The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-09-10
The Cost. Plus Plan.

n
pound cow to town and sold II for three
cents a pound and got SIS for his
COW.
sheep growers are offering wool at u
cents pound and find there Is no
market for II,
A suit OF clothes. with wool selling
at 10 cents a pound. costs $50, The
same suit OF clothes. when wool was
bringing 40 cents a pound, sold for sS5.
For the price Of his COW the Milling
ton farmer might have bought rea-
sonabiy good pair of shoes, II Is doubt
full II he could have sold the hide at
any price.
The trouble with the farmer Is that
everybody else il operating on cost
plus basis. while he gets what he can
for his products. II farm products do
not realize enough for the farmer to
live on comfortably, he sells them for
what he can get and lives the best
he can.
The eost-plus theory is serious
menace to this country. II has taken
about all the initiative away from pub
lie service corporations,
The system began when the govern
ment started building cantonments on
a cost plus basis Contracts were let
with the understanding that the gov
ornment would pay 10 per cent in excess
OF actual cost
There were enough abuses Of the
system in that one enterprise to have
condemned il forever.
The theory that the more a man
spends the more he has, is not sound,
but that seems to be the one that bust
ness is driving toward,
II railroads, street railways, electric
and gas plants and other public serv-
ice corporations are TO be given the
privilege of earning profit on a cost
plus basis without regard TO what they
spend or for what purpose. they will
eventually find themselves In hard
lines, for the plan can not endure and
they win find II difficult to make ends
meet when thrown upon their own re-
sources
On the cost-plus basis there can be
no such thing as profiteering AZ little
common sense il shown. Wages and
salaries can be increased without limit
Foolish expenditures can be made vito
The assumption that the expenditures
alone will produce profit
The war has been over long enough
and business has been given sufficient
notice to warrant the government and
municipalities in Withdrawing their sup
port from institutions they have no
part in managing.
The coSt-plus theory has not only
destroyed initiative ana enthusiasm,
but what is equally as bad, it has de-
stroyed competition.
The unfortunate experience OF the
government during the past few years
In operating public service corporations
has not contributed anything to the
sentiment for public ownership.
II Is a reasonable contention that II
the government and municipalities are
TO take from the taxpayers an amour,
sufficient to make public service cor
porations profitable, then the taxpayers
should have a voice in the control Of
these institutions
Much objection may he raised to
municipality owned public service cor.
porations, but there is an even greater
objection to imposing upon the public
the burden of deficits caused by indif-
ference or mismanagement
There is no well-founded objection to
any institution or individual earning a
reasonable return upon the capital or
labor invested but the public can not
for long afford TO guarantee either per-
petual prosperity when II has no voice
IN the regulation OF their conduct.
The farmer who sells COW has az
much right to require cost plus price
as the man who manufactures a pair
OF shoes on a cost plus basis with
replacement value added.
We reed to get away from the system
of making guarantees unless guaran.
ives are given, and the best way to
accomplish that Is to place every In
dividual and enterprise upon its own
resources.
q