"Born. leaders" of this sort, if they go into business, should become executives, and will do so if they get the proper discipline or training at the start. As has been pointed out in this chapter, a man cannot be a leader or executive in business unless he knows busi ness as a man just as he knew baseball or football as youth, and Ile can get this requisite knowledge only thru study and experience. The "born poet" cannot escape the drudgery necessary to master the teclmic of his craft ; neither can the so-called "born doctor" or "born artist." A youth who seems to have the qualities of leadership cannot become a leader or executive in business unless lie first goes thru the mill and gets a mastery of business details.
If a lad of that kind gets a wrong start and is set at tasks for which lie is entirely unfitted, or if be is forced to remain for years in an environment which smothers his best qualities, Ile will be likely to de generate and to be notable in his later years only for his restlessness and his domineering irritability. The "born leader" does not always, as a man, find his op portunity. The wrong environment may humble him. Napoleon was the world's greatest general in modem times, but if Fate had seized him at the age of twenty one and made him serve for ten years as conductor of a Pullman dining-car, his eyes would have lost their terrible power and his portrait would have bad no charm for hero-worshippers.
Responsibility develops the power of leadership. No man knows his power over men until he has been tested, just as no man knows whether he is brave or not until he has been under fire. Ulysses S. Grant, a graduate of West Point, who had served in the Mex ican War, was a modest nobody when the Civil War broke out in 1861. But for that war he probably would have lived and died in obscurity. The war de veloped in him the latent quality of leadership and Ile became one of the greatest generals of all times.
The youth of twenty or twenty-five contains many a hidden promise. He does not know his own powers or what his career will be, and his friends are in the same darkness as to his future. Hence it is important that young men in business should not be kept for ever at the same task, for their fuaest qualities may then never be developed.
12. Pay of the executive.:—There is a popular no tion that many of our high-class business men, such as the presidents of railroads, banks and insurance companies, are paid higher salaries than they deserve. Plenty of people believe that no man can really earn $50,000 a year., Yet there are executives in the United States whose salaries exceed that amount.
These high salaries are fixed by boards of directors who are anxious that their corporations shall be effi ciently managed. Friendship, favoritism, nepotism, politics, graft—things of this sort play no part what ever in the fixing of these high salaries. A board of
directors which votes a salary of $100,000 to the presi dent of a corporation would be delighted if they could get an equally good man for $10,000, but they know that a $10,000 man would prove a failure. They feel certain that if they engage the $100,000 man instead of the $10,000 man, the corporation's net earnings will be larger and the dividend rate higher. This means simply that they pay a man a salary of $100,000 be cause of his producing capacity, because be can make the company's business so large and profitable that he is really cheaper than a $10,000 man.
Philip D. Armour, the great packer, once showed a Chicago newspaper man about his office. It pired that a comparatively young man sitting at a desk in the corner of the big room was drawing a salary of $18,000 a year. "But Mr. Armour," said the newspaper man, "could you not hire nine men at 000 a year who could do more than he does?" "No," said the millionaire packer, -one hundred $2,000 men could not do the work he does." In Volume II of the Modern Business Texts the reader will study the law governing wages, and he will find that men are paid, _in the long run, inTroportion _ _ to their power of production. The executive's sal ary seems exorbitant to the day laborer. Yet the pay of the executive and of the laborer is determined by the same law. The wage of the day laborer is quite as likely to be excessive, or beyond his deserts, as is the salary of the executive.
Executive ability is comparatively scarce, muscle is abundant; hence the one is dear and the other cheap.
A few years ago a manufacturing concern employ ing five hundred men was found to be losing money. It was selling goods for less than their cost of pro duction. The directors, thoroly alarmed, placed a new man in charge, a man of experience, who in sisted upon having absolute sway over all the affairs of the corporation. He found that the business suffered, for one reason, because of the high cost of raw ma terials, and that if its volume were doubled the raw materials could be purchased in large quantities and more cheaply. He found also that if the plant were doubled in size, the output per employe could be in creased and the costs, therefore, reduced. He dis covered still other ways of increasing the efficiency of the plant and reducing costs. At the end of a year the plant had been doubled, one thousand men were employed, the wages of some of the workmen had been raised, and the company was earning a net in come at the rate of 15 per cent per annum. Every business man of much experience is familiar with in cidents of this kind. If that executive was paid a salary of $50,000 a year, who can prove that he did not earn it?