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                              Cyclopedia

                                 _of_

                        Commerce, Accountancy,

                        Business Administration

                               VOLUME 1

                     _A General Reference Work on_

      ACCOUNTING, AUDITING, BOOKKEEPING, COMMERCIAL LAW, BUSINESS
        MANAGEMENT, ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION,
           BANKING, ADVERTISING, SELLING, OFFICE AND FACTORY
              RECORDS, COST KEEPING, SYSTEMATIZING, ETC.

                       _Prepared by a Corps of_

     AUDITORS, ACCOUNTANTS, ATTORNEYS, AND SPECIALISTS IN BUSINESS
                        METHODS AND MANAGEMENT

            _Illustrated with Over Two Thousand Engravings_

                              TEN VOLUMES

                                CHICAGO

                      AMERICAN TECHNICAL SOCIETY

                                 1910

                            COPYRIGHT, 1909

                                  BY

                   AMERICAN SCHOOL OF CORRESPONDENCE

                            COPYRIGHT, 1909

                                  BY

                      AMERICAN TECHNICAL SOCIETY

                  Entered at Stationers' Hall, London
                          All Rights Reserved

[Illustration: MAILING DEPARTMENT IN THE NEW YORK OFFICES OF THE
WESTERN ELECTRIC COMPANY]




Authors and Collaborators


  JAMES BRAY GRIFFITH, _Managing Editor_.

  Head, Dept. of Commerce, Accountancy, and Business Administration,
  American School of Correspondence.


  ROBERT H. MONTGOMERY

  Of the Firm of Lybrand, Ross Bros. & Montgomery, Certified Public
  Accountants.  Editor of the American Edition of Dicksee's _Auditing_.
  Formerly Lecturer on Auditing at the Evening School of Accounts and
  Finance of the University of Pennsylvania, and the School of Commerce,
  Accounts, and Finance of the New York University.


  ARTHUR LOWES DICKINSON, F. C. A., C. P. A.

  Of the Firms of Jones, Caesar, Dickinson, Wilmot & Company, Certified
  Public Accountants, and Price, Waterhouse & Company, Chartered
  Accountants.


  WILLIAM M. LYBRAND, C. P. A.

  Of the Firm of Lybrand, Ross Bros. & Montgomery, Certified Public
  Accountants.


  F. H. MACPHERSON, C. A., C. P. A.

  Of the Firm of F. H. Macpherson & Co., Certified Public Accountants.


  CHAS. A. SWEETLAND

  Consulting Public Accountant.
  Author of "Loose-Leaf Bookkeeping," and "Anti-Confusion Business
  Methods."


  E. C. LANDIS

  Of the System Department, Burroughs Adding Machine Company.


  HARRIS C. TROW, S. B.

  _Editor-in-Chief_, Textbook Department, American School of
  Correspondence.


  CECIL B. SMEETON, F. I. A.

  Public Accountant and Auditor.
  President, Incorporated Accountants' Society of Illinois.
  Fellow, Institute of Accounts, New York.

  JOHN A. CHAMBERLAIN, A. B., LL. B.

  Of the Cleveland Bar.

  Lecturer on Suretyship, Western Reserve Law School.

  Author of "Principles of Business Law."


  HUGH WRIGHT

  Auditor, Westlake Construction Company.


  GLENN M. HOBBS, Ph. D.

  Secretary, American School of Correspondence.


  JESSIE M. SHEPHERD, A. B.

  Associate Editor, Textbook Department, American School of Correspondence.


  GEORGE C. RUSSELL

  Systematizer.

  Formerly Manager, System Department, Elliott-Fisher Company.


  OSCAR E. PERRIGO, M. E.

  Specialist in Industrial Organization.

  Author of "Machine-Shop Economics and Systems," etc.


  DARWIN S. HATCH, B. S.

  Assistant Editor, Textbook Department, American School of Correspondence.


  CHAS. E. HATHAWAY

  Cost Expert.

  Chief Accountant, Fore River Shipbuilding Co.


  CHAS. WILBUR LEIGH, B. S.

  Associate Professor of Mathematics, Armour Institute of Technology.


  L. W. LEWIS

  Advertising Manager, The McCaskey Register Co.


  MARTIN W. RUSSELL

  Registrar and Treasurer, American School of Correspondence.

  HALBERT P. GILLETTE, C. E.

  Managing Editor, _Engineering-Contracting_.

  Author of "Handbook of Cost Data for Contractors and Engineers."


  R. T. MILLER, JR., A. M., LL. B.

  President, American School of Correspondence.


  WILLIAM SCHUTTE

  Manager of Advertising, National Cash Register Co.


  E. ST. ELMO LEWIS

  Advertising Manager, Burroughs Adding Machine Company.

  Author of "The Credit Man and His Work" and "Financial Advertising."


  RICHARD T. DANA

  Consulting Engineer.

  Chief Engineer, Construction Service Co.


  P. H. BOGARDUS

  Publicity Manager, American School of Correspondence.


  WILLIAM G. NICHOLS

  General Manufacturing Agent for the China Mfg. Co., The Webster Mfg. Co.,
  and the Pembroke Mills.

  Author of "Cost Finding" and "Cotton Mills."


  C. H. HUNTER

  Advertising Manager, Elliott-Fisher Co.


  FRANK C. MORSE

  Filing Expert.

  Secretary, Browne-Morse Co.


  H. E. K'BERG

  Expert on Loose-Leaf Systems.

  Formerly Manager, Business Systems Department, Burroughs Adding
  Machine Co.


  EDWARD B. WAITE

  Head, Instruction Department, American School of Correspondence.




Authorities Consulted


The editors have freely consulted the standard technical and business
literature of America and Europe in the preparation of these volumes.
They desire to express their indebtedness, particularly, to the
following eminent authorities, whose well-known treatises should be in
the library of everyone interested in modern business methods.

Grateful acknowledgment is made also of the valuable service rendered
by the many manufacturers and specialists in office and factory
methods, whose coöperation has made it possible to include in these
volumes suitable illustrations of the latest equipment for office use;
as well as those financial, mercantile, and manufacturing concerns
who have supplied illustrations of offices, factories, shops, and
buildings, typical of the commercial and industrial life of America.


  JOSEPH HARDCASTLE, C. P. A.

  Formerly Professor of Principles and Practice of Accounts, School of
    Commerce, Accounts, and Finance, New York University.
  Author of "Accounts of Executors and Testamentary Trustees."


  HORACE LUCIAN ARNOLD

  Specialist in Factory Organization and Accounting.
  Author of "The Complete Cost Keeper," and "Factory Manager and
    Accountant."


  JOHN F. J. MULHALL, P. A.

  Specialist in Corporation Accounts.
  Author of "Quasi Public Corporation Accounting and Management."


  SHERWIN CODY

  Advertising and Sales Specialist.
  Author of "How to Do Business by Letter," and "Art of Writing and
    Speaking the English Language."


  FREDERICK TIPSON, C. P. A.

  Author of "Theory of Accounts."


  CHARLES BUXTON GOING

  Managing Editor of _The Engineering Magazine_.
  Associate in Mechanical Engineering, Columbia University.
  Corresponding Member, Canadian Mining Institute.


  F. E. WEBNER

  Public Accountant.
  Specialist in Factory Accounting.
  Contributor to The Engineering Press.


  AMOS K. FISKE

  Associate Editor of the _New York Journal of Commerce_.
  Author of "The Modern Bank."


  JOSEPH FRENCH JOHNSON

  Dean of the New York University School of Commerce, Accounts, and
    Finance.
  Editor, _The Journal of Accountancy_.
  Author of "Money, Exchange, and Banking."


  M. U. OVERLAND

  Of the New York Bar.

  Author of "Classified Corporation Laws of All the States."


  THOMAS CONYNGTON

  Of the New York Bar.

  Author of "Corporate Management," "Corporate Organization," "The Modern
    Corporation," and "Partnership Relations."


  THEOPHILUS PARSONS, LL. D.

  Author of "The Laws of Business."


  E. ST. ELMO LEWIS

  Advertising Manager, Burroughs Adding Machine Company.
  Formerly Manager of Publicity, National Cash Register Co.
  Author of "The Credit Man and His Work," and "Financial Advertising."


  T. E. YOUNG, B. A., F. R. A. S.

  Ex-President of the Institute of Actuaries.
  Member of the Actuary Society of America.
  Author of "Insurance."


  LAWRENCE R. DICKSEE, F. C. A.

  Professor of Accounting at the University of Birmingham.
  Author of "Advanced Accounting," "Auditing," "Bookkeeping for Company
    Secretary," etc.


  FRANCIS W. PIXLEY

  Author of "Auditors, Their Duties and Responsibilities," and
    "Accountancy."


  CHARLES U. CARPENTER

  General Manager, The Herring-Hall-Marvin Safe Co.
  Formerly General Manager, National Cash Register Co.
  Author of "Profit Making Management."


  C. E. KNOEPPEL

  Specialist in Cost Analysis and Factory Betterment.
  Author of "Systematic Foundry Operation and Foundry Costing," "Maximum
    Production through Organization and Supervision," and other papers.


  HARRINGTON EMERSON, M. A.

  Consulting Engineer.
  Director of Organization and Betterment Work on the Santa Fe System.
  Originator of the Emerson Efficiency System.
  Author of "Efficiency as a Basis for Operation and Wages."


  ELMER H. BEACH

  Specialist in Accounting Methods.
  Editor, _Beach's Magazine of Business_.
  Founder of The Bookkeeper.
  Editor of _The American Business and Accounting Encyclopedia_.


  J. J. RAHILL, C. P. A.

  Member, California Society of Public Accountants.
  Author of "Corporation Accounting and Corporation Law."


  FRANK BROOKER, C. P. A.

  Ex-New York State Examiner of Certified Public Accountants.
  Ex-President, American Association of Public Accountants.
  Author of "American Accountants' Manual."


  CLINTON E. WOODS, M. E.

  Specialist in Industrial Organization.
  Formerly Comptroller, Sears, Roebuck & Co.
  Author of "Organizing a Factory," and "Woods' Reports."


  CHARLES E. SPRAGUE, C. P. A.

  President of the Union Dime Savings Bank, New York.
  Author of "The Accountancy of Investment," "Extended Bond Tables," and
    "Problems and Studies in the Accountancy of Investment."


  CHARLES WALDO HASKINS, C. P. A., L. H. M.

  Author of "Business Education and Accountancy."


  JOHN J. CRAWFORD

  Author of "Bank Directors, Their Powers, Duties, and Liabilities."


  DR. F. A. CLEVELAND

  Of the Wharton School of Finance, University of Pennsylvania.
  Author of "Funds and Their Uses."

[Illustration: THE ADVERTISING DEPARTMENT WHERE ARE ORIGINATED THE
PUBLICITY CAMPAIGNS OF THE SHERWIN-WILLIAMS CO., CLEVELAND, OHIO]




Foreword


With the unprecedented increase in our commercial activities has come
a demand for better business methods. Methods which were adequate for
the business of a less active commercial era, have given way to systems
and labor-saving ideas in keeping with the financial and industrial
progress of the world.

Out of this progress has risen a new literature--the literature of
business. But with the rapid advancement in the science of business,
its literature can scarcely be said to have kept pace, at least, not to
the same extent as in other sciences and professions. Much excellent
material dealing with special phases of business activity has been
prepared, but this is so scattered that the student desiring to acquire
a comprehensive business library has found himself confronted by
serious difficulties. He has been obliged, to a great extent, to make
his selections blindly, resulting in many duplications of material
without securing needed information on important phases of the subject.

In the belief that a demand exists for a library which shall embrace
the best practice in all branches of business--from buying to selling,
from simple bookkeeping to the administration of the financial affairs
of a great corporation--these volumes have been prepared. Prepared
primarily for use as instruction books for the American School of
Correspondence, the material from which the Cyclopedia has been
compiled embraces the latest ideas with explanations of the most
approved methods of modern business.

Editors and writers have been selected because of their familiarity
with, and experience in handling various subjects pertaining to
Commerce, Accountancy, and Business Administration. Writers with
practical business experience have received preference over those with
theoretical training; practicability has been considered of greater
importance than literary excellence.

In addition to covering the entire general field of business, this
Cyclopedia contains much specialized information not heretofore
published in any form. This specialization is particularly apparent in
those sections which treat of accounting and methods of management for
Department Stores, Contractors, Publishers and Printers, Insurance, and
Real Estate. The value of this information will be recognized by every
student of business.

The principal value which is claimed for this Cyclopedia is as a
reference work, but, comprising as it does the material used by the
School in its correspondence courses, it is offered with the confident
expectation that it will prove of great value to the trained man who
desires to become conversant with phases of business practice with
which he is unfamiliar, and to those holding advanced clerical and
managerial positions.

In conclusion, grateful acknowledgment is made to authors and
collaborators, to whose hearty coöperation the excellence of this work
is due.




Table of Contents

(For professional standing of authors, see list of Authors and
  Collaborators at front of volume.)


VOLUME I


  ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION

                                        _By James B. Griffith_   Page 11

  The Business Engineer--Preliminary Investigation--Charting
  the Organization--Organization  of Business--Organization
  of Mercantile Business--Universal Application of Organization
  Principles--Departmental Authorities--The General Manager--
  Comptroller--Sales Division--Superintendent--Purchasing Agent--
  Employment Department--Charting Salary and Wage Distribution--
  Expense Distribution Chart--Arrangement of Plant--Factory
  Plans--Office Plans--The Committee System--The Suggestion
  Plan--Order Blanks

  ADVERTISING AND SALES ORGANIZATION    _By James B. Griffith_   Page 61

  Systems and Records--Designs and Cuts--Cut Indexes and
  Tracers--Records of Printing--Periodical, Street Car, and Outdoor
  Advertising--Rate Cards--Advertising Contracts--Checking Returns--
  The Sales Department--Branches--The Mail-Order Branch--Follow-up
  Systems--Personal Salesmanship Division--Routing Salesmen--Sales
  Records

  THE CREDIT ORGANIZATION           _By James B. Griffith_      Page 127

  The Credit Man--Information Required--Financial Statements--
  Analysis of Statements--Sources of Information--Local
  Correspondents--Credit Agencies--Recording Credit Information--
  Collections--Monthly Statements--Installment Collections--
  Collections by Attorneys

  THE SHIPPING DEPARTMENT           _By James B. Griffith_      Page 183

  The Shipping Clerk--Class Rates--Commodity Rates--Freight
  Tariffs--Condensed Rate File--Routing Shipments--Filling
  Orders--Checking Shipments--Export  Shipping--Freight Claims--
  Express Shipments--Retail Delivery System

  CORRESPONDENCE AND FILING         _By James B. Griffith_      Page 231

  Opening and Distributing Mail--Correspondence Short Cuts--
  Talking Machines for Dictation--Copying Correspondence--
  Stenographic Division--Records of Work--Filing Division--Filing
  Systems--Methods of Indexing--Guiding, Transferring, and Sorting--
  Selecting Filing Equipment--Styles of Construction

  BUSINESS STATISTICS               _By James B. Griffith_      Page 287

  Sales Costs--Records of Shipments--Returned Goods--Salesmen's
  Records--Expense Distribution--Department Sales--Trading
  Statements--Profit Figuring--Administrative Costs--Profit and
  Loss Statements--Mailing-Room Machinery

  REVIEW QUESTIONS                                              Page 333

  INDEX                                                         Page 347

[Illustration: AN EXECUTIVE OFFICE AT THE PLANT OF CORBIN CABINET LOCK
COMPANY, NEW BRITAIN, CONN.]




ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION


=1.= With little fear of contradiction, it may be stated that every
commercial enterprise is conducted with the one purpose in view of
making money for its owners. Naturally, the owners desire the largest
possible returns from their investment of money or time, or both. Every
person connected with the enterprise, in any capacity whatsoever, is
indirectly working for the same purpose--to make as much money as
possible for the owners of the business.

The largest possible volume of profitable business must be transacted;
the business must be conducted with economy; the returns from each
dollar expended must be as large as possible. This very condition is
one of the beneficial results of modern business methods. The demand
for a greater volume, lower cost of production, and more economical
methods, has brought with it an incentive to greater effort on the part
of the individual, with corresponding rewards.

That the efforts of the individual may be productive of best results,
he must have the coöperation of other individuals engaged in the same
enterprise. The enterprise must be properly organized.

Realizing the absolute necessity of harmoniously working organizations,
keen students of business affairs have given much study to the question
of how to organize a business. They have studied the plans of operation
of the most successful enterprises, for the purpose of discovering
those factors which have contributed most largely to their success.
They have investigated and improved old plans and methods and invented
new methods.

=2. The Business Engineer.= The investigations of these men have
brought into being a new profession--that of the business organizer or
business engineer--a profession that has quickly gained recognition.
Business men, especially those at the head of large enterprises have
not been slow to avail themselves of the services of men who have
mastered the science of business organization.

For the same reason that he has long employed an architect to plan
his building the modern business man calls in a business engineer
or systematizer, to perfect his business organization. As in every
other profession, some incompetent men are found posing as business
engineers, but an increasing number of trained men are entering the
field. It is the work of these men that is placing the profession on a
high plane.

The successful business engineer must have the ability to quickly grasp
the plan of operation of any business with which his work may bring
him in contact; he must be able to analyze conditions and to determine
the factors which make for the success or failure of a business. His
work is to organize and systematize every step of the work in every
department.

=3. The Preliminary Investigation.= The first step in the organization
or systematizing of a business is to determine its natural divisions.
What is the nature of the business, and what are its distinguishing
characteristics? Be it a manufacturing, jobbing, wholesale, retail, or
professional concern, there is some one head on whom rests the final
responsibility for the success or failure of the business. He must be
surrounded with subordinates, each having certain duties to perform,
who will be responsible for the performance of those duties, thereby
coöperating to carry out the purposes of the enterprise.

The highest type of organization is found among the great industrial
enterprises. These enterprises with their many activities most
readily lend themselves to the application of scientific principles
of organization. Here, organization can be carried to its final
conclusion; in a smaller enterprise the same principles apply, but
modification of details is necessary.

If we study the organization of a large enterprise, regarding it as a
type, we can more readily grasp the requirements of a smaller business.
But it must be remembered that in any event, the individual business
must be studied and the organization made to fit the business. A tailor
does not cut all coats from the same pattern.

In certain respects a great industrial organization may be likened
to the army. At the head of the army is the commanding general, on
whom rests the responsibility for the success of any campaign. He
is surrounded by his staff, with whom he consults on questions of
importance. When any important move is decided upon, the members of the
staff--themselves in command of divisions of the army--issue orders to
their subordinate officers. They, in turn, pass the orders along, and
at a predetermined moment, an entire army is set in motion.

Another important feature of the army organization which should
be applied to the organization of a business is the disregard of
the individual. Military authorities long since discovered that a
high standard of efficiency could be maintained only through the
organization of the army along certain lines. The question was not
one of creating offices the duties of which would conform to the
capabilities of certain men; the offices were first created, and then
competent men were selected to fill them.

=4. Individuals Disregarded.= In creating responsibilities in a
business organization, the individual should be disregarded, just as
he is in the army. Unfortunately, the importance of this question
is not always recognized. Too frequently the best interests of the
organization as a whole are subserved to the interests of individuals.
Business enterprises are organized and offices divided among the
principal owners without seriously considering their respective
abilities. This is wrong in principle, and works to the detriment of
the business. It is one of the important problems to be solved in
organization. Jones, who is a natural born financier, prefers to manage
the selling end of the business, while Brown, a salesman of ability, is
made treasurer. Neither is in the right place; change them about, and
an efficient team would result.

Before we can perfect an organization, we must know what the business
is. We must ascertain for what it is organized; what class of business
is carried on; manufacturing, mining, jobbing, wholesale, retail, or
a combination of two or more classes; whether conducted entirely in
one plant or through branches; the method of marketing the goods; by
traveling salesmen, agencies, or mail; the facilities for obtaining
supplies, raw materials, or manufactured goods. When we understand the
nature of the business, we are in a position to work out an impersonal,
systematic organization.

Referring again to the necessity of a disregard of individuals in
perfecting an organization, it is not the province of the business
engineer to determine the qualifications of the men. He must be
governed solely by the requirements of the business. When his work is
completed, it is for the management to decide who is best fitted to
assume the duties and carry out the purposes of the departments and
positions created.

We refer, for convenience, to the business engineer or systematizer;
the principle is the same whether the one doing the work is acting in
a professional capacity, perfecting the organization of his employer's
business, or even solving the problems of his own establishment.


OBJECTS AND CHARACTERISTICS OF ORGANIZATION

=5.= To reduce the subject to concrete form, the objects of business
organization may be defined as follows:

 (A) To unite the individuals who are to conduct an enterprise into a
     body which will work systematically to a common end.

 (B) To bring together or group the component parts of the body with
     respect to their specific relations and duties.

 (C) To elect officers and appoint committees and authorities with
     clearly defined duties and responsibilities.

These definitions all lead to a common center, that is, coöperation.
Without co-operation the success of any organization is very
questionable, if not impossible. With it--a body of men all working
together for a common end--almost any apparent obstacle will be
surmounted. No matter how large an organization may be, how many or
wide its ramifications, if the spirit of co-operation prevails, it will
move as one irresistible body.

And, regardless of the size or nature of a business enterprise, the
organization, as here used, resolves itself into certain easily
distinguished components, as follows:

 First:  The owners, represented in a corporation by the stockholders or
         investing public; in a partnership, by the partners; in an
         individual business, by the proprietor.

 Second: The executive or managerial division.

 Third:  The commercial or active business division.

 Fourth: The manufacturing or productive division.

These components lend themselves naturally to certain specific
subdivisions; natural groups are formed to insure efficient management;
certain authorities are delegated to effect economical operation.

The stockholders (owners) first elect from among their number, a _board
of directors_. This is the initial step toward perfecting a business
organization. The directors represent the stockholders, and the
interest of the stockholder, as such, becomes that of an investor only.
His interest in the operation of the business is to be looked after by
the directors, whom he, or a majority, has elected.

From this board of directors is built the framework of the executive
or managerial division. The first act of the directors is to meet and
elect the usual executive officers: _President_, _Vice-President_,
_Secretary_, and _Treasurer_. In modern organizations, it is customary
to also elect or appoint an _executive committee_ or _board of
managers_.

This committee consists of three or more members, usually selected from
the officers, to which may be added one or more directors who are not
officers.

To this committee, the board of directors delegates its authority in
the actual conduct of the business. This plan of electing an executive
committee is particularly desirable when the board is a large one,
as it concentrates authority and results in more prompt action on
matters demanding immediate attention. A large body is unwieldy, a
quorum cannot always be brought together on short notice, but a working
majority of a small committee can be convened promptly.

The executive committee takes charge of both the commercial and
manufacturing divisions. To still further concentrate authority, it is
customary to appoint a _General Manager_ who has direct supervision
over the immediate operation of both commercial and manufacturing
divisions. He is appointed sometimes by the executive committee, but
more often by the board of directors.

The general manager, while occupying a position of chief acting
executive, acts with the executive committee and is directly
responsible to the board of directors.

The commercial division of a business naturally subdivides into two
sections: _Accounting_, and _Advertising and Sales_. The first thought
of the student might be that accounting is given a position of too
great importance, but in the sense here used it means the records of
the business of every nature, the accounts, the gathering and recording
of statistics and information of every character.

The manufacturing division divides into _Purchasing and Stores_, and
_Production_. In a measure, the purchasing of goods is a function
of the commercial division, but the purchasing of raw material and
supplies is properly under the supervision of the manufacturing
division.


CHARTING THE ORGANIZATION

=6.= What may be termed the anatomy of an industrial body, is most
graphically shown by means of charts. Free use of charts will be made
throughout these papers. With properly designed charts the logical
divisions of authority or expense can be clearly shown.

Fig. 1 furnishes a graphic illustration of the principal components
of the organization under discussion. In the first group we find the
owners (stockholders) whose line of communication with the business is
through the board of directors. Subordinate to the board of directors
are its own executive officers, the executive committee, and general
manager.

The connecting lines show the executive committee to be in direct
communication with the board of directors, while the general manager is
in direct communication with both the executive committee and the board
of directors.

Under the general manager are the commercial and manufacturing
divisions, over both of which he has direct supervision.

=7. Working Authorities in Large Enterprises.= The next logical step
in the development of our organization is a study of the working
authorities and responsibilities of the different officers and their
assistants. We have seen that the administrative authority is for
practical purposes centered in the general manager. It is not to be
supposed, however, that in a large industrial organization he will
personally supervise all of the details of operation of the commercial
and manufacturing divisions. His time must not be taken up with details
which can be as well handled by subordinates. He should be free to
devote his time to questions of policy, the providing of finances, the
consideration of new fields of endeavor, and the making of the more
important contracts. His immediate assistants will be a _Comptroller_
and a _Superintendent_.

The comptroller fills a position identical with that of a business
manager or an assistant manager. His duties are mainly in connection
with the commercial division. It is his business to devise systems of
accounts and systems for recording the activities of every department,
and have reports compiled, in proper form for presentation to the
general manager. His is a statistical department, filling a place
between the general manager and the subordinate departments, and, while
not closing the avenues of communication between these departments and
the general manager, it is here that reports and records of results are
concentrated.

[Illustration: Fig. 1. Chart of a Corporate Manufacturing Enterprise]

The superintendent is in immediate charge of manufacturing operations
and is responsible for the custody of all property used in
manufacturing. His position does not close the avenue of communication
between factory departments and the general manager.

Fig. 2 illustrates the subdivisions of the commercial and manufacturing
branches. This chart does not go back of the administrative section of
the organization, as the stockholders have no direct connection with
the actual operation of the business.

We find the subdivisions of the commercial branch in charge of the
following: _Chief Accountant_, with direct supervision over all
bookkeeping and accounting records; _Chief Stenographer_, in charge
of all stenographic and circularizing work; _Advertising_ and _Sales
Managers_, in charge of publicity and selling campaigns; _Credit man_,
in charge of credits and collections.

The manufacturing department includes the _Purchasing Agent_, who
purchases all manufacturing stores, materials, and supplies; _Chief
Stores clerk_, in charge of the storage of all materials and supplies;
_Chief Engineer_, who designs new products, new machinery for the
manufacture of that product, and conducts all experimental work; _Chief
Draftsman_, who superintends the work of the drafting rooms; _Assistant
Superintendent_, in charge of maintenance of power and heating plants,
internal transportation facilities, machinery and buildings; _Foremen_,
in charge of shops employed in production work.

As shown by the lines of communication, represented by the heavy
lines, the authorities of the comptroller and superintendent extend to
every phase of the work of the commercial and manufacturing branches.
The comptroller is in communication with the manufacturing branch
since the making of schedules, time keeping, and the assembling of
cost statistics are all centered in his office. He does not, however,
assume any of the duties of the superintendent, and while their work
is closely related, the two officers conduct their departments without
conflict of authorities. It must be remembered that they are equally
responsible to the general manager, which of itself requires cordial
coöperation.

[Illustration: Fig. 2. A Chart of Working Authorities in a
Manufacturing Business]

=8. Organization Applied to Small Business.= We have referred only
to large manufacturing enterprises divided into many departments,
necessitating a division of executive duties among a large number of
minor executives. While, in the organization of a smaller enterprise,
not all of these department heads will be required, the principles of
organization, so far as division of authority is concerned, remain the
same.

In the small corporation, we find the same board of directors elected
by the stockholders. This board may be small, consisting of no more
than five, or even three members, but the same executive officers
are elected. One man may hold more than one office, as secretary
and treasurer, or vice-president and treasurer, yet each office is
filled. If the board is small the executive committee may be omitted,
in which case the board itself performs the duties of the executive
committee. There is the same general manager; at least the duties
exist even though there be no such office in name. The president may
act as the executive head, and be recognized as the actual manager of
the business, but in so doing he is acting in an entirely different
capacity than that pertaining to the office of president.

Extending the illustration to a small manufacturing enterprise, the
general manager may assume all of the duties of the comptroller in
the operation of the commercial branch; he may be his own sales
manager or credit man; or in the manufacturing branch, he may act as
superintendent.

The treasurer of the corporation may be the accountant and also act
as credit man. The advertising and sales managers may be one, or the
superintendent may be the purchasing agent as well.

The point intended to be emphasized is that there are certain duties to
be performed, certain responsibilities to be met, certain authorities
to be assumed even though it be but a one-man business. And in this
is illustrated the importance of creating any business organization
without regard to individuals.

=9. Organization of Mercantile Business.= Leaving for a time the
organization of a manufacturing enterprise, we will consider the
application of the principles of organization to a trading business.
In such a business, the administrative section remains the same:
stockholders, directors, officers, executive committee, general
manager. At this point the business naturally divides into the
departments of _buying_ and _selling_.

[Illustration: Fig. 3. A Chart of a Corporate Trading Enterprise]

The buying department is subdivided into _purchasing_, _stock_, and
_shipping_. The subdivisions of the sales department are _sales_ and
_accounting_. Our chart of the organization shown in Fig. 3, follows
the same lines as Fig. 1, the only change being in the main divisions.

Advancing the next step we find the executive officers in charge of
the several divisions of the work, corresponding very closely to those
shown in Fig. 2. The buying department is in charge of the _Purchasing
Agent_, _Chief Stock Clerk_, and _Shipping Clerk_, or _Traffic
Manager_, as he is sometimes known.

The selling department is in charge of the _Chief Accountant_,
_Advertising Manager_, _Sales Manager_, and _Credit Man_. This is shown
clearly in the chart, Fig. 4.

Lest an erroneous impression be gained, it may be well to state at this
point that the advertising and sales managers must work in perfect
harmony. Indeed, advertising is one branch of the sales department and
the success of one is so closely interwoven with the other that no
important step should be taken by either independently.

In many large concerns, the sales manager is the real advertising
manager, even though another may supervise the actual routine of
preparing advertising matter. A competent advertising man makes
a successful sales manager, and every sales manager should have
advertising training, for the purpose of advertising is to create a
demand and assist in making sales.

Referring again to Fig. 4, it is seen that both buying and selling
departments are under the control of the general manager, from
whom direct lines of communication lead to every division of these
departments. Direct communication is also maintained between the two
departments. The accounting division keeps the accounts of the buying
department; the sales division must be in communication with the
purchasing and stock division in respect to maintaining the stock to
be sold, and with the shipping division in respect to the filling of
orders.

=10. Universal Application of Organization Principles.= When we go into
all of the ramifications of business we find many establishments where
minor variations of our plan of organization appear necessary, but in
the final analysis, the fundamentals prove to be the same.

[Illustration: Fig. 4. Chart of Working Authorities in a Trading
Business]

Reduced to its simplest form, we will suppose the business under
consideration to be a small retail establishment conducted by two
partners. No thought has been given to the principles of organization,
yet they are applied in that little store just as surely as in the
immense manufacturing plant.

Ask any commercial salesman calling on the firm who is the man to
see regarding the introduction of a new line of goods, and he will
probably answer, "Mr. Jones is the man to see; he does the buying."
With no thought of organization, the owners of this little business
realize that it is best for one man to do the buying. Perhaps the
other may inspect samples, his opinion may be asked, he may even place
an occasional order, but it is not the rule of the establishment. By
placing the buying in the hands of one partner, confusion is avoided.
He can keep in closer touch with prices, and the results are far more
satisfactory.

Advancing to the larger retail business of the department store,
whether the general store of the small town or the big store of
the city, we find a different problem. Here the buying is further
specialized, for one man buys for one, or at most three or four
departments. The same men act as sales managers and buyers in the
departments for which they are responsible. The manager of a department
in a big store is selected as much for his ability as a buyer as for
his salesmanship. But we do not get away from fundamental principles,
for in buying and selling the manager is performing two entirely
separate and distinct functions.

No matter what the business, we find the same two fundamental
functions, that is, buying and selling. As illustrations of the
application of this principle to different businesses we give the
following:

 Publishers of newspapers and other periodicals buy editorial
 work, manuscript, engraving, paper, printing; sell subscriptions,
 advertising space.

 Publishers of books buy editorial work, manuscript, engraving, paper,
 printing; sell books.

 Railroad companies buy equipment, rails, lumber, coal, supplies,
 labor; sell freight and passenger transportation.

 Schools and colleges buy textbooks, supplies, services of instructors;
 sell instruction.

 Professional men buy their instruction, books, instruments, office
 furnishings, clerical assistance; sell their services.

In every undertaking, revenues are produced through salesmanship. Every
business and every profession has something to sell, and its financial
success depends largely upon the quality of salesmanship employed.
Whether it be a professional man with nothing but his services to
sell and no other means of advertising than through work well done,
or a gigantic commercial organization with its extensive advertising
campaign and many salesmen, a selling organization exists in some form.
And before anything can be sold it must be procured, or bought.

On this question of the universal application of the principles of
organization, we quote from a valuable contribution in _The Engineering
Magazine_, by C. E. Knoeppel:

 "While business as it is now conducted is not as simple as it was in
 the barter days, it must not be inferred that this segregation of
 authority is synonymous with complexity, for its very purpose has
 been to simplify, and that is what it has accomplished. It is only
 where this segregation has been the result of lack of thought and
 proper attention, or other like causes, that we find a complex and
 unsatisfactory condition of affairs. In fact, there is all about
 us sufficient evidence that many commercial enterprises are being
 conducted along lines that, as far as evolutional development is
 concerned, are several stages behind the times.

 "Let us suppose a case, which will apply in a greater or less degree
 to the majority. In the earlier development, we will say that the
 founder of the business was able, on account of its small size, to
 make what sketches he needed, solicit orders, see that they were
 filled, perhaps take a hand at the making if occasion required, see to
 the shipments, and attend to the collections and the keeping of his
 few accounts. He finds that the business grows, and eventually places
 a man in charge of certain branches while he looks after others. The
 accounts eventually require more attention than he can give them
 so he engages a bookkeeper in order that he may be relieved of the
 work. He finds that the quantity of materials received and shipped
 amount to enough to warrant a receiving clerk as well as a shipping
 clerk, and, to handle this material from its inception to shipment
 he conceives the idea of placing a man in charge as stock clerk. He
 then adds a purchasing agent, in order that he may be relieved of
 the detail and that purchases may be made most economically; a man
 is placed in charge of the orders; foremen are placed in charge of
 certain men in the shops; the details connected with making plans,
 drawings, estimates, etc., are taken over by a practical man; his
 manager is given a man to look after the shops or engineering branch;
 while the commercial branch with its many details is placed in the
 hands of another. As the evolution continues, the selling branch is
 assumed by one man; cost details are looked after by another; a chief
 inspector is added in order that all work may be shipped according to
 specifications; the engineer, who before had been a sort of jack of
 all trades, is placed in charge of certain work, while an electrician
 is engaged to look after this particular work; and so this segregation
 continues as the development continues.

 "Perhaps it is not to be wondered at that the founder, in
 looking backward, is inclined to pat himself on the back when,
 in a reminiscent mood, he considers what he terms 'remarkable
 development.' He considers that he has been wonderfully successful in
 building up a business which at the beginning was so small as to admit
 of his supervising every detail, while today he employs a dozen men
 to do the work he once did. There is no getting away from the fact
 that it is this same feeling of self-satisfaction that is responsible
 for a large number of faulty organizations, for if we should tell
 this manufacturer that his business is far from being as successful
 as it is possible for it to be ... he would vigorously resent any
 such accusation; but the fact remains that it is not the success it
 should be, for the very reason that the development has been allowed
 practically to take care of itself. New men were added, new offices
 created, only when absolutely necessary, each newcomer being given
 a general idea of what was expected of him, and not knowing, not
 thinking, or perhaps not having the time to give more than passing
 attention to the matter, the proprietor did not consider the fact that
 his business was a unit, with each worker a part, having a distinct
 relation with every other worker. Hence, as the efficiency of any
 organization is directly in proportion to the care with which these
 relations are considered and treated, his organization naturally fails
 to attain that degree of efficiency obtainable, and for this condition
 he, and he only is responsible."

=11. Departmental Authorities.= The next logical step in the
development of our organization is an analysis of the departmental
organizations. We have seen how the operations of the business are
divided among several divisions or departments. The reason for such
divisions is apparent. In a large business no one man can personally
supervise all of its activities. Each division is engaged in certain
activities that demand the immediate supervision of specialists. One
man is a specialist in advertising, another in sales plans, others
in purchasing, specific manufacturing operations, or the design and
maintenance of appliances intended to improve the product or to reduce
costs.

To reach the highest state of efficiency in every department of the
business, these specialists must be employed, which is another reason
for organizing a business along the line of its activities, and without
respect to individuals.

Before we can decide what manner of man should be placed at the head of
this or that department, we must study the duties of the position, the
responsibilities involved, the authorities to be assumed. To present
this problem in graphic form, the chart (Fig. 5) is designed. While
the arrangement is not inconsistent with Fig. 2, this chart of the
same class of organization is laid out along the lines of authority.
It shows both the authority of the department head and the necessary
activities of his division.

We have selected the organization of a large industrial establishment
for the very reason that many divisions and departments are necessary.
The smaller organization will have a less number of divisions, but it
is much easier to condense than to expand a given plan. Any man who
understands the requirements of a large organization can readily adapt
those ideas to a smaller establishment. He can apply the plan so far as
it can be used to advantage. Some variations of the application of the
plan will be pointed out in our departmental analysis.

[Illustration: Fig. 5. A Chart Which Shows the Duties, Responsibilities
and Authorities to be Assumed by Each Department Head]

It is perhaps unnecessary to say that while the authorities of some of
the department heads have been referred to in preceding pages, this
analysis is intended to exhibit these authorities in greater detail.

=12. General Manager.= As a rule the general manager has general
supervision over the commercial and manufacturing branches. In
conjunction with the president and executive committee, he formulates
all policies to be followed in purchasing, manufacturing, sales, and
advertising, establishing credits, and accounting methods. He is
responsible to the executive committee and board of directors for
procuring materials, their manufacture and sale, and the maintenance of
buildings and machinery.

It is his duty to keep in touch with the operations of every department
and to post himself on the general efficiency of all classes of
workmen. Through reports he will keep informed in regard to the results
of the operations of every department.

While in direct communication with all department and division
heads, he will have for his immediate assistants, a comptroller and
a superintendent. It is from the comptroller that he will receive
statistics and reports of the activities of the business in all its
branches, while to the superintendent he delegates his authority in the
actual operation of the manufacturing branch.

=13. Comptroller.= "A controller or manager" is a standard definition
of the term comptroller. In the organization under consideration, he
is a _controller_ of the business by virtue of the fact that he is
responsible for the accounting and recording of all activities of the
business.

He occupies the position of auditor and is the real systematizer of
the business. He creates all systems of commercial accounting, cost
accounting, departmental records, time keeping, and pay rolls, reports
of superintendent, perpetual inventory, sales statistics, and, in
fact, all records of the business. He prepares all balance sheets,
comparative statements, trading, manufacturing, and profit and loss
statements, and reports to the general manager or executive committee,
or both, on the condition of finances, materials, and finished goods.

Since the formation of important policies may hinge on the reports and
statistics of his department, he occupies an office next in importance
to the general manager. The training and experience gained in his
office place him in direct line for promotion to the office of general
manager.

His authority is absolute over the accounting and stenographic
departments, while his authority extends to other departments only in
respect to their record systems. In the accounting department, his
direct assistant is the chief accountant; and in the stenographic, the
chief stenographer.

In a smaller organization the comptroller may not require the services
of a chief accountant, in which case he performs the duties of the
position. Or the treasurer may occupy the office of comptroller.

_Chief Accountant._ The chief accountant is in immediate charge of
the commercial and factory accounting. His assistants are cashier,
bookkeepers, factory accountant, cost clerks, time clerks.

This department accounts for the receipt and disbursement of all moneys
and properties, figures costs and pay rolls, and prepares statistics
necessary for the use of the comptroller in making up his reports and
statements.

It is evident from this that the comptroller is in a sense the
custodian of all property belonging to the business, since he must,
through his accounting department, account for its receipt and
disbursement. This explains why the comptroller prescribes all systems
for the care and recording of stores, supplies, and finished product.

_Chief Stenographer._ The chief stenographer is at the head of the
correspondence department, with authority over all stenographers,
typists, filing and mailing clerks.

Stenographers are supplied to all divisions by this department. This
plan of having all stenographers in one department subject to the call
of those having need of their services is now adopted by most large
concerns, except in a few cases where stenographers act as private
secretaries to the officers. The plan is an economical one, for only
the number actually required to handle the work of the establishment
need be employed. Under the old plan of employing one or more
stenographers in each department, it is common to find them idle in one
department while in another the work is behind. Another strong point
in favor of the more modern plan is that each stenographer becomes
familiar with the dictation of all departments, and no stenographer has
an opportunity to become familiar with the secrets of the business.

In the stenographic department, the work of addressing and mailing form
letters, catalogues, and circulars is done.

All correspondence is filed by this department.

Records of office supplies, stationery and printed matter are
maintained in this department.

The chief stenographer has charge of and accounts for all postage, but
secures postage by requisition from the cashier or accountant.

=14. Sales Division.= By far the most important division of the entire
commercial branch is the sales division. This division is responsible
for finding a market for the output of the business.

It must create a demand for the product through advertising, open new
fields, study the demands of the trade and the products of competitors,
ascertain as far as may be the possibilities of marketing new products,
and, above all, sell goods at a profit.

The selling division of some of the largest industrial establishments
is in sole charge of a general sales manager, who has authority over
the advertising as well as selling. In our chart we have divided
responsibility for the conduct of this division between sales and
advertising managers, placing the advertising manager on an equality
with, rather than subordinate to, the sales manager. This combination
will produce the most satisfactory results for most enterprises.

_Advertising Manager._ The advertising manager has charge of the
preparation of all advertising literature, catalogues, copy and designs
for all periodical advertising and usually the placing of all contracts
for printing and engraving.

He has authority over all artists and copy writers employed regularly
and for special work.

With the sales manager and general manager, he makes up appropriations
for periodical advertising and places contracts when these
appropriations have been approved.

He confers with the sales manager on all questions pertaining to his
work, no printed matter for the use of the selling division being
ordered until approved by the sales manager. Thus, coöperation of the
sort that makes for success is assured.

_Sales Manager._ The sales manager has authority over the sale of goods
and filling of orders, and his department is divided into selling and
filling. The selling department is further subdivided into salesmen and
mail orders.

One subdivision represents that portion of the sales made by personal
salesmen. The active work is carried on by salesmen who call on the
trade under the orders of the sales manager.

The sales manager hires all salesmen, prescribes their territories and
routes, and supervises their expense accounts.

He compiles reports and statistics of their work for presentation to
the comptroller or general manager, and keeps the records prescribed
for this department.

The mail order division is engaged in the sale of goods by the use of
letters, circulars, and catalogues. Lists of customers and prospective
customers are maintained, and sales follow-up systems are operated
under the immediate supervision of this division.

In the filling department, the chief order clerk is in charge of
entering sales orders, making shipping orders and manufacturing orders.
He maintains a record of sales and manufacturing orders so that he can
keep informed on manufacturing or stock requirements. All invoicing of
shipments is done in this department.

The shipping clerk maintains records of rates of transportation by
rail, water, or truck, and keeps posted on routes and facilities. He
supervises the packing of all goods, and secures proper receipts from
transportation lines.

_Credit Man._ The position of the credit man is an important one in any
establishment.

He collects and records information about the financial responsibility
and credit standing of customers. When necessary, he makes special
investigations, and on the basis of his information extends or limits
credit. Every order from a new customer must be approved by the credit
man before it can be accepted.

When accounts have been opened, it is the duty of the credit man to
collect them when due, or, if not paid promptly, to use every means to
secure a settlement. His work brings him in contact with both the sales
and accounting departments.

The credit man is assisted by such clerks and collectors as may be
necessary for the conduct of his department.

=15. Superintendent.= The superintendent is given general supervision
over the manufacturing branch of the business. His authority extends
directly to the engineering and drafting departments, the work of the
assistant superintendent, foreman of tool room, and shop foremen. His
relations with the purchasing department are advisory rather than
managerial.

His immediate assistants are the chief engineer, assistant
superintendent, and shop foremen.

It is his duty to execute orders for the manufacture of goods, operate
the plant in the most economical manner, study and introduce processes
and methods that tend to reduce manufacturing costs, and keep informed
generally on the efficiency of men, machinery, appliances, and
materials in all manufacturing departments.

With the assistance of the purchasing agent he provides all materials
and supplies required in the manufacture of goods or for the operation
of the plant.

_Chief Engineer._ The chief engineer designs all special machinery
and appliances to be manufactured for use in the plant, designs and
plans all new products for which there appears to be a demand, and
personally supervises the experimental department. The installation of
new equipment is also done under his supervision.

His authority extends to the drafting department which is in charge
of a chief draftsman. This department draws all designs, plans of new
machinery or product, and all plans not classed as architectural.

In a plant where many special tools are made, the chief engineer also
has authority over the tool room.

_Assistant Superintendent._ The assistant superintendent is responsible
for the maintenance in efficient condition of all power, pumping,
heating, and lighting plants, internal transportation facilities, and
the repair of buildings and equipment.

Except in the larger plants, he has authority over the tool room
which is placed in charge of a tool room foreman. This department
is responsible for the custody of all tools, repairs to tools, and
their manufacture. Tools are issued only on requisition and perpetual
inventories are maintained according to systems prescribed.

In some very large industrial plants, like a steel plant, there are
several assistant superintendents, each having specific duties. There
may be a superintendent of power, superintendent of transportation,
superintendent of machinery, superintendent of buildings,
superintendent of stores, etc. In a small plant, the superintendent
will personally perform the duties here assigned to the assistant
superintendent.

_Shop Foremen._ As the name indicates, the shop foremen are in charge
of the various shops or manufacturing departments. It is the duty of
the shop foreman to lay out the work called for by the orders of
the superintendent, and to assign the work to his men. He will make
provision for the prompt execution of orders by making requisition for
the number of men that can be profitably employed in his department. It
is his duty to keep all of his men supplied with work.

=16. Purchasing Agent.= The purchasing agent has charge of the purchase
of all materials for the manufacturing branch, and in some cases for
the commercial branch. In a purely trading concern, his duties would
be in connection with the commercial or selling branch, but in a large
industrial enterprise, the purchase of office supplies, advertising
literature, etc., is usually under the supervision of the comptroller,
chief accountant or advertising manager.

He procures catalogues, price lists, names of manufacturers and
dealers, and keeps generally informed as to sources of supply. He
obtains samples which are submitted to tests by the engineering
department or otherwise.

With the superintendent and general manager, he makes schedules of
materials, secures bids, and places orders. Records of orders and all
information needed in his office are kept according to the systems
prescribed by the comptroller.

He has full authority over the store rooms, in which he is assisted
by the chief stores clerk. This department receives all goods, checks
receipts with orders or invoices, stores the goods, delivers them on
properly executed requisitions, and maintains perpetual inventory
records as prescribed.


EMPLOYMENT DEPARTMENT

=17.= A department, or rather a sub-department, not shown on the chart
but found in some establishments, is the _employment department_. This
department is very properly in immediate charge of the superintendent,
and, in the average manufacturing plant, he will hire all men.
In a plant employing a great number of men, it is impossible for
the superintendent to personally take charge of this work, and an
employment agent is placed in charge.

The employment agent keeps records of all employes and applicants and
hires all men needed by the different foremen.


GENERAL MODIFICATIONS

=18.= The organization that we have described is a representative
illustration of the application of the principles to a large
enterprise, necessitating a considerable number of subdivisions.
But even here the charts show only what may be termed the principal
divisions; the charts might be extended in greater detail. The
explanation might include the exact duties of every employe in each
department, but, as our purpose is to present general principles in
sufficient detail to serve as a guide, explanations of these minute
details have been omitted.

There are, however, modifications to be found in certain cases which
may be made clear by further suggestions. We have referred to the
comptroller, and while in many concerns no such office is recognized,
at least by that title, some man in every business of any magnitude
fills an analogous position.

Most frequently it is the auditor, or if the office of auditor has
not been created, it may be the treasurer. Again, the duties or a
greater part of them, may fall on the office manager or the chief
accountant. Even in a small partnership where one of the partners is
the bookkeeper, the duties exist, and are performed by that partner
who keeps the accounts. It must be remembered that the comptroller's
office is primarily statistical. It matters not whether the statistical
operations involve the keeping of a simple set of books or require
large commercial and factory accounting forces with a third division to
compile statistics from their records, every business demands certain
statistical work. Neither is it important whether the man in charge of
this work be called comptroller, auditor, accountant or office manager,
but we have used the title of comptroller as more exactly descriptive
of the functions of the office when carried to its legitimate
conclusion in a large business.

While, in most manufacturing industries, the superintendent and
purchasing agent have full authority in the making of purchases for
the manufacturing branch, it has been found advisable in some cases
to give the comptroller authority over the purchasing department. A
reason for this is the importance of reducing the investment in raw
material, supplies, etc., to the lowest point consistent with the
actual requirements of the business. Much needless capital is tied up
in raw material, when it might be at least earning bank interest. His
chief concern being to provide a liberal supply of raw materials, the
superintendent is very liable to overstep the bounds in the direction
of too liberal purchases.

A still different condition is found in a large merchandising
establishment. Here practically every department manager is his own
buyer and while he must be regarded as the best judge of what to
buy, it becomes necessary to supervise his purchases in respect to
quantities. The comptroller should, therefore, have authority over the
amounts invested by the several buyers. This is usually controlled
by giving the buyer a stated appropriation at the beginning of each
season, the amount being determined by a study of present conditions
and records of past performance. The making of an appropriation does
not operate against special appropriations to be used in taking
advantage of specially advantageous market conditions, or to increase
stocks of fast selling lines.


DUTIES CLEARLY DEFINED

=19.= One of the first requirements in the development of a successful
organization is that the duties of every employe be clearly defined,
and that each employe be fully informed as to his duties. Nothing
tends to produce greater friction than an overlapping of duties and
authorities.

In a manufacturing plant, when a foreman is placed in charge of a
shop he should be instructed as to his authority, responsibilities,
and exact duties. When these authorities have once been established,
no other man of equal or lower grade in the organization should be
permitted to interfere in any way, nor should the foreman be permitted
to overstep his authority.

Those occupying positions to which greater authorities are attached
should also be careful to not presume upon their authority by
attempting to direct work properly under control of the foreman. The
superintendent or manager who, in passing through a plant, discovers a
workman in the act of violating an established rule, or doing something
dangerous to the lives of himself and fellow employes, or performing
work in the wrong way, is justified in at once bringing the matter to
the notice of that workman; but he should report the occurrence to the
foreman at the first opportunity.

On the contrary, if the manager or superintendent wishes to make a
change in policy involving a departure from the established customs of
the shop, or if he requires the services of a workman even temporarily
in another department, he should first take up the matter with the shop
foreman.

The same policy in general should be observed throughout the
organization. The person placed at the head of a department or division
of the work should have full authority and be held responsible for the
work of all employes in that department. Complaints of inefficiency
of an individual employe should be made to the department head. If
the purchasing agent, for instance, finds the work of a certain
stenographer unsatisfactory, his complaint should be made to the chief
stenographer.

=20. Duties of Individual Workmen.= The duties of the individual
workman in the shop should be as clearly defined as are those of his
foreman. It is the duty of the foreman to lay out the work and to keep
the workman regularly employed on the work assigned to him.

In the operation of the manufacturing branch, the most important
consideration is economy of production. When a workman is kept at one
task he becomes a specialist, increases his production, and reduces
costs.

=21. Duties of Office Employes.= Each clerk in the office should have
his work clearly defined. If specialization is profitable in the shop,
it is equally so in the office. Every man who has been responsible for
the management of an office will agree with us that in no other branch
of business is there a greater tendency to allow work to get behind.

Lack of system is mainly responsible for this state of affairs. While
his duties may be more or less clearly defined, the work of the average
office clerk does not follow any well defined plan. He does the thing
that seems most important, leaving the less important tasks until he
"has time." Instead of surveying the field and laying out a logical,
systematic plan, the average office employe goes about his work in a
haphazard sort of way following the line of least resistance.

The work in every office is largely routine, but the faithful
performance of routine tasks is a necessary accompaniment to those
larger tasks, which in themselves, appear of greater importance.
Routine tasks are drudgery--something that every man seeks to escape.
In freeing himself from a state of drudgery, the department head should
be careful lest he place his subordinates in the same dreaded rut. An
office clerk should be given an opportunity to learn all of the routine
of the division in which he is employed. He will become a more valuable
employe; while adding variety, the performance of more than one task is
training him for a more advanced position.

[Illustration: Fig. 6. A Working Chart for the Guidance of the Employes
in One Department]

To properly systematize the routine, the department head should
first study his department to find out what the routine tasks really
are--what work must be done each day or each week. He should then
list these tasks and assign them to certain clerks to be performed at
certain stated times.

This can be best presented by means of a chart as shown in Fig. 6. This
chart covers the work of a typical general accounting department. At
the top, the general or routine tasks are listed, grouped under proper
divisions. From each task listed a line is extended to the time when
it is to be performed: daily, the day of the week, day of the month,
or the month. The letters at the end of the lines indicate by whom the
tasks are to be performed, _C_ representing clerks, _B_, bookkeepers,
and _A_, cashier.

Taking the collection division as an illustration, we will suppose that
it is Monday, the 2nd of the month. The chart shows that on Monday
notices of notes and accounts due are to be mailed. On the second day
of the month, past due accounts must be taken up and disposed of. In
addition are the daily tasks as indicated by the lines extending to the
daily line.

When a task is to be performed two or three times in a month, the line
is broken and the letter inserted at each break. Even the time of
drawing off a balance sheet, once every three months, is indicated.
A similar chart should be made to show the routine duties of each
department.

Such charts, supplying, as they do, complete working schedules for
the routine of each department, soon reduce the time taken by routine
tasks, which is of no little importance in the conduct of a well
regulated department. They fill a place in office routine analogous to
that of the working plan in the shop. The same idea can be carried out,
and will prove equally valuable, even in an office where the bookkeeper
does all of the work.


CHARTING SALARY AND WAGE DISTRIBUTION

=22.= We have seen how authorities, responsibilities and even routine
duties are most graphically represented by means of charts--the working
plans of the recording divisions of the business. For purposes of
record, the distribution of the expenditures for salaries and wages
of those who make up our organization is of equal importance to the
definition of the authorities and duties.

If the accounts are to be of value they must be correct, and they
cannot be correct unless every item is charged to the proper account.
The value of correct accounts is recognized. They do more than show
what we have received or the expenditures for a specific purpose during
a stated period; they show when and why an expense is increased or
decreased. With such information to point the way to economies in the
future, instead of records that show us merely the amount of an expense
already incurred, accounting takes its rightful place as one of the
most important functions of a business enterprise.

Probably more businesses have failed owing to the lack of proper
accounting methods than from any one other cause. Many a business has
been rejuvenated--turned from failure to success--by the introduction
of a system of accounts that truthfully portrays its activities. Few
business failures are the result of a failure to buy goods at right
prices, or to establish selling prices that show a profit. The more
usual cause is found in leaks in the expense account. Any method that
locates the leaks places us in position to stop them.

The chief value of accounting records lies in the opportunity afforded
for comparison. The fact that a certain expense amounted to $900.00
last month furnishes no information of special value; but when compared
with the amount expended for the same purpose two, three and four
months ago (if these expenses are analyzed and compared with production
or sales or whatever factor would affect the amount) the figures assume
an important significance. But if expenditures are erroneously applied,
if an amount has crept into an expense account that does not belong
there, the comparison had better not have been made. Thus is seen the
necessity of an absolutely accurate distribution.

Here the chart--the working plan--is again applied to excellent
advantage. The chart, Fig. 7, applied to salary and wage distribution,
shows to which of the two principal divisions each item should be
charged. This is the important question--to properly apply expenses to
the commercial and manufacturing branches. Subdivisions of such a chart
segregating expenses of each division are easily made.

The application of the items from which lines lead only to the
commercial or manufacturing branch is readily understood. Between
the two are several items from which lines lead to both branches,
indicating that the expense is to be divided. This division should be
given close study. Care must be used that too large a part of any item
is not applied to either branch. The salary of the general manager, and
usually the comptroller, will be equally divided. The duties of the
chief accountant, chief stenographer and stenographers being chiefly in
connection with the commercial branch, only a small portion of their
salaries is charged to manufacturing. Shipping clerk and packers'
salaries are charged to either one or the other branch, depending upon
the nature of the enterprise. In a manufacturing enterprise where all
goods are delivered to stock rooms ready for shipment, packing and
shipping is a sales expense and is charged to the commercial branch;
in a plant building heavy machinery that must be shipped from the
assembling floor, this expense is usually charged to manufacturing.


EXPENSE DISTRIBUTION CHART

=23.= To present a graphic record of expense distribution, the chart,
Fig. 8, is used. This chart separates commercial and manufacturing
expense, showing amounts, while Fig. 7 shows to which branch each item
belongs.

This chart subdivides commercial expense into _executive_,
_accounting_, _office_, _sales_, and _credits and collections_, showing
totals for each and for the entire commercial branch. Manufacturing
expense is subdivided into _executive_, _accounting_, _purchasing_,
_engineering_, and _shops and equipment_.

A comparison of these statements from month to month will show just
what every item is and indicate the slightest increase in any class
of expense. Similar charts can be readily prepared for any business,
segregating expenditures of each branch, division, or department.

The distribution will naturally vary in different businesses and,
before this chart can be prepared, the exact distribution must be
determined. In this chart, packing and shipping is included as a
commercial expense, while, as stated previously, in some businesses it
would be a manufacturing expense. All such questions must be decided
before the chart is prepared.

[Illustration: Fig. 7. This Shows How Salaries and Wages are
Apportioned to the Two Principal Divisions of a Business]

[Illustration: Fig. 8. This Chart of Expense Distribution Shows the
Amount of Executive and Administrative Salaries, and Expense of Every
Class, and Their Correct Apportionment]




EFFECT OF PHYSICAL ARRANGEMENT


=24.= However efficient the personal organization, satisfactory results
can be obtained only under proper environment. It is not merely a
question of pleasant surroundings for employes, but a financial
proposition; not a reform or a fad, but a money-making plan that
governs the engineer in laying out a plant.

This is not to be a discussion of welfare work, about which much has
been published. Our purpose is to point out the business economy of a
proper physical arrangement of office, store or factory as against the
wasteful methods of a systemless grouping of men and machinery.

The question of physical environment is a practical one that has been
solved by many enterprising concerns, and the subject is deserving
of careful study by the student of business organization. While some
hard-headed business men may regard the question of minor importance,
it is significant that the largest and most successful enterprises,
financially, are those in which employes have been supplied with the
most comforts, surrounded with approved safeguards, and aided in their
work by the latest appliances of proved worth.

There is an old axiom to the effect that even a good workman cannot
be expected to do good work with poor tools. It is equally true
that he cannot be expected to do good work in either unsanitary or
inconveniently arranged shops and offices.

=25. Factory Plans.= The planning of a manufacturing plant is a
question for the engineer, rather than the accountant or business
organizer, but a few general remarks on the subject will not be out of
place in this paper.

It may be stated as a fundamental principle that the factory should be
planned to facilitate the movement of raw material from one department
to another. In the ideal factory, storage for raw material will be
provided where it can be economically received and easily procured
when needed in the factory. It should, if possible, be close to the
department in which the material is subjected to the first operation.

The shops themselves should be arranged to facilitate the movement
of partly completed parts from one department or shop to another. To
illustrate, a foundry should be so located that castings can be taken
direct to the machine shop, or smith shop, not through another shop or
in a round-about way.

Likewise, the machine shop, if the process be continuous, should be
located next to the assembling department. Or, if a "parts" storeroom
is maintained, it should be located between the machine shop and
assembling department. Storage for completed goods should be adjacent
to the assembling department, and convenient to the shipping room or
platform.

The chart, Fig. 9, shows a typical layout of a manufacturing plant
operating both a foundry and wood shop. Naturally the foundry and wood
shop are as widely separated as possible. Storage of foundry materials
is provided for just outside of the foundry, while lumber is convenient
to the wood shop.

The arrows indicate the movement of raw materials through the shops to
the finished goods storeroom, and from thence to the shipping platform.
If these lines are traced it will be seen that at no point is the
material twice moved over the same ground. Each move takes it to the
next operation and one step nearer completion. Where materials and
parts enter a shop at two or more points, the lines are merged, showing
that these materials leave that shop as one piece, part, or finished
article. A feature underlying the whole plan is economy in the movement
of work in process. All work moves _through_ a shop, not back and forth
in the shop.

The ideal conditions do not always exist, neither can they be brought
about in every case. Many plants, built in the past, have been planned
without due regard for these matters; their importance was not
appreciated and the buildings are so located that it is impossible to
secure entirely satisfactory results. However, if present conditions
are studied carefully, many improvements can be brought about at slight
expense. While, as we have intimated, this is a problem for engineers,
a number of cases might be cited where the accountant, called in to
systematize the accounting methods of a manufacturing business, has
suggested physical changes in the shops that have resulted in marked
reductions in costs.


=26. Planning the Office.= The average office is arranged in a very
haphazard way. Departments are located with little regard for their
departmental relations; desks are placed where they fit best rather
than according to any preconceived plan.

[Illustration: Fig. 9. Layout of a Typical Manufacturing Plant]

Logical arrangement of the office has as great an influence on the
economical conduct of the work as does the physical arrangement of
the shop. The most important requisite in the layout of an office is
good light. While ideal conditions are impossible to attain in some
buildings used for offices, much can be accomplished by placing the
desks to take full advantage of the light that is available.

The writer once visited an office in which sixty or more people were
employed in one big room. Most of the light came from the rear and
practically all of the desks faced the light, which is recognized as
most injurious to eyesight. The manager of the office was asked why the
desks were not placed in proper position, and he replied that they were
placed so that the employes would sit with their backs to the entrance,
and not have their attention detracted from the work by visitors.
He considered this an important move, but overlooked the more vital
fact that his employes were not only ruining their eyesight but were
actually doing less work than would have been done under more favorable
conditions.

A change was consented to. As many of the desks as possible were so
placed that the worker would receive the light from the left; some
received it from the right and a few from the back. Three months later
this manager readily admitted that his employes were turning out
at least one-third more work, and their general health was greatly
improved.

The location of the departments and the private offices should be
carefully considered. Departments in which the work is of a nature
requiring frequent inter-communication should be located as closely
together as possible. For instance, the sales department should not
be placed between the order and accounting departments, but the order
department should be close to the accounting department, with which it
is in constant communication.

The workers in a department should be placed to facilitate the movement
of their work from one desk to another. Heads of departments or chief
clerks should be within easy reach of all employes in the department,
and accessible to the executive.

Offices of executives should be located with reference to their duties.
The sales manager and purchasing agent should be accessible to the
public. The general manager should be within easy reach of other
officers but not necessarily accessible to the public.

The importance of conveniently arranged offices is receiving much
serious thought, and many of the larger industrial enterprises are
erecting ideal administration buildings. In all specially planned
buildings, the tendency is toward large rooms, rather than smaller
rooms separating the departments. A large room insures better light and
air, and space can be utilized to much better advantage.

Fig. 10 is a sketch of the first floor plan of the administration
building of one of the large industrial enterprises. This is, in many
respects, an ideal arrangement.

A noticeable feature is the location of the filing department in the
center of the main room. Here it is easily reached by all departments.

At either side of the filing department are the sales and accounting
departments. In the sales department several sales managers' desks
will be noted, with desks for their assistants across a narrow aisle.
It happens that, in this particular business, sales are divided into
departments corresponding with the classes of goods manufactured, with
a sales manager for each department.

The accounting, order, and credit departments are conveniently
arranged, and the auditor is located where he can overlook the entire
office. Executive offices, across the front of the building, are
accessible to the public and those in the general offices.


=27. Store Plans.= The subject of store plans is one of utmost
importance to the merchant. His success is influenced to a great
extent by the first impression received by the prospective customer.
If that impression is favorable, if he is greeted by an orderly, well
arranged store, if his comfort and convenience have been considered,
the customer will return and give to the store at least a part of his
patronage.

The old-fashioned general store, in which all sorts of merchandise was
sold, offered little to commend in respect to orderly arrangement. As
a rule, the goods were jumbled together in a confused mass with no
thought of segregating them in departments. Yet this country store,
found in every hamlet, was the forerunner of the department store of
today.

[Illustration: Fig. 10. Floor Plan of a Modern Administrative Building]

The advent of the department store was a case of adapting the
merchandising methods of the country village to the needs of the city.
A miscellaneous stock of merchandise, greater in size but similar in
character to the country store stock, was gathered in one big store
and subdivided into departments. To compete with one-line stores,
stocks must be equal in volume, which meant that the department store
must carry as large a stock of clothing or of shoes as the exclusive
clothing and shoe stores. The stocks must be as complete and as well
displayed; each department must be a fully stocked store, prepared to
meet the usual demands of a store of that character.

The department store of today is a model of systematic arrangement.
Not only are the goods grouped in departments, but the departments are
logically grouped and located to suit the convenience of the customers.
If one wishes to buy house furnishings, hardware, or dishes, he will
probably find them in adjoining departments.

But the departmental idea is by no means confined to the recognized
department store; it is a feature of every well regulated store
dealing in exclusive lines. Stocks of shoes, hardware, clothing, and
furnishings are all divided and the classes segregated by departments.

The departments themselves are subdivided. Goods are classified, and
each class placed in special compartments. Goods most frequently called
for are near at hand on shelves where they can be easily reached. Top
shelves, space under counters, and other inaccessible corners are
reserved for goods called for less frequently.


THE COMMITTEE SYSTEM

=28.= We have already referred to the necessity of coöperation in every
successful organization. We do not wish to be understood as advancing
this idea of coöperation for the benefit only of executive officers
and heads of departments. It must extend farther than this--it must
penetrate to every nook and corner of the shop.

We must have the coöperation of every workman, no matter how obscure
his position, and to secure this coöperation it is necessary to instill
in him an interest in the welfare of the business as a whole. Treat him
as a mere cog in the wheel and he will very likely be content to do
as little work as possible and still draw his pay, with no thought of
bettering conditions in his department. But show him that you recognize
his ability--that you know that he knows how his work should be
done--and he will readily lend his coöperation. The problem of securing
this coöperation has been given much study, and those who have met
with the greatest success have done so by showing the workman that his
advice and suggestions are appreciated.

No matter how willing you may be to receive them, the workman naturally
hesitates to make suggestions personally. But give him an opportunity
to discuss a point with others of his kind and it is surprising
how many practical ideas will be brought out. Experience has shown
that this spirit of working for the good of the business can best
be maintained through the formation of standing committees. Such
committees bring out the best ideas of the men composing them, and
invariably work for the good of the business.

=29. General Factory Committee.= In the manufacturing branch of a
business, the first committee to be formed is the general factory
committee. This committee is usually composed of the superintendent,
who acts as chairman, the chief engineer or designer, the tool room
foreman, or the special designer of tools, the head of the cost
department, and two or three foremen of the most important departments.

The work of this and all other committees must necessarily be adapted
to the requirements of the business, but, as a general proposition, the
matters to come before the committee may be stated as follows:

 1. Reports and discussions of the standardization of the product.

 2. Reports of progress on new designs or the redesigning of old
    product which has been authorized at previous meetings.

 3. Discussion of economies in general operating methods, economies in
    cost of production, and all questions of a similar nature.

 4. A report on routine work in the factory--whether stock or special
    contracts--condition of orders, and condition of stock to fill future
    orders.

 5. The question of promotions. If all promotions in the shop are
    brought before this committee for approval, it will do away with the
    charge of favoritism of foremen in advancing relatives or personal
    friends without regard to their qualifications. A foreman who is
    obliged to recommend promotions to this committee, will be very
    careful that the promotion is deserved.

=30. Departmental Factory Committees.= Many factories manufacture
more than one line of goods. In such factories it is advisable to
have committees to discuss progress in each specific line. Members of
the factory committee should act as chairmen of these departmental
committees. The committees will be composed of the foremen interested,
the tool room foreman, and the head of the cost department.

The work of the committee, so far as relates to a particular
department, will be very similar to that of the general factory
committee. The discussion will cover:

 1. Standardization of product and suggestions for new designs.

 2. Progress on improvements already started.

 3. Economies in operating expense and cost of production.

 4. Reports on routine work.

=31. Job Bosses.= Carrying the committee plan a step farther, it is
well to hold occasional meetings of the job bosses. The foreman of each
shop will act as chairman and discuss matters pertaining to work in his
own shop with the job bosses under him.

In most factories it is also advisable to hold, at least once a month,
a general foremen's meeting. This should be a meeting of all foremen,
with the superintendent, for the discussion of problems of a general
nature and problems relating to specific shops.


=32. Sales Committee.= In the commercial branch, perhaps the most
important committee is the sales committee. This committee should
consist of the general manager, who acts as chairman, the sales
manager, advertising manager, chief engineer, and superintendent. At
times it may be advisable to call in the head of the cost department
and the tool room foreman.

At the meetings of this committee the following subjects will come up
for discussion:

 1. General sales report, showing progress of the business as a whole.

 2. Territorial sales reports, showing sales in each territory. Both
    of these reports should exhibit comparisons between the current and
    preceding periods.

 3. Reports of sales classified according to the nature of the product,
    or specific lines of goods. This is in some respects the most
    important of the reports, since it shows which are the fast and which
    the slow moving lines.

 4. Suggestions for and a discussion of proposed improvements in the
    present products.

 5. Discussion of proposed new product.

 6. Standardization.

In the discussion of the three last named subjects the engineer and
superintendent are especially interested, and it is here that the
presence of the cost clerk or the tool-room foreman will be required. A
salesman naturally assumes the attitude of considering his customers'
desires of the greatest importance. Naturally he wants the factory
to manufacture the goods that he can sell. But a discussion of
difficulties to be surmounted, increased costs, and like questions
will go far toward bringing him into line and convincing him that the
interests of the house lie in his pushing standard goods.

=33. Advertising Committee.= A committee which is to a certain extent
a subdivision of the sales committee is the advertising committee. The
general manager should act as chairman, and will have with him on the
committee the comptroller, advertising manager, and sales manager.

The work of this committee will be confined to a discussion of:

 1. Results of past advertising, including periodical, street car,
    bill-board, and all other forms.

 2. Appropriations for current advertising.

These advertising reports are very important, for, after sufficient
time to establish an equitable cost basis has elapsed, all future
advertising should be based on the cost of actual sales, giving due
consideration of course to the season of the year, general tendency of
the times, and other factors which might temporarily have a disturbing
influence.

=34. Organization Committee.= Another committee of importance, which,
for convenience, we will call the organization committee, is one which
discusses all questions pertaining to accounting and record systems.
This committee will be headed by the comptroller and will include the
sales manager, advertising manager, credit man, purchasing agent,
and superintendent. Sometimes it will be advisable to call into the
meetings the chief accountant, cost clerk, stores clerk, and even shop
foremen.

As indicated above, the chief work of this committee will be a
discussion of systems. While the comptroller prescribes all systems of
record, reports, statistics, and accounts, he should make no radical
changes without discussing the proposed change with those whose work
will be directly affected.

Many systems, good in theory and which with coöperation would work
out in actual practice, have failed because they were forced on the
business. A systematizer may install a good system and get it into
operation, but unless he has secured the coöperation of those upon
whom its operation will devolve, he will very likely find that after
he leaves there is a gradual disintegration until conditions are worse
than before the change was attempted.

It is seldom that a foreman or a clerk will resent a change if he is
made to feel that he is, in part at least, responsible for the change.
When new systems are introduced in the shop, the foremen are quite
likely to look upon them as a means of checking up their departments--a
sort of police supervision. The writer has had considerable experience
in the introduction of systems into factories, and has invariably found
that the coöperation of the shop foreman could be secured by asking
for his advice. Before prescribing a form or a system of records for
a department, he has made it a point to discuss the difficulties with
the foreman, always leading the foreman to put forward what seemed to
him the greatest difficulties, and then when these have been apparently
solved, to ask the foreman if he does not think such and such a plan
would work. When dealing with particularly obstinate foremen he has
even gone so far as to suggest a plan which is plainly impracticable,
for the very purpose of leading the foreman to suggest a practical
solution. Needless to say, in such cases the foreman gives the plan his
hearty support, because he has been made to feel that the importance of
his suggestions has been recognized.

_Committee Meetings._ The frequency of meeting of the committees herein
suggested must be decided by each manufacturer. No hard-and-fast rules
can be laid down, but generally these suggestions will apply:

  General factory committee, weekly.
  Departmental factory committees, once in two weeks.
  Job bosses and general foremen's meetings, monthly.
  Sales committee, weekly.
  Advertising committee, monthly.
  Organization committee, monthly.

_Committee Secretaries._ At each committee meeting, a stenographer
should be present to act as secretary. When no record is kept,
discussions are quite likely to be rambling rather than confined to a
specific subject. Then, too, matters which were discussed at the last
meeting have grown hazy, and if a man who is responsible for putting
into operation a given suggestion has failed in his duty, there is
always the chance that no one will think of it at the next meeting
unless he brings it up. If, however, an exact record is kept of these
discussions and full reports are delivered to every member of the
committee before the next meeting, a foreman, or other member, will be
very careful about making statements or promises unless he knows that
they can be fulfilled.

Where possible, it is best to have the same stenographer act as
secretary to all committees, as he will become familiar with their work
and can handle it much more expeditiously.


THE SUGGESTION PLAN

=35.= In many factories, and even in mercantile establishments, a
modification of the committee idea has been successfully introduced in
the form of what is known as the suggestion plan. This plan consists in
asking for suggestions from all workmen, these suggestions to pertain
to manner of handling their own work, improvements for the benefit of
the business as a whole, safety appliances, sanitary conditions, and
anything that may be of benefit to the business.

While between foremen and heads of departments the committee plan
undoubtedly works to the best advantage, we advocate the suggestion
plan for the rank and file of workmen. Even when called into a
committee meeting, the workman sometimes hesitates to express his
opinions, when if he were permitted to give them in some other
manner he would make many valuable suggestions. The plan is to place
at convenient points boxes with slots cut in the top in which the
suggestions can be placed. Workmen are invited to write out their
suggestions and place them in these boxes. They may either sign them
or give their clock numbers. The latter plan is sometimes advisable,
as it does not reveal the identity of the men making suggestions. All
suggestions are taken up in committee meeting by the committee directly
interested, and a small prize is given for those suggestions that are
put into use. Even so large a department store as Marshall Field & Co.
has found it extremely profitable to offer $1.00 for each suggestion
offered by an employe that is finally adopted.

Another method is to use autographic registers like the one illustrated
in Fig., 11 on which three copies are made. The original is sent to the
office, the duplicate is retained by the workman, while the triplicate
remains on a roll in the machine. This is removed at the time of the
committee meeting, and any suggestions adopted are posted on a bulletin
board. The workman need not even sign his number, but can present the
duplicate as proof that the suggestion was made by him.

The introduction of any or all of these committee and suggestion plans
requires careful study, but when once put into operation they will
prove both successful and of inestimable value to the business.


ORAL ORDERS CAUSE CONFUSION

=36.= Probably no more prolific source of confusion and
misunderstanding of instructions is to be found than in the habit of
giving oral orders. "I understood you to say" or "I thought you meant"
are familiar excuses offered for a failure to follow what the one
giving them considered clear and explicit instructions.

[Illustration: Fig. 11. Autographic Register Made by United Autographic
Register Co.]

The absolute necessity of clearly defined authorities that every man
connected with an organization may know from whom he is to receive
orders, is well recognized. When we get above the one-man business,
employes are not left in doubt as to the _source_ of their orders. Why
then should there be left the slightest chance of misunderstanding as
to the _nature_ of their orders?

When we issue orders that are to be executed by someone outside of
our own organization, we are careful that they are in writing. If an
order for goods is placed by telephone or telegraph it is confirmed
in writing, not alone for the legal protection afforded by a valid
contract, but that there may be no confusion or misunderstanding.
When we receive an order we prefer to have it in writing for the same
reasons.

The success of any undertaking is largely dependent on the proper
execution of orders. Surely, orders to be executed within the
organization are of equal importance to those that will be executed
by an outsider, and at least the same care should be exercised in
issuing them. The logical conclusion then is that they should be given
in writing. True, oral instructions are sometimes necessary, but all
orders and instructions of importance should be in writing.

There are many classes of internal orders, depending on the nature
of the business. Among them is a class of inter-departmental
communications more in the nature of correspondence than direct
orders. In the harmonious operation of an organization, many requests
are made between departments; general orders affecting all departments
are given by the manager; bulletins are issued by a department manager
to all employes under him--all of these should be in writing.

As an illustration, take a special order from a customer. A salesman
reports that an order can be secured for certain goods provided some
slight change is made in the design. The sales manager will communicate
with the superintendent about the cost of making the changes. The
question then goes to the general manager for a final decision. Imagine
the chances for argument if these negotiations are carried on orally,
but if in writing, what each man said is on record and entirely clear.

[Illustration: Fig. 12. Blank Used for Interdepartment Correspondence]

No elaborate form is needed for these communications, but it is best to
use a form differing from that used in the regular correspondence. A
simple form is shown in Fig. 12. The form should always show from what
department it comes, and, to avoid confusion, it is an excellent plan
to use a distinctive color for each department.

Each department should keep a file of these house communications,
including carbon copies of those issued by them. It is frequently
necessary to follow up their requests to secure reasonably prompt
action.

To insure the follow-up, each department should be provided with
a follow-up file or tickler, a file having thirty-one numbered
compartments to represent the days of the month. This same file can be
used for all sorts of memoranda of matters requiring attention on a
future date.


ADVANTAGES OF UNIFORM BLANKS

=37.= One of the little points in the routine workings of a business
office that is not always given proper consideration is the
establishment of a uniform system of blanks. The blanks used for a
given purpose in one department will be of a certain size and color,
while those used for the same purpose in another department will be
radically different in both size and color. Or blanks of entirely
different classes will be identical in size and color. The result is a
miscellaneous collection of blanks in all sorts of shapes and sizes.

Uniformity in blanks at once establishes a means of identification,
avoids confusion, saves filing space and limits mistakes.

Though we may have given the subject little thought, we have long
been accustomed to uniformity in certain blanks and business papers.
If we have been receiving freight over several railroads the freight
bills of each have been readily distinguished by size, color and
style of printing. Correspondence from our customers is recognized by
the style of the stationery, and orders are distinguished from other
communications of the same concern.

Aside from the question of convenience, there is a certain advertising
value in stationery and blanks with distinctive features. At a glance
we recognize in the morning mail the communications from certain of
our correspondents. We feel sure this envelope contains a remittance,
that one a welcome order, another an invoice of goods for which we have
been waiting; each is recognized by a certain style of the envelope.
At no additional expense we can make our own stationery distinctive.
Letter heads, order blanks, statements, invoices, remittance blanks
will be recognized not by one but by all of our regular correspondents.
They will soon learn to associate our name with certain styles of
stationery.

[Illustration: THE LARKIN ADMINISTRATION BUILDING One of the Finest
Office Buildings in America Devoted to One Industry. The Larkin Co.,
Buffalo, N. Y.]

Distinctive stationery does not necessarily mean expensive stationery.
Our advice is, buy the best quality that you feel you can afford; above
all, make it distinctive, make it represent you. Adopt a color, or
style of type, or shade of ink that will make your stationery stand out
from the mass coming to the desk of every business man.

The problem of filing space is a serious one in most offices, already
overcrowded. Filing devices are made in certain sizes that have become
standard. The more closely blanks to be filed conform to these sizes,
the less space will be required. While we cannot regulate the sizes of
the stationery of our correspondents, we can regulate the size of our
blanks that will eventually find their way into our own files.

[Illustration: SALES ROOM IN THE NEW YORK OFFICE OF THE WESTERN
ELECTRIC COMPANY]




ADVERTISING AND SALES ORGANIZATION

INTRODUCTION


The purpose of this book is to teach neither the art of advertising
nor the science of salesmanship, but rather to set forth some of the
principles that must be applied in the organization of the advertising
and sales department; in particular, to discuss the machinery of the
department--its record-keeping systems.

Opinions differ as to the proper place in a business organization
of advertising and sales--whether they should be handled by, and
considered as, two separate and distinct departmental organizations, or
one. Both plans have their champions.

Whether we call it an _advertising_ or a _sales_ department, the
results sought--the reasons for the existence of the department--are
the same. To _sell goods_ is the aim of the organization, be its head
an advertising manager or a sales manager.

Advertising has been defined to be _printed salesmanship_; yet there is
a well-defined dividing line between the work of the advertising man
and the salesman. The advertising man seeks to impress the name of the
house and the name and quality of its product, on the public mind; to
create interest; to arouse curiosity; to stimulate desire; to attract
people to the store--in a mercantile business. The salesman seeks to
turn that interest, curiosity, desire, into action--the action of
purchase.

The advertising man introduces the possible customer; the salesman
makes the sale. But in some businesses, the advertising man goes one
step farther and actually makes the sale--as in advertising intended to
secure direct orders, by mail. Also, the salesman, when the customer
has been introduced, makes use of other forms of advertising, to
further stimulate desire and assist in making the sale.

No matter at what angle the subject is viewed, it is seen that the
advertising man and the salesman are very dependent on each other. We
prefer, therefore, to consider the sales and advertising departments
as of equal importance; both subordinate parts of the sales division
but working in perfect harmony.

The salesman knows his goods, their strong and weak points, the classes
of people to whom they will appeal. He should know, also, all about his
competitor's goods, and in what respects they are excelled by his own.
In short, he is the one who can give the best selling points to the
advertising man.

The advertising man is expected to be a master of expression. The
unpolished selling points of the salesman are worked over by the
advertising man into clear, pointed, convincing English--printed
salesmanship. His experience tells him how best to reach a given class;
what methods of advertising are best suited for a particular class of
goods.

When a selling campaign is contemplated, the plans should be worked out
by the salesman and the advertising man. The two must work together and
neither should undertake a new campaign, without first consulting the
other.

The claim is sometimes made that the function of advertising is
fulfilled when the inquiry has been received; that it is then
a question of salesmanship--but where does advertising end and
salesmanship begin? If sales are made by mail, the salesman supplements
his salesmanship with catalogs, booklets, circulars, letters--all as
surely advertising as salesmanship; in the store, he displays his goods
attractively, which is a most effective form of advertising. And so, in
the battle for business, victories are won by supplementing advertising
with salesmanship, and salesmanship with advertising--combining the two
for results.

Occasionally, a man is found who combines the creative ability of the
advertising man with the executive ability of the sales manager. When
such a man is found, it is safe to place him in charge of the sales
division, giving him full control of both advertising and sales. He
probably will require the services of a man to attend to the details
of the advertising department, but such an arrangement makes the sales
manager alone responsible.

Most large enterprises, however, require the services of one man to
handle the advertising. For this reason the head of this department
is referred to as the advertising manager, and the department as an
advertising department.


SYSTEMS AND RECORDS

In addition to the technical knowledge of the printing art--type,
engraving, and paper--and of advertising media, which the successful
advertising manager requires, he should have the faculty of applying
common-sense system in the handling of his work. An elaborate system,
which oversteps legitimate bounds and enters the realm of red tape, is
to be deplored, but the advertising man must have a system of records
which will show at all times what he is doing, what results he is
getting, exactly where he stands.

Any discussion of systems must be more or less theoretical, even when
written by an experienced advertising man. The system that works
perfectly in one office may fit in no other, therefore the systems
described in this book are to be taken as examples of what other
advertising men have adopted. From them the student will be able to
devise a practical system for a particular enterprise. At the start,
the system probably will be too complicated; experience alone will tell
the advertising manager where to eliminate, where to simplify, where to
add to make it fit.

=Advertising Information.= The advertising manager collects a vast
amount of information for future use. Every time he picks up a
newspaper or magazine his eye scans the pages for ideas, while mingling
with the crowds or walking alone, he notes what would be to the
unobserving but trifling incidents, all of which can be worked into
copy. If he is systematic he clips and makes memoranda of all this
information, preserving it for use when needed.

How to preserve it in such shape that it can be located quickly is
something of a problem. Probably the oldest methods of preserving
clippings and memoranda is to use a scrapbook, and paste in all
clippings. The scrapbook, however, is never satisfactory for this
purpose; it is not a flexible system.

Clippings should be so filed that any single clipping can be removed
without disturbing the others. The vertical file is largely used as
a receptacle for clippings, but is not entirely satisfactory unless
envelopes take the place of folders. With folders, clippings are liable
to be lost through the open ends.

An old and satisfactory method is to file clippings in envelopes.
Unless the clippings are of large size--like entire pages from trade
papers--it is not necessary to use envelopes of a size to fit a
vertical file, A size that will fit one of the smaller files--about
7"×9"--will be found more satisfactory.

The most satisfactory method of indexing is by subject. An envelope
is used for each subject about which clippings are to be made, all
clippings and memoranda being filed in the proper subject envelope. The
envelopes are indexed alphabetically, according to subjects, and a list
of contents should be recorded on the outside of each envelope. A form
of record is shown in Fig. 1, while Fig. 2 shows the manner of filing
and indexing.

[Illustration: Fig. 1. Special Box Envelope for Clippings and
Advertising Copy]

Clippings are made use of by the advertising man chiefly in the
preparation of copy, and are much more convenient to handle if filed in
envelopes than when pasted in scrapbooks. Instead of an unwieldy book
to handle, an envelope is taken from the file and the desired clipping
selected.

Sometimes the work of the advertising man is of a nature which requires
the preservation of catalogs, booklets, and all sorts of printed
matter issued by competitors. When the accumulation of such matter is
sufficient, it is best to install a complete catalog filing system,
such as is used in the purchasing department.

=Designs and Cuts.= A class of valuable property which accumulates
rapidly in an advertising department, consists of advertising designs
and cuts. This property is not given the care deserved when its value
is considered.

[Illustration: Fig. 2. File Drawer Showing How Clippings are Filed by
Subject]

Artists are paid for designs but too often after the engravings are
made, they are stored in drawers, on shelves, or in any convenient
place to get them out of the way. Little attempt is made to so file and
index them that each can be quickly located.

An old design may be available for use at any time--an engraving of
different size than the original, may be needed, or a slight alteration
may produce a complete change in the design at much less cost than
making a new one. Engravings are expensive and accumulate with amazing
rapidity. Suppose a retailer does daily advertising and uses a new cut
each day; at the end of one year he owns three hundred and sixty-five
original engravings, and probably an equal number of electrotypes. Any
of these may be available for use another time, either in newspapers,
catalogs, or circulars.

The national advertiser, using magazines and trade papers, may
accumulate a less number of engravings than the retailer, but owing to
the class of engraving required and the number of duplicates needed,
his investment is even greater.

[Illustration: Fig. 3. Box File for Drawings and Photographs]

The natural supposition would be that advertisers would give this
property proper care, filing under correct classifications, indexed for
ready reference. But experience proves the contrary. Every printing and
publishing office that has been running five years has an accumulation
of cuts belonging to advertisers, which represent an investment of
thousands of dollars.

Occasionally an advertiser is found who knows exactly where each cut
has been sent and calls for it when needed, but a big majority of these
cuts are never called for and finally are sold by the printer for what
they will bring, as old metal.

Now the property used by the advertising department should receive the
same care as any other; a dollar invested in designs and engravings
should be regarded as a dollar's worth. And if common sense be applied
in devising a system, they can be cared for with as little trouble as
any other property carried in stock.

A very satisfactory method of filing designs is to use a file
constructed on the principle of the vertical file. Stock sizes of files
are too small. Designs cannot be folded and the file should be large
enough to take in the largest designs used. An elaborate file is not
necessary; a box constructed along the lines of the one shown in Fig.
3, will answer the purpose. The chief requirements are to have the
designs filed in one place, where they can be found, and to keep them
clean. Any carpenter can build such a file, while any cabinet man will
construct one of more elaborate design to match the furniture of the
office.

Designs may be filed alphabetically by subjects, or numbered and filed
numerically. As a rule, the alphabetical method will be found more
satisfactory.

Engravings are best filed in a cut cabinet of the usual style. This is
a cabinet of shallow drawers, just deep enough to hold type-high cuts.
All engravings should be numbered and electrotypes stamped with the
same numbers as the originals. The cuts can then be filed by numbers,
and each drawer labeled to show the numbers of the cuts it contains.

[Illustration: Fig. 4. Loose-leaf Scrap Book Sheet for Preserving
Proofs of Engravings]

Cuts should be numbered consecutively, and when an engraving is made in
a new size it will take the next number, regardless of the fact that an
engraving of the same design has already been made. For instance, if
five sizes of engravings are made from one design, there will be five
cut numbers. When the cut is numbered, it is a good plan to stamp the
number on the back of the design; then reference to the design will
show how many times it has been engraved and the numbers of the cuts.

Proofs of all engravings should be kept. These may be pasted in
scrapbooks, but the books should be loose leaf. This makes it possible
to eliminate all dead matter; when designs are of no further use, the
sheets containing the proofs can be destroyed.

A sheet may contain proofs of one or of several cuts, depending on the
size, but all proofs should be arranged in numerical sequence. The
sheet should also show the cut number, the subject, and the date of
ordering electrotypes, as shown in Fig. 4. Since the space required for
proofs cannot be told in advance, it is more practical to substitute
a rubber stamp impression for printing. By using a small stamp, this
information can be stamped opposite each proof.

[Illustration: Fig. 5. Index Card for a Record of Designs and
Engravings]

=Cut Indexes and Tracers.= To complete the filing system for cuts and
designs, an index is needed. Fig. 5 shows a convenient form of index
and record card. This card is headed with the name or subject of
the design, and is indexed under this subject. The data relative to
the design includes the class--as photograph, wash drawing, or line
drawing--the name of the artist, the size of the design, and the date
made. Below this is a complete record of all original engravings and
electrotypes made from the design, including their numbers.

On the back of the card is a record of the publications, catalogs, or
circulars in which the design is used, with dates, as shown in Fig. 6.

If the name of the artist who made a certain design, or the names
of publications in which it has been used, is wanted, reference to
this card gives the desired information. This one card provides all
information that is likely to be needed in reference to both designs
and engravings.

[Illustration: Fig. 6. Reverse of Index Card Showing Where Engravings
are Used]

The methods described provide for a complete record of designs and
engravings, except in respect to cuts which have been sent out. A
record of the cuts that are out, and where each has been sent, is of
the utmost importance.

When a cut is sent out--to the printer, the publisher, or a customer--a
receipt should be obtained. This may be on a post card printed as shown
in Fig. 7. At the same time a record to be used as a tracer should be
made. This should be on a form similar to the one shown in Fig. 8.
These forms may be filed in a tickler under the date on which the cut
should be returned, or alphabetically; but in either case a desk file
should be used so that they can be referred to very readily. This
file should be looked through frequently for it is very necessary to
follow-up the cuts closely. If the cut is not expected to be returned,
it is of course unnecessary to make this tracer record.

[Illustration: Fig. 7. Postal Card Receipt for Cuts]

[Illustration: Fig. 8. Tracer Card for Drawings and Cuts]

=Copy Proofs.= A complete file of proofs of all copy is a necessity in
every advertising department. If requested to do so, any publisher will
furnish several proofs of the ad, and at least three proofs should be
kept on file. Every piece of copy and every circular or other printed
matter should bear an identifying mark of some kind. This usually is a
number.

These numbers should be registered consecutively either in a book or
on cards, and opposite each number should be the title of the copy,
booklet, or catalog. It is well to run different series of numbers for
advertising copy and other literature. Numbers 1 to 5,000 might be used
for copy, and 5,001 to 10,000 for printed matter. The same scheme can
be used to good advantage for office blanks of all kinds, giving each a
form number but using a third series of numbers.

Proofs of ads and copies of all printed matter and blanks should be
filed alphabetically by subject or title. For proofs, the envelope
scheme, as described for clippings, can be used. Envelopes of this
size--7"×9"--will also accommodate copies of most circulars, blanks,
and booklets, but if the sizes average larger a vertical file drawer,
with large envelopes, can be used. The vertical file will also
accommodate catalogs. These files being permanent, the expense of
elaborate cabinets can be dispensed with by substituting the cheaper
transfer files supplied by all manufacturers of such equipment.

Each time a piece of advertising copy is re-set in a different size,
it should be given a new number. New numbers should also be given each
circular, booklet, or blank when it is re-printed, provided there is
the slightest change in the copy.

On each envelope, the copy number should be entered, and if the copy
takes several numbers, all should be entered. Copy bearing the title
"Your Chance" may be set in three sizes--full page, No. 640; half page,
No. 641; and quarter page, No. 645; all proofs will be filed in one
envelope and the three numbers will be entered on the outside.

The register of numbers and the file of proofs provide for the
identification of any copy; if the title of any piece of copy is
wanted, the number being known, reference to the register gives it; or
if the title is known, reference to the file gives the number.


PRINTING ORDERS AND TRACERS

Great care is necessary in issuing and following up orders for
printing; every detail must be watched closely if satisfactory results
are to be secured. In the majority of offices the advertising manager,
or a man under him, attends to all details of ordering printing. Large
concerns find that it pays to employ an experienced man for this work
alone. To a concern whose printing bills amount to several hundred
dollars a month, a man who will give close attention to every detail
of the work, from seeing that he gets the stock specified to checking
bills for overcharges, can make his services worth a good salary.

In printing, as in everything else, the personality of the house
should stand out--a typographical style should be established. This is
accomplished much more quickly if every detail of the printing is in
the hands of one man.

There are concerns in which publicity and sales work must be subdivided
to such an extent that the sales manager has all printed matter
prepared under his direct supervision; while the advertising manager
is responsible for the preparation and placing of the copy. In one
such concern, which has come under the writer's observation, copy
for printing is turned over to a man entirely outside of the sales
division. The theory is that the outside man will watch the interest
of the house, in the matter of price, more closely than the man who
prepares, and perhaps is to use, the copy.

This theory may have some foundation in certain quarters; probably
there are some otherwise competent advertising men who are occasionally
outwitted by the printer; but it is also true that the buyer of
printing, who places his orders on the basis of price alone, frequently
loses more in quality than he saves in cost. The man who is to use
a booklet or folder is really the best judge of its worth--what he
can _afford_ to pay for the kind of work he wants; he knows best
its possible value as a revenue producer. He should be competent to
supervise the placing of the orders, but without exception _all_
printing orders should be placed by the same man.

No matter by whom placed, the printing order should specify every
detail; or if it is not on the order blank, there should be a
specification sheet. The specifications would be something like those
shown in the order form, Fig. 9.

This order should be made in triplicate. The original and duplicate
will go to the printer, the duplicate to be signed and returned as an
acknowledgment of the order, while the triplicate is filed in a tickler
under the date when the acknowledgment should be received--usually the
following day.

[Illustration: Fig. 9. Triplicate Form of Order for Printing]

When the duplicate comes back from the printer it is placed in the
tickler, under the date when proofs may be expected. At the same time
the triplicate is removed from the tickler and placed in a loose-leaf
binder, all copies being filed in numerical sequence. It will be noted
that, at the bottom of the triplicate, the department or account to be
charged is entered, this record being made when the order is placed.

When proofs are returned, the duplicate is moved ahead to the promised
date of delivery. In this way the follow-up for orders is made
practically automatic, all orders filed under any date being removed
for attention on that day.

Little difficulty is experienced in getting printers to put the order
number on the invoice, when requested to do so. The return of two or
three invoices to a printer who neglects this will have the desired
effect. With the numbers on the invoices it is a very simple matter to
find the copy of the order, which will show just what was ordered and
for what department.

=Records of Printing.= A record of all printed matter received and its
disposition is quite as important as for any other class of property.
Unless properly stored and correctly recorded, there is likely to be a
great waste of stock. Many large concerns lose much more through waste
in this direction than the salary of a competent stock clerk. Not all
concerns will require a stock clerk for this purpose alone, but in
every office the stock of printed matter should be placed in charge of
one person--a clerk, perhaps, who has other duties. That person should
be made responsible for the stock, just as the stores clerk is made
responsible for the property in the factory storeroom.

When printing is received, it should be first checked against the order
copy on file, and then put in the storeroom, or sent to the department
where it is to be used if not to go into stock. In the storage of
printing, a very necessary requirement is that it be kept clean,
otherwise, in the case of matter carried in stock for a long period,
there may be as much as a ten per cent loss through spoilage.

It is best to have all printing put up in packages of specified sizes,
depending on the quantities used. The printer will usually make the
size of his packages fit the needs of the customer, if requested
to do so. On the outside of each package, the name and quantity of
the contents should be recorded. When possible a sample should be
attached.

[Illustration: OFFICES OF THE ADVERTISING DEPARTMENT, BURROUGHS ADDING
MACHINE COMPANY, DETROIT, MICH.]

[Illustration: Fig. 10. Perpetual Stock Record for Printing, Showing
its Disposition]

An extensive advertiser will require a good-sized room for the storage
of printing, while for some concerns a small cabinet will answer the
purpose. In storing, the packages should be arranged according to name,
maintaining the alphabetical order so far as possible. A numerical
arrangement, by form numbers, is sometimes recommended, but any filing
scheme which makes it necessary to refer to a supplementary index to
find a number before the article itself can be located is not favored.

A low stock limit should be set for every piece of printing that is
used regularly and likely to be re-ordered. One of the most simple
methods of handling this is to make one package of the quantity set, so
arranging the stock that it will be the last package reached. On the
outside a label is pasted--or a rubber stamp can be used--printed as
follows:

 This package must not be opened without first notifying the office.
 Failure to observe this rule will be considered sufficient cause for
 instant dismissal.

After the storage plan has been arranged then comes the question of
stock records. A simple record which will show quantities received,
issued, and on hand is needed. The form shown in Fig. 10 is used by
a manufacturer who supplies dealers, who are his customers, with
catalogs, booklets, and other forms of printing. The same form is
adapted for use by a concern selling through branches or agencies,
while for another business, the form would be modified, eliminating
records of shipments.

This form is printed on a sheet punched for a loose-leaf binder. A
sheet is used for each catalog, folder, booklet, circular, mailing
card, or other piece of printing, the name being written at the top of
the sheet. The sheets are filed in alphabetical order, indexed with
suitably tabbed index sheets.

When printing is received and the order checked, the name and
description is entered at the head of one of these sheets--except in
the case of a re-order, when a sheet will be found in the binder. The
date, quantity, from whom received, and the cost are next recorded
in the proper columns. If it is a new piece of printed matter, the
quantity received is also entered in the _on hand_ column; if a
reprint, the quantity is added to the stock on hand and the total
extended.

For printing that is to be sent to a dealer, an order is entered on the
form shown in Fig. 11. This gives detailed instructions for shipping,
with the quantity and description of the matter to be sent. The order
is made in duplicate. The original goes to the shipping
clerk, while the duplicate, on a blank sheet, is kept in the office as
a follow-up on the shipping clerk.

[Illustration: Fig. 11. Shipping Order for Printing to be Sent to a
Dealer]

As shipments are made, the shipping clerk enters in the columns
provided for that purpose, the quantity sent and the date. When the
entire order is filled, it is returned to the office. Every day the
duplicates are examined and inquiry is made of the shipping clerk
regarding any orders for which the originals have not been returned.
When the original is received, the duplicate is destroyed.

Shipments are next entered on the stock sheets, while the original
orders are filed in a binder, alphabetically by dealers names.
Reference to this file shows exactly what advertising matter has been
sent each dealer.


PERIODICAL ADVERTISING

When the question of periodical advertising is taken up, the most
important of all publicity fields is entered. From the country weekly,
through the entire list of city dailies, scientific and literary
weeklies and monthlies, popular magazines, class magazines, and trade
papers for every vocation, religious papers, and reviews, periodicals
can be selected which will reach any class or cover any territory. With
the thousands of publications to select from, the advertising manager
needs to know which ones will best reach the people he wants to reach;
what papers have the largest circulations; which are most popular among
a given class or in a certain territory. He must be posted on rates
and discounts, that he may cover his territory economically. And added
to this, he must have a perfect checking system, that he may know
to a certainty what returns each and every publication is bringing
him. Such a system may show him, for example, that the magazine with
a circulation of a million and an advertising rate of $5.00 a line,
brings orders at a less cost than another in which he is paying but
$2.00 a line--or _vice versâ_. Perhaps the cost in both is within the
amount he is prepared to pay, but he must _know_ what it costs, that he
may know where to increase and where to curtail the appropriations.

=Rate Cards.= Supposing the business to have been just started, or
one that has done no advertising--and this is the most satisfactory
premise from which to work, in laying out a general system for the
department--among the first duties of the advertising manager will
be to secure information about mediums, and the chief source of
information will be the publications themselves, as they will respond
promptly to requests for rate cards.

If the advertising manager gets rate cards from a hundred publications,
he will find probably forty or fifty different shapes, sizes, and
styles. Several spasmodic attempts have been made to induce publishers
to adopt a uniform size for rate cards, with but little success. In the
effort to produce something striking, the convenience of the advertiser
is very likely to be overlooked. One publisher will use a 3"×5"
card--the most convenient size; another, in order to better display the
artistic ideas of his own copy department, uses a card 6"×9"; a book
of rules is issued by another; the result is a miscellaneous collection
that does not fit any size of file made.

To insure uniformity in their files, advertising agencies have been
obliged to design rate sheets or cards which they send to the publisher
to be filled in. Some large advertisers now follow the same plan,
requesting publishers to enter rates on special forms.

But whether or not he uses a special form, every advertiser should have
his own file of rate cards--even if the information is written on a
blank card. The special information needed is shown in Fig. 12. This
can be on a card, or if preferred, a sheet to be filed in a loose-leaf
binder can be used. The cards or sheets should be indexed
alphabetically, under the names of the publications.

[Illustration: Fig. 12. Index Card for a Record of Advertising Rates]

If full and satisfactory information is not obtained from the
publishers, it is well to supplement it with information from an
advertising agency. The successful agency, through observation on
behalf of a number of clients, usually has more dependable information
about a given publication than can be obtained by any one advertiser.

All sources of information should be made use of; if the article
advertised is sold to the trade, much valuable information can be
secured from local dealers. In planning a daily paper campaign for a
certain commodity, a letter was sent to each dealer contiguous to each
city asking what morning and evening papers had the largest sale in his
town; at what hour each was received; and the general trend of local
political sentiment. This brought a gratifying response, and helped in
the selection of papers which covered, not only the cities, but the
small towns. Another advertiser secured some very satisfactory reports
from his traveling salesmen, relative to the value of local papers in
which he contemplated advertising.

=Advertising Contracts.= Contracts for advertising are usually made
once a year, in advance. Most publishers of magazines and newspapers
grant certain space discounts, based on the space used within one
year, and in many cases, to secure these discounts, contracts must be
made in advance. Some trade paper publishers allow space discounts,
others maintain flat rates, all of which must be considered in making
contracts.

Practically all magazines, most newspapers, and some trade papers,
allow special discounts or commissions to advertising agencies--though
in the case of newspapers, in many cities, this discount applies only
to _foreign_ advertising, or that originating outside of the city of
publication.

An increasing number of advertisers are placing contracts for space
through the agencies, and relying largely on the advice of the agency
in the selection of mediums. Since the business of the largest and most
successful advertisers is placed through the agencies, it would seem to
be a safe rule to follow. But because an agency handles the orders, the
shrewd advertising manager will not relax in his watchfulness of his
employer's interests. He will maintain just as complete a rate file,
and watch the bills as closely as though dealing direct with publishers.

The experienced advertiser plans his campaigns well in advance, making
annual appropriations for all advertising. This enables the advertising
manager to select mediums, determine the amount to be used in each
class, and prepare suitable copy for the different publications.

This question of the preparation of copy for series of ads applies
especially to national campaigns and local advertising of a general
publicity nature. The advertising manager of a department store is
obliged to prepare newspaper copy daily, and at best can plan his copy
not more than two or three days in advance. In a national campaign
in which advertising is for direct returns, copy must be _tried out_
and its character changed frequently. This does not mean that, in any
case, the same copy should be run indefinitely; it should be changed in
practically every issue. While following the general style adopted for
the house, there should be something new in every issue--something that
will attract and cause the reader to look for the ad each month.

[Illustration: Fig. 13. Schedule of Monthly Insertions in Periodicals]

When the amount of the appropriation has been decided, a schedule of
the mediums to be used should be made. This schedule
should include the space to be used in each publication. Indeed,
the schedule of mediums and space that it is desired to use, often
determines the appropriation. For a general publicity campaign, this
schedule can be made absolute, but when the advertising is for direct
returns, it should be elastic. Mediums which do not pay after a fair
trial, should be dropped, and there should be room in the schedule for
mediums not at first included. Changed conditions may make it advisable
to add a medium which previously has been unprofitable.

[Illustration: Fig. 14. Order Blank Used for Ordering Insertions of
Advertising Copy]

The advertiser who advertises for direct inquiries or orders, usually
finds it necessary to revise his schedule monthly, basing each schedule
on previous results. That he may act intelligently, he must have
an exact record of past results. A convenient form for the monthly
schedule is shown in Fig. 13, which is printed on a sheet punched for
filing in a loose-leaf binder.

Previous results from each publication on each class of goods is shown
in respect to inquires, amount of sales, and cost of the advertising.
In the three columns at the right of the space for each ad, cost of
each, and total cost are shown.

Separate sheets are used for popular magazines, trade papers, and
newspapers. When copy has been sent, the sheets are placed in a
loose-leaf binder, the full schedule for each month being in one place
where it can be readily referred to.

=Orders for Insertion.= When an agency is employed, the agency usually
sends copy and orders for insertion to the publisher; though some
advertisers prefer to send copy direct, leaving the agency to send
orders for insertion. It usually happens, too, that some orders are
sent direct instead of through the agency. One large advertiser follows
the practice of sending orders direct to those publishers who do not
allow agency commissions, all others going through the agency.

If orders are to be sent direct, a special advertising order blank
should be provided. This order should specify to the last detail the
conditions of the order. A blank, which is self-explanatory, is shown
in Fig. 14. The order is made in duplicate and the copy is filed under
the name of the publication.

=Checking Returns.= A necessity to the advertising department is an
efficient system of checking and recording returns from advertising.
Without a checking system on which he can depend, the advertising
manager is spending his employer's money blindly--he does not know what
he is getting for it.

The first requirement in devising a system is a method of _keying_ ads,
that inquiries or orders may be identified and credited to the proper
mediums. Keying systems there are without number--to describe all of
them would require a book the size of this one--but those most commonly
used are adaptations in one form or another, of the idea of changing
the address.

[Illustration: Fig. 15. Card Used for a Record of Inquiries from a
Given Publication]

One of the oldest methods is to use a department number or letter in
the address, changing the number in each publication in which the ad
appears--the address in one would be _Dept. A_; in another, _Dept.
B_. This method is used successfully by some advertisers, but it has
its objections. Most people realize that no concern is so large that
an inquiry will not reach the proper department. If, for example, an
inquiry in response to a beef extract ad, addressed to Swift & Co.,
failed to reach the beef extract department, it would indicate a very
lax system of handling correspondence.

Changing street numbers, room numbers, or postoffice box numbers, is
another common method of keying. This can be operated successfully by
notifying the local postal authorities that all mail is to be delivered
at one number, regardless of the address.

An adaptation of the number key, which can be used to advantage for a
small number of publications, is a combination of numbers representing
publications and dates. First, the publications are numbered, these
numbers being used as the first part of the address. To the publication
number is added the number of the month or week of publication. To
illustrate:

 Suppose that the Technical World is No. 5 on the list and the ad
 is run in October. The key number would be 510--5 standing for the
 publication and 10 for the month. All replies with that address would
 be credited to the Technical World for October.

In using this system it is necessary to use some figure--usually 0--for
a repeater to avoid confusion; No. 112 might mean publication No. 1,
month No. 12, or publication No. 11, month No. 2. By adding a naught
after the publication No., confusion is avoided--1102 would mean No.
11, 2nd month, 10012 would indicate No. 10, 12th month. The system can
be further varied by using N., S., E., and W., or by substituting Ave.
for St. or _vice versâ_.

When readers are requested to ask for catalogs or other printed matter,
the numbers by which these are known to the reader can be used for the
key--as bulletin _A_, bulletin _B_, etc.

For either direct inquiries or orders one of the most popular and
satisfactory keying systems is to use a coupon, indicating the
publication and month in the coupon--_T W 11_ printed in small type in
the coupon would mean Technical World for November.

[Illustration: Fig. 16. Reverse of Checking Card Used for a Record of
Sales]

A coupon to be filled in offers the reader a convenient means of
answering the ad, and this has a tendency to induce a larger number of
replies. Few people will fail to use the coupon or the address given.
A certain very large advertiser, who uses the coupon, states that less
than one per cent of his replies are without means of identification;
either the coupon is used or the name of the magazine is mentioned.

To make their checking systems as nearly perfect as possible, some
advertisers write to all readers who fail to use the key, requesting
them to state where the ad was seen. Some enclose a postal for the
reply, others enclose a printed slip, on which the magazines used are
listed, to be checked and returned.

A reasonable expense is justified to find out where replies do come
from, for it is as much to the advertiser's interest to continue
the use of all profitable mediums as to drop the unprofitable ones.
Many of the most successful advertisers, however, consider it safe
to distribute unidentified replies pro rata, basing the distribution
on the number of keyed replies--that is, if 30 per cent of all keyed
replies can be traced to the Technical World, that magazine will be
credited with 30 per cent of all unidentified replies.

When the mail is opened all replies should be sorted by key numbers,
inquiries and orders separated. Then the total number of inquiries, and
number and amount of orders from each publication should be ascertained
and credited.

For recording credits a form, similar to the one shown in Fig. 15,
should be used. This may be on a card or in loose leaf. A card is
used for each ad, in each publication--that is, if there are seven
insertions in the Technical World in one year, seven record cards will
be used--one for each insertion. These cards or sheets are to be filed
under the names of the publications.

On the back of the card the form shown in Fig. 16, is printed. This
provides for a daily record of sales resulting from the inquiries
recorded on the face, or from the ad if it calls for direct orders.
These forms supply all necessary data for a complete statistical
record for each publication. Too much time would be required to look
through all of these cards every time information is desired about a
given publication; a more condensed record of total results should be
provided.

[Illustration: Fig. 17. Combined Record of Insertions, Costs, and
Sales]


All of the information of practical value can be combined with a record
of insertions on the form shown in Fig. 17, using a sheet for each
publication. The record includes the date of order, space, subject,
copy No., cut No., dates of insertion, checking, and proofreading, the
date and amount of bill, and the number, amount, and average cost of
sales. The record of sales should be entered monthly from the detail
record.

[Illustration: Fig. 18. Daily Record of Sales of Advertised Goods in a
Retail Store]

These sheets are filed in a loose-leaf binder, indexed alphabetically
under the names of the publications. One sheet will accommodate the
full yearly schedule for a monthly or weekly publication.

_Retail Advertising Returns._ To check returns from retail advertising
is quite a different problem from checking returns from keyed ads in
monthly magazines. There are no keys, and no mail inquiries to be
traced. But a record of general results is very desirable, and it is
possible to obtain records which will, at least, indicate the increase
in sales due to advertising.

Results of retail advertising must be measured by comparison; if a
department store advertises handkerchiefs as a leader for Tuesday,
_all_ handkerchief sales for that day would not be due to the
advertising, but it is legitimate to credit advertising with any
increase over normal sales. If correct sales records are kept, it will
be possible to tell the exact amount of handkerchief sales for that and
every other day in the year.

[Illustration: Fig. 19. Detailed Record of the Shipment of Street Car
Cards]

A close check on returns can also be obtained by requiring each
sales person to put a distinguishing mark of some kind on sales for
advertised articles. Proofs of the day's ads, showing the articles
advertised in the department, should be mounted on cards and hung in
each department, that the sales person may know when advertised goods
are sold. If made large enough, the card can be ruled for a tally of
sales, and each sale of advertised goods tallied.

[Illustration: A CORNER IN THE SALES ROOM AT THE CLINTON ST., CHICAGO,
PLANT OF THE WESTERN ELECTRIC COMPANY]

There should be an office record showing the results of advertising for
each department. In comparing these records sales alone cannot be used,
for the weather, and unusual events calculated to increase the crowds
in town, must be considered. To-day's sales of an advertised article,
with unfavorable weather conditions, probably will not equal the sales
of the same article one year ago, which was circus day. If daily
records, similar to that provided in the form shown in Fig. 18, are
kept, they will soon become very valuable to the advertising department
of any retail store.

[Illustration: Fig. 20. Record of Street Car Contract and Net Costs]


STREET CAR ADVERTISING

Street car advertising is of a general publicity nature. It is
intended, not to secure direct orders, but to influence sales by
keeping the name of a commodity before the public. It is local in its
effects, influencing sales only in the cities in which the cards are
used.

Street car advertising is now controlled by a small number of agencies,
who own the space in the cars in the different cities throughout the
country. Through one of these agencies, contracts can be made for space
in street cars in any city in the country.

The rate for street car advertising is based primarily on population,
the _circulation_ consisting of the number of passengers carried. When
the advertiser buys space, he pays for having his card appear in a
specified number of cars, for a stated period. As a rule, the rate is
for monthly periods, with special discounts on yearly contracts, and
cards are changed each month. On certain contracts the agency will
include extra service, without additional cost, by running cards in a
number of extra cars, which are put on during the rush hours.

If desired, the agency will design the copy and print the cards, making
an additional charge for the service. Many street car advertisers
prefer, however, to furnish their own cards. This is probably the
better plan for advertisers who maintain efficient copy departments.

Although this book is not intended to teach the technical details
of the art of preparing copy, it may not be out of place to suggest
that copy for street car cards is in a class by itself. Experienced
advertisers have found that to use wordy arguments on a street car card
is a mistake. The card must catch the eye, for it is expected to arrest
the attention but a moment at best. A picture that tells the story at a
glance, large type, and plenty of color seem to meet with most favor.

The special records required for street car advertising are simple,
consisting of records of contracts. A form for such a record is shown
in Fig. 19. This can be on a card or loose leaf. The form is headed
with the name of the city and instructions for shipping. Below the
heading, is a monthly record of the copy No., subject of the ad, size
of cards, and other necessary data including the gross and net cost.
On the reverse, Fig. 20, is a detailed record of the contract, and a
record of total costs. These sheets are filed in a binder or in a card
tray, indexed by cities.


OUTDOOR ADVERTISING

Outdoor advertising is the term used to describe all such forms of
publicity as bill boards, signs, painted or printed posters, etc. This
is strictly general publicity advertising.

Like street car advertising, outdoor advertising is thoroughly
organized, and the sale of space is practically controlled by a few
companies. Local bill posters, who control the boards, or _stands_,
as they are technically known, have their own national organization
which standardizes the practices of the business, regulates rates, and
insures the advertiser against paying for service that he does not
receive.

Rates for this class of advertising are based on population and the
relative desirability of the location. In a city of 500,000 population,
a stand which 150,000 people pass daily is worth more than one in
another section of the city, which is seen but by 50,000 people.

The advertiser pays for his space on the basis of the number of stands
used, size of posters or signs, relative number of _down town or
preferred position_ stands, and length of service. Rates are figured
for periods of one week, two weeks, one month, and longer.

The records of outdoor advertising are very similar to those of street
car advertising. By changing the column headings of Fig. 19 from cars
to _stands_, the form shown answers every requirement.

No outdoor or street car advertising campaign of national scope should
be undertaken until provision has been made to take care of the
business. The _trade_ must be covered first; when the ad appears on the
boards the goods must be on the dealers' shelves.

Indeed, this is a most important factor in any publicity campaign
intended to create a demand for goods sold through the retailer.
Every possible preparation must be made in advance to secure a wide
distribution so that the consumer attracted by the ad will find it easy
to buy the goods. Making known the name of an article in a locality
where it is not carried in stock, or without telling the consumer where
it can be bought, can result in little advantage to the manufacturer.


WHERE ADVERTISING AND SALESMANSHIP MEET

A very effective method of producing sales--most largely used in
campaigns intended to secure direct orders, by mail--is the use of
circulars, booklets, and form letters. This literature is advertising,
but to use it to secure the best results requires the application of
a certain amount of salesmanship. The advertising man may prepare
an attractive piece of printed matter, well-written and containing
convincing arguments, but unless judiciously used, the time and study
put into its preparation is wasted.

A large quantity of such literature, distributed indiscriminately,
would probably bring some business, but the best results are obtainable
only when its use is concentrated; when it is confined to a particular
class and followed up in a systematic manner. Knowing his goods and the
class of people who use them, the salesman is naturally the best judge
of where and when to use those forms of advertising which he turns into
salesmanship by mail. The discussion of systems of record and methods
of use of this form of literature is taken up under the head of the
_sales department_.


SALES DEPARTMENT

The sales department proper is in charge of a sales manager, who has
immediate authority over his subordinates and is responsible for
the results secured by his department. No position in the business
organization carries with it greater responsibilities, for on the sales
manager rests the burden of marketing the goods at a profit.

Without entering into a discussion of the science of salesmanship, the
writer takes the liberty of suggesting some necessary qualifications of
a sales manager.

He must be thoroughly imbued with the importance of his work and have
an abiding faith in his ability to get the very best results out of
his department. He must be enthusiastic and capable of imparting his
enthusiasm to others.

He must _know_ the goods, be they pianos or investment bonds. He must
believe in his goods and his house. Unless he feels that his house is
the best on earth and offers goods second to none, he cannot produce
the full measure of results of which he is capable.

He must know the goods of his competitor and what methods his
competitors are using. He must be willing to abandon his own pet
schemes when they fail to produce, or to adopt a new plan, even though
originated by another.

He must be a close student of human nature with the capacity for
judging men. He must be a salesman in every sense else he is in no
position to judge the qualifications of those in his employ.

On the other hand, the sales manager should be given full control
of his department, until he proves to be incompetent. While other
members of the organization will be consulted before a new campaign is
launched, when the plans have been approved he should be permitted to
_try them out_ without interference. Assuming that he is a competent
man in the first place, he will be the first to detect the weak points
and set about to find a way to strengthen them.

Many a sales manager has had his usefulness impaired by the
interference of others before he has had an opportunity to give a
selling plan a fair trial. Selling campaigns have been discontinued
before the turning point was reached, because someone higher in
authority lacked faith; when they would have proved successful, if
carried out as originally planned.

This is not an argument for a stubborn adherence to plans, regardless
of consequence--any sales committee is liable to make errors--but
before the campaign is launched the extent to which it shall be tried
out should be decided. If the sales manager is given an appropriation
of $500.00, or $5,000.00, for a trial, he can work intelligently, but
if told to go ahead, and then ordered to stop before his campaign is
well under way, he should not be charged with a failure.

Another thing that the sales manager should control is the question of
salaries paid to the salesmen. We maintain that the amount of salary
paid to a salesman is of no moment provided he is a profitable man.
A $10,000.00 man who sells goods at a cost of 10% is more profitable
than the $5,000.00 man who sells at 10%, or even 9%, because of the
greater volumes of his business. The management should gauge the sales
department by net costs, not by the amount of individual salaries.


BRANCHES OF SALES DEPARTMENT

The sales department is logically divided into two branches--mail
order and personal salesmanship. The mail order branch is that part of
the organization which has to do with the promotion of sales by mail.
The personal salesmanship branch is the division which makes sales by
personal contact with the customer.

The work of the mail order branch is conducted by
correspondents--letter salesmen--assisted by clerks to look after the
routine of the department.

The personal salesmanship branch is conducted, primarily, by salesmen
who visit the customers and personally sell goods. In many lines, the
personal salesmanship branch is supplemented by agencies, who come in
direct contact with the customer.

There are businesses in which the dealers, who carry the goods in
stock, are assisted by both the mail order and personal salesmanship
branches in making the sale to the customer. An example is the piano
business in which inquiries are referred to dealers, the dealer and
prospective customer followed up by mail, and the traveling salesman
sent to assist the dealer to close the sale.


THE MAIL ORDER BRANCH

When the mail order branch is spoken of it does not refer necessarily
to an exclusive mail order business, but the term is used to identify
the department in any concern which uses the mails to promote sales.
While there are many exclusive mail order houses, employing no personal
salesmen, there are practically no exclusively personal salesmanship
houses. There may be no effort to secure direct orders in this manner,
but the mails are used to influence sales. Extensive circularizing
campaigns are conducted for the purpose of making known to the consumer
the merits of certain commodities, which are sold only through dealers.
In the sense here used, such campaigns are within the province of the
mail order branch.

=Form Letters.= An important factor in the conduct of the mail order
branch, is the use of form letters. In a campaign intended to secure
direct orders, the form letter takes the place of the personal salesman.

The form letter presupposes a uniformity of conditions. It is written
to appeal to certain desires of the recipient; its arguments are based
on the supposition that the same desire exists in the minds of all to
whom it is sent, and that the same arguments will cause its readers, as
a class, to yield to those desires.

The result of a form letter campaign depends on the extent to which the
letter fulfills its mission in adapting itself to the conditions of
the class to which it is sent--its adaptability to the mentality and
environment of its readers. The same argument will not appeal to the
mechanic, farmer, merchant, and banker.

The failure of most form letter campaigns can be traced to one of two
causes--failure to adapt the letter to existing conditions, or lack of
judgment in selecting a list for a trial. The goods offered may be used
by plumbers and lawyers, but the same letter should not be expected
to _pull_ with both classes. Like the selling talk of the personal
salesman, the letter should be changed for each class.

Other conditions, also, must be studied. Iowa may have harvested
a bumper crop, while Kansas suffers from a drought; mills in the
Pittsburg district may be running overtime, while Buffalo is in the
midst of local labor disturbances. All of these local conditions
influence the results of the letter campaign.

As to lists used for trials, the more usual mistake is in the use of
too small a list. Some sales managers, who have mailing lists of from
25,000 to 100,000 names, profess to try out a letter with a list of 300
to 500 names. A list of this size is not sufficient to give an actual
test of the pulling power of any letter. Some of the most successful
letter salesmen give it from their experience that the very smallest
list from which a safe test can be made is 1,000 names.

_Keying Form Letters._ It is just as necessary to _key_ form letters
as to key magazine ads. The key makes it possible to trace results.
The question of keying is most important when a series of letters is
used--which is true in most campaigns--for it then becomes necessary to
check the returns from each letter in the series. When one letter only
is sent to a given list, the replies received from that list can be
safely credited to the letter.

There are several methods of keying form letters, among which are
the following: the reader may be requested to address his reply to a
certain department; he may be offered a sample or some novelty; or the
letter may be written in the first person singular so that replies will
naturally be addressed to the writer.

The writer confesses to a preference for the last named method. The
average mail order buyer likes to feel that he is receiving personal
attention--that there is someone in the house to whom he can write,
instead of addressing the house. A personal touch can be put into the
letter signed by an individual that is impossible in a letter signed in
the name of the house.

[Illustration: Fig. 21. Detailed Record of Form Letters Mailed]

There are those who contend that only the name of the house should
be used, that the name of an individual should never be signed to
a letter, and who have printed on their letter heads the phrase:
"_Address all communications to the company, not to individuals._"

While it is perfectly proper to use every legitimate means to keep the
name of the house before the public, there is a good deal of senseless
fear that the prestige of the house will be usurped by the individual.
In some quarters this fear has resulted in the adoption of ridiculously
extreme rules and regulations. One incident in the personal experience
of the writer will serve to illustrate the point. Having occasion
to request a favor from a certain manufacturer--a favor which would
be granted, if at all, by the advertising manager--and knowing the
advertising manager personally, he addressed the request to him, using
his title in connection with the name of the firm. Somewhat surprising
was the following letter, received a few days later:

 DEAR SIR:

 We have your favor of the 12th, addressed to our Mr.--------, and
 your request will receive the attention of the proper individual.

 Our method of handling correspondence is such that, to insure proper
 attention, all communications should be addressed to the company. We
 request that you observe this rule in the future.

                                    Yours truly,

No more reason for the fear that the house will be injured by the
personality of one of its correspondents can be seen, than that the
personality of the salesman will have greater weight with customers
than the reputation of the house. If the personality of an employe--be
he a personal salesman or a correspondent--is worth anything in a
business way, the benefit accrues to the house that employs him.

There is one other objection to the use of the name of the writer of
the letter, and it comes from the United States Statute making it a
criminal offense to open mail addressed to another. But this objection
can be easily overcome; any employe whose name is used will sign an
order authorizing the opening of letters addressed in his name, unless
marked _personal_.

[Illustration: Fig. 22. Record of Sales Resulting from Form Letters]

_Form Letter Records._ A copy of each form letter written should be
kept permanently. The copies should be filed in a manner that will
make it easy to refer to them. For this purpose an arch file or binder
is most satisfactory. The letters themselves may be punched for the
file, or the loose-leaf scrapbook idea can be adopted, pasting several
letters on one leaf.

Each letter should be given a number for the purpose of identification,
whether or not it appears on the letter itself. The copies should be
arranged in the file in numerical order, but where there are several
departments or divisions using form letters, they should be divided by
departmental indexes.

It is also well to keep a second copy of the letter with a sample of
the enclosures, as the enclosures may have an important bearing on the
results. These copies may be preserved in the manner suggested for
filing copies of ads and printed matter.

When a form letter is written, a record form, as shown in Fig. 21,
should be started. This may be on a card or loose leaf; the latter is
preferred on account of the larger space for the record. The heading
shows the No. of the letter, the subject, name of the writer, its
No. in the series to which it belongs--first, second, or third--the
enclosures, and the names of any special lists used. The body of the
form provides for a record of letters mailed during the year, with a
monthly record of total costs.

The sheets are arranged in the order of letter Nos., in a card file or
a loose-leaf binder.

The reverse of this record form is ruled, as shown in Fig. 22, to
provide a record of sales resulting from the use of the letter. Sales
can be entered daily or weekly, but the daily record is recommended.

The methods of obtaining the details for these records is described
later.

=Follow-up Systems.= A necessary and very important factor in the
success of a business transacted through the mails, is the follow-up
system. And in a business in which sales are made by personal salesmen,
the follow-up is used for certain purposes, and is as important as
though used to secure orders.

To follow-up is to keep after, to keep in touch with, and to keep a
certain subject before certain individuals. Whether used to secure
orders or make collections, the idea of the follow-up is the same,
though it is better known as a system for promoting sales.

The follow-up arises from the same necessity that compels the personal
salesman to call on a prospective customer more than once--often many
times--before the first order is secured, and continue to call to
hold his trade. The follow-up simply makes use of letters and other
literature to take the place of the personal salesman.

Mechanically, the follow-up system is a _system_ or _method_ that
insures the sending of the right literature at the right time.
Letters--both form and special--catalogs, booklets, folders, circulars,
and mailing cards are all used in the process of following up the
prospective purchaser; the automatic method of showing when each piece
of literature in the series should be sent, is the follow-up system
itself.

[Illustration: Fig. 23. Vertical File Drawer Equipped as a Tickler]

_Tickler Method._ The simplest method of handling the follow-up system
is to use a tickler in which to file memoranda or correspondence by
dates. A tickler consists of a file equipped with a set of indexes
numbered from 1 to 31 to represent the days of the month, and 12
indexes printed with the name of the month. The monthly indexes are
arranged in order, and the daily indexes are placed in front of the
monthly indexes in numerical sequence. The file may be a vertical
correspondence file, a card tray, or a flat desk file.

In using the tickler for a correspondence follow-up, letters are filed
back of the index representing the day on which the subject is to
receive attention. Each day the letters filed behind that day's index
are removed, and after receiving attention, are filed ahead to the next
follow-up date.

If it is desired to have a letter come up for attention in another than
the current month, the day of the month is noted on the letter, and it
is placed back of the monthly index. On the first of the month, the
index for the previous month is placed at the back of the file, which
brings the current month's index to the front. All papers that have
been filed back of the monthly index are then distributed by dates. A
correspondence file drawer, equipped as a tickler, is shown in Fig. 23.

For a small amount of correspondence, the use of the tickler is very
satisfactory, and it is also used to excellent advantage for keeping
track of the many matters that require attention at a future date.
A tickler should be included in the equipment of _every_ office, no
matter what the line of business.

_Card Follow-up._ For most extensive follow-up systems, the card index
is used, for the reason that a card is easy to handle, occupies but
little space, and can be adapted to any classification desired. A
card is used for each prospective customer, or name on the list to be
followed up, and should bear the name and address and a brief history
of the efforts made to secure an order, or accomplish the object of the
follow-up.

In operating a follow-up system--especially if the object is to sell
goods--the correspondent should have before him a history of the
efforts previously made to secure an order. He should know what letters
and other literature have been mailed just as the personal salesman
knows what arguments he has used. When form letters have been used it
is not necessary to have copies of the letters in each case, but they
should be identified by their numbers, or otherwise. Records of these
letters, by date and number, can be made on a card, so that the card
itself will give the correspondent a complete history of the case. The
correspondence--letters from the prospective customer and copies of
special letters to him--can then be filed in the regular way, and is
accessible at all times.

The oldest method of operating the card follow-up is to use the tickler
index in a card file. The follow-up is operated in exactly the same
manner as described for the correspondence file tickler, except that
the cards are filed ahead instead of the original correspondence.

[Illustration: Fig. 24. Card Used for Follow-up]

A typical follow-up card is shown in Fig. 24. At the head of the card
is the name and address of the prospective customer, followed by the
credit rating, the business, and the source from which the name was
obtained--whether from advertising, a special list, or from a traveling
salesman. The body of the card is ruled for a record of letters mailed,
form and special letters separated. When a letter is sent the No. and
date--if a form letter--is entered, and in the file column is noted the
number of days the card is to be filed ahead--as 10 days or 30 days.
If at the time specified, the next form letter in the series is to be
sent, provided no response has been received, the No. should be noted
on the next blank line in the No. column, so that the letter can be
sent by a clerk, without consulting the salesman.

When the cards come from the file, those on which no form letter
is indicated for the next follow-up should be referred to the
correspondent. If he considers a special letter advisable, he should
have all previous correspondence attached to the card, that he may know
just what has been done to land the customer.

=Cross-Indexing the Chronological File.= One of the disadvantages of
the tickler or chronological index, described above, for a follow-up
is the difficulty of locating a card, when the date under which it is
filed is unknown. A letter may be written on June 10, and the card
filed ahead to June 25; on June 16 a reply may be received which makes
it necessary to find the follow-up card, but to do this it is necessary
to look through all of the cards filed between June 16 and June 25.
If the card is not found, the chances are that on the 25th a regular
follow-up form letter, which will make the system appear ridiculous,
will be sent.

[Illustration: Fig. 25. Follow-up Card with Alphabetical Tab]

To so file the cards that any one can be found by name, without
interference with the automatic features of the follow-up system, is an
important consideration. This can be accomplished by the use of a card
like the one shown in Fig. 25. It will be noted that this card bears
a small tab or projection, on which is printed the letter _B_. These
tabs are cut 1/20 of the width of the card and are in twenty positions
across the card. This allows for twenty subdivisions of the alphabet,
the _A_ tab being in the first position, _B_ in the second, etc.

In filling in a card, one bearing the letter corresponding with the
first letter in the name of the correspondent is selected--a _B_ card
for Brown, an _S_ card for Smith. Now since _B_ is always printed on a
tab in the second position, and this tab is always the same distance
from the end of the card, when the cards are filed, all _B_ tabs will
be in a straight line from front to back of the drawer.

No matter under what date it is filed, if Brown's card is wanted it
will be found by looking through the row of _B_ tabs in the second
position from the left. Regardless of the number, all tabs printed
with the same letter are found in one row, making it possible to file
cards by date and cross-index by name.

[Illustration: Fig. 26. Follow-up Card with Movable Tab to Show Dates]

=Cross-Indexing the Alphabetical File=. An improvement over the
cross-index of the tickler, described above, is the method of
cross-indexing an alphabetical file in a manner to insure a follow-up
on a specified date. A card without tabs, as shown in Fig. 26, is used.
Across the top of the card is printed a series of numbers representing
the days of the month. This may include all of the numbers, from 1 to
31, or the month may be divided into five day periods.

In connection with this card a metal tab, which can be attached at
will, is used. One of these tabs is placed over the number which
represents the date on which it is to be followed up. The card is then
filed, indexed by name.

[Illustration: THE SALES DEPARTMENT IN THE NEW YORK OFFICES OF J.
WALTER THOMPSON COMPANY]

The numbers being printed in the same position on every card, all tabs
placed over the same number will be in a direct line in the file. The
cards to be removed for the follow-up on a certain date are those
bearing tabs over the number representing that date. On June 20, for
illustration, all cards with tabs over No. 20 are taken from the
file. When letters have been written, the tabs are moved to the next
follow-up date, and the cards returned to the file.

[Illustration: Fig. 27. Card for Combined Daily and Monthly Follow-up]

This method of cross-indexing with movable tabs permits of the filing
of the cards in any manner desired, with the knowledge that the
follow-up date will be surely indicated. The tab method is
also used for a combination of daily and monthly index. On the card
shown in Fig. 27, the names of the month are printed under the date.
For a follow-up in a later month a colored tab is used to represent the
monthly index, while a black tab represents the day of the month. To
illustrate, we will suppose that the card is placed in the file on Oct.
5 and the next follow-up date is Nov. 10; a black tab is placed over
No. 10, and a red tab over No. 2. The card will not be disturbed on
Oct. 10, as the red tab indicates that it is to be removed in a later
month, but on Nov. 1, the red tab is removed from the card, and the
black tab will bring it to notice on Nov. 10.

=Lists of Customers.= Every concern whether it secures business through
the mails, by means of personal salesmen, or both, should have a list
of its customers properly classified and arranged for easy reference.
This should be something more than a list of names and addresses;
certain essential facts about each customer--such as his business, the
name of the buyer, the credit rating, and amount of purchases--should
be recorded.

All of this information can be placed at the head of the ledger sheet,
but it never should be necessary for another department to consult the
records of the accounting department for information needed daily. The
information given by the customers' list is of most value to the sales
department and should be kept in that department.

[Illustration: Fig. 28. Monthly Record of Purchases of a Customer]

For customers' lists, cards are most largely used, and are most
satisfactory. Cards are readily classified, new names can be added at
will, and old names are removed without disturbing the balance of the
list or the general arrangement of the cards.

The follow-up card can be used as a customer's card, but should be
moved from the follow-up to a separate file; or a new card can be made
when a prospect becomes a customer.

On the back of the customer's card a form similar to Fig. 28 should be
printed. This is intended for a record of the purchases of the customer
and provides for a monthly record, covering a period of five years. The
amount of purchases is entered monthly from the ledger. In a business
in which the purchases of each customer are infrequent, each order
should be entered with the date, in place of the monthly summary.

_Classification of List._ The value of a list of customers is greatly
enhanced by a careful classification of the names. Lists of those
engaged in the different trades and professions can be bought, but
no list is so valuable as one made up of the names of those who have
answered your advertisements, or with whom you have done business.

[Illustration: Fig. 29. Card File for a Classified Customers' List]

Most houses sell goods to those in different trades or occupations. A
manufacturer may sell different lines, or the same line, to jobbers,
retailers, and consumers; a mail order concern may sell to farmers,
mechanics, and small retailers; a retailer may sell to men and women.
To sell each different line to a different class of people, requires
different arguments--a new line of selling talk must be used in each
case. While the personal salesman has an opportunity to size up his
prospect, and make his argument fit the individual, the letter salesman
must fit his argument to a _class_. To drive home the right argument,
he must be sure of the class to which his prospect belongs. He cannot
hope to form the personal acquaintance of his prospects, but must rely
on a proper classification.

The classes into which a list of customers and prospects should be
divided depends on the nature of the business and the class of goods
sold. It might be manufacturers in different lines, the different
professions, retailers in several lines, or all of these combined into
one list.

With a card list, any classification is easily provided. If the number
of classes is small--not exceeding seven or eight--the classes can be
indicated by the color of the card, a white card being used for one
class, blue for another, etc.

For a more extensive classification, cards with numbered tabs, as in
Fig. 29, are used. It will be noted that there are twelve of these
tabs, and that they are numbered from left to right. In the follow-up
systems, from which this illustration is taken, each number represents
a certain line of business.

Suppose that No. 1 represents manufacturers; if all manufacturers on
the list are to be circularized, only those names recorded on cards
with the No. 1 tab are addressed. Now if the business is one dealing in
specialties, it may be that the specialty to be sold will depend on the
position held by the prospect--a sales manager will be more interested
in a book on sales methods than in one on factory methods. To further
classify the list, colors are used.

In the system referred to, eight colors are used. Seven of these
represent occupations of prospective customers, while the eighth is
used for customers. A manager or executive officer is represented by
a blue card, a sales manager by a white card, etc. When a prospect
becomes a customer, the card is removed from the follow-up file, the
amount of the sale is entered on the back, and it is placed in another
file reserved for customers. At the same time a red card is placed
in the follow-up file for use in further circularizing. The tab on
the customer's card shows his business, but the occupation is not so
important since he is already acquainted with the house and its goods.
A more familiar tone can be adopted in letters to a customer, than to a
prospect.

A complete classification, such as provided in this system, is of
immense value to a letter salesman. Suppose he wishes to address all
executives--the blue card is used; if he wants to reach customers who
are manufacturers, red cards with No. 1 tabs are the ones used. He can
make his letter fit a particular class and be sure of the class.

=Classification of Sales.= There are certain lines of business in
which a second order for the same article is seldom received from any
customer. An example is the music business. The chances of selling a
customer a second piano are remote, but the fact that he has purchased
a piano is a sure indication that he will be interested in certain
classes of music. Book publishing is another example. A man who buys a
book on advertising, or commercial law, or auditing is quite likely to
be a buyer of other books on the same or kindred subjects.

[Illustration: Fig. 30. Card for a Classified Record of Purchases]

In a business conducted through the mail, a classified sales list that
shows at a glance what classes of goods have been sold to each customer
furnishes an excellent guide for further circularizing. On such records
it is not necessary to show the amounts of purchases--the class is the
important item.

Fig. 30 shows a card used for a record of this kind. The goods are
divided into four classes, indicated by the letters at the head of
the columns. When the first sale is made, the name and address are
entered on one of these cards, and the date indicated in the proper
column. A movable tab is placed on the upper edge of the card, over the
letter that indicates the class, and the card is filed. As subsequent
purchases are made the dates are entered, and if the purchase includes
another class of goods, another tab is placed on the card. In time, one
card may bear four tabs, indicating that the customer has bought goods
in all four classes.

When new goods are received, they can be brought to the notice of those
customers whose purchases indicate that they are most likely to be
interested, without disturbing the other cards.

=Indexing Customers' Cards.= The best manner of indexing customers'
and prospects' cards depends on the size of the list. A list of a few
hundred names is best indexed alphabetically. A large list should be
indexed geographically--according to location.

The geographical index consists of index cards printed with the names
of the states, and sets of indexes bearing the names of the cities
and towns in the different states. The state indexes are arranged
in alphabetical order, and back of these the town indexes are filed
alphabetically. The cards are filed back of the town indexes, these
also being arranged alphabetically. When the number of names in a city
is large, the cards are further subdivided by alphabetical indexes.
In states where the list is small, an alphabetical index can be
substituted for the town index, the letters representing towns; names
of customers in Alton would be filed back of the A index, those in
Springfield, back of the S index.

An advantage of the geographical index is that a definite territory can
be covered by the letter salesman, or the personal salesman can go over
the list and find out the condition of the trade in his own territory.


PERSONAL SALESMANSHIP DIVISION

Though the volume of business secured through the medium of the mails
is increasing at a rapid rate, the bulk of the business of the country
is done by personal salesmen.

Leaving out of the discussion the question of retail salesmanship, the
personal salesmanship plan--the employment of traveling salesmen--is
the least expensive method of selling goods at wholesale. To sell
certain low-priced specialties to consumers, the mail order plan is
sometimes best, for the reason that it is necessary to reach a large
number of _possible_ buyers to find a few _actual_ buyers. This can be
done at less expense by letters than by traveling salesmen.

More is being learned about how to use the mails to promote
business--how to make the follow-up system an assistant to the
salesmen. The manufacturer whose goods are sold to the trade, by
salesmen, is learning how to build up his own business by assisting
the dealer to sell his goods. He advertises to interest the consumer,
he follows up the consumer and the dealer, and in the end assists his
own salesman to sell more goods.

Much good literature has been written on the subject of salesmanship,
plenty of advice about being systematic in his work has been given
the traveling man, but very little has been written on the subject of
making sales records and reports of assistance to both the house and
the salesman. Some suggestions on this phase of the question are made
in this discussion.

=Routing Salesmen.= How to route his salesmen to the best advantage
is one of the important problems of the sales manager. He must first
decide how often the territory should be covered, then the extent of
the territory he will attempt to work, and the number of men required.
When this has been done, the territory of each man must be laid out,
and a route which will enable him to cover the territory with the
smallest mileage, must be selected. The territory should not be larger
than a man can cover in a specified time, but large enough to require
all of his time.

_Map and Tack System._ To know just where each man is at all times--to
be able to locate Smith or Brown instantly, every day--is very
necessary. Perhaps the best method of doing this is by the use of what
is known as the _map and tack system_.

State maps, printed in colors, are fastened in the bottoms of shallow
drawers, a drawer for each state. Sharp pointed tacks, with heads
covered with silk in a great variety of colors, are used for various
classifications, and colored silk cords are used to indicate routes and
territory boundaries.

To each salesman is assigned a specific color, by which he is always
known. Tacks with heads of the proper colors are placed in the map at
the towns on his territory. A cord is then strung from tack to tack
in the order in which he will cover the territory. When the salesman
leaves a town the cord is removed from that tack, coiled up, and placed
over the tack at the next town. The tack at the end of the cord always
shows the present location of the salesman. Fig. 31 illustrates a map
with cords--represented by the heavy lines--indicating salesmen's
routes.

[Illustration: Fig. 31. Map Showing Operation of Map and Tack System
Courtesy Browne-Morse Company]

Other tacks, with heads of a different color or coiled wire heads for
holding labels, are used to indicate special facts--as, competition
strong, customer ready to buy, claim to be adjusted, or collections to
be made. These are placed at the side of the salesman's tacks and are
a reminder to write to him, about the special matter, at that town. If
an inquiry is received or a good prospect developed, in some small town
not regularly visited by any salesman, a special tack is placed in the
map at that point. A cord of special color is then strung from this
tack to the nearest stopping point on any salesman's route. This is a
reminder to write the salesman instructing him to make a special trip
to this point outside of his regular territory.

[Illustration: Fig. 32. Traveler's Route Card]

_Route Cards._ It is not always advisable to attempt to lay out the
entire route of a salesman in advance, neither is it always possible
for him to make the towns in the time calculated. It is wise,
therefore, to require the salesman to keep the house constantly advised
about his stopping places. When the route is a long one, a route card,
as shown in Fig. 32, should be mailed to the house weekly. The card
should be 3×5 inches in size, to fit the standard size card drawer.
Route cards of all salesmen, whether there are five or fifty, can then
be kept in a card tray in the manager's desk.

=Reports of Calls.= The successful sales manager of the modern type
is learning to get more and more business from his territory; he is
not satisfied to show a large volume of business in a large territory,
unless he feels that he has secured all of the business possible from
every town. If Baker sells two dealers in Peoria, well and good; but
why did he fail to sell the other five dealers in the same line? And it
is not in a fault-finding spirit that he asks _why_; if he knew why,
perhaps he and the salesman could together work out a plan that would
solve the difficulty and secure from one to five new customers.

[Illustration: Fig. 33. Salesman's Report of Calls in Each Town]

The salesman knows better than anyone else why he has failed to sell
certain dealers; he is the man who becomes familiar with the actual
conditions in each town--what competitors' goods are most popular,
reasons for local business depression such as _crop failures_ or _labor
disturbances_, and any causes for dissatisfaction with the goods or
business methods of his own house. Possibly the sales manager is not
in a position to change conditions, but certainly, he cannot solve
the difficulties unless he knows what they are. The salesman should,
therefore, assume that there is at least a chance that he will receive
assistance by keeping the house posted on every detail that might
affect his trade.

The only way in which practical results can be secured is for the
salesman to make a report on every call made, in every town on his
route. A form of report card is shown in Fig. 33. This is intended for
a brief report of calls in one town. Space is provided for reports of
seven calls, but if there is a larger number of dealers, more than one
card is used. On the back of the card, a full line is allowed to each
dealer for remarks.

The salesman is instructed to mail one of these cards, in an envelope
specially provided for the purpose, from each town on his route. When
received, the sales manager examines them, makes his notations, and
files them according to salesmen's routes. When the salesman is next
in the house the sales manager goes over the cards with him, and they
discuss each case individually.

Forms of report cards differ, naturally, according to the business.
In some lines more specific information is needed in each case to
enable the sales manager to judge intelligently the chances for future
business. Fig. 34 represents a card used in one business for a specific
report on each call made. The form shown in Fig. 35 provides for a
brief report including suggestions regarding the date of the next call.

=Follow-up of Dealers and Salesmen.= In the modern advertising
campaigns of manufacturers in many lines, an effort is made to secure
inquiries from consumers, though the goods are sold through dealers
only. The inquiry is usually secured by a promise of a free sample, a
handsome catalog, or other piece of printed matter.

These inquiries should always be referred to the nearest dealer, and
in answering the inquiry, the name and address of the dealer should
be given. In addition to the inquiries received from advertising,
manufacturers in certain lines invite dealers to send them the names
of good prospects. One of the large paint manufacturers asks the
dealer to send two lists--one of people who are talking of painting
their buildings, one of people whose buildings need painting. The
manufacturer of a widely advertised washing machine asks for the names
of all possible buyers to whom the dealer has talked washing machines,
without making a sale.

The object of all this is to enable the manufacturer to assist the
dealer to sell more goods of his manufacture. Sometimes the margin of
profit to the manufacturer is such that he can afford to maintain an
extensive follow-up on the names, and even send one of his salesmen to
assist the dealer to close the sale.

[Illustration: Fig. 34. Specific Report on Individual Calls]

[Illustration: Fig. 35. Salesman's Report of Call and Follow-up]

The manufacturers of one of the popular pianos has secured excellent
results from the operation of such a system. In this system, the card
shown in Fig. 36 is used to follow-up both the inquirer and the dealer.
It will be noted that columns are provided for a record of the postage
on every letter or piece of printed matter mailed. The prospect
receives a letter once a month, while once in two months a letter is
written to the dealer asking for a report.

With the first letter to the prospect, a postal card acknowledgment
form is enclosed. On the postal, space is provided for names, which
the prospect is asked to fill in with names of friends who might be
interested in pianos. By this simple expedient, an original inquiry is
often added to with a half-dozen new names.

[Illustration: Fig. 36. Card Used for Follow-up of Dealer and Inquirer]

With the first letter to the prospect, there is also enclosed a formal
letter of introduction to the dealer. This letter, which is addressed
to the dealer, reads as follows:

 The bearer of this letter wishes to inspect our pianos. We shall
 esteem it a favor if you will kindly explain the merits of these
 instruments and give---- ----an opportunity to thoroughly examine them.

                                         Respectfully,


At the time of referring the inquiry to the dealer, the blank shown in
Fig. 37 is filled in and mailed to the salesman in whose territory the
dealer is located. The lower half of the blank is for the salesman's
report to the house.

[Illustration: Fig. 37. Notice of Inquiry Sent to Salesman, with Blank
for His Report]

=Salesman's Expense Accounts.= Detailed expense accounts should be
mailed to the house weekly. A conveniently arranged form, with columns,
for regular expense items such as _hotel_, _R. R. fare_, _livery_,
etc., will greatly assist the salesman in making up his accounts. Such
a form is shown in Fig. 38. This is a card 3"×5" in size, punched to
fit a small ring binder small enough to be carried in the pocket. Both
sides of the card are used, providing for a record of expenses covering
a period of one week.


SALES RECORDS

Regardless of the nature of the business, whether sales are made
through the mail, by traveling salesmen, or resident agents, summaries
of sales from day to day, supply much valuable information to the sales
manager. Sales summaries which show the amount of sales each day and
month, are the working charts of the sales manager.

It should be remembered that these statistics are chiefly valuable
for comparative purposes, but to insure comparisons of value, the
statistics must be compiled in proper form. It should be possible to
compare, not alone total sales, but the sales of each man in different
periods, the sales of one man with those of another, the sales in
different territories, the sales of different departments, the sales by
mail with those of personal salesmen.

[Illustration: Fig. 38. Traveler's Weekly Statement of Expenses]

=Daily Sales Records.= The daily record of sales should show the sales
of each department, the source of the sales, and the proportion of cash
and credit sales. These should also be divided as to wholesale and
retail.

A convenient form is shown in Fig. 39. This is a sheet punched for
a loose-leaf book, and there should be as many copies as there are
men in the organization who are directly interested. Besides the
sales manager, the general manager, the advertising manager, and the
comptroller are all directly interested. By using carbon paper as many
copies as needed can be made at one writing.

[Illustration: Fig. 39. Daily Tabulation of Sales by Departments]

[Illustration: Fig. 40. Monthly Recapitulation of Daily Sales Reports]

[Illustration: EXECUTIVE BUILDING OF THE LEWIS PUBLISHING CO.,
UNIVERSITY CITY, ST. LOUIS, MO.]

=Monthly Sales Records.= Fig. 40 represents a sales sheet arranged
for a monthly summary, the statistics being obtained from the daily
records. The monthly summary follows the same lines as the daily
record, except that sales are not divided by departments.

Where the business is divided into several departments one of these
monthly summary sheets can be used for each department.

[Illustration: Fig. 41. Daily and Monthly Record of a Salesman]

These daily and monthly summaries provide for a comparison of wholesale
with retail, mail order with personal salesmen, and departments.
If there is a gain in one department and a loss in another, or a
fluctuation in total sales, these summaries point out the source,
showing where greater efforts are needed and where praise is deserved.

=Salesmen's Records.= While the sale summaries described afford many
valuable comparisons, they do not provide a classification that will
indicate the value of each salesman. There should be a record showing
the volume of business of each man. The form shown in Fig. 41 shows
a card used for a daily and monthly record of one salesman. The form
might be elaborated to show cost of goods, salary, expenses, gross and
net profits; but the tabulating of this information is more properly
the work of the statistical department.

These cards should be filed alphabetically by name of the salesman, and
divided according to states. They will then show the sales of each man
and in each territory.

For a business in which goods are sold by resident agents, a card
similar to the one shown in Fig. 42 should be used. The upper half of
the card provides for the recording of certain essential information,
while the lower half is used to record sales.

[Illustration: Fig. 42. Record of Sales by an Agent or Dealer]

[Illustration: THE CREDIT DEPARTMENT OF THE FIRST NATIONAL BANK,
CHICAGO, ILL.]




THE CREDIT ORGANIZATION


THE CREDIT MAN

Acknowledged specialists may be employed in every branch of an
enterprise, the shrewdest brains may be engaged in buying, producing,
and selling, but the final conservator of the business is the credit
man; others may be profit makers, but he is the _profit saver_ in every
commercial organization.

He is on guard constantly--always on the lookout for the slightest
sign of danger, ever ready to take prompt and vigorous action to avert
disaster to his house or to lend a helping hand to a customer. His
duties make him the most misunderstood man in the entire organization.

He is thorough, methodical, painstaking, a keen student of human
nature, possessing faith in the inherent honesty of his fellow men.
The insistent search for facts that he demands, may cause him to be
regarded as an inquisitive busybody by the very customer whom he
desires most to help; as a carping critic, by the salesman of his own
house.

Through it all he remains faithful to his trust, watchful of the
interests of his house, and has the satisfaction of knowing that in
spite of his mistakes but a remarkably small part of his credits prove
bad--that where his conservatism has lost hundreds in trade, it has
prevented the loss of thousands.

On no man in the organization is there such tremendous pressure brought
to bear to secure favors; on no man do the consequences of his own
mistakes come back so surely. The credit man must be firm, and, while
availing himself of every reliable source of information, he must
stick to his decisions, for he is expected to collect from those to
whom he has extended credit. Every other man has a loop-hole through
which he may escape criticism; if a customer is lost because goods are
unsatisfactory, it may be "up to" the salesman, the shipping clerk, the
superintendent, a foreman, or even an obscure mechanic. The credit man
has no one on whom he can place the blame; if a customer fails to pay,
no reason short of an earthquake will relieve the credit man of the
responsibility.

So much for the credit man. Now for a discussion of the work he is
expected to do, the machinery of his office, and his methods of
operation--for the writer disclaims any intention of attempting to
teach the student how to become a credit man.


INFORMATION REQUIRED

The most important function of the credit man is the determining of the
credit risk--the amount of credit that can safely be extended to each
individual. When he consents to the delivery of goods to be paid for at
a future date, he is loaning his firm's money.

Before credit is granted extreme care must be exercised in determining
the ability of the purchaser to pay, or that he will be able to pay
when the bill is due. After necessary precautions against assuming
too great a risk have been taken, a further insurance against loss is
included in the amount added to cost--a certain per cent of the profit
is expected to offset the risk.

In determining the credit risk, different classes of information are
necessary in different lines of business. While certain specific
information about individual applicants for credit is necessary, the
subject may be divided into two general classes--wholesale and retail.
Under the head of _wholesale_, is included information about all
business concerns, whether a single proprietor, a partnership, or a
corporation. In a general way also, the same information is required
in respect to these concerns by the banker, the manufacturer, the
jobber, and the wholesaler. Under the head of _retail_, is included the
transactions of a retailer with his customers, who may be regarded as
individuals.

Leading authorities on the subject of credit place the factors which
determine the credit risk in two classes--the _man_ and the _business_.
Under the first heading is considered the business morals of the debtor
and his ability in, and familiarity with the business in which he is
engaged. The second heading--the business--is considered from the
financial standpoint, divided as to its assets and liabilities, and the
profits or losses made in its operation.

But as to the relative importance of the two principal factors--the man
and the business--authorities differ. In his valuable contribution to
the literature of credits, Mr. E. St. Elmo Lewis takes the stand that
the man--his character--should be considered secondary. To quote from
Mr. Lewis' book:

 If goods are the basis of all credit, character of the owner is and
 should be an after consideration. The very first question any credit
 man should ask, is, _can_ he pay?

 The question of a man's ability to pay is becoming of greater ease of
 solution.

 The question of the intention or inclination to pay must always be
 shrouded in the nebulæ of psychological theory.

 What is the applicant worth? is the crucial test. Then we shall test
 him by another. What sort of a man is he?

 Do we buy a law suit when we sell him goods?

 How much must we add for moral insurance against loss?

 Character is of vital importance in small concerns; of vital
 importance in concerns doing a large business on small capital,
 and it becomes of less importance as we progress into the field of
 corporations.

In direct contrast to this contention are the views of Mr. Ernest
Reckitt, as expressed in an address delivered before an organization of
bank clerks. After naming the factors to be considered by the banker
before extending credit, he said:

 You will note that in enumerating these factors I place first, and
 purposely so, "The Man Himself," and I believe I am correct in stating
 that bankers are now placing more stress upon this point than ever
 before. The man of good character and intelligence, who is full of
 energy and perseverance, will not find it difficult to obtain a
 reasonable line of credit with his bankers, while the man who is
 deficient in those qualities, whatever his reputed wealth may be, will
 be looked upon with suspicion. It therefore behooves you to become
 students of human character as well as students of banking, if you are
 to fill the highest positions within your reach.

 These comments may be out of the range proposed by this paper, but I
 feel I cannot leave this topic without giving you an illustration of
 the point I wish to emphasize, namely: That it is the character of
 the man, or men, in a business, which must be first considered before
 the banker makes a loan. Some time ago, in a certain city, there was
 a large corporation reputed to be very wealthy, whose balance-sheets
 were beautiful to behold. Their business being large, they were
 borrowers of some of the largest banking institutions of their
 city. Apparently without any warning the corporation was declared
 bankrupt and went into the hands of a receiver. Later, investigation
 showed that the balance-sheet was misleading; some people might have
 called it a worse name, for the assets had been overstated and the
 liabilities understated. I happened to be in that city at the time
 of this failure, and, meeting a director of one of the banks with
 whom I was well acquainted, I inquired if his bank had been caught.
 "No," said he, "they did try and open an account with us some time
 ago with the object of becoming borrowers, but we turned them down."
 I asked him what reasons he and his colleagues on the directorate
 had for such action at a time when this corporation was supposed to
 be so prosperous. "Well," said my friend, "some time ago it came to
 my knowledge that this corporation paid no water tax and that its
 personal property tax was a mere bagatelle to what it should have
 been, and I figured out that the officers of a corporation that would
 be guilty of petty bribery would not be good customers for our bank."

 So it will be seen that a knowledge of the business morals of the men
 in your community and a high ideal, on your part, of what constitutes
 good business morals is a most essential quality in the make-up of a
 banker, and that it was these factors that enabled the bank of which
 my friend was a director to escape what otherwise would have been a
 bad debt.

=Financial Statements.= Without attempting to decide the relative
importance of the two principal factors, it can safely be stated that
one of the first steps to be taken by the credit man is to secure
a financial statement from the applicant. And the character of the
statement may serve as a guide in determining the character of the man
with whom he has to deal.

Most business men are willing to comply with any reasonable request
relative to their financial standing, when applying for credit. Until
recently, the average man had objected to giving out such statements,
except to his bankers, but with the more universal demands for such
statements has come a change, and now a statement of some sort is
almost always obtainable.

The form of statements used by banks differ somewhat from that used
by manufacturers and jobbers, and, while it differs slightly as
between banks, and also as to whether the borrower is an individual,
a partnership, or a corporation, in general the statement required
follows the lines of the form shown in Fig. 1. This statement is
signed, in the name of the firm by a member, in the case of a
partnership; and in the name of the company by one of its officers, in
the case of a corporation. A statement in the same form gives all of
the information of a financial nature required by the manufacturer or
merchant.

=Analysis of the Statement.= Of equal importance with the statement
is the ability to read it--to correctly interpret its real meaning.
This calls for a careful analysis of the several items of which it is
composed. To make a correct analysis means that the credit man must
have a general knowledge of the business in which the one asking for
credit is engaged. The banker must know, for example, whether the
season is one in which more capital is likely to be needed in the
trade of the borrower, or one in which he should be liquidating his
indebtedness.

[Illustration: Fig. 1. Customer's Financial Statement]

So important is this phase of the question that some of the larger
banks have adopted the plan of assigning requests for loans in
different businesses to different officers. One man will investigate
real estate securities, one, applications from board of trade houses,
another handles applications from packing houses, others look after
the steel, building, jobbing, and manufacturing enterprises. Each man
is a specialist, making a special study of conditions in the business
to which he is assigned.

In making an analysis of a statement, each item must be taken up
separately and considered with respect to its relationship to other
items, and its bearing on the statement as a whole.

_Cash on Hand._ The cash on hand should be consistent with the needs
of the business, and, if listed separately, the cash in office should
never be a large sum. There is seldom any good reason why cash should
not be deposited daily. The banker will find it necessary to carefully
scrutinize the amount in bank, particularly if the borrower claims to
deposit in no other bank.

_Merchandise._ This item is always a somewhat uncertain quantity; often
an estimate pure and simple, and the debtor is unlikely to make his
estimate too low. In the absence of provable figures, it is necessary
for the credit man to apply his knowledge of the business. Is the stock
larger than should be required? Is it too low to enable the debtor to
keep pace with his competitors? Or, if a manufacturing business, how
much is raw material and how much finished goods?

One of the important factors in making an analysis of this item is a
knowledge of the accounting methods of the debtor. Does he keep stock
records, or if not, is his stock well cared for and stored in a manner
to permit of a reasonably accurate estimate? On the latter point,
reports of the observation of salesmen, referred to later on, have an
important bearing.

_Bills Receivable._ On the statement form shown, this item is divided
as to notes, secured and unsecured, not due and past due. To state that
the amount of bills receivable is so much is one thing, to state the
amount not due, is quite another. Any considerable amount of unsecured
and past due paper indicates lax methods in the debtor's own credit
department.

_Accounts Receivable._ This item is divided as to accounts less than
60 days past due and accounts more than 60 days past due. These items
require the same close scrutiny as bills receivable.

The two items--bills and accounts receivable--should bear a reasonably
constant ratio to the amount of sales. Any unusual increase in the
percentage of book debts to sales calls for careful scrutiny, and
leads to one of three conclusions: that trade conditions are bad, that
the credit department has been lax, or that the amount is overstated.

The first of these conclusions is supported or rejected by the credit
man's knowledge of financial conditions in general, and of conditions
in the particular trade of the debtor. During a financial panic, or in
a season following crop failures, it is to be expected that book debts
will be greater in amount than in ordinary times. In the event of the
third conclusion, it is time for a careful investigation. As a rule,
the investigation will be productive of best results if an examination
of the books by a public accountant is included.

_Due from Stockholders._ This is an item which must be carefully
studied. Who are the stockholders or partners who own the firm, and for
what? What is their financial responsibility?

Sometimes, stockholders whose entire fortunes are invested in a
corporation are found to be debtors to the same corporation for
borrowed money.

_Due for Merchandise._ This item is divided as to accounts not due
and past due. It should be carefully compared with the same item in
statements furnished in the past. An increase may or may not be due
to natural causes such as the requirements of the trade during a
particular season.

_Due for Borrowed Money._ Any increase in this item should be offset by
an increase in assets, or a decrease in other liabilities.

_Liability as Surety._ This is an item of more importance than is
generally accorded to it. True, the liability is a contingent one, but
many a man has been forced into bankruptcy by the failure of another,
for whom he had become endorser.

Another item which should in the opinion of the writer appear among the
liabilities, is discounted paper. When a man discounts the paper of a
customer, received in the course of business, he assumes a liability
for the amount, if not paid at maturity. True, the liability is
contingent, but a liability nevertheless. The extent of the liability
depends on the prosperity of his own customers and the care which he
has exercised in accepting their paper.

=Information for Retailers.= The information available for the retailer
is of a very different class. Here, the factor, the man himself, plays
a more important part. The retailer is obliged to depend more largely
on his personal knowledge and the general reputation of his customer.

The city retailer, for instance, needs to know where the man works, his
salary, his reputation for paying others--his landlord, grocer, and
butcher--and something about his personal habits and general reputation.

  How long has he been in his present position?
  Does he make frequent changes?
  Does he own a home?
  What rent does he pay?
  Any other wage earner in the family?

These are some of the questions, the answers to which will assist in
determining the credit risk.

The country retailer needs other information about his customers. As a
rule, he can answer all of the questions asked by the city retailer in
respect to his own customers. He is more intimately acquainted with his
customers; he has a better opportunity to learn their characteristics
and habits, than the city retailer. The country retailer has another
advantage, in that a closer bond of friendship exists between him and
his neighbor merchants. The interests of city merchants are no less
common, but distances separating them make an interchange of views more
difficult.

About his country customers--the farmers--the retailer requires still
different information. Besides full information about the real estate
owned, and mortgages given, he needs to know something about the man
himself.

  Does he market his crops early, or is he a speculator--always holding
    for possible higher prices?
  Is the farm well kept up?
  Are the implements properly housed, or left outside at the mercy of the
    elements?
  Does he keep his live stock in good condition, and how much does he feed
    for market?
  Is he thrifty or shiftless?

Only by personal contact can these things be learned. The
country merchant who keeps in closest touch with his farmer
customers--sympathizing with them in their misfortunes and rejoicing
in their prosperity--is usually the most successful. As one country
merchant puts it, he must act as a general advisor, and help them bear
their very aches and pains.


SOURCES OF INFORMATION

The usual sources of credit information are the mercantile agencies,
reports from local correspondents, reports from traveling salesmen, and
merchants' associations or credit reporting agencies.

=Mercantile Agencies=. Of these sources, perhaps the best known and
most widely used by manufacturers and jobbers, is the mercantile
agency. The mercantile agency is the outgrowth of a necessity. About
the year 1840, a few New York merchants formed an association for
the interchange of credit information. Later, this became a business
conducted by individuals who charged a small fee for written reports.

The business has grown to such proportions that a single agency
requires about 200 offices, located in the principal cities throughout
the world. In the territory of each office, which is presided over by
a manager, correspondents are employed, and at certain seasons country
reporters traverse every district, gathering data to be forwarded to
the branch offices. Every court house in the United States has its paid
correspondent, who promptly reports any action--as the filing of suits,
recording of mortgages, or entering of judgments--that might affect the
credit risk of any business man in the country.

Some idea of the magnitude of the business, and the task of gathering
statistics, can be gained when it is considered that the books of a
single agency contain the names and ratings of about 1,500,000 persons.
About each of these individuals, the latest data collected by the
reporters is on file in the various branch offices.

Delays in securing information is one of the most common complaints
against the agency service, but the service is probably as prompt as
can be expected. Suppose a request for a special report is received
this morning. First, the information on file is copied, and proofread
to guard against errors. This is sent to the subscriber, but if it is
not of a recent date he is advised that further information will be
forwarded. Or, there may be no data on file, in which event a reporter
is assigned to the case. He may be obliged to make several calls before
finding his man, and when found, the man may be reluctant about giving
information. If real estate is listed, the real estate man must look
up the title and mortgage records. Thus, two or three days may elapse
before it is possible to furnish the report.

Some complaint is heard that reports furnished by the agencies are
not sufficiently specific--which is probably true in many cases--but
it is often quite difficult to obtain information on which positive
statements can be based. On the whole, the service of the agencies is
of very great value to the subscriber. As to its defects, the best
way to overcome them is for the wholesaler to establish a credit
organization of his own, to supplement the service of the agency.

=Local Correspondents.= If the matter is properly handled, much
valuable information can be secured from local correspondents. The
banker, or a local attorney, is in a position to make confidential
reports on local merchants. In fact, the agencies secure much of their
information from this very source.

But, in establishing local correspondents, the exercise of good
judgment is necessary. The local attorney should not be expected to
furnish information without pay, or to go into details that would not
be asked of an agency charging $100.00 a year for the service.

An attorney has favored us with a blank sent out by one wholesale
house, on which he is asked to make a complete report. Among other
information requested, the blank calls for the value of merchandise,
realty, cash, total worth, liabilities, and numerous references to his
character, habits, etc. Following this statement is the question, "if
not paid, can you collect?"

Here is a very complete statement, to compile which would require
several hours' research, but without a single suggestion that the
attorney will receive pay. And then he is asked if he can collect,
after the house has exhausted all usual methods.

A certain other concern, when opening new territory, writes to a
local attorney telling him they are entering the field; that they
will require information from time to time, for which they expect to
pay a reasonable fee; and ask if he is in a position to represent
them in this capacity. At the same time the attorney is told that he
will receive for collection any accounts on which such action may be
necessary.

When a special report is desired, the blank shown in Fig. 2 is sent.
The local correspondent is expected to give as full information as
possible, for which he is paid promptly.

In this way, excellent results are secured. There is some question
about the advisability of leaving the amount of the fee to the
correspondent. A better plan is to have the fee to be paid for
all ordinary reports decided in advance, extra compensation to be
allowed in special cases. The average country attorney will furnish
an intelligent report for two dollars--a low price for reliable
information.

[Illustration: Fig. 2. Local Correspondents' Report Blank]

=Traveling Salesmen.= Certain information about the business and
general reputation of a customer can best be obtained through the
salesmen of the house. They are the men who come in direct contact with
the customers, acquiring an intimate knowledge of each.

The average salesman objects to making out lengthy reports, but if
approached in the right spirit, will give the credit man the benefit of
his observations. The salesman's judgment is scarcely to be relied upon
in the matter of the financial standing of a customer--his anxiety to
sell goods makes him too optimistic--but he is probably the best judge
of the character and business ability of a man on whom he is calling
regularly.

Frequently a spirit of antagonism to the credit department exists
among the salesmen. This condition indicates a decided lack of that
coöperation so necessary to the success of any business. The credit man
who possesses tact can overcome this antagonism, if he will but drop
his cold-blooded attitude and meet the salesmen on a friendly basis.
If he will cultivate their friendship, the salesmen will respond with
information of great value to him.

Naturally the information secured from a salesman differs from that
received from other sources. About the class of information that can be
expected is provided in the blank shown in Fig. 3. This can be printed
on a standard size card.

[Illustration: Fig. 3. Salesman's Customer's Report Blank]

=Retail Credit Reporting Agencies.= In many cities, merchants have
formed associations for the exchange of ledger experiences. Some of
these associations have been very successful, but the chief difficulty
has been in sustaining interest and in securing the necessary
information. This lack of interest seems to be general in mutual
associations--every man seems afraid that he will give more than he
receives.

[Illustration: ADMINISTRATION BUILDING AT THE PLANT OF STUDEBAKER BROS.
MANUFACTURING CO., SOUTH BEND, IND.]

Out of the merchants' association has grown the retail credit
reporting agency--the exchange of information being conducted as a
private enterprise. The expression, _exchange of information_, is used
advisedly, for the service of these agencies consists mostly of reports
giving the experiences of other merchants. To quote from the prospectus
of one of these concerns:

 Our company does for the retailer what Bradstreet and Dun do for the
 wholesale dealer. We arrive at the result, however, in a different
 way. We give accurate information as to how people pay their bills,
 regardless of their financial standing.

 This information we get from merchants and professional men by means
 of a thorough canvass of our entire territory. We visit all people
 doing business, whether our subscribers or not, and in this way secure
 the names of all consumers in business or private life.

 We are thus able to tell the grocer how Mr. _B._ pays his butcher, his
 tailor, his hatter, his doctor, and every other trade or profession he
 deals with, and each of these in turn is furnished with the same kind
 of information from the grocer; thus we establish the exact credit
 standing of Mr. _B._ with the entire trade of the city.

 Acting upon information thus furnished, every merchant or professional
 man in the city knows from the most reliable and trustworthy source to
 whom he can safely give credit and whom he should refuse.

 For example, we here give a specimen rating with an explanation of the
 same.

 "John Doe, carpenter, 187 Broad St., _5G 2F._"

 This rating indicates that five different merchants have found by
 experience that John Doe is a prompt paying credit customer, and two
 other merchants have found him somewhat slow, but regard him reliable
 and trustworthy.

 Next example:

 "John A. Doe, lawyer, 210 North Second St., _4D 3B._"

 This rating indicates that four different merchants have found him
 too slow in paying to be a desirable credit customer, and three other
 merchants have found him bad pay and unworthy of credit confidence.

Other sources of information, which come under the head of exchanges
of ledger experiences, are the credit men's associations. These
associations, through clearing houses, exchange information about
their customers, thus supplying the wholesaler with the same class of
information as described above for retailers.

One credit man relates the following incident, illustrating the value
of the association clearing house. On one of the reports furnished
by the clearing house, he noticed that another merchant had refused
credit to one of his own customers. Investigation developed the fact
that this particular customer's locality had suffered severely from
the destruction of crops by a cyclone. Now it happened that this credit
man's house was about to fill a large order from this very customer.
The shipment was held up, and the credit man promptly wrote to the
merchant expressing regret that his community had suffered so severely,
and asking if his house could be of any assistance to him. In closing
the letter, the suggestion was made that since collections were likely
to be slow with the merchant, they would allow him to cut down his
order.

The letter had the desired effect. Instead of turning him down the
merchant was made to feel that he had friends in that house, and it is
probable that he continued to be one of their valued customers.


RECORDING CREDIT INFORMATION

Scattered information is of little value. A credit man may avail
himself of all sources of credit information, but unless he has it
filed and recorded where he can put his hand on it, he will find it of
little assistance in determining credit risks. He cannot "keep it in
his head" and get the best results.

There are credit men who profess to rely largely on intuition, but
the hard-headed man--the one who makes the fewest mistakes--relies on
his facts and figures. He uses judgment, but first wants the facts
marshaled in logical order.

=Filing.= The method of filing best adapted to the needs of a given
concern depends on the size of the business, number of customers,
method of collecting information, and the quantity of data kept on
file. In a small business, depending almost entirely on the ratings of
the mercantile agencies, with an occasional special report, no special
filing system is necessary. The few reports received can be filed with
the regular correspondence. But in a well-organized credit department,
handling credit information about a large number of customers, the
question of filing is of importance.

In the first place, all reports should be kept in one place; special
agency reports, reports of traveling salesmen, local correspondents,
and the credit clearing house, with financial statements furnished by
the customer, should be filed together. This means that they should
be separated from the general correspondence; if filed with the
correspondence, they are sure to become scattered when the files are
transferred.

Without question, the most satisfactory method of filing is to use
the vertical file, with a folder for each customer. For the average
business, an alphabetical index is most satisfactory, but for a very
large business, with customers throughout the country, it is best
to subdivide the file by states and towns, arranging the folders of
customers in each town alphabetically.

Credit reports are not, as a rule, of sufficient bulk to require
the large files and folders used for correspondence. A file of the
same style, to accommodate folders about 7×9 inches in size, is more
compact, and has been found very satisfactory for this purpose.

[Illustration: Fig. 4. Front of Credit Information Folder]

A plain folder, such as is used for correspondence, will answer the
purpose, or a special form may be substituted. An excellent example
of the special folder is shown in Fig. 4.The special feature of this
folder is that on the flap which folds over the front provision is
made for a transcript of credit information. The back of this folder
is printed as shown in Fig. 5. This form is used for a record of
purchases, and covers a period of seven years.

=Card Transcripts.= For convenience, it is best to make a brief
transcript of the credit information. This transcript should embody
the essential facts which naturally influence the credit risk, and
should be in such form that it can be referred to very readily.

As explained above, this transcript can be made on the credit
information folder, but the more usual plan is to use a card. For each
customer a card such as shown in Fig. 6. is used. The special feature
of this card is that both the capital and credit ratings are listed.
Such a card saves the time that would be required to refer to the
agency books, and affords a comparison of the ratings given by the
agencies on different dates. Both the book ratings and special reports
are entered on this card.

[Illustration: Fig. 5. Back of Credit Information Folder]

A card which provides for reports, other than those furnished by the
agencies, is shown in Fig. 7. A line for the folder number will be
noted at the top, a numerical system of filing the folders being used.
Although the numerical system is frequently found, it has no practical
advantages, and the alphabetical system is to be preferred.

The form shown in Fig. 8 provides for more general information about
the business--such information as would be gathered from the reports
of salesmen and local correspondents. It will be noted, also, that the
financial information refers more especially to the firm members. This
card is used to supplement the books of the agencies.

[Illustration: Fig. 6. Credit Agency Report Card]

[Illustration: Fig. 7. General Credit Report Card]

The card shown in Fig. 9 gives a complete history of reports asked and
received, and of credits granted. This form is used in a business
in which the purchases of a customer are infrequent, and involve
considerable sums. The credit risk is considered each time an order is
received.

The card shown in Fig. 10 is used by a retailer. As is usual in retail
credits, the information provided for in this form refers to past
experiences and the general reputation of the customer.

[Illustration: Fig. 8. General Credit Information Card]

Like the folders used for filing credit statements and reports, credit
cards should be indexed alphabetically, subdivided by states and towns
when necessary. Filed in this manner, each card is accessible, and can
be referred to quickly. An advantage of cards for this and many other
purposes is that obsolete matter is quickly eliminated, and new names
are added at will without disturbing the general arrangement of the
records.


BRANCH HOUSE CREDITS

Many businesses are conducted through branch houses, each in charge of
a local manager. Customers are supplied by the branches, and it is
customary to have each branch house collect its own accounts. Weekly
reports of the business transacted, including sales, collections, and
stock on hand, are made by each branch to the home office. Duplicate
accounts, made up from these reports, enable the home office to keep in
as close touch with each account as though collections were made direct.

[Illustration: Fig. 9. Card Record of Reports Received and Credit
Granted]

[Illustration: Fig. 10. Credit Card for Retailer's Use]

Large concerns, operating many branches, have found by experience that
it is best to pass on all local applications for credit at the home
office. This work is handled by a division of the credit organization,
known as the _branch house credit department_.

The forms shown and the system described herein were designed for the
use of an oil company, and are very similar to those used by the large
packing companies. When a dealer wishes to secure credit at a branch,
the form shown in Fig. 11 is filled out in duplicate and signed by the
local manager. The original is forwarded to the home office, while
the duplicate is filed in the branch office, under the name of the
applicant. Folders are used for this purpose.

[Illustration: Fig. 11. Branch Office Credit Application]

Only the lower half of this form is filled in at the branch office. The
rating, credit limit, and terms are entered when a reply is received
from the home office.

When the application is received at the home office, the files are
consulted for any information that may have been received previously,
reports are asked from the agencies, and the decision made. The
decision is made known to the branch house on the form shown in Fig.
12.

This form is made in duplicate, both the original and copy being
forwarded to the branch. The original is placed in the branch house
files, together with the application for credit. Both the cashier and
the manager of the branch sign the duplicate, as an acknowledgment that
they understand the terms, and it is then forwarded to the home office.

[Illustration: Fig. 12. Branch Office Credit Notice]

In the home office, the original application and the statement of terms
granted, signed by the branch manager, are filed together. A folder
is used for each customer, filed alphabetically with subdivisons for
states and towns. Every subsequent report and memorandum of credit
information is filed in this folder.

When the report from a branch house shows an account to be past due,
an inquiry blank, as shown in Fig. 13, is sent to the branch. This is
in duplicate, the copy being retained at the branch house, and the
original forwarded to the home office. In both offices, this report is
eventually filed in the folder with other credit information.

A noticeable feature of this system is that all blanks are made in
duplicate. This insures duplicate credit files in the home office and
branches. It is, of course, necessary for each office to forward to the
other any special data that may be received, from whatever source.


COLLECTIONS

The duties of the credit man are not ended when he has passed on the
credit of a prospective customer; a very important duty follows, and
that is to collect the accounts that he has placed on the books. He may
assign the handling of collections to another, but the collection desk
should be under the supervision of the credit man.

[Illustration: Fig. 13. Branch Office Credit Inquiry Blank]

The handling of collections furnishes one of the most severe tests of
the ability of the credit man; it calls for the exercise of a certain
tact, not absolutely essential in any other work in business life. The
successful collector must, first of all, be a good judge of character;
he must be able to read character, and govern himself by what he learns
of his customer's peculiarities. He must be a diplomat, with the happy
faculty of smoothing out the rough spots, and satisfying the chronic
kicker. While using judgment in granting special favors to the slow-pay
customer, he must be able to differentiate between the temporarily
embarrassed but able and honest debtor, and him who continually makes
use of a hard-luck story to arouse sympathy and gain time; he must know
when to be gently firm, and when to take vigorous action to save his
house from loss.

One of the essential accomplishments of a good collector is the ability
to write diplomatic letters. Collection correspondence is in a class by
itself. The most valuable correspondent is said to be he who can write
letters that sell goods. We have no fault to find with this statement,
but prefer the way Mr. Cody puts it--"the ability to write letters that
make people do things." The collection correspondent must be able to
write letters that make people do things.

In a wholesale or manufacturing business, or any business that is
not strictly local, practically all of the collections are made by
mail, hence the subject of collection correspondence becomes of
extreme importance. The extent to which letters are used is naturally
governed by the ideas of the collector; by some they are used freely,
by others as special appeals or duns only. One very successful credit
man, who has handled the collections in one of the largest mercantile
establishments in the country, gives it as his opinion that a letter
should be sent with every request for payment--even with the monthly
statement.

Except in unusual cases, specially dictated letters are not necessary;
filled-in form letters answer every purpose--indeed it is claimed by
many that carefully prepared form letters, designed to meet certain
definite conditions, are superior to letters dictated in the ordinary
rush of business. Forms can be prepared for different classes of
customers, and to meet any of the contingencies likely to arise in the
ordinary business. Form letters used for collection purposes should
be exceptionally well printed, and great care must be used to secure
ribbons that are an exact match for the body of the letter. There is
nothing more calculated to make an unfavorable impression than a letter
in which the date, name, and address fail by several shades to match
the body.

The exact form of the letters must be varied to suit the particular
business in which they are to be used; they will differ in
manufacturing, wholesale, and retail lines, in a mail-order business,
or for installment accounts. In a manufacturing business, for instance,
a letter something like the following might be sent with the monthly
statement.

 DEAR SIR:

 In accordance with our usual custom, we enclose a statement of your
 account as it appears on our books at this date. Will you kindly
 compare this with your records, and advise us of any discrepancies.

 That we might be in a position to fill your orders promptly, we have
 kept our factory running on full time during the past few months,
 which has involved quite a heavy investment in material. We will,
 therefore, appreciate a check from you covering the amount shown to be
 due.

 We will also appreciate a liberal order, which we can fill at once, as
 our stocks are unusually complete just now.

                                     Very truly yours,

Such a letter leaves a very much better taste than _please remit_
stamped on the statement, and yet it plainly asks for a remittance.
There is something about the letter that savors of the personal appeal,
and gives the debtor the feeling that a special accommodation is being
asked, which he should make an effort to grant.

If the first letter fails to bring a response, it should be followed
up. The second letter, following the first in about 10 days, might be
as follows:

 DEAR SIR:

 A few days ago we sent you a statement of your account, showing a
 balance of $, of which $ is past due.

 Not having heard from you, we assume that the account is correct, and
 that it will be satisfactory to you to have us draw on you on the 15th.

 In the meantime we will be very pleased to fill your order for any of
 our goods that you may need.

                                     Very truly yours,

A letter of this kind rarely fails to bring a goodly percentage of
remittances. The mere suggestion of a draft often has the desired
effect. The average merchant dislikes to have a draft presented; he
feels that it has a tendency to injure his credit with the very man
whom he may be obliged to ask for an accommodation--his banker. The
polite request for an order acts as a sugar coating which covers the
suggestion of a dun, and leaves the recipient in a pleasant frame of
mind.

The second paragraph of the above letter does not contain a positive
statement that a draft will be made, nevertheless, such a course is
hinted at, and, unless a communication of some kind is received, the
draft should invariably be made on the date specified. The customer
should be taught that the collector means just what he says; any other
course indicates a lack of sincerity, and gives the customer the
feeling that these notices are not to be regarded seriously.

On the other hand, it is possible to go to the opposite extreme in the
use of drafts. The writer has in mind a business man who had a habit
of sending statements of all accounts the first of the month, without
a letter, and following these with drafts about a week later. Many
times these drafts were made before it was possible for a remittance
in response to the statement to reach him, which caused hard feelings,
and the loss of many customers. It is the custom of many firms to pay
all bills on a certain day of the month--a fact which the observant
collector quickly notes, and governs himself accordingly in the matter
of sending drafts.

When a draft is returned, a letter should be written immediately; and
in this letter a little sharper tone is justifiable. The following is a
good sample of a letter to be used at this point:

 DEAR SIR:

 We are disappointed to find that you have allowed our draft to be
 returned unpaid, as we had counted on this amount to help in meeting
 our current obligations. While the amount of your indebtedness is not
 large, the aggregate of the many small accounts makes up the large
 amount outstanding on our books, and to not receive the amount when
 due, causes us considerable embarrassment.

 As you know, our terms are strictly 30 days net. We must insist on
 receiving prompt payment when bills are due; our prices are figured
 on this basis, and our arrangements for meeting supply bills and
 pay-rolls are dependent on the prompt payment of bills by our
 customers.

 Your total indebtedness to us is $, of which $ is several days past
 due. We would appreciate a remittance of the entire amount, but must
 insist on the immediate payment of the amount past due. Failing to
 receive either a remittance or your note, by the 23rd, we will again
 draw on you, and shall expect you to pay the draft when presented.

 By the way, our Mr. Jackson reports that he has failed to secure an
 order from you on his last two trips. Now if you have any cause for
 dissatisfaction, we would like to have you tell us, as we are more
 than anxious to please you, and would certainly appreciate your future
 orders.

                                 Very truly yours,

One point in this letter, to which special attention is called, is the
absence of the word _dishonor_. Technically, when a draft is not paid
it is dishonored, but the word has an ugly sound; the word _unpaid_
is less harsh, yet conveys the desired meaning. While it is sometimes
necessary to be quite emphatic, nothing is gained by adopting a tone
calculated to arouse the antagonism of the debtor. The time-honored
axiom that "More flies can be caught with sugar than with vinegar," is
given a special force when considered in connection with collection
letters.

Naturally, these letters must be varied to suit the business, the
season, and general trade conditions. They are not submitted as models,
to be used under all circumstances, but to impart an idea--the idea
of _tone_, the sugar coating which is so essential in keeping the
recipient in the right frame of mind. Politely request, ask plainly for
what you want, firmly demand, but never threaten until you are prepared
to carry out your threat. This is a safe rule to follow in handling
collections.


COLLECTION SYSTEMS

In the successful handling of collections, a requisite is promptness.
There must be a system that will insure bringing collections to notice
at the right time. Without attempting to lay down specific systems for
individual concerns, detailed descriptions of systems that have been
found satisfactory in different businesses are given herein.

=Duplicate Invoices.= The tendency at the present time is to regard
each invoice as a separate account, and to regard each as due at the
end of the time specified--thirty, sixty, or ninety days. An exception
is found in the accounts of city customers. A wholesale merchant may
have customers in his own city who buy in small quantities, placing
orders nearly every day. The usual rule is to regard these as monthly
accounts, the account for one month being due the 15th of the following
month. For out-of-town customers, however, the first plan is found more
satisfactory.

A certain large manufacturer, whose business is world wide, treats each
invoice as a separate account, and handles the collections in a very
simple manner. All invoices are made in duplicate, the original going
to the customer. From the duplicate, all entries are made on the books.
If special terms are granted, these terms are stamped on the back of
the duplicate invoice.

[Illustration: Fig. 14. Collection Card for Each Invoice]

When it has served the purpose in the accounting department, the
duplicate invoice is returned to the collection desk. Here it is filed
under the date on which it is due.

The file is a simple arrangement of pigeon holes. A case containing
sixty pigeon holes, large enough to hold invoices laid flat, is used.
These pigeon holes are divided into two sets of thirty each, one above
the other, and each set is numbered from _1_ to _30_. This number
provides for filing ahead sixty days, which is the longest credit term
allowed.

In operating the filing system, the two sets of pigeon holes represent
alternate months. During January, bills due in March are filed in
the upper pigeon holes; in February, bills due in April are filed in
the lower case. Each day the bills due are removed from the file for
attention, leaving the pigeon hole empty for filing bills due sixty
days ahead. On March 10th, for instance, bills are removed from the
_No. 10_ pigeon hole of the upper case; the current day's bills, due
May 10th, are then filed in the same pigeon hole.

[Illustration: Fig. 15. Card Tickler for Collections]

When bills come out for attention, they are referred to the accounting
department to find if they have been paid. For those not paid,
statements are prepared and returned with the bills to the collection
desks. The usual letters are written, and all past due bills are held
in a desk tickler, that they may be followed up from day to day by the
collection clerk.

This system can be operated with the regular tickler file, but for
a large number of bills the pigeon holes are more convenient. A
modification is necessary, also, when the bill and charge system is
used. In that case, an extra copy of the invoice should be made for the
use of the collection clerk.

[Illustration: IN THE GENERAL OFFICES OF CORBIN CABINET LOCK COMPANY,
NEW BRITAIN, CONN.]

=Card Tickler.= A very convenient method, where it is not deemed
advisable to use duplicate invoices, is to fill in a collection card
for each invoice.

A card, printed similarly to the form shown in Fig. 14, is filed under
the date on which the account is due. Each day, all cards filed under
that date are removed for attention. The first step is to compare the
cards with the ledger accounts. If the account has been paid, the card
is destroyed; if not, a statement is sent and the card filed ahead to
the next follow-up date. All letters written and all steps taken are
noted on the card, so that in the end it presents a complete history of
the efforts made to collect the account.

[Illustration: Fig. 16. Collection Card for Alphabetical Cross-Indexing]

A slightly different form of card, which is used in the same manner, is
shown in Fig. 15.

=Cross-Indexing.= The same objection exists in regard to the use of the
tickler card for collections as for other follow-up purposes, which is
the difficulty of finding the cards. Every time a card is removed from
the file it is necessary to compare it with the ledger to find if the
account has been paid.

To overcome the difficulty, a card with an alphabetical tab is used to
good advantage. Such a card is shown in Fig. 16. It will be noted that
this card bears a tab printed with the letter _G_. A card with this
tab is used for every name that commences with _G_, and as all _G_ tabs
are in the same position on the card, they will be in direct line from
front to back of the file.

The cards are filed by dates, but each day all remittances are sent to
the collection desk, that the cards representing accounts that have
been paid may be removed. All cards may be found by name, by referring
to the lettered tabs, thus Brown's card will be found in the row of _B_
tabs.

[Illustration: Fig. 17. Collection Card for Cross-Indexing by Date]

Another method of cross-indexing the collection file is to have the
numbers from _1_ to _31_, representing the days of the month, printed
across the top of the card, as shown in Fig. 17. To indicate the due
date a metal tab is placed over the proper number, a red tab being used
for succeeding months and a black tab for the current month.

The cards are filed alphabetically by name, or subdivided by states and
towns, so that any desired card can be found instantly. Each day all
cards having tabs over that date are removed for attention. On the
first of the month those bearing red tabs are referred to, and if due
in the current month, black tabs are substituted.

=Monthly Statements.= In some houses, it is the practice to follow up
collections on the basis of the monthly statement, instead of treating
each invoice independently. When this is done the collection record
must include a synopsis of the entire account. The card shown in Fig.
18 is used for following collections on such accounts. This form shows
the date and amount of statements, with interest added, date and
amount of drafts, and dates and amounts of payments. Other columns are
provided for a record of letters, promises, extensions, etc.

[Illustration: Fig. 18. Collection Card Showing Synopsis of Entire
Account]

This card is handled in exactly the same manner as it would be if used
for a single invoice. While the card shown is used in a tickler, it
would be improved by the addition of the numbers across the top, which
would permit of alphabetical indexing.

=Local Collections.= Collections from local customers are usually made
by collectors. In handling such collections, a system that will enable
the office to keep track of the work of each collector is necessary.

[Illustration: Fig. 19. Triplicate Statement for Collectors]

One large mercantile concern has solved the problem by using the
following system. This concern has a large number of customers who make
frequent purchases. For convenience, the city is divided into four
sections, one for each week in the month. Each section is divided into
five parts, representing the days of the week from Monday to Friday,
inclusive. One collector covers the entire city, calling on each
customer once a month.

Arrangements are made with the customers in each section to pay their
bills at a certain time each month--the bills of all customers in the
first section are collectible during the first week in the month. Each
customer knows, also, on what day of the week he is to expect the
collector.

Statements are made Saturday morning for all accounts to be collected
the following week. These statements are made in triplicate, as shown
in Fig. 19. Two copies are given to the collector, who arranges them in
a file according to his daily routes. One copy is kept in the office,
filed by routes.

When the collector makes his call, he receipts one copy of the
statement and delivers it to the customer. The second copy is kept by
the collector and turned in with the collection. If the customer is
not found, or if he fails to pay, both copies of the statement must be
turned in by the collector.

Each morning the collector makes his report for the previous day.
The cashier compares the collector's report with his copies of the
statements, and, as the collector must turn in both of his copies when
no payment has been made, a safe check is had on the collector. To
make the check more positive, it is the custom of the cashier to mail
a copy of the statement to those customers who have made no payments,
or partial payments, requesting them to compare with their records and
advise if any discrepancies are found. This makes it impossible for the
collector to hold out collections without detection.

=Collecting from the Ledger.= In many houses having no organized credit
department, the collections are handled by the bookkeeper. When this
work is added to his many other duties, the bookkeeper is obliged to
devise some scheme that will eliminate detail--he has no time to make
additional records. His method is to follow up collections direct from
the ledger.

But there must be some method of bringing the accounts to notice when
they require attention--an automatic system. The most simple scheme
is shown in Fig. 20. Across the end of the ledger sheet--which is
loose-leaf--- numbers representing the days of the month are printed,
and metal markers, or tabs, are attached over the due dates.

To represent different stages in the collection of the accounts,
different colors are used. When a charge is posted to the ledger sheet,
a black tab is placed over the date on which the bill falls due. When
payments are posted the tabs are removed, provided the account is paid
in full; otherwise it is moved forward to the next due date. After
the day's remittances are posted, all sheets with black tabs over the
current date are referred to, and statements made. At the same time,
white tabs are substituted for the black.

[Illustration: Fig. 20. Loose-Leaf Ledger Cross-Indexed for Due Dates]

[Illustration: Fig. 21. Quadruplicate Draft Form which Includes Letters
of Advice to Bank and Drawee]

The next step is to make drafts for all accounts on which white tabs
have appeared ten days, that is, on the 10th drafts are made for all
accounts with white tabs over the 30th. Blue tabs are then substituted
for white. If the draft is returned, a red tab is substituted. The red
tabs indicate accounts past due, which are subject to such action as
may be considered advisable. This ledger sheet, with the adjustable
tabs, insures attention to collections, regardless of the method of
filing.

=Handling Drafts.= When drafts are used extensively, considerable
detail is involved in handling the records. Any method that will reduce
this detail means a material reduction in the expense of conducting the
work of the collection desk.

The usual method is to write the draft and register it in a draft
record book. Then the necessary record is made on the collection
card. A draft register is used that there may be a record showing the
aggregate of drafts outstanding, and the number and amount in the hands
of each bank--where drafts are sent direct, instead of through a local
bank. The next step is to write a letter of advice to the bank. This
method necessitates writing the names of the bank, the drawee, and the
amount of the draft three times--on the draft, letter of advice, and
draft register.

By the use of properly designed forms, this duplication can be avoided.
Fig. 21 shows a set of forms designed for the purpose. _A_ is the
original draft, _B_ is the letter of advice to the bank, _C_ is a
letter of advice to the drawee, and _D_ is the office record. The
draft, _A_, is attached to the letter of advice, _B_, and is detached
by the bank. The four forms are so printed that the date, name of the
bank, amount, and name and address of the drawee register perfectly.
The blanks are properly spaced for use in a typewriter, and all copies
are made with one writing.

Copies _A_ and _B_ are mailed to the bank, and _C_ to the drawee. From
copy _D_ the record is made on the collection card, after which it is
filed in a card tray, under the name of the bank. This keeps copies
of all drafts sent to each bank together, and the total of all drafts
outstanding is quickly obtained on an adding machine. When payments are
made, or drafts are returned, these copies are removed from the files.
Frequent reference to the file insures the necessary follow-up on banks
that are slow in reporting.

=Installment Collections.= Probably the most difficult class of
accounts to handle from a collection standpoint is installment
accounts. Payments are quite irregular, both as to time and amount, and
frequent changes of address make it difficult to keep track of debtors.

[Illustration: Fig. 22. Contract for Installment Sales]

The collector of installment accounts must have the faculty of
meeting and satisfying all sorts of people. He is obliged to listen
to hard-luck tales without number, and while sympathizing with the
customers, must be patiently persistent. If unable to collect the
dollar due, he will accept a half-dollar to keep the account active. So
long as he collects _something_, each time a payment is due, he is in
a position to make the debtor feel the importance of the contract, but
let one or two collection days go by without a payment, and the debtor
has the upper hand. He then feels that he can stand-off the collector
whenever he happens to have other uses for his money, a condition which
becomes increasingly frequent.

An installment dealer will nurse an account to the limit, rather than
take back the goods he has sold. Once he has collected the cost of the
article, he will accept payments of almost any amount, but it will not
do to let the debtor know how lenient he is prepared to be; at least a
semblance of enforcing the contract must be kept up.

[Illustration: Fig. 23. Installment Contract Register]

The most familiar branch of the installment business is the sale of
house furnishings and pianos. The sale of house furnishings on the
installment plan is rapidly increasing, and probably more pianos are
sold on this than any other plan. Furniture dealers who formerly sold
only for cash or on approved credits, are finding profitable business
among the better class of installment buyers.

Installment sales are made on contracts, or leases, which provide that
title to the goods shall be held by the seller until all payments have
been made, and that the right of possession shall be forfeited by the
buyer if he fails to make any payment when due. When the contract is
folded, the outside shows a form printed as in Fig. 22. This particular
form is used by a musical instrument house.

At the head of the form is shown the contract number, amount, date of
contract and collection date, name and address of the buyer, and the
name, number, and make of instrument. Below is space for a record of
payments, divided as to principal and interest, with the names of the
collectors. When a sale is made, a contract is made in duplicate, the
original remaining in possession of the seller and the duplicate being
given to the purchaser.

[Illustration: Fig. 24. Ledger for Installment Accounts]

=Installment Register.= All contracts are registered in numerical
order, in an installment register ruled as shown in Fig. 23. One line
is used for each contract, the particulars recorded being the date and
number of the contract, name and address of the buyer, and the amounts
to be credited to the different sales accounts. It is not necessary
to list the articles sold, as a complete list will be found in the
contract.

The footings of the money columns are carried forward to the end of
the month, when the totals are credited to the sales accounts in the
general ledger. The footing of the _total_ column, which is the total
of all installment sales, is posted to the _debit_ of an _installment
contract_ account in the general ledger. This is a controlling account
of the installment ledger accounts.

=Installment Ledger.= Installment accounts necessitate a form of
ledger differing from that used for ordinary accounts. The special
requirement in such a ledger is space for recording a large number of
payments. Fig. 24 shows a form of loose-leaf ledger sheet designed for
installment accounts.

[Illustration: Fig. 25. Special Cash Receipt Book for Installment
Collections]

One of these ledger sheets is used for each installment contract. The
particulars of the contract are recorded at the head of the ledger
sheet, above the name and address. The particulars recorded are the
number of the contract, the amount and date, amount of payments,
collection day, and whether payments are to be made weekly or monthly.
The body of the form is ruled for a record of payments and balances.

The ledger sheets are arranged in alphabetical order, about
five-hundred sheets in each binder. Each alphabetical section is
separately indexed to afford quick reference to all accounts. If the
contract number only is known, reference is had to the installment
register, where all contracts are recorded in numerical order.

=Cash Receipts.= For installment collections, it is well to provide a
special cash receipt book. Such a form is shown in Fig. 25. This form
is used exclusively for installment receipts, and payments are posted
direct to the installment ledger. The total cash for the day is entered
as one item in the general cash book.

=Statement of Installment Ledger.= From an accounting standpoint,
installment accounts present certain difficulties not experienced
in the handling of other classes of accounts receivable. There is
always a question as to the real value of the accounts outstanding,
a doubt as to the advisability of including the total balances in a
statement of assets. A live account--one on which payments are being
made regularly--is legitimately considered as good an asset as any
other account receivable, but the value of the delinquent account--when
payments are past due--is questionable, and if included in a balance
sheet, the nature of the asset should be clearly stated.

That the actual condition of these accounts may be shown on the general
ledger, it is the better practice to carry two accounts, representing
live and delinquent accounts. Installment sales should be charged to an
_Installment Accounts Receivable_ account, and payments credited to the
same account, which then becomes a general ledger controlling account
of the live accounts in the installment ledger. Another account should
be opened in the general ledger under some such caption as _Installment
Accounts Delinquent_. When accounts become delinquent, they should be
transferred by journal entry to this account. The journal entry would
be:

                        _Installment Accounts Delinquent
                            Installment Accounts Receivable_

This transfer may be made daily, weekly, or monthly, but the period
between transfers should never be longer than one month. Delinquent
accounts may be indicated in the installment ledger by placing a metal
tab of some distinctive color on the ledger sheet or card, or they may
be segregated by transferring them to a special delinquent binder or
file.

[Illustration: Fig. 26. Daily Report of Installment Accounts for the
Credit Man]

When a payment is received on a delinquent account, that account
immediately becomes live, and the amount should be transferred by
journal entry to _Installment Accounts Receivable_. The journal entry
would be:

                        _Installment Accounts Receivable
                            Installment Accounts Delinquent_

Each day, the amount of accounts revived--delinquent accounts on which
payments have been received--should be ascertained. If it is desired to
save the labor of making journal entries daily, a memorandum of these
amounts may be kept and a journal entry made at the end of the month.

When a delinquent account reaches the condition where it is considered
worthless, the amount should be charged to profit and loss, by the
journal entry:

                                _Profit and Loss_
                                   _Installment Accounts Delinquent_

This should be done whenever the credit man carefully examines all
delinquent accounts, which should be not less frequently than once a
month. When payments are received on these accounts, they should be
treated as revived accounts, with proper credit to profit and loss, if
revived during the current fiscal period; but if, in the meantime, the
books have been closed, they should be treated as new accounts.

It is quite necessary for the credit man to know every day how the
installment accounts are running. That he may do this, a daily report,
as shown in Fig. 26, should be made by the installment collection
clerk. The report form should be in loose-leaf, and if the installment
sales are divided by departments, the necessary number of columns to
accommodate the departmental records may be provided.

The report is headed with the amounts of accounts outstanding, divided
as to live and delinquent. New accounts opened and delinquents revived
are added in the live column, and delinquents revived are deducted from
the delinquent column. Cash collections, discounts and allowances, and
delinquents today are deducted separately from the live accounts, and
delinquents today added to the delinquent column. Then the delinquents
charged to profit and loss are deducted from the delinquent column.
The balances represent the net amount of outstanding accounts, and
must agree with the two controlling accounts, _Installment Accounts
Receivable_ and _Installment Accounts Delinquent_.

[Illustration: Fig. 27. Front and Back of Collector's Card]

[Illustration: A CORNER IN THE STENOGRAPHIC DEPARTMENT Weis
Manufacturing Co., Monroe, Mich.]

Such a report enables the manager or credit man to keep in touch with
the actual condition of installment accounts. As a rule, three copies
should be made, one for the manager, one for the credit man, and one to
be kept on file by the collection clerk.

=Filing Contracts.= Some houses follow the practice of allowing the
collector to carry the original contracts, and in such cases the
contracts are filed according to the dates on which payments are due.
It is claimed that it is necessary for the collector to have the
contract, as the customer is quite liable to lose the duplicate and may
ask for particulars about the items purchased.

This plan is not advocated on account of the liability of loss of
contracts. If it is desirable for the collector to carry the contract,
a third copy should be made for that purpose. Original contracts should
be kept in a fire-proof safe, and should be filed in numerical order.
The most convenient file is a document file, in which contracts can be
filed folded.

=Collector's Card.= The most convenient method of handling collections
is to supply the collector with cards as shown in Fig. 27. On the face
of this card is a record of particulars, similar to that shown on the
outside of the contract, while the reverse is ruled for a record of
payments.

Since all contracts call for payments on certain days of the week or
month, it is very necessary that the collection cards be brought to
notice on the collection days. A simple method of providing for this is
to use a card file equipped with a set of thirty-one numbered guides
to represent the days of the month, or a set of guides printed with
the days of the week. The cards are filed back of the guides which
represent the collection days.

It is customary to divide the city into sections, assigning a collector
to each section, the number depending on the size of the city and the
number of accounts. It is necessary to use as many files as there are
collectors, with an office file added for those who prefer to pay at
the office.

Every morning each collector is given the cards on his route, on which
payments are due. On his return, he turns in all cards to the cashier
with the amount collected. If a back call is necessary, the card is
filed ahead a day or two.

The cards in the office file are placed on the cashier's desk each
morning and payments are recorded as made. Those on which no payments
are recorded are kept on the desk, and after a reasonable time are
given to a collector to follow up.

When payments have been recorded in the cash book, all cards are again
placed in the files under the next collection dates. They are then
ready for the collectors.

[Illustration: Fig. 28. Receipt for Installment Collections]

=Collector's Receipt.= Some method is, of course, necessary for
checking up the collectors, and to insure the turning in of all money
collected. A very satisfactory plan has been devised by the cashier
of a western music house, in the form of a duplicate receipt as shown
in Fig. 28. These receipts are bound in book form and numbered in
duplicate, the original being perforated.

The receipt is especially convenient for the customer, as it shows
exactly how the payment is to be credited. For the same reason, it
is equally convenient for the cashier. All of the numbered receipts
must be accounted for; if one is spoiled, it must be turned in, which
provides an effective check on the collector.

=Mail-Order Installment Collections.= An increasing volume of
installment business is now done by mail. An established principle of
the mail-order business is that customers must be given an opportunity
to inspect the goods before they can be expected to make a binding
contract for their purchases. Beginners in the mail-order field are
quite likely to look on this as an impractical plan, fearing the loss
of goods, but experience soon teaches them that it is the only plan on
which the business can be successfully conducted.

When experienced mail-order men, with the courage to try out a new
idea, experimented on the plan of allowing customers to return goods,
they found that the more liberal the offer, the more business they did.
This led to the giving of an absolute guaranty, offering to ship goods
on approval with the privilege of return for any reason within certain
time limits.

As the fear of loss of goods became less pronounced, it was argued that
more liberal terms of payment could be granted with safety--if goods
could be sold successfully on the installment plan to local customers,
why not by mail? A trial proved the plan to be practical, and now many
articles are sold by mail on the installment or easy payment plan.
Goods are even shipped without an advance payment, either the goods or
the first payment to be returned within a certain time limit.

In selling goods by mail on the installment plan, it is necessary
to secure a binding order, in which the customer agrees to return
the goods within a certain number of days, or make the payments as
specified, with an agreement that title to the goods shall be held by
the seller until all payments have been made according to contract.
The contract must also give the seller the right to recall the goods
whenever the customer shall fail to make a single payment as agreed.

The success of the mail-order installment business depends largely on
the manner in which collections are handled. Not having the advantage
of personal contact with the customer, the collector is obliged to
depend on the knowledge of the man which he gains from references and
the correspondence of the customer. But the shrewd collector soon
learns to read his man from the general tone of the correspondence,
and sometimes from the absence of communications from the debtor. When
he has learned the character of the man, he can handle each account
independently; until then, he is obliged to follow the same line of
action in all cases, depending on the law of averages to prove the
correctness of his theories.

[Illustration: Fig. 29. Loose-Leaf Ledger for Mail-Order Collections]

Too great emphasis cannot be placed on the importance of studying the
character of the man. It is only by paying special attention to this
point that the collector can learn to treat each account individually.
In the first place, the class of goods sold largely governs the
class of customers from a credit standpoint. The men who buy sets of
business books are, as a rule, safe credit risks. Their training and
environment have a tendency to teach them the importance of fulfilling
an obligation; appreciating the necessity of maintaining their credit
standing, they will make every effort to carry out the terms of the
contract, or give a valid reason for asking an extension of time.
Illustrating the opposite extreme is the class who will sign a contract
for the purchase of a cheap musical instrument, at a high price, to
gratify a desire to outdo a neighbor, without regard to their ability
to make the payments as agreed. Such people trust to luck, and expect
to pay in promises if they do not happen to have the money. For this
reason, the percentage of profit that must be added to cover the cost
of collection increases, as the quality of the goods and the standard
of the credit risk decrease.

=The Account.= Accounts with mail-order installment buyers are handled
in a similar manner to those of local buyers. All contracts should be
numbered as received, and registered in numerical sequence. The form of
register already shown answers the purpose very nicely.

[Illustration: Fig. 30. Mail-Order Collection Card]

After registering, the particulars of the contract should be entered in
the ledger. A form of ledger sheet used by a publishing house is shown
in Fig. 29. This is loose-leaf, and does not differ in form from the
ordinary balance ledger, except in the particulars given at the head
of the sheet. Here is shown the name and both residence and business
address of the customer, number of contract, monthly payment and due
date, references, source of order, price and name of books, and date of
shipment. These sheets are filed in post binders, five-hundred sheets
to the binder, and indexed alphabetically.

The next step is to enter the contract on a collection card. A
satisfactory form is shown in Fig. 30. This is a card 4×6 inches in
size, and is practically a duplicate of the ledger sheet. The card is
filed in a chronological file under the due date--that is, if payments
are due on the 24th of the month the card is filed under that date.
Except when removed from the file for the use of the collector, or to
enter payments, the card is always filed under the same date. If it
becomes necessary to have an account brought to notice on other than
the regular collection dates, a memo is made on a separate card and
filed in a special tickler.

Should it become necessary to refer to a card on other than
the regular collection dates, reference to the ledger--indexed
alphabetically--gives the due date, by which it is quickly located.
Sometimes, however, it is desirable to refer to all contracts in a
given territory. To make this possible, a card file with indexes
printed with the names of states and cities is provided. For each
contract a plain 3-×5-inch index card is used, the name, address, and
contract number only, being entered. This provides a complete set of
indexes--alphabetical in the ledger; numerical in the register; by due
dates in the collection file; geographical in the card file.

When a payment is received, it is entered in the cash book and posted
to both the ledger and the collection card. Every card must be located
at the time payments are entered in the ledger, or the customer will
very likely receive notices after he has made the payment.

=The Collection Follow-Up.= The promptness of the follow-up on this
class of collections is of the greatest importance--the debtor should
not be given the excuse that he failed to receive a notice. Though not
provided for in the contract, the debtor expects a notice of every
payment due.

When the goods are shipped, a formal notice of shipment should be
mailed, and if the first payment has not been made, it should be
requested. In ten days, or after the approval time limit has expired, a
second notice should be mailed, provided no payment has been received.
This can be a formal notice, and should assume that the goods are
entirely satisfactory, and at the same time calling attention to the
fact that the first payment is past due. If this does not bring a
remittance within ten days, it is well to send a draft notice. This
notice should go into the conditions of the contract in some detail,
and, without assuming a threatening attitude, it should assume that if
payment is not received within five days it is the desire of the debtor
that a draft be made. Either the notice or the draft will usually bring
the first payment, or the return of the goods.

[Illustration: Fig. 31. Attorney's Collection Register]

Each month, a formal statement showing the exact condition of the
account should be mailed a few days before the due date. It is well,
on this statement, to make an offer of a discount for cash to pay the
account in full. A discount of 5% on an account that has several months
to run will often be accepted, and is profitable to both parties. This
statement should be followed in ten days by a second notice, also of a
formal nature.

All notices up to this point may be printed, but further requests
should be in the form of letters. Except when it has been found that
an account should be handled in a special manner, form letters will
be found most satisfactory. The letters should start out mild in tone
increasing in insistence as the series is extended.

When persuasion fails, the debtor should be notified that the account
is being placed in the hands of an attorney, or a collection agency.
But before suit is actually started, it is well to investigate the
probability of collecting a judgment. If a man is judgment proof, it
is much better to take the necessary steps to secure the return of the
goods. This is usually accomplished by requesting the express company
to call on the debtor for the package.

Every debtor has his vulnerable point; if that point is reached, the
money can be collected. The most successful collector is the one who
finds that point in the largest number of cases.

=Collections by Attorneys.= The handling of collections constitutes an
important part of the practice of many attorneys. It would naturally be
supposed that attorneys handling collections for their clients would
have an efficient system of records, but unfortunately this is not the
rule. Except in offices handling a large number of claims the methods
are very lax--there is an entire absence of a system that will reveal
the exact status of every claim. And yet to install a system that will
give just the information desired is very simple, and the operation
requires less labor than to handle the claims in a haphazard way.

[Illustration: Fig. 32. Attorney's Collection Card]

When a claim is received by an attorney, it should be given a
number, and registered in numerical order. The register should be a
book--either loose-leaf or bound--with headings for the date received,
names of debtor and creditor, amount of claim, amount collected, fees,
amount remitted, and date remitted or returned, as shown in Fig. 31.
This is not intended as a complete history of the claim, but merely as
a permanent record.

The papers in each claim should be placed in a folder. The old method
was to use a manila jacket or document envelope, to be filed in a
document file. The objectionable feature of this method is that the
papers must be unfolded for reference. A better plan is to use a
correspondence folder, such as is used in the vertical file, in which
the papers can be kept flat.

Whatever style of folder is used, all papers should be fastened--either
pasted, or by means of a paper fastener. On the outside of the folder
should be written the names of debtor and creditor, and the number
of the claim. The balance of the space on the folder can be used for
recording special information about the claim from time to time. These
claim folders should be filed numerically, according to claim numbers.

[Illustration: Fig. 33. Back of Attorney's Collection Card]

For a convenient record for daily reference, giving a brief history of
the claim, a card is found very satisfactory. The folders are somewhat
bulky and inconvenient for quick reference, and, except in special
cases, it is not necessary to refer to all of the papers. Brief notes,
which can be made on a card, will answer every purpose.

A convenient record form is shown in Fig. 32, which is printed on a
card 4×6 inches in size. This gives the particulars of the receipt of
the claim, the amount, date, and number, with a record of collections,
fees, and remittances. A card is made for each claim, and filed
alphabetically under the name of the debtor. The reverse of the card
is printed as shown in Fig. 33. This shows the different steps taken to
enforce collection.

The card file provides an index to all debtors against whom claims
are on file, while both the register and the file of folders provide
numerical indexes. But it is the creditor who is the client of the
attorney, and it is very necessary that he be in a position to refer
to or report on all claims received from any client. This necessitates
another index to creditors, which is provided for in the card form
shown in Fig. 34.

[Illustration: Fig. 34. Index to Creditors for Attorney]

The card is headed with the name and address of the creditor,
below which is a list of all claims filed by him. When a claim is
returned--paid or unpaid--the date is entered on this card, so that the
record shows only unpaid claims. These cards are filed alphabetically,
under the names of the creditors.

A follow-up of the claims is provided by a plain index card on which is
written the name of the debtor and number of the claim. This card is
filed in a tickler, under the date on which it is desired to follow up
the claim. This serves as a memorandum only, all records being made on
the claim card or the folder.

[Illustration: A SCENE IN ONE OF CHICAGO'S BUSY FREIGHT YARDS, SHOWING
AN OUTBOUND FREIGHT HOUSE]




THE SHIPPING DEPARTMENT


INTRODUCTION

The average manager of a business has but a rudimentary knowledge of
traffic affairs as they relate to the shipment of his goods. He does
not know that he is receiving the lowest rates to which he is entitled,
or that the most favorable classification is applied to his shipments.

A large percentage--probably a majority--of the concerns which do
any considerable amount of shipping, or receive a large quantity of
freight, lose annually in overcharges, due to improper classifications,
defective packing, and a general lack of knowledge of the subject, a
much larger sum than would be required to pay the salary of a competent
traffic manager. There are so many intricate details to be considered
in the shipping problem, that the subject requires special study, and
shippers whose volume of business is even moderate find it profitable
to employ a traffic manager.

Not every shipper is doing a business of sufficient volume to warrant
the employment of a man to devote his entire time to this question,
but, in the organization of every business doing even a small amount
of shipping, there should be one man who will make a study of traffic
matters. He need not have an intimate knowledge of the entire subject
of traffic affairs, but he should be posted on all questions that have
a bearing on the shipment of the goods of his house. When no regular
traffic manager is employed, the duties of the position fall on the
shipping clerk; he is the logical man to make a study of the subject.

Considered from the standpoint of his knowledge of shipping
requirements, classifications, manner of packing, and the application
of special rates, a man who has had experience in the freight
department of a railroad makes the most successful traffic manager.
Such a man may not be fitted to organize and handle the work of the
shipping department but, in a concern large enough to require the
services of a traffic manager, there will be work enough to warrant the
employment of an assistant to look after this branch of the work.


THE SHIPPING CLERK

In this discussion of the organization of the shipping department, the
shipping clerk will be considered as assuming the duties of traffic
manager, as well as those that usually pertain to his position. He will
be at the head and have full charge of the department, keeping such
records as may be called for by the business.

It is the duty of the shipping clerk to see that all goods are shipped
promptly, packed and described to secure the most favorable rates, and
properly routed. He must have a checking system that will enable him
to locate errors and to know that all goods called for by an order
have been shipped. He will be assisted by such packers, checkers, and
porters as may be required to handle the work.

The packers will receive the goods called for by an order from the
stock men, and will pack them properly. They will check all goods
packed against the order. In this, they will be assisted by checkers,
who check the goods received on the shipping floor and again when
they are packed. Discrepancies must be reported at once and adjusted
immediately.

In some concerns, the shipping clerk is also the stock clerk, in which
case he has charge of the actual filling of the orders. He is assisted
by stock men, who select the goods and assemble the orders under his
direction.

Like the head of any other department, the shipping clerk should have
full control of his department. No other person in the organization
should be permitted to make shipments. Concerns have been found in
which it was the custom for different employes to ship small articles
without the knowledge of the shipping clerk. Invariably, this leads
to mistakes and results in blame being wrongfully placed on the
shoulders of the shipping clerk. And even greater damage is done in the
disruption of the organization.

=Information Required.= The shipping clerk should be fully informed on
all traffic questions that affect the shipment of the goods of his
house. Of first importance is a knowledge of classifications, that he
may know that his shipments are placed in the lowest classification to
which they are entitled. Copies of the classifications can be obtained
from any local freight office.

In this country there are three principal classifications, these being
the _official_, governing the eastern territory; _western_, governing
western territory; _southern_, governing southern territory. There are
also a few special classifications governing classifications in certain
states. While some attempt at uniform classification has been made, the
several classifications show many variations, the same article taking
different classifications in different territories.

When classifications are received, they must be carefully studied
by the shipping clerk that he may really understand to what
classifications his goods are entitled. It might be supposed that
a certain article or class of goods would always take the same
classification, but this is not the case; other questions than the name
have a bearing on the question.

The manner of packing goods very often determines the classification.
Certain articles are placed in a lower classification if boxed than
they would be if crated. This is specially true of goods that are
liable to damage in transit. Many shippers make a practice of crating
goods because it can be done more cheaply than boxing, without
realizing that the difference in packing cost is more than offset by
the increase in the freight rate.

The classification is also sometimes determined by the manner in which
the goods are described. It is necessary, therefore, to study the
classifications with reference to the description that will insure the
most favorable rate. However, false descriptions made for the purpose
of securing a lower classification must be avoided, as the Interstate
Commerce Act provides a heavy penalty for such falsification. But there
may be several different descriptions which legitimately apply to a
given article, each placing it in a different class. A case in point:
The western classification made no provision for filing cabinets in
carload lots, with the result that a carload shipment, described as
filing cabinets, took the rate provided for less than carload lots. But
the same classification gave a lower classification, consequently a
lower rate, on office furniture in carload lots. Filing cabinets being
office furniture, it was entirely legitimate to describe such shipments
as office furniture.

Another illustration of the effect of description on the classification
is found in shipments of carriages. The classification, and consequent
rate, on this commodity is based on the space that it will require,
rather than on the rate. If shipped knocked down and properly crated,
with the dimensions stated on the shipping bill, a carriage takes a
lower classification than if shipped assembled, or if the dimensions of
the crate are omitted.

These illustrations are sufficient to show the importance of a thorough
knowledge of the provisions of the different classifications. The
shipping clerk who would give the best service to his house should
make a study of this subject, even if he is obliged to take the
classifications home and study them at night. Every shipper should see
that his shipping clerk is supplied with copies of classifications
governing the territory in which he is doing business, and give him an
opportunity to learn their provisions in respect to the commodities
which he ships.

=Class Rates.= A _class rate_, as the name implies, is one based on
the classification. All commodities are divided into classes, six in
number, and all commodities of the same class--with certain exceptions,
explained later--take the same rate. Schedules of rates between
given points, based on the class, are prepared by the classification
committees, but before being put into effect, they must, in case
they apply between points in different states, be submitted to the
Interstate Commerce Commission for approval. While not a _rate-making_
body, the commission is a _rate-governing_ body, constituting,
in a certain sense, a board of arbitration between shippers and
transportation companies.

The rates being based on the classes--the higher the class, the higher
the rate. To determine the rate, it is first necessary to find the
classification; reference to the rate schedule will show the rate for
each class.

=Commodity Rates.= A commodity rate is one applying to a special
commodity, between definitely stated points. Commodity rates are
established by the railroads to meet some special condition, and with
these the classification committees have nothing to do.

A commodity rate does not apply to articles not named in the tariff
even though they are of a similar nature, nor do they apply between
points not specified in the special tariff. A commodity rate is, in
effect, a special rate; it offers special inducements for the shipment
of certain commodities, but is not intended to favor any one shipper.
The commodity rate is for the benefit of all shippers of the commodity
named.

The volume of traffic is the chief factor in establishing rates,
either regular or special. It is an especially important factor in
establishing a commodity rate. In a given community, some one commodity
may be produced in large quantities. Perhaps it is a raw material which
must be transported to certain manufacturing centers. To encourage
the development of the industry, thereby creating a large volume
of traffic, the railroads leading from the point where the traffic
originates establish a commodity rate to other points, where the raw
material can be used to advantage by the manufacturer. Or, perhaps,
important manufacturers are located on other roads, in which case
connecting lines join with the originating road and issue what is
known as a _joint tariff_. This enables the producer to deliver his
raw material to the manufacturer on favorable terms, when to pay class
rates might compel him to abandon the enterprise, with a consequent
loss of traffic to the railroads. This discriminates against no one,
since every shipper of the particular commodity between the points
named is entitled to the special commodity rate.

Frequently, however, a commodity rate exists between certain points
which might, under certain conditions, be taken advantage of by a
shipper located at a point outside of those named in the commodity
tariff. For illustration, a manufacturer in Peoria, Illinois, is
shipping a commodity on which a special rate is granted between Chicago
and Milwaukee, but takes a class rate from the point of shipment. He
makes a shipment to Milwaukee and pays the through class rate provided
from the point of shipment, when by proper billing he would have paid
the class rate to Chicago, and secured the benefit of the commodity
rate from that point to Milwaukee. A lack of knowledge of commodity
rates in effect in the manufacturer's territory has resulted in an
unnecessary expense--a loss of money.

The claim might be made that the billing clerk at the local freight
office should have given the shipper the benefit of the lowest rate.
But he will fall back on the classification and be prepared to show
that he has given the only rate quoted on shipments from Peoria to
Milwaukee, which is the class rate. It is no part of his duties to
keep posted on commodity rates granted by another road, while it is
distinctly to the interest of the manufacturer to know of the existence
of all such rates applying to his product.

=Freight Tariffs.= The Interstate Commerce Act provides that two copies
of every freight tariff issued by the railroads shall be placed on file
at each freight office, for the inspection of the public. Since the
rates must be made public, the railroads do not object to supplying
shippers with copies of the tariffs applying to their product. Through
the local freight agent, copies of all tariffs applying from the point
of shipment can be obtained.

It has been shown that, in the case of commodity rates, copies of
tariffs from the point of shipment are not always sufficient. It is
necessary to obtain, from connecting lines reaching the territory
in which the trade of the house lies, copies of all special tariffs
applying to the commodities shipped. The freight departments of all
railroads, through their solicitors, make a practice of supplying
copies of all regular and special tariffs to all large shippers on
their lines, and to shippers on connecting lines who are in a position
to divert traffic to them. Any shipper who has been overlooked, should
write to the freight departments of all lines in his territory asking
to be placed on the mailing list to receive copies of all tariffs
affecting his product. By doing this, he will secure copies of all such
tariffs as soon as issued.

The subject of commodity rates is one of the most vexing with which the
shipping clerk has to deal, as it is also one of the most important. To
compile a complete file of special tariffs, involves close study and
much labor. But when once done, it can be kept up-to-date with little
difficulty, and the saving resulting will far outweigh the cost.

=Filing Tariffs.= The manner in which freight tariffs coming into the
office are filed is important, for unless properly filed and indexed
they are likely to be of little value. The filing system must provide
for quickly locating any tariff, and for locating all tariffs that may
have a bearing on a particular case.

In the average shipping clerk's office, it is not uncommon to find the
tariffs dumped into a drawer, without regard to their order, or hung on
a hook on the wall. When a rate is wanted, it is necessary to search
through the tariffs until one giving the rate is found. The chances are
that the first rate found will be used, regardless of the fact that
another tariff shows a special and lower rate.

[Illustration: Fig. 1. Vertical File of Indexed Folders for Railroad
Tariffs]

A very satisfactory file for freight tariffs is the vertical file,
and one drawer will hold all of the tariffs required by the average
shipper. If a two-drawer cabinet is provided, the shipping clerk will
usually find other uses for the extra drawer.

Each railroad whose tariffs are on file should be assigned a folder,
and the folders should be filed alphabetically under the names of
the railroads, as shown in Fig. 1. All tariffs from one railroad
should be filed in the folder assigned to that road, and arranged
according to their numbers. All railroads number their tariffs and,
in correspondence, refer to them by number. Reference to the tariffs
will be facilitated, therefore, if those of each railroad are kept in
numerical sequence.

Loose-leaf binders are sometimes used for filing tariffs, but not all
tariffs are in proper shape for punching to fit the binder. Another
disadvantage in using a loose-leaf binder is that freight tariffs are
not uniform in size, resulting in an awkward, unwieldy book. For these
reasons, the vertical file is found more satisfactory.

=The Index.= Since the tariff folders are filed in alphabetical
sequence, no index is required to locate the tariffs of a given road,
but a cross-index to locate all tariffs that apply to a given point, is
a necessity. This index should be in card form, a card being used for
each town to which the house ships, or is likely to ship, its products.

[Illustration: Fig. 2. Cross-Index to Tariff File]

A very satisfactory form of card for this cross-index is shown in Fig.
2, which also shows the manner of filing. At the head of the card is
the name of the town, and the name of the railroad on which it is
located. Below the heading, the first column shows the names of all
railroads issuing tariffs to the town in question, whether or not the
town is located on the road. Following this are columns for the number
of the tariff and for either commodity or class rates. These cards are
filed in the same manner as the tariff folders--alphabetically by names
of the railroads. A guide card is provided for each road and all cards
representing towns on that road are filed in alphabetical order behind
the guide card.

[Illustration: Fig. 3. Card for Class Rates]

Suppose a rate is wanted from a point on the Delaware, Lackawana &
Western, to a point on the Burlington. Reference to the Burlington
tariffs does not give the rate, for the reason that the Burlington
does not issue tariffs from points on the D. L. & W., but reference
to the card shows that four roads issue tariffs from Buffalo to
Burlington points, one of them being a commodity tariff. Reference to
the commodity tariff shows that the special rate applies from a point
in Ohio to Chicago, a connecting point with the Burlington. By proper
routing, this special rate can be taken advantage of, class rates
applying the balance of the distance. Without the index, it would be
necessary to look through several folders, with the possibility that
the special tariff might be overlooked.

=Condensed Rate File.= A condensed rate file covering a definite
territory will prove a convenience to most shippers. The trade of most
houses is confined to a certain definite and rather limited territory.
A manufacturer may make an occasional shipment to a point outside of
his regular territory, but, as a rule, his shipments will be confined
within certain limits. This is even more true of the jobber and the
wholesaler.

If a special rate file, covering the particular territory in which
the shipper's trade lies, is prepared, it will be found convenient
for reference, and will save consulting the tariff files whenever a
rate is wanted. Such a file can be arranged on cards, or in a small
loose-leaf book. One card or sheet should be used for each town, the
name of the town being written at the head of the card.

[Illustration: Fig. 4. Card Index for Classifications]

The card should show the rates for all classes from the shipping point
to the destination, as well as the route. It may be necessary to record
rates from more than one shipping point. A manufacturer may have two or
more shipping points, and it is important to know from which points he
can secure the most favorable rates. It is also advisable to include
the shipping points of the chief competitors, that they may be given
due consideration in meeting competition.

Fig. 3 shows the form of card for this rate file. The cards should be
filed alphabetically, and it is well to include cards for some of the
principal towns outside of, but convenient to, the regular territory.
The rates for the different classes, rather than on specific articles,
are given for the reason that the classification is more likely to
change than the rate. If the rate on a certain article is given, and
the classification of that article is given, should the classification
of that article be changed, it would be necessary to rewrite the
entire index. It is much less difficult to change the record of the
classification of one article than to revise all of the rates.

=Classification Index.= For convenient reference, the shipping clerk
should prepare an index showing the classification of all articles
that he is obliged to ship. This classification index should be on
cards or in loose leaf, whichever is used for the rate file. One sheet
is used for each article, the name of the article being written at the
top.

[Illustration: Fig. 5. Card for Commodity Rates]

The record should show how the article is packed, the class, and the
classification in which it is found. As has been stated, more than
one class may apply to a given article, depending on the manner of
packing; an article may take the first-class rate if boxed, or double
first-class if crated. In such cases, both classes with the manner of
packing should be shown.

These classification sheets should be filed alphabetically in the
file used for the rate cards, and they should be printed on stock of
a different color. Most shippers will need but a few of these sheets
as the number of articles shipped by one house is small, as a rule. If
a large number of articles is shipped, the classification index is of
even greater importance. A suitable form for this index is shown in
Fig. 4.

=Commodity=Rate File.= When any part of the goods shipped are subject
to commodity rates, a file of commodity rates is fully as important
as class rates. A commodity-rate file is arranged on similar lines
to the file of class rates. A card or sheet is used for each town to
which commodity rates apply, and the cards are filed alphabetically by
names of towns. These cards can be filed with the class rates, but a
distinctive color should be used.

The record should give the names of the articles taking commodity
rates, manner of packing, the point from which the rate applies, the
rate, the number of the tariff, and the name of the issuing railroad.
On the line below the name of the town appears the caption, _see
also_. This is for the name of some other point to which a commodity
rate applies. Boone, Iowa, for instance, may not be a commodity point,
though a special rate from Chicago to Clinton is in effect. The Boone
card would refer to Clinton, and the card for that town would show the
rate. Fig. 5 shows a form for commodity rates.

To compile such a record of rates as has been described, requires an
initial expenditure of much labor, but is a profitable investment. When
once compiled, changes can be recorded with little trouble. These files
will always be valuable for reference, not alone to the shipping clerk
but to the sales manager and the purchasing agent as well.

A comprehensive knowledge of classifications and rates will prove
valuable not only to the shipper, but to the receiver of freight.
It will save any merchant many dollars in freight charges on goods
purchased f. o. b. point of shipment. The shipper may not pack his
goods in a manner to secure the lowest rate, or he may not give the
proper description in the shipping bill. If his attention is called to
the matter by a customer, he probably will make the necessary changes
in his methods.

Even the proprietor of a small retail business will find a study of
this subject a paying investment. The writer has knowledge of a case
in which the owner of a general store saved some $165.00 in one year
by carefully checking every freight bill received, making claims for
overcharges, and watching the packing and routing of his goods. Surely
that amount would be worth saving, even to a house transacting a much
larger volume of business.

=Routing Shipments.= One of the most important duties of the shipping
clerk is the proper routing of his shipments. Like classifications
and rates, the subject requires careful study. In too many cases this
subject receives little attention, but by exercising care in routing
shipments, the shipping clerk can be of material assistance to the
sales department, and, incidentally, to the customers of his house.

Routing frequently affects the rate. It might appear logical to suppose
that the rate between two given points would be the same, regardless
of the route; but this is not the case. Of two routes to a given point,
one may be longer than the other. If shipping and destination points
happen to be in different states, the provision of the Interstate
Commerce Act which forbids a higher rate for a short haul than for
a long haul comes into play. Similar provisions applying to local
shipments, are found in the laws of certain states. In Iowa, for
instance, such a provision covers the transportation of passengers as
well as freight. One railroad is not permitted to meet the competition
of another having a shorter route between two points, but must base
its rate on the mileage. All of which goes to show the necessity of
considering the length of the haul in routing shipments.

The above conditions apply especially to shipments taking class rates,
but when goods which take commodity rates are to be shipped, the
question of routing is of even greater importance. It has been shown
that a commodity rate may be in effect between two points on one road,
or two or more roads may have issued a joint tariff which can be taken
advantage of. The question of commodity rates, therefore, has a most
important bearing on the routing of shipments.

Another factor that has a bearing on the routing is _basing points_,
which necessitates a knowledge of the points on which rates are based.
In the territories governed by the different classifications, certain
common points are used for basing rates. On shipments from the central
states to southern territory, rates are based on Ohio River points,
while, to western territory, they are, in many cases, based on Missouri
River points. Class rates from Chicago to all Missouri River points
are, as a rule, the same over all roads, but, to points beyond the
Missouri River, rates may vary from the different basing points; that
is, the rate from Omaha to a western point may be less than from Kansas
City, though the rate to these basing points is the same.

The alert shipping clerk will learn the basing points in the territory
to which he is shipping goods--which he can do by consulting local
freight officials--and will then secure tariffs from these basing
points to the towns he wishes to reach. This information he will
incorporate in his rate files.

Not least of the factors which should be considered in routing
shipments, is the accommodation of the customer. It is frequently
the case, that of two roads entering a town, the freight house of
one is more conveniently located for the shipper. Rates being equal,
shipments should be routed over the road from which the customer's
cartage charges are the lowest. Or the customer may have a sidetrack
to his warehouse from one road, which makes no switching charge, while
on every car shipped over another road a switching charge must be
paid. This charge may offset an advantage in rates. It always pays to
accommodate the customer. When the wishes of the customer are known,
they should be granted, within reasonable limits, even though it
involves extra expense.


FILLING ORDERS

In all large concerns the filling of orders--that is, the assembling
of the goods--is done by the stock department. The subject is here
discussed in connection with the shipping department for the reason
that in many houses all orders are assembled under the direction of the
shipping clerk; in others he is also the stock keeper or stores clerk.

This discussion refers more especially to the filling of orders in
a jobbing house, or a manufacturing business which carries goods in
stock. It does not refer to those manufacturing enterprises whose
orders are for goods to be manufactured.

As a rule, all orders of a jobbing house should be filled the day they
are received. If they cannot be filled complete, they should be filled
as nearly as possible, and missing articles handled as explained later
under the subject of _Back Orders_.

There is a great chance for time saving in most houses in filling
orders. In many houses, too little consideration is given to the
handling of goods in a manner that will save time in assembling orders.
Lack of a logically planned system is responsible for much of the
confused and confusing rush in the average shipping room, about the
time that orders should be delivered to the transportation companies.

Here is a case in point which came under the observation of the writer.
A certain jobbing house, handling drugs and druggists' sundries,
occupied a five-story building. On each floor there was a stock room in
charge of a stock man, who, with the aid of such helpers as he needed,
kept the stock in proper shape, and assembled the goods required from
his floor to fill orders.

In the drug business, the average order received from a retailer calls
for a large number of articles--it is made up of small items. This
is especially true of orders brought in by the traveling salesmen. As
a consequence, the larger part of the orders received by this house
called for goods from practically every floor.

The custom was to send orders first to the floor farthest from the
shipping room--that is, to the fifth floor. The stock man assembled the
goods required from his floor, placed them in a basket with the order,
and sent them down to the fourth floor. Each order went from floor to
floor and finally reached the shipping room--perhaps being held an hour
on one floor for a single article because of other orders ahead.

A result of this method was that, in the morning, the stock men on
the upper floors were rushed, while those on the lower floors had no
orders to fill, except those calling for goods from one floor only.
In the afternoon, the conditions were reversed. Then the men on the
upper floors had nothing to do but put their stocks in shape; those
on the lower floors were busy filling orders. These conditions were
not particularly objectionable so far as the stock men were concerned,
as they were profitably employed, when not filling orders, in caring
for their stocks; but in the shipping room great confusion resulted.
Goods required to fill the day's orders did not begin to come into the
shipping room until late in the day, and then they came with a rush.
Hurried packing resulted in mistakes, caused disputes, and lost good
customers.

To overcome the difficulty, a new plan which worked admirably was
perfected. A chart was prepared, along the lines of the one shown in
Fig. 6. On this chart, a section was set aside for each floor, and in
the first column the classes of goods stored on each floor were listed.
In the next two columns a few of the articles in each class--enough to
serve as a guide--were listed, and the last column showed the floor
_B_, meaning the basement. On this chart, the location of any class of
goods could be seen at a glance, and in case of doubt about the class
to which an article belonged, reference to the catalogue issued by the
firm gave the desired information.

A copy of the chart was given to the order clerk, who entered all
orders on a billing typewriter. In entering the order all articles
were grouped by floors, starting at the fifth floor. Below the list of
articles from each floor a space was left, the first entry for the next
floor being on the second line below.

[Illustration: Fig. 6. Floor Chart for the Classification of Stock]

Two copies of the order were provided for the use of the shipping
clerk. When the orders reached his desk, he cut one copy into parts,
as represented by the floors from which goods were to come. After
entering the order number on the margin of each, he sent these sections
to the stock men. Each man assembled the goods required from his floor
and sent them, with his section of the order blank, directly to the
shipping room. Here they were checked against the shipping clerk's copy
of the order, and, as soon as all sections had been filled, the order
was ready for packing. This resulted in distributing the work more
evenly, and kept the goods coming regularly to the shipping room.

Another method of accomplishing the same result is to make as many
copies of the order as there are floors, the complete order being sent
to each stock man, who fills only his part. An advantage of dividing
the order sheet, as explained, is that the stock men have no knowledge
of the names of customers. This prevents a stock man from taking a list
of the firm's customers to another house--an occurrence which is not
entirely unknown.

=Back Orders.= Most concerns find it impossible to fill all orders
completely; there are occasional shortages in every house. In such
cases, it is the usual custom to fill all orders as nearly as possible,
and forward the items that are short as soon as they are in stock, or
with a later shipment.

The possibility of these items being overlooked must be provided
against, and this is done by entering all items that are short on a
new order. This is known as a _back order_. The back order should be
made in duplicate and should be printed on stock of some distinctive
color that will not be confused with the regular order blanks. For
convenience in filing, it should also be made the same size as the
regular orders.

If the number of back orders is very large, a separate series of order
numbers is used, but most concerns do not have a sufficient number of
such orders to make this necessary. The more usual custom is to give
the back order the same number as the original of which it is a part.

Of the two copies of the back order, one goes to the shipping clerk,
while the other is kept in the office. The office copy is used to
follow up the shipment of the order. It is necessary for the shipping
clerk to know immediately when goods required to fill back orders are
received. When a separate receiving clerk is employed, the back order
is sometimes made in triplicate, one copy for the receiving clerk, who
notifies the shipping clerk when the goods arrive.

[Illustration: Fig. 7. Back-Order Blank]

When a back order is filled, the shipping clerk returns his copy to the
office. Invoices are made in duplicate, one copy being filed as a sales
sheet. The two copies of the order are filed with the corresponding
copies of the original order. A most satisfactory plan is to file one
copy numerically and one alphabetically, making a cross-index. A simple
form of back-order blank is shown in Fig. 7.


CHECKING SHIPMENTS

One of the vitally important problems in connection with shipping is
the proper checking of items in each shipment. To receive complaints
of shortages is very annoying to the shipper--especially so when he
is not in position to prove that the items claimed to be short were
shipped--but, rather than take the chance of losing a customer, he
usually pockets the loss.

[Illustration: Fig. 8. Order Blank with Column for Shipper's Check]

Shipments should be checked at every stage in the process of filing the
order, by everyone who handles the goods. The stock man should check
his part of the order as he assembles the goods, and again before he
forwards them to the shipping room, or the next floor. When received
in the shipping room, the goods should be checked against the shipping
clerk's order, and again just before they are packed.

It should be a positive rule that all goods shall be checked when they
are placed in the cases. The items should be called off by the packer
as he handles them, and checked on the order by a checker. This is a
safer plan than calling off the items from the order, as it insures a
positive check on the items actually packed--not what should have been
packed. All order blanks should be provided with a separate column
in which to check the items actually shipped, and quantities should
be entered in this column even if the order is shipped in full. The
checking column on the order blank is shown in Fig. 8. If the system
of entering orders includes a copy to be used as an invoice, the items
are entered in this column after the shipping order is returned to the
office.

The initials or numbers of both packer and checker should appear on the
shipping order. It is also a good plan to place in each case a packer's
slip, shown in Fig. 9, giving the number or initials of the packer and
instructing the customer to return the slip with any claim for shortage
or damaged goods. In some houses, it is the custom to make the packer's
slip a duplicate of the order, listing all items packed, in which case,
it makes a convenient receiving slip for the customer.

[Illustration: Fig. 9. Packer's Slip]

While not offering positive insurance against mistakes, a thorough
checking system will reduce errors in packing to a minimum, and will
most certainly pay for the labor involved. In large houses shipping a
large number of packages over several different railroads, a further
complication arises through the liability of deliveries being made to
the wrong freight house. Where several hundred shipments per day are
made, it is not uncommon for a teamster to leave a package at the wrong
road, finding himself short on his deliveries at another road; or the
mistake may be made in loading the drays.

One well-known mail-order house has overcome the difficulty in a simple
manner. This house is shipping several hundred packages a day by
freight, over eight railroads. The basis of their shipping system is a
color scheme, each railroad being designated by a different color--that
is, the New York Central is represented by green, the Erie by blue,
etc.

[Illustration: A FORTY-FIVE FOOT CABIN LAUNCH ON CAR Showing Method of
Loading Boats for Shipment at the Shipbuilding Plant of the Gas Engine
& Power Co. and Charles L. Seabury & Co., Consolidated]

The shipping floor is divided into sections, one for each railroad,
and one for each express company. The low partitions that separate the
sections are painted in the colors representing the railroads, and
over each is a sign bearing the name of the road, also printed in the
corresponding color. All packages are taken directly from the packing
room to the sections of the shipping floor representing the roads over
which they are to be shipped.

[Illustration: Fig. 10. Routing Package Labels]

In all blanks used in shipping, the same color scheme is carried out.
This includes shipping orders, packing orders, invoices, shipping
receipts, and labels. All orders are properly routed before they are
distributed to the billing machine operators for entry. Each operator
enters orders for certain railroads--from one to three, depending on
the distribution of the trade--and is supplied with blanks of proper
color for those roads only. Every order is then entered on blanks of
the color representing the railroad over which the shipment is routed.

In Fig. 10 is shown a label which represents this color scheme. Across
the end of the label is a solid block of color, with the name of the
road in an open letter. All printing on the label is also of the same
color. If the order is properly routed and entered, there is very
little chance for shipments to go astray. On every blank and on the
package itself, the color of the road is a prominent feature, and since
all blanks are written at the same time, they must correspond. Should a
package be placed in the wrong section, it is practically certain that
the error will be discovered when the goods are loaded on the dray.


EXPORT SHIPPING

Export shipping is a subject about which the average American house
knows but little, and herein appears to lie the cause of the loss of
much foreign trade. This is especially true of trade with other than
English-speaking countries. But the real fault lies farther back than
in the shipping department.

The trouble starts in the sales department. Export business is
undertaken without special preparation, and an attempt is made to apply
the methods used in handling domestic trade. Special instructions in
regard to packing, for instance, are ignored because the American
thinks he knows more than his customer in a foreign land.

Before export business is even attempted, the sales department should
become thoroughly familiar with conditions in the country with which
it wishes to do business. Some man in the department should study the
customs regulations, the descriptions necessary, the kind of packing
needed, and the size of package best adapted to the country. Above all,
he must study the desires of the trade, and conform to them, if he
expects to make and hold customers.

Special importance is attached to the question of packing and
describing the goods. No matter how unreasonable the request of the
customer or the foreign salesman may seem, it should be complied
with, for it is made for some good reason. A request of a merchant in
Omaha, ordering dry goods from Chicago, that goods ordinarily packed
in a large case be packed in small oblong boxes, might very properly
be ignored; but not so if the customer is located in a South American
republic. There, if the goods are to go to the interior, they must be
transported over the mountains on the backs of pack mules.

Besides making the packages of suitable size, goods for export must be
packed to withstand hard usage, and must be well protected against the
elements. Goods must be fully and accurately described in order that
they may pass the custom house. The dimensions of each package must be
shown on the shipping bills, for freight rates are based on the space
occupied in the hold of the ship, rather than on weight.

In a recent address on trade conditions in the Latin-American
countries, Wm. Harley Porter, Deputy Captain of the Port of Cienfuegos,
during the occupation of Cuba by the United States government, made
some very pertinent suggestions on these questions, some of which are
published by permission--as follows:

 To secure South American trade, we must first train salesmen. They
 must make an exhaustive study of the different South American tariffs
 and at least know Spanish. They must be willing to accept instructions
 as to shipping, and be powerful enough to insist that they be carried
 out literally. And it would be a good thing for them to take a
 kindergarten course in carpentry and blacksmithing, so that they would
 not continue the stupid, expensive blunders of American houses in the
 packing of goods.

 I don't know how to drive that last statement home hard enough. Our
 consuls plead with our exporters, and our Government distributes
 volumes freely on the subject, yet there is no apparent improvement.

 I confess that until I had some first-hand experience, I supposed that
 the packing evil was a convenient sort of filler, with which Consuls
 padded their reports for want of better material.

 In order to fit out the custom house of Cienfuegos, Cuba, with new
 office furniture, we placed an order amounting to nearly one thousand
 dollars with a Chicago house that brazenly advertised that it made
 a specialty of export business. Their booklet was encouraging, and
 the prices really low. So we ordered roll-top and flat-top desks,
 cashier's desks, office chairs, tables and card cabinets, and then
 worried, for fear that the goods would not arrive before the end
 of the fiscal year, then rapidly approaching, in which event, our
 furniture appropriation would revert to the island treasury.

 Six weeks from the day the order reached Chicago, the goods left
 New York--time enough to have had them come from Hawaii. With the
 goods came a single invoice. The vouchers in triplicate, which must
 be filled properly before the account can be paid by a governmental
 department, had been thrown aside as of no use. To protect the
 exporter, a voucher was drawn, for the ship reached port on June 30,
 the last day of the fiscal year. Several dollars were wasted in cable
 messages to expedite the return of new invoices, and the goods were
 unpacked.

 Not one piece of furniture, save a few chairs, was found whole. No
 American, in the States, would have accepted the goods. We had paid
 for them. A letter of remonstrance brought back a churlish answer,
 written in a cocky American spirit of superiority, to the effect
 that possibly some one outside could tell that house something about
 packing their own goods, but they would be greatly surprised to meet
 such a person.

 The trouble lay in the thinness of the packing cases. Goods are loaded
 into a ship by casting a rope sling about their middle, by which they
 are hoisted up and let down, often with a run, into the hold. Our
 desks, without sufficient outer protection and not being built on
 the principle of a truss bridge, naturally collapsed. The cases were
 none too good for a railway journey, and were certain to be damaged
 at any Central or South American port because, in nearly every case,
 unloading is done from the ship to a lighter, and from the lighter, by
 main strength and awkwardness, to a wharf.

 I cannot recall one instance in which American houses carried out
 instructions literally. I believe that there is a great future for
 an American exporter who will let the man on the ground do his own
 thinking, and take it for granted that he knows what he wants and how
 he wants it. The exasperation of a man who is weeks or months away
 from the markets, and who finds that substitution has been practiced,
 or his goods so packed that destruction was plainly invited, cannot be
 adequately described by a man on my income.

 We bought a typewriter in New York, one time, for two reasons: We
 could get the liberal discount, allowed the government if we bought
 direct from the maker, and we could evade a 25% duty if we received
 it through our custom house and not through another. Also there was a
 line of steamers from New York to our wharf.

 Some five weeks after placing the order, we were notified by an
 express company in Havana that it had accepted for our account
 a typewriter, and that when the duty, plus accrued express and
 forwarding charges, amounting to $45.O3, were paid, it would be
 dispatched in our direction.

 We were out $40.03 because some fool shipping clerk had insisted on
 trying to do our heavy thinking. We had given him the name of the
 steamer by which the machine was to be shipped, but he had discovered,
 in some way, that steamships will not make a bill for less than a
 metric ton. That, he doubtless learned, would cost us $5.00. The
 package only weighed about 30 lbs., so he started it off by express.
 His brain did not carry far enough for him to learn that only one
 American express company crossed the Florida Strait and naturally
 chance took it to another company. Two changes were made in express
 companies before the box reached the coast and the package sauntered
 about in our beautiful Southland for more than a month before it
 landed in Havana.

 Had any Spanish merchant been subjected to the invariable annoyance
 which fell to our lot when we endeavored to patronize American houses,
 he would have given up in despair and remembered the adage of the
 burnt child, forever.

 And, unfortunately, the carelessness of American shippers often costs
 the foreign merchants good, hard dollars. Tariffs in Latin-American
 republics are fearfully and wonderfully made, and there is nothing
 that a pin-headed government employe enjoys more than inflicting a
 fine for a slip in complying with a little red tape.

 Here is a case in point. A large house in Mexico City bought a carload
 of chairs over here, and with the order sent the shipping forms
 prescribed by the Mexican government. A very explicit letter was sent
 also, saying that consular invoices would be provided by their custom
 house broker in Laredo, who would receive the goods at the border, but
 that the shipping forms must be filled out, each package numbered with
 a serial number on the forms. Full description involved, of course,
 a statement as to the kind of wood used, so that the duty might be
 easily adjusted.

 The goods, however, were simply consigned as so many bundles of
 chairs, weight so much. The shipping lists were ignored. The innocent
 receiver of those goods was fined both because they had not been
 properly described and because the weight was grossly understated. It
 cost the Mexican house $800 and when the American was asked to settle
 the charges caused by carelessness, or pig-headedness, he merely
 answered that he was not going to settle any bills with the Mexican
 government.

 The Mexican firm settled--it had to--and posted every importer in the
 republic in the matter, so that not only will that American house not
 sell any more chairs in Mexico, but Americans generally have been
 given another black eye.

 There is a good reason for careful custom regulations, and the
 exporter should know that they are partly for his protection. For
 instance, they usually require that a certain number, generally ten
 per cent, of all packages shall be opened and compared with the
 shipping list. If these packages, chosen at random, are correct, the
 consignment is delivered. But if any variation is found, fraud is
 assumed, and every package is thoroughly examined, usually with more
 or less damage.

 It is customary for English and German firms, in the packing of small
 articles, to use different colored pasteboard boxes, which are often
 decorated with pictures indicating the contents. For instance, in a
 large packing case containing a stock of gentlemen's furnishings,
 all collars will be in boxes of one color, socks in another, cravats
 in another, etc. The large case is lined with tin, by the way, and
 after packing, the tin joints are soldered around the top. Here is
 the English system: First, the small boxes, individualized as much as
 possible; then heavy wrapping paper, then a tin lining inside of an
 outer wooden casing, the latter being well made and reinforced with
 iron straps. Last of all, directions and addresses are stenciled in
 large, clear block letters. The Germans often use oiled paper between
 the tin and the inner packages, so that even if the tin is punctured,
 the oiled paper will resist the sea air, which invariably injures
 delicate fabrics.

 The American idea seems to be to put as much as possible in a large,
 thin box or a poorly bound bale. The European, whose agents study
 conditions on the ground, knows that much interior transportation in
 Latin America is packed by pack mule, and therefore uses medium-sized
 oblong boxes, two of which make a good load.

 I cannot emphasize too strongly the necessity for careful description
 of goods to pass them through a custom house with the least
 inconvenience. Mixed consignments must pay the highest duty assessed
 against anything found in a lump or poorly described quantity. If you
 deal in bolts, for instance, you may not merely say _1,000, 3×2×⅜
 bolts_, but you should say whether they are cotton, linen, or woolen.
 They have to know, before they can assess duty.

 Instead of a ringing peroration about American pluck, progressiveness,
 and other non-essentials, let me give you some shipping rules, if you
 are going to have a try for South American trade.

 Secure shipping list forms beforehand and find out if consular
 invoices are needed.

 Pack your goods in small packages, for you will pay freight on metric
 tons and they are based on cubic measure and not on weight.

 Pack well, for tons of stuff will probably lie on your cases.

 Give each package a serial number and describe it by that number, on
 the shipping forms.

 If your goods can be damaged by sea water, use tin-lined cases.

 Your invoices should show not only number, measurement, and exact
 contents of each package, but their gross, tare, and net weight, for
 in many cases the container must pay the same duty as the contents.

 Be sure that your forwarding agent is reliable, for the law allows
 him many charging privileges if you are careless in providing for
 contingencies.

 Contract, if you can, for through transportation and get from the
 transportation companies the requisite export manifests to accompany
 shipment.

 Make triplicate invoices, one to accompany the goods and two to be
 mailed to the consignee. One of these will be turned over to the
 custom officials, so in case the invoice sent with the goods fails to
 come through, and that often happens, the triplicate can be accepted.
 Without an invoice your goods cannot leave the ship, and I know of
 cases where cargoes have been held awaiting invoices for eight weeks.

 And, in conclusion, remember that sentiment is not the foundation for
 foreign trade. If we sell abroad we must do so on merit and by foreign
 systems--not our own.


FREIGHT CLAIMS

Freight claims are an ever present source of annoyance. Every shipper,
and practically every receiver, of freight finds it necessary to make
claims against the railroads for freight overcharges, shortages, and
damages to goods in transit. Some houses find occasion to make but one
or two claims a year; others constantly have several claims on file,
aggregating a large number each year, but no matter what the number,
they must be given proper attention.

Handling freight claims is not one of the usual duties of the shipping
clerk, nevertheless, it is a proper topic for discussion in connection
with the subject of shipping. The traffic manager, when one is
employed, handles the freight claims; otherwise the details are handled
by some other minor official--as the cashier or the purchasing agent.

The adjustment of claims involves, usually, a large volume of
correspondence, and requires a man of tact. He must possess patience
and persistence to a marked degree. Diplomacy of a high order is
necessary in his correspondence, and promptness is an important factor.
Threats have little effect, other than to delay adjustment of the
claim.

Before a claim is presented, all information pertaining to the case
in possession of the claimant must be assembled, and all facts should
be incorporated in the papers filed. A bill should be made against
the railroad for the amount of the claim, and to this should be
attached the freight receipt or other voucher. These papers should
be accompanied by a letter giving a plain statement of the basis of
the claim; if for an overcharge, the number of the tariff and the
classification on which it is based should be cited. The claim papers
should be as complete as it is possible to make them, presenting all
facts having a possible bearing, otherwise they will be returned by
the claim agent of the railroad for further information. Some of the
questions asked by the claim agent may seem trivial to the claimant,
but the answers are necessary to him in completing the files of his
office. When claim papers are returned through the local freight
office, the information asked should be given and the papers returned
at once.

Claimants become very impatient over delays in the adjustment of their
claims, forgetting that where they handle perhaps a dozen claims
a year, the railroad claim agent must handle thousands, involving
amounts ranging from a few cents to many hundreds of dollars. They
also overlook the fact that a shipment has passed over several roads,
and that before the claim can be adjusted, it must be ascertained on
what road the damage was sustained. The different roads involved must
adjust the claim between themselves, before they can tell where the
money with which to pay it is coming from. The papers must pass through
the hands of agents at all junction and transfer points, and the claim
departments of all roads involved, before the claimant can expect a
reply.

On the other hand, it is not good business to rely solely on the
railroad. Claim papers sometimes repose indefinitely in the desk of
some local freight agent, until brought to light by a persistent
follow-up; occasionally the papers are lost. A follow-up of freight
claims is, therefore, a necessity. The shipper who is most persistent
in following up his claims, is usually the beneficiary of the most
prompt service.

Railroads number all claims as received, and invariably refer to them
by number. It is an excellent plan, therefore, for the shipper to adopt
a numerical system for the purpose of identification. It is quite
important that all correspondence relating to a claim be kept together,
and this is best done by using a folder for each claim. The number of
claims is so small that it is not necessary to use an entire drawer
for claims; they can be accommodated in the front of a drawer used for
regular correspondence.

[Illustration: Fig. 11. Folder for Freight Claims]

The outside of the folder should provide for the name and address of
the consignor or consignee, as the case may be, name of the railroad
on which claim is made, the shipper's claim number, and the railroad's
claim number, as shown in Fig. 11. In this folder, copies of the bill
and of all letters to the railroad company should be filed. The folders
are filed numerically, in the order of the shipper's claim numbers.

To follow up the claim, and to provide an index to the file of claim
folders, a card, similar in form to the one shown in Fig. 12, should be
used. This card provides for a complete history of the claim. At the
head of the card is shown the name of the consignor or the consignee,
shipping point, shipper's and railroad's claim numbers, dates of
shipment, receipt, and filing of claim, the railroad on which claim
is made, and the name of the claim agent. This is followed by a brief
statement of the nature and amount of the claim. The two bottom lines
provide for a record of the payment or rejection of the claim. All of
the information most likely to be needed is found by turning to this
card, without the necessity of consulting the correspondence in the
claim files.

[Illustration: Fig. 12. Card for Follow-Up of Claims]

The manner of filing the card depends somewhat on circumstances. The
usual plan is to file alphabetically, under the name of the consignor,
first grouping by railroads. If goods are received and shipped over but
one road, all of the cards would be filed in one index. But if more
than one road is used, an index card would be used for each road, and
the cards arranged alphabetically back of the index cards of the roads
involved. This arrangement brings the cards of all claims against one
road together, which is a logical plan, since it is the railroad with
whom the claimant is dealing.

Across the top of the card is a series of numbers, from _1_ to _31_.
These represent the days of the month, and are used in connection with
the follow-up of the claim. Metal tabs are placed over the dates on
which it is desired to have the claim brought to notice--that is, if
the claim is to be followed up on the 20th, a tab is placed over the
number _20_. On that day all cards with tabs over this number are
removed from the file, and, after the claims have received proper
attention, the tabs are moved forward to the next follow-up date, and
the cards returned to the file.

[Illustration: Fig. 13. Record of Correspondence on Back of Follow-Up
Card]

A record of all correspondence in connection with the claim is made
on the back of the card, which is ruled and printed for the purpose,
as shown in Fig. 13. This constitutes a tracer which shows, without
reference to the files, just what correspondence has been required in
the adjustment of the claim.

When the number of claims on file is large, there should be another
record which will show the amount of claims outstanding against each
railroad. Of course, the card file gives this information, but some of
the cards are very likely to be out of the file, so that the amount
obtained by a recap of the cards at any time may not represent the
correct total.

An account with each railroad can be kept on a card, as shown in
Fig. 14. This card should be filed with the claim cards, immediately
behind the guide card of the road. In effect, it is a ledger account,
representing a contingent asset.

From an accounting standpoint, the proper method is to charge all
claims to a claim account, crediting whatever account may be affected,
at the same time charging the railroad on the card referred to above.
If an overcharge has been paid on a shipment received, the entry would
be:

  Claim Account       $_____
    In Freight          $_____

[Illustration: Fig. 14. Claim Account Card]

When a claim is disposed of--paid or rejected--claim account receives
credit, while the debit is to cash, or the account originally affected.
Using the above illustration, if the claim is paid in full the entry is:

  Cash               $_____
    Claim Account      $_____

If the claim is rejected:

  In Freight         $_____
    Claim Account      $_____

[Illustration: Fig. 15. Register of Sales]

Thus the claim account is a controlling account, the balance
representing the total claims outstanding, and agreeing with the totals
of the claims against the different roads as shown by the cards. Claim
account represents a questionable asset, and should be so treated
in the balance sheet, a liberal discount being made in the value
represented by the account.


EXPRESS SHIPMENTS

Many business houses are selling classes of goods which are most
successfully shipped by express. This is especially true of those
houses that transact the larger part of their business by mail. The
question of shipping by express is, in itself, quite simple, but
there are numerous details connected with the handling of such orders
which require close attention. While these details vary in different
businesses, as a typical illustration the business of selling books by
mail has been selected.

When an order is received, the first step is to check the
source--whether from circularizing, a re-order, or periodical
advertising, and if the latter, the name of the publication. This
information should be entered on the original order.

Cash and charge orders should then be separated, and on the charge
orders the next step is to investigate the credit and check the
address, especially when no advance payment is made. The address is
checked against any list that may have been used, or against city
directories, when such are available. If the list used has proved
reliable, it usually is safe to pass the order from one whose name
appears therein. Or the occupation given in the directory may warrant
the acceptance of the risk. If he is a customer, his manner of paying
in the past is the best guide.

Should all of these sources of information fail, and if the customer
gives no references, it is well to secure a report from some commercial
or collection agency. It may be necessary to follow up the agency, but
if a reliable agency, like Martindale, is unable to obtain information,
it is best to refuse the order except on a cash basis.

The order having been accepted, it should be entered in an order
register, giving the name of the purchaser, the address in detail,
description of the article ordered, source of the order, and the
price. A sheet, as shown in Fig. 15, should be used for each day's
sales. The sheets should be in duplicate, as a copy is needed by the
statistical department, from which to tabulate the sales from different
sources.

The next step is to open an account on a ledger card, as shown in
Fig. 16. At the same time a collection card should be made. Both of
these cards should be filled in from the original order--not from the
register. If the number is large, the accounts should be numbered, the
number being entered on both the ledger and collection cards. From the
ledger cards, the numbers are entered on the register. Two indexes are
made--one alphabetical and one geographical--on plain index cards, only
the name and address, name of publication ordered, and the account
number being shown. One of these cards is filed alphabetically and the
other geographically, while the ledger cards are filed numerically.

[Illustration: Fig. 16. Ledger Card]

Each day, before the cards are filed, the amount of the new accounts
should be obtained on an adding machine, and checked against the
total of the order register sheet. This will guard against errors in
transcribing, for it is improbable that the same error will be made in
entering the order on the register and on the card.

[Illustration: Fig. 17. Shipping Order and Label Made at One Writing]

The statistical department will obtain a record of total sales from
the duplicate register sheet, and, for this reason, the amount should
be checked against the original sheet. Since these sheets are footed
by different people, this comparison affords a reasonable proof
of accuracy, and also insures the use of the same totals by the
statistical and order departments.

The order is now properly recorded and is ready for shipping. But
before a shipping order can be made, it must be routed. This is done by
consulting a postal and express shipping guide, in which will be found
the name of every postoffice in the country, the names of the express
companies reaching that point, or, if not an express office, the name
of the nearest office. The name of the express company is entered on
the order, which is then turned over to the billing clerk.

[Illustration: Fig. 18. Prepaid Shipping Sheet]

The making of a shipping order, Fig. 17, is the next step. At the head
of, and attached to, the order is a label as shown in the illustration.
This shows the name and address, and the name of the express company,
which information is duplicated on the order blank by means of carbon
paper. The body of the order gives full particulars of the articles
to be shipped, names of the order clerk, checker, and entry clerk,
together with the date. All orders should next be entered on the
shipping sheets, which are supplied by the express companies. A prepaid
sheet is shown in Fig. 18. This is made in duplicate, one copy, signed
by a representative of the express company, remaining with the shipper.
The copy for the express company serves as a voucher for the collection
of the charges.

[Illustration: A MODERN FACTORY DINING ROOM. One of the Developments of
Modern Business. Studebaker Bros. Mfg. Co., South Bend, Ind.]

The express shipping sheet and the orders, with labels attached, should
be sent to the packing and shipping room, where the goods are packed
and shipped. The order should then be returned to the office, and filed
with the customer's orders in the correspondence files. This should be
a formal acknowledgment, giving full information as to when and how
shipped.

It will be seen from the above that orders of this class necessitate
a number of details, each of which forms an important link in the
complete chain.


RETAIL DELIVERY SYSTEM

Not the least important problem in shipping is that of the retail
store. While this problem is of special importance in a large city,
it is one which must be met by the retailer in every community. Under
present conditions, the retailer is obliged to deliver a large per cent
of the goods that he sells, and the tendency is for this percentage to
increase rather than decrease.

The shipping or delivery department is the busiest in the entire
establishment; the details are so many that only with the most perfect
system can the work be handled. The delivery system of one of the big
stores is a revelation to most men; and when our purchase, which is
but one of thousands made in an hour, is delivered at our door, five
or ten miles away, two to five hours later, we marvel at the perfect
working of an apparently complex machine. And yet, when we study it,
we discover that the controlling factor of this vast system is its
simplicity. Less confusion is found, and fewer mistakes are made, in
the delivery department of the largest stores in the world than by the
delivery boy of your corner grocer; and simple system--method--at every
step from the sale to the final delivery is responsible.

While not really complicated, the system of a big store is built to
care for many more details than are met with in the smaller store.
Since a vast majority of retail establishments are in the latter class,
this discussion is confined to the needs of a store of average size.

_Average size_ is a relative term. A store of average size in one
community would be considered as a big store in another. In a large
city, leading stores dealing in exclusive lines--such as clothing,
shoes, or cloaks and suits--answer the description, and it is the needs
of such a store that are discussed herein. A system adapted to the
needs of a store of this class, can easily be expanded for a department
store or modified for a smaller establishment.

=Delivery Tag.= A delivery system starts, not in the shipping room, but
when the sale is made. The very first requisite is a correct address,
and the securing of the address rests with the sales person. Unless
every necessary precaution to insure accuracy at this point is taken,
the further provisions of the system are without avail.

[Illustration: Fig. 19. Label with Colored Border to Indicate Routing]

The first step, then, is for the sales person to write the label or
tag that is to be attached to the package. It should not be left for
another to write the final delivery ticket; this should invariably be
done by the sales person, who then becomes responsible for the address.
In some small stores, the duplicate sales ticket is made to do service
as a delivery ticket, but it is much the safer plan to use a separate
tag or label for this purpose. The address on the duplicate sales
ticket is quite likely to be illegible, and to provide for all details
needed for delivery necessitates a larger ticket than otherwise would
be used.

One of the most practical schemes ever devised is to indicate the
section of the city by the color, size, or shape of the delivery
ticket. The city is first divided into sections, the commonly known
sectional divisions being used--as _North_ side, _South_ side, etc.
When the sale is made, the customer is asked in what section of the
city he resides, and then an appropriate label is selected. All labels
are the same in form, but printed a special color for each section. The
label shown in Fig. 19 is distinguished by a solid border and bar of
color, printed on white paper, all type being printed in black.

Every necessary detail should be provided for on the label. The one
illustrated shows the date, the name and address, _near what street_,
the flat number, the name of the salesman, initials of the inspector,
and amount (if any) of the C. O. D. The caption, near what street, is
of special importance in a large city for it assists greatly in routing
deliveries. An address may be given as 437 E. 72nd St., but if it is
known that this is near Baker Ave., it is much more quickly located by
the driver.

This label is written by the sales person and sent with the goods to
the packers. Here, it is pasted on the package--unless it is a C. O. D.
package, in which case it is first initialed by an inspector. The same
is true of charge sales.

=Routing Deliveries.= The delivery system proper begins with the
routing of the deliveries, which is the first thing done after the
goods reach the shipping room. Bins should be provided for the
different sections of the city and if the business warrants, these
sectional bins should be subdivided, the subdivisions representing
routes. Separate bins should be provided for C. O. D. deliveries, and
it is well to have a bin for special deliveries, such as those to
suburban points, which usually are forwarded by express.

When the packages reach the shipping room, they are sorted into these
bins. As an aid to sorting, the colored labels described prove their
value. Since the color represents the section, packages can be sorted
as rapidly as they can be handled. After they are sorted according to
sections, the packages are again sorted into routes.

In certain lines, such as groceries, the average delivery is made up
of several packages, all of which are put into a basket. Here, the
bins must be differently arranged, being but divisions of the floor
space. But the scheme of using colored labels or shipping tags could
be used to advantage, especially in a downtown store delivering to all
parts of the city. For a grocery with a trade confined to its immediate
neighborhood, the sectional divisions are not needed, but the goods
should be sorted by routes.

[Illustration: Fig. 20. Regular Delivery Sheet]

=The Delivery Sheet.= After routing, the next step is to record the
deliveries. In all modern stores, deliveries to each section of the
city are made at stated hours. As a rule, the deliveries are entered on
the sheets just prior to the hour for the delivery.

Fig. 20 shows the form of the regular delivery sheet, which is used
for cash and charge sales. This sheet shows the date, the name and
address, number of packages, and sale number. The column at the extreme
right is for the signature of the customer as a receipt for the goods.
Whether or not it is either necessary or wise to attempt to secure
the signature of the customer, is a disputed question, and probably
depends on the class of goods delivered and the extent of the business.
A jeweler who delivers a valuable piece of jewelry would be justified
in demanding a receipt, but this would be unnecessary for a grocer. The
shipping clerk in one department store gives it as his opinion that the
signature is not necessary, and, for proof, points to a record of but
two inexpensive packages lost in a year.

[Illustration: Fig. 21. Delivery Boy's Call Tag]

At the bottom of the delivery sheet, calls are listed. This refers to
calls by the driver, where no deliveries are to be made. In a clothing
or department store, it frequently is necessary to call for goods that
have been delivered on approval, or on which alterations are to be made.

The delivery sheets are put up in book form in duplicate. The original
is perforated so that it can be detached, while the duplicate remains
in the book. A book is used for each wagon, and each driver signs for
his deliveries in the space provided for that purpose at the head of
the sheet. The driver then takes the delivery sheet, placing it in a
spring-back binder, and turns it in on his return. It is well to keep
these sheets on file in the shipping room for at least a month--when it
is safe to destroy them.

When a call is to be made, a special tag is given to the driver to be
attached to the package. This tag, which is shown in Fig. 21, gives the
address, and any special instructions that may be necessary.

When the call is for a garment to be altered, the person taking he call
usually ascertains what is to be done, and writes the instructions on
the back of the tag. In case no instructions are given in advance,
they are usually given when the call is made--in which case they are
written on the tag by the driver. When the package reaches the shipping
room, reference to the tag shows what is wanted, and the package can be
forwarded, at once, to the proper department. Carrying out the color
scheme, the call tag should be of a special color to distinguish it
from the delivery tag.

=C. O. D. Deliveries.= Of special importance are C. O. D. deliveries.
There must be a positive record which will make it possible to check
every item at every stage, including all items collected.

[Illustration: Fig. 22. Collect on Delivery Tag]

The handling of a C. O. D. item begins with the sale, when the sales
person, in addition to noting on the sales slip that the item is C. O.
D., makes out a tag, as shown in Fig. 22. This tag, which should be of
a special color, is made with a perforated stub, and on the stub the
information on the tag itself is duplicated. The sales person fills in,
on both the tag and the stub, the name and address of the customer, the
amount to be collected, his own initials, the number of the department,
and the date.

The goods and the duplicate sales ticket go to the packing room, while
the original sales ticket and the tag go to the office, where they are
taken charge of by the C. O. D. clerk. This clerk registers the sale
on a C. O. D. register, stamps the number on the tag and stub, and
returns them to the packing room. The tag is then attached, and the
package sent to the shipping room, while the duplicate sales ticket
goes to the auditor's office.

In a store where the packages are wrapped in the department making
the sale, the routine is changed to the extent of sending the package
direct to the shipping room, with a plain address label. The package is
held in the shipping room until the tag, sent direct from the office,
is received.

[Illustration: Fig. 23. Special C. O. D. Delivery Book]

After they are sorted by routes in the shipping room, all C. O. D.
items are entered in special delivery books, as in Fig. 23. This
book is made in the same style, as the regular delivery book, with
perforated sheets, but should be made of paper of a different color.
The form differs but slightly from that of the regular book, the only
difference being the addition of columns for the C. O. D. number and
the amount to be collected.

When a driver makes a C. O. D. delivery, he gives the customer a
receipt on the tag, Fig. 22, but retains the stub. On returning from
a delivery, he turns in the stub with the money, and the payments are
checked on the duplicate of his delivery sheet. If a package is not
delivered, it must be turned in with the complete tag attached. All
returned C. O. D. packages are checked on the delivery sheets and
entered on the sheets for the next delivery. This system insures a
positive check on the driver, for he must turn in either the package,
or the stub and the money.

[Illustration: Fig. 24. Office Record of C. O. D. Items]

The office record of C. O. D. items is in the form of a register, as
shown in Fig. 24. This register is provided with the same columns as
the C. O. D. delivery sheet, with columns added for the route number
and the driver's number, these columns being used only in the shipping
room. All items are registered in numerical order, a new series of
numbers, starting with _No. 1_, being used each month. The book is made
with duplicate sheets, the original perforated. Once a day, or as fast
as the pages are filled, the originals are sent to the shipping room.

The original sales ticket is placed in an envelope, stamped with the
C. O. D. number and filed numerically by the C. O. D. clerk, who also
keeps the register. In the system described, the tag receipt takes the
place of the sales ticket; but in many stores it is considered best to
send the sales ticket with the package.

[Illustration: Fig. 25. Notice of Attempt to Deliver]

When the shipping clerk receives the record sheet from the office, he
checks the items against his delivery books and enters the route number
and driver's number. As described, each driver's stubs and returned
packages are first checked against his delivery sheet; all stubs are
then checked against the record sheet, which makes a double check in
the shipping room. If a package is refused it is returned either to
the department or the general stockroom, and a receipt obtained on the
back of the tag. The shipping clerk then returns the record sheet to
the office, with the money collected and the tags representing refused
packages.

Sales tickets and cash are turned over to the cashier, while tags and
sales slips of refused packages are sent to the auditor. The auditor
can check both the cash collected on C. O. D.'s and returns against the
duplicate sales tickets in his possession.

=Undelivered Goods.= One of the annoyances met with in the delivery
department of a large store is the difficulty in making deliveries
because people are not at home. Unsuccessful calls are common, and
while it is quite the general custom to leave packages with a neighbor,
it is not always possible to do this, which means that the package must
be returned to the store. And it frequently happens that this brings
forth a vigorous complaint from the customer, who is positive that the
delivery could have been made.

One merchant has found a simple solution of this difficulty, which
could be adopted with profit by all merchants in large cities. Drivers
are supplied with slips printed as shown in Fig. 25. When no one is
found at home, one of these slips is filled out and left in the mail
box. It shows the date, time of day, name of driver, and name of person
with whom the package has been left. The use of this slip eliminates
complaints and proves a great convenience to the customer.

[Illustration: Fig. 26. Post-Card Notice of Attempted Delivery]

When undelivered packages are returned to the store, and nothing is
heard from the customer within 48 hours, a postal card notice, Fig.
26, is mailed to the customer. Frequently, failure to deliver is due
to the wrong address, but even if the correct address is not found in
the directories, the postal authorities usually succeed in locating the
customer.

[Illustration: Fig. 27. Special Delivery Tag]

=Special Deliveries.= Every store, especially in large cities, finds it
necessary to make special deliveries. The customer from out of town, or
about to leave town, wants a package delivered before a certain hour;
the delivery may be to a depot, hotel, office, or even a residence.
These are the deliveries which cannot wait for the regular trip of
the wagon, but are sent by a boy. The important thing, so far as the
delivery department is concerned, is to get them out on time.

[Illustration: Fig. 28. Special Delivery Tag for Department Store]

Fig. 27 shows a tag for special deliveries, used by a clothing
house. The tag shows the name and address of the customer, with
full particulars of the time and place of delivery. At the end is a
perforated stub on which the delivery instructions are repeated. When
the tag is attached to the package by the sales person, the stub is
torn off and sent directly to the shipping room. The shipping clerk is
then on the lookout for the package, and is expected to follow up the
proper department, which in this business usually is the tailor shop.

Another form of special delivery tag used by a department store is
shown in Fig. 28. This tag gives more detailed information about each
step taken, showing the names of all persons handling the package, and
the time at which it is handled by each.

When the delivery system of a retail store is studied, it is found
to be made up of simple methods, which are assembled to make a
complete machine, A noticeable feature of the entire system is that
the apparently insignificant details--the little things--are its most
important parts; which is true of all systems.

[Illustration: A MODEL FILING DEPARTMENT IN THE WHOLESALE HOUSE OF
BUTLER BROS., ST. LOUIS, MO.]




CORRESPONDENCE AND FILING


INTRODUCTION

This book deals with a subject of growing importance in every
office--that of handling correspondence and filing all papers and
documents which form a part of the records of every business. While
making no attempt to teach letter writing, suggestions are made which,
it is hoped, will prove of assistance to those whose duty it is to
handle correspondence. Among those whom it is hoped a study of this
book will benefit, are the incoming-mail clerk, the correspondent, the
stenographer, the private secretary, the file clerk, and, in fact,
every person who has anything to do with handling and preserving
business or professional correspondence.

Present-day conditions tend to increase the volume of correspondence in
every office, and any improvement that will reduce labor or contribute
to more prompt service is welcomed. Every concern, except possibly the
small establishment doing a strictly neighborhood business, uses the
mails more and more in the transaction of its business; we buy, sell,
pay bills, collect money, make contracts, and execute all sorts of
transactions by mail--all of which necessitates writing letters. Not
only is it necessary to answer letters promptly, but the increasing
accumulation of correspondence must be preserved and filed in a manner
that will permit of easy reference; all of which emphasizes the
necessity of systematic methods in the conduct of this very important
department.

In the belief that more representative illustrations will result, and
that they can readily be adapted to the needs of a small establishment,
the suggestions herein are applied to a business in which the
correspondence is large in volume.


OPENING AND DISTRIBUTING MAIL

=Opening Mail.= Incoming mail should invariably be delivered to one
desk in charge of a clerk, usually known as the _incoming-mail clerk_.
When a business has reached a position where a large correspondence is
handled, it is poor business policy for an executive to assume the task
of opening the mail. The natural conclusion, when a house has a large
correspondence, is that its business is correspondingly large, and the
executive who is fitted for his position can devote his energies to
larger tasks with better results. He should be free to look after the
big things--to plan greater results for his business or his department.

The argument has been advanced that it might be dangerous to trust a
clerk with such business secrets as are found in the correspondence,
but in the handling of business transactions practically every one of
these "secrets" come to the knowledge of several clerks. Surely, if
employes can be trusted with the cash and to keep the accounts--if
stenographers can be trusted to take letters of the most confidential
nature--a clerk can be trusted to open and distribute the mail.

=Sorting Mail.= Sorting the mail is the first duty of the incoming-mail
clerk. This sorting is important in that all personal mail may be taken
out before it is opened. A general rule among all large houses is to
instruct all employes to have personal mail sent to their private or
home addresses, but in spite of all precautions an occasional personal
communication will come to the business address. An acquaintance
may know that Smith works for Jones & Co. and, having forgotten his
personal address, sends his letter in care of the house.

If Smith happens to be an unimportant employe, there will be no
question about the communication being personal; but if he is a
department head, there may be reasons for doubt. Large business
organizations are divided into departments, each in charge of a
manager. The correspondence of each department is signed by the head,
over his official title. A reply may be addressed in the name of the
house, to _Smith, Sales Manager_, or to _Smith_, without the title.
The letter addressed to _Smith, Sales Manager_, belongs to the house,
but if his title is omitted, it belongs to Smith, and to open it
without permission is a violation of the law. When the departmental
correspondence is heavy, a considerable number of letters addressed
to the manager, but without his title, may be received, and it is the
custom in many houses to secure written permission from department
heads to open all such letters. This protects the clerk in case a
personal letter is opened by mistake, and insures prompt attention to
correspondence received during the absence of the department manager.

=Distributing Incoming Mail.= After the mail is opened, it should be
carefully distributed. While it is not necessary to read every letter,
the incoming-mail clerk should read as much of each letter as may be
necessary to determine to what department it should go. Frequently,
a letter addressed to one department refers to matters requiring the
attention of another--a letter ordering goods may be addressed to the
advertising manager, or a remittance to the sales department; or a
letter may require the attention of more than one department.

In a large organization it is a very good plan to designate the
departments and executives by numbers, that is, the president might
be _No. 1_, the general manager, _No. 2_, the sales manager, _No. 3_,
etc. When a letter requires the attention of two or more departments,
these numbers should be placed on the letter in the order of their
importance. On a letter containing a remittance and asking for a
quotation, the sales manager's number would follow that of the cashier.
Such letters are sent to the department whose number appears first,
and the numbers indicate to the correspondent that the letter is to be
referred to another department.

For distributing the mail, the clerk should be supplied with baskets
labeled with the names or numbers of the departments. Mail can then be
distributed quickly to the proper departments. If the number of baskets
exceeds six, a rack should be provided for them at the side of the desk.

In some offices, the incoming-mail clerk makes a record of all orders
received, before sending them to the sales or order department; in most
concerns, however, this is done in the statistical department, after
the orders have been passed upon. If the business is strictly cash and
not too large, the statistical work can be done by the mail clerk.

Fig. 1 shows a tally sheet which is made up by the mail clerk for
a small mail-order house. The sales of this house are divided by
departments, each department representing a few specialties. While the
business is essentially mail-order, a few agents are employed. On this
sheet, columns are provided for a record of the articles sold by each
department, the number and amount of cash and credit sales as a result
of advertising, sales by salesmen divided in the same manner, total
cash and credit sales, and the grand total. The cross-footings show the
total sales of each article, while the column footings show the total
sales, divided between advertising and salesmen, and whether cash or
credit.

[Illustration: Fig. 1. Tally Sheet of Sales for Small Mail-Order House]

[Illustration: AN EXTENSIVE EQUIPMENT OF CARD FILES IN THE OFFICE OF A
LARGE CORPORATION. MANUFACTURED BY YAWMAN & ERBE MFG. CO., ROCHESTER,
N.Y.]

When the mail is sorted, all orders are placed together, and these
are then sorted into the classes shown by the tally sheet. To prevent
holding order, a memorandum tally should be made of each lot of mail
handled, and the totals for the day entered on the sheet.

The tally sheet should be loose-leaf and made in manifold. A sufficient
number of copies should be made to supply all department heads who have
a direct interest in the volume of the day's business. Usually, copies
will be required by the executives and the sales manager.

=Departmental Distribution.= The sorting and distribution of the mail,
after it reaches the department for which it is intended, is also of
considerable importance. And, in this sorting, the department manager's
stenographer can render valuable assistance. For the same reason that
the head of the house is relieved of details, the head of a department
should strive to rid himself of tasks which can be as well performed by
a subordinate.

Whether the mail is sorted by the correspondent or his stenographer,
it should be gone through before an attempt is made to answer it.
Letters that can be answered at once should be placed by themselves;
those necessitating further information should be handled specially;
if a letter requires the attention of another department, it should be
answered immediately and passed on.

Under this plan, the mail is prepared for answer before a stenographer
is called to take dictation, which saves time. The correspondent who
does not plan his work calls a stenographer and starts dictating,
taking the first letter that comes to hand. When a letter about which
further information is needed is found, he sends to the files for
correspondence, wasting both his own and his stenographer's time while
waiting for the information.

Before any letters are answered, the necessary notations should be
made on all letters requiring information, and the letters sent to the
proper departments. The very first letters answered should be those
that must be referred to another department. These should be not only
dictated first, but transcribed and forwarded to the next department
before further dictation is given.

These methods will go far toward solving the problem of the prompt
handling of correspondence. Most large houses receive complaints of
delay in answering letters, and when these complaints are investigated
the causes of delay are found to be divided between a lack of method
in handling correspondence and ignorance or carelessness on the part
of the complainant. In any well-managed concern everything possible
will be done to overcome the first-named defect, even to the extent of
providing a system which will, at least partially, overcome the defects
due to the latter cause.

As to the complaints due to ignorance or carelessness, it is found
that at least 75% of all complaints received come within this
classification. In many cases complaints come from persons whose
correspondence is limited to a half-dozen letters, or less, a day.
They fail to appreciate the difficulties of the correspondent whose
dictation averages a hundred letters a day; being unaccustomed to
the departmental plan of organization, they do not realize that
each subject about which they write must be referred to one certain
department. And so, a single letter contains an order, a remittance,
and a request for some special information, and, because he does
not receive a reply covering all subjects referred to in his letter
by return mail, the customer complains of delay. It is entirely
legitimate to politely request a customer to use a separate sheet for
each subject--as orders, remittances, complaints, etc.--but since not
all will comply, some such method as has been described is needed to
insure against unreasonable delay in handling letters that require the
attention of several departments.

In another class is the letter which, for some reason, cannot be
answered at once. An example is the letter to a manufacturer, asking
for a price on a special machine. Before a price can be named, the
engineering department must make a careful estimate of the cost, and it
may be necessary to secure quotations on some special material needed.
This means an unavoidable delay, but the prospective customer should
not be left in a state of expectancy--the letter should be acknowledged
immediately, and the cause of the delay explained. The customer then
feels that he is receiving attention, while if no reply is made until
full information can be given, a competitor more courteous may secure
the order.

=Interdepartment Correspondence.= Of considerable importance in every
large organization is the interdepartment correspondence--the notes
from one department head to another. Every department head finds it
necessary at times to request information from other departments.
Even with an intercommunicating telephone system, with which every
large office and plant should be equipped, many of these requests are
of a nature that, to guard against misunderstandings, demand written
communications.

Usually, these communications call for prompt replies; a letter from
a customer may be held or some important action delayed until the
information is received. A good rule for the correspondent is to
give attention to these notes as soon as received, and answer them
at the earliest possible moment. The stenographer should, as a rule,
write these notes first, or if written in the order in which they are
dictated, should place them on the correspondent's desk immediately.
Of course, judgment must be exercised, for some of these notes do not
require immediate attention and should be held until more important
correspondence is disposed of.

There are also many notes giving instructions, either from a department
head to his subordinates, or from the executive heads to the heads of
departments. Except on general orders, affecting all employes, the
names of all department heads to whom the order applies, should appear
at the head of such notes. The manager may wish to call attention to
some act, common to all department heads, without making it a personal
matter with any one of them, so writes the same note to all. For
example:

  July 15, 1909.

  Mr. Blake,
  Mr. Watson,
  Mr. Kimball,
  Mr. Cobb,
  Mr. Royce,

  Gentlemen;

 During the past few days some of you have been a little careless about
 getting to the office on time. If you arrive 5 or 10 minutes late,
 it will have a very unfortunate effect on the discipline of your
 department, and I trust that each of you will strive to overcome the
 habit of arriving late--a habit which, I am sure, is entirely due to
 carelessness on your part.

  Yours truly,
  General Manager.

In the above example, five copies of the note are required, and four
of these can be carbon copies. When Mr. Blake or Mr. Watson receives
the note, he knows that it is not addressed to him alone, but that each
of the others has received a copy. Without detracting from, but rather
adding to, its effectiveness, this note leaves a much more pleasant
impression than a personal note to each man. No one man feels that he
has been singled out for criticism.


CORRESPONDENCE SHORT CUTS

=Dictating by Number.= One of the greatest time savers in handling
correspondence is dictation by numbers. The plan is to indicate each
letter by a number, instead, of requiring the stenographer to take down
the name and address.

Probably 90 per cent of the letters dictated are replies to other
letters. When the correspondent has his mail ready for dictation,
he should write, or stamp with a numbering stamp, _No. 1_ on the
first letter answered. To the stenographer he will say "_No. 1_,"
and, instead of the name and address, this number is entered in the
stenographer's notebook. The original letter, from which the address is
obtained, is turned over to the stenographer. A new series of numbers,
beginning with _No. 1_, should be used each day, to run consecutively
during the day.

Careful tests, made in different offices, show that in taking ordinary
business correspondence dictation, the stenographer wastes about 20
per cent of the time writing the name and address. By the use of the
numbering plan, practically all of this time is saved.

=Form Paragraphs.= A large per cent of the correspondence of the
average business is a repetition of the things that have been said
before. Day after day the same questions are asked and answered,
the same complaints are received, the same arguments, formal
acknowledgments, and requests form a large part of the dictation.
Over and over the same paragraphs are used to say the same things, a
repetition and waste of time for both correspondent and stenographer,
which can be done away with by the use of form paragraphs.

For illustration, the acknowledgment of remittances is entirely
formal, rarely necessitating a special letter. Many times, however,
the letter of remittance asks for special information, which can be
given in the same letter with the acknowledgment. If one or more form
acknowledgment paragraphs are prepared to meet different conditions,
one of these can be used, saving the time required for dictation.

Form paragraphs are especially applicable in answering complaints and
in sales letters. Complaints can usually be divided into a few classes,
and one paragraph will answer all complaints of the same kind. In
sales letters, form paragraphs will answer all requests for certain
information about the product, the terms of sale, the guaranty, etc.

Not only do form paragraphs save much time in dictation, but they
result in stronger letters. It is the experience of every correspondent
that he can write better letters one day than another. The best form
paragraphs are found in the letters written on the correspondent's good
days.

Form paragraphs should be arranged for ready reference. A very
satisfactory method is to write them on sheets punched for filing
in a binder. The paragraphs should be numbered consecutively, and
indexed by subject. Copies should be supplied to all correspondents and
stenographers who have occasion to use them.

Frequently a large part of the day's correspondence can be handled
with form paragraphs, and through constant use the stenographer will
become so familiar with them that he will be in a position to answer
many letters without dictation. The really efficient stenographer--one
of the kind who expects to advance to the position of private
secretary--will make a careful study of form paragraphs, fitting
himself to handle the minor correspondence, thereby saving the more
valuable time of the correspondent.

=Talking Machines for Dictation.= Every year sees an increase in the
use of the talking machine for dictation. These machines have now been
brought to a state of perfection which makes their use feasible, and in
many large offices they are used to the almost complete exclusion of
shorthand writers.

An outfit for correspondence work consists, usually, of two
machines--one for recording and one for reproducing dictation. The
correspondent dictates his letters to the recording machine and passes
the cylinders on which the record has been made to the stenographer,
who transcribes on the typewriter direct from the reproducing machine.
In small offices, one machine is made to answer every purpose, as it
can be changed instantly from a recorder to a producer.

After the dictation on a cylinder has been transcribed it is shaved,
and is then ready for a new record. This permits of the use of the
cylinders until they are worn thin, and reduces the expense to a
minimum.

[Illustration: Fig. 2. The Dictaphone _Columbia Phonograph Co._]

The principal advantages claimed for this machine are that it saves all
of the time of the stenographer usually required for taking dictation;
the correspondent can dictate at any time without waiting for a
stenographer; the work is more evenly distributed, and consequently
finished earlier in the day. In the opinion of the writer, the chief
advantage lies in having the machine at hand ready for dictation day or
night.

While in some offices the shorthand writer has been almost entirely
supplanted, the machine is more likely to be used as an auxiliary.
It can never supply the brains of the human machine, and is not
likely to lessen the demand for competent stenographers. Fig. 2 is an
illustration of one of the well-known makes of correspondence machines.

=Correspondence Requisitions.= A considerable per cent of the letters
to be answered in a business office are of such a nature that former
correspondence must be referred to before an intelligent reply can be
given. The unsatisfactory character of the replies to many letters can
be traced to the fact that the correspondent did not take the trouble
to first find out what had been written before.

To insure against the loss of correspondence, it should be most
carefully filed, and every letter should be accounted for. Also, if a
correspondent wants certain correspondence from the files he should
state explicitly what correspondence or information he desires. This
not only insures his getting the information needed to formulate an
intelligent reply, but protects the file clerk.

The systematic method is to have a correspondence requisition, similar
to the one shown in Fig. 3. On this requisition is noted just what is
wanted--invoice, order, or letter--with room for special instructions.
One of these requisitions should be sent to the files whenever any
papers are wanted, and nothing should be delivered without such a
requisition. By placing this requisition in the files, in place of the
papers removed, the file clerk can always trace missing correspondence.

[Illustration: Fig. 3. Requisition for Correspondence]

=Complaints and Changes of Address.= In some lines of business,
complaints and notices of change of addresses are quite numerous. An
example is the business of publishing a weekly or monthly periodical.
Many complaints are received from subscribers who claim that they do
not receive the publication regularly. The great majority of these
complaints can be traced to carelessness on the part of the subscriber
in failing to notify of change of address.

In some businesses, the handling of complaints requires the services
of a correspondent, and a clerk to trace the complaint and gather the
information necessary before an adjustment can be made. In a smaller
business, the work of looking up the information usually falls on
the stenographer. But no matter who gathers the information, the
correspondent never should attempt to answer or adjust a complaint
until he has made a thorough investigation. Not until he understands
all of the causes leading up to the complaint, can he correctly judge
of its merits.

The policy of having all complaints handled by one man is in keeping
with approved business practice. A man who makes a study of the subject
soon learns to handle complaints to the ultimate satisfaction of all
concerned. Being independent of the selfish interests of a particular
department, he is much more likely to serve the best interests of the
house than any other man in the organization. The sales manager, for
instance, is not the best man to adjust complaints of customers; he is
likely to be more liberal than is warranted, because of his fear of
losing trade.

When a complaint has been investigated, everything possible should be
done to remove the cause, and to guard against a similar complaint in
the future. The seemingly little precautions count for much. In the
matter of changes of address, for instance, it is a small matter for
the one who makes the change to see that it is made not only on the
ledger but on the sales list, the collection card, and in every place
where the address is permanently recorded. Failure to make the change
in one place may lead to endless confusion.

_Stenographer's Reference Index._ Here is a suggestion for the special
benefit of the stenographer. Keep in your desk a reference index of
names, addresses, and telephone numbers. There are certain persons and
firms to whom your employer frequently writes letters. These are not
in reply to letters, but are written in the usual course of business.
The names of these persons should be on your index so that when you are
told to write to Mr. Hunter or Mr. Roberts you will not be obliged to
ask the address.

Probably your employer will not ask you to keep such an index, but
surely will appreciate your knowing the addresses. When he finds that
you always know the telephone numbers of the printer, the bank, and
other local houses with whom he does business regularly, as well as the
addresses of prominent out-of-town correspondents, he will at least not
place it to your discredit.

But do not keep the addresses on sheets of paper that surely will
soon become confusing on account of changes and additions which make
an alphabetical arrangement impossible. Ask for a small card tray,
holding 3"×5" cards, that will go in the drawer of your desk, a set
of alphabetical indexes, and a supply of blank cards. Such an outfit
can be bought at any first-class stationer's for a dollar or two.
When you want to preserve an address, write it on a card, and file
it alphabetically. If your employer will not supply the outfit, cut
slips of paper and indexes to fit one of the small compartments in the
desk drawer. Have the index, even if you must devise your own method
of keeping it; you will at least have the satisfaction of saving many
minutes of your time. And in the formation of a systematic habit you
will be adding to your equipment.

=Making Corrections.= All stenographers make mistakes, and no
correspondent is entirely free from faulty dictation, which
necessitates corrections in letters after they are written. But the
time of the stenographer and, incidentally, expense to the house,
can be saved if the correspondent will exercise reasonable care in
indicating the corrections to be made.

Do not deface the letter so that neat corrections will be impossible,
unless the mistake is so serious as to necessitate rewriting the entire
letter. When the wrong word has been used, draw a light pencil line
under it and write the correct word on the margin or the end of the
letter; if the word is misspelled, underline it and write the correct
spelling at the end of the line. This takes even less time than to
deface the letter, and leaves it in such shape that corrections can be
made quickly and neatly.

To the stenographer it is well to say, "If you find it impossible to
make a neat correction, rewrite the letter." Nothing gives a more
unfavorable impression of a house than an untidy letter, and your
employer is more willing to overlook an occasional mistake than a
letter filled with visible erasures.


COPYING CORRESPONDENCE

Copies of outgoing correspondence are a part of the system of every
business office. There was a time when copies of important letters were
made by hand, and then came the copying press and tissue impression
book with many cloths, wringers, pans of water, and other paraphernalia
for moistening the sheets of the book. The copying press is an awkward
machine, difficult to operate, and altogether unsatisfactory, but,
until a better method was offered, it answered the purpose.

One of the greatest defects in the copying-book method is the
impossibility of making uniformly clear copies; some will be clear
while others are blurred, and the important letter is usually the one
that is illegible. The difficulty in securing clear copies is due to
the impossibility of securing uniform pressure. While the copying press
is still found in a few small offices, it is practically obsolete,
and not used in offices where modern efficient methods receive
consideration.

=Carbon Copies.= A simple method of obtaining copies of outgoing
letters, invoices, orders, etc., is to make duplicates by means of
carbon paper. In its adaptability and far-reaching effect, the sheet
of carbon paper has proved to be one of the greatest of all aids to
modern business methods. Used in connection with a typewriter of
modern construction, the carbon sheet has revolutionized manifolding
processes, making possible as many duplicate copies of any paper as are
required in ordinary business.

The carbon method of obtaining copies of letters has the merit of
economy in time. When the letter is written, the copy is made; if extra
copies, up to a half-dozen, are wanted, all are made at one writing. If
the last letter is being written when it is time for the mail to leave
the office, it need not be held to make a copy.

The carbon method is not expensive. Good carbon paper costs 2 cents or
less a sheet, and for 1,000 copies only about 30 sheets are required.
A satisfactory quality of plain paper for copies can be bought for
$1.00 or less a thousand. These prices are naturally subject to slight
fluctuations, depending on the quantities purchased and the locality.

A defect in the carbon method is found in the manner of making
corrections. It is not uncommon for a man to make a slight correction,
or add a note, in his own handwriting; such corrections and additions
cannot appear on the carbon copy. When corrections are made on the
typewriter, it is very difficult to obtain a clear copy of the
correction on the second, or carbon, sheet--the correction on the copy
is very likely to be blurred. If the correction is written directly on
the copy, without using carbon paper, the essential feature of the copy
is destroyed; it is no longer a facsimile, and its value as evidence is
very materially lessened.

=Mechanical Copiers.= There are now on the market several mechanical
copiers, without the many disadvantages of the copying press, or the
defects of the carbon method. One of the most satisfactory and best
known is the roller copier. The fundamental principle of the roller
copier is that of the clothes wringer; the original letter, with a wet
tissue sheet placed against the written side, is passed between rubber
rollers, to which just the right amount of pressure is applied.

Working from the clothes-wringer idea as a basis, the inventor of the
roller copier set about to remedy the defects of the copying press.
It was found that clear copies could be obtained only under certain
conditions; the pressure must be absolutely uniform, and the tissue
sheet must be moistened evenly.

[Illustration: Fig. 4. Mechanism of the Yawman & Erbe Roller Copier]

As to the pressure, it was found that too much or too little resulted
in unsatisfactory copies--some faint, others blurred--the very defect
that had made the use of the copying press objectionable. This was
overcome by using an adjusting screw by which the exact pressure
required could be obtained. But, if the pressure were left on all of
the time, the rubber rollers would soon be flat. So, an adjustment
lever was added, by which the pressure could be thrown on before
copying, and thrown off when the machine is not in use.

To adjust a single sheet of tissue paper so that it would lie smooth on
the letter, was out of the question. This difficulty was overcome by
copying on a continuous roll, and the problem of moistening was solved
by passing the paper through water, insuring equal moisture over the
entire surface.

The mechanism of the roller copier is shown in Fig. 4. The paper
from the roll is passed under the dampening roll in the water tank,
then between the large roller and the wringing roller, over the same
large roller and between it and the copying roller, thence out over
the flanged roller and down to the winding reel. The pressure on the
wringing and copying roller is adjusted by the adjusting screws _A_
and _B_, and the adjustment lever throws the pressure on or off. The
letter to be copied is laid face down on the feeding shelf, the edge
is placed under the copying roller, pressure thrown on, and a turn of
the crank carries the letter through into a receiving basket, leaving
a perfect copy. If additional copies are wanted--any number up to a
half-dozen--the operation is repeated for each copy.

[Illustration: Fig. 5. General View of the Yawman & Erbe Roller Copier]

The paper on which the copies have been made passes to a winding reel
under the copier, as shown in Fig. 5. This is a large rectangular reel
on which the paper is stretched tightly, so that it will be smooth when
dry. The open construction of the reel affords free circulation of
air, drying the copies very quickly. After the day's copying is done,
the action of the machine is reversed by the turn of a thumbscrew, the
paper is broken above the last copy, that on the reel is brought back
over the copier, and the letters cut apart with the cutting knife at
the end of the feeding shelf. The separate copies are then ready for
filing with the original letters, keeping letters and replies together.

Among the advantages claimed for the machine are certainty of legible
copies, copies of all corrections, and economy of operation. The copies
are made after the letter has been written and corrected; consequently
it must be a facsimile. If a note is written at the bottom or on the
margin, it is shown in the copy.

Copying is the last operation before mailing. Frequently a man finds,
after the letter is written, that he needs additional copies. With the
carbon system it is necessary to rewrite the letter; with the copier,
the copies can be obtained any time before the letter is mailed.

The copier is economical in operation. The best quality of paper costs
50 cents a roll, and a little more than one roll, or about 60 cents'
worth of paper is required for 1,000 copies; and there is no carbon
paper to buy. The office boy can operate the copier, and it takes but a
few minutes to copy the day's mail of the average concern. If desired,
the machine can be obtained with an electric motor attached, but this
power is really unnecessary unless the correspondence averages 300 or
more letters a day.


STENOGRAPHIC DIVISION

As has been stated elsewhere in this series of books, the modern
plan for a large organization is to have an independent stenographic
division or department. Instead of each department head and
correspondent having one or more stenographers in his office, to handle
his work only, this plan contemplates placing all stenographers and
typists in one room, in charge of a chief stenographer. Except where an
executive officer has a stenographer who acts as his private secretary,
this plan is now carried out in the most highly organized of our larger
enterprises.

The stenographers are subject to the call of any correspondent, the
chief stenographer supplying the one who is first available. The plan
is sometimes modified to the extent of holding a stenographer for the
work of a certain correspondent during stated hours; the stenographer
being, at other times, available for any other correspondent.

The plan has proved to be economical and beneficial in many other
ways. It is economical, as it reduces the number of stenographers
actually needed to handle the work. Under the old plan, some of the
stenographers are idle a part of the time, or obliged to do copy work
to keep busy. For example, in a certain house, two departments were
located in adjoining rooms. The department heads each had more work
than one stenographer could do, but not sufficient to keep two busy all
the time; it was necessary for each to employ two stenographers--four
in all--and let them fill in a part of their time addressing envelopes,
and similar work. The plan of having a common stenographic force was
tried, and three stenographers handled the work of both departments,
with some time to spare for the work of other departments--a clear
saving of 25%.

The stenographer is benefited by becoming familiar with the
correspondence of all departments. While not learning all of the
secrets of one department, the stenographer obtains a much better
insight into the business as a whole--far more valuable as a business
training than a more intimate knowledge of a single department.

Every correspondent is benefited by having several stenographers
who are familiar with his work. If a certain stenographer leaves,
is ill, or takes a vacation, he is not placed under the handicap of
having his work stand still until he can break in a substitute. The
new stenographer can be given some dictation in each department while
becoming familiar with the work.

The work is more evenly distributed, with the result that the mail is
out on time and no stenographer is obliged to work after hours. When
all work together under one chief, the efficiency of the stenographic
force, individually and collectively, is materially increased.

Not the least of the many advantages of this plan is the one of
having all typewriters in one place, confining the noise. Employes in
other departments of the office are greatly benefited by working in
comparative quiet. Especially advantageous is the absence of the noise
of the typewriter in private offices.

When the stenographic division is installed, it is necessary to
provide a system of call bells, with a push button at the desk of each
correspondent. Each correspondent is assigned a signal by which he may
summon a stenographer. The chief assigns a stenographer to answer each
call, or in the absence of the chief, the one whose turn it is answers
the call.

=Records of Work.= An independent stenographic division necessitates a
careful record of work performed. These records are required in order
that the expense may be distributed and the wages of the stenographers
charged to the proper departments. A distribution of office expense is
just as necessary as a distribution of factory charges. The records
should show exactly what it costs to conduct the purchasing, sales,
or credit departments. If a man divides his time between two or more
departments, his salary should be charged accordingly. In like manner,
the wages of a stenographer should be distributed.

[Illustration: Fig. 6. Stenographer's Weekly Record of Work,
Distributed by Departments]

Elaborate or complicated records are not required; a record of the time
worked for each department is sufficient, though usually the number of
letters written is included. First, is the record of work done by each
individual. This should be a record covering a week's work, and may be
kept on a card. Fig. 6 shows a form designed for such a record. This is
on a 5"×8" card, one of which is given to each stenographer, who keeps
the record from day to day.

This form provides for a record of the work of the stenographer each
day in the week. The columns from left to right are headed with the
names of the departments, but instead of having these printed in, it is
best to leave the spaces blank and write the names. The daily record
shows the hours worked and number of letters written, both morning and
afternoon, for each department. Space is also provided for a record of
miscellaneous or special work, which should be explained briefly. The
total number of hours shown by this record should, of course, agree
with the time for which the stenographer is paid.

These cards should be turned in to the chief stenographer, who will
file them under the name or the number of the stenographer, keeping all
records of each employe together. If preferred, daily reports can be
used, though the weekly report will prove satisfactory in almost every
case.

On receipt of the individual reports, the chief stenographer should
make up a weekly report of the work of the entire division. The object
of the report is primarily to show the amount to be charged to each
department for stenographic work, but may also show the cost of each
stenographer.

The form shown in Fig. 7 provides for a complete report. The work of
each stenographer for each day of the week is distributed among the
several departments, showing the number of hours worked, the number of
letters written, and the cost. A record for five departments with six
stenographers is provided for in the form shown. The footings of the
columns show the total cost to the departments and the total column
at the right, which is an extension of daily costs, shows the total
cost for each stenographer. The footing of the total column, and the
cross-footing of the departmental columns, must agree and exactly equal
the amount of the pay-roll of the stenographic division.

[Illustration: THE "IN-MAIL" DEPARTMENT WHERE 10,000 LETTERS ARE
RECEIVED DAILY AND SORTED FOR DISTRIBUTION AND ATTENTION The Larkin
Co., Buffalo, N. Y.]

[Illustration: Fig. 7. Departmental Distribution of Work of
Stenographic Division]

One valuable comparison shown by this report is the cost to handle the
work of one department or correspondent, when different stenographers
are used. The comparison must be based on the letters of one
correspondent, because, while they are not likely to vary materially,
there is a marked difference in the length of the letters written by
different correspondents; also, the dictation of some correspondents is
much more easy to take than others.

The form shown should be loose-leaf, and made in duplicate. One copy
goes to the comptroller and one is kept by the chief stenographer. The
size can be increased to accommodate a large number of departments or
stenographers, but rather than use a sheet that is bulky, it is better
to use more than one sheet. To provide for a monthly distribution of
costs, these reports should be closed on the last day of the month,
regardless of the day of the week.

=Hints for Stenographers. Telegrams.= When a telegram is sent, it is
safe to assume that its object is to secure quick action; otherwise
a letter would serve the purpose. Telegrams should, therefore, be
transcribed and dispatched immediately, regardless of any other work
that may be on the machine.

It has become the usual custom of business to confirm telegrams by
mail. The more usual custom is to write a letter, in which the telegram
is quoted, but the matter can be handled with less labor by the use
of triplicate telegraph blanks. The original is the regulation blank
supplied by the telegraph companies; the duplicate is on a sheet of the
same size as the telegraph blank, but printed as shown in Fig. 8; the
triplicate is a blank sheet of paper. The duplicate is mailed to the
correspondent, while the triplicate is filed with his correspondence.
Unless some special explanation is demanded, it is unnecessary to write
a letter.

=Don'ts.= Don't keep your employer waiting while you hunt for, or
sharpen, a pencil. Always keep a supply of at least a half-dozen
well-sharpened pencils on hand. Keep them in a handy place and take
them with you when your employer calls you to his desk to take
dictation. Remember that his time is more valuable than your own.

Don't be afraid of working a few minutes overtime, when requested to do
so. Only an unreasonable employer will ask you to work after hours,
excepting when it is really necessary. But occasionally something will
come up at the last moment, making it necessary to write and mail a
letter that night. Remember that what seems to you a trivial matter,
may be of the utmost importance to your employer.

Don't overlook the important letters. If you handle a heavy
correspondence there will be many days when you will find it impossible
to transcribe all of the dictation you have taken, but some of the
letters will be important while others can be held over without loss.
Write the important letters first; if you are not sure which they are,
ask your employer. He will appreciate your interest.

[Illustration: Fig. 8. Confirmation of Telegram]

Don't overlook the necessity of learning something about the
business in which you are employed. Every business has its own
nomenclature--technical terms peculiar to the business, with which you
may be unfamiliar. When you accept a new position, read the catalogs,
circulars, and other literature of the house; this is the easiest way
to familiarize yourself with the technical terms. You will find your
position improved if you can correctly transcribe the terms peculiar to
the business.

Don't waste envelopes and postage. Your employer may write a half-dozen
letters to one firm the same day. This frequently happens in writing
to branch offices and agencies. See to it that all letters to the same
address are enclosed in one envelope. The saving in postage will be
very considerable.

Don't underestimate the opportunities afforded by your position.
There really is no position offering better chances for advancement
than that of the willing and competent stenographer. There are many
incompetents, and for such salaries are small; but there are plenty of
positions at good salaries open to the really competent. A stenographer
handles many confidential matters, learns the business secrets of
his employer, and has every opportunity to learn the business. The
stenographer who takes advantage of the opportunities to learn becomes
a private secretary, and rapidly advances to even more important
positions.

Don't betray secrets. This is the most important _don't_ of all.
Remember that your employer dictates many confidential letters,
imparting business and private secrets. Do not, under any
circumstances, impart these confidential matters to others, and never
talk about the business to those outside the office.


FILING DIVISION

Only a small per cent of the records of a business are found in the
books of account; the larger part are in the form of business papers of
various kinds. And, since the records in the books are, in the main,
based on the records found in these papers, the papers themselves are
not less valuable than the books. Letters, orders, invoices, receipts,
vouchers, contracts, specifications, and estimates form the basis of
the larger part of the business transactions of all houses, giving
authority for transactions and offering proof that the transactions
have been completed. The proper preservation of these papers is,
therefore, a necessity, and, since they form so important a part of the
records, they must be accessible.

The filing division is, therefore, one of the most necessary in the
office of any enterprise, and should receive the careful attention
that its importance deserves. Whether the equipment of the filing
division consists of a single file or many large cabinets, it should
be located where it will be accessible to all departments. It should
be given as nearly a central location as the general plan of the
office will permit. In a very large enterprise a separate room may be
required, while in a small business the files may be arranged along
the wall or around a corner. But whatever its location, aisles leading
to the filing division should be left open, that it may be reached
conveniently from any part of the office. Since good light is not
so essential as for some other divisions, it is sometimes advisable
to locate the filing division where the light is not sufficient for
another division--as the bookkeeping division. At the same time, there
must be sufficient light to enable the file clerk to do the work
properly.

As a general rule, all filing should be in one place, although under
certain conditions, which are referred to later, special departmental
filing is justified. It should be possible to obtain from the general
files all papers that have a bearing on a particular transaction, or
all of the correspondence of a given concern. More or less confusion
results when certain of the papers are missing. For example, if a part
of the correspondence about an order is filed in the sales department,
the papers in the general file may not give a complete history of
the case, and the order may be accepted or rejected under a wrong
impression because the most important letter is missing.

When independent filing systems are maintained by the different
departments, it is sometimes difficult to determine just where certain
papers will be found. To say the least, it is quite difficult to
collect all of the papers referring to one subject, when the filing is
handled in this manner.

Experience has demonstrated that a central filing division is really
more convenient for the department manager, than to maintain his own
filing system. If the system has been properly installed, he can obtain
correspondence or other papers from the general files about as quickly
as from his own files, with the added advantage of obtaining all of the
correspondence with a particular person. If another department has been
in correspondence with the same person, he has their letters as well as
his own. When the credit man, for example, reviews the correspondence
of a customer from whom he is trying to collect an account, he will
not be ignorant of the existence of a letter from the sales manager in
which special terms were offered to secure the order.

=The File Clerk.= The filing division should be in charge of a
file clerk and the clerk should have full control of the work of
the division. In a large business, a chief file clerk and several
assistants will be required, while in a small business it is customary
for the stenographer to do the filing. No matter what the extent of the
filing, the principle is the same; if but two persons are employed and
one is expected to do the filing, the other should neither file nor
remove papers from the file. When a letter is wanted, the file clerk
should be asked for it.

The essential qualifications of a file clerk may be summed up as
follows:

  A good memory;
  The habit of accuracy;
  The ability to read confusing chirography;
  The ability to spell correctly;
  Speed.

To these might be added the possession of a liberal amount of common
sense, the faculty of absorbing information, and ability to correlate
facts according to their importance.

A good memory is very necessary, for the papers that have been filed
must be found when wanted. Letters signed by an individual may be filed
with the correspondence of his firm. When the manager calls for "that
letter from Whitcomb," it is embarrassing to ask him with what firm Mr.
Whitcomb is connected; still more so to keep the manager waiting while
an index is consulted.

A comprehensive index is necessary, of course, and the efficient file
clerk will be fortified against all possible contingencies with proper
indexes, but a memory which will permit of ignoring indexes, except in
special cases, is a valuable asset. It may be stated as a rule that
it should not be necessary to refer to special indexes to locate the
letters of a regular correspondent.

Accuracy is another very necessary qualification. Accuracy is a
habit--the habit of first finding the right way to do a thing, and
then doing it that way every time. The habit of doing a thing the same
way every time is very important in filing. If the rule is to file all
correspondence in the name of the firm from whom it is received, no
matter by whom signed, it is very essential that all letters from the
firm be filed in exactly the same way--not a part of them in the name
of the individual.

Accuracy is necessary also in placing letters in the files. Letters
that belong in the _Be_ division of the index must be filed there--not
in the _Ba_ division; letters intended for folder _No. 19_ are to all
intents lost, if placed in _No. 91_.

To be able to read confusing chirography is a talent that is much
appreciated in more than one line of endeavor; it is especially
valuable to the file clerk. The signatures of many men are notoriously
difficult to read, and large numbers of such signatures come to the
filing division of every concern having an extensive correspondence.

Spelling might seem to be an accomplishment not absolutely essential to
the equipment of a file clerk, but the ability to spell correctly is
very helpful. It is a great help in indexing. Especially when a finely
subdivided index is used, correct spelling is necessary to determine
the division under which a paper should be filed.

Speed is an absolute requirement. When the manager wants a letter, he
wants it at once. When the day's mail reaches the filing division,
it must be filed as quickly as possible. Some one may call for a
letter within an hour after it reaches the files, and to find it in
the unfiled correspondence means inevitable delay. Nowhere is prompt
service more thoroughly appreciated than in the filing division.

The importance of securing a file clerk with proper qualifications
is apparently overlooked in many offices. A girl is placed in charge
because she will work for a small salary, resulting--unless she is
qualified--in very poor service. An incompetent file clerk can, in a
short time, get the files in a demoralized condition almost impossible
to straighten out. The necessity of proper filing makes the position
one of real importance. On the other hand, the possibilities of the
position are seldom appreciated by the clerk. This is due, perhaps, to
the policy of making the position one of the lowest in the office from
the salary standpoint; but the greatest possibilities of the position
lie outside of the salary question.

The position of file clerk is a sure stepping stone to something
better--a more responsible and better paid position. No clerk in the
office has a better opportunity to obtain a general knowledge of the
business. From the stenographer who files the manager's personal
correspondence, to the clerk in charge of an extensive filing division,
each is intrusted with important papers revealing the very secrets of
the business. The position is a confidential one, and the clerk who can
absorb the information that must inevitably come to his notice, and
_keep the information to himself_, is surely preparing to fill a higher
position; he has a golden opportunity to demonstrate his absolute
trustworthiness.


FILING SYSTEMS

[Illustration: Fig. 9. Flat Letter File. _Browne-Morse Co._]

The evolution of methods of filing is itself an interesting study. From
the days when the merchant preserved his bills and important letters
by hanging them on a sharp-pointed hook, to the present with filing
cabinets of pleasing design and careful construction, in sizes to hold
papers of all shapes and kinds, there has been constant progress. The
advance of business methods, bringing with it an ever-increasing volume
of papers to be preserved, has resulted in a demand for more simple
methods--more scientific systems of filing. Those confronted with a
practical solution of the problem, and those attempting to supply the
demand, have devoted much time to a study of the subject. This has
brought into being the filing expert who makes a study of the filing
problems of concerns in all lines of business. The manufacturer has
kept pace with the development, and now is prepared to furnish the
right device for filing any document from a small card to the largest
drawing or map.

In this discussion of filing systems, it is not necessary to consider
the obsolete methods, even though they have at some time been
considered standard. The purpose of this discussion will be better
served by a study of the more modern systems.

=Flat Files.= One of the filing systems still found in some offices is
the flat, or box file. This file is made in the form of a box, with
a hinged cover, as shown in Fig. 9. This box is of the right size
to hold letters without folding, and is equipped with an _A_ to _Z_
index. Letters and other papers are filed between the index sheets in
the order of their receipt. Sometimes an attempt is made to keep all
of the correspondence of one person together but, since the letters
are simply laid in the file, with no means of separating those of the
several correspondents filed in one subdivision, it is very difficult
to maintain this arrangement.

Cabinets are also made with box drawers of wood, the number of drawers
in a cabinet ranging from two to sixty. This permits of the use of
a more finely subdivided index, and better classification of the
contents. Each box in the cabinet is equipped with a spring compressor
which holds the contents in place. To file or remove papers it is
necessary to release this compressor. The index is removable, and when
the drawer is full, the index and contents are placed in one of the box
files referred to, which then becomes a transfer case. A new index is
placed in the file, which is then ready for current correspondence.

This style of cabinet was for long the best to be had, but when
used for filing an extensive correspondence, its defects became
apparent. Among the disadvantages of its use, one of the chief is the
uneven filling up of the separate divisions. Where the alphabet is
divided among several drawers, one may fill up in two months, while
another is but half full at the end of a year. This means that the
transferring must be done whenever a single drawer is filled, instead
of transferring the contents of the entire file at one time, adding to
the difficulty of locating correspondence at a given date.

Other disadvantages are that correspondence is mixed together, making
it difficult to locate all of the correspondence of one person; to
remove a letter, the drawer must be taken from the file, and a search
made through all of the letters in a given subdivision of the alphabet.
Frequent transfers are necessary, resulting in an accumulation of
transfer files which occupy valuable space in the office.

=Vertical Filing.= The vertical system of filing takes its name from
the fact that papers are filed vertically, on edge, instead of being
laid flat in a drawer. Vertical filing is the result of a gradual
evolution of filing methods.

Those who recognized the defects of the old systems, set about to
correct them. In the search for a remedy, all systems in use--for
whatever purpose--were carefully investigated, among others the
so-called _railroad system_. For years, railroads had been keeping all
correspondence relating to one subject together, attaching the letters
to a strong backing sheet. The sheet, with the letters attached, was
folded twice, making a package about 3½"×9" in size, which package
was known as a file. These files were numbered, and kept in numerical
sequence in pigeon holes, or in boxes similar to the present-day
document files. When the document boxes were used, which was the case
in the larger offices, the packages or files were placed on end--filed
vertically. This undoubtedly was the forerunner of the present-day
vertical file.

The plan of keeping together all correspondence about a given subject
naturally appealed to the investigator as being practicable for use
in a commercial house. Not a few houses adopted the system in its
entirety, which included an alphabetically indexed book in which a
brief synopsis of the correspondence was written. The book was also
used for a cross-index to the names of individual correspondents. It
was really a system of recording the principal contents of letters,
with references to the files where all of the correspondence could be
found.

[Illustration: Fig. 10. The Principle of Vertical Filing. _Browne-Morse
Co._]

While the idea of keeping all of the correspondence on one subject, or
with one individual, together, was excellent, this system was not well
adapted to commercial use. Writing the contents of letters in a book
was entirely impractical, and too much time was required to open the
files and refer to the contents. But, said someone, why not adopt the
numerical idea, and substitute a numerical for the alphabetical index
in the box file; instead of index sheets printed with the letters, why
not have them numbered from _1_ up? Then a number could be assigned
to each correspondent and all of his letters could be filed under the
index sheet bearing the corresponding number. An index book could be
used for the names and references to the numbers.

Next came the card-index man with a proposition to use his cards for an
index to the files. Not long ago the writer inspected a filing system
consisting of a number of box files indexed numerically, arranged on a
shelf. A card index supplied the cross-references. In this particular
case the system was designed by a card-index manufacturer to create a
market for card files.

But the use of card indexes furnished the final solution of the filing
problem. If small cards could be filed on edge, why not letters? With a
larger drawer, with index guides to fit, the card index idea could be
adapted to the filing of correspondence. Indeed, a flat file drawer,
standing on edge, as shown in Fig. 10, illustrates the principle of
vertical filing.

[Illustration: Fig. 11. Folder for Vertical Filing _Browne-Morse Co._]

To preserve the idea of keeping all correspondence of one individual
or firm together, folders are used. A folder, as shown in Fig. 11,
consists of a piece of heavy manila paper folded, with one edge higher
than the other, forming a pocket 9¾"×11⅞" in size. The higher
or projecting edge of the folder is used for writing the name of the
correspondent or other reference; or the folder may be made with a
projecting tab for the purpose.

One of these folders is used for each correspondent. Suppose, for
example, that correspondence develops with Scott & Blake. The name of
the concern is written on the projection of a folder, and all letters
from, with copies of all letters written to, Scott & Blake are placed
in this folder in the order of their date--the last letter in front.
The folder provides a complete history of the correspondence with the
concern.

[Illustration: Fig. 12. Guides for Vertical Filing. _Browne-Morse Co._]

The folders are filed on edge between guides or index cards having
projections on which the indexes are written or printed. The indexes
are fastened in a vertical file drawer, yet are removable. On the
bottom of the guide, Fig. 12, is a square-cut projection, punched with
a round hole. This projection drops into an opening in the bottom of
the drawer, and engages a countersunk rod which is passed through
the hole. The rod holds the guide firmly in place, but since the rod
is removable, the guide can be taken out when it is desired to do so.
The folders are not fastened in any way, and any folder can be removed
without disturbing the others, as shown in Fig. 13.

[Illustration: Fig. 13. Vertical File Drawer Showing Folders and Guides
_Browne-Morse Co._]

=Methods of Indexing.= There are four principal methods of indexing the
vertical file; namely, the numerical, alphabetical, geographical, and
subject. These four methods, with their resulting combinations, provide
for the proper indexing of any class of papers.

_Numerical Indexing._ Numerical indexing was the method first used with
the vertical file, and still is extensively used. With the numerical
system of indexing, the folders are numbered consecutively in the upper
right-hand corner. The folders are filed in numerical sequence between
guides, numbered usually by 10's, as shown in Fig. 14.

Each correspondent is known by a number, and all of his
correspondence--both original letters and copies of replies--is filed
in a folder bearing his number. To locate his folder, a cross-index
is necessary, as it is not possible to remember the numbers of all
correspondents. The index is provided by a card on which is written the
name, the folder number or file number, and any other memoranda that
may be desired. The card is filed in a card drawer behind the proper
alphabetical index guide, where it can be found very quickly.

[Illustration: Fig. 14. Numerical Indexing _Browne-Morse Co._]

Suppose, for example, that correspondence develops with B. J. Anderson.
We will file his letter or a copy of our reply in the next unused
numbered folder--which happens to be _No. 545_--and this will be Mr.
Anderson's number as long as we have any dealings with him. Before
placing the folder in the proper place in the file--following folder
_No. 544_, back of guide _540_--we will write Mr. Anderson's name near
the upper edge, and at the same time we will fill out an index card as
shown in Fig. 15. This card will be filed in its proper place in the
card index drawer, and whenever we wish to refer to this correspondence
we will turn to the card, which shows that it will be found in folder
_No. 545_.

When a letter refers to more than one person or subject, it is filed
under the most important. For example, when correspondence develops
with a firm, it should always be filed under the firm name, even though
the letters are signed by individuals. We will suppose that one of
our correspondents is the Norton Machine Co., and that folder _No.
610_ is assigned. Later, a letter signed by T. J. Watson, Secretary,
is received. Since the letter refers to the business of the Norton
Machine Co., it will be filed in their folder, and we will fill out
a cross-index card for T. J. Watson, Secretary, referring to the
company's folder, as shown in Fig. 16. This will be filed with the
other cards in the alphabetical card index, and will enable us to
locate the correspondence of T. J. Watson, even if we do not remember
the name of the company.

[Illustration: Fig. 15. Index Card for Numerical Filing]

_Alphabetical Indexing._ The alphabetical is the simplest method of
indexing. The guide or index cards are printed with the letters of the
alphabet, providing an alphabetical index between which the folders are
filed. Sets of alphabetical guides with any number of subdivisions up
to 4000 are to be had.

[Illustration: Fig. 16. Indexing Firm Correspondence for Numerical
Filing]

With the alphabetical system a folder is assigned to each regular
correspondent, as with the numerical system, but instead of a number,
only the name is written on the folder, or on the tab projection. The
folder is filed back of the proper alphabetical guide, as in Fig. 17,
and is used exclusively for that one correspondent.

[Illustration: Fig. 17. File with 50 Alphabetical Subdivisions
_Browne-Morse Co._]

It is the experience of every business house that a small
correspondence is received from a large number of persons. Perhaps but
one or two letters will be received, the person never developing into a
regular correspondent. This correspondence is treated as miscellaneous.
For miscellaneous correspondence a separate folder, on which the
index letters are written or printed, is used for each alphabetical
subdivision. This may be placed either behind or in front of the name
folders, as in Fig. 18.

The miscellaneous folder should not be allowed to become too full.
When a sufficient number of letters are accumulated with a firm or
individual, or whenever the nature of the correspondence indicates
that it is likely to become permanent, it should be transferred to a
separate folder.

_Geographical Indexing._ When for any reason it is desirable to have
correspondence arranged according to territory, the geographical system
of indexing is used to excellent advantage. The plan is exactly like
alphabetical indexing, with the exception that the files are divided
according to territory. First, the files are divided by states by
means of state guides--indexes printed with the names of the states. A
very large concern may require guides for all states, while a smaller
business will use only three or four such divisions. Or a concern
doing business in a half-dozen states may find it advisable to arrange
the correspondence from but two of them territorially, indexing the
balance alphabetically. The correspondence from a single state may
require two or more drawers; or one drawer may accommodate that from
several states.

[Illustration: Fig. 18. Tab Folders. Miscellaneous Folders in front.
_Library Bureau_]

To subdivide the states, guide cards printed with the names of the
towns are used. These are arranged alphabetically between the state
guides. Correspondence folders are filed back of the town guides in
alphabetical sequence. If there is a large number of correspondents in
one town, the folders are subdivided with a set of alphabetical guides.
The geographical method of indexing is shown in Fig. 19.

[Illustration: Fig. 19. Geographical-Alphabetical Filing with Guides
for States and Towns. _Library Bureau_]

When the correspondence in a state is scattered, with but few
correspondents in each town, a set of alphabetical guides can be
substituted for the town guides. In New York state, for instance, the
letter _A_ would represent Albion, Attica, and other towns the names of
which begin with that letter. If there is a large town--as Albany--in
which there are a number of correspondents, a town guide should be
inserted in its proper place in the alphabetical index. Then, if the
correspondence from Albany is sufficient, it can be subdivided with
alphabetical guides, but these should be of a different color than
those representing the towns. The geographical index can be expanded
to any limit by inserting additional town and alphabetical guides,
wherever and whenever needed.

[Illustration: ONE OF THE STENOGRAPHERS' ROOMS AT THE PLANT OF THE
POSTUM CEREAL COMPANY, LTD., BATTLE CREEK, MICH.]

[Illustration: Fig. 20. Subject Indexing and Cross-Reference Notice
Memoranda on Index Cards _Library Bureau_]

_Subject Index._ The subject index is used whenever the subject of the
correspondence is more important than the name of the writer. Subject
indexing may be used in connection with the regular correspondence.

When it is desired to file by subjects indexed numerically, a numbered
folder is headed with the name of the subject, and all correspondence
pertaining to the subject is filed in that folder. An index card is
then filled in with the name of the subject and the number of the
folder, and filed alphabetically. Additional cross-index cards are
headed with the names of correspondents, and refer to the subject and
folder number. Several subject index cards are shown in Fig. 20.

Subject filing can be adapted to the alphabetical index by inserting
folders or guides headed with the names of subjects, as shown in Fig.
21. These folders are used for correspondence pertaining to a given
subject, and cross-index cards are made for the names of individuals.

=Selecting the Index.= The selection of the index for correspondence
files is important, and must be governed by the nature of the business,
and the correspondence to be filed. Subject indexing is the least
used of any of the methods described. Railroads, and a few large
corporations determine as far as possible a number of subject headings
under which all correspondence shall be filed, individuals being known
only in the miscellaneous correspondence; but these are exceptions,
and this method of filing is not adapted to the needs of the average
business concern.

[Illustration: Fig. 21. Subject and Alphabetical Folder _Browne-Morse
Co._]

Geographical indexing is quite largely used by jobbers, and is a very
practicable method for a concern whose correspondence is confined
within a definite territory. It is also used to advantage in connection
with other methods of indexing. For example, a concern in Chicago,
with a large number of customers in Illinois, Iowa, and Wisconsin,
might use a geographical index for those states, while filing all other
correspondence alphabetically.

This leaves alphabetical and numerical indexing from which to make a
selection. A thorough investigation, which has included consultations
with many leading filing experts, and examinations of the systems used
by more than a hundred representative houses, from the small retail
store to the largest corporations, leads to the conclusion that, except
in special cases, the alphabetical index is best. It is best because
simplest; and to do a thing in the most simple way is one of the
cardinal principles of business system.

Alphabetical indexing adapts itself to every possible requirement.
Suppose, for example, that the correspondence of the Norton Machine
Company is filed alphabetically, and that you want to refer to the
correspondence of T. J. Watson, who is secretary of the company. A
cross-index card is headed with the name of the company. This would be
exactly like the cross-index shown in Fig. 16, except that the number
would be omitted.

There may be times when you will wish to keep together all
correspondence pertaining to a given subject--as a contract in
which you are interested. A folder can be made for this contract,
headed with the subject name, and filed in its proper place in the
alphabetical index. Cross-reference cards can be made, headed with the
names of individuals, and referring to the subject. Perhaps, when the
contract is completed, there will be no further reason for keeping the
correspondence together, and it can then be distributed according to
the regular alphabetical arrangement.

Should you wish to adapt the geographical idea to any part of the
correspondence, the alphabetical index lends itself to the change
without disturbing the general arrangement of the files. It can be
expanded to any size; any class of correspondence can be segregated;
and with properly subdivided indexes, papers can be quickly located.

Probably the two most important advantages of the alphabetical over the
numerical system of indexing are its economy of operation and safety.
As to the first named advantage, there is a saving at the start in
the outfit required. Only the letter file and alphabetical index are
needed--there is no investment in a card-index outfit, unless it be a
very small one for cross-references. But the greatest saving is in the
time required for its operation.

Without considering the operations involved in filing letters, compare
the two methods when a letter is wanted from the files. Suppose that
the file clerk has received a requisition for the correspondence of the
Norton Machine Company. With the numerical index, the following steps
are taken:

  (1) Open card index drawer;
  (2) Refer to cards filed back of the N guide, and find index
      card showing that folder _No. 610_ holds the correspondence;
  (3) Close card index drawer;
  (4) Open vertical file drawer;
  (5) Refer to folders back of the _600_ index, find _No. 610_,
      remove folder;
  (6) Close vertical file drawer.

When the alphabetical index is used, only the following steps are
necessary:

  (1) Open vertical file drawer;
  (2) Refer direct to folder of Norton Machine Company, back of the _N_
      guide, and remove correspondence;
  (3) Close file drawer.

[Illustration: Fig. 22. Alphabetical vs. Numerical Filing]


This is merely an application of the principle that a straight line is
the shortest distance between two points, as illustrated in Fig. 22.

Alphabetical indexing is the safer for the reason that there is less
liability of filing a letter in the wrong place. With the numerical
system, the filing of letters in the wrong folder is not uncommon, and
when this is done the letters are practically lost.

The usual routine in numerical filing is first to place the folder
numbers on the letters, and then file according to these numbers
without reference to the name. Naturally, the file clerk commits to
memory the numbers of a large part of the active correspondents, and
places them on the letters without referring to the card index. Memory
is ever fickle, and if the wrong number is placed on the letter, it is
probable that it will be filed accordingly.

In the use of figures, the most common of all errors is transposition,
and this is a constant source of danger in filing. Suppose, for
example, that in placing the number on a letter from the Norton Machine
Company, a transposition is made and the number reads _160_ instead of
_610_. The letter is filed in folder _No. 160_, just four hundred and
fifty folders out of the way. The letter is practically lost, for there
is no way to locate it except to look through all of the folders until
it is found.

With the alphabetical index there is some danger of filing a letter
in the wrong place, but it is materially lessened by the fact that
the name must be kept in mind. If the letter is incorrectly filed, it
probably will be placed in a folder close to the right one. Almost
without exception, it will be found within two or three folders of its
proper place; there is scarcely a possibility that a letter from Norton
will be filed in White's folder.


MISCELLANEOUS FILING

=Salesmen's Correspondence.= The correspondence from salesmen and
branch houses is, as a rule, more bulky than that from even the largest
customers. A sub-divison should be provided that will make it possible
to locate quickly a letter of any date, without looking through a great
mass of correspondence. The most simple way to accomplish this is to
divide the correspondence of each salesman or branch by months. A
folder should be used each month.

Sufficient space should be provided in the general files to hold
salesmen's correspondence for an entire year. If subdivided by months,
old correspondence can be located much more quickly than if scattered
through several transfer files.

One way to reduce the bulk of this correspondence in the salesmen's
folders is to require each salesman to use a separate sheet for each
subject about which he writes. Nine out of every ten letters from a
salesman refer specifically to transactions with certain customers, and
are chiefly important in connection with the correspondence of those
customers. Such letters should be filed in the customers' folders,
where they will be found when it is wished to investigate transactions
with a customer.

The correspondence of some very large customers is also quite bulky.
This, also, can be subdivided by the use of a new folder each month. A
similar plan is used to advantage in connection with subject filing, a
separate folder, filed back of the subject guide, being used for each
correspondent.

=Correspondence of Temporary Value.= Every large enterprise receives
a considerable amount of correspondence which has no permanent value.
Inquiries for catalogs in response to advertising are of no value
unless further correspondence is developed. It is advisable to set
aside sufficient space in the files, and file such correspondence
alphabetically, in miscellaneous folders. Later, when further
correspondence develops, separate folders can be made and transferred
to the regular files. After a reasonable time--when the follow-up
is abandoned--the inquiries can be destroyed, saving space in the
permanent files.

=Orders.= The manner of filing orders depends on the business and the
method of handling. It will depend on whether the greater part of the
orders are received direct from customers on their own blanks, on
blanks supplied by the house, or from salesmen on the blanks of the
house.

When orders are received direct from customers, whether in the form of
letters or on the customers' blanks, it is customary to copy them on
the house order blanks, from which orders are filled and billed. The
most practical disposition of customers' original orders is to file
them with their correspondence, instead of providing a special file
for them. There are certain exceptions, as subscriptions received by a
magazine and which, for certain reasons, should be kept by themselves;
but that outlined can be regarded as a general rule. One reason for
filing orders with the correspondence is that, in case of dispute, it
will very likely be necessary to refer to past correspondence.

The manner of filing the house blanks depends on the number of copies
made. Some houses make but two copies of the order--one to be sent to
the customer as an acknowledgment, and one from which the order is
filled. This leaves but one copy for the office, and this should be
filed numerically, which also brings it in the order of the date. If
the order copy is also used as a posting medium, it should be filed in
a loose-leaf binder; otherwise a vertical file drawer can be used.

Another very satisfactory method is to enter the order in
triplicate--one copy as an acknowledgment, an office copy, and a
shipping copy--leaving two copies for the files. One copy should
be filed numerically, the other alphabetically. This provides a
cross-index without the necessity of writing a card index, showing
how easy it is to provide valuable records by using ordinary care. A
complete order record is provided by making one extra copy, which is
done with no additional labor.

Orders received from salesmen on the house blanks are sometimes used as
a posting medium, in which case they are filed in a binder, by date.
Another method is to make the invoice in duplicate, and use one copy
as a posting medium. In such case, the copy of the order can be filed
alphabetically, bringing all orders from each customer together.

[Illustration: Fig. 23. Special Invoice Folder--Open _Browne-Morse Co._]

=Invoices.= The method of filing invoices depends on whether or not a
complete voucher system is used. When no voucher system is used, all
invoices should be filed alphabetically in a vertical file. A folder
should be used for each firm or person from whom goods are purchased,
so that all of their invoices can be kept together. Invoices should be
filed in the folder in the order of their dates, the last one in front.

With the voucher system, invoices are sometimes attached to the
voucher, in which case they are filed according to the voucher number
and a separate card index is kept for alphabetical reference. The more
modern plan, however, is to file the voucher numerically, retaining the
alphabetical index for invoices.

Invoices can be filed in the same file with the correspondence, or in a
special file. When the former method is adopted a folder of a special
color should be used. There would then be two folders for a firm, one
for invoices and one for correspondence. Special folders with double
folds are largely used for filing invoices, as shown in Fig. 23.

[Illustration: Fig. 24. Document File. _Browne-Morse Co._]

=Documents and Legal Papers.= For filing documents and legal papers,
there are two standard methods. The older of the two is to fold the
papers and file them on end in a document drawer, like the one shown in
Fig. 24. The drawer is equipped with a compressor or following block
for keeping the papers in an upright position, and either alphabetical
or numerical indexes. These drawers can be obtained singly or in
cabinets containing any number.

The more modern method is to file documents and legal papers in a
vertical file, using document envelopes, as shown in Fig. 25. These
envelopes are of the right size to hold legal papers flat, insuring
convenient reference, which is a decided improvement over the older
method of folding the papers. Any of the several methods of indexing
can be used, depending on the requirements of the business.

[Illustration: Fig. 25. Document File Envelopes _Browne-Morse Co._]

As a filing system for the lawyer's office, this method is unsurpassed.
Every record of the office is kept in one complete filing system, yet
each case is separate and distinct. Every paper and all correspondence
relating to a given case is filed, unfolded, in one of the document
envelopes--or a folder can be used--bringing all papers on the same
subject together.

If indexed alphabetically, the papers are filed according to the name
of the client. When the numerical index is adopted, an alphabetical
index card with cross-references, including the docket index, is
used. The folders may be numbered by case or office numbers. Copies
of opinions can be filed in the same manner, making every opinion
available whether given yesterday or ten years ago. The usual confusion
in the lawyer's office, incident to the search for papers scattered
through several files, is entirely done away with.

=Clippings.= The vertical system is the most practicable for filing
clippings, but, since they are liable to be lost through the open
ends of the ordinary correspondence folder, it is best to use either
the envelope or the invoice folder--preferably the former. Indexing
for clippings should be by subject, and if a file is used exclusively
for clippings, it may be either numerical or alphabetical. As a rule,
the latter is most satisfactory, though the former is used quite
extensively.

[Illustration: Fig. 26. Drawing or Map File _C. J. Lundstrom Co._]

An envelope should be used for each subject. On the front of the
envelope the name of the subject and a list of the contents is written.
All clippings relating to that subject are filed in the envelope, which
is placed back of the proper alphabetical guide. Cross-references, when
needed, are provided by a card index.

=Drawings and Maps.= A large concern, especially a manufacturing
enterprise, has a large number of drawings, blue prints, maps, and
photographs to file. One method is to file them in large folders, laid
flat in a flat drawer, using a card index for cross-reference.

A more convenient method is to file them vertically. The ordinary
vertical file drawer is too small for large drawings, but in Fig. 26 is
shown a special file which will accommodate drawings measuring 24"×36".
The drawings are filed in heavy folders, made to fit the drawer. This
drawer is hinged at its lower front edge, permitting it to be opened by
simply tilting the drawer forward, an operation which is accomplished
with very little exertion. The drawer is held in open position by an
automatic catch which is quickly released when it is desired to close
the drawer. Each drawer is provided with an adjustable follower which
moves back as the space fills up. When open the drawer exposes its
entire contents, any of which may be picked out instantly and again
filed with the utmost convenience and dispatch. When a large tracing
is to be filed, it is desirable to first pull out the folder to which
it belongs and, after having placed the tracing therein, to slip the
folder back in its place. This prevents any accidental creasing of the
drawing.

Either an alphabetical or numerical index can be used, depending on the
class of drawings to be filed. In a machine shop, where all machines
and parts are known by number, the numerical index is best. In a
publishing house, where it is desired to keep all drawings used for
each book, they should be filed alphabetically by subject.

=Credit Reports.= Vertical filing is best for credit reports, as
it brings together all credit information about a customer. Unlike
correspondence, it is customary to fasten credit reports in the folder
by using a drop of paste at the top of each report. A folder is used
for each customer, and all reports are attached in the order of their
date.

The index may be numerical, alphabetical, or geographical. When the
numerical system is used, a card index furnishes the cross-reference.
The card contains the name and the number of the folder, with a brief
history of the customer's dealings with the house.


FILING HELPS

=Guiding.= The importance of guiding should not be overlooked, for
guides are the great essential of a successful filing system. They must
be simple and correct. They must be inserted at sufficient intervals
to guide eye and hand instantly to the desired folder. A vertical file
drawer holds about 5000 letters, and, assuming that the average is 10
letters to a folder, this would mean 500 folders. A general rule is to
use 50 guides to a drawer, or one guide for every ten folders.

The estimate of the number of guides required should be liberal. If
there are 500 regular correspondents, it is better to equip the files
with a 60 subdivision alphabetical index than to confine it to a 50
subdivision index.

Guides must stand hard usage and remain legible; therefore the best
quality should be used. All manufacturers of filing equipment now
supply guides of heavy pressboard with metal tips. The metal tip guide
is entirely rigid and supports the papers or folders in the file,
keeping them rigid and in alignment. An important feature is that the
index heading (name, letter, or number) can be changed at any time by
merely inserting a new slip in the metal tip. Metal tip guides cost
more than the old-style manila guide stock, but in the end are more
economical. The money paid for a filing outfit should be regarded as a
permanent investment; if the expense is to be cut down, let it be in
the purchase of supplies used for transfer, rather than in the regular
files which are used every day.

=Transferring.= Correspondence which is out of date should be
removed from the current file and filed in transfer files or boxes,
indexed as in the regular files. Transfers should not be made too
frequently. It is often advisable to use cabinets large enough to hold
the correspondence for two years, one part being used for current
correspondence, the other for correspondence one year back. At the end
of the year, all of the correspondence is removed from the older file,
which becomes the current file during the succeeding year.

[Illustration: Fig. 27. Sorting Tray]

=Sorting.= The work of the file clerk is facilitated and greater
accuracy insured by the use of a sorting tray, as shown in Fig. 27.
This consists of a wooden tray, equipped with alphabetical or numerical
guides according to the system used. For the alphabetical system a set
of _A_ to _Z_ guides--one for each letter of the alphabet--is used.

Before attempting to file, the clerk sorts the day's correspondence in
this tray. All correspondence belonging in one division of the alphabet
is thus brought together, and can be quickly filed.


SELECTING FILING EQUIPMENT

[Illustration: Fig. 28. Showing Manner of Joining Upright Sections.
_Browne-Morse Co._]

The selection of filing equipment has been greatly simplified by the
manufacturers, who have studied the filing problem with the view to
supplying the demand for equipment to accommodate every business
paper. As new problems have presented themselves, new equipment has
been designed. The needs of the smallest office, as well as those of
the largest corporation, have been studied and met. Heavy cabinets of
solid construction have given way to cabinets built in sections, any
one of which can be carried by the office boy. The man who has but a
half-dozen letters a day to file finds a section exactly suited to
his requirements; as his business grows, he adds other sections; the
cabinet grows with the business, making one complete system, no matter
how small or how large.

The most universally used of all filing devices is the vertical file.
As has been explained in the preceding pages, it adapts itself to
almost all of the papers found in a business office. Vertical files are
made with drawers in three standard sizes: letter size, for ordinary
correspondence, or papers up to 9½"×11" in size; legal or cap size,
for legal blanks, reports, and other large papers up to 10"×15" in
size; invoice size, for invoices, orders, credit reports, and all
papers not larger than 5¼"×8". Papers 8"×10" can be filed in the
invoice size by folding once.

=Styles of Construction.= Two standard styles of construction are used
for vertical files, horizontal sections and upright sections or units.
The horizontal section is made one vertical file drawer high and either
two or three drawers wide. Upright units are one drawer wide, four
drawers high for letter and cap sizes, and five drawers high for the
invoice size.

The upright unit is the newer and preferred style of construction;
it is more substantial, and for either large or small filing systems
occupies less floor space. Upright units are put together as shown in
Fig. 28. Each section is built with skeleton ends, and at each end of
the cabinet--whether one or a dozen sections--end panels are used,
making one complete cabinet. The sections are locked together, and can
be separated at will. Fig. 29 shows three upright sections, in the
three standard sizes, joined together to make a complete cabinet. This
gives some indication of the possibilities offered by this style of
construction in building a cabinet to meet every requirement.

[Illustration: Fig. 29. Three Upright Sections in Standard Sizes
_Browne-Morse Co._]

Upright units are also made with combinations of drawers for different
purposes. For a small business, an assortment of files for different
purposes is frequently desirable. An entire section filled with files
of one kind may not be needed, but a combination section offers a
solution. The combination illustrated in Fig. 30 contains one cupboard,
six shallow storage blanks, two double card-index drawers, and three
document files. A vertical file drawer can be substituted for the
cupboard unit.

If vouchers, or other folded documents are to be filed, the document
drawers shown in the combination unit can be used, or provision can be
made for filing these papers in the vertical file. The vertical file
drawer is divided lengthwise by partitions into compartments of the
same width as the document file. Each compartment is equipped with a
follower block and countersunk rod for holding guides.

[Illustration: Fig. 30. Combination Cabinet _Browne-Morse Co._]

Where a large number of folded documents are to be filed, as in the
office of a corporation using a voucher system, this file is much more
convenient than the old style. An old-style document file has a limited
filing capacity, and must be taken from the cabinet for consultation.
A vertical file drawer, legal size, provides three compartments, each
24" in length. This gives an actual filing capacity of six feet in a
single drawer. An upright section, equipped for document filing, is
shown in Fig. 31. If an entire section is not needed for this purpose,
one drawer can be equipped for document filing, and the others used for
correspondence.

[Illustration: Fig. 31. Upright Cabinet for Documents _Library Bureau_]

A style of construction designed to combine the expansion idea with
variety is known as the _inter-inter cabinet_. This cabinet consists
primarily of an outer cabinet or shell of standard height, depth,
and width. This shell is divided into compartments of standard
height into which the filing devices are fitted. The various filing
devices are arranged in skeleton units of standard dimensions, made
interchangeable so that any desired combination can be produced. Fig.
32 shows an outside cabinet, card index, and vertical file units, which
fit the openings in the cabinet.

[Illustration: OUTSIDE CABINET]

[Illustration: Fig. 32. Inter-Inter Construction _Macey Co._]

This construction enables the user to make a combination of small units
of various kinds to suit present requirements, all housed in a single
case in a compact form. Provision for future expansion is unnecessary,
since an additional outside cabinet can be added at any time, and the
units rearranged at will to conform with changes in the system.

An inter-inter cabinet shown in Fig. 33 suggests the variety of devices
that can be accommodated in a single shell. This cabinet contains
vertical file, card index, legal blank drawers, and document files.

The need has been felt for a small filing cabinet, or stack of
sections, that would be complete and give the proper variety. The
professional man, the department manager, and the executive have need
for a small cabinet for personal correspondence, reports, statistics,
records of matters requiring personal attention, blanks and forms,
private papers, and all matters of a confidential nature. This need
seems to have been met satisfactorily by the small sections known to
the trade as _sectionets_.

[Illustration: Fig. 33. Inter-Inter Cabinet _The Macey Co._]

These are complete sections, the largest size being that of the
vertical file drawer, which can be stacked one on top of the other or
side by side. Any of the standard filing devices can be made up into
these sections. A small section for 4"×6" cards is shown in Fig. 34.
A single section, with top and base, makes a complete cabinet, which
can be added to as needed. Fig. 35 shows a small stack of sections
consisting of vertical file, 5"×8" card index, and 3"×5" card-index
drawers, and one document file, on a leg base.

=Transfer Files.= Files for the storage of transferred correspondence
can be of cheaper construction than the regular filing cabinets, as
they are less frequently referred to and not subject to the same hard
usage. They should, however, be of reasonably substantial construction;
it is usual to keep business correspondence at least two years, and it
may be necessary to refer to it many times after it is transferred.
Then, too, if substantial transfer files are provided, they can be
used again and again; sufficient transfer files to hold two years'
correspondence will last indefinitely.

[Illustration: Fig. 34. Card Sectionet _Shaw-Walker Co._]

At first, manufacturers of vertical filing equipment supplied nothing
more substantial than boxes made of binder's board. Boxes the size of a
vertical file drawer were used. These were usually stored on shelves,
and to refer to the contents it was necessary to take down the box and
remove the cover. To keep pace with improvements in filing cabinets,
new styles of transfer files have been perfected. One of the most
satisfactory of the more modern styles is the drawer transfer file,
which is practically a single drawer section. It is made of light wood
with a drawer as shown in Fig. 36. These files can be stacked, one on
top of another, and locked together, making a solid filing cabinet.
The drawers hold the contents of a vertical file drawer, but are not
equipped with follower blocks, and are not recommended for current
filing. These transfer files cost more than the old style, but when
durability and accessibility are considered, they probably are more
economical in the long run.

[Illustration: DICTATING TO THE BUSINESS PHONOGRAPH, MANUFACTURED BY
THE NATIONAL PHONOGRAPH COMPANY, ORANGE, N.J.]

[Illustration: Fig. 35. A Stack of Sectionets _Shaw-Walker Co._]

=Metal Files.= Metal furniture is rapidly gaining in popularity
for office use. All sorts of office furniture is now made of sheet
steel--desks, tables, chairs, counters, and filing devices for all
purposes. Metal cabinets are made in upright sections and equipped with
the same filing devices found in wooden cabinets. Fig. 37 shows a row
of metal sections, combining a variety of filing devices. At either end
are roller book shelves and a cupboard, while in the center are six
styles of files.

[Illustration: Fig. 36. Transfer Drawer. _Browne-Morse Co._]

[Illustration: Fig. 37. A Row of Metal Files. _The Berger Co._]

The most apparent advantage of metal files is the safety afforded, as
it has been amply demonstrated that they will go through a very severe
fire without damage to contents. Few offices have sufficient vault
space for the papers that must be kept. Metal files not only take care
of the valuable papers, but by keeping all papers away from combustible
material, act as a fire preventive.

Another reason for the increasing popularity of metal files is the
scarcity of suitable timber and its advancing cost. The supply of
oak and mahogany is decreasing so rapidly that the necessity for a
substitute seems inevitable in the near future. For office furniture
steel seems to offer the most practical substitute.

[Illustration: BURROUGHS ADDING MACHINES IN THE OFFICE OF THE FAIR,
DEPARTMENT STORE, CHICAGO, ILL.]




BUSINESS STATISTICS


STATISTICAL DEPARTMENT

One of the chief functions of the comptroller's office is to gather
statistics which tell what is being done in every branch, department,
and division of the business. The purpose of these statistics is to
show the results of these activities--the gross volume of transactions,
the cost, and the result in net profits. When assembled in the form of
intelligent reports, these statistics present an understandable history
of the business.

The statistical department may be considered as the cost department
of the commercial branch. Manufacturers recognize the necessity for
comprehensive statistics in the manufacturing branch; they realize
that they must know what their goods cost to manufacture; but in
comparatively few enterprises is the importance of commercial costs
recognized.

In the factory, costs are figured down to the most minute detail; what
it costs to perform each operation on every part of the completed whole
is known; the efficiency of every man--what he costs in wages, in
power, and general expense, and the cost of every bit of material he
uses--all of this is told by the cost accounting system. What it costs
to sell the goods is usually a matter of guess work.

To know what it costs to run a business--to know _commercial costs_--is
just as important as to know manufacturing costs. Both are necessities
if the business is to attain its greatest possibilities.

What are the actual profits of this or that department?

How much net profit is there in handling this commodity?

Does it cost more to send a salesman to that little town, ten miles off
the main line, to take Jones' order than the profits on his business?

Is there as much profit in working _this_ territory as some other?

Measured by the standard of _net profits_--not volume of sales--is
Brown a profitable salesman? Compared with White, what is his
efficiency?

These are some of the questions to be answered before it can be claimed
that the statistical department has reached its highest state of
efficiency. The success of modern merchandising is measured, not by the
volume of business transacted, but by profits. In days gone by, the
merchant liked to be able to say that he sold more goods last year than
any of his competitors; today he is better pleased if he has made the
most money. A net profit of 10% on a business of $500,000.00, is more
attractive than a million-dollar business without profit.

Commercial costs may be divided into two classes--sales costs and
administrative costs. Of the two, sales costs are the more important;
if sales costs are not kept down, there will be nothing left from which
to pay administrative costs.

=Sales Costs.= In the broadest interpretation, sales costs include
every expense properly chargeable to the sale of goods. For statistical
purposes it may very properly be divided into direct and indirect, or
general selling expense. Direct sales expense is made up of salaries
and traveling expenses of salesmen--items which can be definitely
determined and charged against definite sales. Indirect sales expense
is made up of advertising, salaries of the sales manager and his
office assistants, expense of entering orders and billing, packing
and shipping expense, and all similar items properly chargeable to
the expense of marketing the goods--items which, while chargeable to
sales, cannot be applied directly to individual sales, nor to specific
territories.

Figuring sales costs is a specific function of the statistical
department which is sometimes referred to as _profit figuring_--an
appropriate term, since the principal object of gathering sales
statistics is to determine profits. As a preliminary to figuring
profits, it is necessary to have an accurate record of the _cost_ of
the goods sold. In a manufacturing enterprise, it is expected that
this information will be supplied by the cost department; in a trading
business, the statistical department must make the calculations.

The first step is to obtain a record of all goods received. This can
be done most easily by obtaining duplicate invoices, which will be
supplied by those from whom goods are purchased, if insisted upon. To
the invoice must be added the freight and cartage--items which must be
supplied by the accounting department. This gives the total cost, laid
down, and should be divided to show costs per unit--as yards, dozen,
pounds, barrels, or tons. On a mixed shipment it is not difficult to
apportion the freight to the different commodities. Every freight bill
shows the rate at which the shipment is billed, and the total can be
apportioned by weight on the same basis.

To insure a permanent record of cost prices, it is best to register
each shipment received, with its cost. This register should be divided
according to commodities, providing a separate record of each one. A
loose-leaf book is best for the purpose.

A suitable form is shown in Fig. 1. This sheet is headed with the name
of the article or commodity, and each sheet is used for a record of
receipts of a single article. The record includes date of invoice, date
received, from whom, lot number, quantity, price, amount of invoice,
freight and cartage, total cost, and cost per unit. Each lot of goods
received is given a lot number, these numbers being consecutive for
each commodity.

The sheet serves the double purpose of a record of receipts and a price
list. Both the quantity and total columns are footed, the footings
being carried forward to the end of the month. All sheets are filed
alphabetically by commodities, subdivided by departments, the current
sheets always being on top.

=Records of Shipments.= Before sales costs and profits can be figured,
the statistical department must be supplied with records of shipments.
This may be accomplished by providing an extra copy of the invoice,
which is easily done with modern billing systems. To save transcribing,
the copy for the statistical department should be wider than the
original invoice. The extra width allows for the addition of special
columns needed in figuring profits on the shipment, as shown in Fig.
2. This form has added columns for total cost, gross profits, sales
expense, net profits, and per cent of net profits.

When these invoice copies are received in the statistical department,
the price lists, Fig. 1, are referred to for cost prices. Here the use
of the lot number assumes importance, as prices are obtained for the
specific lot numbers shown on the invoice, resulting in actual rather
than estimated profit figures.

After serving their purposes in the tabulation of other data, explained
later, the invoice copies are filed alphabetically, keeping all
invoices to the same customer together. Either a vertical file or a
post binder may be used for this purpose.

[Illustration: Fig. 1. Register of Merchandise Received]

=Returned Goods.= Another very important record in profit figuring is
that of returned goods. Profits may be figured on the invoices, but if
accurate profits on the business of a customer or a salesman are to be
recorded, returned goods must be considered.

[Illustration: Fig. 2. Copy of Invoice for Statistical Department]

When goods are returned, it means a loss of anticipated profits,
and should be considered in the same light as an actual loss. In a
well-managed business, returned goods are kept down to a minimum; if
they increase above normal, an investigation into causes is in order.
Repeated returns of the same merchandise indicate a defect in the
merchandise itself; if those from the territory of one salesman are
frequent, an inquiry into the salesman's methods is necessary--he may
have the fault of loading his customers too heavily, or of adding to
their orders--all of which are added reasons why a record of returns
should be kept.

A blank for a monthly record is shown in Fig. 3. This record shows the
name of the department from which the goods were sold, the commodity,
name of customer, price at which sold, the cost--including selling
cost--the loss, and the name of the salesman. From this sheet, all data
necessary for complete records can be tabulated.

[Illustration: Fig. 3. Report of Returned Goods]

=Salesmen's Records.= One of the special benefits--perhaps the chief
benefit--of a profit-figuring department is a record of the work of
each salesman. Not merely the volume of his sales, but the profits on
those sales, measure his worth to the house.

The salesman whose sales are largest in quantity, or even in dollars
and cents, is not necessarily the best salesman. One man may sell a
thousand dollars' worth of sugar, while another sells two hundred
dollars' worth of tea and makes more money for the house; one strives
for volume--making price concessions to secure a big order--while the
other is content with smaller sales at a good profit.

In the final analysis, profits determine the efficiency of the
salesman. His salary may be large or small; his expense high or low;
but he is not efficient unless his business shows a net profit.

To tabulate the sales of each salesman, so that a complete record of
his work may be seen at a glance, is then, of the utmost importance.
The first step should be to make a record of _what_ he sells--how much
calico and how much silk. On a loose-leaf sheet, ruled as shown in Fig.
4, a record of a salesman's sales of a single commodity may be kept;
from these sheets, a record of his total sales can be tabulated.

The head of this sheet shows the name of the commodity, the name
of the salesman, and the month covered by the record. A detailed
record is kept of each day's sales, showing quantity, cost, sales,
gross profits, and per cent of gross profit. At the end of the month
returns are deducted--the information being obtained from the returned
goods report, Fig. 3, leaving the net record. This sheet, which is
loose-leaf, is filed alphabetically by salesman's name, the sheets for
each man being in alphabetical order by commodities.

A record of the salesman's total business is made on the loose-leaf
form shown in Fig. 5. This record is made up from the totals of the
commodity records, Fig. 4, and the form has the same columns, with
an additional column, headed _% of total_. In this column is entered
the per cent which the total sales of each commodity bears to the
salesman's total sales. The profits on the salesman's business usually
increase in direct ratio to the increase in the per cent of sales of
the higher-priced specialties.

This total record is, of course, made up at the end of the month, only
the monthly totals being shown. A recapitulation is made at the bottom
of the sheet. In the right-hand, or credit, column the gross profit
is brought down; in the left-hand column, sales expense is entered,
the several items being separated. First, the salary of the salesman
and the amount of his traveling expenses are entered and footed, the
total being the direct sales expense. Following this is entered the
general sales expense that should be charged against the business of
the salesman, this item being supplied by the accounting department.
The total sales expense is then extended in the credit column and
deducted from gross profits, leaving net profits--the real measure of
the salesman's value.

[Illustration: Fig. 4. Record of Salesman's Sales Arranged by
Commodities]

These sheets should be filed in the same binder with the salesman's
commodity sales records. A separate index may be used, or they may
be filed on top of the commodity sheets, bringing the entire month's
record together. To make identification easy, they should be of a
different color from the commodity sheets.

Sales records such as these give a complete history of the business
of each salesman; they tell the whole story in language most easily
understood by the manager. The longer they are kept, the more valuable
the history becomes.

=Mail Orders.= In a business in which occasional mail orders are
received, sales of this character may be grouped under some such
caption as _home office_, and treated in the statistical records in the
same manner as the sales of one salesman. Where an extensive mail-order
department is maintained, it may be advisable to keep records of the
business of each mail-order salesman.

=Expense Distribution.= General sales expense must be distributed,
on some equitable basis, over the total sales. There are two logical
factors on which this distribution may be made, _total sales_ and _cost
of goods sold_. The latter seems to be the most equitable. If based on
total sales, the distribution may actually penalize the salesman who
is really the most profitable. For example, one salesman may sell for
$2000.00 goods which cost $1500.00, while another will obtain $2200.00
for the same goods; if the expense is distributed on the basis of total
sales, a larger amount is charged against the business of the latter
salesman when the increase is all profit. On the basis of cost, the
same amount would be charged against the business of both salesmen.

When the total sales expense and total cost of goods sold is
ascertained, the former is divided by the latter amount to obtain the
correct percentage. This is then added to the cost of sales of each
salesman.

While, as a rule, general sales expense should be charged against the
cost of _all_ goods sold, there are certain exceptions when a part of
this expense should be charged against specific sales. For example,
a manufacturer may make a special appropriation for advertising his
product in a certain state, using local papers, street cars, and bill
boards. In that case the advertising is very properly chargeable
against the business from that state; though it might be advisable to
distribute the amount over several months.

[Illustration: Fig. 5. Record of a Salesman's Total Sales]

A mail-order department involves certain expenses, none of which are
chargeable against the business produced by the salesmen. Included in
this special expense are such items as postage, stationery, printing,
and stenographers' salaries. This expense should be charged against the
business of the department and, if records of the work of each salesman
are kept, it must be _prorated_ on the basis of cost of goods sold by
each.

=Total Commodity Sales.= A record of the total sales of each commodity
is necessary in order that the profit in handling the commodity may be
determined. Sometimes it is found that a commodity which is apparently
being sold at a profit is actually sold at a loss, when the actual
selling costs are determined. Or, one salesman may sell the commodity
at a loss, while others sell it at a profit.

The form shown in Fig. 6 is used for a summary of the sales of one
commodity. At the end of the month one of these sheets is headed with
the name of each commodity and the totals entered from the salesman's
commodity records, Fig. 4. Opposite the name of each salesman is
entered the quantity and amount of his sales, following which is an
important column headed _% of whole_. In this column is entered the
percentage which the sales of the one salesman bear to the total sales
of the commodity. If Bacon sells 40% of all the tea sold by the house,
it is shown by this report; if he sells 50% of the sugar, it is shown
just as plainly. Not only how much of a given commodity is sold, but
who sold it, is recorded on this monthly summary.

In the columns following total sales, the total cost and gross profits
are entered. From the gross profit is deducted the sales expense--this
being calculated on the percentage shown for total sales expense in
the recap at the bottom of the salesman's sheet, Fig. 5, leaving the
net profit. In the last column, the per cent of net profit is entered.
The footing at the bottom of the sheet shows total amounts and the
percentages of sales expense, and net profits are calculated on the
basis of these totals; this gives the average expense and profit on the
total volume of sales.

=Department Sales.= Next in importance to a knowledge of profits
on a single commodity is a knowledge of the results produced by a
department. This necessitates a record of departmental sales. Sales and
profits measure the efficiency of a department, just as they do of a
salesman.

[Illustration: Fig. 6. Record of Total Sales of One Commodity]

[Illustration: RAILWAY EXCHANGE BUILDING, CHICAGO, ILL. An Excellent
Example of the Modern Type of Office Buildings]

The necessity for departmental records depends on the business. A
manufacturer who produces but two or three articles needs only records
of sales of commodities; a wholesaler requires records of sales of
classes of goods. In a wholesale business, departmental divisions are
distinct; each department is in charge of a head, and the record of the
department is his record.

In a comparison of departmental profits, the percentage of net profits
should not be followed blindly. Certain departments are not money
makers. To a certain extent it is possible to discontinue unprofitable
lines, or even departments, but in some businesses it is necessary
to maintain departments which are not profitable. In the dry goods
business--either wholesale or retail--the margin of gross profit in
notions is so small that it is doubtful if, when all legitimate expense
is deducted, a net profit is realized. The salesman for a wholesale
house whose sales of notions is largest, has made the poorest record;
the manager who has kept the sales of the notion department at the
lowest price--at the same time keeping his stock down--may be the most
efficient.

For a record of departmental sales the form shown in Fig. 7 may be
used. The data for this report is secured from the commodity records,
Fig. 6. For each commodity, the quantity and total amount of sales are
entered. Following this is a per cent column in which is entered the
ratio which the sale of each commodity bears to the total sales of the
department. The columns which follow are the same as on the commodity
sales records. A loose-leaf form should be used, and this may be filed
with the commodity records--the departmental record on top, with the
commodity records arranged alphabetically underneath.

The forms described provide detailed records of the business of each
salesman and each department (classified by commodities), records of
goods received, and of returned goods. From these records, complete
trading statements can be made for each department, or for the entire
business.

=Trading Statements.= Reports in the form of trading statements made
from these records give the manager the facts in which he is specially
interested; they show him the profits of the business and the sources
of the profits.

[Illustration: Fig. 7. Record of Sales of a Department Divided as to
Commodities]

A monthly trading statement should be made for each department, in
order that the total operations may be seen at a glance. All of the
essential facts are shown on the department report, Fig. 7, but a
properly constructed trading statement affords an opportunity for
valuable comparisons. While the fact that a department has made a net
profit of $7864.20 this month is interesting, these figures take on
added interest when compared with last month's profits.

A form for a monthly departmental trading summary is shown in Fig. 8.
In this form, the trading statement for the current month is entered
in the two columns headed _trading_. First, the total amount of sales
is entered in the credit column; then the value of stock on hand at
the beginning of the month is entered on the next line, in the debit
column. When the profit-figuring department is organized, it is
necessary to have an accurate inventory in each department that this
trading statement may be started correctly. If started on a correct
basis, the record becomes perpetual. To the amount on hand is added the
value of goods received, as shown by the merchandise received reports,
Fig. 1. From the total, the value of the inventory at the end of the
month is deducted, the remainder being known as the _turnover_--the
cost or inventory value of goods sold. To find the value of the
inventory an actual count of the goods on hand is unnecessary. The
value may be found by deducting from the total the value, at cost, of
goods sold, which is the footing of the total cost column, Fig. 7. This
inventory is, of course, the amount shown as on hand at the beginning
of the next month.

The difference between the _turnover_ and _sales_ is the _gross
profit_--being the amount necessary to balance the debit and credit
columns. The gross profit is brought down and entered in the credit
column. Sales expense is entered in the debit column, the difference
between this amount and gross profits being _net trading profit_, for
the current month.

The three columns at the right are for comparative figures. In the
column headed _to date_ is entered the total sales, turnover, gross
profits, expense, and net profits from the beginning of the current
fiscal year to date; in the two columns next following, the same facts
are entered for last month and last year.

[Illustration: Fig. 8. A Form for a Monthly Trading Summary]

As a rule, these monthly trading statements for each department give
the manager just the information he wants; but, when there are a large
number of departments, it is sometimes advisable to tabulate these
statements, giving one complete record. A form for such a report is
shown in Fig. 9. No detailed explanation of this report is necessary,
the columns being arranged for the same information as given on the
department statement. The only exception is the inventory column, which
is intended for the current inventory only. In the three comparative
columns at the right, net profits only are entered. This statement
gives a history of sales in a nut shell.

=Customers' Profit Records.= To know the value of each customer, as
measured by the profits on his business, is as important as a knowledge
of the value of each salesman. It is for the purpose of obtaining this
information that columns for calculating net profits are added to the
statistical department's copy of the invoice, Fig. 2.

Detailed records of purchases of each customer, divided by commodities,
are unnecessary, but there should be a summary showing total purchases
and profits. Detailed information about individual shipments and
separate commodities can be obtained from the invoice copies.

Fig. 10 shows a form for a customer's record on a 4-in. X 6-in. card.
This form provides for monthly records only. At the end of the month
the total purchases and total profits are obtained from the invoice
copies, and the amounts entered on the card. The card is ruled for a
two-years' record.

These cards should be filed geographically, the name of the town
heading the card. If there are several customers in a town, their
cards should be arranged in alphabetical order. State boundaries need
not be followed; it is usually better to file the cards according
to salesmen's territories. This makes a combined customers' and
territorial file, and if a record of the business in a town or state is
wanted, it can be obtained from the cards. If desired, a new card can
be inserted for a total record of each town or group of towns.

=Value of Profit Figuring.= The value of the records described can
scarcely be overestimated. To know the profit-making ability of each
department and each salesman; to read at a glance the value of every
town and every customer; to know the cost value of goods sold and the
exact condition of the stock at the end of every month, these are the
facts which enable a manager to size up his business.

[Illustration: Fig. 9. Departmental Comparative Trading Statement]

The man who lacks these facts--who is obliged to wait for them until
the end of the year, and then get only a part of them, does not have
a grasp of his business, and cannot expect to bring it to the highest
possible state of efficiency. That more managers have not insisted
on having these facts before them is doubtless due to one or both of
two causes: _failure to appreciate their value_; and _the belief that
dependable statistics of this sort were unobtainable without too great
an expenditure of labor_. Neither is borne out; all the evidence is to
the contrary.

[Illustration: Fig. 10. Record of Purchases and Profits of a Customer]

As to their value, little need be said. The fact that the most
extensive enterprises find it profitable to compile statistics setting
forth the most minute operations in every department is sufficient
evidence of the value of corresponding statistics to the smaller
merchant or manufacturer. If a great railway system finds it not only
profitable but necessary to compile statistics showing the cost of
repairs per ton-mile for every engine in its service, arranged for a
comparison of the efficiency of individual locomotives, surely the
merchant will find it profitable to analyze his profits. An analysis
of the profits and losses of a wholesale grocer, showing how much he
has made on tea; how much he has lost on sugar; what profit has been
produced by a certain salesman; the profit value of a customer, is
of as great value to him as a knowledge of the cost of repairs on an
individual car to the officials of a railway.

To the man who has made no attempt to secure them, the compilation
of these statistics may seem an endless task, not justified by their
value. Actually, the magnitude of the task is, to a great extent,
governed by desire; a man is quite likely to obtain what he really
wants, and as his desires increase the difficulties decrease.

When it comes to the actual work of preparing these statistics, the
difficulties are found to be really minor ones. The main thing is to
do the work every day; to record the transactions of a single day does
not involve an undue amount of labor, but if allowed to get behind, the
task assumes appalling proportions.

Modern billing systems make it possible to tabulate certain of these
statistics when the bills are made. The adding machine is also of
inestimable value in statistical work; computations which would involve
a whole day of hand-and-brain work are made in an hour on a modern
adding or calculating machine.

In deciding what statistics should be compiled, the nature and needs
of the business must be considered. It is usually unnecessary to use
as the unit a single brand of a given commodity. A wholesale grocer,
for instance, would not find it necessary to make separate records
of each brand, or even each article, in canned goods. They would be
divided into classes--as vegetables, fruits, and meats, and each class
would be treated in the records as a single commodity. When taking on
an entirely new line, he might wish to compile separate statistics for
a time, but when the fact that the line is a profitable one has been
established, the special statistics would be unnecessary.

Again, one house will find it advisable to go into certain details not
considered necessary in another establishment. For example, one house
has, as a result of the facts revealed by their statistical department,
established a system of bonuses to their salesmen based on the profit
percentages of their business. This necessitates a record different
from any of those that have been shown. This concern has grouped the
goods in each department according to percentages of gross profits--as
5%, 10%, 20%, 25%, etc. Each salesman is given a monthly quota--based
on salary, territory, and previous sales--which he is expected to
reach. This quota specifies not only the amount of sales but the
percentage of profit; each $100.00 of sales is expected to include not
more than a certain amount of 5% goods, nor less than a given amount of
25% goods, the exact ratio of each being given. If a salesman exactly
equals his quota, maintaining the percentage prescribed, he is given
a small bonus; if he exceeds his quota and maintains the prescribed
percentages, or increases the percentage of sales of the more
profitable goods, his bonus is increased in proportion to the increased
profits--the greater the percentage of profits, the more rapid the
increase in the bonus. On the other hand, if his sales of goods sold at
a small profit increase, he is penalized by being denied a bonus, no
matter what the volume of his sales.

[Illustration: Fig. 11. Salesman's Comparative Sales Statement]

This bonus system, which is an adaptation of the bonus wage system
used in factories, has the effect of increasing the sale of the most
profitable goods. When a customer places an order for goods in which
there is little profit, the salesman--who cannot refuse the order--is
given an incentive to push the sale of more profitable goods; he must
do so as a matter of self-protection.

To determine the bonuses, statistical statements differing from those
already shown are necessary. These statements must divide sales
according to percentage groups, rather than by commodities, as shown in
Fig. 11. The data for this statement is taken from the commodity sales
statement, Fig. 4, and with an adding machine can be tabulated very
quickly.

Another house, which does an exclusive mail-order business, keeps
accurate records of the sales resulting from circular letters, charging
the cost of the letters, including postage, to those sales. Records
are also kept of the sales of each correspondent. When an order is
received, the correspondence record is examined and, if the order is in
response to a dictated letter, the correspondent receives credit. Each
correspondent is required to keep a record of the number of dictated
and form letters that he uses, the cost of which is charged against
his sales. At the end of the month results are tabulated showing the
percentage of orders secured from circular letters and from dictated
letters; the amount of business from each letter of each correspondent;
and the percentage of cost to the cost of goods sold.

These and many other statistics can be tabulated, and for each a
special form is needed. The classes of information to be presented in
statistical form depend on the business. When it has been determined
what information will be of greatest value, forms should be prepared
which will make it possible to tabulate the desired facts with the
least labor.


ADMINISTRATIVE COSTS

Commercial costs which are not chargeable to sales are classed as
administrative, and may be divided into _executive_, _accounting_,
_office expense_, _credits_, and _collections_.

In a strictly trading business, _purchasing_ is an added division,
while in a manufacturing enterprise it is usual to consider this a
manufacturing expense.

_Executive_ expense is made up of the salaries of the general manager
and comptroller, salaries of clerks and stenographers, and a proper
portion of miscellaneous expense. In a manufacturing business, a part
of the executive salaries is charged to manufacturing.

_Accounting_ expense includes the salaries of chief accountant and
cashier, clerks and stenographers, blank books and supplies, and
miscellaneous expense.

_Office_ expense is charged with the salary of the chief stenographer,
and the expense of mailing and filing, including salaries of clerks.

_Credits_ and _collection_ expense include the salaries of the credit
man and his clerks, the cost of mercantile agency service and reports,
and the cost of collections, including postage.

_Purchasing_ expense, which, as stated, sometimes is a commercial
expense, includes the salaries of purchasing agent, receiving clerk,
stores clerk and their assistants, and the entire expense of the
storeroom.

In a strictly trading business, such items as power, heat and
light, insurance and taxes--usually a manufacturing expense--become
administrative expense. These, and all similar items, are grouped under
the head of _miscellaneous_, to be distributed over all divisions of
commercial costs.

In the main, the different divisions of administrative costs are easily
assembled. In each division there is the salary of the department
head, the total of which is charged to the division, and a correct
apportionment of salaries which must be divided among two or more
divisions. For illustration, the salaries of stenographers are
distributed as has already been explained. By far the larger part of
this expense is charged to the advertising and sales departments, but
from the weekly reports of this division, the amount to be charged
to the executive, accounting, credit and collection, and purchasing
divisions may be obtained.

_Mailing Costs._ In the division of office expense one item which must
be distributed, at least between sales and administrative, is mailing
expense. Mailing expense is made up of labor and postage, the latter
being most important.

All enterprises of magnitude maintain a separate mailing department in
charge of one person, frequently the chief stenographer. The very fact
that postage is the big item of expense in the mailing room, makes a
very complete system of records absolutely essential.

The work of the mailing room consists of folding circulars and letters,
enclosing catalogs, circulars, and letters in envelopes, addressing,
filling in dates and addresses on printed form letters, and stamping.
Sometimes addressing and filling in is done in the stenography
division, but the more usual plan is to consider this a part of the
mailing expense.

[Illustration: Fig. 12. A Report of Labor in the Mailing Room]

Of first importance is a record of work done, which is best secured
by means of a daily report of the work of each clerk. All work should
be assigned by the head of the department, and the clerk required to
keep an accurate record of both time and production. This question of
assigning the work is especially important in the mailing room, as one
department may flood the room with work which, if done, would make it
impossible to handle the work of other departments for several days.
The head of the department must decide which is the most important
work. Sometimes it is necessary to make out, in advance, a weekly
schedule of circularizing to be done, and compel all departments to
be governed by the schedule. As an alternative, some of the larger
enterprises maintain a separate mailing room, in charge of the
advertising department, exclusively for circularizing work.

A suitable form for the employe's daily report is shown in Fig. 12.
This report is divided for a record of the different classes of work
performed. All work is recorded by number, that is, if the work
is folding circular _No. 518_, that number is placed in the first
column opposite _folding_. The center column is for the name of the
department; as a rule, the form number indicates the name of the
department, but sometimes the same form is used by several departments.
In the columns next following, the clerk enters the number of pieces
handled and the time taken. The extension columns, showing rate and
amount, are filled in by the head of the department.

From these reports, the pay-roll is made up. All of this work can be
handled on a piece-rate basis, and most large concerns find this the
most economical basis. The rate must necessarily be varied to suit
local conditions, and should be high enough that by doing a full day's
work a clerk will earn something more than the standard day wage. For
example, a girl will address from 1000 to 1500 envelopes, or fill in
addresses on the same number of form letters, in a day of eight hours,
the average being--say 1200. In different cities the accepted wage
standard for the class of help required in this work varies from $5.00
to $7.00 a week. Where the $5.00 rate prevails, a piece rate of 90
cents a thousand is equitable; a girl who maintains an average of 1200
a day for five and one-half days (the usual time required in an office)
will earn $5.94 with a chance to earn still more if she can increase
her speed. The extra ninety-four cents is an inducement to at least
equal the average; without it, she would probably drop to 1000 or less.
While her wage has been increased, the cost has been lowered.

=Daily Mail Report.= That the information may be in convenient form
for statistical purposes and for making final reports, there should
be a daily mail report. This report should be a complete record of
everything mailed, showing the number of pieces and the rate of
postage for each. A form for such a report is shown in Fig. 13. This
report is divided for a record of regular mail-letters, circulars, and
catalogs--and merchandise. The latter is not required in all cases, but
is very important for a concern doing a mail-order business in small
articles which can be sent by mail.

[Illustration: Fig. 13. Form for a Daily Mail Report]

[Illustration: Fig. 14. Stamp Identification]

This report shows the description, number of pieces, and postage
rate. In the description column the name of the department should be
written first, followed by a description of the mail originating in
that department. The daily report should be made up by the stamp
clerk, without reference to the individual employes' reports, as it is
intended as a check against the latter. A memorandum of the number of
pieces reported for the different operations by the employes should be
kept, and at the end of the week compared with the quantities shown
by the daily mail reports. For some of the operations, the quantities
reported by employes may be the larger, certain work being completed
on matter which has not been mailed. To reconcile this difference, the
work itself should be on hand in the mailing room.

[Illustration: Fig. 15. Voucher for Postage]

=Postage Record.= The most important of all records in the mailing
room is the postage record. Postage should be placed in charge of the
stamp clerk, who should be made responsible for its accounting. The
mail clerk is, in fact, a cashier, having the custody of the equivalent
of cash in the form of postage stamps. Unless a very strict record is
kept, there are abundant opportunities for thievery of stamps and,
because they are almost as easily disposed of as cash, the temptation
is strong. So great have the losses been from this source, that the
government now permits business houses to identify its own stamps by
means of perforations. There is now on the market a machine which
perforates the initials or trade mark of a firm. The machine is very
rapid in operation and stamps can be perforated in sheets very quickly.
An enlarged reproduction of a stamp perforation is shown in Fig. 14.

[Illustration: Fig. 16. A Weekly Report of Postage Used]

[Illustration: ROTUNDA IN THE ROOKERY BUILDING, CHICAGO, ILL. This is
One of the Largest Office Buildings in the City]

[Illustration: ROTUNDA IN THE RAILWAY EXCHANGE BUILDING, CHICAGO,
ILL. An Exterior View of this Building is Shown Elsewhere in this
Volume]

The first step in providing for a complete postage record is to make
a voucher for postage required. The cashier should require a voucher
before supplying stamps or the money with which to buy them. A special
voucher form showing the postage on hand, and the number of stamps of
each denomination required, is shown in Fig. 15. This should be made
in duplicate; the original goes to the cashier and the duplicate is
retained by the stamp clerk.

=Weekly Report.= From the daily mail reports, a weekly postage report
should be made. This report should show the total amount of postage
used, distributed by departments. A form for such a report is shown in
Fig. 16. In the first column the names of the departments are written,
and in the daily columns the amounts used are recorded. The amount
expended for registry and special delivery is entered at the bottom of
the sheet, and below this is a recapitulation showing the balance of
postage on hand. This report, which is made by the head of the mailing
room, should be in duplicate--one copy for the accounting department,
and one to be retained by the stamp clerk.

=Weekly Mailing Report.= The final report of the mailing room is a
weekly report which shows exactly what work has been done for each
department. The information required to make up this report is obtained
from the employes' daily reports, and the daily mail reports. The
postage is taken from the daily mail reports and checked with the
weekly postage report to guard against any inaccuracy. A comprehensive
form of report is shown in Fig. 17. This report is made to the
statistical department.

=Stationery and Supplies.= Attention has already been called to the
necessity for the proper care of stationery and office supplies. The
losses due to careless handling of supplies are more serious than is
usually appreciated. Probably the best way to reduce this expense is
to require signed requisitions for all supplies drawn, and to charge
all supplies to the different departments. All departments should be
required to present requisitions once a day only, and then only during
certain hours. In very few offices is a stock clerk required for office
supplies alone; if the supplies are kept in the regular storeroom, or
if one of the office clerks has charge of the supply cabinet, this plan
will save time, as an hour a day is sufficient to handle the work in
almost any office.

[Illustration: Fig. 17. Weekly Report of Mailing Department]

After posting the supplies records, the clerk in charge should make a
report to the statistical department of supplies drawn. This may be a
weekly report, as shown in Fig. 18. A second copy should be made for
the accounting department.

[Illustration: Fig. 18. Summary of Supplies Drawn]

This report shows the value of supplies drawn each day by each
department. The amounts can be entered daily from the requisitions, the
totals being entered at the end of the week.

=Summary of Administrative Expense.= The reports and records described
place the statistical department in a position to make complete
summaries of administrative expense. The salaries of department and
division heads, clerks, and stenographers employed in each department
are obtained from the accounting department; mailing expense is
obtained from the weekly report of the mailing clerk; cost of supplies
drawn is shown by the supplies clerk's report; the amount of expense
items not otherwise accounted for is supplied by the accounting
department. The last item named--representing overhead expense--can be
distributed to the departments on the basis of the ratio of the known
expense of each department--that is, if the known expense, including
salaries, mailing, and supplies, in one department is 20% of the known
expense of all departments, it may be charged with 20% of the overhead.

[Illustration: Fig. 19. Form for a Distribution of Administrative
Expense]

Fig. 19 shows a form for a summary of all administrative expense,
the different classes of expense being divided for each department.
Totals of expense of each class, totals for each department, and the
grand total are shown. Totals of the different classes and the grand
total must agree with the records of the accounting department. At
the bottom of the administrative expense summary the per cent of
total administrative expense to sales and turnover--or cost of goods
sold--should be shown.

=Profit and Loss Statements.= The profits shown by the comparative
trading statement, Fig. 9, are trading profits only--not net profits,
as administrative expense and profits from other sources than sales are
not included. A statement should be prepared, therefore, which will
show net profits. This can be combined with the trading statement,
but the better plan is to prepare a separate statement. It is usually
advisable to supply copies of the trading statement to the heads of
all departments of the sales division that each may see what progress
he is making, and compare it with that of other departments. It is not
advisable, however, to let the department heads know the exact net
profits; this information is for the general manager and directors.

Fig. 20 shows a form of monthly profit and loss statement, divided by
departments. The totals for the fiscal year to the first of the current
month are brought forward at the head of the sheet; then the figures
for the current month are entered. Sales, sales expense, and sales
profits are taken from the trading statement; administrative expense
is shown by the summary, Fig. 19. Administrative expense is charged to
the different departments on the basis of the turnover--that is, if
the total administrative expense is 10% of the total turnover, each
department will be charged an amount equal to 10% of its turnover.

[Illustration: Fig. 20. Condensed Profit and Loss Statement by
Departments]

There are certain profits which arise from other sources than the sale
of goods in which the concern is trading. Among other sources are
interest and premiums and profits on the sale of bonds and stocks. All
such items should be listed separately each month that the amount of
unusual profits may be known. This statement presents a history of the
progress of the business reduced to its final analysis--that of actual
net profits.


MAILING-ROOM MACHINERY

Mechanical devices and machines are used for many purposes in an
office, and both the variety of uses and types of machines are steadily
increasing. Inventors and manufacturers of office appliances are
working constantly to perfect devices which will save time, insure
accuracy, and reduce costs. Among the important devices are several
designed to reduce labor and insure increased speed in the mailing room.

=Addressing Machines.= One of the most efficient labor-saving devices
is the addressing machine, which is used for addressing envelopes,
cards, and other matter, to a large list of names. These machines
are especially well adapted for the names to which communications
are addressed at regular intervals. Brokers and commission men use
them for addressing daily market letters to permanent lists of
correspondents; business houses in all lines find them convenient for
monthly statements, using the machine both for addressing the envelopes
and filling in the names on the statements. An office boy can fill
in addresses on statements for all accounts in the sales ledger, and
address the envelopes, saving about one-half the time of the bookkeeper.

In the advertising and sales department, the addressing machine is used
to excellent advantage for addressing follow-up letters, booklets,
circulars, and catalogs. Its use makes it easy to send advertising
literature to all customers at frequent intervals. The machine is not
recommended for a prospective customer's follow-up list, unless a large
number of follow-ups are to be sent; but when a man becomes a customer,
it may be safely assumed that the name is permanent.

Of the machines now on the market, one of the best known is the
_addressograph_. This machine is made with both card addresses and
chain addresses. The card machine, which is shown in Fig. 21, is the
most practical for the uses to which the machine is put in the average
office. With this machine, metal frames the size of an index card
are used. These frames are made in two styles, one of which has a
metal printing plate, while with the other, the name and address are
set in rubber type. With the first style, the printing plate is made
by stamping the letters on a sheet of metal. This makes a permanent
address, which cannot be changed without making a new plate.

[Illustration: Fig. 21. The Addressograph Addressing Machine
_Addressograph Co._]


Fig. 22 shows the rubber type frame. The name and address are set up
in the type frame, and can be changed at will. Type taken from old
addresses can be used over and over again. When an address is set, a
proof is printed on a card, which is placed in the upper half of the
frame. This card is large enough for notations, and can be arranged for
recording any information desired.

The metal frames are provided with tabs printed with letters, names of
towns, numbers, or other special information, and are filed in card
drawers, as shown in Fig. 23. They may be filed in any of the usual
ways adapted for card systems; a customers' list may be filed according
to states and towns, and the names in a certain town addressed without
disturbing the balance of the list.

[Illustration: Fig. 22. Metal Frames for Rubber Type _The Addressograph
Co._]

To operate the machine, the address plates are first transferred to
the magazine on top of the machine. The contents of a drawer can be
transferred without handling. The plates are automatically fed to the
printing point of the machine, from which they are returned to the
drawer, which is placed under the machine, in the exact order in which
they were filed. When the address frame reaches the printing point, the
address is plainly visible on the card, so that any name can be skipped.

With an addressograph it is claimed that 3000 addresses an hour can
easily be made. This takes the place of several girls, and reduces the
cost to a minimum.

[Illustration: Fig. 23. Addressing Card File. _Addressograph Co._]

=Folding Machines.= One of the most practical labor-saving devices for
the mailing room is the folding machine. Direct advertising, by means
of circular or form letters, and printed circulars, is becoming more
and more popular. Where such communications were formerly mailed in
hundreds, they are now mailed in thousands; it is not uncommon for a
concern using this form of advertising to mail a million circulars or
letters on one proposition in a single season.

[Illustration: Fig. 24. Folding Machine Operated by Electric Motor. _A.
B. Dick Co._]

To fold these letters and circulars in the ordinary way is an expensive
task. Not only is the labor cost involved, but the question of space,
which in many offices is of even greater importance. While a plant
occupying buildings owned by the company may be in a position to
provide plenty of space for offices, the great majority of businesses
are conducted in cramped office quarters; the modern office building
with its high rents tends to reduce office space to a minimum. As a
result, many a business, lacking room in which to work a large force
of folders, has been obliged to hire its extensive circularizing done
outside of the office.

These difficulties have to a great extent been overcome by the folding
machine. For many years printers have made use of machines for folding,
but it was not until a comparatively recent date that a machine adapted
to office use was perfected. Now there are several practical machines
on the market.

One of these machines will fold from 4000 to 7000 letters or circulars
an hour, depending on the size and weight of the paper, and the number
of folds. This is equal to eight persons folding by hand, and the
machine and operator occupy no more space than one hand folder.

The best machines are so made that they can be operated by hand or
electric power. Wherever electric lights are available, the power
machine can be used. Including the cost of power, the maximum cost of
folding with one of the machines is from 3 cents to 5 cents a thousand.
One of the well-known types, with motor attached, is shown in Fig. 24.

=Mailing Machines.= To a concern mailing large quantities of circular
matter, an envelope sealer or mailing machine is indispensable.
Envelope sealers which worked in a more or less satisfactory manner
have been on the market for several years. These machines have been
improved, and their best features combined with new ideas, until now
machines are to be had which work perfectly.

Several of the machines seal envelopes only; one both seals the
envelopes and attaches the stamp. The combination sealing and stamping
machine seals, stamps, and counts envelopes at an average rate of 8000
an hour, doing the work of from eight to ten clerks.

When sealed by the machine, the flaps of the envelopes are folded
tightly and securely sealed. The moistening device is so constructed
that the amount of moisture passing under each flap is regulated to
a nicety, preventing envelopes sticking together on account of too
much water being applied. Coincident with the sealing of an envelope,
the stamp is applied. Every envelope passing through the machine is
stamped; as a result, none are returned from the postoffice for lack of
postage.

[Illustration: Fig. 25. The Mailometer Mailing Machine _Mailometer Co._]

A special counting device automatically counts the stamps as applied,
the counter being in full view of the operator. This means an absolute
check on the postage account. The stamps are locked in a glass case
and, by moving a lever, the stamp mechanism can be thrown out of
operation. It can only be made to apply stamps again by unlocking the
case, which places the stamps absolutely under the control of one
person.

After being sealed and counted, the envelopes pass to a stacker, all
facing one way so that they can be tied in bundles for sending to the
postoffice. This is a point worthy of consideration where dispatch in
getting mail out is of importance. Envelopes of any size up to twelve
inches are handled, and by throwing off the sealing device, mailing
cards can be stamped.

The machine referred to is shown in Fig. 25. In operation, the mail
is gathered and placed on the rack shown at the top of the machine,
with the flap of each envelope overlapping the one next to it. The
operator, taking a bunch of about twenty-five envelopes from the rack,
holds them lightly against the feed rolls at the left of the machine.
The automatic feed separates the envelopes, permitting only one at a
time to pass its flap over a metal disc which revolves in water. As the
envelope is advanced, the stamps are fed forward, cut off, moistened,
and rolled upon the passing envelope. The stamps used in the machine
are put up in continuous-ribbon form, wound on a reel, there being 3000
stamps on a reel. Until the government supplies stamps in this form,
they are being supplied by the manufacturers, who have arranged with
the government to make them to their order.

=Letter-Printing Machines.= The present extensive use of circular or
form letters is made possible by the use of letter-printing machines.
To write all of the letters on a typewriter is out of the question,
owing to the cost. Consequently, concerns doing any considerable
circularizing have resorted to imitation typewritten letters.

[Illustration: Fig. 26. The Multigraph Cylinder Printing Machine
_American Multigraph Sales Co._]

For many purposes letters bring better results than printed circulars,
but without the personal touch--unless the recipient is made to feel
that the letter was written to him--a letter loses its force. This fact
makes the ordinary printed letter ineffective. An imitation typewritten
letter makes the personal appeal possible; if it is printed from
typewriter type in a color that matches the ribbon of the machine, the
name and address can we filled in, and it will look like a typewritten
letter.

Many printers have learned to produce satisfactory letters of this
character and, within the last few years, several printing machines,
designed for office use, have been put on the market. These machines
are adaptations of the printing-press idea. Letters are set up as they
would be for a printing press, typewriter type being used; but instead
of printing from ink applied directly to the type, the letters are
printed through a large typewriter ribbon. Ribbons of the same kind
are used on the typewriter for filling in names and addresses, which
insures a perfect match. One of these machines will print from 1000 to
2500 letters an hour.

[Illustration: Fig. 27. Multi-Copy Typewriter. _Multi-Copy Typewriter
Co._]

There are two distinct types of machines, the cylinder machine and the
flat-bed machine. A well-known machine of the cylinder type is shown
in Fig. 26. The machine has two cylinders, one for type storage and
one for printing. The type is held in slots in which it moves freely.
To set up a letter on the printing cylinder, the storage cylinder
is revolved until the pointer at the top of the machine reaches the
desired letter, when a slight pressure of the finger on the small lever
in the center moves the type into the slot on the printing cylinder.
This is continued until the line is set, when the printing cylinder is
moved into position for the next line. To distribute the type to the
storage cylinder, this operation is reversed.

After the letter is set, a ribbon is drawn around the printing
cylinder, and the machine is ready to print. The paper is fed, printing
side up, underneath the cylinder. A turn of the crank draws the paper
through, prints it, and discharges it at the back of the machine.
Special power attachments can be put on which operate both the machine
itself and an automatic feed, which greatly increases the speed.

[Illustration: Fig. 28. The Writerpress Printing Machine. _The
Writerpress Co._]

Machines of the flat-bed type are shown in Figs. 27 and 28. With these
machines the type is kept in cases, the compartments of which are
arranged in the same order as the keys on a typewriter. The type is set
up and locked in a chase, just as it is by a printer, and the chase
placed on the flat bed of the machine.

The ribbon is stretched tightly over the type, the printing being done
by moving an impression roller over the ribbon. Paper is fed, one sheet
at a time, against the paper guide, and the roller, passing over,
produces the desired printing impression. When the roller is returned,
the sheet is automatically ejected and counted. The pressure and shade
of the printing are regulated by the adjustment of impression screws.

An advantage claimed for this type of machine is that electrotypes
and zinc etchings can be used, or regular printers' job type can
be substituted for printing small circulars and office forms. If a
letter or form is used frequently, it can be electrotyped and held
permanently, releasing the type.

[Illustration: A WELL-ARRANGED OFFICE OF A BANKING HOUSE Peabody,
Houghteling & Co., Chicago, Ill.]




REVIEW QUESTIONS.

PRACTICAL TEST QUESTIONS.


In the foregoing sections of this Cyclopedia numerous illustrative
examples are worked out in detail in order to show the application of
the various methods and principles. Accompanying these are examples for
practice which will aid the reader in fixing the principles in mind.

In the following pages are given a large number of test questions
and problems which afford a valuable means of testing the reader's
knowledge of the subjects treated. They will be found excellent
practice for those preparing for Civil Service Examinations. In some
cases numerical answers are given as a further aid in this work.




REVIEW QUESTIONS

ON THE SUBJECT OF

ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION


1. If called on to perfect the organization of a business enterprise,
what would be your first steps in making your investigation?

2. In creating responsibilities, how would you regard the individuals
conducting the enterprise?

3. Explain, in your own terms, the objects of organization. What are
the principal components of a business organization?

4. What is the function of the executive committee? Over what
divisions does the _general manager_ have authority, and to whom is he
responsible?

5. Into what sections do the commercial and manufacturing divisions
divide?

6. Make a chart of an industrial organization, showing the principal
components and their relationship, one to the other.

7. Who are the immediate assistants of the general manager? Explain the
nature and responsibilities of their positions.

8. Make and explain a chart showing the subdivisions of the commercial
and manufacturing divisions over which the two assistants of the
general manager have authority.

9. Explain how these principles of organization are applied to the
small corporation.

10. In a corporation organized to conduct a trading business, how does
the organization differ from that of a manufacturing enterprise?

11. What are the specific duties of the comptroller? Over what
departments does he have absolute authority, and who are his immediate
assistants, in charge of those departments?

12. What are the functions of the _sales division_? Who are the
department heads in control of the sales division, and what are their
specific duties?

13. To what departments does the authority of the superintendent extend?

14. Who are the immediate assistants of the superintendent, and what
are their duties?

15. Describe, briefly, the duties of the purchasing agent.

16. What general rules should be made in respect to a definition of
duties and authorities?

17. Illustrate by means of a chart, with necessary explanations, the
proper distribution of salaries and wages in a manufacturing enterprise.

18. Prepare an expense distribution chart, showing amounts for a
business selected by yourself.

19. Illustrate the location of the departments in a manufacturing
enterprise with which you are familiar, and suggest how the plan might
be improved.

20. What general plan should be followed in arranging an office.
Illustrate a model office plan for a business of your own selection.

21. What is meant by the _committee system_?

22. Name the usual committees which consider questions affecting the
operation of the manufacturing division. How are these committees made
up, and what questions do each consider?

23. What committees consider questions affecting the commercial
division? What questions are considered by these committees?

24. Explain the suggestion plan and its operation.

25. Suppose the sales manager wishes to send out a sample which must be
made in the factory. How should he proceed to secure the sample?




REVIEW QUESTIONS

ON THE SUBJECT OF

ADVERTISING AND SALES ORGANIZATION


1. Describe and illustrate a practical system for the preservation of
advertising information in the form of clippings and memoranda.

2. Describe and illustrate a complete system for filing and keeping a
record of drawing and engravings.

3. Discuss the advisability of having all printing ordered by one man,
or allowing each department head to place his own orders.

4. Explain how you would provide for proper records of printing, from
the time the order is placed to the issue from stock. Illustrate the
necessary forms.

5. If you were placing advertising in 100 periodicals, how would you
keep a record of their advertising rates?

6. An advertiser in a large city uses 32 magazines of national
circulation. How would you suggest keying his ads to identify the
inquiries?

7. What form of record would you keep of the inquiries received from a
given publication?

8. How would you suggest obtaining a record of results of retail
advertising? Name some of the factors which might influence the sale of
an advertised article on a certain day?

9. What special conditions, in your opinion, should exist before a
manufacturer of a food product starts an outdoor advertising campaign
in Cleveland, Ohio?

10. Name at least three necessary qualifications of a successful sales
manager.

11. What is meant by the mail order branch of the sales department? How
are sales made by the mail order branch?

12. What, in your opinion, is the most satisfactory method of keying
form letters?

13. Illustrate the necessary forms for records of form letters,
including records of results.

14. State your understanding of the follow-up system, and the manner of
its use.

15. Explain four methods of bringing a name to notice at a given date,
illustrating the forms you would use in each case.

16. What objects are attained by maintaining a customers' list separate
from the ledger and the follow-up list?

17. Name two or more reasons for classifying a mailing list. Name some
of the usual classifications.

18. Explain how a card list can be made to automatically indicate the
business and the position or occupation of each man.

19. Explain how a customers' list can be made to show the class of
purchases of each customer.

20. Explain the map and tack system of routing salesmen, and name some
of the advantages of its use.

21. What benefit does the salesman derive from reports of his calls
which he makes to the house?

22. Illustrate a suitable form for a salesman's report of calls, and
explain how it is to be used.

23. Explain and illustrate a system for following up dealers on
inquiries referred to them.

24. Suggest a form for a salesman's expense account.

25. Illustrate suitable forms for daily and monthly sales reports.




REVIEW QUESTIONS

ON THE SUBJECT OF

THE CREDIT ORGANIZATION


1. In respect to the general classes of information required by the
credit man, how would you divide the subject?

2. Name the two factors which govern the credit risk, and state in what
respects these factors are of importance.

3. Analyze at least three of the items which make up the statement
shown in Fig. 1.

4. Discuss the character of the information about his customers
required by the city and country retailer.

5. What are the principal sources of credit information?

6. How would you suggest obtaining information through local sources?
Show form of report you would expect from a local correspondent.

7. To what extent can the salesman be expected to supply credit
information about his customers? What form of report would you expect
him to submit?

8. What do you consider the best method of filing credit information in
a wholesale house having two thousand customers in six states?

9. Illustrate a suitable card form for a transcript of credit
information for the above-mentioned wholesale house.

10. Describe a system of handling credits for a corporation whose goods
are sold through branch houses, illustrating the necessary forms.

11. Describe a system for following up collections by means of
duplicate invoices.

12. Explain how a card collection system can be arranged to indicate
the names, the cards being filed according to due dates. If filed by
name, how can the due dates be shown?

13. Illustrate a form of collection card suitable for a business of
your own choosing.

14. Describe a system for handling the local collections of a wholesale
house, illustrating the necessary forms.

15. How can collections be followed up directly from the ledger
accounts?

16. Describe a system for keeping the accounts and handling the
collections in a house selling furniture on the installment plan,
illustrating all necessary forms.

17. Discuss the special factors to be considered in handling
installment collections by mail.

18. What general ledger controlling accounts of the installment ledger
are necessary? Explain the sources of entry to these accounts.

19. Describe a collection system to be used by an attorney,
illustrating the necessary forms.




REVIEW QUESTIONS

ON THE SUBJECT OF

THE SHIPPING DEPARTMENT


1. Discuss, in a general way, the duties and responsibilities of the
shipping clerk.

2. What is your understanding of the term _classifications_, as applied
to shipping?

3. Explain how the manner of packing and the description given affect
the classification of an article.

4. What is your understanding of _class rates_?

5. What are _commodity rates_, and what factors usually govern the
establishment of a commodity rate?

6. By whom are rates prepared, and by what body must they be approved
before they become effective?

7. Explain how the routing of a shipment may be influenced by the
existence of a commodity rate.

8. If called upon to organize a shipping department for a manufacturing
concern in Dayton, Ohio, whose product is shipped to all parts of the
United States, what steps would you take to secure freight tariffs?

9. Outline a system for filing these tariffs.

10. What index would be required?

11. If shipments were confined to cities of 10,000 population, or over,
in two states, how would you arrange a rate file covering these towns
only?

12. How would you keep a record of the classifications of the goods
shipped by your house?

13. Describe the method you would use for recording commodity rates
applying to your product.

14. What is your understanding of the term _basing point_, and why is a
knowledge of basing points necessary to the successful shipping clerk?

15. Discuss the proper method of filling orders to insure promptness.

16. How should shortages be taken care of?

17. Discuss the question of checking shipments, including a method that
will insure against errors in delivery.

18. Describe a system for handling freight claims, illustrating the
forms you would use.

19. How should claims be handled from an accounting standpoint?

20. Describe the necessary routine in entering and filling orders in a
mail-order house shipping all goods by express.

21. Describe a simple system of handling deliveries in a city retail
store.

22. Suggest a method that will insure against goods being sent to the
wrong section of the city.

23. How would you handle a delivery when the driver fails to find the
customer at home?

24. What special precautions are necessary in handling C.O.D.
deliveries?

25. If a customer asks to have goods delivered to him at a railway
station before train time, what special provision should be made to
insure delivery?




REVIEW QUESTIONS

ON THE SUBJECT OF

CORRESPONDENCE AND FILING


1. What are the usual duties of the incoming mail clerk?

2. Make such suggestions as you deem advisable relative to the handling
of correspondence after it reaches the department for which it is
intended.

3. Suggest a method of handling interdepartment correspondence to
insure promptness.

4. Discuss short cut methods which will aid in the handling of
correspondence.

5. What method of obtaining copies of correspondence would you
recommend for a house having an average of 300 letters a day? Give
reasons for your recommendations.

6. Discuss the advantages of having all stenographers in a large house
in one department, in charge of a chief stenographer.

7. Describe and illustrate the forms for the necessary records of the
stenographic department.

8. Discuss the advantages or disadvantages of a central filing division
over departmental filing.

9. What are the duties of a file clerk? Name the essential
qualifications of a file clerk.

10. State your understanding of _vertical filing_.

11. What, in your opinion, are the special advantages of vertical
filing over other methods?

12. Describe and show the necessary index cards for _numerical_,
_alphabetical_, _geographical_, and _subject indexing_.

13. Suggest conditions which would make each of these methods
advisable.

14. Which method do you consider best for the average office?

15. What special suggestions can you make relative to filing
correspondence of salesmen, branch offices, and customers from whom a
large number of communications are received?

16. Discuss the filing of orders and invoices.

17. How would you file documents? Credit reports?

18. To provide suitable indexing, how many guides should be used for a
file containing 1500 folders?

19. What provision should be made for transferring correspondence?

20. What are the special advantages of sectional filing cabinets?




REVIEW QUESTIONS

ON THE SUBJECT OF

BUSINESS STATISTICS


1. What are the functions of the statistical department?

2. Into what two classes are commercial costs divided?

3. How are sales costs classified? To what class does the railroad fare
paid by a traveling salesman belong?

4. How can a record of goods received be obtained by the statistical
department?

5. How should this information be recorded?

6. What special purpose does this record of purchase serve?

7. What is the first record required in figuring profits on sales? How
is it obtained?

8. Why is a record of goods returned by customers needed by the
statistical department?

9. How would you provide for a record of a salesman's sales of a single
commodity? Illustrate.

10. Illustrate and explain the form you would use for a record of a
salesman's total business.

11. In tabulating sales, how would you treat the sales of the
mail-order department?

12. Discuss the proper method of distributing general sales expense.

13. What facts are shown by a record of the total sales of a single
commodity? Illustrate the form you would use to bring out these facts.

14. Why are properly classified departmental sales records of
importance?

15. Discuss the subject of trading statements and illustrate a form for
such a statement.

16. Why is a record showing the profits on the business of a customer,
of value? Illustrate a form for a condensed record.

17. What classes of expense are included in the term _administrative_?

18. Illustrate and explain a suitable form for a daily record of the
work of a clerk in the mailing room.

19. What is the purpose of a daily mail report? Illustrate the form you
would use.

20. Explain, and show necessary forms for a system designed to maintain
an accurate check on the postage account.

21. Illustrate and explain a form for a weekly postage report.

22. In preparing a summary of administrative expense, distributed by
departments, on what basis would you distribute the item of insurance
on office furniture and fixtures?

23. Prepare a profit and loss statement (using your own figures)
showing profits earned by each of four departments.

24. On what basis have you distributed administrative expense in the
above statement?




INDEX


INDEX


      A

  Addressing machines                                                321

  Addressograph                                                      323

  Administrative and industrial organization                       11-59
    chart of organization                                             16
    charting salary and wage distribution                             38
    committee system                                                  50
    departmental                                                      26
    duties defined
      of individual workmen                                           36
      of office employes                                              36
    employment department                                             33
    expense distribution chart                                        40
    oral orders cause confusion                                       56
    physical arrangement                                              44
    sales division                                                    30
    suggestion plan                                                   55
    uniform blanks                                                    58

  Advertising committee                                               53

  Advertising contracts                                               80

  Advertising periodical                                              78

  Advertising and sales organization                              61-124
      advertising information                                         63
      copy proofs                                                     70
      cut indexes and tracers                                         68
      designs and cuts                                                65
      outdoor advertising                                             92
      periodical advertising                                          78
        checking returns                                              83
        contracts for                                                 80
        orders for insertion                                          83
        rate cards                                                    78
      printing orders and tracer                                      71
      sales department                                                94
        branches of                                                   95
          mail order                                                  96
          personal salesmanship division                             112

  Advertising and sales organization
    sales records                                                    120
    street car advertising                                            91
    systems and records                                               63

  Advertising and salesmanship                                        93


      B

  Back orders                                                        199

  Branch house credits                                               144

  Business organizer                                                  11

  Business statistics                                            287-329
    administrative costs                                             308
      commercial costs                                               308
      daily mail report                                              312
      postage record                                                 313
      stationery and supplies                                        315
      weekly mailing report                                          315
      weekly postage report                                          315
    statistical department                                           287
      customer's profit records                                      303
      department sales                                               297
      expense distribution                                           295
      mail orders                                                    295
      records of shipments                                           289
      returned goods                                                 291
      sales costs                                                    288
      salesmen's records                                             292
      total commodity sales                                          297
      trading statements                                             299
    value of profit figuring                                         303


      C

  C.O.D. deliveries                                                  224

  Chart of expense distribution                                       40

  Chart of salary and wage distribution                               38

  Charting the organization                                           16

  Checking shipments                                                 200

  Chief accountant                                                    29

  Chief engineer                                                      32

  Chief stenographer                                                  29

  Class rates                                                        186

  Collections                                                        148

  Collection systems                                                 152

  Committee system
    advertising committee                                             53
    departmental factory committees                                   51
    general factory committees                                        51
    job bosses                                                        52
    organization committee                                            53
    sales committee                                                   52

  Commodity rates                                                    186

  Comptroller                                                         28

  Correspondence copying                                             243
    carbon copies                                                    244
    mechanical copiers                                               244

  Correspondence and filing                                      231-285
    copying correspondence                                           243
    correspondence short cuts                                        238
    filing division                                                  254
    filing equipment                                                 278
    filing helps                                                     276
    filing systems                                                   257
    mail                                                             231
    miscellaneous filing                                             271
    stenographic division                                            247

  Correspondence short cuts                                          238
    complaints and changes of address                                241
    dictating by number                                              238
    form paragraphs                                                  238
    making corrections                                               243
    requisitions                                                     240
    stenographer's reference index                                   242
    talking machines for dictation                                   239

  Credit man                                                     31, 127

  Credit organization                                            127-180
    branch house credits                                             144
    collection systems,                                              152
      card tickler                                                   155
      cash receipts                                                  167
      collecting from the ledger                                     159
      collector's card                                               171
      collector's receipt                                            172
      cross-indexing                                                 155
      duplicate invoices                                             152
      filing contracts,                                              171
      handling drafts                                                162
      installment collections                                        162
      installment ledger                                             166
      installment register                                           165
      local collections                                              158
      monthly statements                                             157
    collections                                                      148
    credit man                                                       127
    financial statements                                             130
    information required                                             128
    information for retailers                                        133
    mail-order installment collections                               172
      account                                                        175
      follow-up                                                      176
      by attorneys                                                   178
    recording credit information                                     140
      card transcripts,                                              141
      filing                                                         140
    sources of information                                           135
      local correspondents                                           136
      mercantile agencies                                            135
      retail credit reporting agencies                               138
      traveling salesmen                                             137

  Credit organization, recording                                     140


      D

  Departmental organization                                           26


     E

  Expense distribution chart                                          40

  Export shipping                                                    204

  Express shipments                                                  215


      F

  File clerk                                                         255

  Filing, miscellaneous                                              271
    clippings                                                        275
    correspondence of temporary value                                272
    credit reports                                                   276
    documents and legal papers,                                      274
    drawings and maps                                                275
    invoices                                                         273
    orders                                                           272
    salesmen's correspondence                                        271

  Filing equipment                                                   278
    metal files                                                      283
    transfer files                                                   282

  Filing helps                                                       276
    guiding                                                          276
    sorting                                                          277
    transferring                                                     277

  Filing systems                                                     257
    flat files                                                       258
    indexing methods                                                 262
      alphabetical                                                   264
      geographical                                                   265
      numerical                                                      262
      subject                                                        267
    vertical files                                                   259

  Filling orders                                                     196

  Financial statements                                               130

  Folding machines                                                   324

  Form letter records                                                101

  Forms
    alphabetical vs. numerical filing                                270
    alphabetical subdivisions                                        265
    attorney's collection card                                       178
    attorney's collection register                                   177
    back order blank                                                 200
    blank used for interdepartment correspondence                     57
    border on label to indicate routing                              220
    box envelope for clippings                                        64
    box file                                                          66
    branch office
      credit application                                             146
      credit inquiry blank                                           148
      credit notice                                                  147
    card for a classified record of purchases                        111
    card for combined daily and monthly follow-up                    107
    card for commodity rates                                         193
    card for follow-up                                               104
    card for follow-up claims                                        211
    card for follow-up of dealer and inquirer                        119
    card for publication inquiries                                    84
    card file for a classified customer's list                       109
    card file for railroad tariffs                                   189
    card index for classification                                    192
    card record of reports received and credit granted               145
    card tickler for collections                                     154
    cash receipt book for installment collections                    166
    chart of
      apportionment of salaries and wages                             41
      corporate manufacturing enterprise                              17
      corporate trading enterprise                                    21
      departmental authorities                                        27
      expense distribution                                            42
      working authorities in a manufacturing business                 19
      working authorities in a trading business                       23
    checking card used for record of sales                            86
    claim account card                                               213
    collection card for
      alphabetical cross-indexing                                    155
      cross-indexing by date                                         156
      each invoice                                                   153
      synopsis of entire account                                     157
    collector's card                                                 170
    combination cabinet                                              280
    condensed profit-and-loss statement by departments               320
    condensed rate card                                              191
    confirmation of telegram                                         253
    contract for installment sales                                   163
    copy of invoice for statistical department                       291
    credit agency report card                                        143
    credit card for retailer's use                                   145
    credit information folder                                        141
    cross-index to tariff file                                       190
    customer's financial statement                                   131
    daily mail report                                                312
    daily and monthly record of salesmen                             123
    daily report of installment accounts for collector               168
    daily tabulation of sales by departments                         122
    delivery boy's call tag                                          223
    delivery sheet                                                   222
    delivery tag                                                     224
    departmental comparative trading statement                       304
    departmental distribution of work of stenographic division       251
    detailed record of form letters mailed                            98
    distribution of administrative expense                           318
    document file                                                    274
    document file envelopes                                          274
    drawing file                                                     275
    file drawer                                                       65
    floor chart for filling orders                                   198
    floor plan of a modern administrative building                    49
    folder for freight claims                                        210
    follow-up card with alphabetical tab                             105
    follow-up card with movable tab to show dates                    106
    general credit information card                                  144
    general credit report card                                       143
    geographic alphabetic filing                                     266
    index to creditors for attorney                                  180
    index card for
      numerical filing                                               264
      record of advertising rates                                     79
      record of designs and engravings                                68
    indexing firm correspondence for numerical filing                264
    installment contract register                                    164
    layout of a typical manufacturing plant                           46
    ledger card                                                      216
    ledger for installment accounts                                  165
    local correspondent's report blank                               137
    loose-leaf ledger cross-indexed for due dates                    160
    loose-leaf ledger for mail-order collections                     174
    loose-leaf scrap book sheet for engravings                        67
    mail-order collection card                                       175
    monthly recapitulation of daily sales reports                    122
    monthly record of purchases of customer                          108
    monthly trading summary                                          302
    notice of attempt to deliver                                     227
    notice of inquiry sent to salesman with blank for his report     120
    office record of C.O.D. items                                    226
    order blank                                                      201
      for insertions of advertising copy                              82
    packer's slip                                                    202
    perpetual stock for printing                                      75
    post-card notice of attempted delivery                           228
    post-card receipt for cuts                                        70
    prepaid shipping sheet                                           218
    quadruplicate draft form                                         161
    receipt for installment collections                              172
    record of
      correspondence on back of follow-up card                       212
      costs and sales                                                 88
      purchases and profits of customer                              305
      sales advertisement                                             89
      sales by an agent or dealer                                    124
      sales of a department divided as to commodities                300
      sales resulting from form letters                              100
      salesman's sales arranged by commodities                       294
      salesman's total sales                                         296
      shipment of street car cards                                    90
      street car contract and net cost                                91
      total sales of one commodity                                   298
    register of merchandise received                                 290
    register of sales                                                214
    report of labor in the mailing room                              310
    report of returned goods                                         292
    requisition for correspondence                                   241
    routing package labels                                           203
    salesman's comparative sales statement                           307
    salesman's customer's report blank                               138
    salesman's report of call and follow-up                          118
    salesman's report of calls in each town                          116
    schedule of monthly insertions in periodicals                     81
    shipping order and label made at one writing                     217
    shipping order for printing                                       77
    sorting tray                                                     277
    special C.O.D. delivery book                                     225
    special delivery tag                                             228
    special delivery tag for department store                        229
    special invoice folder                                           273
    specific report on industrial calls                              118
    stenographer's weekly record of work distributed by departments  249
    subject and alphabetical folder                                  268
    subject indexing and cross-reference                             267
    summary of supplies drawn                                        317
    tab folders                                                      266
    tally of sales for small mail-order house                        234
    tracer card for drawings and cuts                                 70
    traveler's route card                                            115
    traveler's weekly statement of expenses                          121
    triplicate form for printing                                      73
    triplicate statement for collection                              158
    vertical file drawer equipped as a tickler                       102
    voucher for postage                                              313
    weekly report of mailing department                              316
    weekly report of postage used                                    314
    working chart for employes                                        37
  Freight claims                                                     208

  Freight tariffs                                                    188
    filing                                                           188
    indexing                                                         190


      G

  General manager                                                     28


      I

  Installment collections                                            162


      J

  Job bosses                                                          52


      K

  Keying form letters                                                 97


      M

  Mail
    departmental distribution                                        235
    distributing incoming mail                                       233
    interdepartment correspondence                                   237
    opening mail                                                     231
    sorting mail                                                     232
  Mail orders                                                         96
    classification of sales                                          110
    cross-indexing alphabetical file                                 106
    cross-indexing chronological file                                105
    follow-up systems                                                101
      card follow-up                                                 103
      tickler method                                                 102
    form letters                                                      96
    lists of customers                                               107
  Mail-order installment collections                                 172
  Mailing-room machinery                                             321
    addressing machines                                              321
    folding machines                                                 324
    letter-printing machines                                         327
    mailing machines                                                 325
  Mercantile agencies                                                135

  Mercantile business, organization of                                20


      O

  Organization
    administrative and industrial                                  11-59
    advertising and sales                                             61
    applied to small business                                         20
    characteristics of                                                14
    of mercantile business                                            20
    objects of                                                        14
  Organization committee                                              53
  Organization principles, universal application of                   22
  Outdoor advertising                                                 92

      P

  Periodical advertising                                             78

  Personal salesmanship                                              112
    expense accounts                                                 120
    follow-up of dealers and salesmen                                117
    reports of calls                                                 115
    routing salesmen                                                 114

  Purchasing agent                                                    33


      R

  Rate cards                                                          78

  Retail advertising returns                                          89

  Retail credit reporting agencies                                   138

  Retail delivery system                                             219
    C.O.D. deliveries                                                224
    delivery sheet                                                   222
    delivery tag                                                     220
    routing deliveries                                               221
    special deliveries                                               229
    undelivered goods                                                227

  Routing salesmen                                                   114

  Routing shipments                                                  194


      S

  Salary and wage distribution, chart of                              38

  Sales committee                                                     52

  Sales manager                                                       30

  Sales records                                                      120
    daily                                                            121
    monthly                                                          123
    salesmen's                                                       123

  Shipping clerk                                                     184
    class rates                                                      186
    classification index                                             192
    commodity rate file                                              193
    commodity rates                                                  186
    condensed rate file                                              191
    freight tariffs                                                  188
    information required                                             184
    routing shipments                                                194

  Shipping department                                            183-229
    back orders                                                      199
    checking shipments                                               200
    export shipping                                                  204
    express shipments                                                215
    filling orders                                                   196
    freight claims                                                   208
    retail delivery system                                           219
    shipping clerk                                                   184

  Special deliveries                                                 229

  Statements
    accounts receivable                                              132
    bills receivable                                                 132
    cash on hand                                                     132
    due for borrowed money                                           133
    due for merchandise                                              133
    due from stockholders                                            133
    liability as surety                                              133
    merchandise                                                      132

  Stenographers                                                      247
    "don'ts"                                                         252
    hints for                                                        252
    records of work                                                  248

  Street car advertising                                              91

  Superintendent                                                      31


      T

  Transfer files                                                     282




                          TRANSCRIBER'S NOTE

-Obvious print and punctuation errors were corrected.