New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-01-14
1HF NEW IDEA m INDUSTRIAL COSTS
LET CAPITAL PAY FOR OWN SlUPlDllY
AS It the Consumer Charged with the Expense Maintaining Idle Equip
mn Should the Burden Be Placed on Manufacturer the
Wheels Would Soon Begin to Turn
~FFICIENCY had produced its

EFFICIENCY had produced ITS
X schism.
- The nature Of 1t is hard TO
define or to phrase for the laymsn's
understanding. The news Of 1t is that
a group Of radicals. entertaining a
new doctrine, has presented IT to the
American Society of Mechanical En-
gineers and urged them TO freedom
If thought and liberty of propaganda.
1t is the most interesting and per-
haps the most significant thing that
has happened since the word eff
cheney began to make us conscious OF
our ineficiency. The trouble with the
idea of efficiency, in the opinion OF
the radicals, is that it has been one
sided.
With amazing frsnkness the en-
gineers who subscribe to the new
theory. which is fathered by II. L..
CAN'T, of New York, declare that
shirkers are to be found among the
managers of big industries. Their
general planning is poor. They
often build their plant too big. They
overestimate the demand for goods
and are extravagant in their sales
policies. The expense Of all these in
completeness is charged to the cost
Of producing goods.
And because the cost Of produc-
ton has hitherto been obliged to bear
the expense of the wastefulness in
production. of the inefficiency of cap
ital and of plant idleness and unem-
ployment in dull times, the consumer
has paid it.
The new doctrine holds that CAPT
tel shall bear the cost of its own
wastefulness, of its own ineficiency.
and Of the idleness Of plant.
In determining the price of goods
the investment hitherto has been the
prime factor. Now, we are told that
the prime factor should be the meth
cd of production.
The Real Assets
of a Nation
IF there is any one thing which
has been MADE clear by the war, y
saws Mr.. CAN'T, sit is that the most
important asset which either man
or nation can have is the ability to
do things. Our industrial and eco
nomic developments have in the past
been largely based on the theory that
the most important quality man
oan possess is his ability to buy
things: but the war has distinctly
shown that this quality is secondary
10 the ability to do things. The rec
ognition Of this fact is having most
icr reaching effect, for 1t makes
Gear that the real assets Of a ma
ton are properly equipped indus
tries and men trained to operate
them efficiently. The money which
has been spent on an industrial prop
erty. whether it has been spent wise
" or unwisely, and the amount OF
money needed TO reproduce 1t are
both secondary in Importance to the
ability of that plant to accomplish
the object for which it was con-
structed. and hence cannot be given
the first place in determining the
value of the property.
"Inasmuch as every Industrial
plant is built to produce some article
Of commerce at a cost which will
enable it to compete with other pro-
ducers, the value Of a plant as a
producing unit must depend upon ii
ability TO accomplish the object for
which IL was created.
ITO determine the value Of an In
dustrisl property, therefore, we must
be able to know with accuracy the
cost at which it can produce IT.
product and the amount it can pro
duce. To compare two factories on
this basis, their cost systems mus,
he alike; For, II there is lack oil
agreement as TO methods Of cost &C
counting, there will necessarily be a
lack Of agreement as TO the esd.
mated value of the properties. There
are many methods Of cost account
ing; but there are only two leading
theories as to what cost consists Of
They are:
'First-That the cost of an articl,
must include all Of the expense in
CURED In producing II, whether such
expense actually contributed TO tht
desired end or not.
"Second-That the cost of an ar
ticle should include only those ex
penses actually needed for its pro
duction, and any other expenses in
Cured by the producers for any rea
son whatever must he charged t
.omo other account
idle Machinery
L. Ernensive