Ill.) American School (Lansing.

Cyclopedia of commerce, accountancy, business administration ... [microform] online

. (page 1 of 27)
Online LibraryIll.) American School (LansingCyclopedia of commerce, accountancy, business administration ... [microform] → online text (page 1 of 27)
Font size
QR-code for this ebook


This is a digital copy of a book that was preserved for generations on library shelves before it was carefully scanned by Google as part of a project
to make the world's books discoverable online.

It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject
to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books
are our gateways to the past, representing a wealth of history, culture and knowledge that's often difficult to discover.

Marks, notations and other marginalia present in the original volume will appear in this file - a reminder of this book's long journey from the
publisher to a library and finally to you.

Usage guidelines

Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the
public and we are merely their custodians. Nevertheless, this work is expensive, so in order to keep providing this resource, we have taken steps to
prevent abuse by commercial parties, including placing technical restrictions on automated querying.

We also ask that you:

+ Make non-commercial use of the files We designed Google Book Search for use by individuals, and we request that you use these files for
personal, non-commercial purposes.

+ Refrain from automated querying Do not send automated queries of any sort to Google's system: If you are conducting research on machine
translation, optical character recognition or other areas where access to a large amount of text is helpful, please contact us. We encourage the
use of public domain materials for these purposes and may be able to help.

+ Maintain attribution The Google "watermark" you see on each file is essential for informing people about this project and helping them find
additional materials through Google Book Search. Please do not remove it.

+ Keep it legal Whatever your use, remember that you are responsible for ensuring that what you are doing is legal. Do not assume that just
because we believe a book is in the public domain for users in the United States, that the work is also in the public domain for users in other
countries. Whether a book is still in copyright varies from country to country, and we can't offer guidance on whether any specific use of
any specific book is allowed. Please do not assume that a book's appearance in Google Book Search means it can be used in any manner
anywhere in the world. Copyright infringement liability can be quite severe.

About Google Book Search

Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers
discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web

at http : //books . google . com/|




rPRESIDEr




fe.:<VICE\VVA;Cs
PRESIDENT,



:SECR^irVXRY



TREASURER



.i.iA.-.V.yV.Vw.Av.vJIu




Cyclopedia of Commerce,
Accountancy, Business ...

American School (Chicago, III.), Ill
American School (Chicago




■ ' ' '■/v f T I I I J






Digitized by



Google



Digitized by



Google



Digitized by



Google



Digitized by



Google



<
m

o






H

H
S

H

O
QQ
M

O

K
O

M

SB

H
X
H

as

H

95
H

H
OS

<

a*

H

Q

3



Digitized by



Google



Cyclopedia

of

Commerce, Accountancy,
Business Administration



A General Reference Work on

ACCOUNTING, AUDITING, BOOKKEEPING, COMMERCIAL LAW, BUSINESS

MANAGEMENT, ADMINISTRATIVE AND INDUSTRIAL ORGANIZATION,

BANKING, ADVERTISING, SELLING, OFFICE AND FACTORY

RECORDS, COST KEEPING, SYSTEMATIZING, ETC.



Prepared by a Corps of



AUDITORS, ACCOUNTANTS, ATTORNEYS, AND SPECIALISTS IN BUSINESS
METHODS AND MANAGEMENT



Illustrated with Over Two Thousand Engravings



TEN VOLUMES



CHICAGO
AMERICAN SCHOOL OF CORRESPONDENCE
^ 1910



Digitized by



Google



^•1




C'^^y^JTte 3oho«) of

i IC M^ )



Copyright. 1909

BY

AMERICAN SCHOOL OF CORRESPONDENCE
Copyright. 1909

BY

AMERICAN TECHNICAL SOCIETY



Entered at Stationers' Hall, London
All Rights Reserved



Digitized by



Google



Authors and Collaborators



JAMES BRAY GRIFFITH, Managing Editor

Head. Dept. of Commerce. Accountancy, and Business Administration. American School
of Correspondence.

ROBERT H. MONTGOMERY

Of the Firm of Lybrmnd. Rosa Bros, ft Montgomery. Certified Public Accountants.

Editor of the American Edition of Dicksee's Auditing.

Formerly Lecturer on Auditing at the Evening School of Accounts and Finance of the

Untversity of Pennsylvania, and the School of Commerce. Accounts, and Finance of

the New Yoric University.



ARTHUR LOWES DICKINSON, F. C. A., C. P. A.

Of the Firms of Jones. Caesar, Dickinson. Wilmot A Company. Certified Public Ac-
countants, axkd Price, Waterhouse A Company, Chartered Accountants.



WILLIAM M. LYBRAND, C. P. A.

Of the Firm of Lybrand, Roes Bros. & Montffomery. Certified Public Accountanta



F. H. MACPHERSON, C. A., C. P. A.

Of the Fhrm of F. H. Bfacpherson & Ca. Certified Public Accountants.



CHAS. A. SWEETLAND

Consulting Public Accountant.

Author of "Loose-Leaf Bookkeeping." and "Anti-Confusion Business Methods/

E. C. LANDIS

Of the System Department. Burrouflrhs Addinar Machine Compnny.



HARRIS C. TROW, S. B.

Editor-in-Chittf, Textbook Department. American School of Conrespondence



CECIL B. SMEETON, F. I. A.

Public Accountant and Auditor.

President. Incorporated Accountants' Society of Illinois.

Fellow. Institute of Accounts. New York.



Digitized by



Google



Authors and Collaborators — Continued



JOHN A. CHAMBERLAIN, A. B., LL. B.

Of the Cleveland Bar.

Lecturer on SuretyBhip, Western Reserve Law SchooL

Aothor of "Principlee of Buaineaa Law."

HUGH WRIGHT

Auditor, Westlake Construction Company.

^•
GLENN M. HOBBS, Ph. D.

Secretary, American School of Correspondence.

^•

JESSIE M. SHEPHERD, A. B.

Associate Editor, Textbook Department, American School of Correspondence.



GEORGE C. RUSSELL

Systematizer.

Formerly lianaser. System Department, Elliott-Fisher Company.



OSCAR E. PERRIGO, M. E.

Specialist in Industrial Organization.

Author of " Bfachine-Shop Economics and Systems,'' etc



DARWIN S. HATCH, B. S.

Assistant Editor. Textbook Department. American School of Correspondence.

^•
CHAS. E. HATHAWAY '

Cost Expert.

Chief Accountant, Fore River Shipbuilding Co.

^•
CHAS. WILBUR LEIGH, B. S.

Associate Professor of Mathematics. Armour Institute of Technoloiry.

^•
L. W. LEWIS

Advertising Manager, The McCaaikey Register Co.

MARTIN W. RUSSELL

Registrar and Treasurer. American School of Correspondence.



Digitized by



Google



Authors and Collaborators — Continued



HALBERT P. GILLETTE, C. E.

ManaffinsT Editor, EngineerinthContracHng,

Author of " Handbook of Ckwt Data for Contractors and Engineers."



R. T. MILLER, JR., A. M., LL. B.

Preeident, American School of Correspondence.

^•
WILLIAM SCHUTTE

Manaffer of Advertisinff. National Cash Register Co.

^•
E. ST. ELMO LEWIS

Advertisinff Manager, Burrooshs Addinff Machine Company.

Author of " The Credit Man and His Work " and " Financial Advertisinff.*'

RICHARD T. DANA

Consultinff Engineer.

Chief Engineer, Construction Service Co.

P. H. BOGARDUS

Publicity Blanaffer. American School of Correspondence.



WILLIAM G. NICHOLS

General Manufacturing Asent for the China Mfff. Co.. The Webster Mfff. Ca. and

the Pembroke Mills.
Author of "Cost Finding '* and " Cotton Mills."



C. H. HUNTER

Advertising Manager, Elliott-Fisher Co.

FRANK C. MORSE

Fainff Expert.

Secretary, J^rowne-Morse Co.

H. E. K'BERG

Expert on Loose- Leaf Systems.

Formerly Manager, Business Systems Department. Burroughs Addinff Bfachine Co.

EDWARD B. WAITE

Head, Instructkm Department, American School of Correspjndence.



Digitized by



Google



Authorities Consulted



THE editors have freely consulted the standard technical and business
literature of America and Europe in the preparation of these volumes.
They desire to express their indebtedness, particularly, to the following
eminent authorities, whose well-known treatises should be in the library of
everyone interested in modem business methods.

Grateful acknowledgment is made also of the valuable service rendered
by the many manufacturers and specialists in office and factory methods,
whose cooperation has made it possible to include in these volumes suitable
illustrations of the latest equipment for office use ; as well as those financial,
mercantile, and manufacturing concerns who have supplied illustrations of
offices, factories, shops, and buildings, typical of the commercial and indus-
trial life of America.



JOSEPH HARDCASTLE, C. P. A.

Formerly Professor of Principles and Practice of Accounts. School of (Commerce.

Accounts, and Finance, New York University.
Author of "Accounts of Executors and Testamentary Trustees."



HORACE LUCIAN ARNOLD

Specialist in Factory Orsranization and Accountinsr.

Author of "The Complete Ckwt Keeper/' and " Factory Manaser and Accountant."



JOHN F. J. MULHALL, P. A.

Specialist in Corporation Accounts.

Author of "Quasi Public Corporation Accounting and Manaerement."

^•
SHERWIN CODY

AdvertiBinff and Sales Specialist.

Author of "How to Do Business by Letter," and "Art of Writinflr and Speakinff the
English Lamruase."

^•
FREDERICK TIPSON, C. P. A.

Author of "Theory of Accounts."

^*

CHARLES BUXTON GOING

ManaffiniT Editor of The Blngineering Magazine.
Associate in Mechanical Enflrineerinsr, Columbia University,
Correspondinir Member. Canadian Mining Institute.



F. E. WEBNER

Public Accountant.

Specialist in Factory Accountinir.

Contributor to The Emnneerinsr Press.



Digitized by



Google



Authorities Consulted — Continued



AMOS K. FISKE

Associate Editor of the Nwf York Journal of Commgro;
Author of "The Modem Bank."



JOSEPH FRENCH JOHNSON

Dean of the New York University School of Commerce, Accounts, and Finance.
Editor, The Journal of Accountancy.
Author of '* Money, Exchanffe, and Banking."



M. U. OVERLAND

Of the New York Bar.

Author of "Classified Corporatkm Laws of AU the SUtes."



THOMAS CONYNGTON

Of the New York Bar.

Author of "Corporate Management." "Corporate Organization." "The Modem Cor-
poration,'' and " Partnership Relations."

THEOPHILUS PARSONS, LL. D.

Author of "The Laws of Business."



E. ST. ELMO LEWIS

Advertising Manager. Burrouffha Addinff Machine Company.

Formerly Manager of Publicity. National Cash Register Co.

Author of "The Credit Man and His Work," and "Financial Advertising.'



T. E. YOUNG, B. A., F. R. A. S.

Ex-President of the Institute of Actuaries.
Member of the Actuary Society of America.
Author of " Insurance."

LAWRENCE R. DICKSEE, F. C. A.

Professor of Accountinir at the University of Birmingrham.

Author of "Advanced Accountinff," "Auditing." "Bookkeepins: for Company Secretary.'
etc

^•
FRANCIS W. PIXLEY

Author of "Auditors, Their Duties and Responsibilities." and "Accountancy."



CHARLES U. CARPENTER

General Manager, The Herrinsr- Hall-Marvin Safe Co.
Formerly General Manager. National Cash Register Co.
Author of "Profit Making Manafirement."



Digitized by



Google



Authorities Consulted — Continued



C. E. KNOEPPEL

Specialist in Cost Analysis and Factory Betterment.

Author of "Systematic Foundry Operation and Foundry Costinfir,'' " Maximum Produc-
tion throuffb Organization and Supervision," and other papers.



HARRINGTON EMERSON, M. A.

ConsultinflT Engineer.

Director of Oraranization and Betterment Work on the Santa Fe System.

Originator of the Emerson Efficiency System.

Author of " Efficiency >w a Basis for Operation and Wases."

^•
ELMER H. BEACH

Specialist in Accountinff Methods.

Eklitor, Beach* B Moffoaine of Busineaa,

Founder of The Bookkeeper.

Editor of J%e American Busineaa and Accounting Encyclopedia,

^•
J. J. RAHILL, C. P. A.

Member, California Society of Public Accountants.
Author of "Corporation Accounting and Corporation Law."

^•
FRANK BROOKER, C. P. A.

Ex-New York State Examiner of Certified Public Accountants.
Ex-President, American Association of Public Accountants.
Author of " American Accountants' Manual."

CLINTON E. WOODS, M. E.

Specialist in Industrial Orsranizatlon.

Formerly Ccnnptroller, Sears, Roebuck A Co.

Author of "Orsanizinff a Factory," and "Woods* Reports."

CHARLES E. SPRAGUE, C. P. A.

President of the Unkm Dime Savings Bank, New York.

Author of "The Accountancy of Investment," "Extended Bond Tables," and "Prob-
lems and Studies in the Accountancy of Investment."

CHARLES WALDO HASKINS, C. P. A., L. H. M.

Author of " Business Education and Accountancy."

^•
JOHN J. CRAWFORD

Author of " Bank Directors, Their Powers, Duties, and Liabilities.'"'

^•
DR. F. A. CLEVELAND

Of the Wharton School of Finance, University of Pennsylvania.
Author of "Funds and Their Uses."



Digitized by



Google



Digitized by



Google



H









S ■

M O*

H as

S •J



§8

M m

^ £

H ^

M H

H CO

06
<
flu
H
Q

O

9S



H
flS
M

>

<

H
B
H



Digitized by



Google



Fore^vord



WITH the unprecedented increase in our commercial
activities has come a demand for better business
methods. Methods which were adequate for the
business of a less active commercial era, have given way to
systems and labor-saving ideas in keeping with the financial
and industrial progress of the world,

<L Out of this progress has risen a new literature — the
literature of business. But with the rapid advancement in <
the science of business, its literature can scarcely be said to
have kept pace, at least, not to the same extent as in other
sciences and professions. Much excellent material dealing
with special phases of business activity has been prepared,
but this is so scattered that the student desiring to acquire
a comprehensive business library has found himself confronted
by serious difficulties. He has been obliged, to a great extent,
to make his selections blindly, resulting in many duplications
of material without securing needed information on important
phases of the subject.

4L In the belief that a demand exists for a library which
shall embrace the best practice in all branches of business —
from buying to selling, from simple bookkeeping to the
administration of the financial affairs of a great corporation—
these volumes have been prepared. Prepared primarily for



Digitized by



Google



use as instruction books for the American School of Corre-
spondence, the material from which the Cyclopedia has been
compiled embraces the latest ideas with explanations of the
most approved methods of modem business.

<L Editors and writers have been selected because of their
familiarity with, and experience in handling various subjects
pertaining to Commerce, Accountancy, and Business Adminis-
tration. Writers with practical business experience have
received preference over those with theoretical training;
practicability has been considered of greater importance than
literary excellence.

CL In addition to covering the entire general field of business,
this Cyclopedia contains much specialized information not
heretofore published in any form. This specialization is par-
ticularly apparent in those sections which treat of accounting
and methods of management for Department Stores, Con-
tractors, Publishers and Printers, Insurance, and Real Estate.
The value of this information will be recognized by every
student of business.

C The principal value which is claimed for this Cyclopedia
is as a reference work, but, comprising as it does the material
used by the School in its correspondence courses, it is offered
with the confident expectation that it will prove of great
value to the trained man who desires to become conversant
with phases of business practice with which he is unfamiliar,
and to those holding advanced clerical and managerial
positions.

C In conclusion, grateful acknowledgment is made to authors
and collaborators, to whose hearty cooperation the excellence
of this work is due.



Digitized by



Google



Table of Contents



VOLUME I

Administrative and Industrial Organization

By James B. Griffith t Page*ll

The Business Ensrineer— Prelimin&iT Investisration — Chartms the Organization
— Orsranization of Business — Oraranization of Mercantile Business — Universal
Application of Orsranization Principles— Departmental Authorities— The General
Manager— Comptroller — Sales Division— Superintendent— Purchasing Agent
— Employment Department — CHiarting Salary and Wage Distribution— Expense
Distribution Chart— Arrangement of Plant — Factory Plans— Office Plans— The
Committee System— The Suggestion Plan — 6rder Blanks

Advertising and Sales Organization . By James B. Griffith Page 61

Systems and Records — Designs and Cuts — Cut Indexes and Tracers — Records
of Printing— Periodical, Street Car, and Outdoor Advertising — Rate Cards—
Advertising Contracts — Checking Returns — The Sales Department — Branches
— The Biail-Order Branch— Follow-up Systems— Personal Salesmanship Division
— Routing Salesmen — Sales Records

The Credit Organization . . By Jamss B. Griffith Page 127

The Credit Blan — Information Required — Financial Statements — Analysis of
Statements— Sources of Information — Local Correspondents — Credit Agencies
— Recording Credit Information— Collections— Mcmthly Statements — ^Installment
Collections— Collections by Attorneys

The. Shipping Department . . By Jam^es B. Griffith Page 183

The Shipping Clerk — Class Rates — Commodity Rates — Freight Tariffs — Con-
densed Rate File— Routing Shipments- Filling Orders— Checking Shipments—
Export Shipping— Freight Claims— Express Shipments— Retail Delivery System

Ck>RRESPONDENCE AND FILING . . By James B, Griffith Page 231

Opening and Distributing MaO Correspondence Short Cuts— Talking Machines

for Dictation— Copying Correspondence— Stenographic Division— Records of
Work— Filing Division— FUing Systems— Methods of Indexing— Guiding. Trans-
ferring, and Sorting — Selecting Filing Equipment— Styles of Construction

Business Statistics , ... By James B. Griffith Page 287

Sales Costs — Records of Shipments— Returned Goods— Salesmen's Records —
Expense Distribution— Department Sales— Trading Statements— Profit Figuring
—Administrative Costs — Profit and Loss Statements— Mailing-Room Machinery

Review Questions Page 333

Index Page 347



* For page numbers, see foot of pages.

tFor professional standing of authors, see list of Authors and Collaborators at
front of volume.



Digitized by



Google



9i

o



m

H

flu

m

o

M



H
H



flQ

O

u



H

<
•J

flu

H

S
H

H
<

H
U

SI

Pu

o

>

H

D

H
X
M

K



Digitized by



Google



ADMINISTRATIVE AND INDUS-
TRIAL ORGANIZATION



I, With little fear of contradiction, it may be stated that every
2 commercial enterprise b conducted with the one purpose in view of
J making money for its owners. Naturally, the owners desire the
s largest possible returns from their investment of money or time, or
^ both. Every person connected with the enterprise, in any capacity
' whatsoever, is indirectly working for the same purpose — to make
z as much money as possible for the owners of the business.

J The largest possible volume of profitable business must be

a transacted; the business must be conducted with economy; the

a returns from each dollar expended must be as large as possible. This

^ very condition is one of the beneficial results of modem business

1 methods. The demand for a greater volume, lower cost of production,
■ and more economical methods, has brought with It an Incentive to
[ greater effort on the part of the individual, with corresponding rewards.
I That the efforts of the Individual may be productive of best

results, he must have the cooperation of other individuals engaged
in the same enterprbe. The enterprise must be properly organized.

Realizing the absolute necessity of harmoniously working organi-
zations, keen students of business affairs have given much study to
the question of how to organize a business. They have studied the
plans of operation of the most successful enterprises, for the purpose
of discovering those factors which have contributed most largely
to their success. They have investigated and improved old plans
and methods and invented new methods.

2. The Business Engineer. The investigations of these men
have brought into being a new profession — that of the business
organizer or business engineer — a profession that has quickly gained
recognition. Business men, especially those at the head of large
enteiprises have not been slow to avail themselves of the services of
men who have mastered the science of business organization.

For the same reason that he has long employed an architect to
plan hb building the modem business man calb in a business engi-

Vopyright, 1909, by American School of Correspondence.



11

Digitized by



Google



2 ORGANIZATION

neer or systematizer, to perfect bb business organization. As in
every other profession, some incompetent men are found posing as
business engineers, but an increasing number of trained men are
entering the field. It b the v/ork of these men that b placing the pro-
fession on a high plane.

The successful business engineer must have the ability to quickly
grasp the plan of operation of any business with which hb work may
bring him in contact; he must be able to analyze conditions and to
determine the factors which make for the success or failure of a busi-
ness. Hb work b to organize and systematize every step of the
work in every department.

3. The Preliminary Investigation. The first step in the organi-
zation or systematizing of a business is to determine its natural
divbions. What b the nature of the business, and what are its dis-
tingubhing characteristics? Be it a manufacturing, jobbing, whole-
sale, retail, or professional concern, there b some one head on whom
rests the final responsibility for the success or failure of the business.
He must be surrounded with subordinates, each having certain duties
to perform, who will be responsible for the performance of those
duties, thereby cooperating to carry out the purposes of the enter-
prise.

The highest type of organization b found among the great indus-
trial enterprises. These enterprises with their many activities most
readily lend themselves to the application of scientific principles of
organization. Here, organization can be carried to its final con-
clusion; in a smaller enterprbe the same principles apply, but modifi-
cation of detaib b necessary.

If we study the organization of a large enterprise, regarding it
as a type, we can more readily grasp the requirements of a smaller
business. But it must be remembered that in any event, the individual
business must be studied and the organization made to fit the business.
A tailor does not cut all coats from the same pattern.

In certain respects a great industrial organization may be likened
to the army. At the head of the army is the commanding general,
on whom rests the responsibility for the success of any campaign.
He b surrounded by hb staff, with whom he consults on questions of
importance. When any important move is decided upon, the mem-
bers of the staff — themselves in command of divisions of the armv —



12

Digitized by VjOOQIC



ORGANIZATION :]

issue orders to their subordinate officers. They, in turn, pass the
orders along, and at a predetermined moment, an entire army is set in
motion.

Another important feature of the army organization which should
be applied to the organization of a business is the disregard of the
individual. Military authorities long since discovered that a high
standard of efficiency could be maintained only through the organiza-
tion of the army along certain Imes. The question was not one of
creating offices the duties of which would conform to the capabilities
of certain men; the offices w^ere first created, and then competent men
were selected to fill them.

4. Individuals Disregarded. In creating responsibilities in a



Online LibraryIll.) American School (LansingCyclopedia of commerce, accountancy, business administration ... [microform] → online text (page 1 of 27)