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Landrum-Griffin Doesn't Cover This . .
Plus All You Can Steal By EDWARD W. ZIEGLER In THE NATION ♦ ♦ ♦ Edward W. Ziegler, a former newspaperman, is now an editor at McGraw-Hill. With few exceptions, American in dustry has been loudly bewailing its falling profit margins for almost a decade. Industrial leaders have been glumly predicting that industry is pricing itself out of world markets; indeed, judging by the reaction of auto buyers and the TVA, American industry may be pricing itself out of its own market as well. Almost all the trouble is blamed on the high cost of labor (never on the high cost of management). But per haps a better explanation lies in the short and brutal word larceny. Work ers usually take things (tools, parts, materials) ; managers usually take money (kickbacks and inflated ex pense accounts) ; but whoever takes, the consumer has to foot the bill in the form of higher prices How much is the bill? Industry, be cause it regards any kind of adverse publicity as tantamount to conviction of mismanagement, hides its losses (even from itself) by complex ac counting methods. But insurance men, who have to make good on at least part of what might be called the pure thievery, say the annual total runs into $5 billion or more That, too, is the estimate of Nor man Jaspan, New York management consultant. And above and beyond these billions is a much larger total of semi-official and quasi-legal thiev ery that higher managers and execu tives carry on by means of padded expense accounts, THIEVERY—15% OF GENERAL PRICE LEVEL Mr. Jaspan recently told the Amer ican Management Association that the general price level could be reduced 15 per cent if dishonesty were re moved from American business. "The nation's gross national product has in creased by $92.3 billion since 1952," he pointed out, "but profits have re mained at the 1952 level." He put the blame on business dishonesty, adding that more than 60 per cent of the losses are the work of supervisory and executive employees. Mr. Jaspan's fig ures may be exaggerated, but not— according to other observers—by very much. And no one can say that Rich ard L. Bollard of Liberty Mutual In surance Company was exaggerating when he pointed out, a short time ago, that insurance companies are paying out 130 per cent more in fidelity claims than ten years ago. George Y., a toolroom worker at a 6,000-man General Motors plant, along with Tony A. and Bill M., had been stealing fine gauges, taps, car bide tools, micrometers and other easily portable metal-wolking equip ment for years. George's home work shop was superbly equipped. He stole nothing but the best. But George got caught by a fluke. His supervisor knocked George's coat off a hook one day when he brushed up against it. About $20 worth of carbide inserts rolled out of the pock et. George had put them there just an hour before. The supervisor hustled George to the plant manager's office, where they were joined by the per sonnel manager. They grilled George. They got noth ing. For $20 worth of tools, the com pany wasn't going to go to the police and George knew it. The worst they could do was fire him. The tools he had been hoarding in his garage work shop bore no GM imprint. No one could prove he hadn't bought them. But a quick audit raised the alarm. There was a $10',000 shortage in the tool room for that one year alone. Further evidence implicated Tony and Bill, All three were fired. CUSTOMER PAYS THE BILL Today in Elyria, Ohio, there is a new, well-equipped and highly suc cessful tool-and-die shop. Its owners are George, Tony and Bill. It was fi nanced—short term—by General Mo tors. Long term, you and I are amor tizing the cost every time we buy a new Chevrolet. According to one cyni cal observer, the flourishing new busi ness no doubt lists General Motors as a customer. At another GM plant, the scrap supervisor made a qdiet deal with a scrap dealer. The supervisor would sell the dealer scrap brass at the price of scrap iron and split the difference. The plan was so simple that it worked perfectly for three years. The weight tickets and the price tickets always matched properly. And the scales were always in perfect working order. But one day someone thought to look inside one of the scrap dealer's trucks to see the "iron". Of course it was brass. The plant was poorer by almost $80,000. The supervisor was fired. But none of his $40,000 share was recovered. General Motors, by the way, is widely acclaimed as one of the most efficient, best organized of our large corporations. In Richmond, Va., the district man ager of an electrical manufacturer's distributing subsidiary checked over the warehouse inventory figures against a physical audit in the fall of 1955. He discovered serious shortages. Vacuum cleaners, portable radios, television sets—even bulky electric ranges—had simply disappeared. He hired two private detectives, who hid themselves above a false ceil ing over the shipping dock and began watching outgoing shipments. Within 48 hours they saw one of the delivery men nudge an extra vacuum cleaner carton from stock into his outgoing pile. Then he loaded the whole ship ment into his truck and started off. The private eyes climbed down and followed. They trailed him to his mother's house, where he dropped off the vacuum cleaner. They made their arrest. The district manager called in the police. Two city detectives, the private detectives, and the manager grilled the delivery man for hours. He con fessed only the theft of the $49.95 vacuum cleaner. Although the short age totaled many thousands of dol lars, the evidence would support only a petty larceny charge. TAKES A CROOK TO CATCH A CROOK The manager fired the delivery man and the warehouse manager. He came very close to firing his operating man ager, as well, suspecting a kickback arrangement among the three. But he could prove nothing more. The case was closed to the satisfaction of the parent company. But what the com pany did not know was that the man ager himself had "borrowed" a tele vision set from stock for his own use, along with a window fan and an air conditioner. He "bought" an electric range and a refrigerator that same year with money he made on his ex pense account. Little men perform little acts of larceny, all gaining much more than they would lose if they got caught. Typical of industry's half-tolerant at titude is this response a cigar company executive gave DUN's REVIEW AND MODERN INDUSTRY to the ques tion: "Which kind of dishonesty is most expensive?" Answered the exec utive: "The kind we never discover." In the total picture of larceny in industry, however, the petty pilferings of little men fade into insignificance. Come on, Jack, $12,000 a year and all you can steal—sounds good, does n't it?" Thus an electronics engineer carrying too much gin on top of too little vermouth egged an old friend into following him to a new job in California. (Continued On Page Seven) Minimum Price-Fix Wins In Ohio COLUMBUS, Ohio—(CNS)—State legislators have overriden Governor Michael DiSalle's veto of a so-called fair trade law. The law lets manu facturers fix minimum retail prices for their products and forces all re tailers within the state to abide by them. Prior to this, only those retail ers who signed fair-trade contracts have been forced to observe them. Shoe Stores Fight To Survive BOSTON, Mass.—(PAI)—The boot and shoemakers union is strongly pro testing against the "cannibalism" in the shoe industry under which the big manufacturers are gobbling up big and little retail shoe stores. In a state ment the union's general executive board declared that more and more huge companies are taking over the retail outlets, destroying competition and forcing hundreds of independents out of business. M * •■V % >■■■ •* ■ ' , s ■ : v •|i| r: : £ i ' MS: m ■ y':' M: - M t pip Mil m If m in* 1 •ivX-:' ■\ Y ■■ \ ■ /. -j : ;.IG &.-■ 4 h i € % , \ How can a farm afford the special services it needs? Farming ,.. like any other industry ... needs the efficiencies and economies of specialized departments. The farm business needs a sales de partment and a purchasing department . . . someone to counsel on insurance and credit . . . and many more depart ments to work out important problems. If it weren't for cooperatives, most farmers couldn't afford these special ized services. Purchasing cooperatives * supply materials and products of high est quality at lowest possible cost. Mar keting cooperatives help improve the quality of produce and sell it at the most favorable prices. Mutual insur ance companies provide protection at lowest cost. Credit associations lend money for farm operations. These cooperatives make farming more business-like and more profitable. i m "■ m :-y % L:;: -, ÿf m PURCHASING COOPERAT! VI MARKETING COOPERATIVE m mM > Y \ m ¥ : MUTUAL INSURANCE CREDIT ASSOCIATION I I | I I I I ] | I | I I I I I j | | I I I I FARMERS UNION CENTRAL EXCHANGE FARMERS UNION MARKETING ASSOCIATION FARMERS UNION GRAIN TERMINAL ASSOCIATION © Co-op Adv. Council 1 966 Wherever there it a human need • • • COOPERATIVES CAN MEET IT ♦ ♦ ♦ Co-operatives Are the Balance Wheel That Strengthens Our Free Economy FARMERS UNION OIL COMPANY Ophelm, Montana LAUREL CO-OPERATIVE ASS'N. Laurel, Montana FARMERS UNION OIU COMPANY of Glendive, Montana FARMERS EXCHANGE Stevensvllle, Montana FARMERS UNION TRADING CO. Fairview, Montana FARMERS UNION OH, COMPANY of Great Falls, Montana FARMERS UNION OH. COMPANY of Peerless, Montana F. U. OH. & SUPPLY COMPANY of Hinsdale, Montana EQUITY CO-OPERATIVE ASS'N. of Geraldine, Montana FARMERS UNION OH. COMPANY Sidney, Montana FARMERS UNION OH. COMPANY Lewisfown, Montana FARMERS UNION EXCHANGE Kallspell, Montana POWER FARMERS ELEV. CO. of Power, Montana ' FARMERS UNION OIL COMPANY of Plentywood, Montana FARMERS UNION GRAIN CO. of Poplar, Montana FARMERS UNION ELEVATOR CO. • Wolf Point, Montana FARMERS UNION OIL COMPANY Roy, Montana EQUITY CO-OPERATIVE ASS'N. of Brady, Montana FARMERS UNION OIL & SUPER SERVICE STATION of Glasgow FARMERS UNION ELEVATOR CO. of Belt, Montana FARMERS UNION ELEVATOR CO, of Chinook, Montana FARMERS UNION GRAIN CO. of Peerless, Montana FARMERS UNION OIL COMPANY of Wolf Point, Montana FARMERS UNION ELEVATOR CO. of Rudyard, Montana FARMERS UNION OH. COMPANY Raker, Montana FARMERS UNION OH. COMPANY of Nashua, Montana FARMERS UNION OIL COMPANY of Havre, Montana SIDNEY CO-OP MARKET, Sidney Meats—Lunch WINIFRED FARMERS OIL CO. Winifred, Montana Groceries FARMERS UNION OIL COMPANY of Circle, Montana FARMERS UNION ELEV. & OIL CO. of Pendroy, Montana FARMERS UNION TRADING CO. of Butte, Montana FARMERS UNION OIL COMPANY of Joplin, Montana FARMERS UNION ELEVATOR CO. of Joplin, Montana FARMERS UNION OH. COMPANY of Plaxvllle, Montana FARMERS UNION CO-OP OIL CO. of Richey, Montana FARMERS UNION CO-OPERATIVE Miles City, Montana FARMERS UNION CO-OP ASS'N. Cut Bank, Montana EQUITY CO-OP ASS'N. OF HARLEM Elevator and Oil Stations nt Harlem—I loge land—Turner FARMERS SUPPLY CO-OP of Conrad, Montana FARMERS UNION SUPER SERVICE of Chinook, Montana FARMERS UNION OIL COMPANY of Geyser, Montana FARMERS UNION OIL COMPANY Froid, Montana FARMERS UNION OIL COMPANY of Townsend, Montana DAGMAR F U. TRADING CO. Dagmar, Montana FARMERS UNION OH. COMPANY Lindsay, Montana FARMERS UNION GRAIN & FEED FARMERS UNION GRAIN CO. Nashua, Montana CO. F U, GRAIN & SUPPLY CO. Billings, Montana Glasgow, Montana