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as “commercial conscience." Under the form of a corporation men have been willing to do or cause to be done that which they would not do as individuals. Behind the corporate form they have been able to conceal, for the time being at least, the evidence and record of acts for which as individuals they would have been, and should now be, condemned. Through the corporation the control of great interests by the ownership of fifty-one per cent. of the stock has made men forget the minority stockholder, and fail to realize that the directors of corporations are trustees for every stockholder, not merely fifty-one per cent. of the stockholders. The corporation has made speculation easy through its shares of stock. The engraver's plate and the printing press have so successfully turned out stock certificates as to make one almost believe that the dead theory of an irredeemable paper currency has come to life.

But despite all that is wrong, the corporation has been a great agency for industrial good; like all great powers, it is susceptible of both the greatest good and the greatest evil.

It is worse than useless merely to inveigh against great corporations and assail men of wealth. Mere denunciation inflames men's passions and destroys their judgment. Criticism to be helpful must be constructive, not destructive. To destroy all corporations, to despoil all rich men, because some are doing ill, would lead to anarchy.

It is for the educated man to find out what is good and make it better, to learn what is evil and to stop it. Large steps have been taken in the right direction. Systematic, intelligent, dispassionate investigation and study of corporate conditions are being made.

Publicity of the affairs of corporations, resulting in a irate knowledge of conditions, has opened the way to great im covement. If men know that their business acts cannot be hidden from their associates, they will see to it that nothing unfair, nothing dishonest is done. The leaders of business are not insensible to public opinion. A director of a bank would not use bank funds for personal gain if his act would be immediately known to the depositors; the railroad manager would not give rebates if he was unable to conceal them; the manufacturer would not use unfair methods to destroy a competitor's trade, nor deceive the public as to the quality of his products, if his actions would be known to the public; the business manager would not use the funds of his corporation for bribery and corruption if the record of his expenditure would be opened to public inspection. Publicity of corporation affairs is not an invasion of private rights. There is a wide difference between an individual and a corporation. The corporation created by law has privileges and powers impossible for the individual to possess, and hence assumes corresponding obligations which are not imposed upon the individual. We can know and judge of a man's character and worth through his individuality; with corporations there is no individuality. The individual lives among men who by association learn to know him; the corporation lives within its books, its records, and only through them can it be known and judged. No right is invaded by opening these records so that we may know the corporation with which we deal, but much wrong is possible if they be closed.

The actual value of a corporation's property is concealed so that its stock may be fictitiously varied in price; its earnings are juggled so that its stock is depressed and those on the inside the majority interest-may purchase for their personal gain; its assets are hidden so that it escapes its fair share of the burden of taxation; its debts are covered so that it may establish a false credit; its money is used for illegitimate purposes. All this and more is possible if records are closed. It cannot be rightly urged that any private right is lost if by opening the records such actions by corporate managers can be prevented. In fact, the more one carefully studies corporate activity the more difficult he finds it to suggest a single corporate act that would not be better and more safely done were the record of it open to public knowledge and proper inspection.

The relation of capital and labor is another of the great subjects which men who enter the avenues of commerce and trade must study. As with the combination of capital under the corporation there have been good and evil, so with the combination of labor there is the same. The combination of labor is the natural, the inevitable results of combination of capital and of present business methods. Those who seek to destroy the labor union are as foolish as those who would destroy the corporation; those who would measure the wage of labor in mere dollars and cents are as unwise as those who measure business success by money alone. The problem of labor touches the social welfare, the social progress, of the world. It is only the educated man who will be able to deal fairly and wisely with this problem, and his education must be as broad as humanity itself.

One of the newer questions in business is the difference between fair and unfair competition. Few are more difficult, none more need the guide of high ideals. We demand free competition. Such competition inevitably means greater success to some than to others, and to many, failure. The man without idealshe who says, “business is business," and acts accordingly—soon adopts as his rule of conduct “anything to win”; uses every means not legally prohibited, to destroy his competitor; and little by little as the pinch comes he tries by trickery to evade the law, and finally, if he thinks himself big enough and strong enough, ignores the law. Such men deny that fair competition is possible; they represent the idea that "might makes right."

The man who has been well educated—he who has made high ideals his guides—clearly sees the vicious speciousness of such reasoning. Equity, not law, defines the line between fair and unfair competition—the conscience of man, like the conscience of the Chancellor, will tell when that line is passed. In the first place discard the “anything to win” idea. The game of football is a good example of the rough and tumble of business life. The man who earnestly and vigorously plays for the ball, and in so doing outruns, knocks down and perhaps injures an opponent, plays a fair game, but if he plays to injure an opponent with the hope of thereby getting the ball, he plays an unfair game and ought to be put off the field. So in business a man should give the best that is in him honestly and lawfully to make his business succeed, but he should not make the injury or destruction of a competitor the object of his endeavor.

The opportunities offered in commercial life to-day are greater than ever before in the world's history. Every kind of business is in need of trained minds and hands. The men who make the most of their educational advantages, who are broad minded and big hearted, who are not afraid to work, who understand their duties toward their fellows, who strive intelligently and earnestly toward the highest ideals of life and character, will gain the only success worth having. When such men die it will be truthfully said, the world is better because they have lived.

Factory Accounting as Applied to Machine Shops.*


BY JOHN WHITMORE, I described to you last week the way in which the cost of having and maintaining factory capacity is divided up so as to determine the cost of having and maintaining each unit of the factory capacity, that is, as far as machine-tool units are concerned. And I described to you how the factory capacity, actually utilized in making the various products of the factory, is charged into the respective cost accounts for the various products. You will remember that the method of doing this is to divide the total annual expense of a machine by the number of hours during which, according to a careful calculation, the machine should be actually used in the course of a year, thus arriving at the expense of the machine per hour; and then to record the time the machine is engaged on the individual job, or article being produced; and finally to multiply the hourly rate by the time and to charge the resulting figure into the cost account for that job, or article; and by means of the monthly summary drawn out from the machine rates ledger, to charge that same figure into the manufacturing account in the general ledger, for, as must constantly be borne in mind, the manufacturing account in the general ledger is always kept in agreement with the sum of the open cost accounts.

And you will remember that I said to you that inasmuch as machines may be idle, not only for that small proportion of their time which under the best management may be unavoidable, but also from lack of business, or from faults in the shop management, or because machines are ill adapted to the work of the shop; and inasmuch as the expense of machines when they are idle from these latter causes is no part of the proper and necessary cost of the article produced by the machines in operation; therefore this expense of machines idle is not, either with the greatest propriety, or with the greatest convenience or usefulness, charged into the cost of the articles produced, but is charged to a separate account for idle capacity. This completes the disposition of the expenses which were absorbed in the machine rates.

You will further remember that for these debits to the manu

*NOTE: This article is a reproduction, without change, of the fourth of the lectures up on which the present series of articles is based.

facturing account in the general ledger and to the idle capacity account in the general ledger, the corresponding credit is made to a general ledger account entitled “ Machine Rates Account.”

Now the expenses which have been absorbed into the machine rates are, first, a proportion of the following representing the cost of factory space:

Interest on investment in land.
Interest on investment in buildings.
Repairs to buildings.
Depreciation of buildings.
Heat and light.
Taxes on land and buildings.
Insurance on buildings.

Second, the whole of the following representing the cost of machinery:

Interest on investment in machinery.
Repairs to machinery.
Depreciation of machinery.
Taxes on machinery.
Insurance on machinery.

And I described to you last week how the machine rates might also include expenses which would be represented in the general ledger by three additional accounts, viz. :

Special supplies.
Special superintendence.
Special tools expense.

I told you last week that the cost of factory space is distributed at least to the following:

Cost of power.
Machine rates.
Storehouse expense.
General factory expense.
General office expense.

The charges for factory space to the general ledger accounts representing these expenses should be made monthly, a fixed monthly charge to each according to the floor-space ascertained to be taken by each, at the cost per square foot of floor-space determined as I described to you last week. When these debit: are made, a corresponding credit has to be made, and for this pur

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