The Bismarck Tribune

Ermatinger Calls Lund Audit Report 'Either Naive or Malicious'

TABULATOR USE WARRANTED BY ITS EFFICIENCY

Electric Device Cost $2,605.44 for 11 Months. Not Five Months.

USED UNIVERSALLY

Motor Vehicle, Compensation and Health Bureaus Work

Machine

Charging that O. B. Lund's audit report on the state highway department is "either naive or malicious," J. J. Ermatinger, highway commission secretary, denies its accuracy in a statement issued today.

Lund is the examiner employed by the state board of auditors and his reports are state documents.

Ermatinger's charge that Lund's report is inaccurate deals with the auditor's statement that the Hollerith tabulating machine is an unnecessary expense and costs $2,605.44 for five months of operation, exclusive of labor. Ermatinger said the figures which Lund mentioned in his report cover the cost of the machine for 11 months of operation instead of five months and declares it to be apparent that Lund is interested in discrediting the work done by the tabulating machine.

The machine in question is used by the highway department in compiling statistical data. It operates by electricity and makes tabulations from record cards which are passed through it. The data for any given job is contained on a card by means of a punch and a code. A hole punched in the card at a particular place means a certain thing. The machine sorts these cards, and can sort, count and list the data from thousands of cards in a single day.

In his report Lund said that the business of the department was not sufficiently large to warrant use of the machine. Ermatinger contends that the business is not only large enough to justify use of the machine but that the machine is enabling the department to replace guess work with facts in its operation.

In his statement, issued today, Ermatinger said:

"C. B. Lund, in his audit report of the state highway department, makes severe criticism of the use by this department of the Hollerith tabulating machines.

'Not Well Informed!'

"Mr. Lund's criticism is inaccurate and his comments disclose that he is not well informed on the subject. However, we welcome his criticisms, blundering as they are, because it offers opportunity to show what this machine does and how its business practices are being improved.

"The Hollerith tabulators were installed in July, 1927, and not in January, 1928, as Mr. Lund says. They have been in use ever since, a period of 11 months to the date of Mr. Lund's audit report of May 31. That is just another mistake on his part. The figures cover 11 months of operation.

"It is true that this machine is leased from its owners and that the department pays a rental charge. These machines cannot be bought. Hundreds of them are in use by the federal government, private business firms and departments of other state governments. They are leased because it is impossible to buy them. In that respect we are no different from the federal government.

"Mr. Lund is wrong again, however, when he says we must pay a service charge. Like other state departments we do pay a service charge on adding and calculating machines—but not on the Hollerith devices.

"It appears that for some reason, best known to himself, Mr. Lund was very eager to discredit the use of these machines. In any event he charges the full time of two clerks, whose combined salaries total $200 month, to the operation of the calculator. A careful auditor would verify his impressions instead of jumping to conclusions as Mr. Lund did. He got his idea of cost from the titles given these two clerks. Apparently he neither asked for information regarding their work or observed their work closely himself, because the fact is that each clerk gives less than a quarter of his time to the operation of this machine. It is difficult therefore, to say if Mr. Lund's charge is merely naive or deliberately malicious. At any rate it is inaccurate.

Calls Audit Joke

"Mr. Lund's comment that a clerk devoting half a month to our cost accounting at a cost not to exceed $15 per month can produce the same results as the machines or give this department the information it needs, merely shows an amazing lack of knowledge on Mr. Lund's part. If his audit reports were not serious business it would rank as a joke and a good one.

"Here are a few of the maintenance reports produced by the machines:

"1. Class and item reports on completed operations, giving the cost cutting weeds, smoothing road surface, cleaning culverts, repairs, highway marking, etc., for each of 33 different items.

"2. Commodity reports showing units of labor, materials, machine repairs, etc. and their cost of 86 different items. These reports are divided by six divisions, central office and the total for the state for the current month and the cumulative total for the year to date. It also gives the per-mile-cost of each item and permits comparisons of the cost from month to month and year to year. These reports go to the highway commission monthly.

We are setting the following reports:

main
nearly 800 of these. It is important each patrol section. There are now that we have data as to the results achieved by patrolmen and the work done by them. We can compare costs on maintaining dirt roads with the costs of other dirt roads or the cost of gravel roads in any way we wish. We can divide costs for each patrol section into 33 different items if we wish and have done so for several counties at different times.

"4. The amounts of materials purchased from each firm with which the highway department does business. These can be reanalyzed to show the things purchased and the prices paid. When the original data is once transferred to the punched card we can analyze that data from any angle.

"At present the machines are used only for ascertaining maintenance costs. Some of the things it already has disclosed have been of more valuable aid to the department than the cost of the machine for a year.

Change Accounting System

"We have cards ready for carrying data on construction costs but must design a numbering code first. In due time everything done by the department will go on the machine. This must wait, however, until we have completed installation of a new and proper accounting system to control expenditures and liabilities and to insure compliance with the department's budget system.

"The machine is efficient. Cards can be punched at the rate of 200 to 400 per hour, depending upon the efficiency of the clerk. The machine sorts them at the rate of 350 a minute and tabulates them at the rate of 125 a minute and we get five different totals in one operation. The sorting and tabulating machines work faster than the human hand or mind. They can do the work of six to ten clerks.

"Mr. Lund's criticism bears directly on the policy of the highway department. He may not realize it but any businessman can understand that it is necessary to have a definite check on various operations if the business is to operate efficiently. The highway department spends almost $5,000,000 a year in all parts of the state. Its activities are widely distributed from a geographical standpoint. Only by an adequate system of statistics can the department heads and the highway commission determine where efficiency is greatest and where it is lacking, or why. The real value of the machine is that it automatically calls attention of the highway commission to these things and permits correction where correction is necessary. Mr. Lund might get all the information he needed with half the time of a clerk paid $150 a month. Perhaps he would not need much.

Other Bureaus Aided

"Mr. Lund lays either his honesty or his accuracy open to question by failing to mention the revenue which this machine brings in from other state departments or the service performed for them. In addition to our own work we analyze cards for the state health department and the state workmen's compensation bureau. Of course we make a charge for this service and it helps to reduce our overhead.

"We are now making an analysis of the motor vehicle registrations because some of that data is essential to us in making our budget estimates. Other information may be of use to the legislature in case it should desire to change the fee schedule for automobile registrations. We believe legislation should be based upon facts instead of guesses. This machine eliminates guesswork.

"Mr. Lund never knew of these machines until they were installed in this department and I believe he knows nothing today regarding their operation or efficiency. They have been demonstrated to many legislators, county commissioners and businessmen and reports made by the machine shown to these people. All were unstinted in their praise of the machines and our efforts to get real business procedure. Thousands of business firms and governmental departments, whose volume of business is no greater than ours, use this machine.

"There are two other machines in this state. The Implement Dealers Mutual Fire Insurance company at Grand Forks has one and the Grand Lodge of the A. O. U. W. at Fargo has the other. The Minnesota highway department has two. The University of Minnesota, Hennepin county, road and bridge department, the Minnesota workmen's compensation bureau, board of railroad commissioners and Minneapolis board of park commissioners have one each. There are several others in use in Minnesota.

"State highway departments using them include those of Wisconsin, New Jersey, California, Nebraska, Pennsylvania, Michigan, and Rhode Island. Many departments of the federal government have them. My list is two years old and a more recent compilation doubtless would show more widespread use. Their adoption in North Dakota is merely in keeping with the spirit of the times."