponfour factors

1. The economic environment

2. The equipmentoftheplant

3. The organization and managementoftheplant

4. The selling department

The economic environmentprovidesconvenient situations

which make possible the cheap production and profitable

disposal of the good|,^g,.^^g^

4 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

The equipmentof the plant provides shelter forthe

em-ployeesand the tools, and also supplies mechanical means

by which the raw materials can be changed into salable

products

Onthe organizationand managementoftheplantdepend

the owners' ability to utilize tothe bestadvantagetheirraw

materialsandthe timeofthementhey employ

The successful running of a concern resolves itselfintotenproblems

1. Whereshalltheplantbelocated?

2. To whatextent shall the business be integrated and

concentrated?

3. To whatextentshallthe enterprisebe specialized?

5. What form of power shall be employed to run theplant?

equip-ment?

This volume will confine itself to the discussion of theindustrial problems,hence itwill consideronlythe firstnine

of the above questions The tenth is so importantthatit

can be adequately handled only by making it the specialtopic of another treatise

CHAPTER IIGENERAL THEORY OF INDUSTRIAL LOCATION The census report of 1905shows thattheUnited Statesin

that year produced nearly $15,000,000,000 worth of factured goods.1 Ifwetabulate the fifteenmostproductive

Totalfor 15 States $11,876,919,313

Ifwe exclude California and Missouri from the list, we

$800,000,000, and that three fourths of the entire factured goods inthe United States are madewithin states

manu-havinga total area of less than 450,000 square miles, less

than one seventh of the entire area of the United States,

excluding our insular possessions

Ifwe make an analysis byindustrial districts,the factis

broughtout still moreprominently, as shown by the

' Statistica:!,Abstractofthe UnitedStates, 1909, pp 192, 193.

6 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

AREA, POPULATION AND VALUE OP MANUFACTURING

PRODUCTS FOR THIRTEEN SELECTED INDUSTRIAL

DISTRICTS. 1905.'

InduDtrlal D)«trict.

8 THE PRINCIPLES OP INDUSTRIAL MANAGEMENTinto certainlocalities intheUnited States The Industrial

United Statesincludes the section north of theOhioEiver

and theMason and Dixon Line,and east ofthe MississippiEiver,withsmaller sectionslike theBirmingham districtin

Alabama, the Pueblo district inColorado, and Kansas City

inKansas andMissouri

The distribution ofindustriesfromthe standpointofthenature of the industry, shows that this great district haswithin itverymarked divisions

Thelittlestate of RhodeIsland ranks firstinthe

produc-tion of silverware and jewelry, second as a manufacturerof

worstedgoods, third indyeingand finishingtextiles, fourth

as a "maker of cotton goods Connecticut is first in the

productionof eleven articles, typical products of which areneedles and pins, ammunition, brass work, corsets, hard-

ware, and cutlery Massachusetts is preeminently a shoe

goods, woolens, and aU kindsof shoeproducts New Yorkholds the record with twenty-nine first places, including

woodpulp, printing and piiblishing, sugar refining, and a

numberofotherlessimportantindustries. NewJerseyis first

indyeingandfinishingtextiles, asa producerof silkandsilk

goods,andasa manufacturer ofsewing machinesandments Pennsylvaniaholds first place in nine departments

attach-ofindustrialactivity, among which are carpetandrugufacturing, cars, coke, foundryand machine-shop products,

Ittakessecondplace in themanufactureof silkgoods,

print-ing and publishing, women'sclothing, electrical apparatus,hosieryand knit goods, lumber and planing-mill products

including meat packing, agricultural implements, bicycles,

products, carriages and wagons, and carriage and wagon

GENERAL THEORY OF INDUSTRIAL LOCATION 9

materials; is second in ironandsteel, and thirdin foundry

and machine-shopproducts The great flourstate is

Within recent years, the Southern States have become importantin theproductionof certain lines of goods Ala-

while in the manufacturing of coke it gives place onlyto

Pennsylvania South Carolina ranks second in the

produc-tion of cottongoods,with North Carolinaaclosethird, both

havingoutclassedmanynorthernrivalswithin adecade, and

TheIndustrial map (Fig 1) showsthat political

bound-ariesare not recognized in the world of production

East-em Pennsylvania isindustrially different fromwestern

Penn-sylvania The great forests in the states of Wisconsin,Michigan, and Minnesota naturally give them first, second,andthirdrankrespectively as prodticers oflumber andtimber

products Alabama's development in ironandsteel is

read-ilyaccountedfor becauseofits vast deposits of oreand coal,

but the Southern States contain the only cotton-producing

other state, yet Pennsylvania takes first rank in tanning,while Massachusetts is second New Yorkthird, andIllinois

seventh place Montanaisthegreatestproducer ofraw wool

in the country, yet Massachusetts makes more woolen and

worsted goods than anyotherstate inthe Union vaniaand Ohio are the two greatest coal and natural gas-

Pennsyl-producing states in the land, yet New York is first in the

production of gas for illumination and heating purposes

Forty years ago, Pennsylvania waa a great iron and steel

producingstate, because ofthe greatproductivityofthe iron

works in its eastern portion To-day eastern Pennsylvania

is relativelyunimportantintheiron and steel business A

generationago Ohio imported almost all of its shoes from

10 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

the east. To-day Ohiois oneofthe greatshoemakingstates

in theUnion, givingplaceonlyto Massachusetts,NewYork,

and NewHampshire.-' Ascoreof other instancesmight be

cited wherein industries have changed their location It

becomes evident,therefore,that there must be a numberof

The twelfthcensusmentions sevenfactorswhichgiverise

to thelocalization of industries: ^

"(1) Nearness to materials, (2) Nearness to markets,

(3) Water power, (4) Favorable climate, (5) A Supplyof

Mo-mentumofanearlystart '

Whileallofthese causes contributetoindustriallocation,

there are but four primary factors, viz : (1) Markets, (2)

Eawmaterials, (3) Labor, (4) Power

Climate, although sometimes important, as a rule has

littleinfluenceindetermininglocation,unless itacts in junctionwithsomeor allofthe touiprimaryfactors,because

con-artificialmeans can be takentomakea manufacturing

estab-lishmentcome upto nearlyanyrequirementof heat, cold,ormoisture

The supplyofcapitalandthemomentumofan earlystart

each have an important influence, but they are secondary

bepresentin order to give theinitialimpetus

Generally speaking, the most important factor in the

determinationof anyindustrial location is the market, for

withoutameansof disposingof the goods, abusinesscould

marketswhen nootherfactorsare to beconsidered This isnoticeableinthe iron industry in theUnited States Inthe

'Twelfth UnitedStates Census 1900, Vol VII, Manufactures,Part1, TableLXXVI, pp clxxxivto clxxxvii.

2 Ibid., pp. ccx-ccxiv

GENERAL THEORY OP INDUSTRIAL LOCATION 11

early history of the country thegreat consumingcenters for

iron were thecitiesanddistricts scattered along theAtlantic

manyother smaller towns werethe ironusers The Eastern

States had then, and still have, considerable deposits of

valuable iron ore The Schuylkill Valleywas anespecially

favored district inthatrespect It possessed access to iron

ore, anthracite coal, and limestone Blastfurnaces, rollingmills, and otherkinds of ironworks filled the entirevalley

A greatnumberofthe subsidia;ry industries found a

profita-blesituation in that locality The SchuylkillCanal offered

cheap water transportation forthe iron to Philadelphia,from whichcity itwas easily distributed byrailandwatertothe

consumingpoints alongtheeastern coast

Sixty years ago, people knewthat western Pennsylvania

hadrich deposits of ironore,coal, andlimestone In 1856,

no lessthantwenty-onefurnaces inPennsylvaniahad

demon-stratedthatthewesterncoals could beusedforironmaking.*Longbeforethat time, however, nature had, bythegiftofan

ideal location, destined Pittsburgtobe the great iron city

Three navigable rivers make afortune building trinityfor

Pittsburg Two streams, flowing fromoppositedirections,

bring therawmaterials together at a pointwhere they can

readilybe changed into finished products; while the third

oneoftherichest valleys intheworld, andaffords anaturalhighwayforthedistribution of ironproducts Thedevelop-

mentof theOhioValley has alsobeenhastenedbythe

pres-ence of gas, which supplied themostperfect fuel knownfor

themere cost oftapping the ground

After the Civil War, the great extension of railways

through theWest made sucha tremendous market for iron

1Cf Tenth UnitedStates Census, Statistics of Manufactures,

12 THE PRINCIPLES OF mDUSTRIAl MANAGEMENT

became knownthe worldover as theIron City Indeed, the

greatdemandsof the railroads for railscansed easternagersand proprietors tostartplantewestof theAll^henies

man-Inthe early nineties the LackawannaSteelCompany moved

port of BuHalo

Second in importancetothemarketforthedevelopment

of anindustryis the location of the rawmaterials

Pitts-burgwasnotagreat iron city until it had a marketoutlet

TheSchuylkillYaUeyfailedtoproducesteelandiron for the

West, becaiisethe situation of Pittsburgin relation to tiie

rawmaterials is farsuperior to that of easternPennsylvania

itdoes to transporttherawmaterials,notwithstanding thefact

that freightratesonfinished goodsareusuallymuchhigherthanon rawmaterials Thereasonforthis isthat a compa-

whentheproductis completed Tomanufactureone ton of

Company, Pittsburg, requiresin their blast furnace 17 cwt

of coke, 10 cwt of limestone, and 32.2 cwt of iron ore.^

Inotherwords, to transportrawmaterial towithin aimity of the market requires the paying of freight on two and one half tons of material, of which only one ton is

prox-salable

If a market is accessibleaiid all other things are equal,

desirable to locatenearrawmaterial, where rawmaterial is

animportantelementin thecost.

In 1852, therewere shipped from Marquette, Mich., six

1"An Outline of the MetaDurgy of Iron and Steel," by A.HumboltSexton,p 146.

2"TheHonorable PeterWhite," by RalphD Williams,p. 57,

The Penton PublishingCompany, 1905.

GENERAL THEORY OF INDUSTRIAL LOCATION 13

itwa» theforerurinor of tmeof thenio«t important

develop-inonts in thfj iron and nt/iti] industry It ri'Vfial<id to theworld aBourwiof raw mattsrial ttiatwas dfistined tr^give the

Unit^jd Statr« fir«t rank in tlji« fiold. By 1889, the Lake

Suiwrior region itroduaal more than seven and one half

millifm t^jnsof oreoutof the fourteenand onehalf million

UAaIoftheUnil'-d Btat*^.^ In 1907, nearly 52,000,000 tons

of orewere p^jducedinthis country; and, ofthatquantity,

y<itthedej^xj8it« are bo situated and so rich, and thelakesafford such excellentnie-ans of transportation that tiie total

ctjstof mining and of carrying the oreto Pittsburg is less

provid-ing for reserves and sinking funds, these ores sell in the

Lower Lake Ports forfrom ^4.00toij!5.00perfcjn,depending

ontheir quality.'

Whydid notthe citiesa>x>ut the Northern Lake become

great manufacturers of iron productswhen theyhave suchgreut deposits of oreneitrathand? Oreis onlyoneelement

madeto turntlie iron oreint^j finishedproductsatthe mines,

soas to comixjtewith the Pittsburg iron, hut that citywas

near the market and the price of cokewasso high, dueto

the expenseoftransportingitU)the North, that the northern

lake ports, long before tlie eighties, found that their greatfui/iire wasto be intheshippingof iron oreand not in the

makingofiron For a long time, themammothvessels that

curriedtheore tothe lowerlake jwrts had toreturnwithout

cargo Latiir it was found that wjal could be transported

'MineralResources oftheUnitedStates, 1903, pp 41and45.

-' Ibid,, 1908, Vol I, MetallicProducts,p 64. The year1907is

2 Ibid., 1908, Vol I, Metallic Products, pp. 71, 72, and77.

14 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

northwardinthe otherwiseemptyholds, and iron and steel

could be made ataprofitin theseupperports for the great

northwest markets as long as the coal transported merelytookupthe otherwisevacantspace in the vessels

in-tentionof buildingalarge plant in the vicinity of Duluth,

in order to provide steel products for the northwesternmarket

After Pittsburg lost its supremacyin the productionof

from the meeting-place of the Monongahela andAlleghany

Rivers tothe cities along the lower lakes Buffalo, land, andChicagohave becomeveryimportant, while Pitts-

Cleve-burg, although still increasing its output, islosingits

pre-eminent position InJune, 1908, the Iron Agerecords theconstructionof the greateststeelplant in theworldatGary,

Indiana, a fewmiles east ofChicago Thatplantis located

at the lower end of Lake Michigan, where the ore istaken

railwayservice InthiswaythenewIndianacityis locatednear themarketandthe rawmaterial

Laborand powerare notsoimportant indeterminingthelocationofplants inthe ironandsteel industries astheyare

1. The inventive genius of the American has beenable

to devise so much labor-saving machinery that the large

majorityofthe operations havebecomealmost, ifnotquite,

automatic

2. Coal and gas are raw materials for iron and steel.

Theylikewisemake power Hencethe iron andsteeltrieswhen locating near rawmaterials are bound to locate

indus-near power

The extensive use of machines makes possible the

pay-mentofhighwages withoutthe reductionofprofits. Labor

thus can be broughtto any vicinity where accessibility to

GENERAL THEORY OF INDUSTRIAL LOCATION 15

raw material and market makealocation desirable for steel

making.

affectedby the source ofraw materials as is shown fromthe

followingtables, the firstof which shows the productionof

raw wool:

^

state.

16 THE PRINCIPLES OP INDUSTRIAL MANAGEMENT

$109,612,57983,054,56152,640,76338,880,81918,899,93718,142,52017,972,56914,284,4804,698,4053,586,528

Total, 10 States

Total, UnitedStates

$361,773,161380,934,003

oneamongthe ten leading manufacturing states. Thetotal

value of the combined manufacturing output of the other

nineofthe wool-growing statesmakes asum of $3,572,428,

ofwhich amountCaliforniagave $823,239; Oregon, 356; Michigan,$1,338,493,andUtah, $268,340! Ohio, with

$1,142,-its comparatively smalloutputinwoolen manufactures, madeover $14,000 worth of woolen manufactures more than the

combined effortsof allthe other greatwool-growing states.^

From astudyof the above tables it is evident that thepositionofthe sourceofrawmaterialshave smallinfluencein

determiningthe legationofwoolenindustries Thepresence

ofagoodmarketislikewisenot so important, asisevidenced

bythe factthat the middlewest is thehome of millions of

people, andyetonly onecommonwealth finds aplace in thelistofthe firsttenmanufacturing communities

1Adapted from Table 45, Census BulletinNo. 74,pp 130-137.

2CensusBulletinNo 74,pp 180-137.

GENERAL THEORY OP INDUSTRIAL LOCATION 17

In1905 the ten leadingcottonmanufacturingstateswere: *

state.

18 THE PRINCIPLES OF INDUSTRIAL MANAGEMENT

duced goodstothe valueof$380,934,003/and New England

made $218,108,733 worth, while New York, Pennsylvania,

and New Jerseymade goods to the value of $140,077,900.^

Southern New England, NewYork, New Jersey, and

Penn-sylvaniamade $358,000,000 worth of goods out of a total

productionof $381,000,000—nearly94percent

The silk industryshows alike development, as indicated

bythe followingtable

state.