The Birmingham age-herald., 1915-12-02

 men, that day is past We now have to get down to the hard facts of busi- ness, to learn precisely what they are, where the weaknesses and losses ex- ist, and practice the same thorough ness which characterizes trade and in dustry in Europe. We need to study standard systems of bookk coping and cost accounting.
 The fact must be admitted that in order to put a selling price on product a manufacturer must first know ex- act1y what it costs to manufacture and sell it.
 ACCURATE INFORMATION
 A manufacturer who does not know with a close degree of accuracy what it costs him to produce the different articles he manufactures and what 1t costs him to sell them. is not in a po- sition inte1ligently to meet competition, and invites business disaster. E Many of the larger manufacturers have thorough cost accounting systems, which they recognize as necessary in order to give them the information es- sential to successful management On the other hand, the number of smaller manufacturers who have no adequate cost accounting system and who price their goods arbitrarily is amazing.
 Proper accounting for the smaller manufacturer is most. essential. It is necessary for his success that he know on what particular article he is mak- ing a fair profit and on what he is making only a narrow margin of profit or losing money. If he has this fnfor- nation he can concentrate on the manufacture and sale of the product on which the profits are satisfactory.
 Whole industries, in many instances, are suffering from general lack of intelligent knowledge of cost.
 ha fadara1 G. sion help to cure those conditions?
 The commission has no power and no desire to use compulsory methods. But it does hope to reach the desired end by indorsing standard systems of bookkeeping and cost accounting. and to assist in devising standard systems, either at the request of individual mer chants and manufacturers or through the association that represents the in dustry The commission expects to have for this work an adequate force of experienced accountants and cost experts and the service, in an advis- ory capacity, of public accountants of national reputation.
 BENEFITS OFFERED
 What may be expected from such activities of the federal trade commits sion?
 1. The individual enterprises will be
 
 exactly where they stand. Their prices will be made on a solid basis of fact.
 g. The employees of these firms will be benefited. They will be trained to more thorough and more accurate meth ods of work. This improved knowledge will increase their effectiveness and their individual value to their employ CTS.
 g. The investor will be benefited. He will be able to invest his money with greater assurance that it will be used in the most advantageous manner
 4. The public will benefit. It will not have to pay for inefficient methods.
 To take a specific example, suppose that there are five plants making cer- tain line. Imagine that one of these plants Is run efficiently and that the other four are managed in slipshod manner.
 Where is the sort of trouble going to appear that costs the public and the trade heavily? In the four plants run in slow enly manner, of course. It is in those four plants that the expensive strikes will occur, the dangerous dissatisfaction among workers will appear, and the de- moralizing practice of selling below cost of manufacture will take root and other unfair methods of competition as means of making sales.
 INCREASING EFFICIENCY
 If we can raise the level of effectiveness prevailing in these four plants to the level prevailing at the ably managed plant or even higher, benefits will accrue to every interest concerned. All five of the plants will be on a more satisfactory competi- tive basis. The employees in at least four of the plants will learn to do their work to better purpose Consumers will be forced to pay for fewer inefficient methods The jobbers and retailers will get their goods under more advantag- eous conditions. And the bankers will have five excellent accounts on their books instead of one excellent and four doubtful ones.
 An up-to-date system of accounting will enable the banker to extend to the smaller manufacturer the credit to which he is entitled, and which he needs in or der to expand his business The small manufacturer may have just as much brains ability, knowledge of his wares and of his customers as the larger op- orator. he may even put out a superior product. But he cannot show the banker a balance sheet based on proper ac- counting methods. and the banker does not feel ready to extend credit without the knowledge that such a balance sheet would supply; thus, because business men of this type cannot give statements about their business affairs in the exact man. ner necessarily required by the bank CTS, their credit is restricted and their expansion checked.
 ORG ANIMATION ADVOCATED
 There should be greater degree of or eanization ana of mutual helpfuiness in aii lines of trade and industry. so that Arnerican business may be welded into a commercial and industrial whole; the pal.