OK, this is the twenty-fourth of January AD21. And just as I predicted, and horribly as that may be, sure enough I had to give a lecture now on the HAS.

As soon as we had the system, why I thought, "Well everybody'll understand that, that's very simple." Do you see? You just get a product and the org officer comes along behind you and puts the organization there so he can get that product and straightens it out. That's very simple. And then I found out after I worked for a little while; I'll be truthful, I figured out I'd have to say something about the product officer, because that seemed to be in doubt a little bit. So eventually I worked at it myself to get a good grip on this subject of product officer, and pushed it on through, and gave a talk on the subject, and thought everything would be great, and org officer, and so forth. And what'd I run into then? Why I ran into the org officer wasn't really understood, so I gave you a talk on the org officer and got that straightened out. And then HAS has reared its ugly head. So I'll try to straighten out the role of the HAS.

We are dealing with product one, product two, product three, product four. And product one is the establishment, and product two is the product of the establishment, what does the establishment make? What does it produce? And product three, that is the correction of the establishment. And product four, that is the correction of the product.

1.) A group which has the idea of where it's going and what it's going to do, and is not all individuated one from another, can normally pull together so it will eventually make it.

Now to look at this very rapidly, we find out that it's necessary when we have a product to get out, that an organization get it out. Now to give you a stable datum, if you want to improve the volume of production you have to organize. If you want to improve the quality of a product, you have to organize. If you want to improve the viability of a product, you have to organize. If you're being served a lousy dinner, seldom, at great expense, the answer is organize, organize, organize. No volume? Well, organize it up so the raw materials come in, so it goes down on a proper assembly line of preparation, and comes out at the other end as a product. If you want to improve the quality, why go down that line, find out who hasn't got the tech of making soup. And you also improve the quality of the steps and the exactness with which they are done, and you will come up with a better quality of product.

2.) Here in the SO (1971), we are on the edge of a 2 year survival, just beginning to make it. We are doing this into the teeth of a relentless enemy, and we hear his "death rattle" once in a while. We will make it, but now are on the margin of survival.

And, once more, if you want to improve the viability you have to be able to scout the various logistics involved in the raw material, and you have to take the excess steps and the excess do-less motions out of the line, that finally winds up in a dinner, and you will wind up with a cheaper dinner.

3.) We are in a world which is very "topsy-turvy" (upside down) economically and otherwise.

Now the trick is to wind up with lots of dinners, of good, acceptable quality, and a viability of getting dinners. In other words, viability comes down to when it comes to finance, the outgo/income law applies. And if you only ever knew this about finance, why you would actually have it made. There's practically nobody in the world has actually learned this about finance. And it is a very elementary thing to learn. And it is simply that income must exceed outgo. And outgo must be less than income.

4.) The MINIMUM of survival is to be able to operate for 2 YEARS without making a penny. That is the BEGINNING of viability.

Now if you've learned that you become a financial genius. Now from where do we go from there? Where do we go from there? Well then we really get to be a financial genius, and money starts shooting out in all directions, and you don't know what to do with the stuff, and that is to say you; and this is where the production officer functions; he recognizes that his losses are the losses in money he doesn't get. Those are the losses. The losses are not in the paper clip package for two cents when it could be bought for one cent, although that is an economy which is necessary to know. It is the junior economy. And nobody knows this other economy at all. It's a complete stranger.

5.) And IF YOU DO have to operate without income, you have time to get REALLY BUSY and handle it.

Every week that your org does not make three thousand dollars and only makes two thousand dollars, you are running at a loss of one thousand dollars. I don't care what you've got in the bank, I don't care how smug everybody looks, if your org has a potential of twelve thousand dollars a week and you only make three thousand dollars a week, you are losing nine thousand dollars a week cold, hard, spendable cash. If your org and your skills and capability and so forth would run at twenty-five thousand dollars a week, and you are only getting five thousand dollars a week, you are losing twenty thousand dollars a week cold, hard cash. When the stat goes down from eighty-nine hundred dollars to seventy-nine hundred dollars, it isn't pretty good, you have just lost one thousand bucks. Now that is the way you handle production money. And what that requires from the production officer; now hold your hat now, hold your hat; it requires a big idea. And it doesn't require somebody sitting around saying, "Well, if we could just make the paper clips for two cents a pack, and we actually are spending now, we could save one mil, and so forth. And therefore our profit will be..." That's what's wrong with capitalism, they're always worrying about profit. Don't every worry about profit, worry about millions. See, worry wrong target.

6.) For instance, "cash bills" were so bad over the world in 1969, October, that I didn't expect Scientology to survive. It was an insolvent mess. The "cash-bills" of Scientology Orgs were crossed. (Bills were more than cash). (Note: Bills = Debts Owing.)

So when you really know this about income and outgo, now you are a screaming financial genius. Now you really are one. So, look it over.

7.) MSH originated the "Financial Planning Program # 1", which I issued as an ED, to handle.

Now, the realm of income/outgo is what difference is between income and outgo. Now if your income is two cents higher than outgo, you say, "We're solvent." Heh heh heh heh! Oh you nuts! You may be solvent at that existing instant, but you are not viable. What

8.) In 7 or 8 months, she achieved the result of ALL ORGS SOLVENT. It was a HARD job.

does it take in this universe to be viable? Boy, this is, this is quite a universe! This is quite a universe. And if you look this universe over very carefully you will find out it has all kinds of wild ramifications. If a farmer wants to wind up viable, and he calculates very carefully that he will need twenty tons of wheat to see him through the year, he's a god damn fool if he doesn't raise two hundred and fifty tons. I didn't mean to be profane. You can cut that off the tape. But he is, he's a fool. He's a fool if he doesn't raise two hundred and fifty tons. He needs twenty tons of wheat, so he's, gone.

9.) She found that many orgs were very unreal on how much they cost per week to run, so they didn't know how much they HAD to make to stay solvent.

If I could just get your wits to sort of separate on the idea of what viability is, your org should be able to run without any trouble whatsoever for at least two years without ever making a cent or firing a person. And about then you might have achieved better survival. You got the idea?

10.) The next step is NOT JUST to make as much as you need per week, but to start to buy SURVIVAL, and that is, at a MINIMUM, a 2 YEARS RUN WITHOUT A PENNY WALKING IN THE DOOR.

People who sit around and live one of these hand to mouth existence is like saying, "Our cash/bills ratio, that's pretty good now. Cash/bills ratio, we owe one hundred dollars less than we've got, and we're doing great." Boy, you died. Death was several months ago. Get your think, get your think different.

11.) That would get you over most political and other crises.

Now if you ever wonder about why you don't have enough money to do everything you want to do and bribe all the senators you want to bribe, and buy all the prime ministers you want to buy and so forth, it is just that piece of think.

12.) These are the HARD FACTS OF LIFE. So how much Establishment can you afford?

I'll tell you a great oddity about this world. You think if you would decrease prices you will make more money. Ha ha ha. You can too much increase a price and you will immediately dive your income. You can too much increase a price, you will immediately dive your income. Increase or decrease your prices too greatly, and you mess up your income. If you want to shut your income off, why just raise your prices unexpectedly. But in a world of inflation, money is worth less and less and less, so how are you going to compensate for the fact that the money you are getting is buying less and less and less, and your prices are decreasing consistently? Well that's an interesting idea.

13.) Obviously YOU CANNOT afford an Establishment which doesn't PRODUCE. And, YOU CANNOT afford people IN the Establishment which do not produce. And YOU CANNOT afford to harbour machinery which doesn't produce, and offices which have no service use. THESE are the things you CAN'T afford.

If somebody came along right now and said that an automobile, the X-model automobile cost twice as much as it was going to cost last year, that's horrible. People stay away in droves from X, because they've increased the price of it. Even if you put out model X-1, so you've got to put out a spoofer car. Brand new creation. And it is so great it cost fifty times as much as an X-mobile. Now you get some buyers. Man is not rational where it comes to pricing. People do not sit around and figure it all out.

14.) The WRONG way to do it, is to fire staff to balance you books when the income goes down.

Now this is no advice, to kite your prices up into the sky and not give any service for it, god knows. You give service of a caliber that would get you ten times as much as you're getting, and you'll get the ten times as much, providing as you don't tell people you've raised the price. So therefore you don't dare raise the price, so therefore you have to do something else. You have to reprice. So it requires re-pricing, repackaging.

15.) The way to do it is HAT, TRAIN, and get MORE PRODUCTIVE on post, the staff members you do have.

Now this is a world of airy-fairy, god 'elp us, because you ask people for a survey on this subject and they give you nothing but lies, so you're never able to establish it. So it all has to be by doing, and you offer this other package of something else, and then you will find out what your pricing is.

16.) The manager always has the responisbility of providing work for his workers. (Somebody in Russia ought to learn this.)

Now this might not work in the commercial world of automobiles, except it would. I think the Rolls Royce is the biggest swindle in the world. I do. They do things like lock the bonnet so nobody but a Rolls Royce mechanic can touch it, because it's so fragile. And they give some kind of spring suspension so that the chassis is independent of the body. I've driven them. They've got no pick up. They sure ride nice. An old lady's car. But, they sure cost.

17.) It's not just "how much Establishment?", it's "how much Production?"

Now they've made a price reputation very high, because the quality is such that the deterioration is very slight. And then they never change their model, so they never build in any obsolescence. So it's nothing to be asked twelve thousand, five hundred pounds for a second hand Rolls Royce. Jesus god, twelve thousand, five hundred pounds for a second hand Rolls Royce! Bah! People would ask you with a straight face, you know? A Buick will run rings around it. It's got name, it's got quality, its deterioration is terrific, and it's driven by the Maharajah of Spangpour. There's status involved in it, and so on.

18.) Now we are back to Resources. How much Resources does the HAS have that can be utilized by production?

So there are all kinds of factors in this subject of pricing. But if your pricing is something you can't fool with, you can fool with volume. But you have to make sure that your costing is adequate. And out of all of this that I've just been giving you; this is not a lecture on economics; this is what establishes how big an establishment you're going to maintain.

19.) It's very simple. Income for last 3 months was "X". Therefore expenses over next 3 months must be "1/2 X", and income must be "2 X".

The products officers' capability of getting the stuff out, and getting it out economically in volume, high quality, can determine the potential viability. Now the usual method of a firm is followed by governments also. And they expand to absorb all of the income. That is the rule under which most organizations operate. Expand internally, administratively, with duplications, to absorb all of the income that is coming in. So there is a counter rule which works on this planet. Why, I wouldn't even bother to inquire. And I've never bothered to inquire. An organization tends to spend a bit more than it makes, and it is the operating rule under which all organizations function. And you will find it is never violated. So the organizing officer's job is to violate it. Do you see?

20.) Then you are at a QUARTER of income for Establishment if you target it and pull it off.

Now the big idea that the product officer got; you say, "Well heaven's sakes, what do you mean the big idea of the product officer? This is all established by somebody else at a higher echelon, and nobody gets any idea." No look, even a guy in the, even a guy in division two, a bird in division two who is working on his post there, he can get a big idea in the field of promotion.

21.) Most organizations are terrifically INEFFICIENT. The IDIOT answer is to "close down" some part of the org or "lay off" thousands of people. But that's what the wog world does! (like General Motors)

The registrar sitting at her post, she can all of a sudden get a big idea, and put it into effect without any further nonsense. And people in the assembly lines, they can sit there and look at this, and all of a sudden get a big idea. It's all in the field of A big idea is how to get, usually, more consumption of what you're producing. And an organization doesn't run without these big ideas popping up here and there. Usually they're not germane because they don't apply to consumption. So all the big ideas you get must apply to consumption. So you're always on the outlook for big ideas that have to do with consumption of your product, 'cause that gives you the margin where you can push your product volume up.

22.) That isn't management, that's an INSULT to idiots!

And therefore you can maintain your viability.

23.) Look at it. They have THAT much Establishment. What is the management responsibility? To get the production CONSUMED, not reduced. Their Product Officer is a lousy manager.

So if the big ideas which you accept as an executive is for the increase of consumption, and it's direct and immediate of the thing which you are consuming, why great. The promotion people who all of a sudden get out a leaflet that everybody stuffs very, very swiftly into their pocket rather than throws into the waste basket has of course increased the consumption of leaflets. And you'll find out that will go much further.

24.) You DON'T reduce production, you INCREASE CONSUMPTION.

So all of your big ideas, the real big ideas, have to do with the increase of consumption. And a product officer operating on Flag is how do we increase the consumption of Flag products? It exactly defines it. And it defines it department after department in an org. How do we increase the consumption of this product?

25.) So if you have 12 auditors and only half work for 6, WOW! You better increase the consumption! It's not enough to JUST produce products, you have to increase consumption of products, or in the case of auditors as producers, you have to UTILIZE them.

Now, when it comes down to the final analysis is when an increase of product is such that it starts injuring the viability of the org, it must be an uneconomical product. And it must not have very much to do with the final production, and we're talking about, believe it or not, HCO. We're just talking about how much org.

26.) A good manager, P/O & O/O, will balance these factors out.

So the expansion that you're trying to increase is in the field of consumption, and then in the field of production to meet that consumption, and then an economical furnishing of that production in order to meet the consumption. Works backwards, don't you see? It is not the purpose of an organization or HCO to put as much organization there as it, the organization makes. I would say that a safe average to work on to begin with would be about fifty percent. And then I would say just for fun that one should aim toward a third. And as it goes on up in volume, one should be aiming toward a quarter. The cost of the establishment is a quarter of the income of the establishment is what I mean.

27.) That is why PR, Distribution, and Dissemination are so important. You've GOT TO KNOW what people want. You've got to estimate what they want and predict what they want - and provide it.

Your first and primary target is not one hundred percent, and it never is one hundred percent, and it certainly is never two hundred and twenty-five percent like governments run. So your legitimate target of HCO is furnishing an organization, the total cost of which is about fifty percent of the income. And that would be its initial, primary target.

28.) Example: People "say" they want "new" Tech. But the "old" Tech hasn't been correctly produced. They really want "workable" Tech - and RESULTS.

And now he starts in HCO, the HAS, he says, "Well wait a minute, wait a minute. The HAS, what do you mean? The HAS, the finance is in division three isn't it?" No, it's in the HCO/HAS hat. It's got to be, because he says how much organization you've got. Now you tell me somebody in treasury who ever told anybody how much organization you had? All they do is grumble. You ask treasury, treasury varies. Treasury varies from total neglect to grumble. That is the tone scale band they run. And that's natural. "The staff has not been fed for three weeks, could we please have ten cents to buy a loaf of bread?" Grumble. I mean that's natural.

29.) This missing factor in this example is QUALITY. The quality of the Tech was missing.

There are two people you never want anywhere near an organization in control of that organization. Two people. They do not establish management policy. One of them is accountants, and the other is lawyers. And this isn't my datum, and it's not built out of my antipathies to either of these people. The attitude of an accountant has to be the attitude of an accountant. He had got to make sure that the money due and owing to this organization is collected, and that the bills of this organization are paid, and that there is some money to put in reserve.

30.)

Now the various functions of accounts include of course going through purchasing, because they can buy things cheaper, and this, that and the other thing. But accounts is established by FP. And I call to your attention that FP is an activity, FP is an activity which is shared in by the head of each division.

Now you're liable to see something new about FP and divisional heads, and that is each production branch should have the status of a divisional head. Your ad council should be about the same tech/admin ratio of the org. And that should be your ad council. You should not have two tech people and seven admin people, because it'll give you an unbalanced FP. You look this over. It'll give you an unreal ad council action. Do you see? There's not a possibility of; your production division then is totally overwhelmed by the remaining committee action. So that production, nobody has his eye on production, people have their eye only on administration.

31.) If you connect up a guy who CAN'T DO IT with a guy who wants it, you are going to have immediate production problems and the fullest Qual you ever heard of!

Administration is important. If you pull the people off of administration and you put them only on production, why you will find that the org will go downhill. The administrators are vital to that org. But if production, there's two opposite ends. The Aristotelian, Aristotle's pendulum, the two extremes have a mean between them, and we've been running where administration, and administrative divisions thought more and had more say than the production divisions. Well we have to even it up, and we have to bring it back considerably, and we have to swing it so that it doesn't quite go to such extremes.

32.) We had a situation where Qual dropped out the use of their basic tool - the Green form. They would start in handling from the top, fly a rud and end off. What about the REST of the GF? Well, it wasn't being consumed, but that's where some cases need to be corrected to finish their Qual Cycle. I solved it by having the GF assessed once thru. Then take the biggest read and handle it. Bang! - cracks the case every time.

Now we could swing it so that only production divisions, this would be the tendency, only production divisions may say what we can buy and do and do with our money because they make it. You know what political philosophy I have just described? Communism. The woiker. That political philosophy is so lousy that they can't buy shoes. That's all that's wrong with it. It isn't that it violates the rights of man or anything of the sort, it just is non-productive. It's a non-productive system. And what's wrong with extreme capitalism and so forth is it's non-productive system. And there are two extremes, one, the administrator; not even the administrator. It swung clear over to the guy who happens to have a couple of quick bucks. And then he lives off the interest of these bucks, and he figures out how he can swindle some companies into borrowing some of these bucks so he can foreclose and get the company, and sell it and make some more bucks. And that's capitalism. It has nothing to do with production, it just has to do with bucks.

33.) Of course, the auditor MUST know how to read the meter and run whichever process is needed.

So similarly, you can get an organization which is run by accountants, and they will talk about nothing but bucks. It's grim. It gets very grim, but they have their point, and they have a very important role. They're supposed to sit there and make sure that that dough is actually collected. And do you know that a lot of treasuries, they don't make sure the dough is collected? Wow! You talk about neglect.

34.) Most of your big ideas in production are about SOMETHING YOU HAVE ALREADY GOT. The "big idea" is, "how are you going to USE this?"

Now, to the degree they don't collect the dough they will enforce economy on the org. So you actually mustn't, mustn't put them in charge of the org. And reversely, the same thing, you can't have a run away org which has no financial checks and balances in it. Now I can do that, by the way, run a run away org that has no financial checks and balances in it, but then there's a hidden, built in computer at work, 'cause I can tell you any org I'm running, I can tell you about what the logistics are of the org, and about what its financial position is, and when the accountants say it is something else I make them immediately go back to their desks and start figuring. And they will come out at the other end of the line, not because I say so, but with a picture much closer to what I've got, because I know what margins I'm operating on, I know how much we should be making, I know how much we shouldn't be making.

35.) UTILIZE YOUR RESOURCES is the answer. On the "Green Form" example above, the campaign could be - "Come in and get a Free Green Form". This would correct the Tech outness and get the person back on lines as a CONSUMER.

Alright, within that framework then I can suddenly tell people to buy things and do things, and that sort of thing, that appears to be uncontrolled, mostly because it doesn't pass through FP or something like this. Well, the statistic involved in the thing is the test of the pudding. Any org I'm running starts accumulating reserves, accumulating reserves, they finally find out we've run out of this bank account because it's too full, and that bank account, and what country can you put it in now. And that is the way that one ought to run. But you would have to have yourself; I'm not trying to post you up as a financial genius, I just happen to be one. But you, you've got to, when you're running an org you've got to know about where you stay. And then somebody; this is always the little secret computer that's sitting on your desk. You know the financial position of this org, and its bank balances, and what it's spending, what it can afford, and what its costs are, and what is its potential of production and that sort of thing.

36.) But by survey, we find that GFs have got a bad name because people had them done the old way and were tired of them - so we campaign for "Free Case Analysis".

You know these things, bang, bang, bang. And somebody comes up to you and says, "We're going to put a new wing on the building. And this new wing on the building is going to house eight hundred and fifty-two new desks of some kind or another, and we're going to something." And I'd say, "What the, what, woah. What is this all about?" In other words, it's the ability to recognize a proposal for establishment which is unreal as far as the production goes, 'cause your eye is on the production.

37.) If you are promoting the "Free Case Analysis" or "Case Cracking Analysis", then somebody has to run like hell and keep the lines in, auditors ready, etc.

Somebody walks up to me and says, "Well, what we ought to do actually is put in twenty new auditing rooms, and so on." "Alright, what's the cost twenty new auditing rooms, and so forth? That's fine. Let's work on that. That's great, OK, twenty new auditing rooms." Somebody talks about putting in new service space and so on, "Well great, great, service space. What's the logistics of the service space? Fine, fine." That's all legitimate. Somebody talks about putting in new Coca Cola vending machines along the desks of the typists and I say, "What? Why?" And they say, "Well, I have a friend and he sells these machines, and..." So I'd be likely to do a survey of the thing, and I'd find out that they have to walk two and a half blocks in the hot sun, or something like that, to get themselves a Coke, something like this, so I'll put in chocolate bar machines and a Coke vending machine, and hot drink vending machines and so forth. As a matter of fact, you can remember times when this has occurred. That's just staff service. And they wound up not costing money, and so on, in other words all the factors balanced out and that was fine.

38.) This would be the O/O's job, not the HAS or Establishment Officer. Because it's a temporary thing - a pilot.

You could furnish a service, it pays for itself one way or another, so on. But I don't ever consider an organization able to afford anything, even burnt match sticks, unless it's got a couple of years of reserve for its total establishment outlay. When I've got that I know I'm working at a bare minimum, and at that moment why I start to get loose with money. And of course I'm not above shooting the moon on this sort of thing. It's not the type of thing that an accountant approves of. And as a matter of fact I have often seen a look of absolute but hidden horror on the face of accountants and so forth, when I have said, "Yes, well alright. Well so and so, and etcetera." And they get hopeful that this will at least go through FP, and it doesn't. And it comes out on the other end that we have put in this many thousand, and we have gotten back at the other end oh my god! Because it would be a project which increased consumption, or met a consumption which could be brought about. So what consumption can be brought about is one of the first thoughts of a production man. Otherwise he will run out of space to put his products. He doesn't care how many products he makes as long as they don't sit there.

39.) The line for this pilot has to be Person Recieved, Escorted to Auditor, Assessed, C/Sed, Escorted to Reg to be told what he can now do about it - buy a Case Cracking intensive - and signed up. If all these steps are not in, then the whole "big idea" will fail and you get no increased consumption of auditor's time for PAID intensives.

Now I'm sure the production manager of the Ford Motor Company never gives a second thought to Fords being consumed by the public, only he ought to. He ought to. If Edsel Ford, which is one of the biggest mechanical blunders of history, and one of the biggest production blunders of history was the Edsel. If Edsel Ford had known anything whatsoever about his business, and if he'd ever probably read his grandfather's notes, or whoever, whatever he was to Henry Ford, he would have found that Henry Ford operated on the policy of America on wheels. Small, cheap transportation. And right at the time he was building the Edsel and so forth, America was going into small, cheap transportation, but they couldn't get any in America so they bought foreign cars. It's nuts. He could have built a tin lizzy designed in Milan that would have sold like hot cakes and so on, but he would have had to have looked over his market. What could his market have consumed? So he would have had to have his eye on the main chance of production.

40.) We had a "Hospital Project" once where Ministers went to hospitals, cheered up people and gave them cards with a phone number. The project was destroyed by having no person as a terminal to answer the phone. That is an example of a "big idea" with no O/O backup.

Instead of that, he built something was a cross between a Buick and a Mercury, and it was rather indistinguishable from a Mercury, and it was a terrible lemon. And he built it without any idea of consumption survey or anything else, see? He didn't have any idea. So chains of dealers went broke in all directions. It was a terrible catastrophe. He didn't even run a pilot project. Why didn't they hand build it? It would have been much cheaper. Why didn't they hand build one of these damn things and run it out on the street, and ask anybody if he wanted it? I mean, that's the most elementary pilot project I could think of.

41.) The O/O then would handle these "Special Projects" from "Big Ideas" of the P/O. Then, if successful and continuing, the HAS would incorporate them into the Organization.

So, you've always got a department function, and it's called the special program section. And if an org doesn't have any special program sections it's goofy. And every time you get one of these wild ideas, you put it into special programs, and it'll wind up not wrecking you.

42.) The HAS should then also have "HCO Expeditors" to use under the O/O on these "Special Projects", so the Org doesn't get ripped apart, and vital posts don't go unmanned.

Well that would have been special programs, Ford Motor Company. Let's hand build one of these things, these monsters, and run it out on the street and see if somebody wants it. And they run it out on the street, and the little boys all throw stones at it. Give it to a good looking young man and he can't pick up a girl the whole length of Main Street. You know, run some practical tests.

43.) You find HCO Expeditors today "filing in CF" when long ago the HAS should have had TWO CF Clerks. Or "helping in HCO" when LONG AGO the HAS should have a FULLY ESTABLISHED HCO.

And they finally would have monkeyed around, and they probably would have built something like a Milan, Italy designer's horror, with sweeping fenders that come up from the bonnet and a half an inch road clearance between its crank case and any spare rock-that's a Lancia. And build something like this, and thrown it together, and wondered how cheap you could throw this thing together, and find the cheapest motor that you could probably get, and finally find it's a washing machine motor, something like that. And throw it under the bonnet of the thing, and run it out into the street, and give it to the handsome young man, and it's immediately, completely busts is springs with loads of girls. And they try to offer it to anybody in sight, and they immediately starts reaching in their pocket book for a check, or something, buy it with small change and so on. Gee dogs! Do you see? But that would have been through special programs. So, any production action through the org must remember to have special programs.

44.) No, if Expeditors have free time, they should be on STUDY to become more hatted and valuable resources. And their best use outside of that is for these special "big idea" projects - NOT off filing CF someplace.

Now there's a terribly funny story about this. Diana of course has as C/S 6, a special programs section. And early on we didn't know much about how this artistic idea of Celebrity Center would go. A very short time ago, after it's been going for all this length of time, I say, "You know, it's funny. I understand Celebrity Center now has quite an establishment there, and it's got about ten or twelve orgs. And it's branching out, and it's got now ten or twelve of these, and they seem to have quite a bit of income, and we seem to have people involved with this, and so on. Who's got this around here? I mean it doesn't seem to be our account." Diana says, "I have." She's been sitting there as promotions, busy managing this whole network, and she and Yvonne Gilliam apparently just running with the ball and so on. That's the other mistake, they never turned it over to management. Here's this expanding network of orgs suddenly emerging, growing up and mushrooming all over the place here and so forth. She's been doing it quite competently, and Yvonne has been doing it quite competently. Establishing new centers, everything's going along fine. It's still running in special programs.

45.) So the HAS's job is to maintain the Establishment. And to do that we have an ORG BOARD. IT is NOT accidental. IT is PRODUCTION oriented. It is NOT an "arbitrary".

So if something is successful in special programs, it will force itself on your attention. Yeah, I just suddenly realized it didn't have the main line of command and control. Its reports didn't come in through the channels any one expected its reports. Not that we weren't paying attention to it, not that we didn't appreciate it, we thought it was great, but I'd never, it never had an aides meeting on Celebrity Centers or anything like this. I just woke up, all this machinery of control is missing. Who had it? Special programs.

46.) Every one of those departments on it has a PRODUCT. And if you work it BACKWARDS FROM the product and sub-products of the org, you end up with the 1967 Org Board!

Well now that's a test of success. And it's about time then that management reaches into its hip pocket and brings out its wallet, and says, "Let's turn this thing loose. Let's get this thing going."

47.) How does a HAS post the Org? He fills it up to the degree it is demanded by production.

Now therefore, all new types of expansions are piloted. They are piloted, otherwise you'll go broke, because you're testing consumption. Now it's one idea to get an idea concerning consumption, it's another idea to find out if it is. It never, the idea, the big idea you get is not necessarily sent through special programs, but if it is so strange and bizarre that you don't know what to do with it, and it looks like it has an interesting ramifications, and it doesn't fit any place, why don't go for broke on this thing, put it through special programs, and set up a little unit in special programs and so forth, and let them pilot the thing. And then don't forget about it, find out how it did.

48.) He expands his Establishment by increasing the posting of his existing Org Board.

But your big ideas that you get along this line are very often the most banal big ideas you ever heard of. They're just based on how to get more people to walk into the org. But every once in a while you'll get a big idea in the field of production, it will have to do with promotion or what you are offering, or how you will handle this or that, or something of this sort. All of which is perfectly allowable within a framework which you probably regard as perfectly rigid. The framework is quite rigid, and the big ideas aren't. And after you get this all straightened out and tested, why it is time to put some establishment there. So things that move from special programs in, have to be provided for by the HAS. As elementary as that. Things that you move into the establishment as an establishment, and they are legitimately part of the establishment, then those things become the things allowed for by the HAS. And it's up to the HAS to keep the establishment below, way below the cost figure of the income. And a good target is fifty percent.

49.) And to do this he requires resources. I've given you one pool of resources - HCO Expeditors.

You say, "Yeah, but the HAS, he mostly has to do with ethics, doesn't he?" No, he doesn't have anything much to do with ethics. Ethics officer has to do with that. Ethics is how you hold the edges. The ethics officer is the god of the edges. "This thing must flow down this channel, and hit these spots. And these spots must be there." And that is sort of the; he is the last word in edges. That may sound esoteric, but people use him to monitor behavior, and I never heard of anything so nutty in my life. Who cares about behavior? It's pathetic. You once in a while will see somebody in control of things who is very concerned with whether two terminals get along with each other. Well fine, spend some time, have a third party investigate it. So, so what? Very little to do with it. Interpersonal relations are only good in the presence of successful production. And the thing which you want to do is increase production. And that handles all the interpersonal relations you have anything to do with.

50.) Occasionally you get a personell man who thinks his personell pools are the bigger and better running Divisions!

No, the HAS would determine the size and type and kind of the establishment which could be afforded. And he would have to have to do with logistics. And he may be running much less establishment than he could afford. His first economy, traditionally, has been very erroneously on HAS itself. And I'm always asking HCO area secretaries, "How can you possibly have too few people in HCO? How the hell can you do this?" It absolutely assaults my reality. It's something like somebody standing up and saying, "This is blue," when it is scarlet. It is a complete and utter and total disobedience of all points of reality. And I'll tell you why. He's the guy who recruits personnel. He's the bird who controls establishment. He's the bird who says how many people should be where. And he comes around to me and he tells me he hasn't got anybody in HCO.

51.) A mad scene in the SO is "missionairing". Missions have PRIORITY. And you should hear the screams of the Establishment people. But, in the SO, the Product comes first. And our Product is "Scientology around the World".

Once in a while, once in a while somebody walks up to you and brags that he isn't doing his job. Well that is HCO's method of not doing their job. That's a brag. "Well we haven't got anybody in HCO. Nobody here," and so forth. "Don't have any facilities, haven't got any. It's tough. Haven't got file cabinets to keep anything in, there's no place to file anything here in HCO." Wow.

52.) Actually it puts a heavy burden on the 3rd Mate (HCO) on the ship.

Now immediately, out of that one thing, do you have some idea of what the HCOAS should be doing? The ne plus ultra of his not doing his job would be no manned and operating HCO. That would be the irreducible minimum of his job would at least be a manned and operating HCO. That is irreducible minimum. A fully manned, perfect HCO is the irreducible minimum of his doing his job.

53.) But he should get clever, and read the old FOs about a MISSIONAIRE UNIT. That would give him an extra pool to draw from, if he sets it up.

Now if he's got that, he should get on with it and do his job, which is put the establishment there. And that is why HCO is the command channel, and you say, "How possibly could HCO possibly build up an organization." Well Christ! It's in charge of the org boards, it's in charge of the personnel, it's in charge of hatting, it's in charge of the communication which gives it the communication lines, 'cause an organization consists of the lines.

54.) The Missionaire Unit spend most of their time studying and on guard duty. If another higher trained missionaire is taken from the org, they can "fill in" while he's gone. Or they go as 2nd or 3rd missionaires to get experience.

And it's in charge of inspection, so that it knows it, and it's in charge of ethics so it can hold the edges of this thing, and so on. And when you've done all that you probably have missed the one point by which HCO builds, holds, maintains, mans and controls the organization, and it's the orders issue section.

55.) So the main problem of HCO is to get PERSONNEL POOLS. His main FLUB in DESTROYING what organization has been put there.

Now if you want to know how bad off an area is organized, or an organization is organized, look at its orders of the day and find out whether or not it controls any establishment orders. And if it doesn't contain any establishment orders, then the HCOAS is not building an organization, so who is building an organization? And the answer is nobody. So what's going to happen to this organization? It's not going to exist.

56.) This can be done by "having all the Qual terminals audit in Tech Div. to handle the backlog". That is HCO?S FLUB for not predicting the volume of delivery and TECH Auditors required. (for Example)

Now how much organization he can build is determined by viability. Financial viability. Limitations on personnel is mostly imaginary. It has to do with, "We don't like people." Did you ever see that marvelous little cartoon of the fellow sitting in the box and saying, "I hate everybody." You know? Marvelous little cartoon. Well you don't want one, you don't want a department one like that. A department one must be prepared to take anybody on, even though they have to shove half of them out through department three.

57.) So what are the HAS's resources: Money, People, Hatted People, Trained People, Very Valuable People, and the Materials of Knowledge, and the MEST to assist production.

Now if you have an HCOAS who knows his business, then the orders, organizationally, to put the establishment there, from the data which is given one way or the other through the lines, and the tip offs which are given by production, and the requirements of production and so on, why he can put an organization there. So he's actually an organization builder. And there's the point of the establishment product one builder. And he builds an organization.

58.) It is a POVERTY HCO if it has no resources and has to unmock what it builds.

With an HCOAS around, and days go by and I don't see a manned division two, I begin to wonder, "Is this guy waiting for an order to put up an org board for division two? What the devil is he involved in? What's he so involved in he can't do his job? Where's the org board, and where's some personnel in this division two? Is he waiting for orders to put an org here?" No, he's got the orders to put an org here, he's in charge of org boards. Yeah you say, "Well he's not in charge of buildings, and he's not in charge of this," oh yes he is. Orders issue section. And when they're issued they can be inspected, and if they happen there's a time machine, and so forth.

59.) It's as stupid as using the wood from the house you just built to build a 2nd house.

I can take an HCO, I can build quite an organization with an HCO. It's what's the viability of this organization would be the only controlling factor. Organization that's new, young, something like that, why sometimes I might fudge over into seventy-five percent, but it would certainly soon be very rapidly down to somewhere around fifty percent of its income would the cost of the organization. And if it really got to running I'd ashamed of myself if the organization was running at any higher cost than about twenty-five percent. Be ashamed of myself. I'd think I just didn't know my business at all. What the hell's going on? Doesn't anybody get an ideas around here at all? You know? What's going on? Production must be zero, consumption isn't figured out, the production isn't matched up to the consumption, do you follow? There's something out of gear here some place. Great big why, see? How come we're spending fifty percent of what we make? That's silly.

60.) You say the problem is FP? Well if I was a HAS who couldn't get the pay for new staff through FP, I would "not OK" anything the P/O wanted until he produced more with what he had and he could afford more Establishment.

Also, walking up and down the org and so forth, and seeing that staff isn't getting more than they used to get and so forth, and they aren't getting more than they need and so forth, that's also silly. What's the matter? Of course we've got the answer to that. We've had the answer to that here for some little time. The income per staff member only sixteen to eighteen pounds didn't mean orgs were over manned, it means people weren't wearing their hats, and there was no production orientation. It's incredible. You can't pay somebody twenty pounds a week if he himself is only making, on the average for the organization, sixteen pounds a week. So if people say, "Well, they pay us badly," who the hell's they? We're looking at they right between the eyes, sitting right back of that typewriter, boy. Why don't you pay yourself better? If you turned out a little bit higher quality letter perhaps you would be. Who knows?

61.) It could get so crazy that the HAS is transferring all the staff each week to keep up with production. Trying to run a 345 man org with only 15 staff!

You expect some great god to descend from heaven and magically wave a wand and so forth? What the devil is the expectancy here? A fellow would have to do productive work. And then the production would have to be of a quality and a desirability to bring about consumption. Any way you look at it, I don't care if you're looking at this in a moneyless society, that is the way it works. If this village with its garden plots doesn't raise more than four or five such villages could possibly eat, it will be a bunch of poor, down trodden, starvation, famine faced peasants. They won't even be able to afford bicycles. Maybe there's no money involved at all. Maybe they never see a drachma or a durum or a ruble, from one year's end to the next. But you look around there, and this has been true for thousands of years. And it was true in the Euphrates, and was true in any other zone or district on this or any other planet.

62.) When production is not adequate for the Establishment, then the Establishment goes "poor" in all its resources.

One of the reasons the United States is having problems right now, and it must cause the suppressives just fantastic problems, is one man can now raise enough food to feed forty-seven. It used to be that one man could raise enough food to feed four. And this is causing terrible problems, and has total economic strains on the government right now. It's awful. But the damn fools keep shipping over seas money. Why are they shipping money over seas? They haven't got that. So, that any of these economic criteria just have to do with just these very, very, very plain factors.

63.) Its main resources are of course TRAINED STAFF MEMBERS.

You cannot pay a worker more than he makes. And that is all there is to that. So this guy sits there, and he's supposed to punch holes in belts, so he chews up belts, so he throws them out the window, so he throws them in the garbage can, and no belts arrive at the other end of the line, and there's no belts to be consumed and so forth. About that time he starts whinnying about how he's underpaid. I don't have any sympathy at all. I'm not being the hard hearted task master, I just know more about life than he does.

64.) And willing auditors, and cheap expansion space, and sources of inexpensive materials and equipment of the org - like filing cabinets.

It's fantastic. In the United States you look around and you see some of these young squirts hitting papa up for a new Jaguar or something like this, and so on. I often wonder how long they're going to go. It's sort of like a circus, you see a not too competent performer on a high wire. Which performance and at what point of the wire is he going to go all the way down to the sawdust? It's one of these things.

65.) The WRONG way to do it is to spend 8000 Dollars for new desks for P/O, O/O, & HAS. That's beginning into the incredible practice of "spending money you don't have".

Now there's been all kinds of Katzenjammer kids running around, telling people lies about economics, but there are other people running around telling people about the poor, down trodden worker. After they get their worker's paradise in Russia they all starve to death. Trouble in Russia right now is they got no shoes to keep out the snow-nicks. Not that you have to have a great deal of shoes, but if you will go around with a body you might as well produce enough to keep it going.

66.) You CAN do this in this society. Very clever. They are ALWAYS WILLING for you to "spend money you don't have" - credits, loans, etc.

67.) But we DON'T do that. That is why we STILL own our own souls and why we are NOT in the "pockets" of the International Bankers.

68.) We are SOLVENT, are OURSELVES, and DO EXIST, because we make our OWN WAY.

69.) Some staff wonder why I don't pay them better. It's the wrong question. I'm not even on their Board of Directors. Their low pay is a direct result of unhattedness for production in their orgs. If they produce more they get paid more.

70.) This is the ECOLOGY of the Universe in which we live:

• STAFF MEMBERS WHO PRODUCE GET PAID.

71.) Example:

An Instant Hat of Staff gives VOLUME.

A Mini Hat gives some QUALITY.

A Full Hat gives VIABILITY.

72.) As a manager, your first thought is for VOLUME. You demand VOLUME of Product. Then as 2nd Action you demand QUALITY of the VOLUME. Then 3rd you calculate and demand VIABILITY.

73.) If you don't do, however, a bit of VIABILITY PLANNING before all this, you may have an awful time of it.

74.) You can predict from stats where an org will be 5 or 6 months from now. (Ex: AOLA will be DOUBLE its current 40.000/wk income and corresponding delivery stats.) So whose job is it to prepare for that DOUBLING of the Establishment? The HAS of the org. And whose fault is it if they DON'T DOUBLE the size of the Establishment - space, auditors, staff, etc. - ? The HAS of the Org.

75.) But it takes months to train, hat, and groove-in staff. And find space and rent or buy it. So who is doing it NOW? I don't think anyone but me.

76.) The WRONG time for the HAS to think about Establishment for the increased production IS WHEN IT IS ALREADY INCREASED. No, they must predict it and start way AHEAD of the increase by building up RESOURCES.

77.) We are going to see a boom in Europe. We are translating the lot!

• OEC

Into all major EU Languages.

78.) It needed a bright idea, because the cost of PUBLISHING all these things in all these Languages was prohibitive - millions of dollars. (NOT-VIABLE).

79.) The bright ideas was SIGHT TRANSLATIONS onto TAPES. The courses are done on tape or cassette by trained translators. The orgs then only need a lot of tape machines for the students.

80.) New tapes can be sold to the orgs every 3 months, because the tapes will wear out from so much daily use.

81.) The Russians are now fooling around with psychic phenomena. It's a field of interest the government doesn't fully control, so we release into their midst "Russian Scientology".

82.) The only reason you are not making a penetration in some areas is because NO MATERIALS are there.

83.) We are putting out KNOWLEDGE. When applied, you can get production, ability, case gain, etc. But the basis is KNOWLEDGE. So that's what we need to put in an area first - the TRANSLATED KNOWLEDGE.

84.) The consumption of the KNOWLEDGE is quaranteed. It's the basics of LIFE. But you must have the books, tapes, bulletins available in the LANGUAGE. And the SUPERVISORS for the COURSES.

85.) If you put in a FRAGMENT of something, IT WILL BOOM, AND THEN COLLAPSE. Thus we also need to have Supervisors, M/U Word Tech, and the OEC for the Organization.

86.) If you only put in a fragment of this Prod/Org system, it would boom & collapse. Example: The HAS gets 60 staff for the org, but none are auditors, all are unhatted. They would behave like 60 ENEMIES to the org and each other!

87.) A 60 man MOB is not an org nor an Establishment.

88.) So I've elected the HAS as the person who puts and maintains the Establishment there.

89.) If the O/O did all that, he would CEASE to help the Product Officer!

90.) If the P/O has no backup by the O/O, he can't increase VOLUME or QUALITY of products, so will fail.

91.) So the proper division of duties is for the HAS to care for the Establishment.

92.) The HAS must not take people from fast-flowing posts to give to the O/O to fill other fast-flowing posts. That's nuts. And it would be a HAS in POVERTY who didn't have any resources.

93.) Let me give you something from SOCIALISM that IS true. (Most of it is balderdash).

"THE WEALTH OF THE WORLD ARE THE REAL THINGS IN THE WORLD. AND THAT IS WEALTH. MONEY IS ONLY A SUBSTITUTE FOR WEALTH, AND IS NOT ITSELF WEALTH."

94.) Money is only valid to the degree that it can substitute for actual wealth. Money is only of any use to the degree that it can purchase things of value.

95.) Value is established by things that are WANTED. Value is established by "wantedness".

96.) You can fluctuate (change) value by making scarcities and demands, etc., but it is basically "wantedness".

97.) "Keynesian" philosophy is valid UNLESS you put it in the field of ECONOMICS. It IS VALID in the field of PRODUCTION, but NOT in the field of MONEY.

98.) So in production, you DO have to "create want" or desire for consumption of the products.

99.) What you are selling is absolutely priceless - KNOWLEDGE, and how to APPLY IT for BETTER, HIGHER QUALITY, LIFE or SURVIVAL.

100.) No "price" could be put on it. So what is its price? Its price is WHAT CAN BE RECEIVED FOR IT; NOT WHAT IT IS WORTH.

101.) So pricing is based, not on VALUE, but WHAT CAN BE RECEIVED FOR IT.

102.) And that depends on HOW MUCH IT IS WANTED.

103.) Once you have this sorted out and aligned, you can determine HOW MUCH ESTABLISHMENT THE HAS CAN PUT THERE.

104.) Don't just "fill in" posts on an org board because they are empty.

105.) Put up the org baord and then post it TO THE DEGREE THAT IT IS REQUIRED TO BACKUP PRODUCTION.

106.) Now the Command Lines will go mad to the degree you don't build it from the top. So the FIRST PRODUCTION man you put on is in-charge of everything AND does the production.

107.) When you have ONE auditor, he IS the P/O AND the whole of Tech and Qual.

108.) When you have more auditors, it's because you have a DEMAND for more auditing.

109.) That is created by RESULTS and BOOKS.

110.) The stats of an org are almost monitored by the degree the knowledge has been circulated.

111.) It's a direct relationship. The stats are proportional to the amount of KNOWLEDGE circulated by the organization. (Not by the amount of "sales-talk")

112.) So the HAS builds the org according to the stats he can build by. If he builds the org at a cost of 50% of the income of the organization, he's really doing great.

113.) A "rich" HAS is one who has reserves, resources.

114.) The wealth of the world are ACTUALITIES. A HAS is wealthy to the degree he has trained staff members, trained staff in reserve, auditors, supervisors, etc.

115.) A "rich" HAS could even ask the P/O to find work for 5 fully trained auditors not being utilized on production lines at the moment - great for use in Special Projects - time for a "big idea" - see?

116.) Or he could ask the P/O to produce more income so he can put on 25 staff - already hatted - to expand the Establishment.

117.) Interesting COINS: "How many auditing hours and Supervisor's minutes can the org furnish?"

118.) "How many students hours, public courses, etc. can the organization furnish?"

119.) That's a RESOURCES SURVEY done by the HAS. "How many hours?" for instance depends on how many auditing rooms and how many auditors.

120.) An HAS should know the resources of his org. The ACTUAL wealth. When he knows this he can then tell if he has spare or reserve resources.

121.) Example: Org with 6 auditors. WDAH for week 36. Wow, should be 150 with 6 auditors at 25 hrs each! So that org is throwing away their gold coins of 114 "auditing hours" every week. And this can NEVER be recovered for that week. It can never be "SPENT" again. They threw it away.

122.) It's "funny money. If you DON'T SPEND it - you HAVEN'T GOT is.

123.) Ex. Student hours. The course room fits 20 students. An 8 hours day org. So that's 160 student-hours per day. For a 5 day week it's l800 Student-Hours. That's the "coins" of the org.

124.) Now you understand why I say the HAS is "poor" if he doesn't have resources. Those ARE his resources.

125.) If he had 160 staff and only one auditor and one supervisor for 7 courses, he would be in poverty. Only 25 WDAH & very few supervisor minutes per course or student possible. That org would go broke FAST. It could not afford itself! There's nothing to deliver!