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recovered his health. He argued that if the new food was good for him, it would be equally good for others, and with the limited capital at his command began the introduction of his shredded wheat.

A small restaurant in Denver was purchased and here the inventor started a quick lunch service restaurant equipped with the wide-arm service chair designed by himself. He advertised the new "Natural Food," as he then called it, and business at the little restaurant was good. "There was only one way to get shredded wheat; one had to come to that particular restaurant and eat it off the wide-armed chairs."

As the next step, the inventor constructed a small wheatshredder much like a coffee-grinder, and proposed to sell these to the housewives so they might make their own shredded wheat. He discovered, however, that the housewives didn't want shredded wheat, and naturally would not buy his shredder. This was the first setback for the new product.

Not discouraged by this failure, the inventor sold his restaurant, and with a cash capital of $1,500 went to Boston to introduce shredded wheat to a reluctant public there. At the time he arrived a food fair was in progress. This was exactly in line, and Mr. Perky rented space and installed a wheat-shredder. Here his ability as a promoter showed itself, for he not only sold his shredded wheat, but he induced Boston capitalists to join with him in a new company-The Cereal Food Machine Companyfor its wider exploitation.

Forcing a Breakfast Food on the Public

As the next step, Mr. Perky leased a small factory and began the manufacture of shredded wheat. "His output was away ahead of consumption. The public had a way of laughing at this newfangled food product. They called it 'baled hay.' The bread-bakers laughed at it and told him over and over again that he could never make a go of it. The deficit that soon began to

pile up against him was appalling. It was one thing to manufacture shredded wheat, but it was quite another to induce the public to accept it as a food."

Mr. Perky thereupon started out as sales agent for his product. Among other selling plans he originated the advertising lectures. To make them more attractive, young women were trained as lecturers and demonstrators, and at one time Mr. Perky maintained a fully equipped college of domestic science.

Meanwhile funds were running low and the inventor-salesman found great difficulty in meeting his weekly pay-roll. A Worcester capitalist was persuaded to make a considerable investment in his enterprise, under condition that the factory be moved to that place. This was done and the manufacture of shredded wheat began on a larger scale. It was not long, however, before all the available storage space in the new plant was filled with shredded wheat which showed a tendency to stay in storage instead of going into active circulation. Mr. Perky employed a New York sales agent, shipping him two car-loads of the product. The salesman wired back protesting. Mr. Perky, however, shipped two additional car-loads and "went himself to New York, leased a vacant store on Broadway and setting up one of his shredding machines in the show window began to manufacture shredded wheat so that the passers-by could see how it was done."

The direct effect of this effort was fairly good. The far more important result, however, was the interesting of the late Ogden Mills in the inventor and his enterprise. "Mr. Mills made a good-sized investment in the proposition and also contributed in the way of suggestions and advice. New machinery was invented for more economical methods of turning out the product, making the process largely automatic, which greatly reduced the costs, and a considerable sum was judiciously expended for advertising." Gradually the public began to wake up to the good features of shredded wheat. The consumption increased rapidly and in a comparatively short time the enterprise began to be profitable.

Since that time the history of shredded wheat is one of continued success. Two enormous factories have been completed at Niagara Falls, and a third is under way. The Canadian trade is supplied from a factory on the Canadian side of the Niagara River, and the West is supplied by still another factory at Oakland, Cal.

"The Shredded Wheat Company is capitalized for $10,000,000. There are no bonds. Its plant additions have been built out of earnings. It usually carries from two to three years' supply of wheat on hand. This last year's income tax was over $500,000."

Testing the Enterprise

Shredded wheat was, basically, all right, and Mr. Perky knew it was, but apparently the public did not want it. How many men would have had the patience and the determination to push on until the public indifference was overcome? How many other breakfast foods, perhaps equally good, have fallen by the wayside for lack of this bull-dog determination? And how many of them never would have succeeded regardless of any amount of pushing and pertinacity that could profitably be put behind them?

While in some cases uncertainties will exist that can only be removed by the pragmatic test-by actual trial-this does not relieve the owner or the promoter, and the investor as well, from the responsibility of investigating every phase of the new undertaking so far as investigation can be profitably carried. A proper investigation will almost always eliminate the basically unsound enterprise and will remove more or less of the uncertainty from enterprises of any character. In Part III of the present work the investigation of an enterprise to determine, so far as may be, its soundness and desirability is discussed in detail.

CHAPTER V

EFFICIENT MANAGEMENT

Importance of Efficient Management

Efficient management is by far the most important single requisite of business success. An undertaking may be meritorious; its capital may be more than adequate, but if its management is poor, failure in greater or less degree is certain. On the other hand, even a poor undertaking, or a good undertaking crippled by lack of money, will, unless the handicap is too heavy, be brought to a successful issue by good management. Usually, the degree of success in any particular enterprise—within its possibilities—is determined by the ability of its management.

A Socialistic Experiment

I

A well-known efficiency engineer gives an interesting account of his experience with a socialistic colony. A lady of wealth had given a square mile of land for its local habitation. This land lay in an island off the coast of California but near excellent markets on the mainland. The society was known as "The Brotherhood of Man" and there were two kinds of members-resident workers and non-resident contributors. The contributors furnished the needed capital, the resident workers were to start the various industries upon which the permanent success of the colony would depend.

Any contributing member might at any time change his status from that of a contributor to that of a worker. Or, if he died while working in the "outer world" his family could become members of the colony, be assured of a house and home, and a part in the general welfare "not according to greed or deed as in the outer world, but according to need."

'Harrington Emerson in Staff Bulletin 52.

The idea appealed to the efficiency engineer. It seemed to him "a rational assurance against disaster for me and mine." As he frankly states, however, he had no intention of becoming a resident worker so long as he had health and strength for the competitive struggle "in which I hoped by greed and deed to do far better for myself and mine than were I to become a worker in this island forest paradise. But what a favorable prospect for the colonists!"

Intellect vs. Organization

"Here were 640 acres of land, either fertile fields or great forests. In the sea were unlimited supplies of fish; along the beaches inexhaustible clam beds. There were deer and other game, rabbits and other fur-bearing animals." The coast Indians, not far away, enjoying much the same conditions, had lived for centuries in abundance. They were not rich because they did not care to save, but never poor because of the natural richness of the country. "How much better therefore the outlook for the colony with not only its specific land endowment but also with its collection of skilled and ardent workers in the prime of life, with the splendid markets for all its surplus in the two neighboring cities."

...

All the traditions of the white race were part of the endowment, and all the accumulated knowledge of the ages was available. . . How could there be failure? So full of hope, I was initiated by a most impressive ritual, I was given pass-words and taught grips and I took boat to see for myself the workings of the colony. I spent a week among them....

I found a number of fine men and fine women, also a few children. The men were for the most part interesting dreamers who had not made a business success in the competitive outer world. Some got up at 4 o'clock every morning and worked furiously all day, their wives cooking for all the workers. But there were other dreamers who had no taste for hard manual labor, who preferred to write books on socialism, who stayed up late to discuss and argue, and who lay abed until the middle of the forenoon and then expected the overworked women to prepare for them special meals. Some of these dreamers sulked when objection was made to their irregularity.

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