Perth Amboy evening news., 1923-03-17
THOUGHTS FOR THINKERS
1T PAYS TO KNOW

/ American business is not a selfish,
| privileg seeking monster. The agi-
! tator who so describes it and the
| statesman who treats it with abuse
| and suspicion forget that American
business is the daily labor of the
whole people and the clothes upon
| their backs and three meals a day.
| More vital to the wage earners, who
are ten to one greater in number
| than business executives, is the con-
| tinued prosperity of America Busi-
ness in America is not big business,
/ it is little businesses-all the units of
production, even the single machine
| in the shop and the farm and the
| home. American business is vast
fabric woven through the up-going
| years by the daily tasks of faithful
virtuous people,
Overhead
| To manufacture an article of any
kind there must be, first of all, some
| thing to make it out of-raw mate
| rial; secondly, some human hand Or
| hands to make it, or labor. AS
everybody knows, upon these two
| items-raw material and labor-de-
pend very largely the cost to the
! manufacturer of producing his
goods, and, therefore, the price at
which they are finally to be sold. But
there is a third item, fully as impor-
tant and necessary to be taken ac-
count of as these two and that is
| Overhead
1t is word you meet right along.
| It's a favorite topic with a certain
class of newspapers to poke fun at.
Many people consider it more or less
Of a joke, but it is no joke to the
| manufacturer or to the public either,
| for it has much to do with prices at
(which goods must be sold.
The money for every expense
which the manufacturer has to meet
in running his business must come
to him from the sale of his goods to
his customers. And overhead is just
as necessary and unavoidable an ex-
pense in any business, large or small,
as are labor and raw materials.
Whenver you see a business man
surrounded by a. lot of checks you
can be sure that the same mail has.
brought him a lot of bills which
takes much Of the joy out of those
checks.
An idea of the influence which
overhead has on the cost of produce
ton and hence the prices to the pub
some of the expenses which come
under this head. Stenographers,
bookkeepers, correspondents can
you imagine a firm doing business
without them? How could plant
dispose of its product excepting
through salesmen or advertising, or
| both? None of these forces help the
firm in producing or have any part
in the item of raw materials, yet
without them the business would fall
flat. Such expenses as these go to
make UP overhead.
Freight, carriage, motor trucks;
stamps, stationery, telegrams; labels,
printed matter, boxes, packing cases,
wrapping paper-.hese are all neces-
gary, must be paid for-more 'over-
head" expense.
Coal. electric power, light, tele-
phones: insurance, interest, rents,
taxes-all must be paid, and the
| money to pay with must come from
the sale of goods to the customers.
The above are some of the more
common items that make up the
| overhead expense. 1t is clear to any
reasonable mind that they cannot be
dispensed with, and it is equally
clear that any material advance in
| the cost of any or. all such items to
| the manufacturer, has a correspond
| ing effect on the cost of production.
For instance, take just one item, an
advance in railroad rate, and in
stantly, it is felt in the overhead ex-
pense, for even if the customer pays
the freight on the finished product,
the manufacturer must pay it on the
raw material. lie must pay in
creased fares for his travelling sales
men and the same conditions apply
where hotel and restaurant rates
are increased.
Get the idea of overhead in your
mind, for a saving in overhead ex-
pense means 2 saving in costs to
| the company, and a man or woman
who can save overhead expense to
a firm increase his or her value to
the firm. For instance, the items of
spoilage and waste cost the manu-
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to have these millionaires come
down here. 1t opens their eyes to
the opportunities of the South and
will make it much easier in years
to come for the South to get that
capital which it has always so much
needed. So L say to all America:
Watch the South grow"
General business as reflected by
the index of the Babsonchart is run
ming at a new high of per cent
above normal.