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Title: Cyclopedia of Commerce, Accountancy, Business
Administration, v. 01 (of 10)

Author: American School of Correspondence

Release date: July 26, 2014 [eBook #46424]
Most recently updated: October 24, 2024

Language: English

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*** START OF THE PROJECT GUTENBERG EBOOK CYCLOPEDIA
OF COMMERCE, ACCOUNTANCY, BUSINESS ADMINISTRATION, V.
01 (OF 10) ***

Cyclopedia
of

Commerce, Accountancy,
Business Administration

Volume 1

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 TECHNICAL SOCIETY
1910

Copyright, 1909
BY
AMERICAN SCHOOL OF CORRESPONDENCE

Copyright, 1909
BY
AMERICAN TECHNICAL SOCIETY

Entered at Stationers' Hall, London
All Rights Reserved

MAILING DEPARTMENT IN THE NEW YORK OFFICES OF THE
WESTERN ELECTRIC COMPANY

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 Lybrand, Ross Bros. & 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 University of Pennsylvania, and the
School of Commerce, Accounts, and Finance of the New
York University.

ARTHUR LOWES DICKINSON, F. C. A., C. P. A.
Of the Firms of Jones, Caesar, Dickinson, Wilmot & Company,
Certified Public Accountants, and Price, Waterhouse &
Company, Chartered Accountants.

WILLIAM M. LYBRAND, C. P. A.
Of the Firm of Lybrand, Ross Bros. & Montgomery, Certified
Public Accountants.

F. H. MACPHERSON, C. A., C. P. A.
Of the Firm of F. H. Macpherson & Co., 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, Burroughs Adding Machine
Company.

HARRIS C. TROW, S. B.
Editor-in-Chief, Textbook Department, American School of
Correspondence.

CECIL B. SMEETON, F. I. A.
Public Accountant and Auditor.
President, Incorporated Accountants' Society of Illinois.
Fellow, Institute of Accounts, New York.

JOHN A. CHAMBERLAIN, A. B., LL. B.
Of the Cleveland Bar.
Lecturer on Suretyship, Western Reserve Law School.
Author of "Principles of Business 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 Manager, System Department, Elliott-Fisher Company.

OSCAR E. PERRIGO, M. E.
Specialist in Industrial Organization.
Author of "Machine-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
Technology.

L. W. LEWIS
Advertising Manager, The McCaskey Register Co.

MARTIN W. RUSSELL
Registrar and Treasurer, American School of Correspondence.

HALBERT P. GILLETTE, C. E.
Managing Editor, Engineering-Contracting.
Author of "Handbook of Cost Data for Contractors and
Engineers."

R. T. MILLER, JR., A. M., LL. B.
President, American School of Correspondence.

WILLIAM SCHUTTE
Manager of Advertising, National Cash Register Co.

E. ST. ELMO LEWIS
Advertising Manager, Burroughs Adding Machine Company.
Author of "The Credit Man and His Work" and "Financial
Advertising."

RICHARD T. DANA
Consulting Engineer.
Chief Engineer, Construction Service Co.

P. H. BOGARDUS
Publicity Manager, American School of Correspondence.

WILLIAM G. NICHOLS
General Manufacturing Agent for the China Mfg. Co., The
Webster Mfg. Co., and the Pembroke Mills.
Author of "Cost Finding" and "Cotton Mills."

C. H. HUNTER
Advertising Manager, Elliott-Fisher Co.

FRANK C. MORSE
Filing Expert.
Secretary, Browne-Morse Co.

H. E. K'BERG
Expert on Loose-Leaf Systems.
Formerly Manager, Business Systems Department, Burroughs
Adding Machine Co.

EDWARD B. WAITE

Head, Instruction Department, American School of
Correspondence.

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 modern business methods.
Grateful acknowledgment is made also of the valuable service rendered
by the many manufacturers and specialists in office and factory methods,
whose coöperation 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
industrial 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 Organization and Accounting.
Author of "The Complete Cost Keeper," and "Factory Manager
and Accountant."

JOHN F. J. MULHALL, P. A.
Specialist in Corporation Accounts.

Author of "Quasi Public Corporation Accounting and
Management."

SHERWIN CODY
Advertising and Sales Specialist.
Author of "How to Do Business by Letter," and "Art of Writing
and Speaking the English Language."

FREDERICK TIPSON, C. P. A.
Author of "Theory of Accounts."

CHARLES BUXTON GOING
Managing Editor of The Engineering Magazine.
Associate in Mechanical Engineering, Columbia University.
Corresponding Member, Canadian Mining Institute.

F. E. WEBNER
Public Accountant.
Specialist in Factory Accounting.
Contributor to The Engineering Press.

AMOS K. FISKE
Associate Editor of the New York Journal of Commerce.
Author of "The Modern Bank."

JOSEPH FRENCH JOHNSON
Dean of the New York University School of Commerce,
Accounts, and Finance.
Editor, The Journal of Accountancy.
Author of "Money, Exchange, and Banking."

M. U. OVERLAND
Of the New York Bar.
Author of "Classified Corporation Laws of All the States."

THOMAS CONYNGTON
Of the New York Bar.
Author of "Corporate Management," "Corporate Organization,"
"The Modern Corporation," and "Partnership Relations."

THEOPHILUS PARSONS, LL. D.
Author of "The Laws of Business."

E. ST. ELMO LEWIS
Advertising Manager, Burroughs Adding 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 Accounting at the University of Birmingham.
Author of "Advanced Accounting," "Auditing," "Bookkeeping for
Company Secretary," etc.

FRANCIS W. PIXLEY
Author of "Auditors, Their Duties and Responsibilities," and
"Accountancy."

CHARLES U. CARPENTER
General Manager, The Herring-Hall-Marvin Safe Co.
Formerly General Manager, National Cash Register Co.
Author of "Profit Making Management."

C. E. KNOEPPEL

Specialist in Cost Analysis and Factory Betterment.
Author of "Systematic Foundry Operation and Foundry Costing,"
"Maximum Production through Organization and
Supervision," and other papers.

HARRINGTON EMERSON, M. A.
Consulting Engineer.
Director of Organization and Betterment Work on the Santa Fe
System.
Originator of the Emerson Efficiency System.
Author of "Efficiency as a Basis for Operation and Wages."

ELMER H. BEACH
Specialist in Accounting Methods.
Editor, Beach's Magazine of Business.
Founder of The Bookkeeper.
Editor of The American Business 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 Organization.
Formerly Comptroller, Sears, Roebuck & Co.
Author of "Organizing a Factory," and "Woods' Reports."

CHARLES E. SPRAGUE, C. P. A.
President of the Union Dime Savings Bank, New York.

Author of "The Accountancy of Investment," "Extended Bond
Tables," and "Problems 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."

THE ADVERTISING DEPARTMENT WHERE ARE ORIGINATED
THE PUBLICITY CAMPAIGNS OF THE SHERWIN-WILLIAMS
CO., CLEVELAND, OHIO

Foreword

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.

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.

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

Editors and writers have been selected because of their familiarity with, and
experience in handling various subjects pertaining to Commerce,
Accountancy, and Business Administration. Writers with practical business

experience have received preference over those with theoretical training;
practicability has been considered of greater importance than literary
excellence.

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 particularly apparent in those sections which
treat of accounting and methods of management for Department Stores,
Contractors, Publishers and Printers, Insurance, and Real Estate. The value
of this information will be recognized by every student of business.

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.

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

Table of Contents

(For professional standing of authors, see list of Authors and Collaborators at front of volume.)

VOLUME I
Administrative and Industrial
Organization By James B. Griffith Page 11
The Business Engineer—Preliminary Investigation—Charting the Organization—
Organization of Business—Organization of Mercantile Business—Universal
Application of Organization Principles—Departmental Authorities—The General
Manager—Comptroller—Sales Division—Superintendent—Purchasing Agent—
Employment Department—Charting Salary and Wage Distribution—Expense
Distribution Chart—Arrangement of Plant—Factory Plans—Office Plans—The
Committee System—The Suggestion Plan—Order 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
Mail-Order Branch—Follow-up Systems—Personal Salesmanship Division—
Routing Salesmen—Sales Records

The Credit Organization By James B. Griffith Page 127
The Credit Man—Information Required—Financial Statements—Analysis of
Statements—Sources of Information—Local Correspondents—Credit Agencies—
Recording Credit Information—Collections—Monthly Statements—Installment
Collections—Collections by Attorneys

The Shipping Department By James B. Griffith Page 183

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

Correspondence and Filing By James B. Griffith Page 231
Opening and Distributing Mail—Correspondence Short Cuts—Talking Machines for
Dictation—Copying Correspondence—Stenographic Division—Records of Work—
Filing Division—Filing Systems—Methods of Indexing—Guiding, Transferring, 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

AN EXECUTIVE OFFICE AT THE PLANT OF CORBIN CABINET
LOCK COMPANY, NEW BRITAIN, CONN.

ADMINISTRATIVE AND INDUSTRIAL
ORGANIZATION

1. With little fear of contradiction, it may be stated that every
commercial enterprise is conducted with the one purpose in view of making
money for its owners. Naturally, the owners desire the 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 as much money as possible for the
owners of the business.
The largest possible volume of profitable business must be transacted;
the business must be conducted with economy; the returns from each dollar
expended must be as large as possible. This very condition is one of the
beneficial results of modern business 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.
That the efforts of the individual may be productive of best results, he
must have the coöperation of other individuals engaged in the same
enterprise. The enterprise must be properly organized.
Realizing the absolute necessity of harmoniously working
organizations, 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 enterprises 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 his
building the modern business man calls in a business engineer or
systematizer, to perfect his 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 is the
work of these men that is placing the profession on a high plane.
The successful business engineer must have the ability to quickly grasp
the plan of operation of any business with which his 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 business. His work is to organize
and systematize every step of the work in every department.
3. The Preliminary Investigation. The first step in the organization or
systematizing of a business is to determine its natural divisions. What is the
nature of the business, and what are its distinguishing characteristics? Be it
a manufacturing, jobbing, wholesale, retail, or professional concern, there is
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 coöperating to carry out the purposes
of the enterprise.
The highest type of organization is found among the great industrial
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 conclusion; in a smaller enterprise
the same principles apply, but modification of details is 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 is surrounded by his
staff, with whom he consults on questions of importance. When any
important move is decided upon, the members of the staff—themselves in
command of divisions of the army—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 organization of the army along certain
lines. The question was not one of creating offices the duties of which
would conform to the capabilities of certain men; the offices were first
created, and then competent men were selected to fill them.
4. Individuals Disregarded. In creating responsibilities in a business
organization, the individual should be disregarded, just as he is in the army.
Unfortunately, the importance of this question is not always recognized.
Too frequently the best interests of the organization as a whole are
subserved to the interests of individuals. Business enterprises are organized
and offices divided among the principal owners without seriously
considering their respective abilities. This is wrong in principle, and works
to the detriment of the business. It is one of the important problems to be
solved in organization. Jones, who is a natural born financier, prefers to
manage the selling end of the business, while Brown, a salesman of ability,
is made treasurer. Neither is in the right place; change them about, and an
efficient team would result.
Before we can perfect an organization, we must know what the business
is. We must ascertain for what it is organized; what class of business is
carried on; manufacturing, mining, jobbing, wholesale, retail, or a
combination of two or more classes; whether conducted entirely in one
plant or through branches; the method of marketing the goods; by traveling
salesmen, agencies, or mail; the facilities for obtaining supplies, raw
materials, or manufactured goods. When we understand the nature of the
business, we are in a position to work out an impersonal, systematic
organization.
Referring again to the necessity of a disregard of individuals in
perfecting an organization, it is not the province of the business engineer to

determine the qualifications of the men. He must be governed solely by the
requirements of the business. When his work is completed, it is for the
management to decide who is best fitted to assume the duties and carry out
the purposes of the departments and positions created.
We refer, for convenience, to the business engineer or systematizer; the
principle is the same whether the one doing the work is acting in a
professional capacity, perfecting the organization of his employer's
business, or even solving the problems of his own establishment.

OBJECTS AND CHARACTERISTICS OF ORGANIZATION

5. To reduce the subject to concrete form, the objects of business
organization may be defined as follows:
(A) To unite the individuals who are to conduct an enterprise into a body which will
work systematically to a common end.
(B) To bring together or group the component parts of the body with respect to their
specific relations and duties.
(C) To elect officers and appoint committees and authorities with clearly defined duties
and responsibilities.

These definitions all lead to a common center, that is, coöperation.
Without co-operation the success of any organization is very questionable,
if not impossible. With it—a body of men all working together for a
common end—almost any apparent obstacle will be surmounted. No matter
how large an organization may be, how many or wide its ramifications, if
the spirit of co-operation prevails, it will move as one irresistible body.
And, regardless of the size or nature of a business enterprise, the
organization, as here used, resolves itself into certain easily distinguished
components, as follows:
First: The owners, represented in a corporation by the stockholders or investing public; in a
partnership, by the partners; in an individual business, by the proprietor.
Second: The executive or managerial division.
Third: The commercial or active business division.
Fourth: The manufacturing or productive division.

These components lend themselves naturally to certain specific
subdivisions; natural groups are formed to insure efficient management;
certain authorities are delegated to effect economical operation.
The stockholders (owners) first elect from among their number, a board
of directors. This is the initial step toward perfecting a business
organization. The directors represent the stockholders, and the interest of
the stockholder, as such, becomes that of an investor only. His interest in
the operation of the business is to be looked after by the directors, whom
he, or a majority, has elected.
From this board of directors is built the framework of the executive or
managerial division. The first act of the directors is to meet and elect the
usual executive officers: President, Vice-President, Secretary, and
Treasurer. In modern organizations, it is customary to also elect or appoint
an executive committee or board of managers.
This committee consists of three or more members, usually selected
from the officers, to which may be added one or more directors who are not
officers.
To this committee, the board of directors delegates its authority in the
actual conduct of the business. This plan of electing an executive committee
is particularly desirable when the board is a large one, as it concentrates
authority and results in more prompt action on matters demanding
immediate attention. A large body is unwieldy, a quorum cannot always be
brought together on short notice, but a working majority of a small
committee can be convened promptly.
The executive committee takes charge of both the commercial and
manufacturing divisions. To still further concentrate authority, it is
customary to appoint a General Manager who has direct supervision over
the immediate operation of both commercial and manufacturing divisions.
He is appointed sometimes by the executive committee, but more often by
the board of directors.
The general manager, while occupying a position of chief acting
executive, acts with the executive committee and is directly responsible to
the board of directors.
The commercial division of a business naturally subdivides into two
sections: Accounting, and Advertising and Sales. The first thought of the
student might be that accounting is given a position of too great importance,

but in the sense here used it means the records of the business of every
nature, the accounts, the gathering and recording of statistics and
information of every character.
The manufacturing division divides into Purchasing and Stores, and
Production. In a measure, the purchasing of goods is a function of the
commercial division, but the purchasing of raw material and supplies is
properly under the supervision of the manufacturing division.

CHARTING THE ORGANIZATION

6. What may be termed the anatomy of an industrial body, is most
graphically shown by means of charts. Free use of charts will be made
throughout these papers. With properly designed charts the logical divisions
of authority or expense can be clearly shown.
Fig. 1 furnishes a graphic illustration of the principal components of the
organization under discussion. In the first group we find the owners
(stockholders) whose line of communication with the business is through
the board of directors. Subordinate to the board of directors are its own
executive officers, the executive committee, and general manager.
The connecting lines show the executive committee to be in direct
communication with the board of directors, while the general manager is in
direct communication with both the executive committee and the board of
directors.
Under the general manager are the commercial and manufacturing
divisions, over both of which he has direct supervision.
7. Working Authorities in Large Enterprises. The next logical step in
the development of our organization is a study of the working authorities
and responsibilities of the different officers and their assistants. We have
seen that the administrative authority is for practical purposes centered in
the general manager. It is not to be supposed, however, that in a large
industrial organization he will personally supervise all of the details of
operation of the commercial and manufacturing divisions. His time must
not be taken up with details which can be as well handled by subordinates.
He should be free to devote his time to questions of policy, the providing of
finances, the consideration of new fields of endeavor, and the making of the

more important contracts. His immediate assistants will be a Comptroller
and a Superintendent.
The comptroller fills a position identical with that of a business manager
or an assistant manager. His duties are mainly in connection with the
commercial division. It is his business to devise systems of accounts and
systems for recording the activities of every department, and have reports
compiled, in proper form for presentation to the general manager. His is a
statistical department, filling a place between the general manager and the
subordinate departments, and, while not closing the avenues of
communication between these departments and the general manager, it is
here that reports and records of results are concentrated.

Fig. 1. Chart of a Corporate Manufacturing Enterprise

The superintendent is in immediate charge of manufacturing operations
and is responsible for the custody of all property used in manufacturing. His
position does not close the avenue of communication between factory
departments and the general manager.

Fig. 2 illustrates the subdivisions of the commercial and manufacturing
branches. This chart does not go back of the administrative section of the
organization, as the stockholders have no direct connection with the actual
operation of the business.
We find the subdivisions of the commercial branch in charge of the
following: Chief Accountant, with direct supervision over all bookkeeping
and accounting records; Chief Stenographer, in charge of all stenographic
and circularizing work; Advertising and Sales Managers, in charge of
publicity and selling campaigns; Credit man, in charge of credits and
collections.
The manufacturing department includes the Purchasing Agent, who
purchases all manufacturing stores, materials, and supplies; Chief Stores
clerk, in charge of the storage of all materials and supplies; Chief Engineer,
who designs new products, new machinery for the manufacture of that
product, and conducts all experimental work; Chief Draftsman, who
superintends the work of the drafting rooms; Assistant Superintendent, in
charge of maintenance of power and heating plants, internal transportation
facilities, machinery and buildings; Foremen, in charge of shops employed
in production work.
As shown by the lines of communication, represented by the heavy
lines, the authorities of the comptroller and superintendent extend to every
phase of the work of the commercial and manufacturing branches. The
comptroller is in communication with the manufacturing branch since the
making of schedules, time keeping, and the assembling of cost statistics are
all centered in his office. He does not, however, assume any of the duties of
the superintendent, and while their work is closely related, the two officers
conduct their departments without conflict of authorities. It must be
remembered that they are equally responsible to the general manager, which
of itself requires cordial coöperation.

Fig. 2. A Chart of Working Authorities in a Manufacturing Business

8. Organization Applied to Small Business. We have referred only to
large manufacturing enterprises divided into many departments,
necessitating a division of executive duties among a large number of minor
executives. While, in the organization of a smaller enterprise, not all of
these department heads will be required, the principles of organization, so
far as division of authority is concerned, remain the same.

In the small corporation, we find the same board of directors elected by
the stockholders. This board may be small, consisting of no more than five,
or even three members, but the same executive officers are elected. One
man may hold more than one office, as secretary and treasurer, or vice-
president and treasurer, yet each office is filled. If the board is small the
executive committee may be omitted, in which case the board itself
performs the duties of the executive committee. There is the same general
manager; at least the duties exist even though there be no such office in
name. The president may act as the executive head, and be recognized as
the actual manager of the business, but in so doing he is acting in an
entirely different capacity than that pertaining to the office of president.
Extending the illustration to a small manufacturing enterprise, the
general manager may assume all of the duties of the comptroller in the
operation of the commercial branch; he may be his own sales manager or
credit man; or in the manufacturing branch, he may act as superintendent.
The treasurer of the corporation may be the accountant and also act as
credit man. The advertising and sales managers may be one, or the
superintendent may be the purchasing agent as well.
The point intended to be emphasized is that there are certain duties to be
performed, certain responsibilities to be met, certain authorities to be
assumed even though it be but a one-man business. And in this is illustrated
the importance of creating any business organization without regard to
individuals.
9. Organization of Mercantile Business. Leaving for a time the
organization of a manufacturing enterprise, we will consider the application
of the principles of organization to a trading business. In such a business,
the administrative section remains the same: stockholders, directors,
officers, executive committee, general manager. At this point the business
naturally divides into the departments of buying and selling.

Fig. 3. A Chart of a Corporate Trading Enterprise

The buying department is subdivided into purchasing, stock, and
shipping. The subdivisions of the sales department are sales and
accounting. Our chart of the organization shown in Fig. 3, follows the same
lines as Fig. 1, the only change being in the main divisions.
Advancing the next step we find the executive officers in charge of the
several divisions of the work, corresponding very closely to those shown in

Fig. 2. The buying department is in charge of the Purchasing Agent, Chief
Stock Clerk, and Shipping Clerk, or Traffic Manager, as he is sometimes
known.
The selling department is in charge of the Chief Accountant, Advertising
Manager, Sales Manager, and Credit Man. This is shown clearly in the
chart, Fig. 4.
Lest an erroneous impression be gained, it may be well to state at this
point that the advertising and sales managers must work in perfect harmony.
Indeed, advertising is one branch of the sales department and the success of
one is so closely interwoven with the other that no important step should be
taken by either independently.
In many large concerns, the sales manager is the real advertising
manager, even though another may supervise the actual routine of preparing
advertising matter. A competent advertising man makes a successful sales
manager, and every sales manager should have advertising training, for the
purpose of advertising is to create a demand and assist in making sales.
Referring again to Fig. 4, it is seen that both buying and selling
departments are under the control of the general manager, from whom
direct lines of communication lead to every division of these departments.
Direct communication is also maintained between the two departments. The
accounting division keeps the accounts of the buying department; the sales
division must be in communication with the purchasing and stock division
in respect to maintaining the stock to be sold, and with the shipping division
in respect to the filling of orders.
10. Universal Application of Organization Principles. When we go
into all of the ramifications of business we find many establishments where
minor variations of our plan of organization appear necessary, but in the
final analysis, the fundamentals prove to be the same.

Fig. 4. Chart of Working Authorities in a Trading Business

Reduced to its simplest form, we will suppose the business under
consideration to be a small retail establishment conducted by two partners.
No thought has been given to the principles of organization, yet they are
applied in that little store just as surely as in the immense manufacturing
plant.

Ask any commercial salesman calling on the firm who is the man to see
regarding the introduction of a new line of goods, and he will probably
answer, "Mr. Jones is the man to see; he does the buying." With no thought
of organization, the owners of this little business realize that it is best for
one man to do the buying. Perhaps the other may inspect samples, his
opinion may be asked, he may even place an occasional order, but it is not
the rule of the establishment. By placing the buying in the hands of one
partner, confusion is avoided. He can keep in closer touch with prices, and
the results are far more satisfactory.
Advancing to the larger retail business of the department store, whether
the general store of the small town or the big store of the city, we find a
different problem. Here the buying is further specialized, for one man buys
for one, or at most three or four departments. The same men act as sales
managers and buyers in the departments for which they are responsible. The
manager of a department in a big store is selected as much for his ability as
a buyer as for his salesmanship. But we do not get away from fundamental
principles, for in buying and selling the manager is performing two entirely
separate and distinct functions.
No matter what the business, we find the same two fundamental
functions, that is, buying and selling. As illustrations of the application of
this principle to different businesses we give the following:
Publishers of newspapers and other periodicals buy editorial work, manuscript,
engraving, paper, printing; sell subscriptions, advertising space.
Publishers of books buy editorial work, manuscript, engraving, paper, printing; sell
books.
Railroad companies buy equipment, rails, lumber, coal, supplies, labor; sell freight and
passenger transportation.
Schools and colleges buy textbooks, supplies, services of instructors; sell instruction.
Professional men buy their instruction, books, instruments, office furnishings, clerical
assistance; sell their services.

In every undertaking, revenues are produced through salesmanship.
Every business and every profession has something to sell, and its financial
success depends largely upon the quality of salesmanship employed.
Whether it be a professional man with nothing but his services to sell and
no other means of advertising than through work well done, or a gigantic
commercial organization with its extensive advertising campaign and many

salesmen, a selling organization exists in some form. And before anything
can be sold it must be procured, or bought.
On this question of the universal application of the principles of
organization, we quote from a valuable contribution in The Engineering
Magazine, by C. E. Knoeppel:
"While business as it is now conducted is not as simple as it was in the barter days, it
must not be inferred that this segregation of authority is synonymous with complexity, for
its very purpose has been to simplify, and that is what it has accomplished. It is only where
this segregation has been the result of lack of thought and proper attention, or other like
causes, that we find a complex and unsatisfactory condition of affairs. In fact, there is all
about us sufficient evidence that many commercial enterprises are being conducted along
lines that, as far as evolutional development is concerned, are several stages behind the
times.
"Let us suppose a case, which will apply in a greater or less degree to the majority. In
the earlier development, we will say that the founder of the business was able, on account
of its small size, to make what sketches he needed, solicit orders, see that they were filled,
perhaps take a hand at the making if occasion required, see to the shipments, and attend to
the collections and the keeping of his few accounts. He finds that the business grows, and
eventually places a man in charge of certain branches while he looks after others. The
accounts eventually require more attention than he can give them so he engages a
bookkeeper in order that he may be relieved of the work. He finds that the quantity of
materials received and shipped amount to enough to warrant a receiving clerk as well as a
shipping clerk, and, to handle this material from its inception to shipment he conceives the
idea of placing a man in charge as stock clerk. He then adds a purchasing agent, in order
that he may be relieved of the detail and that purchases may be made most economically; a
man is placed in charge of the orders; foremen are placed in charge of certain men in the
shops; the details connected with making plans, drawings, estimates, etc., are taken over by
a practical man; his manager is given a man to look after the shops or engineering branch;
while the commercial branch with its many details is placed in the hands of another. As the
evolution continues, the selling branch is assumed by one man; cost details are looked after
by another; a chief inspector is added in order that all work may be shipped according to
specifications; the engineer, who before had been a sort of jack of all trades, is placed in
charge of certain work, while an electrician is engaged to look after this particular work;
and so this segregation continues as the development continues.
"Perhaps it is not to be wondered at that the founder, in looking backward, is inclined to
pat himself on the back when, in a reminiscent mood, he considers what he terms
'remarkable development.' He considers that he has been wonderfully successful in
building up a business which at the beginning was so small as to admit of his supervising
every detail, while today he employs a dozen men to do the work he once did. There is no
getting away from the fact that it is this same feeling of self-satisfaction that is responsible
for a large number of faulty organizations, for if we should tell this manufacturer that his
business is far from being as successful as it is possible for it to be ... he would vigorously
resent any such accusation; but the fact remains that it is not the success it should be, for
the very reason that the development has been allowed practically to take care of itself.
New men were added, new offices created, only when absolutely necessary, each
newcomer being given a general idea of what was expected of him, and not knowing, not
thinking, or perhaps not having the time to give more than passing attention to the matter,

the proprietor did not consider the fact that his business was a unit, with each worker a
part, having a distinct relation with every other worker. Hence, as the efficiency of any
organization is directly in proportion to the care with which these relations are considered
and treated, his organization naturally fails to attain that degree of efficiency obtainable,
and for this condition he, and he only is responsible."

11. Departmental Authorities. The next logical step in the
development of our organization is an analysis of the departmental
organizations. We have seen how the operations of the business are divided
among several divisions or departments. The reason for such divisions is
apparent. In a large business no one man can personally supervise all of its
activities. Each division is engaged in certain activities that demand the
immediate supervision of specialists. One man is a specialist in advertising,
another in sales plans, others in purchasing, specific manufacturing
operations, or the design and maintenance of appliances intended to
improve the product or to reduce costs.
To reach the highest state of efficiency in every department of the
business, these specialists must be employed, which is another reason for
organizing a business along the line of its activities, and without respect to
individuals.
Before we can decide what manner of man should be placed at the head
of this or that department, we must study the duties of the position, the
responsibilities involved, the authorities to be assumed. To present this
problem in graphic form, the chart (Fig. 5) is designed. While the
arrangement is not inconsistent with Fig. 2, this chart of the same class of
organization is laid out along the lines of authority. It shows both the
authority of the department head and the necessary activities of his division.
We have selected the organization of a large industrial establishment for
the very reason that many divisions and departments are necessary. The
smaller organization will have a less number of divisions, but it is much
easier to condense than to expand a given plan. Any man who understands
the requirements of a large organization can readily adapt those ideas to a
smaller establishment. He can apply the plan so far as it can be used to
advantage. Some variations of the application of the plan will be pointed
out in our departmental analysis.

Fig. 5. A Chart Which Shows the Duties, Responsibilities and
Authorities to be Assumed by Each Department Head

It is perhaps unnecessary to say that while the authorities of some of the
department heads have been referred to in preceding pages, this analysis is
intended to exhibit these authorities in greater detail.
12. General Manager. As a rule the general manager has general
supervision over the commercial and manufacturing branches. In
conjunction with the president and executive committee, he formulates all
policies to be followed in purchasing, manufacturing, sales, and advertising,
establishing credits, and accounting methods. He is responsible to the
executive committee and board of directors for procuring materials, their
manufacture and sale, and the maintenance of buildings and machinery.
It is his duty to keep in touch with the operations of every department
and to post himself on the general efficiency of all classes of workmen.
Through reports he will keep informed in regard to the results of the
operations of every department.

While in direct communication with all department and division heads,
he will have for his immediate assistants, a comptroller and a
superintendent. It is from the comptroller that he will receive statistics and
reports of the activities of the business in all its branches, while to the
superintendent he delegates his authority in the actual operation of the
manufacturing branch.
13. Comptroller. "A controller or manager" is a standard definition of
the term comptroller. In the organization under consideration, he is a
controller of the business by virtue of the fact that he is responsible for the
accounting and recording of all activities of the business.
He occupies the position of auditor and is the real systematizer of the
business. He creates all systems of commercial accounting, cost accounting,
departmental records, time keeping, and pay rolls, reports of superintendent,
perpetual inventory, sales statistics, and, in fact, all records of the business.
He prepares all balance sheets, comparative statements, trading,
manufacturing, and profit and loss statements, and reports to the general
manager or executive committee, or both, on the condition of finances,
materials, and finished goods.
Since the formation of important policies may hinge on the reports and
statistics of his department, he occupies an office next in importance to the
general manager. The training and experience gained in his office place him
in direct line for promotion to the office of general manager.
His authority is absolute over the accounting and stenographic
departments, while his authority extends to other departments only in
respect to their record systems. In the accounting department, his direct
assistant is the chief accountant; and in the stenographic, the chief
stenographer.
In a smaller organization the comptroller may not require the services of
a chief accountant, in which case he performs the duties of the position. Or
the treasurer may occupy the office of comptroller.
Chief Accountant. The chief accountant is in immediate charge of the
commercial and factory accounting. His assistants are cashier, bookkeepers,
factory accountant, cost clerks, time clerks.
This department accounts for the receipt and disbursement of all
moneys and properties, figures costs and pay rolls, and prepares statistics

necessary for the use of the comptroller in making up his reports and
statements.
It is evident from this that the comptroller is in a sense the custodian of
all property belonging to the business, since he must, through his
accounting department, account for its receipt and disbursement. This
explains why the comptroller prescribes all systems for the care and
recording of stores, supplies, and finished product.
Chief Stenographer. The chief stenographer is at the head of the
correspondence department, with authority over all stenographers, typists,
filing and mailing clerks.
Stenographers are supplied to all divisions by this department. This plan
of having all stenographers in one department subject to the call of those
having need of their services is now adopted by most large concerns, except
in a few cases where stenographers act as private secretaries to the officers.
The plan is an economical one, for only the number actually required to
handle the work of the establishment need be employed. Under the old plan
of employing one or more stenographers in each department, it is common
to find them idle in one department while in another the work is behind.
Another strong point in favor of the more modern plan is that each
stenographer becomes familiar with the dictation of all departments, and no
stenographer has an opportunity to become familiar with the secrets of the
business.
In the stenographic department, the work of addressing and mailing
form letters, catalogues, and circulars is done.
All correspondence is filed by this department.
Records of office supplies, stationery and printed matter are maintained
in this department.
The chief stenographer has charge of and accounts for all postage, but
secures postage by requisition from the cashier or accountant.
14. Sales Division. By far the most important division of the entire
commercial branch is the sales division. This division is responsible for
finding a market for the output of the business.
It must create a demand for the product through advertising, open new
fields, study the demands of the trade and the products of competitors,
ascertain as far as may be the possibilities of marketing new products, and,
above all, sell goods at a profit.

The selling division of some of the largest industrial establishments is in
sole charge of a general sales manager, who has authority over the
advertising as well as selling. In our chart we have divided responsibility
for the conduct of this division between sales and advertising managers,
placing the advertising manager on an equality with, rather than subordinate
to, the sales manager. This combination will produce the most satisfactory
results for most enterprises.
Advertising Manager. The advertising manager has charge of the
preparation of all advertising literature, catalogues, copy and designs for all
periodical advertising and usually the placing of all contracts for printing
and engraving.
He has authority over all artists and copy writers employed regularly
and for special work.
With the sales manager and general manager, he makes up
appropriations for periodical advertising and places contracts when these
appropriations have been approved.
He confers with the sales manager on all questions pertaining to his
work, no printed matter for the use of the selling division being ordered
until approved by the sales manager. Thus, coöperation of the sort that
makes for success is assured.
Sales Manager. The sales manager has authority over the sale of goods
and filling of orders, and his department is divided into selling and filling.
The selling department is further subdivided into salesmen and mail orders.
One subdivision represents that portion of the sales made by personal
salesmen. The active work is carried on by salesmen who call on the trade
under the orders of the sales manager.
The sales manager hires all salesmen, prescribes their territories and
routes, and supervises their expense accounts.
He compiles reports and statistics of their work for presentation to the
comptroller or general manager, and keeps the records prescribed for this
department.
The mail order division is engaged in the sale of goods by the use of
letters, circulars, and catalogues. Lists of customers and prospective
customers are maintained, and sales follow-up systems are operated under
the immediate supervision of this division.

In the filling department, the chief order clerk is in charge of entering
sales orders, making shipping orders and manufacturing orders. He
maintains a record of sales and manufacturing orders so that he can keep
informed on manufacturing or stock requirements. All invoicing of
shipments is done in this department.
The shipping clerk maintains records of rates of transportation by rail,
water, or truck, and keeps posted on routes and facilities. He supervises the
packing of all goods, and secures proper receipts from transportation lines.
Credit Man. The position of the credit man is an important one in any
establishment.
He collects and records information about the financial responsibility
and credit standing of customers. When necessary, he makes special
investigations, and on the basis of his information extends or limits credit.
Every order from a new customer must be approved by the credit man
before it can be accepted.
When accounts have been opened, it is the duty of the credit man to
collect them when due, or, if not paid promptly, to use every means to
secure a settlement. His work brings him in contact with both the sales and
accounting departments.
The credit man is assisted by such clerks and collectors as may be
necessary for the conduct of his department.
15. Superintendent. The superintendent is given general supervision
over the manufacturing branch of the business. His authority extends
directly to the engineering and drafting departments, the work of the
assistant superintendent, foreman of tool room, and shop foremen. His
relations with the purchasing department are advisory rather than
managerial.
His immediate assistants are the chief engineer, assistant superintendent,
and shop foremen.
It is his duty to execute orders for the manufacture of goods, operate the
plant in the most economical manner, study and introduce processes and
methods that tend to reduce manufacturing costs, and keep informed
generally on the efficiency of men, machinery, appliances, and materials in
all manufacturing departments.
With the assistance of the purchasing agent he provides all materials and
supplies required in the manufacture of goods or for the operation of the

plant.
Chief Engineer. The chief engineer designs all special machinery and
appliances to be manufactured for use in the plant, designs and plans all
new products for which there appears to be a demand, and personally
supervises the experimental department. The installation of new equipment
is also done under his supervision.
His authority extends to the drafting department which is in charge of a
chief draftsman. This department draws all designs, plans of new machinery
or product, and all plans not classed as architectural.
In a plant where many special tools are made, the chief engineer also
has authority over the tool room.
Assistant Superintendent. The assistant superintendent is responsible for
the maintenance in efficient condition of all power, pumping, heating, and
lighting plants, internal transportation facilities, and the repair of buildings
and equipment.
Except in the larger plants, he has authority over the tool room which is
placed in charge of a tool room foreman. This department is responsible for
the custody of all tools, repairs to tools, and their manufacture. Tools are
issued only on requisition and perpetual inventories are maintained
according to systems prescribed.
In some very large industrial plants, like a steel plant, there are several
assistant superintendents, each having specific duties. There may be a
superintendent of power, superintendent of transportation, superintendent of
machinery, superintendent of buildings, superintendent of stores, etc. In a
small plant, the superintendent will personally perform the duties here
assigned to the assistant superintendent.
Shop Foremen. As the name indicates, the shop foremen are in charge of
the various shops or manufacturing departments. It is the duty of the shop
foreman to lay out the work called for by the orders of the superintendent,
and to assign the work to his men. He will make provision for the prompt
execution of orders by making requisition for the number of men that can
be profitably employed in his department. It is his duty to keep all of his
men supplied with work.
16. Purchasing Agent. The purchasing agent has charge of the purchase
of all materials for the manufacturing branch, and in some cases for the
commercial branch. In a purely trading concern, his duties would be in

connection with the commercial or selling branch, but in a large industrial
enterprise, the purchase of office supplies, advertising literature, etc., is
usually under the supervision of the comptroller, chief accountant or
advertising manager.
He procures catalogues, price lists, names of manufacturers and dealers,
and keeps generally informed as to sources of supply. He obtains samples
which are submitted to tests by the engineering department or otherwise.
With the superintendent and general manager, he makes schedules of
materials, secures bids, and places orders. Records of orders and all
information needed in his office are kept according to the systems
prescribed by the comptroller.
He has full authority over the store rooms, in which he is assisted by the
chief stores clerk. This department receives all goods, checks receipts with
orders or invoices, stores the goods, delivers them on properly executed
requisitions, and maintains perpetual inventory records as prescribed.

EMPLOYMENT DEPARTMENT

17. A department, or rather a sub-department, not shown on the chart
but found in some establishments, is the employment department. This
department is very properly in immediate charge of the superintendent, and,
in the average manufacturing plant, he will hire all men. In a plant
employing a great number of men, it is impossible for the superintendent to
personally take charge of this work, and an employment agent is placed in
charge.
The employment agent keeps records of all employes and applicants
and hires all men needed by the different foremen.

GENERAL MODIFICATIONS

18. The organization that we have described is a representative
illustration of the application of the principles to a large enterprise,
necessitating a considerable number of subdivisions. But even here the
charts show only what may be termed the principal divisions; the charts

might be extended in greater detail. The explanation might include the exact
duties of every employe in each department, but, as our purpose is to
present general principles in sufficient detail to serve as a guide,
explanations of these minute details have been omitted.
There are, however, modifications to be found in certain cases which
may be made clear by further suggestions. We have referred to the
comptroller, and while in many concerns no such office is recognized, at
least by that title, some man in every business of any magnitude fills an
analogous position.
Most frequently it is the auditor, or if the office of auditor has not been
created, it may be the treasurer. Again, the duties or a greater part of them,
may fall on the office manager or the chief accountant. Even in a small
partnership where one of the partners is the bookkeeper, the duties exist,
and are performed by that partner who keeps the accounts. It must be
remembered that the comptroller's office is primarily statistical. It matters
not whether the statistical operations involve the keeping of a simple set of
books or require large commercial and factory accounting forces with a
third division to compile statistics from their records, every business
demands certain statistical work. Neither is it important whether the man in
charge of this work be called comptroller, auditor, accountant or office
manager, but we have used the title of comptroller as more exactly
descriptive of the functions of the office when carried to its legitimate
conclusion in a large business.
While, in most manufacturing industries, the superintendent and
purchasing agent have full authority in the making of purchases for the
manufacturing branch, it has been found advisable in some cases to give the
comptroller authority over the purchasing department. A reason for this is
the importance of reducing the investment in raw material, supplies, etc., to
the lowest point consistent with the actual requirements of the business.
Much needless capital is tied up in raw material, when it might be at least
earning bank interest. His chief concern being to provide a liberal supply of
raw materials, the superintendent is very liable to overstep the bounds in the
direction of too liberal purchases.
A still different condition is found in a large merchandising
establishment. Here practically every department manager is his own buyer
and while he must be regarded as the best judge of what to buy, it becomes

necessary to supervise his purchases in respect to quantities. The
comptroller should, therefore, have authority over the amounts invested by
the several buyers. This is usually controlled by giving the buyer a stated
appropriation at the beginning of each season, the amount being determined
by a study of present conditions and records of past performance. The
making of an appropriation does not operate against special appropriations
to be used in taking advantage of specially advantageous market conditions,
or to increase stocks of fast selling lines.

DUTIES CLEARLY DEFINED

19. One of the first requirements in the development of a successful
organization is that the duties of every employe be clearly defined, and that
each employe be fully informed as to his duties. Nothing tends to produce
greater friction than an overlapping of duties and authorities.
In a manufacturing plant, when a foreman is placed in charge of a shop
he should be instructed as to his authority, responsibilities, and exact duties.
When these authorities have once been established, no other man of equal
or lower grade in the organization should be permitted to interfere in any
way, nor should the foreman be permitted to overstep his authority.
Those occupying positions to which greater authorities are attached
should also be careful to not presume upon their authority by attempting to
direct work properly under control of the foreman. The superintendent or
manager who, in passing through a plant, discovers a workman in the act of
violating an established rule, or doing something dangerous to the lives of
himself and fellow employes, or performing work in the wrong way, is
justified in at once bringing the matter to the notice of that workman; but he
should report the occurrence to the foreman at the first opportunity.
On the contrary, if the manager or superintendent wishes to make a
change in policy involving a departure from the established customs of the
shop, or if he requires the services of a workman even temporarily in
another department, he should first take up the matter with the shop
foreman.
The same policy in general should be observed throughout the
organization. The person placed at the head of a department or division of

the work should have full authority and be held responsible for the work of
all employes in that department. Complaints of inefficiency of an individual
employe should be made to the department head. If the purchasing agent,
for instance, finds the work of a certain stenographer unsatisfactory, his
complaint should be made to the chief stenographer.
20. Duties of Individual Workmen. The duties of the individual
workman in the shop should be as clearly defined as are those of his
foreman. It is the duty of the foreman to lay out the work and to keep the
workman regularly employed on the work assigned to him.
In the operation of the manufacturing branch, the most important
consideration is economy of production. When a workman is kept at one
task he becomes a specialist, increases his production, and reduces costs.
21. Duties of Office Employes. Each clerk in the office should have his
work clearly defined. If specialization is profitable in the shop, it is equally
so in the office. Every man who has been responsible for the management
of an office will agree with us that in no other branch of business is there a
greater tendency to allow work to get behind.
Lack of system is mainly responsible for this state of affairs. While his
duties may be more or less clearly defined, the work of the average office
clerk does not follow any well defined plan. He does the thing that seems
most important, leaving the less important tasks until he "has time." Instead
of surveying the field and laying out a logical, systematic plan, the average
office employe goes about his work in a haphazard sort of way following
the line of least resistance.
The work in every office is largely routine, but the faithful performance
of routine tasks is a necessary accompaniment to those larger tasks, which
in themselves, appear of greater importance. Routine tasks are drudgery—
something that every man seeks to escape. In freeing himself from a state of
drudgery, the department head should be careful lest he place his
subordinates in the same dreaded rut. An office clerk should be given an
opportunity to learn all of the routine of the division in which he is
employed. He will become a more valuable employe; while adding variety,
the performance of more than one task is training him for a more advanced
position.

Fig. 6. A Working Chart for the Guidance of the Employes in One
Department

To properly systematize the routine, the department head should first
study his department to find out what the routine tasks really are—what
work must be done each day or each week. He should then list these tasks
and assign them to certain clerks to be performed at certain stated times.

This can be best presented by means of a chart as shown in Fig. 6. This
chart covers the work of a typical general accounting department. At the
top, the general or routine tasks are listed, grouped under proper divisions.
From each task listed a line is extended to the time when it is to be
performed: daily, the day of the week, day of the month, or the month. The
letters at the end of the lines indicate by whom the tasks are to be
performed, C representing clerks, B, bookkeepers, and A, cashier.
Taking the collection division as an illustration, we will suppose that it
is Monday, the 2nd of the month. The chart shows that on Monday notices
of notes and accounts due are to be mailed. On the second day of the month,
past due accounts must be taken up and disposed of. In addition are the
daily tasks as indicated by the lines extending to the daily line.
When a task is to be performed two or three times in a month, the line is
broken and the letter inserted at each break. Even the time of drawing off a
balance sheet, once every three months, is indicated. A similar chart should
be made to show the routine duties of each department.
Such charts, supplying, as they do, complete working schedules for the
routine of each department, soon reduce the time taken by routine tasks,
which is of no little importance in the conduct of a well regulated
department. They fill a place in office routine analogous to that of the
working plan in the shop. The same idea can be carried out, and will prove
equally valuable, even in an office where the bookkeeper does all of the
work.

CHARTING SALARY AND WAGE DISTRIBUTION

22. We have seen how authorities, responsibilities and even routine
duties are most graphically represented by means of charts—the working
plans of the recording divisions of the business. For purposes of record, the
distribution of the expenditures for salaries and wages of those who make
up our organization is of equal importance to the definition of the
authorities and duties.
If the accounts are to be of value they must be correct, and they cannot
be correct unless every item is charged to the proper account. The value of
correct accounts is recognized. They do more than show what we have

received or the expenditures for a specific purpose during a stated period;
they show when and why an expense is increased or decreased. With such
information to point the way to economies in the future, instead of records
that show us merely the amount of an expense already incurred, accounting
takes its rightful place as one of the most important functions of a business
enterprise.
Probably more businesses have failed owing to the lack of proper
accounting methods than from any one other cause. Many a business has
been rejuvenated—turned from failure to success—by the introduction of a
system of accounts that truthfully portrays its activities. Few business
failures are the result of a failure to buy goods at right prices, or to establish
selling prices that show a profit. The more usual cause is found in leaks in
the expense account. Any method that locates the leaks places us in position
to stop them.
The chief value of accounting records lies in the opportunity afforded
for comparison. The fact that a certain expense amounted to $900.00 last
month furnishes no information of special value; but when compared with
the amount expended for the same purpose two, three and four months ago
(if these expenses are analyzed and compared with production or sales or
whatever factor would affect the amount) the figures assume an important
significance. But if expenditures are erroneously applied, if an amount has
crept into an expense account that does not belong there, the comparison
had better not have been made. Thus is seen the necessity of an absolutely
accurate distribution.
Here the chart—the working plan—is again applied to excellent
advantage. The chart, Fig. 7, applied to salary and wage distribution, shows
to which of the two principal divisions each item should be charged. This is
the important question—to properly apply expenses to the commercial and
manufacturing branches. Subdivisions of such a chart segregating expenses
of each division are easily made.
The application of the items from which lines lead only to the
commercial or manufacturing branch is readily understood. Between the
two are several items from which lines lead to both branches, indicating that
the expense is to be divided. This division should be given close study. Care
must be used that too large a part of any item is not applied to either branch.
The salary of the general manager, and usually the comptroller, will be

equally divided. The duties of the chief accountant, chief stenographer and
stenographers being chiefly in connection with the commercial branch, only
a small portion of their salaries is charged to manufacturing. Shipping clerk
and packers' salaries are charged to either one or the other branch,
depending upon the nature of the enterprise. In a manufacturing enterprise
where all goods are delivered to stock rooms ready for shipment, packing
and shipping is a sales expense and is charged to the commercial branch; in
a plant building heavy machinery that must be shipped from the assembling
floor, this expense is usually charged to manufacturing.

EXPENSE DISTRIBUTION CHART

23. To present a graphic record of expense distribution, the chart, Fig. 8,
is used. This chart separates commercial and manufacturing expense,
showing amounts, while Fig. 7 shows to which branch each item belongs.
This chart subdivides commercial expense into executive, accounting,
office, sales, and credits and collections, showing totals for each and for the
entire commercial branch. Manufacturing expense is subdivided into
executive, accounting, purchasing, engineering, and shops and equipment.
A comparison of these statements from month to month will show just
what every item is and indicate the slightest increase in any class of
expense. Similar charts can be readily prepared for any business,
segregating expenditures of each branch, division, or department.
The distribution will naturally vary in different businesses and, before
this chart can be prepared, the exact distribution must be determined. In this
chart, packing and shipping is included as a commercial expense, while, as
stated previously, in some businesses it would be a manufacturing expense.
All such questions must be decided before the chart is prepared.

Fig. 7. This Shows How Salaries and Wages are Apportioned to the Two
Principal Divisions of a Business

Fig. 8. This Chart of Expense Distribution Shows the Amount of
Executive and Administrative Salaries, and Expense of Every Class,
and Their Correct Apportionment

EFFECT OF PHYSICAL ARRANGEMENT

24. However efficient the personal organization, satisfactory results can
be obtained only under proper environment. It is not merely a question of
pleasant surroundings for employes, but a financial proposition; not a
reform or a fad, but a money-making plan that governs the engineer in
laying out a plant.
This is not to be a discussion of welfare work, about which much has
been published. Our purpose is to point out the business economy of a
proper physical arrangement of office, store or factory as against the
wasteful methods of a systemless grouping of men and machinery.
The question of physical environment is a practical one that has been
solved by many enterprising concerns, and the subject is deserving of
careful study by the student of business organization. While some hard-
headed business men may regard the question of minor importance, it is
significant that the largest and most successful enterprises, financially, are
those in which employes have been supplied with the most comforts,
surrounded with approved safeguards, and aided in their work by the latest
appliances of proved worth.
There is an old axiom to the effect that even a good workman cannot be
expected to do good work with poor tools. It is equally true that he cannot
be expected to do good work in either unsanitary or inconveniently
arranged shops and offices.
25. Factory Plans. The planning of a manufacturing plant is a question
for the engineer, rather than the accountant or business organizer, but a few
general remarks on the subject will not be out of place in this paper.
It may be stated as a fundamental principle that the factory should be
planned to facilitate the movement of raw material from one department to
another. In the ideal factory, storage for raw material will be provided where
it can be economically received and easily procured when needed in the
factory. It should, if possible, be close to the department in which the
material is subjected to the first operation.
The shops themselves should be arranged to facilitate the movement of
partly completed parts from one department or shop to another. To
illustrate, a foundry should be so located that castings can be taken direct to

the machine shop, or smith shop, not through another shop or in a round-
about way.
Likewise, the machine shop, if the process be continuous, should be
located next to the assembling department. Or, if a "parts" storeroom is
maintained, it should be located between the machine shop and assembling
department. Storage for completed goods should be adjacent to the
assembling department, and convenient to the shipping room or platform.
The chart, Fig. 9, shows a typical layout of a manufacturing plant
operating both a foundry and wood shop. Naturally the foundry and wood
shop are as widely separated as possible. Storage of foundry materials is
provided for just outside of the foundry, while lumber is convenient to the
wood shop.
The arrows indicate the movement of raw materials through the shops to
the finished goods storeroom, and from thence to the shipping platform. If
these lines are traced it will be seen that at no point is the material twice
moved over the same ground. Each move takes it to the next operation and
one step nearer completion. Where materials and parts enter a shop at two
or more points, the lines are merged, showing that these materials leave that
shop as one piece, part, or finished article. A feature underlying the whole
plan is economy in the movement of work in process. All work moves
through a shop, not back and forth in the shop.
The ideal conditions do not always exist, neither can they be brought
about in every case. Many plants, built in the past, have been planned
without due regard for these matters; their importance was not appreciated
and the buildings are so located that it is impossible to secure entirely
satisfactory results. However, if present conditions are studied carefully,
many improvements can be brought about at slight expense. While, as we
have intimated, this is a problem for engineers, a number of cases might be
cited where the accountant, called in to systematize the accounting methods
of a manufacturing business, has suggested physical changes in the shops
that have resulted in marked reductions in costs.
26. Planning the Office. The average office is arranged in a very
haphazard way. Departments are located with little regard for their
departmental relations; desks are placed where they fit best rather than
according to any preconceived plan.

Fig. 9. Layout of a Typical Manufacturing Plant

Logical arrangement of the office has as great an influence on the
economical conduct of the work as does the physical arrangement of the
shop. The most important requisite in the layout of an office is good light.
While ideal conditions are impossible to attain in some buildings used for
offices, much can be accomplished by placing the desks to take full
advantage of the light that is available.
The writer once visited an office in which sixty or more people were
employed in one big room. Most of the light came from the rear and
practically all of the desks faced the light, which is recognized as most
injurious to eyesight. The manager of the office was asked why the desks
were not placed in proper position, and he replied that they were placed so
that the employes would sit with their backs to the entrance, and not have
their attention detracted from the work by visitors. He considered this an
important move, but overlooked the more vital fact that his employes were
not only ruining their eyesight but were actually doing less work than
would have been done under more favorable conditions.
A change was consented to. As many of the desks as possible were so
placed that the worker would receive the light from the left; some received
it from the right and a few from the back. Three months later this manager
readily admitted that his employes were turning out at least one-third more
work, and their general health was greatly improved.
The location of the departments and the private offices should be
carefully considered. Departments in which the work is of a nature
requiring frequent inter-communication should be located as closely

together as possible. For instance, the sales department should not be placed
between the order and accounting departments, but the order department
should be close to the accounting department, with which it is in constant
communication.
The workers in a department should be placed to facilitate the
movement of their work from one desk to another. Heads of departments or
chief clerks should be within easy reach of all employes in the department,
and accessible to the executive.
Offices of executives should be located with reference to their duties.
The sales manager and purchasing agent should be accessible to the public.
The general manager should be within easy reach of other officers but not
necessarily accessible to the public.
The importance of conveniently arranged offices is receiving much
serious thought, and many of the larger industrial enterprises are erecting
ideal administration buildings. In all specially planned buildings, the
tendency is toward large rooms, rather than smaller rooms separating the
departments. A large room insures better light and air, and space can be
utilized to much better advantage.
Fig. 10 is a sketch of the first floor plan of the administration building
of one of the large industrial enterprises. This is, in many respects, an ideal
arrangement.
A noticeable feature is the location of the filing department in the center
of the main room. Here it is easily reached by all departments.
At either side of the filing department are the sales and accounting
departments. In the sales department several sales managers' desks will be
noted, with desks for their assistants across a narrow aisle. It happens that,
in this particular business, sales are divided into departments corresponding
with the classes of goods manufactured, with a sales manager for each
department.
The accounting, order, and credit departments are conveniently
arranged, and the auditor is located where he can overlook the entire office.
Executive offices, across the front of the building, are accessible to the
public and those in the general offices.
27. Store Plans. The subject of store plans is one of utmost importance
to the merchant. His success is influenced to a great extent by the first
impression received by the prospective customer. If that impression is

favorable, if he is greeted by an orderly, well arranged store, if his comfort
and convenience have been considered, the customer will return and give to
the store at least a part of his patronage.
The old-fashioned general store, in which all sorts of merchandise was
sold, offered little to commend in respect to orderly arrangement. As a rule,
the goods were jumbled together in a confused mass with no thought of
segregating them in departments. Yet this country store, found in every
hamlet, was the forerunner of the department store of today.

Fig. 10. Floor Plan of a Modern Administrative Building

The advent of the department store was a case of adapting the
merchandising methods of the country village to the needs of the city. A
miscellaneous stock of merchandise, greater in size but similar in character
to the country store stock, was gathered in one big store and subdivided into
departments. To compete with one-line stores, stocks must be equal in
volume, which meant that the department store must carry as large a stock
of clothing or of shoes as the exclusive clothing and shoe stores. The stocks
must be as complete and as well displayed; each department must be a fully
stocked store, prepared to meet the usual demands of a store of that
character.
The department store of today is a model of systematic arrangement.
Not only are the goods grouped in departments, but the departments are
logically grouped and located to suit the convenience of the customers. If

one wishes to buy house furnishings, hardware, or dishes, he will probably
find them in adjoining departments.
But the departmental idea is by no means confined to the recognized
department store; it is a feature of every well regulated store dealing in
exclusive lines. Stocks of shoes, hardware, clothing, and furnishings are all
divided and the classes segregated by departments.
The departments themselves are subdivided. Goods are classified, and
each class placed in special compartments. Goods most frequently called
for are near at hand on shelves where they can be easily reached. Top
shelves, space under counters, and other inaccessible corners are reserved
for goods called for less frequently.

THE COMMITTEE SYSTEM

28. We have already referred to the necessity of coöperation in every
successful organization. We do not wish to be understood as advancing this
idea of coöperation for the benefit only of executive officers and heads of
departments. It must extend farther than this—it must penetrate to every
nook and corner of the shop.
We must have the coöperation of every workman, no matter how
obscure his position, and to secure this coöperation it is necessary to instill
in him an interest in the welfare of the business as a whole. Treat him as a
mere cog in the wheel and he will very likely be content to do as little work
as possible and still draw his pay, with no thought of bettering conditions in
his department. But show him that you recognize his ability—that you
know that he knows how his work should be done—and he will readily lend
his coöperation. The problem of securing this coöperation has been given
much study, and those who have met with the greatest success have done so
by showing the workman that his advice and suggestions are appreciated.
No matter how willing you may be to receive them, the workman
naturally hesitates to make suggestions personally. But give him an
opportunity to discuss a point with others of his kind and it is surprising
how many practical ideas will be brought out. Experience has shown that
this spirit of working for the good of the business can best be maintained
through the formation of standing committees. Such committees bring out

the best ideas of the men composing them, and invariably work for the good
of the business.
29. General Factory Committee. In the manufacturing branch of a
business, the first committee to be formed is the general factory committee.
This committee is usually composed of the superintendent, who acts as
chairman, the chief engineer or designer, the tool room foreman, or the
special designer of tools, the head of the cost department, and two or three
foremen of the most important departments.
The work of this and all other committees must necessarily be adapted
to the requirements of the business, but, as a general proposition, the
matters to come before the committee may be stated as follows:
1. Reports and discussions of the standardization of the product.
2. Reports of progress on new designs or the redesigning of old product which has been
authorized at previous meetings.
3. Discussion of economies in general operating methods, economies in cost of
production, and all questions of a similar nature.
4. A report on routine work in the factory—whether stock or special contracts—
condition of orders, and condition of stock to fill future orders.
5. The question of promotions. If all promotions in the shop are brought before this
committee for approval, it will do away with the charge of favoritism of foremen in
advancing relatives or personal friends without regard to their qualifications. A
foreman who is obliged to recommend promotions to this committee, will be very
careful that the promotion is deserved.

30. Departmental Factory Committees. Many factories manufacture
more than one line of goods. In such factories it is advisable to have
committees to discuss progress in each specific line. Members of the
factory committee should act as chairmen of these departmental
committees. The committees will be composed of the foremen interested,
the tool room foreman, and the head of the cost department.
The work of the committee, so far as relates to a particular department,
will be very similar to that of the general factory committee. The discussion
will cover:
1. Standardization of product and suggestions for new designs.
2. Progress on improvements already started.
3. Economies in operating expense and cost of production.
4. Reports on routine work.

31. Job Bosses. Carrying the committee plan a step farther, it is well to
hold occasional meetings of the job bosses. The foreman of each shop will
act as chairman and discuss matters pertaining to work in his own shop with
the job bosses under him.
In most factories it is also advisable to hold, at least once a month, a
general foremen's meeting. This should be a meeting of all foremen, with
the superintendent, for the discussion of problems of a general nature and
problems relating to specific shops.
32. Sales Committee. In the commercial branch, perhaps the most
important committee is the sales committee. This committee should consist
of the general manager, who acts as chairman, the sales manager,
advertising manager, chief engineer, and superintendent. At times it may be
advisable to call in the head of the cost department and the tool room
foreman.
At the meetings of this committee the following subjects will come up
for discussion:
1. General sales report, showing progress of the business as a whole.
2. Territorial sales reports, showing sales in each territory. Both of these reports should
exhibit comparisons between the current and preceding periods.
3. Reports of sales classified according to the nature of the product, or specific lines of
goods. This is in some respects the most important of the reports, since it shows
which are the fast and which the slow moving lines.
4. Suggestions for and a discussion of proposed improvements in the present products.
5. Discussion of proposed new product.
6. Standardization.

In the discussion of the three last named subjects the engineer and
superintendent are especially interested, and it is here that the presence of
the cost clerk or the tool-room foreman will be required. A salesman
naturally assumes the attitude of considering his customers' desires of the
greatest importance. Naturally he wants the factory to manufacture the
goods that he can sell. But a discussion of difficulties to be surmounted,
increased costs, and like questions will go far toward bringing him into line
and convincing him that the interests of the house lie in his pushing
standard goods.
33. Advertising Committee. A committee which is to a certain extent a
subdivision of the sales committee is the advertising committee. The

general manager should act as chairman, and will have with him on the
committee the comptroller, advertising manager, and sales manager.
The work of this committee will be confined to a discussion of:
1. Results of past advertising, including periodical, street car, bill-board, and all other
forms.
2. Appropriations for current advertising.

These advertising reports are very important, for, after sufficient time to
establish an equitable cost basis has elapsed, all future advertising should be
based on the cost of actual sales, giving due consideration of course to the
season of the year, general tendency of the times, and other factors which
might temporarily have a disturbing influence.
34. Organization Committee. Another committee of importance,
which, for convenience, we will call the organization committee, is one
which discusses all questions pertaining to accounting and record systems.
This committee will be headed by the comptroller and will include the sales
manager, advertising manager, credit man, purchasing agent, and
superintendent. Sometimes it will be advisable to call into the meetings the
chief accountant, cost clerk, stores clerk, and even shop foremen.
As indicated above, the chief work of this committee will be a
discussion of systems. While the comptroller prescribes all systems of
record, reports, statistics, and accounts, he should make no radical changes
without discussing the proposed change with those whose work will be
directly affected.
Many systems, good in theory and which with coöperation would work
out in actual practice, have failed because they were forced on the business.
A systematizer may install a good system and get it into operation, but
unless he has secured the coöperation of those upon whom its operation will
devolve, he will very likely find that after he leaves there is a gradual
disintegration until conditions are worse than before the change was
attempted.
It is seldom that a foreman or a clerk will resent a change if he is made
to feel that he is, in part at least, responsible for the change. When new
systems are introduced in the shop, the foremen are quite likely to look
upon them as a means of checking up their departments—a sort of police
supervision. The writer has had considerable experience in the introduction

of systems into factories, and has invariably found that the coöperation of
the shop foreman could be secured by asking for his advice. Before
prescribing a form or a system of records for a department, he has made it a
point to discuss the difficulties with the foreman, always leading the
foreman to put forward what seemed to him the greatest difficulties, and
then when these have been apparently solved, to ask the foreman if he does
not think such and such a plan would work. When dealing with particularly
obstinate foremen he has even gone so far as to suggest a plan which is
plainly impracticable, for the very purpose of leading the foreman to
suggest a practical solution. Needless to say, in such cases the foreman
gives the plan his hearty support, because he has been made to feel that the
importance of his suggestions has been recognized.
Committee Meetings. The frequency of meeting of the committees
herein suggested must be decided by each manufacturer. No hard-and-fast
rules can be laid down, but generally these suggestions will apply:
General factory committee, weekly.
Departmental factory committees, once in two weeks.
Job bosses and general foremen's meetings, monthly.
Sales committee, weekly.
Advertising committee, monthly.
Organization committee, monthly.

Committee Secretaries. At each committee meeting, a stenographer
should be present to act as secretary. When no record is kept, discussions
are quite likely to be rambling rather than confined to a specific subject.
Then, too, matters which were discussed at the last meeting have grown
hazy, and if a man who is responsible for putting into operation a given
suggestion has failed in his duty, there is always the chance that no one will
think of it at the next meeting unless he brings it up. If, however, an exact
record is kept of these discussions and full reports are delivered to every
member of the committee before the next meeting, a foreman, or other
member, will be very careful about making statements or promises unless
he knows that they can be fulfilled.
Where possible, it is best to have the same stenographer act as secretary
to all committees, as he will become familiar with their work and can
handle it much more expeditiously.

THE SUGGESTION PLAN

35. In many factories, and even in mercantile establishments, a
modification of the committee idea has been successfully introduced in the
form of what is known as the suggestion plan. This plan consists in asking
for suggestions from all workmen, these suggestions to pertain to manner of
handling their own work, improvements for the benefit of the business as a
whole, safety appliances, sanitary conditions, and anything that may be of
benefit to the business.
While between foremen and heads of departments the committee plan
undoubtedly works to the best advantage, we advocate the suggestion plan
for the rank and file of workmen. Even when called into a committee
meeting, the workman sometimes hesitates to express his opinions, when if
he were permitted to give them in some other manner he would make many
valuable suggestions. The plan is to place at convenient points boxes with
slots cut in the top in which the suggestions can be placed. Workmen are
invited to write out their suggestions and place them in these boxes. They
may either sign them or give their clock numbers. The latter plan is
sometimes advisable, as it does not reveal the identity of the men making
suggestions. All suggestions are taken up in committee meeting by the
committee directly interested, and a small prize is given for those
suggestions that are put into use. Even so large a department store as
Marshall Field & Co. has found it extremely profitable to offer $1.00 for
each suggestion offered by an employe that is finally adopted.
Another method is to use autographic registers like the one illustrated in
Fig., 11 on which three copies are made. The original is sent to the office,
the duplicate is retained by the workman, while the triplicate remains on a
roll in the machine. This is removed at the time of the committee meeting,
and any suggestions adopted are posted on a bulletin board. The workman
need not even sign his number, but can present the duplicate as proof that
the suggestion was made by him.
The introduction of any or all of these committee and suggestion plans
requires careful study, but when once put into operation they will prove
both successful and of inestimable value to the business.

ORAL ORDERS CAUSE CONFUSION

36. Probably no more prolific source of confusion and
misunderstanding of instructions is to be found than in the habit of giving
oral orders. "I understood you to say" or "I thought you meant" are familiar
excuses offered for a failure to follow what the one giving them considered
clear and explicit instructions.
The absolute necessity of clearly
defined authorities that every man
connected with an organization may know
from whom he is to receive orders, is well
recognized. When we get above the one-
man business, employes are not left in
Fig. 11. Autographic Register doubt as to the source of their orders. Why
Made by United then should there be left the slightest
Autographic Register Co. chance of misunderstanding as to the
nature of their orders?
When we issue orders that are to be executed by someone outside of our
own organization, we are careful that they are in writing. If an order for
goods is placed by telephone or telegraph it is confirmed in writing, not
alone for the legal protection afforded by a valid contract, but that there
may be no confusion or misunderstanding. When we receive an order we
prefer to have it in writing for the same reasons.
The success of any undertaking is largely dependent on the proper
execution of orders. Surely, orders to be executed within the organization
are of equal importance to those that will be executed by an outsider, and at
least the same care should be exercised in issuing them. The logical
conclusion then is that they should be given in writing. True, oral
instructions are sometimes necessary, but all orders and instructions of
importance should be in writing.
There are many classes of internal orders, depending on the nature of
the business. Among them is a class of inter-departmental communications
more in the nature of correspondence than direct orders. In the harmonious
operation of an organization, many requests are made between departments;
general orders affecting all departments are given by the manager; bulletins

are issued by a department manager to all employes under him—all of these
should be in writing.
As an illustration, take a special order from a customer. A salesman
reports that an order can be secured for certain goods provided some slight
change is made in the design. The sales manager will communicate with the
superintendent about the cost of making the changes. The question then
goes to the general manager for a final decision. Imagine the chances for
argument if these negotiations are carried on orally, but if in writing, what
each man said is on record and entirely clear.

Fig. 12. Blank Used for Interdepartment Correspondence

No elaborate form is needed for these communications, but it is best to
use a form differing from that used in the regular correspondence. A simple
form is shown in Fig. 12. The form should always show from what
department it comes, and, to avoid confusion, it is an excellent plan to use a
distinctive color for each department.
Each department should keep a file of these house communications,
including carbon copies of those issued by them. It is frequently necessary
to follow up their requests to secure reasonably prompt action.
To insure the follow-up, each department should be provided with a
follow-up file or tickler, a file having thirty-one numbered compartments to

represent the days of the month. This same file can be used for all sorts of
memoranda of matters requiring attention on a future date.

ADVANTAGES OF UNIFORM BLANKS

37. One of the little points in the routine workings of a business office
that is not always given proper consideration is the establishment of a
uniform system of blanks. The blanks used for a given purpose in one
department will be of a certain size and color, while those used for the same
purpose in another department will be radically different in both size and
color. Or blanks of entirely different classes will be identical in size and
color. The result is a miscellaneous collection of blanks in all sorts of
shapes and sizes.
Uniformity in blanks at once establishes a means of identification,
avoids confusion, saves filing space and limits mistakes.
Though we may have given the subject little thought, we have long been
accustomed to uniformity in certain blanks and business papers. If we have
been receiving freight over several railroads the freight bills of each have
been readily distinguished by size, color and style of printing.
Correspondence from our customers is recognized by the style of the
stationery, and orders are distinguished from other communications of the
same concern.
Aside from the question of convenience, there is a certain advertising
value in stationery and blanks with distinctive features. At a glance we
recognize in the morning mail the communications from certain of our
correspondents. We feel sure this envelope contains a remittance, that one a
welcome order, another an invoice of goods for which we have been
waiting; each is recognized by a certain style of the envelope. At no
additional expense we can make our own stationery distinctive. Letter
heads, order blanks, statements, invoices, remittance blanks will be
recognized not by one but by all of our regular correspondents. They will
soon learn to associate our name with certain styles of stationery.

THE LARKIN ADMINISTRATION BUILDING
One of the Finest Office Buildings in America Devoted to One Industry. The Larkin Co.,
Buffalo, N. Y.

Distinctive stationery does not necessarily mean expensive stationery.
Our advice is, buy the best quality that you feel you can afford; above all,
make it distinctive, make it represent you. Adopt a color, or style of type, or
shade of ink that will make your stationery stand out from the mass coming
to the desk of every business man.
The problem of filing space is a serious one in most offices, already
overcrowded. Filing devices are made in certain sizes that have become
standard. The more closely blanks to be filed conform to these sizes, the
less space will be required. While we cannot regulate the sizes of the
stationery of our correspondents, we can regulate the size of our blanks that
will eventually find their way into our own files.

SALES ROOM IN THE NEW YORK OFFICE OF THE WESTERN
ELECTRIC COMPANY

ADVERTISING AND SALES ORGANIZATION

INTRODUCTION

The purpose of this book is to teach neither the art of advertising nor the
science of salesmanship, but rather to set forth some of the principles that
must be applied in the organization of the advertising and sales department;
in particular, to discuss the machinery of the department—its record-
keeping systems.
Opinions differ as to the proper place in a business organization of
advertising and sales—whether they should be handled by, and considered
as, two separate and distinct departmental organizations, or one. Both plans
have their champions.
Whether we call it an advertising or a sales department, the results
sought—the reasons for the existence of the department—are the same. To
sell goods is the aim of the organization, be its head an advertising manager
or a sales manager.
Advertising has been defined to be printed salesmanship; yet there is a
well-defined dividing line between the work of the advertising man and the
salesman. The advertising man seeks to impress the name of the house and
the name and quality of its product, on the public mind; to create interest; to
arouse curiosity; to stimulate desire; to attract people to the store—in a
mercantile business. The salesman seeks to turn that interest, curiosity,
desire, into action—the action of purchase.
The advertising man introduces the possible customer; the salesman
makes the sale. But in some businesses, the advertising man goes one step
farther and actually makes the sale—as in advertising intended to secure
direct orders, by mail. Also, the salesman, when the customer has been

introduced, makes use of other forms of advertising, to further stimulate
desire and assist in making the sale.
No matter at what angle the subject is viewed, it is seen that the
advertising man and the salesman are very dependent on each other. We
prefer, therefore, to consider the sales and advertising departments as of
equal importance; both subordinate parts of the sales division but working
in perfect harmony.
The salesman knows his goods, their strong and weak points, the classes
of people to whom they will appeal. He should know, also, all about his
competitor's goods, and in what respects they are excelled by his own. In
short, he is the one who can give the best selling points to the advertising
man.
The advertising man is expected to be a master of expression. The
unpolished selling points of the salesman are worked over by the
advertising man into clear, pointed, convincing English—printed
salesmanship. His experience tells him how best to reach a given class;
what methods of advertising are best suited for a particular class of goods.
When a selling campaign is contemplated, the plans should be worked
out by the salesman and the advertising man. The two must work together
and neither should undertake a new campaign, without first consulting the
other.
The claim is sometimes made that the function of advertising is fulfilled
when the inquiry has been received; that it is then a question of
salesmanship—but where does advertising end and salesmanship begin? If
sales are made by mail, the salesman supplements his salesmanship with
catalogs, booklets, circulars, letters—all as surely advertising as
salesmanship; in the store, he displays his goods attractively, which is a
most effective form of advertising. And so, in the battle for business,
victories are won by supplementing advertising with salesmanship, and
salesmanship with advertising—combining the two for results.
Occasionally, a man is found who combines the creative ability of the
advertising man with the executive ability of the sales manager. When such
a man is found, it is safe to place him in charge of the sales division, giving
him full control of both advertising and sales. He probably will require the
services of a man to attend to the details of the advertising department, but
such an arrangement makes the sales manager alone responsible.

Most large enterprises, however, require the services of one man to
handle the advertising. For this reason the head of this department is
referred to as the advertising manager, and the department as an advertising
department.

SYSTEMS AND RECORDS

In addition to the technical knowledge of the printing art—type,
engraving, and paper—and of advertising media, which the successful
advertising manager requires, he should have the faculty of applying
common-sense system in the handling of his work. An elaborate system,
which oversteps legitimate bounds and enters the realm of red tape, is to be
deplored, but the advertising man must have a system of records which will
show at all times what he is doing, what results he is getting, exactly where
he stands.
Any discussion of systems must be more or less theoretical, even when
written by an experienced advertising man. The system that works perfectly
in one office may fit in no other, therefore the systems described in this
book are to be taken as examples of what other advertising men have
adopted. From them the student will be able to devise a practical system for
a particular enterprise. At the start, the system probably will be too
complicated; experience alone will tell the advertising manager where to
eliminate, where to simplify, where to add to make it fit.
Advertising Information. The advertising manager collects a vast
amount of information for future use. Every time he picks up a newspaper
or magazine his eye scans the pages for ideas, while mingling with the
crowds or walking alone, he notes what would be to the unobserving but
trifling incidents, all of which can be worked into copy. If he is systematic
he clips and makes memoranda of all this information, preserving it for use
when needed.
How to preserve it in such shape that it can be located quickly is
something of a problem. Probably the oldest methods of preserving
clippings and memoranda is to use a scrapbook, and paste in all clippings.
The scrapbook, however, is never satisfactory for this purpose; it is not a
flexible system.

Clippings should be so filed that any single clipping can be removed
without disturbing the others. The vertical file is largely used as a receptacle
for clippings, but is not entirely satisfactory unless envelopes take the place
of folders. With folders, clippings are liable to be lost through the open
ends.
An old and satisfactory method is to file clippings in envelopes. Unless
the clippings are of large size—like entire pages from trade papers—it is
not necessary to use envelopes of a size to fit a vertical file, A size that will
fit one of the smaller files—about 7"×9"—will be found more satisfactory.
The most satisfactory method of indexing is by subject. An envelope is
used for each subject about which clippings are to be made, all clippings
and memoranda being filed in the proper subject envelope. The envelopes
are indexed alphabetically, according to subjects, and a list of contents
should be recorded on the outside of each envelope. A form of record is
shown in Fig. 1, while Fig. 2 shows the manner of filing and indexing.

Fig. 1. Special Box Envelope for Clippings and Advertising Copy

Clippings are made use of by the advertising man chiefly in the
preparation of copy, and are much more convenient to handle if filed in
envelopes than when pasted in scrapbooks. Instead of an unwieldy book to
handle, an envelope is taken from the file and the desired clipping selected.

Sometimes the work of the advertising man is of a nature which
requires the preservation of catalogs, booklets, and all sorts of printed
matter issued by competitors. When the accumulation of such matter is
sufficient, it is best to install a complete catalog filing system, such as is
used in the purchasing department.
Designs and Cuts. A class of valuable property which accumulates
rapidly in an advertising department, consists of advertising designs and
cuts. This property is not given the care deserved when its value is
considered.

Fig. 2. File Drawer Showing How Clippings are Filed by Subject

Artists are paid for designs but too often after the engravings are made,
they are stored in drawers, on shelves, or in any convenient place to get
them out of the way. Little attempt is made to so file and index them that
each can be quickly located.
An old design may be available for use at any time—an engraving of
different size than the original, may be needed, or a slight alteration may
produce a complete change in the design at much less cost than making a
new one. Engravings are expensive and accumulate with amazing rapidity.
Suppose a retailer does daily advertising and uses a new cut each day; at the

end of one year he owns three hundred and sixty-five original engravings,
and probably an equal number of electrotypes. Any of these may be
available for use another time, either in newspapers, catalogs, or circulars.
The national advertiser, using magazines and trade papers, may
accumulate a less number of engravings than the retailer, but owing to the
class of engraving required and the number of duplicates needed, his
investment is even greater.
The natural supposition would be that
advertisers would give this property
proper care, filing under correct
classifications, indexed for ready
reference. But experience proves the
contrary. Every printing and publishing
office that has been running five years has
Fig. 3. Box File for Drawings an accumulation of cuts belonging to
and Photographs advertisers, which represent an investment
of thousands of dollars.
Occasionally an advertiser is found who knows exactly where each cut
has been sent and calls for it when needed, but a big majority of these cuts
are never called for and finally are sold by the printer for what they will
bring, as old metal.
Now the property used by the advertising department should receive the
same care as any other; a dollar invested in designs and engravings should
be regarded as a dollar's worth. And if common sense be applied in devising
a system, they can be cared for with as little trouble as any other property
carried in stock.
A very satisfactory method of filing designs is to use a file constructed
on the principle of the vertical file. Stock sizes of files are too small.
Designs cannot be folded and the file should be large enough to take in the
largest designs used. An elaborate file is not necessary; a box constructed
along the lines of the one shown in Fig. 3, will answer the purpose. The
chief requirements are to have the designs filed in one place, where they
can be found, and to keep them clean. Any carpenter can build such a file,
while any cabinet man will construct one of more elaborate design to match
the furniture of the office.

Designs may be filed alphabetically by subjects, or numbered and filed
numerically. As a rule, the alphabetical method will be found more
satisfactory.
Engravings are best filed in a cut cabinet of the usual style. This is a
cabinet of shallow drawers, just deep enough to hold type-high cuts. All
engravings should be numbered and electrotypes stamped with the same
numbers as the originals. The cuts can then be filed by numbers, and each
drawer labeled to show the numbers of the cuts it contains.

Fig. 4. Loose-leaf Scrap Book Sheet for Preserving Proofs of
Engravings

Cuts should be numbered consecutively, and when an engraving is made
in a new size it will take the next number, regardless of the fact that an
engraving of the same design has already been made. For instance, if five
sizes of engravings are made from one design, there will be five cut
numbers. When the cut is numbered, it is a good plan to stamp the number
on the back of the design; then reference to the design will show how many
times it has been engraved and the numbers of the cuts.
Proofs of all engravings should be kept. These may be pasted in
scrapbooks, but the books should be loose leaf. This makes it possible to
eliminate all dead matter; when designs are of no further use, the sheets
containing the proofs can be destroyed.
A sheet may contain proofs of one or of several cuts, depending on the
size, but all proofs should be arranged in numerical sequence. The sheet

should also show the cut number, the subject, and the date of ordering
electrotypes, as shown in Fig. 4. Since the space required for proofs cannot
be told in advance, it is more practical to substitute a rubber stamp
impression for printing. By using a small stamp, this information can be
stamped opposite each proof.

Fig. 5. Index Card for a Record of Designs and Engravings

Cut Indexes and Tracers. To complete the filing system for cuts and
designs, an index is needed. Fig. 5 shows a convenient form of index and
record card. This card is headed with the name or subject of the design, and
is indexed under this subject. The data relative to the design includes the
class—as photograph, wash drawing, or line drawing—the name of the
artist, the size of the design, and the date made. Below this is a complete
record of all original engravings and electrotypes made from the design,
including their numbers.
On the back of the card is a record of the publications, catalogs, or
circulars in which the design is used, with dates, as shown in Fig. 6.
If the name of the artist who made a certain design, or the names of
publications in which it has been used, is wanted, reference to this card
gives the desired information. This one card provides all information that is
likely to be needed in reference to both designs and engravings.

Fig. 6. Reverse of Index Card Showing Where Engravings are Used

The methods described provide for a complete record of designs and
engravings, except in respect to cuts which have been sent out. A record of
the cuts that are out, and where each has been sent, is of the utmost
importance.
When a cut is sent out—to the printer, the publisher, or a customer—a
receipt should be obtained. This may be on a post card printed as shown in
Fig. 7. At the same time a record to be used as a tracer should be made. This
should be on a form similar to the one shown in Fig. 8. These forms may be
filed in a tickler under the date on which the cut should be returned, or
alphabetically; but in either case a desk file should be used so that they can
be referred to very readily. This file should be looked through frequently for
it is very necessary to follow-up the cuts closely. If the cut is not expected
to be returned, it is of course unnecessary to make this tracer record.

Fig. 7. Postal Card Receipt for Cuts

Copy Proofs. A complete file of
proofs of all copy is a necessity in every
advertising department. If requested to do
so, any publisher will furnish several
proofs of the ad, and at least three proofs
should be kept on file. Every piece of
copy and every circular or other printed
matter should bear an identifying mark of
some kind. This usually is a number.
These numbers should be registered
consecutively either in a book or on cards,
and opposite each number should be the
title of the copy, booklet, or catalog. It is
well to run different series of numbers for
advertising copy and other literature.
Numbers 1 to 5,000 might be used for
Fig. 8. Tracer Card copy, and 5,001 to 10,000 for printed
for Drawings and Cuts
matter. The same scheme can be used to
good advantage for office blanks of all kinds, giving each a form number
but using a third series of numbers.
Proofs of ads and copies of all printed matter and blanks should be filed
alphabetically by subject or title. For proofs, the envelope scheme, as
described for clippings, can be used. Envelopes of this size—7"×9"—will
also accommodate copies of most circulars, blanks, and booklets, but if the

sizes average larger a vertical file drawer, with large envelopes, can be
used. The vertical file will also accommodate catalogs. These files being
permanent, the expense of elaborate cabinets can be dispensed with by
substituting the cheaper transfer files supplied by all manufacturers of such
equipment.
Each time a piece of advertising copy is re-set in a different size, it
should be given a new number. New numbers should also be given each
circular, booklet, or blank when it is re-printed, provided there is the
slightest change in the copy.
On each envelope, the copy number should be entered, and if the copy
takes several numbers, all should be entered. Copy bearing the title "Your
Chance" may be set in three sizes—full page, No. 640; half page, No. 641;
and quarter page, No. 645; all proofs will be filed in one envelope and the
three numbers will be entered on the outside.
The register of numbers and the file of proofs provide for the
identification of any copy; if the title of any piece of copy is wanted, the
number being known, reference to the register gives it; or if the title is
known, reference to the file gives the number.

PRINTING ORDERS AND TRACERS

Great care is necessary in issuing and following up orders for printing;
every detail must be watched closely if satisfactory results are to be
secured. In the majority of offices the advertising manager, or a man under
him, attends to all details of ordering printing. Large concerns find that it
pays to employ an experienced man for this work alone. To a concern
whose printing bills amount to several hundred dollars a month, a man who
will give close attention to every detail of the work, from seeing that he gets
the stock specified to checking bills for overcharges, can make his services
worth a good salary.
In printing, as in everything else, the personality of the house should
stand out—a typographical style should be established. This is
accomplished much more quickly if every detail of the printing is in the
hands of one man.

There are concerns in which publicity and sales work must be
subdivided to such an extent that the sales manager has all printed matter
prepared under his direct supervision; while the advertising manager is
responsible for the preparation and placing of the copy. In one such
concern, which has come under the writer's observation, copy for printing is
turned over to a man entirely outside of the sales division. The theory is that
the outside man will watch the interest of the house, in the matter of price,
more closely than the man who prepares, and perhaps is to use, the copy.
This theory may have some foundation in certain quarters; probably
there are some otherwise competent advertising men who are occasionally
outwitted by the printer; but it is also true that the buyer of printing, who
places his orders on the basis of price alone, frequently loses more in
quality than he saves in cost. The man who is to use a booklet or folder is
really the best judge of its worth—what he can afford to pay for the kind of
work he wants; he knows best its possible value as a revenue producer. He
should be competent to supervise the placing of the orders, but without
exception all printing orders should be placed by the same man.
No matter by whom placed, the printing order should specify every
detail; or if it is not on the order blank, there should be a specification sheet.
The specifications would be something like those shown in the order form,
Fig. 9.
This order should be made in triplicate. The original and duplicate will
go to the printer, the duplicate to be signed and returned as an
acknowledgment of the order, while the triplicate is filed in a tickler under
the date when the acknowledgment should be received—usually the
following day.

Fig. 9. Triplicate Form of Order for Printing

When the duplicate comes back from the printer it is placed in the
tickler, under the date when proofs may be expected. At the same time the
triplicate is removed from the tickler and placed in a loose-leaf binder, all
copies being filed in numerical sequence. It will be noted that, at the bottom
of the triplicate, the department or account to be charged is entered, this
record being made when the order is placed.

When proofs are returned, the duplicate is moved ahead to the promised
date of delivery. In this way the follow-up for orders is made practically
automatic, all orders filed under any date being removed for attention on
that day.
Little difficulty is experienced in getting printers to put the order
number on the invoice, when requested to do so. The return of two or three
invoices to a printer who neglects this will have the desired effect. With the
numbers on the invoices it is a very simple matter to find the copy of the
order, which will show just what was ordered and for what department.
Records of Printing. A record of all printed matter received and its
disposition is quite as important as for any other class of property. Unless
properly stored and correctly recorded, there is likely to be a great waste of
stock. Many large concerns lose much more through waste in this direction
than the salary of a competent stock clerk. Not all concerns will require a
stock clerk for this purpose alone, but in every office the stock of printed
matter should be placed in charge of one person—a clerk, perhaps, who has
other duties. That person should be made responsible for the stock, just as
the stores clerk is made responsible for the property in the factory
storeroom.
When printing is received, it should be first checked against the order
copy on file, and then put in the storeroom, or sent to the department where
it is to be used if not to go into stock. In the storage of printing, a very
necessary requirement is that it be kept clean, otherwise, in the case of
matter carried in stock for a long period, there may be as much as a ten per
cent loss through spoilage.
It is best to have all printing put up in packages of specified sizes,
depending on the quantities used. The printer will usually make the size of
his packages fit the needs of the customer, if requested to do so. On the
outside of each package, the name and quantity of the contents should be
recorded. When possible a sample should be attached.

OFFICES OF THE ADVERTISING DEPARTMENT, BURROUGHS
ADDING MACHINE COMPANY, DETROIT, MICH.

Fig. 10. Perpetual Stock Record for Printing, Showing its Disposition

An extensive advertiser will require a good-sized room for the storage
of printing, while for some concerns a small cabinet will answer the
purpose. In storing, the packages should be arranged according to name,
maintaining the alphabetical order so far as possible. A numerical

arrangement, by form numbers, is sometimes recommended, but any filing
scheme which makes it necessary to refer to a supplementary index to find a
number before the article itself can be located is not favored.
A low stock limit should be set for every piece of printing that is used
regularly and likely to be re-ordered. One of the most simple methods of
handling this is to make one package of the quantity set, so arranging the
stock that it will be the last package reached. On the outside a label is
pasted—or a rubber stamp can be used—printed as follows:
This package must not be opened without first notifying the office.
Failure to observe this rule will be considered sufficient cause for
instant dismissal.

After the storage plan has been arranged then comes the question of
stock records. A simple record which will show quantities received, issued,
and on hand is needed. The form shown in Fig. 10 is used by a
manufacturer who supplies dealers, who are his customers, with catalogs,
booklets, and other forms of printing. The same form is adapted for use by a
concern selling through branches or agencies, while for another business,
the form would be modified, eliminating records of shipments.
This form is printed on a sheet punched for a loose-leaf binder. A sheet
is used for each catalog, folder, booklet, circular, mailing card, or other
piece of printing, the name being written at the top of the sheet. The sheets
are filed in alphabetical order, indexed with suitably tabbed index sheets.
When printing is received and the order checked, the name and
description is entered at the head of one of these sheets—except in the case
of a re-order, when a sheet will be found in the binder. The date, quantity,
from whom received, and the cost are next recorded in the proper columns.
If it is a new piece of printed matter, the quantity received is also entered in
the on hand column; if a reprint, the quantity is added to the stock on hand
and the total extended.
For printing that is to be sent to a dealer, an order is entered on the form
shown in Fig. 11. This gives detailed instructions for shipping, with the
quantity and description of the matter to be sent. The order is made in
duplicate. The original goes to the shipping clerk, while the duplicate, on a
blank sheet, is kept in the office as a follow-up on the shipping clerk.

Fig. 11. Shipping Order for Printing to be Sent to a Dealer

As shipments are made, the shipping clerk enters in the columns
provided for that purpose, the quantity sent and the date. When the entire
order is filled, it is returned to the office. Every day the duplicates are
examined and inquiry is made of the shipping clerk regarding any orders for
which the originals have not been returned. When the original is received,
the duplicate is destroyed.
Shipments are next entered on the stock sheets, while the original orders
are filed in a binder, alphabetically by dealers names. Reference to this file
shows exactly what advertising matter has been sent each dealer.

PERIODICAL ADVERTISING

When the question of periodical advertising is taken up, the most
important of all publicity fields is entered. From the country weekly,
through the entire list of city dailies, scientific and literary weeklies and
monthlies, popular magazines, class magazines, and trade papers for every
vocation, religious papers, and reviews, periodicals can be selected which
will reach any class or cover any territory. With the thousands of
publications to select from, the advertising manager needs to know which
ones will best reach the people he wants to reach; what papers have the
largest circulations; which are most popular among a given class or in a
certain territory. He must be posted on rates and discounts, that he may

cover his territory economically. And added to this, he must have a perfect
checking system, that he may know to a certainty what returns each and
every publication is bringing him. Such a system may show him, for
example, that the magazine with a circulation of a million and an
advertising rate of $5.00 a line, brings orders at a less cost than another in
which he is paying but $2.00 a line—or vice versâ. Perhaps the cost in both
is within the amount he is prepared to pay, but he must know what it costs,
that he may know where to increase and where to curtail the appropriations.
Rate Cards. Supposing the business to have been just started, or one
that has done no advertising—and this is the most satisfactory premise from
which to work, in laying out a general system for the department—among
the first duties of the advertising manager will be to secure information
about mediums, and the chief source of information will be the publications
themselves, as they will respond promptly to requests for rate cards.
If the advertising manager gets rate cards from a hundred publications,
he will find probably forty or fifty different shapes, sizes, and styles.
Several spasmodic attempts have been made to induce publishers to adopt a
uniform size for rate cards, with but little success. In the effort to produce
something striking, the convenience of the advertiser is very likely to be
overlooked. One publisher will use a 3"×5" card—the most convenient size;
another, in order to better display the artistic ideas of his own copy
department, uses a card 6"×9"; a book of rules is issued by another; the
result is a miscellaneous collection that does not fit any size of file made.
To insure uniformity in their files, advertising agencies have been
obliged to design rate sheets or cards which they send to the publisher to be
filled in. Some large advertisers now follow the same plan, requesting
publishers to enter rates on special forms.
But whether or not he uses a special form, every advertiser should have
his own file of rate cards—even if the information is written on a blank
card. The special information needed is shown in Fig. 12. This can be on a
card, or if preferred, a sheet to be filed in a loose-lea binder can be used.
The cards or sheets should be indexed alphabetically, under the names of
the publications.

Fig. 12. Index Card for a Record of Advertising Rates

If full and satisfactory information is not obtained from the publishers,
it is well to supplement it with information from an advertising agency. The
successful agency, through observation on behalf of a number of clients,
usually has more dependable information about a given publication than
can be obtained by any one advertiser.
All sources of information should be made use of; if the article
advertised is sold to the trade, much valuable information can be secured
from local dealers. In planning a daily paper campaign for a certain
commodity, a letter was sent to each dealer contiguous to each city asking
what morning and evening papers had the largest sale in his town; at what
hour each was received; and the general trend of local political sentiment.
This brought a gratifying response, and helped in the selection of papers
which covered, not only the cities, but the small towns. Another advertiser
secured some very satisfactory reports from his traveling salesmen, relative
to the value of local papers in which he contemplated advertising.
Advertising Contracts. Contracts for advertising are usually made
once a year, in advance. Most publishers of magazines and newspapers
grant certain space discounts, based on the space used within one year, and
in many cases, to secure these discounts, contracts must be made in
advance. Some trade paper publishers allow space discounts, others
maintain flat rates, all of which must be considered in making contracts.
Practically all magazines, most newspapers, and some trade papers,
allow special discounts or commissions to advertising agencies—though in

the case of newspapers, in many cities, this discount applies only to foreign
advertising, or that originating outside of the city of publication.
An increasing number of advertisers are placing contracts for space
through the agencies, and relying largely on the advice of the agency in the
selection of mediums. Since the business of the largest and most successful
advertisers is placed through the agencies, it would seem to be a safe rule to
follow. But because an agency handles the orders, the shrewd advertising
manager will not relax in his watchfulness of his employer's interests. He
will maintain just as complete a rate file, and watch the bills as closely as
though dealing direct with publishers.
The experienced advertiser plans his campaigns well in advance,
making annual appropriations for all advertising. This enables the
advertising manager to select mediums, determine the amount to be used in
each class, and prepare suitable copy for the different publications.
This question of the preparation of copy for series of ads applies
especially to national campaigns and local advertising of a general publicity
nature. The advertising manager of a department store is obliged to prepare
newspaper copy daily, and at best can plan his copy not more than two or
three days in advance. In a national campaign in which advertising is for
direct returns, copy must be tried out and its character changed frequently.
This does not mean that, in any case, the same copy should be run
indefinitely; it should be changed in practically every issue. While
following the general style adopted for the house, there should be
something new in every issue—something that will attract and cause the
reader to look for the ad each month.

Fig. 13. Schedule of Monthly Insertions in Periodicals

When the amount of the appropriation has been decided, a schedule of
the mediums to be used should be made. This schedule should include the
space to be used in each publication. Indeed, the schedule of mediums and
space that it is desired to use, often determines the appropriation. For a
general publicity campaign, this schedule can be made absolute, but when
the advertising is for direct returns, it should be elastic. Mediums which do
not pay after a fair trial, should be dropped, and there should be room in the
schedule for mediums not at first included. Changed conditions may make
it advisable to add a medium which previously has been unprofitable.

Fig. 14. Order Blank Used for Ordering Insertions of Advertising Copy

The advertiser who advertises for direct inquiries or orders, usually
finds it necessary to revise his schedule monthly, basing each schedule on
previous results. That he may act intelligently, he must have an exact record
of past results. A convenient form for the monthly schedule is shown in Fig.
13, which is printed on a sheet punched for filing in a loose-leaf binder.

Previous results from each publication on each class of goods is shown
in respect to inquires, amount of sales, and cost of the advertising. In the
three columns at the right of the space for each ad, cost of each, and total
cost are shown.
Separate sheets are used for popular magazines, trade papers, and
newspapers. When copy has been sent, the sheets are placed in a loose-leaf
binder, the full schedule for each month being in one place where it can be
readily referred to.
Orders for Insertion. When an agency is employed, the agency usually
sends copy and orders for insertion to the publisher; though some
advertisers prefer to send copy direct, leaving the agency to send orders for
insertion. It usually happens, too, that some orders are sent direct instead of
through the agency. One large advertiser follows the practice of sending
orders direct to those publishers who do not allow agency commissions, all
others going through the agency.
If orders are to be sent direct, a special advertising order blank should
be provided. This order should specify to the last detail the conditions of the
order. A blank, which is self-explanatory, is shown in Fig. 14. The order is
made in duplicate and the copy is filed under the name of the publication.
Checking Returns. A necessity to the advertising department is an
efficient system of checking and recording returns from advertising.
Without a checking system on which he can depend, the advertising
manager is spending his employer's money blindly—he does not know what
he is getting for it.
The first requirement in devising a system is a method of keying ads,
that inquiries or orders may be identified and credited to the proper
mediums. Keying systems there are without number—to describe all of
them would require a book the size of this one—but those most commonly
used are adaptations in one form or another, of the idea of changing the
address.

Fig. 15. Card Used for a Record of Inquiries from a Given Publication

One of the oldest methods is to use a department number or letter in the
address, changing the number in each publication in which the ad appears—
the address in one would be Dept. A; in another, Dept. B. This method is
used successfully by some advertisers, but it has its objections. Most people
realize that no concern is so large that an inquiry will not reach the proper
department. If, for example, an inquiry in response to a beef extract ad,
addressed to Swift & Co., failed to reach the beef extract department, it
would indicate a very lax system of handling correspondence.
Changing street numbers, room numbers, or postoffice box numbers, is
another common method of keying. This can be operated successfully by
notifying the local postal authorities that all mail is to be delivered at one
number, regardless of the address.
An adaptation of the number key, which can be used to advantage for a
small number of publications, is a combination of numbers representing
publications and dates. First, the publications are numbered, these numbers
being used as the first part of the address. To the publication number is
added the number of the month or week of publication. To illustrate:
Suppose that the Technical World is No. 5 on the list and the ad is
run in October. The key number would be 510—5 standing for the
publication and 10 for the month. All replies with that address would
be credited to the Technical World for October.

In using this system it is necessary to use some figure—usually 0—for a
repeater to avoid confusion; No. 112 might mean publication No. 1, month
No. 12, or publication No. 11, month No. 2. By adding a naught after the

publication No., confusion is avoided—1102 would mean No. 11, 2nd
month, 10012 would indicate No. 10, 12th month. The system can be
further varied by using N., S., E., and W., or by substituting Ave. for St. or
vice versâ.
When readers are requested to ask for catalogs or other printed matter,
the numbers by which these are known to the reader can be used for the key
—as bulletin A, bulletin B, etc.
For either direct inquiries or orders one of the most popular and
satisfactory keying systems is to use a coupon, indicating the publication
and month in the coupon—T W 11 printed in small type in the coupon
would mean Technical World for November.

Fig. 16. Reverse of Checking Card Used for a Record of Sales

A coupon to be filled in offers the reader a convenient means of
answering the ad, and this has a tendency to induce a larger number of
replies. Few people will fail to use the coupon or the address given. A
certain very large advertiser, who uses the coupon, states that less than one
per cent of his replies are without means of identification; either the coupon
is used or the name of the magazine is mentioned.
To make their checking systems as nearly perfect as possible, some
advertisers write to all readers who fail to use the key, requesting them to
state where the ad was seen. Some enclose a postal for the reply, others
enclose a printed slip, on which the magazines used are listed, to be
checked and returned.

A reasonable expense is justified to find out where replies do come
from, for it is as much to the advertiser's interest to continue the use of all
profitable mediums as to drop the unprofitable ones. Many of the most
successful advertisers, however, consider it safe to distribute unidentified
replies pro rata, basing the distribution on the number of keyed replies—
that is, if 30 per cent of all keyed replies can be traced to the Technical
World, that magazine will be credited with 30 per cent of all unidentified
replies.
When the mail is opened all replies should be sorted by key numbers,
inquiries and orders separated. Then the total number of inquiries, and
number and amount of orders from each publication should be ascertained
and credited.
For recording credits a form, similar to the one shown in Fig. 15, should
be used. This may be on a card or in loose leaf. A card is used for each ad,
in each publication—that is, if there are seven insertions in the Technical
World in one year, seven record cards will be used—one for each insertion.
These cards or sheets are to be filed under the names of the publications.
On the back of the card the form shown in Fig. 16, is printed. This
provides for a daily record of sales resulting from the inquiries recorded on
the face, or from the ad if it calls for direct orders. These forms supply all
necessary data for a complete statistical record for each publication. Too
much time would be required to look through all of these cards every time
information is desired about a given publication; a more condensed record
of total results should be provided.

Fig. 17. Combined Record of Insertions, Costs, and Sales

All of the information of practical value can be combined with a record
of insertions on the form shown in Fig. 17, using a sheet for each
publication. The record includes the date of order, space, subject, copy No.,
cut No., dates of insertion, checking, and proofreading, the date and amount
of bill, and the number, amount, and average cost of sales. The record of
sales should be entered monthly from the detail record.

Fig. 18. Daily Record of Sales of Advertised Goods in a Retail Store

These sheets are filed in a loose-leaf binder, indexed alphabetically
under the names of the publications. One sheet will accommodate the full
yearly schedule for a monthly or weekly publication.
Retail Advertising Returns. To check returns from retail advertising is
quite a different problem from checking returns from keyed ads in monthly
magazines. There are no keys, and no mail inquiries to be traced. But a
record of general results is very desirable, and it is possible to obtain
records which will, at least, indicate the increase in sales due to advertising.
Results of retail advertising must be measured by comparison; if a
department store advertises handkerchiefs as a leader for Tuesday, all
handkerchief sales for that day would not be due to the advertising, but it is
legitimate to credit advertising with any increase over normal sales. If

correct sales records are kept, it will be possible to tell the exact amount of
handkerchief sales for that and every other day in the year.

Fig. 19. Detailed Record of the Shipment of Street Car Cards

A close check on returns can also be obtained by requiring each sales
person to put a distinguishing mark of some kind on sales for advertised
articles. Proofs of the day's ads, showing the articles advertised in the
department, should be mounted on cards and hung in each department, that
the sales person may know when advertised goods are sold. If made large
enough, the card can be ruled for a tally of sales, and each sale of advertised
goods tallied.

A CORNER IN THE SALES ROOM AT THE CLINTON ST.,
CHICAGO, PLANT OF THE WESTERN ELECTRIC COMPANY

There should be an office record showing the results of advertising for
each department. In comparing these records sales alone cannot be used, for
the weather, and unusual events calculated to increase the crowds in town,
must be considered. To-day's sales of an advertised article, with unfavorable
weather conditions, probably will not equal the sales of the same article one
year ago, which was circus day. If daily records, similar to that provided in
the form shown in Fig. 18, are kept, they will soon become very valuable to
the advertising department of any retail store.

Fig. 20. Record of Street Car Contract and Net Costs

STREET CAR ADVERTISING

Street car advertising is of a general publicity nature. It is intended, not
to secure direct orders, but to influence sales by keeping the name of a
commodity before the public. It is local in its effects, influencing sales only
in the cities in which the cards are used.
Street car advertising is now controlled by a small number of agencies,
who own the space in the cars in the different cities throughout the country.
Through one of these agencies, contracts can be made for space in street
cars in any city in the country.
The rate for street car advertising is based primarily on population, the
circulation consisting of the number of passengers carried. When the
advertiser buys space, he pays for having his card appear in a specified
number of cars, for a stated period. As a rule, the rate is for monthly
periods, with special discounts on yearly contracts, and cards are changed
each month. On certain contracts the agency will include extra service,
without additional cost, by running cards in a number of extra cars, which
are put on during the rush hours.
If desired, the agency will design the copy and print the cards, making
an additional charge for the service. Many street car advertisers prefer,

however, to furnish their own cards. This is probably the better plan for
advertisers who maintain efficient copy departments.
Although this book is not intended to teach the technical details of the
art of preparing copy, it may not be out of place to suggest that copy for
street car cards is in a class by itself. Experienced advertisers have found
that to use wordy arguments on a street car card is a mistake. The card must
catch the eye, for it is expected to arrest the attention but a moment at best.
A picture that tells the story at a glance, large type, and plenty of color seem
to meet with most favor.
The special records required for street car advertising are simple,
consisting of records of contracts. A form for such a record is shown in Fig.
19. This can be on a card or loose leaf. The form is headed with the name of
the city and instructions for shipping. Below the heading, is a monthly
record of the copy No., subject of the ad, size of cards, and other necessary
data including the gross and net cost. On the reverse, Fig. 20, is a detailed
record of the contract, and a record of total costs. These sheets are filed in a
binder or in a card tray, indexed by cities.

OUTDOOR ADVERTISING

Outdoor advertising is the term used to describe all such forms of
publicity as bill boards, signs, painted or printed posters, etc. This is strictly
general publicity advertising.
Like street car advertising, outdoor advertising is thoroughly organized,
and the sale of space is practically controlled by a few companies. Local
bill posters, who control the boards, or stands, as they are technically
known, have their own national organization which standardizes the
practices of the business, regulates rates, and insures the advertiser against
paying for service that he does not receive.
Rates for this class of advertising are based on population and the
relative desirability of the location. In a city of 500,000 population, a stand
which 150,000 people pass daily is worth more than one in another section
of the city, which is seen but by 50,000 people.
The advertiser pays for his space on the basis of the number of stands
used, size of posters or signs, relative number of down town or preferred

position stands, and length of service. Rates are figured for periods of one
week, two weeks, one month, and longer.
The records of outdoor advertising are very similar to those of street car
advertising. By changing the column headings of Fig. 19 from cars to
stands, the form shown answers every requirement.
No outdoor or street car advertising campaign of national scope should
be undertaken until provision has been made to take care of the business.
The trade must be covered first; when the ad appears on the boards the
goods must be on the dealers' shelves.
Indeed, this is a most important factor in any publicity campaign
intended to create a demand for goods sold through the retailer. Every
possible preparation must be made in advance to secure a wide distribution
so that the consumer attracted by the ad will find it easy to buy the goods.
Making known the name of an article in a locality where it is not carried in
stock, or without telling the consumer where it can be bought, can result in
little advantage to the manufacturer.

WHERE ADVERTISING AND SALESMANSHIP MEET

A very effective method of producing sales—most largely used in
campaigns intended to secure direct orders, by mail—is the use of circulars,
booklets, and form letters. This literature is advertising, but to use it to
secure the best results requires the application of a certain amount of
salesmanship. The advertising man may prepare an attractive piece of
printed matter, well-written and containing convincing arguments, but
unless judiciously used, the time and study put into its preparation is
wasted.
A large quantity of such literature, distributed indiscriminately, would
probably bring some business, but the best results are obtainable only when
its use is concentrated; when it is confined to a particular class and followed
up in a systematic manner. Knowing his goods and the class of people who
use them, the salesman is naturally the best judge of where and when to use
those forms of advertising which he turns into salesmanship by mail. The
discussion of systems of record and methods of use of this form of literature
is taken up under the head of the sales department.

SALES DEPARTMENT

The sales department proper is in charge of a sales manager, who has
immediate authority over his subordinates and is responsible for the results
secured by his department. No position in the business organization carries
with it greater responsibilities, for on the sales manager rests the burden of
marketing the goods at a profit.
Without entering into a discussion of the science of salesmanship, the
writer takes the liberty of suggesting some necessary qualifications of a
sales manager.
He must be thoroughly imbued with the importance of his work and
have an abiding faith in his ability to get the very best results out of his
department. He must be enthusiastic and capable of imparting his
enthusiasm to others.
He must know the goods, be they pianos or investment bonds. He must
believe in his goods and his house. Unless he feels that his house is the best
on earth and offers goods second to none, he cannot produce the full
measure of results of which he is capable.
He must know the goods of his competitor and what methods his
competitors are using. He must be willing to abandon his own pet schemes
when they fail to produce, or to adopt a new plan, even though originated
by another.
He must be a close student of human nature with the capacity for
judging men. He must be a salesman in every sense else he is in no position
to judge the qualifications of those in his employ.
On the other hand, the sales manager should be given full control of his
department, until he proves to be incompetent. While other members of the
organization will be consulted before a new campaign is launched, when the
plans have been approved he should be permitted to try them out without
interference. Assuming that he is a competent man in the first place, he will
be the first to detect the weak points and set about to find a way to
strengthen them.
Many a sales manager has had his usefulness impaired by the
interference of others before he has had an opportunity to give a selling plan
a fair trial. Selling campaigns have been discontinued before the turning

point was reached, because someone higher in authority lacked faith; when
they would have proved successful, if carried out as originally planned.
This is not an argument for a stubborn adherence to plans, regardless of
consequence—any sales committee is liable to make errors—but before the
campaign is launched the extent to which it shall be tried out should be
decided. If the sales manager is given an appropriation of $500.00, or
$5,000.00, for a trial, he can work intelligently, but if told to go ahead, and
then ordered to stop before his campaign is well under way, he should not
be charged with a failure.
Another thing that the sales manager should control is the question of
salaries paid to the salesmen. We maintain that the amount of salary paid to
a salesman is of no moment provided he is a profitable man. A $10,000.00
man who sells goods at a cost of 10% is more profitable than the $5,000.00
man who sells at 10%, or even 9%, because of the greater volumes of his
business. The management should gauge the sales department by net costs,
not by the amount of individual salaries.

BRANCHES OF SALES DEPARTMENT

The sales department is logically divided into two branches—mail order
and personal salesmanship. The mail order branch is that part of the
organization which has to do with the promotion of sales by mail. The
personal salesmanship branch is the division which makes sales by personal
contact with the customer.
The work of the mail order branch is conducted by correspondents—
letter salesmen—assisted by clerks to look after the routine of the
department.
The personal salesmanship branch is conducted, primarily, by salesmen
who visit the customers and personally sell goods. In many lines, the
personal salesmanship branch is supplemented by agencies, who come in
direct contact with the customer.
There are businesses in which the dealers, who carry the goods in stock,
are assisted by both the mail order and personal salesmanship branches in
making the sale to the customer. An example is the piano business in which
inquiries are referred to dealers, the dealer and prospective customer

followed up by mail, and the traveling salesman sent to assist the dealer to
close the sale.

THE MAIL ORDER BRANCH

When the mail order branch is spoken of it does not refer necessarily to
an exclusive mail order business, but the term is used to identify the
department in any concern which uses the mails to promote sales. While
there are many exclusive mail order houses, employing no personal
salesmen, there are practically no exclusively personal salesmanship
houses. There may be no effort to secure direct orders in this manner, but
the mails are used to influence sales. Extensive circularizing campaigns are
conducted for the purpose of making known to the consumer the merits of
certain commodities, which are sold only through dealers. In the sense here
used, such campaigns are within the province of the mail order branch.
Form Letters. An important factor in the conduct of the mail order
branch, is the use of form letters. In a campaign intended to secure direct
orders, the form letter takes the place of the personal salesman.
The form letter presupposes a uniformity of conditions. It is written to
appeal to certain desires of the recipient; its arguments are based on the
supposition that the same desire exists in the minds of all to whom it is sent,
and that the same arguments will cause its readers, as a class, to yield to
those desires.
The result of a form letter campaign depends on the extent to which the
letter fulfills its mission in adapting itself to the conditions of the class to
which it is sent—its adaptability to the mentality and environment of its
readers. The same argument will not appeal to the mechanic, farmer,
merchant, and banker.
The failure of most form letter campaigns can be traced to one of two
causes—failure to adapt the letter to existing conditions, or lack of
judgment in selecting a list for a trial. The goods offered may be used by
plumbers and lawyers, but the same letter should not be expected to pull
with both classes. Like the selling talk of the personal salesman, the letter
should be changed for each class.

Other conditions, also, must be studied. Iowa may have harvested a
bumper crop, while Kansas suffers from a drought; mills in the Pittsburg
district may be running overtime, while Buffalo is in the midst of local
labor disturbances. All of these local conditions influence the results of the
letter campaign.
As to lists used for trials, the more usual mistake is in the use of too
small a list. Some sales managers, who have mailing lists of from 25,000 to
100,000 names, profess to try out a letter with a list of 300 to 500 names. A
list of this size is not sufficient to give an actual test of the pulling power of
any letter. Some of the most successful letter salesmen give it from their
experience that the very smallest list from which a safe test can be made is
1,000 names.
Keying Form Letters. It is just as necessary to key form letters as to key
magazine ads. The key makes it possible to trace results. The question of
keying is most important when a series of letters is used—which is true in
most campaigns—for it then becomes necessary to check the returns from
each letter in the series. When one letter only is sent to a given list, the
replies received from that list can be safely credited to the letter.
There are several methods of keying form letters, among which are the
following: the reader may be requested to address his reply to a certain
department; he may be offered a sample or some novelty; or the letter may
be written in the first person singular so that replies will naturally be
addressed to the writer.
The writer confesses to a preference for the last named method. The
average mail order buyer likes to feel that he is receiving personal attention
—that there is someone in the house to whom he can write, instead of
addressing the house. A personal touch can be put into the letter signed by
an individual that is impossible in a letter signed in the name of the house.

Fig. 21. Detailed Record of Form Letters Mailed

There are those who contend that only the name of the house should be
used, that the name of an individual should never be signed to a letter, and
who have printed on their letter heads the phrase: "Address all
communications to the company, not to individuals."
While it is perfectly proper to use every legitimate means to keep the
name of the house before the public, there is a good deal of senseless fear
that the prestige of the house will be usurped by the individual. In some
quarters this fear has resulted in the adoption of ridiculously extreme rules
and regulations. One incident in the personal experience of the writer will
serve to illustrate the point. Having occasion to request a favor from a
certain manufacturer—a favor which would be granted, if at all, by the
advertising manager—and knowing the advertising manager personally, he
addressed the request to him, using his title in connection with the name of
the firm. Somewhat surprising was the following letter, received a few days
later:
Dear Sir:
We have your favor of the 12th, addressed to our Mr.————,
and your request will receive the attention of the proper individual.
Our method of handling correspondence is such that, to insure
proper attention, all communications should be addressed to the
company. We request that you observe this rule in the future.
Yours truly,

No more reason for the fear that the house will be injured by the
personality of one of its correspondents can be seen, than that the

personality of the salesman will have greater weight with customers than
the reputation of the house. If the personality of an employe—be he a
personal salesman or a correspondent—is worth anything in a business way,
the benefit accrues to the house that employs him.
There is one other objection to the use of the name of the writer of the
letter, and it comes from the United States Statute making it a criminal
offense to open mail addressed to another. But this objection can be easily
overcome; any employe whose name is used will sign an order authorizing
the opening of letters addressed in his name, unless marked personal.

Fig. 22. Record of Sales Resulting from Form Letters

Form Letter Records. A copy of each form letter written should be kept
permanently. The copies should be filed in a manner that will make it easy
to refer to them. For this purpose an arch file or binder is most satisfactory.
The letters themselves may be punched for the file, or the loose-leaf
scrapbook idea can be adopted, pasting several letters on one leaf.
Each letter should be given a number for the purpose of identification,
whether or not it appears on the letter itself. The copies should be arranged
in the file in numerical order, but where there are several departments or
divisions using form letters, they should be divided by departmental
indexes.
It is also well to keep a second copy of the letter with a sample of the
enclosures, as the enclosures may have an important bearing on the results.

These copies may be preserved in the manner suggested for filing copies of
ads and printed matter.
When a form letter is written, a record form, as shown in Fig. 21, should
be started. This may be on a card or loose leaf; the latter is preferred on
account of the larger space for the record. The heading shows the No. of the
letter, the subject, name of the writer, its No. in the series to which it
belongs—first, second, or third—the enclosures, and the names of any
special lists used. The body of the form provides for a record of letters
mailed during the year, with a monthly record of total costs.
The sheets are arranged in the order of letter Nos., in a card file or a
loose-leaf binder.
The reverse of this record form is ruled, as shown in Fig. 22, to provide
a record of sales resulting from the use of the letter. Sales can be entered
daily or weekly, but the daily record is recommended.
The methods of obtaining the details for these records is described later.
Follow-up Systems. A necessary and very important factor in the
success of a business transacted through the mails, is the follow-up system.
And in a business in which sales are made by personal salesmen, the
follow-up is used for certain purposes, and is as important as though used to
secure orders.
To follow-up is to keep after, to keep in touch with, and to keep a
certain subject before certain individuals. Whether used to secure orders or
make collections, the idea of the follow-up is the same, though it is better
known as a system for promoting sales.
The follow-up arises from the same necessity that compels the personal
salesman to call on a prospective customer more than once—often many
times—before the first order is secured, and continue to call to hold his
trade. The follow-up simply makes use of letters and other literature to take
the place of the personal salesman.
Mechanically, the follow-up system is a system or method that insures
the sending of the right literature at the right time. Letters—both form and
special—catalogs, booklets, folders, circulars, and mailing cards are all
used in the process of following up the prospective purchaser; the automatic
method of showing when each piece of literature in the series should be
sent, is the follow-up system itself.

Fig. 23. Vertical File Drawer Equipped as a Tickler

Tickler Method. The simplest method of handling the follow-up system
is to use a tickler in which to file memoranda or correspondence by dates. A
tickler consists of a file equipped with a set of indexes numbered from 1 to
31 to represent the days of the month, and 12 indexes printed with the name
of the month. The monthly indexes are arranged in order, and the daily
indexes are placed in front of the monthly indexes in numerical sequence.
The file may be a vertical correspondence file, a card tray, or a flat desk file.
In using the tickler for a correspondence follow-up, letters are filed back
of the index representing the day on which the subject is to receive
attention. Each day the letters filed behind that day's index are removed,
and after receiving attention, are filed ahead to the next follow-up date.
If it is desired to have a letter come up for attention in another than the
current month, the day of the month is noted on the letter, and it is placed
back of the monthly index. On the first of the month, the index for the
previous month is placed at the back of the file, which brings the current
month's index to the front. All papers that have been filed back of the
monthly index are then distributed by dates. A correspondence file drawer,
equipped as a tickler, is shown in Fig. 23.
For a small amount of correspondence, the use of the tickler is very
satisfactory, and it is also used to excellent advantage for keeping track of
the many matters that require attention at a future date. A tickler should be

included in the equipment of every office, no matter what the line of
business.
Card Follow-up. For most extensive follow-up systems, the card index
is used, for the reason that a card is easy to handle, occupies but little space,
and can be adapted to any classification desired. A card is used for each
prospective customer, or name on the list to be followed up, and should
bear the name and address and a brief history of the efforts made to secure
an order, or accomplish the object of the follow-up.
In operating a follow-up system—especially if the object is to sell goods
—the correspondent should have before him a history of the efforts
previously made to secure an order. He should know what letters and other
literature have been mailed just as the personal salesman knows what
arguments he has used. When form letters have been used it is not necessary
to have copies of the letters in each case, but they should be identified by
their numbers, or otherwise. Records of these letters, by date and number,
can be made on a card, so that the card itself will give the correspondent a
complete history of the case. The correspondence—letters from the
prospective customer and copies of special letters to him—can then be filed
in the regular way, and is accessible at all times.
The oldest method of operating the card follow-up is to use the tickler
index in a card file. The follow-up is operated in exactly the same manner
as described for the correspondence file tickler, except that the cards are
filed ahead instead of the original correspondence.

Fig. 24. Card Used for Follow-up

A typical follow-up card is shown in Fig. 24. At the head of the card is
the name and address of the prospective customer, followed by the credit
rating, the business, and the source from which the name was obtained—
whether from advertising, a special list, or from a traveling salesman. The
body of the card is ruled for a record of letters mailed, form and special
letters separated. When a letter is sent the No. and date—if a form letter—is
entered, and in the file column is noted the number of days the card is to be
filed ahead—as 10 days or 30 days. If at the time specified, the next form
letter in the series is to be sent, provided no response has been received, the
No. should be noted on the next blank line in the No. column, so that the
letter can be sent by a clerk, without consulting the salesman.
When the cards come from the file, those on which no form letter is
indicated for the next follow-up should be referred to the correspondent. If
he considers a special letter advisable, he should have all previous
correspondence attached to the card, that he may know just what has been
done to land the customer.
Cross-Indexing the Chronological File. One of the disadvantages of
the tickler or chronological index, described above, for a follow-up is the
difficulty of locating a card, when the date under which it is filed is
unknown. A letter may be written on June 10, and the card filed ahead to
June 25; on June 16 a reply may be received which makes it necessary to
find the follow-up card, but to do this it is necessary to look through all of
the cards filed between June 16 and June 25. If the card is not found, the
chances are that on the 25th a regular follow-up form letter, which will
make the system appear ridiculous, will be sent.

Fig. 25. Follow-up Card with Alphabetical Tab

To so file the cards that any one can be found by name, without
interference with the automatic features of the follow-up system, is an
important consideration. This can be accomplished by the use of a card like
the one shown in Fig. 25. It will be noted that this card bears a small tab or
projection, on which is printed the letter B. These tabs are cut 1/20 of the
width of the card and are in twenty positions across the card. This allows
for twenty subdivisions of the alphabet, the A tab being in the first position,
B in the second, etc.
In filling in a card, one bearing the letter corresponding with the first
letter in the name of the correspondent is selected—a B card for Brown, an
S card for Smith. Now since B is always printed on a tab in the second
position, and this tab is always the same distance from the end of the card,
when the cards are filed, all B tabs will be in a straight line from front to
back of the drawer.
No matter under what date it is filed, if Brown's card is wanted it will be
found by looking through the row of B tabs in the second position from the
left. Regardless of the number, all tabs printed with the same letter are
found in one row, making it possible to file cards by date and cross-index
by name.

Fig. 26. Follow-up Card with Movable Tab to Show Dates

Cross-Indexing the Alphabetical File. An improvement over the cross-
index of the tickler, described above, is the method of cross-indexing an
alphabetical file in a manner to insure a follow-up on a specified date. A
card without tabs, as shown in Fig. 26, is used. Across the top of the card is
printed a series of numbers representing the days of the month. This may
include all of the numbers, from 1 to 31, or the month may be divided into
five day periods.
In connection with this card a metal tab, which can be attached at will,
is used. One of these tabs is placed over the number which represents the
date on which it is to be followed up. The card is then filed, indexed by
name.

THE SALES DEPARTMENT IN THE NEW YORK OFFICES OF J.
WALTER THOMPSON COMPANY

The numbers being printed in the same position on every card, all tabs
placed over the same number will be in a direct line in the file. The cards to
be removed for the follow-up on a certain date are those bearing tabs over
the number representing that date. On June 20, for illustration, all cards
with tabs over No. 20 are taken from the file. When letters have been
written, the tabs are moved to the next follow-up date, and the cards
returned to the file.

Fig. 27. Card for Combined Daily and Monthly Follow-up

This method of cross-indexing with movable tabs permits of the filing
of the cards in any manner desired, with the knowledge that the follow-up
date will be surely indicated. The tab method is also used for a combination
of daily and monthly index. On the card shown in Fig. 27, the names of the
month are printed under the date. For a follow-up in a later month a colored
tab is used to represent the monthly index, while a black tab represents the
day of the month. To illustrate, we will suppose that the card is placed in the
file on Oct. 5 and the next follow-up date is Nov. 10; a black tab is placed
over No. 10, and a red tab over No. 2. The card will not be disturbed on
Oct. 10, as the red tab indicates that it is to be removed in a later month, but
on Nov. 1, the red tab is removed from the card, and the black tab will bring
it to notice on Nov. 10.
Lists of Customers. Every concern whether it secures business through
the mails, by means of personal salesmen, or both, should have a list of its
customers properly classified and arranged for easy reference. This should
be something more than a list of names and addresses; certain essential
facts about each customer—such as his business, the name of the buyer, the
credit rating, and amount of purchases—should be recorded.
All of this information can be placed at the head of the ledger sheet, but
it never should be necessary for another department to consult the records
of the accounting department for information needed daily. The information
given by the customers' list is of most value to the sales department and
should be kept in that department.

Fig. 28. Monthly Record of Purchases of a Customer

For customers' lists, cards are most largely used, and are most
satisfactory. Cards are readily classified, new names can be added at will,
and old names are removed without disturbing the balance of the list or the
general arrangement of the cards.
The follow-up card can be used as a customer's card, but should be
moved from the follow-up to a separate file; or a new card can be made
when a prospect becomes a customer.
On the back of the customer's card a form similar to Fig. 28 should be
printed. This is intended for a record of the purchases of the customer and
provides for a monthly record, covering a period of five years. The amount
of purchases is entered monthly from the ledger. In a business in which the
purchases of each customer are infrequent, each order should be entered
with the date, in place of the monthly summary.
Classification of List. The value of a list of customers is greatly
enhanced by a careful classification of the names. Lists of those engaged in
the different trades and professions can be bought, but no list is so valuable
as one made up of the names of those who have answered your
advertisements, or with whom you have done business.

Fig. 29. Card File for a Classified Customers' List

Most houses sell goods to those in different trades or occupations. A
manufacturer may sell different lines, or the same line, to jobbers, retailers,
and consumers; a mail order concern may sell to farmers, mechanics, and
small retailers; a retailer may sell to men and women. To sell each different
line to a different class of people, requires different arguments—a new line
of selling talk must be used in each case. While the personal salesman has
an opportunity to size up his prospect, and make his argument fit the
individual, the letter salesman must fit his argument to a class. To drive
home the right argument, he must be sure of the class to which his prospect
belongs. He cannot hope to form the personal acquaintance of his prospects,
but must rely on a proper classification.
The classes into which a list of customers and prospects should be
divided depends on the nature of the business and the class of goods sold. It
might be manufacturers in different lines, the different professions, retailers
in several lines, or all of these combined into one list.
With a card list, any classification is easily provided. If the number of
classes is small—not exceeding seven or eight—the classes can be
indicated by the color of the card, a white card being used for one class,
blue for another, etc.
For a more extensive classification, cards with numbered tabs, as in Fig.
29, are used. It will be noted that there are twelve of these tabs, and that
they are numbered from left to right. In the follow-up systems, from which
this illustration is taken, each number represents a certain line of business.

Suppose that No. 1 represents manufacturers; if all manufacturers on the
list are to be circularized, only those names recorded on cards with the No.
1 tab are addressed. Now if the business is one dealing in specialties, it may
be that the specialty to be sold will depend on the position held by the
prospect—a sales manager will be more interested in a book on sales
methods than in one on factory methods. To further classify the list, colors
are used.
In the system referred to, eight colors are used. Seven of these represent
occupations of prospective customers, while the eighth is used for
customers. A manager or executive officer is represented by a blue card, a
sales manager by a white card, etc. When a prospect becomes a customer,
the card is removed from the follow-up file, the amount of the sale is
entered on the back, and it is placed in another file reserved for customers.
At the same time a red card is placed in the follow-up file for use in further
circularizing. The tab on the customer's card shows his business, but the
occupation is not so important since he is already acquainted with the house
and its goods. A more familiar tone can be adopted in letters to a customer,
than to a prospect.
A complete classification, such as provided in this system, is of
immense value to a letter salesman. Suppose he wishes to address all
executives—the blue card is used; if he wants to reach customers who are
manufacturers, red cards with No. 1 tabs are the ones used. He can make his
letter fit a particular class and be sure of the class.
Classification of Sales. There are certain lines of business in which a
second order for the same article is seldom received from any customer. An
example is the music business. The chances of selling a customer a second
piano are remote, but the fact that he has purchased a piano is a sure
indication that he will be interested in certain classes of music. Book
publishing is another example. A man who buys a book on advertising, or
commercial law, or auditing is quite likely to be a buyer of other books on
the same or kindred subjects.

Fig. 30. Card for a Classified Record of Purchases

In a business conducted through the mail, a classified sales list that
shows at a glance what classes of goods have been sold to each customer
furnishes an excellent guide for further circularizing. On such records it is
not necessary to show the amounts of purchases—the class is the important
item.
Fig. 30 shows a card used for a record of this kind. The goods are
divided into four classes, indicated by the letters at the head of the columns.
When the first sale is made, the name and address are entered on one of
these cards, and the date indicated in the proper column. A movable tab is
placed on the upper edge of the card, over the letter that indicates the class,
and the card is filed. As subsequent purchases are made the dates are
entered, and if the purchase includes another class of goods, another tab is
placed on the card. In time, one card may bear four tabs, indicating that the
customer has bought goods in all four classes.
When new goods are received, they can be brought to the notice of
those customers whose purchases indicate that they are most likely to be
interested, without disturbing the other cards.
Indexing Customers' Cards. The best manner of indexing customers'
and prospects' cards depends on the size of the list. A list of a few hundred
names is best indexed alphabetically. A large list should be indexed
geographically—according to location.
The geographical index consists of index cards printed with the names
of the states, and sets of indexes bearing the names of the cities and towns
in the different states. The state indexes are arranged in alphabetical order,

and back of these the town indexes are filed alphabetically. The cards are
filed back of the town indexes, these also being arranged alphabetically.
When the number of names in a city is large, the cards are further
subdivided by alphabetical indexes. In states where the list is small, an
alphabetical index can be substituted for the town index, the letters
representing towns; names of customers in Alton would be filed back of the
A index, those in Springfield, back of the S index.
An advantage of the geographical index is that a definite territory can be
covered by the letter salesman, or the personal salesman can go over the list
and find out the condition of the trade in his own territory.

PERSONAL SALESMANSHIP DIVISION

Though the volume of business secured through the medium of the
mails is increasing at a rapid rate, the bulk of the business of the country is
done by personal salesmen.
Leaving out of the discussion the question of retail salesmanship, the
personal salesmanship plan—the employment of traveling salesmen—is the
least expensive method of selling goods at wholesale. To sell certain low-
priced specialties to consumers, the mail order plan is sometimes best, for
the reason that it is necessary to reach a large number of possible buyers to
find a few actual buyers. This can be done at less expense by letters than by
traveling salesmen.
More is being learned about how to use the mails to promote business—
how to make the follow-up system an assistant to the salesmen. The
manufacturer whose goods are sold to the trade, by salesmen, is learning
how to build up his own business by assisting the dealer to sell his goods.
He advertises to interest the consumer, he follows up the consumer and the
dealer, and in the end assists his own salesman to sell more goods.
Much good literature has been written on the subject of salesmanship,
plenty of advice about being systematic in his work has been given the
traveling man, but very little has been written on the subject of making
sales records and reports of assistance to both the house and the salesman.
Some suggestions on this phase of the question are made in this discussion.

Routing Salesmen. How to route his salesmen to the best advantage is
one of the important problems of the sales manager. He must first decide
how often the territory should be covered, then the extent of the territory he
will attempt to work, and the number of men required. When this has been
done, the territory of each man must be laid out, and a route which will
enable him to cover the territory with the smallest mileage, must be
selected. The territory should not be larger than a man can cover in a
specified time, but large enough to require all of his time.
Map and Tack System. To know just where each man is at all times—to
be able to locate Smith or Brown instantly, every day—is very necessary.
Perhaps the best method of doing this is by the use of what is known as the
map and tack system.
State maps, printed in colors, are fastened in the bottoms of shallow
drawers, a drawer for each state. Sharp pointed tacks, with heads covered
with silk in a great variety of colors, are used for various classifications, and
colored silk cords are used to indicate routes and territory boundaries.
To each salesman is assigned a specific color, by which he is always
known. Tacks with heads of the proper colors are placed in the map at the
towns on his territory. A cord is then strung from tack to tack in the order in
which he will cover the territory. When the salesman leaves a town the cord
is removed from that tack, coiled up, and placed over the tack at the next
town. The tack at the end of the cord always shows the present location of
the salesman. Fig. 31 illustrates a map with cords—represented by the
heavy lines—indicating salesmen's routes.

Fig. 31. Map Showing Operation of Map and Tack System Courtesy
Browne-Morse Company

Other tacks, with heads of a different color or coiled wire heads for
holding labels, are used to indicate special facts—as, competition strong,
customer ready to buy, claim to be adjusted, or collections to be made.
These are placed at the side of the salesman's tacks and are a reminder to
write to him, about the special matter, at that town. If an inquiry is received
or a good prospect developed, in some small town not regularly visited by
any salesman, a special tack is placed in the map at that point. A cord of
special color is then strung from this tack to the nearest stopping point on
any salesman's route. This is a reminder to write the salesman instructing
him to make a special trip to this point outside of his regular territory.

Fig. 32. Traveler's Route Card

Route Cards. It is not always advisable to attempt to lay out the entire
route of a salesman in advance, neither is it always possible for him to make
the towns in the time calculated. It is wise, therefore, to require the
salesman to keep the house constantly advised about his stopping places.
When the route is a long one, a route card, as shown in Fig. 32, should be
mailed to the house weekly. The card should be 3×5 inches in size, to fit the
standard size card drawer. Route cards of all salesmen, whether there are
five or fifty, can then be kept in a card tray in the manager's desk.
Reports of Calls. The successful sales manager of the modern type is
learning to get more and more business from his territory; he is not satisfied
to show a large volume of business in a large territory, unless he feels that
he has secured all of the business possible from every town. If Baker sells
two dealers in Peoria, well and good; but why did he fail to sell the other
five dealers in the same line? And it is not in a fault-finding spirit that he
asks why; if he knew why, perhaps he and the salesman could together work
out a plan that would solve the difficulty and secure from one to five new
customers.

Fig. 33. Salesman's Report of Calls in Each Town

The salesman knows better than anyone else why he has failed to sell
certain dealers; he is the man who becomes familiar with the actual
conditions in each town—what competitors' goods are most popular,
reasons for local business depression such as crop failures or labor
disturbances, and any causes for dissatisfaction with the goods or business
methods of his own house. Possibly the sales manager is not in a position to
change conditions, but certainly, he cannot solve the difficulties unless he
knows what they are. The salesman should, therefore, assume that there is
at least a chance that he will receive assistance by keeping the house posted
on every detail that might affect his trade.
The only way in which practical results can be secured is for the
salesman to make a report on every call made, in every town on his route. A
form of report card is shown in Fig. 33. This is intended for a brief report of
calls in one town. Space is provided for reports of seven calls, but if there is
a larger number of dealers, more than one card is used. On the back of the
card, a full line is allowed to each dealer for remarks.
The salesman is instructed to mail one of these cards, in an envelope
specially provided for the purpose, from each town on his route. When
received, the sales manager examines them, makes his notations, and files
them according to salesmen's routes. When the salesman is next in the

house the sales manager goes over the cards with him, and they discuss
each case individually.
Forms of report cards differ, naturally, according to the business. In
some lines more specific information is needed in each case to enable the
sales manager to judge intelligently the chances for future business. Fig. 34
represents a card used in one business for a specific report on each call
made. The form shown in Fig. 35 provides for a brief report including
suggestions regarding the date of the next call.
Follow-up of Dealers and Salesmen. In the modern advertising
campaigns of manufacturers in many lines, an effort is made to secure
inquiries from consumers, though the goods are sold through dealers only.
The inquiry is usually secured by a promise of a free sample, a handsome
catalog, or other piece of printed matter.
These inquiries should always be referred to the nearest dealer, and in
answering the inquiry, the name and address of the dealer should be given.
In addition to the inquiries received from advertising, manufacturers in
certain lines invite dealers to send them the names of good prospects. One
of the large paint manufacturers asks the dealer to send two lists—one of
people who are talking of painting their buildings, one of people whose
buildings need painting. The manufacturer of a widely advertised washing
machine asks for the names of all possible buyers to whom the dealer has
talked washing machines, without making a sale.
The object of all this is to enable the manufacturer to assist the dealer to
sell more goods of his manufacture. Sometimes the margin of profit to the
manufacturer is such that he can afford to maintain an extensive follow-up
on the names, and even send one of his salesmen to assist the dealer to close
the sale.

Fig. 34. Specific Report on Individual Calls

Fig. 35. Salesman's Report of Call and Follow-up

The manufacturers of one of the popular pianos has secured excellent
results from the operation of such a system. In this system, the card shown
in Fig. 36 is used to follow-up both the inquirer and the dealer. It will be
noted that columns are provided for a record of the postage on every letter
or piece of printed matter mailed. The prospect receives a letter once a
month, while once in two months a letter is written to the dealer asking for
a report.
With the first letter to the prospect, a postal card acknowledgment form
is enclosed. On the postal, space is provided for names, which the prospect
is asked to fill in with names of friends who might be interested in pianos.

By this simple expedient, an original inquiry is often added to with a half-
dozen new names.

Fig. 36. Card Used for Follow-up of Dealer and Inquirer

With the first letter to the prospect, there is also enclosed a formal letter
of introduction to the dealer. This letter, which is addressed to the dealer,
reads as follows:
The bearer of this letter wishes to inspect our pianos. We shall
esteem it a favor if you will kindly explain the merits of these
instruments and give—— ——an opportunity to thoroughly examine
them.
Respectfully,

At the time of referring the inquiry to the dealer, the blank shown in Fig.
37 is filled in and mailed to the salesman in whose territory the dealer is
located. The lower half of the blank is for the salesman's report to the
house.

Fig. 37. Notice of Inquiry Sent to Salesman, with Blank for His Report

Salesman's Expense Accounts. Detailed expense accounts should be
mailed to the house weekly. A conveniently arranged form, with columns,
for regular expense items such as hotel, R. R. fare, livery, etc., will greatly
assist the salesman in making up his accounts. Such a form is shown in Fig.
38. This is a card 3"×5" in size, punched to fit a small ring binder small
enough to be carried in the pocket. Both sides of the card are used,
providing for a record of expenses covering a period of one week.

SALES RECORDS

Regardless of the nature of the business, whether sales are made
through the mail, by traveling salesmen, or resident agents, summaries of
sales from day to day, supply much valuable information to the sales
manager. Sales summaries which show the amount of sales each day and
month, are the working charts of the sales manager.
It should be remembered that these statistics are chiefly valuable for
comparative purposes, but to insure comparisons of value, the statistics
must be compiled in proper form. It should be possible to compare, not

alone total sales, but the sales of each man in different periods, the sales of
one man with those of another, the sales in different territories, the sales of
different departments, the sales by mail with those of personal salesmen.

Fig. 38. Traveler's Weekly Statement of Expenses

Daily Sales Records. The daily record of sales should show the sales of
each department, the source of the sales, and the proportion of cash and
credit sales. These should also be divided as to wholesale and retail.
A convenient form is shown in Fig. 39. This is a sheet punched for a
loose-leaf book, and there should be as many copies as there are men in the
organization who are directly interested. Besides the sales manager, the
general manager, the advertising manager, and the comptroller are all
directly interested. By using carbon paper as many copies as needed can be
made at one writing.

Fig. 39. Daily Tabulation of Sales by Departments

Fig. 40. Monthly Recapitulation of Daily Sales Reports

EXECUTIVE BUILDING OF THE LEWIS PUBLISHING CO.,
UNIVERSITY CITY, ST. LOUIS, MO.

Monthly Sales Records. Fig. 40 represents a sales sheet arranged for a
monthly summary, the statistics being obtained from the daily records. The
monthly summary follows the same lines as the daily record, except that
sales are not divided by departments.
Where the business is divided into several departments one of these
monthly summary sheets can be used for each department.

These daily and monthly
summaries provide for a comparison
of wholesale with retail, mail order
with personal salesmen, and
departments. If there is a gain in one
department and a loss in another, or
a fluctuation in total sales, these
summaries point out the source,
showing where greater efforts are
needed and where praise is deserved.
Salesmen's Records. While the
sale summaries described afford
many valuable comparisons, they do
not provide a classification that will
indicate the value of each salesman.
There should be a record showing
the volume of business of each man.
Fig. 41. Daily and Monthly Record The form shown in Fig. 41 shows a
of a Salesman card used for a daily and monthly
record of one salesman. The form
might be elaborated to show cost of goods, salary, expenses, gross and net
profits; but the tabulating of this information is more properly the work of
the statistical department.
These cards should be filed alphabetically by name of the salesman, and
divided according to states. They will then show the sales of each man and
in each territory.
For a business in which goods are sold by resident agents, a card similar
to the one shown in Fig. 42 should be used. The upper half of the card
provides for the recording of certain essential information, while the lower
half is used to record sales.

Fig. 42. Record of Sales by an Agent or Dealer

THE CREDIT DEPARTMENT OF THE FIRST NATIONAL BANK,
CHICAGO, ILL.

THE CREDIT ORGANIZATION

THE CREDIT MAN

Acknowledged specialists may be employed in every branch of an
enterprise, the shrewdest brains may be engaged in buying, producing, and
selling, but the final conservator of the business is the credit man; others
may be profit makers, but he is the profit saver in every commercial
organization.
He is on guard constantly—always on the lookout for the slightest sign
of danger, ever ready to take prompt and vigorous action to avert disaster to
his house or to lend a helping hand to a customer. His duties make him the
most misunderstood man in the entire organization.
He is thorough, methodical, painstaking, a keen student of human
nature, possessing faith in the inherent honesty of his fellow men. The
insistent search for facts that he demands, may cause him to be regarded as
an inquisitive busybody by the very customer whom he desires most to
help; as a carping critic, by the salesman of his own house.
Through it all he remains faithful to his trust, watchful of the interests of
his house, and has the satisfaction of knowing that in spite of his mistakes
but a remarkably small part of his credits prove bad—that where his
conservatism has lost hundreds in trade, it has prevented the loss of
thousands.
On no man in the organization is there such tremendous pressure
brought to bear to secure favors; on no man do the consequences of his own
mistakes come back so surely. The credit man must be firm, and, while
availing himself of every reliable source of information, he must stick to his
decisions, for he is expected to collect from those to whom he has extended
credit. Every other man has a loop-hole through which he may escape

criticism; if a customer is lost because goods are unsatisfactory, it may be
"up to" the salesman, the shipping clerk, the superintendent, a foreman, or
even an obscure mechanic. The credit man has no one on whom he can
place the blame; if a customer fails to pay, no reason short of an earthquake
will relieve the credit man of the responsibility.
So much for the credit man. Now for a discussion of the work he is
expected to do, the machinery of his office, and his methods of operation—
for the writer disclaims any intention of attempting to teach the student how
to become a credit man.

INFORMATION REQUIRED

The most important function of the credit man is the determining of the
credit risk—the amount of credit that can safely be extended to each
individual. When he consents to the delivery of goods to be paid for at a
future date, he is loaning his firm's money.
Before credit is granted extreme care must be exercised in determining
the ability of the purchaser to pay, or that he will be able to pay when the
bill is due. After necessary precautions against assuming too great a risk
have been taken, a further insurance against loss is included in the amount
added to cost—a certain per cent of the profit is expected to offset the risk.
In determining the credit risk, different classes of information are
necessary in different lines of business. While certain specific information
about individual applicants for credit is necessary, the subject may be
divided into two general classes—wholesale and retail. Under the head of
wholesale, is included information about all business concerns, whether a
single proprietor, a partnership, or a corporation. In a general way also, the
same information is required in respect to these concerns by the banker, the
manufacturer, the jobber, and the wholesaler. Under the head of retail, is
included the transactions of a retailer with his customers, who may be
regarded as individuals.
Leading authorities on the subject of credit place the factors which
determine the credit risk in two classes—the man and the business. Under
the first heading is considered the business morals of the debtor and his
ability in, and familiarity with the business in which he is engaged. The

second heading—the business—is considered from the financial standpoint,
divided as to its assets and liabilities, and the profits or losses made in its
operation.
But as to the relative importance of the two principal factors—the man
and the business—authorities differ. In his valuable contribution to the
literature of credits, Mr. E. St. Elmo Lewis takes the stand that the man—
his character—should be considered secondary. To quote from Mr. Lewis'
book:
If goods are the basis of all credit, character of the owner is and should be an after
consideration. The very first question any credit man should ask, is, can he pay?

The question of a man's ability to pay is becoming of greater ease of solution.
The question of the intention or inclination to pay must always be shrouded in the
nebulæ of psychological theory.
What is the applicant worth? is the crucial test. Then we shall test him by another. What
sort of a man is he?
Do we buy a law suit when we sell him goods?
How much must we add for moral insurance against loss?
Character is of vital importance in small concerns; of vital importance in concerns doing
a large business on small capital, and it becomes of less importance as we progress into the
field of corporations.

In direct contrast to this contention are the views of Mr. Ernest Reckitt,
as expressed in an address delivered before an organization of bank clerks.
After naming the factors to be considered by the banker before extending
credit, he said:
You will note that in enumerating these factors I place first, and purposely so, "The Man
Himself," and I believe I am correct in stating that bankers are now placing more stress
upon this point than ever before. The man of good character and intelligence, who is full of
energy and perseverance, will not find it difficult to obtain a reasonable line of credit with
his bankers, while the man who is deficient in those qualities, whatever his reputed wealth
may be, will be looked upon with suspicion. It therefore behooves you to become students
of human character as well as students of banking, if you are to fill the highest positions
within your reach.
These comments may be out of the range proposed by this paper, but I feel I cannot
leave this topic without giving you an illustration of the point I wish to emphasize, namely:
That it is the character of the man, or men, in a business, which must be first considered
before the banker makes a loan. Some time ago, in a certain city, there was a large
corporation reputed to be very wealthy, whose balance-sheets were beautiful to behold.
Their business being large, they were borrowers of some of the largest banking institutions
of their city. Apparently without any warning the corporation was declared bankrupt and
went into the hands of a receiver. Later, investigation showed that the balance-sheet was
misleading; some people might have called it a worse name, for the assets had been
overstated and the liabilities understated. I happened to be in that city at the time of this

failure, and, meeting a director of one of the banks with whom I was well acquainted, I
inquired if his bank had been caught. "No," said he, "they did try and open an account with
us some time ago with the object of becoming borrowers, but we turned them down." I
asked him what reasons he and his colleagues on the directorate had for such action at a
time when this corporation was supposed to be so prosperous. "Well," said my friend,
"some time ago it came to my knowledge that this corporation paid no water tax and that
its personal property tax was a mere bagatelle to what it should have been, and I figured
out that the officers of a corporation that would be guilty of petty bribery would not be
good customers for our bank."
So it will be seen that a knowledge of the business morals of the men in your
community and a high ideal, on your part, of what constitutes good business morals is a
most essential quality in the make-up of a banker, and that it was these factors that enabled
the bank of which my friend was a director to escape what otherwise would have been a
bad debt.

Financial Statements. Without attempting to decide the relative
importance of the two principal factors, it can safely be stated that one of
the first steps to be taken by the credit man is to secure a financial statement
from the applicant. And the character of the statement may serve as a guide
in determining the character of the man with whom he has to deal.
Most business men are willing to comply with any reasonable request
relative to their financial standing, when applying for credit. Until recently,
the average man had objected to giving out such statements, except to his
bankers, but with the more universal demands for such statements has come
a change, and now a statement of some sort is almost always obtainable.
The form of statements used by banks differ somewhat from that used
by manufacturers and jobbers, and, while it differs slightly as between
banks, and also as to whether the borrower is an individual, a partnership,
or a corporation, in general the statement required follows the lines of the
form shown in Fig. 1. This statement is signed, in the name of the firm by a
member, in the case of a partnership; and in the name of the company by
one of its officers, in the case of a corporation. A statement in the same
form gives all of the information of a financial nature required by the
manufacturer or merchant.
Analysis of the Statement. Of equal importance with the statement is
the ability to read it—to correctly interpret its real meaning. This calls for a
careful analysis of the several items of which it is composed. To make a
correct analysis means that the credit man must have a general knowledge
of the business in which the one asking for credit is engaged. The banker
must know, for example, whether the season is one in which more capital is

likely to be needed in the trade of the borrower, or one in which he should
be liquidating his indebtedness.

Fig. 1. Customer's Financial Statement

So important is this phase of the question that some of the larger banks
have adopted the plan of assigning requests for loans in different businesses
to different officers. One man will investigate real estate securities, one,
applications from board of trade houses, another handles applications from
packing houses, others look after the steel, building, jobbing, and
manufacturing enterprises. Each man is a specialist, making a special study
of conditions in the business to which he is assigned.
In making an analysis of a statement, each item must be taken up
separately and considered with respect to its relationship to other items, and

its bearing on the statement as a whole.
Cash on Hand. The cash on hand should be consistent with the needs of
the business, and, if listed separately, the cash in office should never be a
large sum. There is seldom any good reason why cash should not be
deposited daily. The banker will find it necessary to carefully scrutinize the
amount in bank, particularly if the borrower claims to deposit in no other
bank.
Merchandise. This item is always a somewhat uncertain quantity; often
an estimate pure and simple, and the debtor is unlikely to make his estimate
too low. In the absence of provable figures, it is necessary for the credit
man to apply his knowledge of the business. Is the stock larger than should
be required? Is it too low to enable the debtor to keep pace with his
competitors? Or, if a manufacturing business, how much is raw material and
how much finished goods?
One of the important factors in making an analysis of this item is a
knowledge of the accounting methods of the debtor. Does he keep stock
records, or if not, is his stock well cared for and stored in a manner to
permit of a reasonably accurate estimate? On the latter point, reports of the
observation of salesmen, referred to later on, have an important bearing.
Bills Receivable. On the statement form shown, this item is divided as
to notes, secured and unsecured, not due and past due. To state that the
amount of bills receivable is so much is one thing, to state the amount not
due, is quite another. Any considerable amount of unsecured and past due
paper indicates lax methods in the debtor's own credit department.
Accounts Receivable. This item is divided as to accounts less than 60
days past due and accounts more than 60 days past due. These items require
the same close scrutiny as bills receivable.
The two items—bills and accounts receivable—should bear a
reasonably constant ratio to the amount of sales. Any unusual increase in
the percentage of book debts to sales calls for careful scrutiny, and leads to
one of three conclusions: that trade conditions are bad, that the credit
department has been lax, or that the amount is overstated.
The first of these conclusions is supported or rejected by the credit
man's knowledge of financial conditions in general, and of conditions in the
particular trade of the debtor. During a financial panic, or in a season
following crop failures, it is to be expected that book debts will be greater

in amount than in ordinary times. In the event of the third conclusion, it is
time for a careful investigation. As a rule, the investigation will be
productive of best results if an examination of the books by a public
accountant is included.
Due from Stockholders. This is an item which must be carefully studied.
Who are the stockholders or partners who own the firm, and for what? What
is their financial responsibility?
Sometimes, stockholders whose entire fortunes are invested in a
corporation are found to be debtors to the same corporation for borrowed
money.
Due for Merchandise. This item is divided as to accounts not due and
past due. It should be carefully compared with the same item in statements
furnished in the past. An increase may or may not be due to natural causes
such as the requirements of the trade during a particular season.
Due for Borrowed Money. Any increase in this item should be offset by
an increase in assets, or a decrease in other liabilities.
Liability as Surety. This is an item of more importance than is generally
accorded to it. True, the liability is a contingent one, but many a man has
been forced into bankruptcy by the failure of another, for whom he had
become endorser.
Another item which should in the opinion of the writer appear among
the liabilities, is discounted paper. When a man discounts the paper of a
customer, received in the course of business, he assumes a liability for the
amount, if not paid at maturity. True, the liability is contingent, but a
liability nevertheless. The extent of the liability depends on the prosperity
of his own customers and the care which he has exercised in accepting their
paper.
Information for Retailers. The information available for the retailer is
of a very different class. Here, the factor, the man himself, plays a more
important part. The retailer is obliged to depend more largely on his
personal knowledge and the general reputation of his customer.
The city retailer, for instance, needs to know where the man works, his
salary, his reputation for paying others—his landlord, grocer, and butcher—
and something about his personal habits and general reputation.
How long has he been in his present position?
Does he make frequent changes?

Does he own a home?
What rent does he pay?
Any other wage earner in the family?
These are some of the questions, the answers to which will assist in
determining the credit risk.
The country retailer needs other information about his customers. As a
rule, he can answer all of the questions asked by the city retailer in respect
to his own customers. He is more intimately acquainted with his customers;
he has a better opportunity to learn their characteristics and habits, than the
city retailer. The country retailer has another advantage, in that a closer
bond of friendship exists between him and his neighbor merchants. The
interests of city merchants are no less common, but distances separating
them make an interchange of views more difficult.
About his country customers—the farmers—the retailer requires still
different information. Besides full information about the real estate owned,
and mortgages given, he needs to know something about the man himself.
Does he market his crops early, or is he a speculator—always holding
for possible higher prices?
Is the farm well kept up?
Are the implements properly housed, or left outside at the mercy of the
elements?
Does he keep his live stock in good condition, and how much does he feed
for market?
Is he thrifty or shiftless?
Only by personal contact can these things be learned. The country
merchant who keeps in closest touch with his farmer customers—
sympathizing with them in their misfortunes and rejoicing in their
prosperity—is usually the most successful. As one country merchant puts it,
he must act as a general advisor, and help them bear their very aches and
pains.

SOURCES OF INFORMATION

The usual sources of credit information are the mercantile agencies,
reports from local correspondents, reports from traveling salesmen, and

merchants' associations or credit reporting agencies.
Mercantile Agencies. Of these sources, perhaps the best known and
most widely used by manufacturers and jobbers, is the mercantile agency.
The mercantile agency is the outgrowth of a necessity. About the year 1840,
a few New York merchants formed an association for the interchange of
credit information. Later, this became a business conducted by individuals
who charged a small fee for written reports.
The business has grown to such proportions that a single agency
requires about 200 offices, located in the principal cities throughout the
world. In the territory of each office, which is presided over by a manager,
correspondents are employed, and at certain seasons country reporters
traverse every district, gathering data to be forwarded to the branch offices.
Every court house in the United States has its paid correspondent, who
promptly reports any action—as the filing of suits, recording of mortgages,
or entering of judgments—that might affect the credit risk of any business
man in the country.
Some idea of the magnitude of the business, and the task of gathering
statistics, can be gained when it is considered that the books of a single
agency contain the names and ratings of about 1,500,000 persons. About
each of these individuals, the latest data collected by the reporters is on file
in the various branch offices.
Delays in securing information is one of the most common complaints
against the agency service, but the service is probably as prompt as can be
expected. Suppose a request for a special report is received this morning.
First, the information on file is copied, and proofread to guard against
errors. This is sent to the subscriber, but if it is not of a recent date he is
advised that further information will be forwarded. Or, there may be no data
on file, in which event a reporter is assigned to the case. He may be obliged
to make several calls before finding his man, and when found, the man may
be reluctant about giving information. If real estate is listed, the real estate
man must look up the title and mortgage records. Thus, two or three days
may elapse before it is possible to furnish the report.
Some complaint is heard that reports furnished by the agencies are not
sufficiently specific—which is probably true in many cases—but it is often
quite difficult to obtain information on which positive statements can be
based. On the whole, the service of the agencies is of very great value to the

subscriber. As to its defects, the best way to overcome them is for the
wholesaler to establish a credit organization of his own, to supplement the
service of the agency.
Local Correspondents. If the matter is properly handled, much
valuable information can be secured from local correspondents. The banker,
or a local attorney, is in a position to make confidential reports on local
merchants. In fact, the agencies secure much of their information from this
very source.
But, in establishing local correspondents, the exercise of good judgment
is necessary. The local attorney should not be expected to furnish
information without pay, or to go into details that would not be asked of an
agency charging $100.00 a year for the service.
An attorney has favored us with a blank sent out by one wholesale
house, on which he is asked to make a complete report. Among other
information requested, the blank calls for the value of merchandise, realty,
cash, total worth, liabilities, and numerous references to his character,
habits, etc. Following this statement is the question, "if not paid, can you
collect?"
Here is a very complete statement, to compile which would require
several hours' research, but without a single suggestion that the attorney
will receive pay. And then he is asked if he can collect, after the house has
exhausted all usual methods.
A certain other concern, when opening new territory, writes to a local
attorney telling him they are entering the field; that they will require
information from time to time, for which they expect to pay a reasonable
fee; and ask if he is in a position to represent them in this capacity. At the
same time the attorney is told that he will receive for collection any
accounts on which such action may be necessary.
When a special report is desired, the blank shown in Fig. 2 is sent. The
local correspondent is expected to give as full information as possible, for
which he is paid promptly.
In this way, excellent results are secured. There is some question about
the advisability of leaving the amount of the fee to the correspondent. A
better plan is to have the fee to be paid for all ordinary reports decided in
advance, extra compensation to be allowed in special cases. The average

country attorney will furnish an intelligent report for two dollars—a low
price for reliable information.

Fig. 2. Local Correspondents' Report Blank

Traveling Salesmen. Certain information about the business and
general reputation of a customer can best be obtained through the salesmen
of the house. They are the men who come in direct contact with the
customers, acquiring an intimate knowledge of each.
The average salesman objects to making out lengthy reports, but if
approached in the right spirit, will give the credit man the benefit of his
observations. The salesman's judgment is scarcely to be relied upon in the
matter of the financial standing of a customer—his anxiety to sell goods
makes him too optimistic—but he is probably the best judge of the
character and business ability of a man on whom he is calling regularly.
Frequently a spirit of antagonism to the credit department exists among
the salesmen. This condition indicates a decided lack of that coöperation so
necessary to the success of any business. The credit man who possesses tact
can overcome this antagonism, if he will but drop his cold-blooded attitude
and meet the salesmen on a friendly basis. If he will cultivate their

friendship, the salesmen will respond with information of great value to
him.
Naturally the information secured from a salesman differs from that
received from other sources. About the class of information that can be
expected is provided in the blank shown in Fig. 3. This can be printed on a
standard size card.

Fig. 3. Salesman's Customer's Report Blank

Retail Credit Reporting Agencies. In many cities, merchants have
formed associations for the exchange of ledger experiences. Some of these
associations have been very successful, but the chief difficulty has been in
sustaining interest and in securing the necessary information. This lack of
interest seems to be general in mutual associations—every man seems
afraid that he will give more than he receives.

ADMINISTRATION BUILDING AT THE PLANT OF
STUDEBAKER BROS. MANUFACTURING CO., SOUTH BEND,
IND.

Out of the merchants' association has grown the retail credit reporting
agency—the exchange of information being conducted as a private
enterprise. The expression, exchange of information, is used advisedly, for
the service of these agencies consists mostly of reports giving the
experiences of other merchants. To quote from the prospectus of one of
these concerns:
Our company does for the retailer what Bradstreet and Dun do for the wholesale dealer.
We arrive at the result, however, in a different way. We give accurate information as to how
people pay their bills, regardless of their financial standing.
This information we get from merchants and professional men by means of a thorough
canvass of our entire territory. We visit all people doing business, whether our subscribers
or not, and in this way secure the names of all consumers in business or private life.
We are thus able to tell the grocer how Mr. B. pays his butcher, his tailor, his hatter, his
doctor, and every other trade or profession he deals with, and each of these in turn is
furnished with the same kind of information from the grocer; thus we establish the exact
credit standing of Mr. B. with the entire trade of the city.
Acting upon information thus furnished, every merchant or professional man in the city
knows from the most reliable and trustworthy source to whom he can safely give credit and
whom he should refuse.
For example, we here give a specimen rating with an explanation of the same.
"John Doe, carpenter, 187 Broad St., 5G 2F."
This rating indicates that five different merchants have found by experience that John
Doe is a prompt paying credit customer, and two other merchants have found him

somewhat slow, but regard him reliable and trustworthy.
Next example:
"John A. Doe, lawyer, 210 North Second St., 4D 3B."
This rating indicates that four different merchants have found him too slow in paying to
be a desirable credit customer, and three other merchants have found him bad pay and
unworthy of credit confidence.

Other sources of information, which come under the head of exchanges
of ledger experiences, are the credit men's associations. These associations,
through clearing houses, exchange information about their customers, thus
supplying the wholesaler with the same class of information as described
above for retailers.
One credit man relates the following incident, illustrating the value of
the association clearing house. On one of the reports furnished by the
clearing house, he noticed that another merchant had refused credit to one
of his own customers. Investigation developed the fact that this particular
customer's locality had suffered severely from the destruction of crops by a
cyclone. Now it happened that this credit man's house was about to fill a
large order from this very customer. The shipment was held up, and the
credit man promptly wrote to the merchant expressing regret that his
community had suffered so severely, and asking if his house could be of any
assistance to him. In closing the letter, the suggestion was made that since
collections were likely to be slow with the merchant, they would allow him
to cut down his order.
The letter had the desired effect. Instead of turning him down the
merchant was made to feel that he had friends in that house, and it is
probable that he continued to be one of their valued customers.

RECORDING CREDIT INFORMATION

Scattered information is of little value. A credit man may avail himself
of all sources of credit information, but unless he has it filed and recorded
where he can put his hand on it, he will find it of little assistance in
determining credit risks. He cannot "keep it in his head" and get the best
results.
There are credit men who profess to rely largely on intuition, but the
hard-headed man—the one who makes the fewest mistakes—relies on his

facts and figures. He uses judgment, but first wants the facts marshaled in
logical order.
Filing. The method of filing best adapted to the needs of a given
concern depends on the size of the business, number of customers, method
of collecting information, and the quantity of data kept on file. In a small
business, depending almost entirely on the ratings of the mercantile
agencies, with an occasional special report, no special filing system is
necessary. The few reports received can be filed with the regular
correspondence. But in a well-organized credit department, handling credit
information about a large number of customers, the question of filing is of
importance.
In the first place, all reports should be kept in one place; special agency
reports, reports of traveling salesmen, local correspondents, and the credit
clearing house, with financial statements furnished by the customer, should
be filed together. This means that they should be separated from the general
correspondence; if filed with the correspondence, they are sure to become
scattered when the files are transferred.
Without question, the most satisfactory method of filing is to use the
vertical file, with a folder for each customer. For the average business, an
alphabetical index is most satisfactory, but for a very large business, with
customers throughout the country, it is best to subdivide the file by states
and towns, arranging the folders of customers in each town alphabetically.
Credit reports are not, as a rule, of sufficient bulk to require the large
files and folders used for correspondence. A file of the same style, to
accommodate folders about 7×9 inches in size, is more compact, and has
been found very satisfactory for this purpose.

Fig. 4. Front of Credit Information Folder

A plain folder, such as is used for correspondence, will answer the
purpose, or a special form may be substituted. An excellent example of the
special folder is shown in Fig. 4.The special feature of this folder is that on
the flap which folds over the front provision is made for a transcript of
credit information. The back of this folder is printed as shown in Fig. 5.
This form is used for a record of purchases, and covers a period of seven
years.
Card Transcripts. For convenience, it is best to make a brief transcript
of the credit information. This transcript should embody the essential facts
which naturally influence the credit risk, and should be in such form that it
can be referred to very readily.
As explained above, this transcript can be made on the credit
information folder, but the more usual plan is to use a card. For each
customer a card such as shown in Fig. 6. is used. The special feature of this
card is that both the capital and credit ratings are listed. Such a card saves
the time that would be required to refer to the agency books, and affords a
comparison of the ratings given by the agencies on different dates. Both the
book ratings and special reports are entered on this card.

Fig. 5. Back of Credit Information Folder

A card which provides for reports, other than those furnished by the
agencies, is shown in Fig. 7. A line for the folder number will be noted at
the top, a numerical system of filing the folders being used. Although the
numerical system is frequently found, it has no practical advantages, and
the alphabetical system is to be preferred.
The form shown in Fig. 8 provides for more general information about
the business—such information as would be gathered from the reports of
salesmen and local correspondents. It will be noted, also, that the financial
information refers more especially to the firm members. This card is used to
supplement the books of the agencies.

Fig. 6. Credit Agency Report Card

Fig. 7. General Credit Report Card

The card shown in Fig. 9 gives a complete history of reports asked and
received, and of credits granted. This form is used in a business in which
the purchases of a customer are infrequent, and involve considerable sums.
The credit risk is considered each time an order is received.
The card shown in Fig. 10 is used by a retailer. As is usual in retail
credits, the information provided for in this form refers to past experiences
and the general reputation of the customer.

Fig. 8. General Credit Information Card

Like the folders used for filing credit statements and reports, credit
cards should be indexed alphabetically, subdivided by states and towns
when necessary. Filed in this manner, each card is accessible, and can be
referred to quickly. An advantage of cards for this and many other purposes
is that obsolete matter is quickly eliminated, and new names are added at
will without disturbing the general arrangement of the records.

BRANCH HOUSE CREDITS

Many businesses are conducted through branch houses, each in charge
of a local manager. Customers are supplied by the branches, and it is
customary to have each branch house collect its own accounts. Weekly
reports of the business transacted, including sales, collections, and stock on
hand, are made by each branch to the home office. Duplicate accounts,
made up from these reports, enable the home office to keep in as close
touch with each account as though collections were made direct.

Fig. 9. Card Record of Reports Received and Credit Granted

Fig. 10. Credit Card for Retailer's Use

Large concerns, operating many branches, have found by experience
that it is best to pass on all local applications for credit at the home office.
This work is handled by a division of the credit organization, known as the
branch house credit department.
The forms shown and the system described herein were designed for the
use of an oil company, and are very similar to those used by the large
packing companies. When a dealer wishes to secure credit at a branch, the
form shown in Fig. 11 is filled out in duplicate and signed by the local
manager. The original is forwarded to the home office, while the duplicate
is filed in the branch office, under the name of the applicant. Folders are
used for this purpose.

Fig. 11. Branch Office Credit Application

Only the lower half of this form is filled in at the branch office. The
rating, credit limit, and terms are entered when a reply is received from the
home office.
When the application is received at the home office, the files are
consulted for any information that may have been received previously,
reports are asked from the agencies, and the decision made. The decision is
made known to the branch house on the form shown in Fig. 12.
This form is made in duplicate, both the original and copy being
forwarded to the branch. The original is placed in the branch house files,
together with the application for credit. Both the cashier and the manager of
the branch sign the duplicate, as an acknowledgment that they understand
the terms, and it is then forwarded to the home office.

Fig. 12. Branch Office Credit Notice

In the home office, the original application and the statement of terms
granted, signed by the branch manager, are filed together. A folder is used
for each customer, filed alphabetically with subdivisons for states and
towns. Every subsequent report and memorandum of credit information is
filed in this folder.
When the report from a branch house shows an account to be past due,
an inquiry blank, as shown in Fig. 13, is sent to the branch. This is in
duplicate, the copy being retained at the branch house, and the original
forwarded to the home office. In both offices, this report is eventually filed
in the folder with other credit information.
A noticeable feature of this system is that all blanks are made in
duplicate. This insures duplicate credit files in the home office and
branches. It is, of course, necessary for each office to forward to the other
any special data that may be received, from whatever source.

COLLECTIONS

The duties of the credit man are not ended when he has passed on the
credit of a prospective customer; a very important duty follows, and that is
to collect the accounts that he has placed on the books. He may assign the
handling of collections to another, but the collection desk should be under
the supervision of the credit man.

Fig. 13. Branch Office Credit Inquiry Blank

The handling of collections furnishes one of the most severe tests of the
ability of the credit man; it calls for the exercise of a certain tact, not
absolutely essential in any other work in business life. The successful
collector must, first of all, be a good judge of character; he must be able to
read character, and govern himself by what he learns of his customer's
peculiarities. He must be a diplomat, with the happy faculty of smoothing
out the rough spots, and satisfying the chronic kicker. While using judgment
in granting special favors to the slow-pay customer, he must be able to
differentiate between the temporarily embarrassed but able and honest
debtor, and him who continually makes use of a hard-luck story to arouse
sympathy and gain time; he must know when to be gently firm, and when to
take vigorous action to save his house from loss.

One of the essential accomplishments of a good collector is the ability
to write diplomatic letters. Collection correspondence is in a class by itself.
The most valuable correspondent is said to be he who can write letters that
sell goods. We have no fault to find with this statement, but prefer the way
Mr. Cody puts it—"the ability to write letters that make people do things."
The collection correspondent must be able to write letters that make people
do things.
In a wholesale or manufacturing business, or any business that is not
strictly local, practically all of the collections are made by mail, hence the
subject of collection correspondence becomes of extreme importance. The
extent to which letters are used is naturally governed by the ideas of the
collector; by some they are used freely, by others as special appeals or duns
only. One very successful credit man, who has handled the collections in
one of the largest mercantile establishments in the country, gives it as his
opinion that a letter should be sent with every request for payment—even
with the monthly statement.
Except in unusual cases, specially dictated letters are not necessary;
filled-in form letters answer every purpose—indeed it is claimed by many
that carefully prepared form letters, designed to meet certain definite
conditions, are superior to letters dictated in the ordinary rush of business.
Forms can be prepared for different classes of customers, and to meet any
of the contingencies likely to arise in the ordinary business. Form letters
used for collection purposes should be exceptionally well printed, and great
care must be used to secure ribbons that are an exact match for the body of
the letter. There is nothing more calculated to make an unfavorable
impression than a letter in which the date, name, and address fail by several
shades to match the body.
The exact form of the letters must be varied to suit the particular
business in which they are to be used; they will differ in manufacturing,
wholesale, and retail lines, in a mail-order business, or for installment
accounts. In a manufacturing business, for instance, a letter something like
the following might be sent with the monthly statement.
Dear sir:
In accordance with our usual custom, we enclose a statement of
your account as it appears on our books at this date. Will you kindly
compare this with your records, and advise us of any discrepancies.

That we might be in a position to fill your orders promptly, we
have kept our factory running on full time during the past few months,
which has involved quite a heavy investment in material. We will,
therefore, appreciate a check from you covering the amount shown to
be due.
We will also appreciate a liberal order, which we can fill at once,
as our stocks are unusually complete just now.
Very truly yours,

Such a letter leaves a very much better taste than please remit stamped
on the statement, and yet it plainly asks for a remittance. There is something
about the letter that savors of the personal appeal, and gives the debtor the
feeling that a special accommodation is being asked, which he should make
an effort to grant.
If the first letter fails to bring a response, it should be followed up. The
second letter, following the first in about 10 days, might be as follows:
Dear sir:
A few days ago we sent you a statement of your account, showing
a balance of $ , of which $ is past due.
Not having heard from you, we assume that the account is correct,
and that it will be satisfactory to you to have us draw on you on the
15th.
In the meantime we will be very pleased to fill your order for any
of our goods that you may need.
Very truly yours,

A letter of this kind rarely fails to bring a goodly percentage of
remittances. The mere suggestion of a draft often has the desired effect. The
average merchant dislikes to have a draft presented; he feels that it has a
tendency to injure his credit with the very man whom he may be obliged to
ask for an accommodation—his banker. The polite request for an order acts
as a sugar coating which covers the suggestion of a dun, and leaves the
recipient in a pleasant frame of mind.
The second paragraph of the above letter does not contain a positive
statement that a draft will be made, nevertheless, such a course is hinted at,
and, unless a communication of some kind is received, the draft should
invariably be made on the date specified. The customer should be taught
that the collector means just what he says; any other course indicates a lack
of sincerity, and gives the customer the feeling that these notices are not to
be regarded seriously.

On the other hand, it is possible to go to the opposite extreme in the use
of drafts. The writer has in mind a business man who had a habit of sending
statements of all accounts the first of the month, without a letter, and
following these with drafts about a week later. Many times these drafts were
made before it was possible for a remittance in response to the statement to
reach him, which caused hard feelings, and the loss of many customers. It is
the custom of many firms to pay all bills on a certain day of the month—a
fact which the observant collector quickly notes, and governs himself
accordingly in the matter of sending drafts.
When a draft is returned, a letter should be written immediately; and in
this letter a little sharper tone is justifiable. The following is a good sample
of a letter to be used at this point:
Dear sir:
We are disappointed to find that you have allowed our draft to be
returned unpaid, as we had counted on this amount to help in meeting
our current obligations. While the amount of your indebtedness is not
large, the aggregate of the many small accounts makes up the large
amount outstanding on our books, and to not receive the amount when
due, causes us considerable embarrassment.
As you know, our terms are strictly 30 days net. We must insist on
receiving prompt payment when bills are due; our prices are figured on
this basis, and our arrangements for meeting supply bills and pay-rolls
are dependent on the prompt payment of bills by our customers.
Your total indebtedness to us is $ , of which $ is several
days past due. We would appreciate a remittance of the entire amount,
but must insist on the immediate payment of the amount past due.
Failing to receive either a remittance or your note, by the 23rd, we will
again draw on you, and shall expect you to pay the draft when
presented.
By the way, our Mr. Jackson reports that he has failed to secure an
order from you on his last two trips. Now if you have any cause for
dissatisfaction, we would like to have you tell us, as we are more than
anxious to please you, and would certainly appreciate your future
orders.
Very truly yours,

One point in this letter, to which special attention is called, is the
absence of the word dishonor. Technically, when a draft is not paid it is
dishonored, but the word has an ugly sound; the word unpaid is less harsh,
yet conveys the desired meaning. While it is sometimes necessary to be
quite emphatic, nothing is gained by adopting a tone calculated to arouse
the antagonism of the debtor. The time-honored axiom that "More flies can

be caught with sugar than with vinegar," is given a special force when
considered in connection with collection letters.
Naturally, these letters must be varied to suit the business, the season,
and general trade conditions. They are not submitted as models, to be used
under all circumstances, but to impart an idea—the idea of tone, the sugar
coating which is so essential in keeping the recipient in the right frame of
mind. Politely request, ask plainly for what you want, firmly demand, but
never threaten until you are prepared to carry out your threat. This is a safe
rule to follow in handling collections.

COLLECTION SYSTEMS

In the successful handling of collections, a requisite is promptness.
There must be a system that will insure bringing collections to notice at the
right time. Without attempting to lay down specific systems for individual
concerns, detailed descriptions of systems that have been found satisfactory
in different businesses are given herein.
Duplicate Invoices. The tendency at the present time is to regard each
invoice as a separate account, and to regard each as due at the end of the
time specified—thirty, sixty, or ninety days. An exception is found in the
accounts of city customers. A wholesale merchant may have customers in
his own city who buy in small quantities, placing orders nearly every day.
The usual rule is to regard these as monthly accounts, the account for one
month being due the 15th of the following month. For out-of-town
customers, however, the first plan is found more satisfactory.
A certain large manufacturer, whose business is world wide, treats each
invoice as a separate account, and handles the collections in a very simple
manner. All invoices are made in duplicate, the original going to the
customer. From the duplicate, all entries are made on the books. If special
terms are granted, these terms are stamped on the back of the duplicate
invoice.

Fig. 14. Collection Card for Each Invoice]

When it has served the purpose in the accounting department, the
duplicate invoice is returned to the collection desk. Here it is filed under the
date on which it is due.
The file is a simple arrangement of pigeon holes. A case containing
sixty pigeon holes, large enough to hold invoices laid flat, is used. These
pigeon holes are divided into two sets of thirty each, one above the other,
and each set is numbered from 1 to 30. This number provides for filing
ahead sixty days, which is the longest credit term allowed.
In operating the filing system, the two sets of pigeon holes represent
alternate months. During January, bills due in March are filed in the upper
pigeon holes; in February, bills due in April are filed in the lower case. Each
day the bills due are removed from the file for attention, leaving the pigeon
hole empty for filing bills due sixty days ahead. On March 10th, for
instance, bills are removed from the No. 10 pigeon hole of the upper case;
the current day's bills, due May 10th, are then filed in the same pigeon hole.

Fig. 15. Card Tickler for Collections

When bills come out for attention, they are referred to the accounting
department to find if they have been paid. For those not paid, statements are
prepared and returned with the bills to the collection desks. The usual letters
are written, and all past due bills are held in a desk tickler, that they may be
followed up from day to day by the collection clerk.
This system can be operated with the regular tickler file, but for a large
number of bills the pigeon holes are more convenient. A modification is
necessary, also, when the bill and charge system is used. In that case, an
extra copy of the invoice should be made for the use of the collection clerk.

IN THE GENERAL OFFICES OF CORBIN CABINET LOCK
COMPANY, NEW BRITAIN, CONN.

Card Tickler. A very convenient method, where it is not deemed
advisable to use duplicate invoices, is to fill in a collection card for each
invoice.
A card, printed similarly to the form shown in Fig. 14, is filed under the
date on which the account is due. Each day, all cards filed under that date
are removed for attention. The first step is to compare the cards with the
ledger accounts. If the account has been paid, the card is destroyed; if not, a
statement is sent and the card filed ahead to the next follow-up date. All
letters written and all steps taken are noted on the card, so that in the end it
presents a complete history of the efforts made to collect the account.

Fig. 16. Collection Card for Alphabetical Cross-Indexing

A slightly different form of card, which is used in the same manner, is
shown in Fig. 15.
Cross-Indexing. The same objection exists in regard to the use of the
tickler card for collections as for other follow-up purposes, which is the
difficulty of finding the cards. Every time a card is removed from the file it
is necessary to compare it with the ledger to find if the account has been
paid.
To overcome the difficulty, a card with an alphabetical tab is used to
good advantage. Such a card is shown in Fig. 16. It will be noted that this
card bears a tab printed with the letter G. A card with this tab is used for
every name that commences with G, and as all G tabs are in the same
position on the card, they will be in direct line from front to back of the file.
The cards are filed by dates, but each day all remittances are sent to the
collection desk, that the cards representing accounts that have been paid
may be removed. All cards may be found by name, by referring to the
lettered tabs, thus Brown's card will be found in the row of B tabs.

Fig. 17. Collection Card for Cross-Indexing by Date

Another method of cross-indexing the collection file is to have the
numbers from 1 to 31, representing the days of the month, printed across
the top of the card, as shown in Fig. 17. To indicate the due date a metal tab
is placed over the proper number, a red tab being used for succeeding
months and a black tab for the current month.
The cards are filed alphabetically by name, or subdivided by states and
towns, so that any desired card can be found instantly. Each day all cards
having tabs over that date are removed for attention. On the first of the
month those bearing red tabs are referred to, and if due in the current
month, black tabs are substituted.
Monthly Statements. In some houses, it is the practice to follow up
collections on the basis of the monthly statement, instead of treating each
invoice independently. When this is done the collection record must include
a synopsis of the entire account. The card shown in Fig. 18 is used for
following collections on such accounts. This form shows the date and
amount of statements, with interest added, date and amount of drafts, and
dates and amounts of payments. Other columns are provided for a record of
letters, promises, extensions, etc.

Fig. 18. Collection Card Showing Synopsis of Entire Account

This card is handled in exactly the same manner as it would be if used
for a single invoice. While the card shown is used in a tickler, it would be
improved by the addition of the numbers across the top, which would
permit of alphabetical indexing.
Local Collections. Collections from local customers are usually made
by collectors. In handling such collections, a system that will enable the
office to keep track of the work of each collector is necessary.
One large mercantile concern has solved the problem by using the
following system. This concern has a large number of customers who make
frequent purchases. For convenience, the city is divided into four sections,
one for each week in the month. Each section is divided into five parts,
representing the days of the week from Monday to Friday, inclusive. One
collector covers the entire city, calling on each customer once a month.
Arrangements are made with the customers in each section to pay their
bills at a certain time each month—the bills of all customers in the first
section are collectible during the first week in the month. Each customer
knows, also, on what day of the week he is to expect the collector.

Statements are made Saturday
morning for all accounts to be collected
the following week. These statements are
made in triplicate, as shown in Fig. 19.
Two copies are given to the collector, who
arranges them in a file according to his
daily routes. One copy is kept in the
office, filed by routes.
When the collector makes his call, he
receipts one copy of the statement and
delivers it to the customer. The second
copy is kept by the collector and turned in
with the collection. If the customer is not
found, or if he fails to pay, both copies of
the statement must be turned in by the
collector.
Each morning the collector makes his
Fig. 19. Triplicate Statement
for Collectors report for the previous day. The cashier
compares the collector's report with his
copies of the statements, and, as the collector must turn in both of his copies
when no payment has been made, a safe check is had on the collector. To
make the check more positive, it is the custom of the cashier to mail a copy
of the statement to those customers who have made no payments, or partial
payments, requesting them to compare with their records and advise if any
discrepancies are found. This makes it impossible for the collector to hold
out collections without detection.
Collecting from the Ledger. In many houses having no organized
credit department, the collections are handled by the bookkeeper. When this
work is added to his many other duties, the bookkeeper is obliged to devise
some scheme that will eliminate detail—he has no time to make additional
records. His method is to follow up collections direct from the ledger.
But there must be some method of bringing the accounts to notice when
they require attention—an automatic system. The most simple scheme is
shown in Fig. 20. Across the end of the ledger sheet—which is loose-leaf
—- numbers representing the days of the month are printed, and metal
markers, or tabs, are attached over the due dates.

To represent different stages in the collection of the accounts, different
colors are used. When a charge is posted to the ledger sheet, a black tab is
placed over the date on which the bill falls due. When payments are posted
the tabs are removed, provided the account is paid in full; otherwise it is
moved forward to the next due date. After the day's remittances are posted,
all sheets with black tabs over the current date are referred to, and
statements made. At the same time, white tabs are substituted for the black.

Fig. 20. Loose-Leaf Ledger Cross-Indexed for Due Dates

Fig. 21. Quadruplicate Draft Form which Includes Letters of Advice to
Bank and Drawee

The next step is to make drafts for all accounts on which white tabs
have appeared ten days, that is, on the 10th drafts are made for all accounts
with white tabs over the 30th. Blue tabs are then substituted for white. If the
draft is returned, a red tab is substituted. The red tabs indicate accounts past

due, which are subject to such action as may be considered advisable. This
ledger sheet, with the adjustable tabs, insures attention to collections,
regardless of the method of filing.
Handling Drafts. When drafts are used extensively, considerable detail
is involved in handling the records. Any method that will reduce this detail
means a material reduction in the expense of conducting the work of the
collection desk.
The usual method is to write the draft and register it in a draft record
book. Then the necessary record is made on the collection card. A draft
register is used that there may be a record showing the aggregate of drafts
outstanding, and the number and amount in the hands of each bank—where
drafts are sent direct, instead of through a local bank. The next step is to
write a letter of advice to the bank. This method necessitates writing the
names of the bank, the drawee, and the amount of the draft three times—on
the draft, letter of advice, and draft register.
By the use of properly designed forms, this duplication can be avoided.
Fig. 21 shows a set of forms designed for the purpose. A is the original
draft, B is the letter of advice to the bank, C is a letter of advice to the
drawee, and D is the office record. The draft, A, is attached to the letter of
advice, B, and is detached by the bank. The four forms are so printed that
the date, name of the bank, amount, and name and address of the drawee
register perfectly. The blanks are properly spaced for use in a typewriter,
and all copies are made with one writing.
Copies A and B are mailed to the bank, and C to the drawee. From copy
D the record is made on the collection card, after which it is filed in a card
tray, under the name of the bank. This keeps copies of all drafts sent to each
bank together, and the total of all drafts outstanding is quickly obtained on
an adding machine. When payments are made, or drafts are returned, these
copies are removed from the files. Frequent reference to the file insures the
necessary follow-up on banks that are slow in reporting.
Installment Collections. Probably the most difficult class of accounts
to handle from a collection standpoint is installment accounts. Payments are
quite irregular, both as to time and amount, and frequent changes of address
make it difficult to keep track of debtors.
The collector of installment accounts must have the faculty of meeting
and satisfying all sorts of people. He is obliged to listen to hard-luck tales

without number, and while sympathizing
with the customers, must be patiently
persistent. If unable to collect the dollar
due, he will accept a half-dollar to keep
the account active. So long as he collects
something, each time a payment is due, he
is in a position to make the debtor feel the
importance of the contract, but let one or
two collection days go by without a
payment, and the debtor has the upper
hand. He then feels that he can stand-off
the collector whenever he happens to have
other uses for his money, a condition
which becomes increasingly frequent.
An installment dealer will nurse an
account to the limit, rather than take back
the goods he has sold. Once he has
collected the cost of the article, he will
accept payments of almost any amount,
Fig. 22. Contract for
but it will not do to let the debtor know
Installment Sales
how lenient he is prepared to be; at least a
semblance of enforcing the contract must be kept up.

Fig. 23. Installment Contract Register]

The most familiar branch of the installment business is the sale of house
furnishings and pianos. The sale of house furnishings on the installment
plan is rapidly increasing, and probably more pianos are sold on this than
any other plan. Furniture dealers who formerly sold only for cash or on
approved credits, are finding profitable business among the better class of
installment buyers.
Installment sales are made on contracts, or leases, which provide that
title to the goods shall be held by the seller until all payments have been
made, and that the right of possession shall be forfeited by the buyer if he
fails to make any payment when due. When the contract is folded, the
outside shows a form printed as in Fig. 22. This particular form is used by a
musical instrument house.
At the head of the form is shown the contract number, amount, date of
contract and collection date, name and address of the buyer, and the name,
number, and make of instrument. Below is space for a record of payments,
divided as to principal and interest, with the names of the collectors. When
a sale is made, a contract is made in duplicate, the original remaining in
possession of the seller and the duplicate being given to the purchaser.

Fig. 24. Ledger for Installment Accounts

Installment Register. All contracts are registered in numerical order, in
an installment register ruled as shown in Fig. 23. One line is used for each
contract, the particulars recorded being the date and number of the contract,
name and address of the buyer, and the amounts to be credited to the
different sales accounts. It is not necessary to list the articles sold, as a
complete list will be found in the contract.
The footings of the money columns are carried forward to the end of the
month, when the totals are credited to the sales accounts in the general
ledger. The footing of the total column, which is the total of all installment
sales, is posted to the debit of an installment contract account in the general
ledger. This is a controlling account of the installment ledger accounts.
Installment Ledger. Installment accounts necessitate a form of ledger
differing from that used for ordinary accounts. The special requirement in
such a ledger is space for recording a large number of payments. Fig. 24
shows a form of loose-leaf ledger sheet designed for installment accounts.

Fig. 25. Special Cash Receipt Book for Installment Collections

One of these ledger sheets is used for each installment contract. The
particulars of the contract are recorded at the head of the ledger sheet,
above the name and address. The particulars recorded are the number of the
contract, the amount and date, amount of payments, collection day, and
whether payments are to be made weekly or monthly. The body of the form
is ruled for a record of payments and balances.
The ledger sheets are arranged in alphabetical order, about five-hundred
sheets in each binder. Each alphabetical section is separately indexed to
afford quick reference to all accounts. If the contract number only is known,
reference is had to the installment register, where all contracts are recorded
in numerical order.
Cash Receipts. For installment collections, it is well to provide a
special cash receipt book. Such a form is shown in Fig. 25. This form is
used exclusively for installment receipts, and payments are posted direct to
the installment ledger. The total cash for the day is entered as one item in
the general cash book.
Statement of Installment Ledger. From an accounting standpoint,
installment accounts present certain difficulties not experienced in the
handling of other classes of accounts receivable. There is always a question

as to the real value of the accounts outstanding, a doubt as to the
advisability of including the total balances in a statement of assets. A live
account—one on which payments are being made regularly—is legitimately
considered as good an asset as any other account receivable, but the value
of the delinquent account—when payments are past due—is questionable,
and if included in a balance sheet, the nature of the asset should be clearly
stated.
That the actual condition of these accounts may be shown on the
general ledger, it is the better practice to carry two accounts, representing
live and delinquent accounts. Installment sales should be charged to an
Installment Accounts Receivable account, and payments credited to the
same account, which then becomes a general ledger controlling account of
the live accounts in the installment ledger. Another account should be
opened in the general ledger under some such caption as Installment
Accounts Delinquent. When accounts become delinquent, they should be
transferred by journal entry to this account. The journal entry would be:
Installment Accounts Delinquent
Installment Accounts Receivable
This transfer may be made daily, weekly, or monthly, but the period
between transfers should never be longer than one month. Delinquent
accounts may be indicated in the installment ledger by placing a metal tab
of some distinctive color on the ledger sheet or card, or they may be
segregated by transferring them to a special delinquent binder or file.

Fig. 26. Daily Report of Installment Accounts for the Credit Man

When a payment is received on a delinquent account, that account
immediately becomes live, and the amount should be transferred by journal
entry to Installment Accounts Receivable. The journal entry would be:
Installment Accounts Receivable
Installment Accounts Delinquent
Each day, the amount of accounts revived—delinquent accounts on
which payments have been received—should be ascertained. If it is desired
to save the labor of making journal entries daily, a memorandum of these
amounts may be kept and a journal entry made at the end of the month.
When a delinquent account reaches the condition where it is considered
worthless, the amount should be charged to profit and loss, by the journal
entry:
Profit and Loss
Installment Accounts Delinquent
This should be done whenever the credit man carefully examines all
delinquent accounts, which should be not less frequently than once a month.
When payments are received on these accounts, they should be treated as
revived accounts, with proper credit to profit and loss, if revived during the
current fiscal period; but if, in the meantime, the books have been closed,
they should be treated as new accounts.
It is quite necessary for the credit man to know every day how the
installment accounts are running. That he may do this, a daily report, as
shown in Fig. 26, should be made by the installment collection clerk. The
report form should be in loose-leaf, and if the installment sales are divided
by departments, the necessary number of columns to accommodate the
departmental records may be provided.
The report is headed with the amounts of accounts outstanding, divided
as to live and delinquent. New accounts opened and delinquents revived are
added in the live column, and delinquents revived are deducted from the
delinquent column. Cash collections, discounts and allowances, and
delinquents today are deducted separately from the live accounts, and
delinquents today added to the delinquent column. Then the delinquents
charged to profit and loss are deducted from the delinquent column. The
balances represent the net amount of outstanding accounts, and must agree
with the two controlling accounts, Installment Accounts Receivable and
Installment Accounts Delinquent.

Fig. 27. Front and Back of Collector's Card

A CORNER IN THE STENOGRAPHIC DEPARTMENT
Weis Manufacturing Co., Monroe, Mich.

Such a report enables the manager or credit man to keep in touch with
the actual condition of installment accounts. As a rule, three copies should
be made, one for the manager, one for the credit man, and one to be kept on
file by the collection clerk.
Filing Contracts. Some houses follow the practice of allowing the
collector to carry the original contracts, and in such cases the contracts are
filed according to the dates on which payments are due. It is claimed that it
is necessary for the collector to have the contract, as the customer is quite
liable to lose the duplicate and may ask for particulars about the items
purchased.
This plan is not advocated on account of the liability of loss of
contracts. If it is desirable for the collector to carry the contract, a third
copy should be made for that purpose. Original contracts should be kept in
a fire-proof safe, and should be filed in numerical order. The most
convenient file is a document file, in which contracts can be filed folded.
Collector's Card. The most convenient method of handling collections
is to supply the collector with cards as shown in Fig. 27. On the face of this
card is a record of particulars, similar to that shown on the outside of the
contract, while the reverse is ruled for a record of payments.

Since all contracts call for payments on certain days of the week or
month, it is very necessary that the collection cards be brought to notice on
the collection days. A simple method of providing for this is to use a card
file equipped with a set of thirty-one numbered guides to represent the days
of the month, or a set of guides printed with the days of the week. The cards
are filed back of the guides which represent the collection days.
It is customary to divide the city into sections, assigning a collector to
each section, the number depending on the size of the city and the number
of accounts. It is necessary to use as many files as there are collectors, with
an office file added for those who prefer to pay at the office.
Every morning each collector is given the cards on his route, on which
payments are due. On his return, he turns in all cards to the cashier with the
amount collected. If a back call is necessary, the card is filed ahead a day or
two.
The cards in the office file are placed on the cashier's desk each
morning and payments are recorded as made. Those on which no payments
are recorded are kept on the desk, and after a reasonable time are given to a
collector to follow up.
When payments have been recorded in the cash book, all cards are again
placed in the files under the next collection dates. They are then ready for
the collectors.

Fig. 28. Receipt for Installment Collections

Collector's Receipt. Some method is, of course, necessary for checking
up the collectors, and to insure the turning in of all money collected. A very
satisfactory plan has been devised by the cashier of a western music house,
in the form of a duplicate receipt as shown in Fig. 28. These receipts are
bound in book form and numbered in duplicate, the original being
perforated.
The receipt is especially convenient for the customer, as it shows
exactly how the payment is to be credited. For the same reason, it is equally
convenient for the cashier. All of the numbered receipts must be accounted
for; if one is spoiled, it must be turned in, which provides an effective check
on the collector.
Mail-Order Installment Collections. An increasing volume of
installment business is now done by mail. An established principle of the
mail-order business is that customers must be given an opportunity to
inspect the goods before they can be expected to make a binding contract
for their purchases. Beginners in the mail-order field are quite likely to look
on this as an impractical plan, fearing the loss of goods, but experience soon
teaches them that it is the only plan on which the business can be
successfully conducted.
When experienced mail-order men, with the courage to try out a new
idea, experimented on the plan of allowing customers to return goods, they
found that the more liberal the offer, the more business they did. This led to
the giving of an absolute guaranty, offering to ship goods on approval with
the privilege of return for any reason within certain time limits.
As the fear of loss of goods became less pronounced, it was argued that
more liberal terms of payment could be granted with safety—if goods could
be sold successfully on the installment plan to local customers, why not by
mail? A trial proved the plan to be practical, and now many articles are sold
by mail on the installment or easy payment plan. Goods are even shipped
without an advance payment, either the goods or the first payment to be
returned within a certain time limit.
In selling goods by mail on the installment plan, it is necessary to secure
a binding order, in which the customer agrees to return the goods within a
certain number of days, or make the payments as specified, with an
agreement that title to the goods shall be held by the seller until all
payments have been made according to contract. The contract must also

give the seller the right to recall the goods whenever the customer shall fail
to make a single payment as agreed.
The success of the mail-order installment business depends largely on
the manner in which collections are handled. Not having the advantage of
personal contact with the customer, the collector is obliged to depend on the
knowledge of the man which he gains from references and the
correspondence of the customer. But the shrewd collector soon learns to
read his man from the general tone of the correspondence, and sometimes
from the absence of communications from the debtor. When he has learned
the character of the man, he can handle each account independently; until
then, he is obliged to follow the same line of action in all cases, depending
on the law of averages to prove the correctness of his theories.

Fig. 29. Loose-Leaf Ledger for Mail-Order Collections

Too great emphasis cannot be placed on the importance of studying the
character of the man. It is only by paying special attention to this point that
the collector can learn to treat each account individually. In the first place,
the class of goods sold largely governs the class of customers from a credit
standpoint. The men who buy sets of business books are, as a rule, safe
credit risks. Their training and environment have a tendency to teach them

the importance of fulfilling an obligation; appreciating the necessity of
maintaining their credit standing, they will make every effort to carry out
the terms of the contract, or give a valid reason for asking an extension of
time. Illustrating the opposite extreme is the class who will sign a contract
for the purchase of a cheap musical instrument, at a high price, to gratify a
desire to outdo a neighbor, without regard to their ability to make the
payments as agreed. Such people trust to luck, and expect to pay in
promises if they do not happen to have the money. For this reason, the
percentage of profit that must be added to cover the cost of collection
increases, as the quality of the goods and the standard of the credit risk
decrease.
The Account. Accounts with mail-order installment buyers are handled
in a similar manner to those of local buyers. All contracts should be
numbered as received, and registered in numerical sequence. The form of
register already shown answers the purpose very nicely.

Fig. 30. Mail-Order Collection Card

After registering, the particulars of the contract should be entered in the
ledger. A form of ledger sheet used by a publishing house is shown in Fig.
29. This is loose-leaf, and does not differ in form from the ordinary balance
ledger, except in the particulars given at the head of the sheet. Here is
shown the name and both residence and business address of the customer,
number of contract, monthly payment and due date, references, source of
order, price and name of books, and date of shipment. These sheets are filed

in post binders, five-hundred sheets to the binder, and indexed
alphabetically.
The next step is to enter the contract on a collection card. A satisfactory
form is shown in Fig. 30. This is a card 4×6 inches in size, and is practically
a duplicate of the ledger sheet. The card is filed in a chronological file
under the due date—that is, if payments are due on the 24th of the month
the card is filed under that date. Except when removed from the file for the
use of the collector, or to enter payments, the card is always filed under the
same date. If it becomes necessary to have an account brought to notice on
other than the regular collection dates, a memo is made on a separate card
and filed in a special tickler.
Should it become necessary to refer to a card on other than the regular
collection dates, reference to the ledger—indexed alphabetically—gives the
due date, by which it is quickly located. Sometimes, however, it is desirable
to refer to all contracts in a given territory. To make this possible, a card file
with indexes printed with the names of states and cities is provided. For
each contract a plain 3-×5-inch index card is used, the name, address, and
contract number only, being entered. This provides a complete set of
indexes—alphabetical in the ledger; numerical in the register; by due dates
in the collection file; geographical in the card file.
When a payment is received, it is entered in the cash book and posted to
both the ledger and the collection card. Every card must be located at the
time payments are entered in the ledger, or the customer will very likely
receive notices after he has made the payment.
The Collection Follow-Up. The promptness of the follow-up on this
class of collections is of the greatest importance—the debtor should not be
given the excuse that he failed to receive a notice. Though not provided for
in the contract, the debtor expects a notice of every payment due.
When the goods are shipped, a formal notice of shipment should be
mailed, and if the first payment has not been made, it should be requested.
In ten days, or after the approval time limit has expired, a second notice
should be mailed, provided no payment has been received. This can be a
formal notice, and should assume that the goods are entirely satisfactory,
and at the same time calling attention to the fact that the first payment is
past due. If this does not bring a remittance within ten days, it is well to
send a draft notice. This notice should go into the conditions of the contract

in some detail, and, without assuming a threatening attitude, it should
assume that if payment is not received within five days it is the desire of the
debtor that a draft be made. Either the notice or the draft will usually bring
the first payment, or the return of the goods.
Each month, a formal statement showing the
exact condition of the account should be mailed
a few days before the due date. It is well, on this
statement, to make an offer of a discount for
cash to pay the account in full. A discount of 5%
on an account that has several months to run will
often be accepted, and is profitable to both
parties. This statement should be followed in ten
days by a second notice, also of a formal nature.
All notices up to this point may be printed,
but further requests should be in the form of
letters. Except when it has been found that an
account should be handled in a special manner,
form letters will be found most satisfactory. The
letters should start out mild in tone increasing in
insistence as the series is extended.
When persuasion fails, the debtor should be
notified that the account is being placed in the
hands of an attorney, or a collection agency. But
before suit is actually started, it is well to
investigate the probability of collecting a
judgment. If a man is judgment proof, it is much
better to take the necessary steps to secure the
return of the goods. This is usually accomplished
by requesting the express company to call on the
debtor for the package.
Fig. 31. Attorney's
Every debtor has his vulnerable point; if that
Collection Register
point is reached, the money can be collected.
The most successful collector is the one who finds that point in the largest
number of cases.
Collections by Attorneys. The handling of collections constitutes an
important part of the practice of many attorneys. It would naturally be

supposed that attorneys handling collections for their clients would have an
efficient system of records, but unfortunately this is not the rule. Except in
offices handling a large number of claims the methods are very lax—there
is an entire absence of a system that will reveal the exact status of every
claim. And yet to install a system that will give just the information desired
is very simple, and the operation requires less labor than to handle the
claims in a haphazard way.

Fig. 32. Attorney's Collection Card

When a claim is received by an attorney, it should be given a number,
and registered in numerical order. The register should be a book—either
loose-leaf or bound—with headings for the date received, names of debtor
and creditor, amount of claim, amount collected, fees, amount remitted, and
date remitted or returned, as shown in Fig. 31. This is not intended as a
complete history of the claim, but merely as a permanent record.
The papers in each claim should be placed in a folder. The old method
was to use a manila jacket or document envelope, to be filed in a document
file. The objectionable feature of this method is that the papers must be
unfolded for reference. A better plan is to use a correspondence folder, such
as is used in the vertical file, in which the papers can be kept flat.
Whatever style of folder is used, all papers should be fastened—either
pasted, or by means of a paper fastener. On the outside of the folder should
be written the names of debtor and creditor, and the number of the claim.
The balance of the space on the folder can be used for recording special

information about the claim from time to time. These claim folders should
be filed numerically, according to claim numbers.

Fig. 33. Back of Attorney's Collection Card

For a convenient record for daily reference, giving a brief history of the
claim, a card is found very satisfactory. The folders are somewhat bulky and
inconvenient for quick reference, and, except in special cases, it is not
necessary to refer to all of the papers. Brief notes, which can be made on a
card, will answer every purpose.
A convenient record form is shown in Fig. 32, which is printed on a
card 4×6 inches in size. This gives the particulars of the receipt of the claim,
the amount, date, and number, with a record of collections, fees, and
remittances. A card is made for each claim, and filed alphabetically under
the name of the debtor. The reverse of the card is printed as shown in Fig.
33. This shows the different steps taken to enforce collection.
The card file provides an index to all debtors against whom claims are
on file, while both the register and the file of folders provide numerical
indexes. But it is the creditor who is the client of the attorney, and it is very
necessary that he be in a position to refer to or report on all claims received
from any client. This necessitates another index to creditors, which is
provided for in the card form shown in Fig. 34.

Fig. 34. Index to Creditors for Attorney

The card is headed with the name and address of the creditor, below
which is a list of all claims filed by him. When a claim is returned—paid or
unpaid—the date is entered on this card, so that the record shows only
unpaid claims. These cards are filed alphabetically, under the names of the
creditors.
A follow-up of the claims is provided by a plain index card on which is
written the name of the debtor and number of the claim. This card is filed in
a tickler, under the date on which it is desired to follow up the claim. This
serves as a memorandum only, all records being made on the claim card or
the folder.

A SCENE IN ONE OF CHICAGO'S BUSY FREIGHT YARDS,
SHOWING AN OUTBOUND FREIGHT HOUSE

THE SHIPPING DEPARTMENT

INTRODUCTION

The average manager of a business has but a rudimentary knowledge of
traffic affairs as they relate to the shipment of his goods. He does not know
that he is receiving the lowest rates to which he is entitled, or that the most
favorable classification is applied to his shipments.
A large percentage—probably a majority—of the concerns which do
any considerable amount of shipping, or receive a large quantity of freight,
lose annually in overcharges, due to improper classifications, defective
packing, and a general lack of knowledge of the subject, a much larger sum
than would be required to pay the salary of a competent traffic manager.
There are so many intricate details to be considered in the shipping
problem, that the subject requires special study, and shippers whose volume
of business is even moderate find it profitable to employ a traffic manager.
Not every shipper is doing a business of sufficient volume to warrant
the employment of a man to devote his entire time to this question, but, in
the organization of every business doing even a small amount of shipping,
there should be one man who will make a study of traffic matters. He need
not have an intimate knowledge of the entire subject of traffic affairs, but he
should be posted on all questions that have a bearing on the shipment of the
goods of his house. When no regular traffic manager is employed, the duties
of the position fall on the shipping clerk; he is the logical man to make a
study of the subject.
Considered from the standpoint of his knowledge of shipping
requirements, classifications, manner of packing, and the application of
special rates, a man who has had experience in the freight department of a
railroad makes the most successful traffic manager. Such a man may not be

fitted to organize and handle the work of the shipping department but, in a
concern large enough to require the services of a traffic manager, there will
be work enough to warrant the employment of an assistant to look after this
branch of the work.

THE SHIPPING CLERK

In this discussion of the organization of the shipping department, the
shipping clerk will be considered as assuming the duties of traffic manager,
as well as those that usually pertain to his position. He will be at the head
and have full charge of the department, keeping such records as may be
called for by the business.
It is the duty of the shipping clerk to see that all goods are shipped
promptly, packed and described to secure the most favorable rates, and
properly routed. He must have a checking system that will enable him to
locate errors and to know that all goods called for by an order have been
shipped. He will be assisted by such packers, checkers, and porters as may
be required to handle the work.
The packers will receive the goods called for by an order from the stock
men, and will pack them properly. They will check all goods packed against
the order. In this, they will be assisted by checkers, who check the goods
received on the shipping floor and again when they are packed.
Discrepancies must be reported at once and adjusted immediately.
In some concerns, the shipping clerk is also the stock clerk, in which
case he has charge of the actual filling of the orders. He is assisted by stock
men, who select the goods and assemble the orders under his direction.
Like the head of any other department, the shipping clerk should have
full control of his department. No other person in the organization should be
permitted to make shipments. Concerns have been found in which it was the
custom for different employes to ship small articles without the knowledge
of the shipping clerk. Invariably, this leads to mistakes and results in blame
being wrongfully placed on the shoulders of the shipping clerk. And even
greater damage is done in the disruption of the organization.
Information Required. The shipping clerk should be fully informed on
all traffic questions that affect the shipment of the goods of his house. Of

first importance is a knowledge of classifications, that he may know that his
shipments are placed in the lowest classification to which they are entitled.
Copies of the classifications can be obtained from any local freight office.
In this country there are three principal classifications, these being the
official, governing the eastern territory; western, governing western
territory; southern, governing southern territory. There are also a few
special classifications governing classifications in certain states. While
some attempt at uniform classification has been made, the several
classifications show many variations, the same article taking different
classifications in different territories.
When classifications are received, they must be carefully studied by the
shipping clerk that he may really understand to what classifications his
goods are entitled. It might be supposed that a certain article or class of
goods would always take the same classification, but this is not the case;
other questions than the name have a bearing on the question.
The manner of packing goods very often determines the classification.
Certain articles are placed in a lower classification if boxed than they would
be if crated. This is specially true of goods that are liable to damage in
transit. Many shippers make a practice of crating goods because it can be
done more cheaply than boxing, without realizing that the difference in
packing cost is more than offset by the increase in the freight rate.
The classification is also sometimes determined by the manner in which
the goods are described. It is necessary, therefore, to study the
classifications with reference to the description that will insure the most
favorable rate. However, false descriptions made for the purpose of
securing a lower classification must be avoided, as the Interstate Commerce
Act provides a heavy penalty for such falsification. But there may be
several different descriptions which legitimately apply to a given article,
each placing it in a different class. A case in point: The western
classification made no provision for filing cabinets in carload lots, with the
result that a carload shipment, described as filing cabinets, took the rate
provided for less than carload lots. But the same classification gave a lower
classification, consequently a lower rate, on office furniture in carload lots.
Filing cabinets being office furniture, it was entirely legitimate to describe
such shipments as office furniture.

Another illustration of the effect of description on the classification is
found in shipments of carriages. The classification, and consequent rate, on
this commodity is based on the space that it will require, rather than on the
rate. If shipped knocked down and properly crated, with the dimensions
stated on the shipping bill, a carriage takes a lower classification than if
shipped assembled, or if the dimensions of the crate are omitted.
These illustrations are sufficient to show the importance of a thorough
knowledge of the provisions of the different classifications. The shipping
clerk who would give the best service to his house should make a study of
this subject, even if he is obliged to take the classifications home and study
them at night. Every shipper should see that his shipping clerk is supplied
with copies of classifications governing the territory in which he is doing
business, and give him an opportunity to learn their provisions in respect to
the commodities which he ships.
Class Rates. A class rate, as the name implies, is one based on the
classification. All commodities are divided into classes, six in number, and
all commodities of the same class—with certain exceptions, explained later
—take the same rate. Schedules of rates between given points, based on the
class, are prepared by the classification committees, but before being put
into effect, they must, in case they apply between points in different states,
be submitted to the Interstate Commerce Commission for approval. While
not a rate-making body, the commission is a rate-governing body,
constituting, in a certain sense, a board of arbitration between shippers and
transportation companies.
The rates being based on the classes—the higher the class, the higher
the rate. To determine the rate, it is first necessary to find the classification;
reference to the rate schedule will show the rate for each class.
Commodity Rates. A commodity rate is one applying to a special
commodity, between definitely stated points. Commodity rates are
established by the railroads to meet some special condition, and with these
the classification committees have nothing to do.
A commodity rate does not apply to articles not named in the tariff even
though they are of a similar nature, nor do they apply between points not
specified in the special tariff. A commodity rate is, in effect, a special rate;
it offers special inducements for the shipment of certain commodities, but is

not intended to favor any one shipper. The commodity rate is for the benefit
of all shippers of the commodity named.
The volume of traffic is the chief factor in establishing rates, either
regular or special. It is an especially important factor in establishing a
commodity rate. In a given community, some one commodity may be
produced in large quantities. Perhaps it is a raw material which must be
transported to certain manufacturing centers. To encourage the development
of the industry, thereby creating a large volume of traffic, the railroads
leading from the point where the traffic originates establish a commodity
rate to other points, where the raw material can be used to advantage by the
manufacturer. Or, perhaps, important manufacturers are located on other
roads, in which case connecting lines join with the originating road and
issue what is known as a joint tariff. This enables the producer to deliver his
raw material to the manufacturer on favorable terms, when to pay class
rates might compel him to abandon the enterprise, with a consequent loss of
traffic to the railroads. This discriminates against no one, since every
shipper of the particular commodity between the points named is entitled to
the special commodity rate.
Frequently, however, a commodity rate exists between certain points
which might, under certain conditions, be taken advantage of by a shipper
located at a point outside of those named in the commodity tariff. For
illustration, a manufacturer in Peoria, Illinois, is shipping a commodity on
which a special rate is granted between Chicago and Milwaukee, but takes a
class rate from the point of shipment. He makes a shipment to Milwaukee
and pays the through class rate provided from the point of shipment, when
by proper billing he would have paid the class rate to Chicago, and secured
the benefit of the commodity rate from that point to Milwaukee. A lack of
knowledge of commodity rates in effect in the manufacturer's territory has
resulted in an unnecessary expense—a loss of money.
The claim might be made that the billing clerk at the local freight office
should have given the shipper the benefit of the lowest rate. But he will fall
back on the classification and be prepared to show that he has given the
only rate quoted on shipments from Peoria to Milwaukee, which is the class
rate. It is no part of his duties to keep posted on commodity rates granted by
another road, while it is distinctly to the interest of the manufacturer to
know of the existence of all such rates applying to his product.

Freight Tariffs. The Interstate Commerce Act provides that two copies
of every freight tariff issued by the railroads shall be placed on file at each
freight office, for the inspection of the public. Since the rates must be made
public, the railroads do not object to supplying shippers with copies of the
tariffs applying to their product. Through the local freight agent, copies of
all tariffs applying from the point of shipment can be obtained.
It has been shown that, in the case of commodity rates, copies of tariffs
from the point of shipment are not always sufficient. It is necessary to
obtain, from connecting lines reaching the territory in which the trade of the
house lies, copies of all special tariffs applying to the commodities shipped.
The freight departments of all railroads, through their solicitors, make a
practice of supplying copies of all regular and special tariffs to all large
shippers on their lines, and to shippers on connecting lines who are in a
position to divert traffic to them. Any shipper who has been overlooked,
should write to the freight departments of all lines in his territory asking to
be placed on the mailing list to receive copies of all tariffs affecting his
product. By doing this, he will secure copies of all such tariffs as soon as
issued.
The subject of commodity rates is one of the most vexing with which
the shipping clerk has to deal, as it is also one of the most important. To
compile a complete file of special tariffs, involves close study and much
labor. But when once done, it can be kept up-to-date with little difficulty,
and the saving resulting will far outweigh the cost.
Filing Tariffs. The manner in which freight tariffs coming into the
office are filed is important, for unless properly filed and indexed they are
likely to be of little value. The filing system must provide for quickly
locating any tariff, and for locating all tariffs that may have a bearing on a
particular case.
In the average shipping clerk's office, it is not uncommon to find the
tariffs dumped into a drawer, without regard to their order, or hung on a
hook on the wall. When a rate is wanted, it is necessary to search through
the tariffs until one giving the rate is found. The chances are that the first
rate found will be used, regardless of the fact that another tariff shows a
special and lower rate.

Fig. 1. Vertical File of Indexed Folders for Railroad Tariffs

A very satisfactory file for freight tariffs is the vertical file, and one
drawer will hold all of the tariffs required by the average shipper. If a two-
drawer cabinet is provided, the shipping clerk will usually find other uses
for the extra drawer.
Each railroad whose tariffs are on file should be assigned a folder, and
the folders should be filed alphabetically under the names of the railroads,
as shown in Fig. 1. All tariffs from one railroad should be filed in the folder
assigned to that road, and arranged according to their numbers. All railroads
number their tariffs and, in correspondence, refer to them by number.
Reference to the tariffs will be facilitated, therefore, if those of each railroad
are kept in numerical sequence.
Loose-leaf binders are sometimes used for filing tariffs, but not all
tariffs are in proper shape for punching to fit the binder. Another
disadvantage in using a loose-leaf binder is that freight tariffs are not
uniform in size, resulting in an awkward, unwieldy book. For these reasons,
the vertical file is found more satisfactory.
The Index. Since the tariff folders are filed in alphabetical sequence, no
index is required to locate the tariffs of a given road, but a cross-index to
locate all tariffs that apply to a given point, is a necessity. This index should
be in card form, a card being used for each town to which the house ships,
or is likely to ship, its products.

Fig. 2. Cross-Index to Tariff File

A very satisfactory form of card for this cross-index is shown in Fig. 2,
which also shows the manner of filing. At the head of the card is the name
of the town, and the name of the railroad on which it is located. Below the
heading, the first column shows the names of all railroads issuing tariffs to
the town in question, whether or not the town is located on the road.
Following this are columns for the number of the tariff and for either
commodity or class rates. These cards are filed in the same manner as the
tariff folders—alphabetically by names of the railroads. A guide card is
provided for each road and all cards representing towns on that road are
filed in alphabetical order behind the guide card.

Fig. 3. Card for Class Rates

Suppose a rate is wanted from a point on the Delaware, Lackawana &
Western, to a point on the Burlington. Reference to the Burlington tariffs
does not give the rate, for the reason that the Burlington does not issue
tariffs from points on the D. L. & W., but reference to the card shows that
four roads issue tariffs from Buffalo to Burlington points, one of them being
a commodity tariff. Reference to the commodity tariff shows that the
special rate applies from a point in Ohio to Chicago, a connecting point
with the Burlington. By proper routing, this special rate can be taken
advantage of, class rates applying the balance of the distance. Without the
index, it would be necessary to look through several folders, with the
possibility that the special tariff might be overlooked.
Condensed Rate File. A condensed rate file covering a definite territory
will prove a convenience to most shippers. The trade of most houses is
confined to a certain definite and rather limited territory. A manufacturer
may make an occasional shipment to a point outside of his regular territory,
but, as a rule, his shipments will be confined within certain limits. This is
even more true of the jobber and the wholesaler.
If a special rate file, covering the particular territory in which the
shipper's trade lies, is prepared, it will be found convenient for reference,
and will save consulting the tariff files whenever a rate is wanted. Such a
file can be arranged on cards, or in a small loose-leaf book. One card or
sheet should be used for each town, the name of the town being written at
the head of the card.

Fig. 4. Card Index for Classifications

The card should show the rates for all classes from the shipping point to
the destination, as well as the route. It may be necessary to record rates
from more than one shipping point. A manufacturer may have two or more
shipping points, and it is important to know from which points he can
secure the most favorable rates. It is also advisable to include the shipping
points of the chief competitors, that they may be given due consideration in
meeting competition.
Fig. 3 shows the form of card for this rate file. The cards should be filed
alphabetically, and it is well to include cards for some of the principal
towns outside of, but convenient to, the regular territory. The rates for the
different classes, rather than on specific articles, are given for the reason
that the classification is more likely to change than the rate. If the rate on a
certain article is given, and the classification of that article is given, should
the classification of that article be changed, it would be necessary to rewrite
the entire index. It is much less difficult to change the record of the
classification of one article than to revise all of the rates.
Classification Index. For convenient reference, the shipping clerk
should prepare an index showing the classification of all articles that he is
obliged to ship. This classification index should be on cards or in loose leaf,
whichever is used for the rate file. One sheet is used for each article, the
name of the article being written at the top.

Fig. 5. Card for Commodity Rates

The record should show how the article is packed, the class, and the
classification in which it is found. As has been stated, more than one class
may apply to a given article, depending on the manner of packing; an article
may take the first-class rate if boxed, or double first-class if crated. In such
cases, both classes with the manner of packing should be shown.
These classification sheets should be filed alphabetically in the file used
for the rate cards, and they should be printed on stock of a different color.
Most shippers will need but a few of these sheets as the number of articles
shipped by one house is small, as a rule. If a large number of articles is
shipped, the classification index is of even greater importance. A suitable
form for this index is shown in Fig. 4.
Commodity=Rate File. When any part of the goods shipped are subject
to commodity rates, a file of commodity rates is fully as important as class
rates. A commodity-rate file is arranged on similar lines to the file of class
rates. A card or sheet is used for each town to which commodity rates apply,
and the cards are filed alphabetically by names of towns. These cards can be
filed with the class rates, but a distinctive color should be used.
The record should give the names of the articles taking commodity
rates, manner of packing, the point from which the rate applies, the rate, the
number of the tariff, and the name of the issuing railroad. On the line below
the name of the town appears the caption, see also. This is for the name of
some other point to which a commodity rate applies. Boone, Iowa, for
instance, may not be a commodity point, though a special rate from
Chicago to Clinton is in effect. The Boone card would refer to Clinton, and
the card for that town would show the rate. Fig. 5 shows a form for
commodity rates.
To compile such a record of rates as has been described, requires an
initial expenditure of much labor, but is a profitable investment. When once
compiled, changes can be recorded with little trouble. These files will
always be valuable for reference, not alone to the shipping clerk but to the
sales manager and the purchasing agent as well.
A comprehensive knowledge of classifications and rates will prove
valuable not only to the shipper, but to the receiver of freight. It will save
any merchant many dollars in freight charges on goods purchased f. o. b.
point of shipment. The shipper may not pack his goods in a manner to
secure the lowest rate, or he may not give the proper description in the

shipping bill. If his attention is called to the matter by a customer, he
probably will make the necessary changes in his methods.
Even the proprietor of a small retail business will find a study of this
subject a paying investment. The writer has knowledge of a case in which
the owner of a general store saved some $165.00 in one year by carefully
checking every freight bill received, making claims for overcharges, and
watching the packing and routing of his goods. Surely that amount would
be worth saving, even to a house transacting a much larger volume of
business.
Routing Shipments. One of the most important duties of the shipping
clerk is the proper routing of his shipments. Like classifications and rates,
the subject requires careful study. In too many cases this subject receives
little attention, but by exercising care in routing shipments, the shipping
clerk can be of material assistance to the sales department, and, incidentally,
to the customers of his house.
Routing frequently affects the rate. It might appear logical to suppose
that the rate between two given points would be the same, regardless of the
route; but this is not the case. Of two routes to a given point, one may be
longer than the other. If shipping and destination points happen to be in
different states, the provision of the Interstate Commerce Act which forbids
a higher rate for a short haul than for a long haul comes into play. Similar
provisions applying to local shipments, are found in the laws of certain
states. In Iowa, for instance, such a provision covers the transportation of
passengers as well as freight. One railroad is not permitted to meet the
competition of another having a shorter route between two points, but must
base its rate on the mileage. All of which goes to show the necessity of
considering the length of the haul in routing shipments.
The above conditions apply especially to shipments taking class rates,
but when goods which take commodity rates are to be shipped, the question
of routing is of even greater importance. It has been shown that a
commodity rate may be in effect between two points on one road, or two or
more roads may have issued a joint tariff which can be taken advantage of.
The question of commodity rates, therefore, has a most important bearing
on the routing of shipments.
Another factor that has a bearing on the routing is basing points, which
necessitates a knowledge of the points on which rates are based. In the

territories governed by the different classifications, certain common points
are used for basing rates. On shipments from the central states to southern
territory, rates are based on Ohio River points, while, to western territory,
they are, in many cases, based on Missouri River points. Class rates from
Chicago to all Missouri River points are, as a rule, the same over all roads,
but, to points beyond the Missouri River, rates may vary from the different
basing points; that is, the rate from Omaha to a western point may be less
than from Kansas City, though the rate to these basing points is the same.
The alert shipping clerk will learn the basing points in the territory to
which he is shipping goods—which he can do by consulting local freight
officials—and will then secure tariffs from these basing points to the towns
he wishes to reach. This information he will incorporate in his rate files.
Not least of the factors which should be considered in routing
shipments, is the accommodation of the customer. It is frequently the case,
that of two roads entering a town, the freight house of one is more
conveniently located for the shipper. Rates being equal, shipments should
be routed over the road from which the customer's cartage charges are the
lowest. Or the customer may have a sidetrack to his warehouse from one
road, which makes no switching charge, while on every car shipped over
another road a switching charge must be paid. This charge may offset an
advantage in rates. It always pays to accommodate the customer. When the
wishes of the customer are known, they should be granted, within
reasonable limits, even though it involves extra expense.

FILLING ORDERS

In all large concerns the filling of orders—that is, the assembling of the
goods—is done by the stock department. The subject is here discussed in
connection with the shipping department for the reason that in many houses
all orders are assembled under the direction of the shipping clerk; in others
he is also the stock keeper or stores clerk.
This discussion refers more especially to the filling of orders in a
jobbing house, or a manufacturing business which carries goods in stock. It
does not refer to those manufacturing enterprises whose orders are for
goods to be manufactured.

As a rule, all orders of a jobbing house should be filled the day they are
received. If they cannot be filled complete, they should be filled as nearly as
possible, and missing articles handled as explained later under the subject
of Back Orders.
There is a great chance for time saving in most houses in filling orders.
In many houses, too little consideration is given to the handling of goods in
a manner that will save time in assembling orders. Lack of a logically
planned system is responsible for much of the confused and confusing rush
in the average shipping room, about the time that orders should be delivered
to the transportation companies.
Here is a case in point which came under the observation of the writer.
A certain jobbing house, handling drugs and druggists' sundries, occupied a
five-story building. On each floor there was a stock room in charge of a
stock man, who, with the aid of such helpers as he needed, kept the stock in
proper shape, and assembled the goods required from his floor to fill orders.
In the drug business, the average order received from a retailer calls for
a large number of articles—it is made up of small items. This is especially
true of orders brought in by the traveling salesmen. As a consequence, the
larger part of the orders received by this house called for goods from
practically every floor.
The custom was to send orders first to the floor farthest from the
shipping room—that is, to the fifth floor. The stock man assembled the
goods required from his floor, placed them in a basket with the order, and
sent them down to the fourth floor. Each order went from floor to floor and
finally reached the shipping room—perhaps being held an hour on one floor
for a single article because of other orders ahead.
A result of this method was that, in the morning, the stock men on the
upper floors were rushed, while those on the lower floors had no orders to
fill, except those calling for goods from one floor only. In the afternoon, the
conditions were reversed. Then the men on the upper floors had nothing to
do but put their stocks in shape; those on the lower floors were busy filling
orders. These conditions were not particularly objectionable so far as the
stock men were concerned, as they were profitably employed, when not
filling orders, in caring for their stocks; but in the shipping room great
confusion resulted. Goods required to fill the day's orders did not begin to
come into the shipping room until late in the day, and then they came with a

rush. Hurried packing resulted in mistakes, caused disputes, and lost good
customers.
To overcome the difficulty, a new plan which worked admirably was
perfected. A chart was prepared, along the lines of the one shown in Fig. 6.
On this chart, a section was set aside for each floor, and in the first column
the classes of goods stored on each floor were listed. In the next two
columns a few of the articles in each class—enough to serve as a guide—
were listed, and the last column showed the floor B, meaning the basement.
On this chart, the location of any class of goods could be seen at a glance,
and in case of doubt about the class to which an article belonged, reference
to the catalogue issued by the firm gave the desired information.
A copy of the chart was given to the order clerk, who entered all orders
on a billing typewriter. In entering the order all articles were grouped by
floors, starting at the fifth floor. Below the list of articles from each floor a
space was left, the first entry for the next floor being on the second line
below.

Fig. 6. Floor Chart for the Classification of Stock

Two copies of the order were provided for the use of the shipping clerk.
When the orders reached his desk, he cut one copy into parts, as represented
by the floors from which goods were to come. After entering the order
number on the margin of each, he sent these sections to the stock men. Each
man assembled the goods required from his floor and sent them, with his

section of the order blank, directly to the shipping room. Here they were
checked against the shipping clerk's copy of the order, and, as soon as all
sections had been filled, the order was ready for packing. This resulted in
distributing the work more evenly, and kept the goods coming regularly to
the shipping room.
Another method of accomplishing the same result is to make as many
copies of the order as there are floors, the complete order being sent to each
stock man, who fills only his part. An advantage of dividing the order sheet,
as explained, is that the stock men have no knowledge of the names of
customers. This prevents a stock man from taking a list of the firm's
customers to another house—an occurrence which is not entirely unknown.
Back Orders. Most concerns find it impossible to fill all orders
completely; there are occasional shortages in every house. In such cases, it
is the usual custom to fill all orders as nearly as possible, and forward the
items that are short as soon as they are in stock, or with a later shipment.
The possibility of these items being overlooked must be provided
against, and this is done by entering all items that are short on a new order.
This is known as a back order. The back order should be made in duplicate
and should be printed on stock of some distinctive color that will not be
confused with the regular order blanks. For convenience in filing, it should
also be made the same size as the regular orders.
If the number of back orders is very large, a separate series of order
numbers is used, but most concerns do not have a sufficient number of such
orders to make this necessary. The more usual custom is to give the back
order the same number as the original of which it is a part.
Of the two copies of the back order, one goes to the shipping clerk,
while the other is kept in the office. The office copy is used to follow up the
shipment of the order. It is necessary for the shipping clerk to know
immediately when goods required to fill back orders are received. When a
separate receiving clerk is employed, the back order is sometimes made in
triplicate, one copy for the receiving clerk, who notifies the shipping clerk
when the goods arrive.

Fig. 7. Back-Order Blank

When a back order is filled, the shipping clerk returns his copy to the
office. Invoices are made in duplicate, one copy being filed as a sales sheet.
The two copies of the order are filed with the corresponding copies of the
original order. A most satisfactory plan is to file one copy numerically and
one alphabetically, making a cross-index. A simple form of back-order
blank is shown in Fig. 7.

CHECKING SHIPMENTS

One of the vitally important problems in connection with shipping is the
proper checking of items in each shipment. To receive complaints of
shortages is very annoying to the shipper—especially so when he is not in
position to prove that the items claimed to be short were shipped—but,
rather than take the chance of losing a customer, he usually pockets the loss.

Fig. 8. Order Blank with Column for Shipper's Check

Shipments should be checked at every stage in the process of filing the
order, by everyone who handles the goods. The stock man should check his
part of the order as he assembles the goods, and again before he forwards
them to the shipping room, or the next floor. When received in the shipping
room, the goods should be checked against the shipping clerk's order, and
again just before they are packed.
It should be a positive rule that all goods shall be checked when they are
placed in the cases. The items should be called off by the packer as he
handles them, and checked on the order by a checker. This is a safer plan
than calling off the items from the order, as it insures a positive check on
the items actually packed—not what should have been packed. All order
blanks should be provided with a separate column in which to check the
items actually shipped, and quantities should be entered in this column even
if the order is shipped in full. The checking column on the order blank is
shown in Fig. 8. If the system of entering orders includes a copy to be used
as an invoice, the items are entered in this column after the shipping order is
returned to the office.
The initials or numbers of both packer and checker should appear on the
shipping order. It is also a good plan to place in each case a packer's slip,

shown in Fig. 9, giving the number or initials of the packer and instructing
the customer to return the slip with any claim for shortage or damaged
goods. In some houses, it is the custom to make the packer's slip a duplicate
of the order, listing all items packed, in which case, it makes a convenient
receiving slip for the customer.
While not offering positive insurance against
mistakes, a thorough checking system will
reduce errors in packing to a minimum, and will
most certainly pay for the labor involved. In
large houses shipping a large number of
packages over several different railroads, a
further complication arises through the liability
of deliveries being made to the wrong freight
house. Where several hundred shipments per day
Fig. 9. Packer's Slip are made, it is not uncommon for a teamster to
leave a package at the wrong road, finding
himself short on his deliveries at another road; or the mistake may be made
in loading the drays.
One well-known mail-order house has overcome the difficulty in a
simple manner. This house is shipping several hundred packages a day by
freight, over eight railroads. The basis of their shipping system is a color
scheme, each railroad being designated by a different color—that is, the
New York Central is represented by green, the Erie by blue, etc.

A FORTY-FIVE FOOT CABIN LAUNCH ON CAR
Showing Method of Loading Boats for Shipment at the Shipbuilding
Plant of the Gas Engine & Power Co. and Charles L. Seabury & Co., Consolidated

The shipping floor is divided into sections, one for each railroad, and
one for each express company. The low partitions that separate the sections
are painted in the colors representing the railroads, and over each is a sign
bearing the name of the road, also printed in the corresponding color. All
packages are taken directly from the packing room to the sections of the
shipping floor representing the roads over which they are to be shipped.

Fig. 10. Routing Package Labels

In all blanks used in shipping, the same color scheme is carried out.
This includes shipping orders, packing orders, invoices, shipping receipts,
and labels. All orders are properly routed before they are distributed to the
billing machine operators for entry. Each operator enters orders for certain
railroads—from one to three, depending on the distribution of the trade—
and is supplied with blanks of proper color for those roads only. Every
order is then entered on blanks of the color representing the railroad over
which the shipment is routed.
In Fig. 10 is shown a label which represents this color scheme. Across
the end of the label is a solid block of color, with the name of the road in an
open letter. All printing on the label is also of the same color. If the order is
properly routed and entered, there is very little chance for shipments to go
astray. On every blank and on the package itself, the color of the road is a
prominent feature, and since all blanks are written at the same time, they

must correspond. Should a package be placed in the wrong section, it is
practically certain that the error will be discovered when the goods are
loaded on the dray.

EXPORT SHIPPING

Export shipping is a subject about which the average American house
knows but little, and herein appears to lie the cause of the loss of much
foreign trade. This is especially true of trade with other than English-
speaking countries. But the real fault lies farther back than in the shipping
department.
The trouble starts in the sales department. Export business is undertaken
without special preparation, and an attempt is made to apply the methods
used in handling domestic trade. Special instructions in regard to packing,
for instance, are ignored because the American thinks he knows more than
his customer in a foreign land.
Before export business is even attempted, the sales department should
become thoroughly familiar with conditions in the country with which it
wishes to do business. Some man in the department should study the
customs regulations, the descriptions necessary, the kind of packing needed,
and the size of package best adapted to the country. Above all, he must
study the desires of the trade, and conform to them, if he expects to make
and hold customers.
Special importance is attached to the question of packing and describing
the goods. No matter how unreasonable the request of the customer or the
foreign salesman may seem, it should be complied with, for it is made for
some good reason. A request of a merchant in Omaha, ordering dry goods
from Chicago, that goods ordinarily packed in a large case be packed in
small oblong boxes, might very properly be ignored; but not so if the
customer is located in a South American republic. There, if the goods are to
go to the interior, they must be transported over the mountains on the backs
of pack mules.
Besides making the packages of suitable size, goods for export must be
packed to withstand hard usage, and must be well protected against the
elements. Goods must be fully and accurately described in order that they

may pass the custom house. The dimensions of each package must be
shown on the shipping bills, for freight rates are based on the space
occupied in the hold of the ship, rather than on weight.
In a recent address on trade conditions in the Latin-American countries,
Wm. Harley Porter, Deputy Captain of the Port of Cienfuegos, during the
occupation of Cuba by the United States government, made some very
pertinent suggestions on these questions, some of which are published by
permission—as follows:
To secure South American trade, we must first train salesmen. They must make an
exhaustive study of the different South American tariffs and at least know Spanish. They
must be willing to accept instructions as to shipping, and be powerful enough to insist that
they be carried out literally. And it would be a good thing for them to take a kindergarten
course in carpentry and blacksmithing, so that they would not continue the stupid,
expensive blunders of American houses in the packing of goods.
I don't know how to drive that last statement home hard enough. Our consuls plead with
our exporters, and our Government distributes volumes freely on the subject, yet there is
no apparent improvement.
I confess that until I had some first-hand experience, I supposed that the packing evil
was a convenient sort of filler, with which Consuls padded their reports for want of better
material.
In order to fit out the custom house of Cienfuegos, Cuba, with new office furniture, we
placed an order amounting to nearly one thousand dollars with a Chicago house that
brazenly advertised that it made a specialty of export business. Their booklet was
encouraging, and the prices really low. So we ordered roll-top and flat-top desks, cashier's
desks, office chairs, tables and card cabinets, and then worried, for fear that the goods
would not arrive before the end of the fiscal year, then rapidly approaching, in which event,
our furniture appropriation would revert to the island treasury.
Six weeks from the day the order reached Chicago, the goods left New York—time
enough to have had them come from Hawaii. With the goods came a single invoice. The
vouchers in triplicate, which must be filled properly before the account can be paid by a
governmental department, had been thrown aside as of no use. To protect the exporter, a
voucher was drawn, for the ship reached port on June 30, the last day of the fiscal year.
Several dollars were wasted in cable messages to expedite the return of new invoices, and
the goods were unpacked.
Not one piece of furniture, save a few chairs, was found whole. No American, in the
States, would have accepted the goods. We had paid for them. A letter of remonstrance
brought back a churlish answer, written in a cocky American spirit of superiority, to the
effect that possibly some one outside could tell that house something about packing their
own goods, but they would be greatly surprised to meet such a person.
The trouble lay in the thinness of the packing cases. Goods are loaded into a ship by
casting a rope sling about their middle, by which they are hoisted up and let down, often
with a run, into the hold. Our desks, without sufficient outer protection and not being built
on the principle of a truss bridge, naturally collapsed. The cases were none too good for a
railway journey, and were certain to be damaged at any Central or South American port

because, in nearly every case, unloading is done from the ship to a lighter, and from the
lighter, by main strength and awkwardness, to a wharf.
I cannot recall one instance in which American houses carried out instructions literally. I
believe that there is a great future for an American exporter who will let the man on the
ground do his own thinking, and take it for granted that he knows what he wants and how
he wants it. The exasperation of a man who is weeks or months away from the markets,
and who finds that substitution has been practiced, or his goods so packed that destruction
was plainly invited, cannot be adequately described by a man on my income.
We bought a typewriter in New York, one time, for two reasons: We could get the liberal
discount, allowed the government if we bought direct from the maker, and we could evade
a 25% duty if we received it through our custom house and not through another. Also there
was a line of steamers from New York to our wharf.
Some five weeks after placing the order, we were notified by an express company in
Havana that it had accepted for our account a typewriter, and that when the duty, plus
accrued express and forwarding charges, amounting to $45.O3, were paid, it would be
dispatched in our direction.
We were out $40.03 because some fool shipping clerk had insisted on trying to do our
heavy thinking. We had given him the name of the steamer by which the machine was to be
shipped, but he had discovered, in some way, that steamships will not make a bill for less
than a metric ton. That, he doubtless learned, would cost us $5.00. The package only
weighed about 30 lbs., so he started it off by express. His brain did not carry far enough for
him to learn that only one American express company crossed the Florida Strait and
naturally chance took it to another company. Two changes were made in express
companies before the box reached the coast and the package sauntered about in our
beautiful Southland for more than a month before it landed in Havana.
Had any Spanish merchant been subjected to the invariable annoyance which fell to our
lot when we endeavored to patronize American houses, he would have given up in despair
and remembered the adage of the burnt child, forever.
And, unfortunately, the carelessness of American shippers often costs the foreign
merchants good, hard dollars. Tariffs in Latin-American republics are fearfully and
wonderfully made, and there is nothing that a pin-headed government employe enjoys
more than inflicting a fine for a slip in complying with a little red tape.
Here is a case in point. A large house in Mexico City bought a carload of chairs over
here, and with the order sent the shipping forms prescribed by the Mexican government. A
very explicit letter was sent also, saying that consular invoices would be provided by their
custom house broker in Laredo, who would receive the goods at the border, but that the
shipping forms must be filled out, each package numbered with a serial number on the
forms. Full description involved, of course, a statement as to the kind of wood used, so that
the duty might be easily adjusted.
The goods, however, were simply consigned as so many bundles of chairs, weight so
much. The shipping lists were ignored. The innocent receiver of those goods was fined
both because they had not been properly described and because the weight was grossly
understated. It cost the Mexican house $800 and when the American was asked to settle the
charges caused by carelessness, or pig-headedness, he merely answered that he was not
going to settle any bills with the Mexican government.
The Mexican firm settled—it had to—and posted every importer in the republic in the
matter, so that not only will that American house not sell any more chairs in Mexico, but
Americans generally have been given another black eye.

There is a good reason for careful custom regulations, and the exporter should know
that they are partly for his protection. For instance, they usually require that a certain
number, generally ten per cent, of all packages shall be opened and compared with the
shipping list. If these packages, chosen at random, are correct, the consignment is
delivered. But if any variation is found, fraud is assumed, and every package is thoroughly
examined, usually with more or less damage.
It is customary for English and German firms, in the packing of small articles, to use
different colored pasteboard boxes, which are often decorated with pictures indicating the
contents. For instance, in a large packing case containing a stock of gentlemen's
furnishings, all collars will be in boxes of one color, socks in another, cravats in another,
etc. The large case is lined with tin, by the way, and after packing, the tin joints are
soldered around the top. Here is the English system: First, the small boxes, individualized
as much as possible; then heavy wrapping paper, then a tin lining inside of an outer
wooden casing, the latter being well made and reinforced with iron straps. Last of all,
directions and addresses are stenciled in large, clear block letters. The Germans often use
oiled paper between the tin and the inner packages, so that even if the tin is punctured, the
oiled paper will resist the sea air, which invariably injures delicate fabrics.
The American idea seems to be to put as much as possible in a large, thin box or a
poorly bound bale. The European, whose agents study conditions on the ground, knows
that much interior transportation in Latin America is packed by pack mule, and therefore
uses medium-sized oblong boxes, two of which make a good load.
I cannot emphasize too strongly the necessity for careful description of goods to pass
them through a custom house with the least inconvenience. Mixed consignments must pay
the highest duty assessed against anything found in a lump or poorly described quantity. If
you deal in bolts, for instance, you may not merely say 1,000, 3×2×⅜ bolts, but you
should say whether they are cotton, linen, or woolen. They have to know, before they can
assess duty.
Instead of a ringing peroration about American pluck, progressiveness, and other non-
essentials, let me give you some shipping rules, if you are going to have a try for South
American trade.
Secure shipping list forms beforehand and find out if consular invoices are needed.
Pack your goods in small packages, for you will pay freight on metric tons and they are
based on cubic measure and not on weight.
Pack well, for tons of stuff will probably lie on your cases.
Give each package a serial number and describe it by that number, on the shipping
forms.
If your goods can be damaged by sea water, use tin-lined cases.
Your invoices should show not only number, measurement, and exact contents of each
package, but their gross, tare, and net weight, for in many cases the container must pay the
same duty as the contents.
Be sure that your forwarding agent is reliable, for the law allows him many charging
privileges if you are careless in providing for contingencies.
Contract, if you can, for through transportation and get from the transportation
companies the requisite export manifests to accompany shipment.
Make triplicate invoices, one to accompany the goods and two to be mailed to the
consignee. One of these will be turned over to the custom officials, so in case the invoice
sent with the goods fails to come through, and that often happens, the triplicate can be

accepted. Without an invoice your goods cannot leave the ship, and I know of cases where
cargoes have been held awaiting invoices for eight weeks.
And, in conclusion, remember that sentiment is not the foundation for foreign trade. If
we sell abroad we must do so on merit and by foreign systems—not our own.

FREIGHT CLAIMS

Freight claims are an ever present source of annoyance. Every shipper,
and practically every receiver, of freight finds it necessary to make claims
against the railroads for freight overcharges, shortages, and damages to
goods in transit. Some houses find occasion to make but one or two claims
a year; others constantly have several claims on file, aggregating a large
number each year, but no matter what the number, they must be given
proper attention.
Handling freight claims is not one of the usual duties of the shipping
clerk, nevertheless, it is a proper topic for discussion in connection with the
subject of shipping. The traffic manager, when one is employed, handles the
freight claims; otherwise the details are handled by some other minor
official—as the cashier or the purchasing agent.
The adjustment of claims involves, usually, a large volume of
correspondence, and requires a man of tact. He must possess patience and
persistence to a marked degree. Diplomacy of a high order is necessary in
his correspondence, and promptness is an important factor. Threats have
little effect, other than to delay adjustment of the claim.
Before a claim is presented, all information pertaining to the case in
possession of the claimant must be assembled, and all facts should be
incorporated in the papers filed. A bill should be made against the railroad
for the amount of the claim, and to this should be attached the freight
receipt or other voucher. These papers should be accompanied by a letter
giving a plain statement of the basis of the claim; if for an overcharge, the
number of the tariff and the classification on which it is based should be
cited. The claim papers should be as complete as it is possible to make
them, presenting all facts having a possible bearing, otherwise they will be
returned by the claim agent of the railroad for further information. Some of
the questions asked by the claim agent may seem trivial to the claimant, but
the answers are necessary to him in completing the files of his office. When

claim papers are returned through the local freight office, the information
asked should be given and the papers returned at once.
Claimants become very impatient over delays in the adjustment of their
claims, forgetting that where they handle perhaps a dozen claims a year, the
railroad claim agent must handle thousands, involving amounts ranging
from a few cents to many hundreds of dollars. They also overlook the fact
that a shipment has passed over several roads, and that before the claim can
be adjusted, it must be ascertained on what road the damage was sustained.
The different roads involved must adjust the claim between themselves,
before they can tell where the money with which to pay it is coming from.
The papers must pass through the hands of agents at all junction and
transfer points, and the claim departments of all roads involved, before the
claimant can expect a reply.
On the other hand, it is not good business to rely solely on the railroad.
Claim papers sometimes repose indefinitely in the desk of some local
freight agent, until brought to light by a persistent follow-up; occasionally
the papers are lost. A follow-up of freight claims is, therefore, a necessity.
The shipper who is most persistent in following up his claims, is usually the
beneficiary of the most prompt service.
Railroads number all claims as received, and invariably refer to them by
number. It is an excellent plan, therefore, for the shipper to adopt a
numerical system for the purpose of identification. It is quite important that
all correspondence relating to a claim be kept together, and this is best done
by using a folder for each claim. The number of claims is so small that it is
not necessary to use an entire drawer for claims; they can be accommodated
in the front of a drawer used for regular correspondence.

Fig. 11. Folder for Freight Claims

The outside of the folder should provide for the name and address of the
consignor or consignee, as the case may be, name of the railroad on which
claim is made, the shipper's claim number, and the railroad's claim number,
as shown in Fig. 11. In this folder, copies of the bill and of all letters to the
railroad company should be filed. The folders are filed numerically, in the
order of the shipper's claim numbers.
To follow up the claim, and to provide an index to the file of claim
folders, a card, similar in form to the one shown in Fig. 12, should be used.
This card provides for a complete history of the claim. At the head of the
card is shown the name of the consignor or the consignee, shipping point,
shipper's and railroad's claim numbers, dates of shipment, receipt, and filing
of claim, the railroad on which claim is made, and the name of the claim
agent. This is followed by a brief statement of the nature and amount of the
claim. The two bottom lines provide for a record of the payment or rejection
of the claim. All of the information most likely to be needed is found by
turning to this card, without the necessity of consulting the correspondence
in the claim files.

Fig. 12. Card for Follow-Up of Claims

The manner of filing the card depends somewhat on circumstances. The
usual plan is to file alphabetically, under the name of the consignor, first
grouping by railroads. If goods are received and shipped over but one road,
all of the cards would be filed in one index. But if more than one road is
used, an index card would be used for each road, and the cards arranged
alphabetically back of the index cards of the roads involved. This
arrangement brings the cards of all claims against one road together, which
is a logical plan, since it is the railroad with whom the claimant is dealing.
Across the top of the card is a series of numbers, from 1 to 31. These
represent the days of the month, and are used in connection with the follow-
up of the claim. Metal tabs are placed over the dates on which it is desired
to have the claim brought to notice—that is, if the claim is to be followed
up on the 20th, a tab is placed over the number 20. On that day all cards
with tabs over this number are removed from the file, and, after the claims
have received proper attention, the tabs are moved forward to the next
follow-up date, and the cards returned to the file.

Fig. 13. Record of Correspondence on Back of Follow-Up Card

A record of all correspondence in connection with the claim is made on
the back of the card, which is ruled and printed for the purpose, as shown in
Fig. 13. This constitutes a tracer which shows, without reference to the files,
just what correspondence has been required in the adjustment of the claim.
When the number of claims on file is large, there should be another
record which will show the amount of claims outstanding against each
railroad. Of course, the card file gives this information, but some of the
cards are very likely to be out of the file, so that the amount obtained by a
recap of the cards at any time may not represent the correct total.
An account with each railroad can be kept on a card, as shown in Fig.
14. This card should be filed with the claim cards, immediately behind the
guide card of the road. In effect, it is a ledger account, representing a
contingent asset.
From an accounting standpoint, the proper method is to charge all
claims to a claim account, crediting whatever account may be affected, at
the same time charging the railroad on the card referred to above. If an
overcharge has been paid on a shipment received, the entry would be:
Claim Account $_____
In Freight $_____

Fig. 14. Claim Account Card

When a claim is disposed of—paid or rejected—claim account receives
credit, while the debit is to cash, or the account originally affected. Using
the above illustration, if the claim is paid in full the entry is:
Cash $_____
Claim Account $_____

If the claim is rejected:
In Freight $_____
Claim Account $_____

Fig. 15. Register of Sales

Thus the claim account is a controlling account, the balance
representing the total claims outstanding, and agreeing with the totals of the
claims against the different roads as shown by the cards. Claim account
represents a questionable asset, and should be so treated in the balance
sheet, a liberal discount being made in the value represented by the account.

EXPRESS SHIPMENTS

Many business houses are selling classes of goods which are most
successfully shipped by express. This is especially true of those houses that
transact the larger part of their business by mail. The question of shipping
by express is, in itself, quite simple, but there are numerous details
connected with the handling of such orders which require close attention.
While these details vary in different businesses, as a typical illustration the
business of selling books by mail has been selected.
When an order is received, the first step is to check the source—whether
from circularizing, a re-order, or periodical advertising, and if the latter, the
name of the publication. This information should be entered on the original
order.
Cash and charge orders should then be separated, and on the charge
orders the next step is to investigate the credit and check the address,
especially when no advance payment is made. The address is checked
against any list that may have been used, or against city directories, when

such are available. If the list used has proved reliable, it usually is safe to
pass the order from one whose name appears therein. Or the occupation
given in the directory may warrant the acceptance of the risk. If he is a
customer, his manner of paying in the past is the best guide.
Should all of these sources of information fail, and if the customer gives
no references, it is well to secure a report from some commercial or
collection agency. It may be necessary to follow up the agency, but if a
reliable agency, like Martindale, is unable to obtain information, it is best to
refuse the order except on a cash basis.
The order having been accepted, it should be entered in an order
register, giving the name of the purchaser, the address in detail, description
of the article ordered, source of the order, and the price. A sheet, as shown
in Fig. 15, should be used for each day's sales. The sheets should be in
duplicate, as a copy is needed by the statistical department, from which to
tabulate the sales from different sources.
The next step is to open an account on a ledger card, as shown in Fig.
16. At the same time a collection card should be made. Both of these cards
should be filled in from the original order—not from the register. If the
number is large, the accounts should be numbered, the number being
entered on both the ledger and collection cards. From the ledger cards, the
numbers are entered on the register. Two indexes are made—one
alphabetical and one geographical—on plain index cards, only the name
and address, name of publication ordered, and the account number being
shown. One of these cards is filed alphabetically and the other
geographically, while the ledger cards are filed numerically.

Fig. 16. Ledger Card

Each day, before the cards are filed, the amount of the new accounts
should be obtained on an adding machine, and checked against the total of
the order register sheet. This will guard against errors in transcribing, for it
is improbable that the same error will be made in entering the order on the
register and on the card.

Fig. 17. Shipping Order and Label Made at One Writing

The statistical department will obtain a record of total sales from the
duplicate register sheet, and, for this reason, the amount should be checked
against the original sheet. Since these sheets are footed by different people,
this comparison affords a reasonable proof of accuracy, and also insures the
use of the same totals by the statistical and order departments.
The order is now properly recorded and is ready for shipping. But
before a shipping order can be made, it must be routed. This is done by
consulting a postal and express shipping guide, in which will be found the
name of every postoffice in the country, the names of the express
companies reaching that point, or, if not an express office, the name of the
nearest office. The name of the express company is entered on the order,
which is then turned over to the billing clerk.

Fig. 18. Prepaid Shipping Sheet

The making of a shipping order, Fig. 17, is the next step. At the head of,
and attached to, the order is a label as shown in the illustration. This shows
the name and address, and the name of the express company, which
information is duplicated on the order blank by means of carbon paper. The
body of the order gives full particulars of the articles to be shipped, names
of the order clerk, checker, and entry clerk, together with the date. All
orders should next be entered on the shipping sheets, which are supplied by
the express companies. A prepaid sheet is shown in Fig. 18. This is made in
duplicate, one copy, signed by a representative of the express company,
remaining with the shipper. The copy for the express company serves as a
voucher for the collection of the charges.

A MODERN FACTORY DINING ROOM.
One of the Developments of Modern Business. Studebaker Bros. Mfg. Co., South Bend, Ind.

The express shipping sheet and the orders, with labels attached, should
be sent to the packing and shipping room, where the goods are packed and
shipped. The order should then be returned to the office, and filed with the
customer's orders in the correspondence files. This should be a formal
acknowledgment, giving full information as to when and how shipped.
It will be seen from the above that orders of this class necessitate a
number of details, each of which forms an important link in the complete
chain.

RETAIL DELIVERY SYSTEM

Not the least important problem in shipping is that of the retail store.
While this problem is of special importance in a large city, it is one which
must be met by the retailer in every community. Under present conditions,
the retailer is obliged to deliver a large per cent of the goods that he sells,
and the tendency is for this percentage to increase rather than decrease.
The shipping or delivery department is the busiest in the entire
establishment; the details are so many that only with the most perfect
system can the work be handled. The delivery system of one of the big
stores is a revelation to most men; and when our purchase, which is but one

of thousands made in an hour, is delivered at our door, five or ten miles
away, two to five hours later, we marvel at the perfect working of an
apparently complex machine. And yet, when we study it, we discover that
the controlling factor of this vast system is its simplicity. Less confusion is
found, and fewer mistakes are made, in the delivery department of the
largest stores in the world than by the delivery boy of your corner grocer;
and simple system—method—at every step from the sale to the final
delivery is responsible.
While not really complicated, the system of a big store is built to care
for many more details than are met with in the smaller store. Since a vast
majority of retail establishments are in the latter class, this discussion is
confined to the needs of a store of average size.
Average size is a relative term. A store of average size in one
community would be considered as a big store in another. In a large city,
leading stores dealing in exclusive lines—such as clothing, shoes, or cloaks
and suits—answer the description, and it is the needs of such a store that are
discussed herein. A system adapted to the needs of a store of this class, can
easily be expanded for a department store or modified for a smaller
establishment.
Delivery Tag. A delivery system starts, not in the shipping room, but
when the sale is made. The very first requisite is a correct address, and the
securing of the address rests with the sales person. Unless every necessary
precaution to insure accuracy at this point is taken, the further provisions of
the system are without avail.

Fig. 19. Label with Colored Border to Indicate Routing

The first step, then, is for the sales person to write the label or tag that is
to be attached to the package. It should not be left for another to write the
final delivery ticket; this should invariably be done by the sales person, who
then becomes responsible for the address. In some small stores, the
duplicate sales ticket is made to do service as a delivery ticket, but it is
much the safer plan to use a separate tag or label for this purpose. The
address on the duplicate sales ticket is quite likely to be illegible, and to
provide for all details needed for delivery necessitates a larger ticket than
otherwise would be used.
One of the most practical schemes ever devised is to indicate the section
of the city by the color, size, or shape of the delivery ticket. The city is first
divided into sections, the commonly known sectional divisions being used
—as North side, South side, etc. When the sale is made, the customer is
asked in what section of the city he resides, and then an appropriate label is
selected. All labels are the same in form, but printed a special color for each
section. The label shown in Fig. 19 is distinguished by a solid border and
bar of color, printed on white paper, all type being printed in black.
Every necessary detail should be provided for on the label. The one
illustrated shows the date, the name and address, near what street, the flat
number, the name of the salesman, initials of the inspector, and amount (if
any) of the C. O. D. The caption, near what street, is of special importance

in a large city for it assists greatly in routing deliveries. An address may be
given as 437 E. 72nd St., but if it is known that this is near Baker Ave., it is
much more quickly located by the driver.
This label is written by the sales person and sent with the goods to the
packers. Here, it is pasted on the package—unless it is a C. O. D. package,
in which case it is first initialed by an inspector. The same is true of charge
sales.
Routing Deliveries. The delivery system proper begins with the routing
of the deliveries, which is the first thing done after the goods reach the
shipping room. Bins should be provided for the different sections of the city
and if the business warrants, these sectional bins should be subdivided, the
subdivisions representing routes. Separate bins should be provided for C. O.
D. deliveries, and it is well to have a bin for special deliveries, such as those
to suburban points, which usually are forwarded by express.
When the packages reach the shipping room, they are sorted into these
bins. As an aid to sorting, the colored labels described prove their value.
Since the color represents the section, packages can be sorted as rapidly as
they can be handled. After they are sorted according to sections, the
packages are again sorted into routes.
In certain lines, such as groceries, the average delivery is made up of
several packages, all of which are put into a basket. Here, the bins must be
differently arranged, being but divisions of the floor space. But the scheme
of using colored labels or shipping tags could be used to advantage,
especially in a downtown store delivering to all parts of the city. For a
grocery with a trade confined to its immediate neighborhood, the sectional
divisions are not needed, but the goods should be sorted by routes.

Fig. 20. Regular Delivery Sheet

The Delivery Sheet. After routing, the next step is to record the
deliveries. In all modern stores, deliveries to each section of the city are
made at stated hours. As a rule, the deliveries are entered on the sheets just
prior to the hour for the delivery.
Fig. 20 shows the form of the regular delivery sheet, which is used for
cash and charge sales. This sheet shows the date, the name and address,
number of packages, and sale number. The column at the extreme right is
for the signature of the customer as a receipt for the goods. Whether or not
it is either necessary or wise to attempt to secure the signature of the
customer, is a disputed question, and probably depends on the class of
goods delivered and the extent of the business. A jeweler who delivers a
valuable piece of jewelry would be justified in demanding a receipt, but this
would be unnecessary for a grocer. The shipping clerk in one department
store gives it as his opinion that the signature is not necessary, and, for
proof, points to a record of but two inexpensive packages lost in a year.

Fig. 21. Delivery Boy's Call Tag

At the bottom of the delivery sheet, calls are listed. This refers to calls
by the driver, where no deliveries are to be made. In a clothing or
department store, it frequently is necessary to call for goods that have been
delivered on approval, or on which alterations are to be made.
The delivery sheets are put up in book form in duplicate. The original is
perforated so that it can be detached, while the duplicate remains in the
book. A book is used for each wagon, and each driver signs for his
deliveries in the space provided for that purpose at the head of the sheet.
The driver then takes the delivery sheet, placing it in a spring-back binder,
and turns it in on his return. It is well to keep these sheets on file in the
shipping room for at least a month—when it is safe to destroy them.
When a call is to be made, a special tag is given to the driver to be
attached to the package. This tag, which is shown in Fig. 21, gives the
address, and any special instructions that may be necessary.
When the call is for a garment to be altered, the person taking he call
usually ascertains what is to be done, and writes the instructions on the back
of the tag. In case no instructions are given in advance, they are usually
given when the call is made—in which case they are written on the tag by
the driver. When the package reaches the shipping room, reference to the
tag shows what is wanted, and the package can be forwarded, at once, to the
proper department. Carrying out the color scheme, the call tag should be of
a special color to distinguish it from the delivery tag.
C. O. D. Deliveries. Of special importance are C. O. D. deliveries.
There must be a positive record which will make it possible to check every
item at every stage, including all items collected.

Fig. 22. Collect on Delivery Tag

The handling of a C. O. D. item begins with the sale, when the sales
person, in addition to noting on the sales slip that the item is C. O. D.,
makes out a tag, as shown in Fig. 22. This tag, which should be of a special
color, is made with a perforated stub, and on the stub the information on the
tag itself is duplicated. The sales person fills in, on both the tag and the
stub, the name and address of the customer, the amount to be collected, his
own initials, the number of the department, and the date.
The goods and the duplicate sales ticket go to the packing room, while
the original sales ticket and the tag go to the office, where they are taken
charge of by the C. O. D. clerk. This clerk registers the sale on a C. O. D.
register, stamps the number on the tag and stub, and returns them to the
packing room. The tag is then attached, and the package sent to the shipping
room, while the duplicate sales ticket goes to the auditor's office.
In a store where the packages are wrapped in the department making the
sale, the routine is changed to the extent of sending the package direct to the
shipping room, with a plain address label. The package is held in the
shipping room until the tag, sent direct from the office, is received.

Fig. 23. Special C. O. D. Delivery Book

After they are sorted by routes in the shipping room, all C. O. D. items
are entered in special delivery books, as in Fig. 23. This book is made in the
same style, as the regular delivery book, with perforated sheets, but should
be made of paper of a different color. The form differs but slightly from that
of the regular book, the only difference being the addition of columns for
the C. O. D. number and the amount to be collected.
When a driver makes a C. O. D. delivery, he gives the customer a
receipt on the tag, Fig. 22, but retains the stub. On returning from a
delivery, he turns in the stub with the money, and the payments are checked
on the duplicate of his delivery sheet. If a package is not delivered, it must
be turned in with the complete tag attached. All returned C. O. D. packages
are checked on the delivery sheets and entered on the sheets for the next
delivery. This system insures a positive check on the driver, for he must turn
in either the package, or the stub and the money.

Fig. 24. Office Record of C. O. D. Items

The office record of C. O. D. items is in the form of a register, as shown
in Fig. 24. This register is provided with the same columns as the C. O. D.
delivery sheet, with columns added for the route number and the driver's
number, these columns being used only in the shipping room. All items are
registered in numerical order, a new series of numbers, starting with No. 1,
being used each month. The book is made with duplicate sheets, the original
perforated. Once a day, or as fast as the pages are filled, the originals are
sent to the shipping room.
The original sales ticket is placed in an envelope, stamped with the C.
O. D. number and filed numerically by the C. O. D. clerk, who also keeps
the register. In the system described, the tag receipt takes the place of the
sales ticket; but in many stores it is considered best to send the sales ticket
with the package.
When the shipping clerk receives the record sheet from the office, he
checks the items against his delivery books and enters the route number and
driver's number. As described, each driver's stubs and returned packages are
first checked against his delivery sheet; all stubs are then checked against
the record sheet, which makes a double check in the shipping room. If a
package is refused it is returned either to the department or the general

stockroom, and a receipt obtained on the back
of the tag. The shipping clerk then returns the
record sheet to the office, with the money
collected and the tags representing refused
packages.
Sales tickets and cash are turned over to
the cashier, while tags and sales slips of
refused packages are sent to the auditor. The
auditor can check both the cash collected on
C. O. D.'s and returns against the duplicate Fig. 25. Notice of Attempt
sales tickets in his possession. to Deliver
Undelivered Goods. One of the
annoyances met with in the delivery department of a large store is the
difficulty in making deliveries because people are not at home.
Unsuccessful calls are common, and while it is quite the general custom to
leave packages with a neighbor, it is not always possible to do this, which
means that the package must be returned to the store. And it frequently
happens that this brings forth a vigorous complaint from the customer, who
is positive that the delivery could have been made.
One merchant has found a simple solution of this difficulty, which could
be adopted with profit by all merchants in large cities. Drivers are supplied
with slips printed as shown in Fig. 25. When no one is found at home, one
of these slips is filled out and left in the mail box. It shows the date, time of
day, name of driver, and name of person with whom the package has been
left. The use of this slip eliminates complaints and proves a great
convenience to the customer.

Fig. 26. Post-Card Notice of Attempted Delivery

When undelivered packages are returned to the store, and nothing is
heard from the customer within 48 hours, a postal card notice, Fig. 26, is
mailed to the customer. Frequently, failure to deliver is due to the wrong
address, but even if the correct address is not found in the directories, the
postal authorities usually succeed in locating the customer.

Fig. 27. Special Delivery Tag

Special Deliveries. Every store, especially in large cities, finds it
necessary to make special deliveries. The customer from out of town, or
about to leave town, wants a package delivered before a certain hour; the
delivery may be to a depot, hotel, office, or even a residence. These are the
deliveries which cannot wait for the regular trip of the wagon, but are sent
by a boy. The important thing, so far as the delivery department is
concerned, is to get them out on time.

Fig. 27 shows a tag for special
deliveries, used by a clothing house. The
tag shows the name and address of the
customer, with full particulars of the time
and place of delivery. At the end is a
perforated stub on which the delivery
instructions are repeated. When the tag is
attached to the package by the sales person,
the stub is torn off and sent directly to the
shipping room. The shipping clerk is then
on the lookout for the package, and is
expected to follow up the proper
department, which in this business usually
is the tailor shop.
Another form of special delivery tag
used by a department store is shown in Fig.
28. This tag gives more detailed
information about each step taken, showing Fig. 28. Special Delivery Tag
the names of all persons handling the for Department Store
package, and the time at which it is handled
by each.
When the delivery system of a retail store is studied, it is found to be
made up of simple methods, which are assembled to make a complete
machine, A noticeable feature of the entire system is that the apparently
insignificant details—the little things—are its most important parts; which
is true of all systems.

A MODEL FILING DEPARTMENT IN THE WHOLESALE HOUSE
OF BUTLER BROS., ST. LOUIS, MO.

CORRESPONDENCE AND FILING

INTRODUCTION

This book deals with a subject of growing importance in every office—
that of handling correspondence and filing all papers and documents which
form a part of the records of every business. While making no attempt to
teach letter writing, suggestions are made which, it is hoped, will prove of
assistance to those whose duty it is to handle correspondence. Among those
whom it is hoped a study of this book will benefit, are the incoming-mail
clerk, the correspondent, the stenographer, the private secretary, the file
clerk, and, in fact, every person who has anything to do with handling and
preserving business or professional correspondence.
Present-day conditions tend to increase the volume of correspondence in
every office, and any improvement that will reduce labor or contribute to
more prompt service is welcomed. Every concern, except possibly the small
establishment doing a strictly neighborhood business, uses the mails more
and more in the transaction of its business; we buy, sell, pay bills, collect
money, make contracts, and execute all sorts of transactions by mail—all of
which necessitates writing letters. Not only is it necessary to answer letters
promptly, but the increasing accumulation of correspondence must be
preserved and filed in a manner that will permit of easy reference; all of
which emphasizes the necessity of systematic methods in the conduct of
this very important department.
In the belief that more representative illustrations will result, and that
they can readily be adapted to the needs of a small establishment, the
suggestions herein are applied to a business in which the correspondence is
large in volume.

OPENING AND DISTRIBUTING MAIL

Opening Mail. Incoming mail should invariably be delivered to one
desk in charge of a clerk, usually known as the incoming-mail clerk. When
a business has reached a position where a large correspondence is handled,
it is poor business policy for an executive to assume the task of opening the
mail. The natural conclusion, when a house has a large correspondence, is
that its business is correspondingly large, and the executive who is fitted for
his position can devote his energies to larger tasks with better results. He
should be free to look after the big things—to plan greater results for his
business or his department.
The argument has been advanced that it might be dangerous to trust a
clerk with such business secrets as are found in the correspondence, but in
the handling of business transactions practically every one of these "secrets"
come to the knowledge of several clerks. Surely, if employes can be trusted
with the cash and to keep the accounts—if stenographers can be trusted to
take letters of the most confidential nature—a clerk can be trusted to open
and distribute the mail.
Sorting Mail. Sorting the mail is the first duty of the incoming-mail
clerk. This sorting is important in that all personal mail may be taken out
before it is opened. A general rule among all large houses is to instruct all
employes to have personal mail sent to their private or home addresses, but
in spite of all precautions an occasional personal communication will come
to the business address. An acquaintance may know that Smith works for
Jones & Co. and, having forgotten his personal address, sends his letter in
care of the house.
If Smith happens to be an unimportant employe, there will be no
question about the communication being personal; but if he is a department
head, there may be reasons for doubt. Large business organizations are
divided into departments, each in charge of a manager. The correspondence
of each department is signed by the head, over his official title. A reply may
be addressed in the name of the house, to Smith, Sales Manager, or to
Smith, without the title. The letter addressed to Smith, Sales Manager,
belongs to the house, but if his title is omitted, it belongs to Smith, and to
open it without permission is a violation of the law. When the departmental
correspondence is heavy, a considerable number of letters addressed to the
manager, but without his title, may be received, and it is the custom in
many houses to secure written permission from department heads to open
all such letters. This protects the clerk in case a personal letter is opened by

mistake, and insures prompt attention to correspondence received during
the absence of the department manager.
Distributing Incoming Mail. After the mail is opened, it should be
carefully distributed. While it is not necessary to read every letter, the
incoming-mail clerk should read as much of each letter as may be necessary
to determine to what department it should go. Frequently, a letter addressed
to one department refers to matters requiring the attention of another—a
letter ordering goods may be addressed to the advertising manager, or a
remittance to the sales department; or a letter may require the attention of
more than one department.
In a large organization it is a very good plan to designate the
departments and executives by numbers, that is, the president might be No.
1, the general manager, No. 2, the sales manager, No. 3, etc. When a letter
requires the attention of two or more departments, these numbers should be
placed on the letter in the order of their importance. On a letter containing a
remittance and asking for a quotation, the sales manager's number would
follow that of the cashier. Such letters are sent to the department whose
number appears first, and the numbers indicate to the correspondent that the
letter is to be referred to another department.
For distributing the mail, the clerk should be supplied with baskets
labeled with the names or numbers of the departments. Mail can then be
distributed quickly to the proper departments. If the number of baskets
exceeds six, a rack should be provided for them at the side of the desk.
In some offices, the incoming-mail clerk makes a record of all orders
received, before sending them to the sales or order department; in most
concerns, however, this is done in the statistical department, after the orders
have been passed upon. If the business is strictly cash and not too large, the
statistical work can be done by the mail clerk.
Fig. 1 shows a tally sheet which is made up by the mail clerk for a small
mail-order house. The sales of this house are divided by departments, each
department representing a few specialties. While the business is essentially
mail-order, a few agents are employed. On this sheet, columns are provided
for a record of the articles sold by each department, the number and amount
of cash and credit sales as a result of advertising, sales by salesmen divided
in the same manner, total cash and credit sales, and the grand total. The
cross-footings show the total sales of each article, while the column

footings show the total sales, divided between advertising and salesmen,
and whether cash or credit.

Fig. 1. Tally Sheet of Sales for Small Mail-Order House

AN EXTENSIVE EQUIPMENT OF CARD FILES IN THE OFFICE
OF A LARGE CORPORATION. MANUFACTURED BY YAWMAN &
ERBE MFG. CO., ROCHESTER, N.Y.

When the mail is sorted, all orders are placed together, and these are
then sorted into the classes shown by the tally sheet. To prevent holding
order, a memorandum tally should be made of each lot of mail handled, and
the totals for the day entered on the sheet.

The tally sheet should be loose-leaf and made in manifold. A sufficient
number of copies should be made to supply all department heads who have
a direct interest in the volume of the day's business. Usually, copies will be
required by the executives and the sales manager.
Departmental Distribution. The sorting and distribution of the mail,
after it reaches the department for which it is intended, is also of
considerable importance. And, in this sorting, the department manager's
stenographer can render valuable assistance. For the same reason that the
head of the house is relieved of details, the head of a department should
strive to rid himself of tasks which can be as well performed by a
subordinate.
Whether the mail is sorted by the correspondent or his stenographer, it
should be gone through before an attempt is made to answer it. Letters that
can be answered at once should be placed by themselves; those
necessitating further information should be handled specially; if a letter
requires the attention of another department, it should be answered
immediately and passed on.
Under this plan, the mail is prepared for answer before a stenographer is
called to take dictation, which saves time. The correspondent who does not
plan his work calls a stenographer and starts dictating, taking the first letter
that comes to hand. When a letter about which further information is needed
is found, he sends to the files for correspondence, wasting both his own and
his stenographer's time while waiting for the information.
Before any letters are answered, the necessary notations should be made
on all letters requiring information, and the letters sent to the proper
departments. The very first letters answered should be those that must be
referred to another department. These should be not only dictated first, but
transcribed and forwarded to the next department before further dictation is
given.
These methods will go far toward solving the problem of the prompt
handling of correspondence. Most large houses receive complaints of delay
in answering letters, and when these complaints are investigated the causes
of delay are found to be divided between a lack of method in handling
correspondence and ignorance or carelessness on the part of the
complainant. In any well-managed concern everything possible will be
done to overcome the first-named defect, even to the extent of providing a

system which will, at least partially, overcome the defects due to the latter
cause.
As to the complaints due to ignorance or carelessness, it is found that at
least 75% of all complaints received come within this classification. In
many cases complaints come from persons whose correspondence is limited
to a half-dozen letters, or less, a day. They fail to appreciate the difficulties
of the correspondent whose dictation averages a hundred letters a day;
being unaccustomed to the departmental plan of organization, they do not
realize that each subject about which they write must be referred to one
certain department. And so, a single letter contains an order, a remittance,
and a request for some special information, and, because he does not
receive a reply covering all subjects referred to in his letter by return mail,
the customer complains of delay. It is entirely legitimate to politely request
a customer to use a separate sheet for each subject—as orders, remittances,
complaints, etc.—but since not all will comply, some such method as has
been described is needed to insure against unreasonable delay in handling
letters that require the attention of several departments.
In another class is the letter which, for some reason, cannot be answered
at once. An example is the letter to a manufacturer, asking for a price on a
special machine. Before a price can be named, the engineering department
must make a careful estimate of the cost, and it may be necessary to secure
quotations on some special material needed. This means an unavoidable
delay, but the prospective customer should not be left in a state of
expectancy—the letter should be acknowledged immediately, and the cause
of the delay explained. The customer then feels that he is receiving
attention, while if no reply is made until full information can be given, a
competitor more courteous may secure the order.
Interdepartment Correspondence. Of considerable importance in
every large organization is the interdepartment correspondence—the notes
from one department head to another. Every department head finds it
necessary at times to request information from other departments. Even
with an intercommunicating telephone system, with which every large
office and plant should be equipped, many of these requests are of a nature
that, to guard against misunderstandings, demand written communications.
Usually, these communications call for prompt replies; a letter from a
customer may be held or some important action delayed until the

information is received. A good rule for the correspondent is to give
attention to these notes as soon as received, and answer them at the earliest
possible moment. The stenographer should, as a rule, write these notes first,
or if written in the order in which they are dictated, should place them on
the correspondent's desk immediately. Of course, judgment must be
exercised, for some of these notes do not require immediate attention and
should be held until more important correspondence is disposed of.
There are also many notes giving instructions, either from a department
head to his subordinates, or from the executive heads to the heads of
departments. Except on general orders, affecting all employes, the names of
all department heads to whom the order applies, should appear at the head
of such notes. The manager may wish to call attention to some act, common
to all department heads, without making it a personal matter with any one
of them, so writes the same note to all. For example:
July 15, 1909.
Mr. Blake,
Mr. Watson,
Mr. Kimball,
Mr. Cobb,
Mr. Royce,
Gentlemen;
During the past few days some of you have been a little careless about getting to the office
on time. If you arrive 5 or 10 minutes late, it will have a very unfortunate effect on the discipline of
your department, and I trust that each of you will strive to overcome the habit of arriving late—a
habit which, I am sure, is entirely due to carelessness on your part.
Yours truly,
General Manager.

In the above example, five copies of the note are required, and four of
these can be carbon copies. When Mr. Blake or Mr. Watson receives the
note, he knows that it is not addressed to him alone, but that each of the
others has received a copy. Without detracting from, but rather adding to, its
effectiveness, this note leaves a much more pleasant impression than a
personal note to each man. No one man feels that he has been singled out
for criticism.

CORRESPONDENCE SHORT CUTS

Dictating by Number. One of the greatest time savers in handling
correspondence is dictation by numbers. The plan is to indicate each letter
by a number, instead, of requiring the stenographer to take down the name
and address.
Probably 90 per cent of the letters dictated are replies to other letters.
When the correspondent has his mail ready for dictation, he should write, or
stamp with a numbering stamp, No. 1 on the first letter answered. To the
stenographer he will say "No. 1," and, instead of the name and address, this
number is entered in the stenographer's notebook. The original letter, from
which the address is obtained, is turned over to the stenographer. A new
series of numbers, beginning with No. 1, should be used each day, to run
consecutively during the day.
Careful tests, made in different offices, show that in taking ordinary
business correspondence dictation, the stenographer wastes about 20 per
cent of the time writing the name and address. By the use of the numbering
plan, practically all of this time is saved.
Form Paragraphs. A large per cent of the correspondence of the
average business is a repetition of the things that have been said before.
Day after day the same questions are asked and answered, the same
complaints are received, the same arguments, formal acknowledgments, and
requests form a large part of the dictation. Over and over the same
paragraphs are used to say the same things, a repetition and waste of time
for both correspondent and stenographer, which can be done away with by
the use of form paragraphs.
For illustration, the acknowledgment of remittances is entirely formal,
rarely necessitating a special letter. Many times, however, the letter of
remittance asks for special information, which can be given in the same
letter with the acknowledgment. If one or more form acknowledgment
paragraphs are prepared to meet different conditions, one of these can be
used, saving the time required for dictation.
Form paragraphs are especially applicable in answering complaints and
in sales letters. Complaints can usually be divided into a few classes, and
one paragraph will answer all complaints of the same kind. In sales letters,
form paragraphs will answer all requests for certain information about the
product, the terms of sale, the guaranty, etc.

Not only do form paragraphs save much time in dictation, but they
result in stronger letters. It is the experience of every correspondent that he
can write better letters one day than another. The best form paragraphs are
found in the letters written on the correspondent's good days.
Form paragraphs should be arranged for ready reference. A very
satisfactory method is to write them on sheets punched for filing in a binder.
The paragraphs should be numbered consecutively, and indexed by subject.
Copies should be supplied to all correspondents and stenographers who
have occasion to use them.
Frequently a large part of the day's correspondence can be handled with
form paragraphs, and through constant use the stenographer will become so
familiar with them that he will be in a position to answer many letters
without dictation. The really efficient stenographer—one of the kind who
expects to advance to the position of private secretary—will make a careful
study of form paragraphs, fitting himself to handle the minor
correspondence, thereby saving the more valuable time of the
correspondent.
Talking Machines for Dictation. Every year sees an increase in the use
of the talking machine for dictation. These machines have now been
brought to a state of perfection which makes their use feasible, and in many
large offices they are used to the almost complete exclusion of shorthand
writers.
An outfit for correspondence work consists, usually, of two machines—
one for recording and one for reproducing dictation. The correspondent
dictates his letters to the recording machine and passes the cylinders on
which the record has been made to the stenographer, who transcribes on the
typewriter direct from the reproducing machine. In small offices, one
machine is made to answer every purpose, as it can be changed instantly
from a recorder to a producer.
After the dictation on a cylinder has been transcribed it is shaved, and is
then ready for a new record. This permits of the use of the cylinders until
they are worn thin, and reduces the expense to a minimum.
The principal advantages claimed for this machine are that it saves all of
the time of the stenographer usually required for taking dictation; the
correspondent can dictate at any time without waiting for a stenographer;
the work is more evenly distributed, and consequently finished earlier in the

day. In the opinion of the writer, the chief
advantage lies in having the machine at hand
ready for dictation day or night.
While in some offices the shorthand
writer has been almost entirely supplanted,
the machine is more likely to be used as an
auxiliary. It can never supply the brains of the
human machine, and is not likely to lessen the
demand for competent stenographers. Fig. 2
is an illustration of one of the well-known
makes of correspondence machines.
Correspondence Requisitions. A
Fig. 2. The Dictaphone considerable per cent of the letters to be
Columbia Phonograph Co. answered in a business office are of such a
nature that former correspondence must be
referred to before an intelligent reply can be given. The unsatisfactory
character of the replies to many letters can be traced to the fact that the
correspondent did not take the trouble to first find out what had been
written before.
To insure against the loss of correspondence, it should be most carefully
filed, and every letter should be accounted for. Also, if a correspondent
wants certain correspondence from the files he should state explicitly what
correspondence or information he desires. This not only insures his getting
the information needed to formulate an intelligent reply, but protects the file
clerk.
The systematic method is to have a correspondence requisition, similar
to the one shown in Fig. 3. On this requisition is noted just what is wanted
—invoice, order, or letter—with room for special instructions. One of these
requisitions should be sent to the files whenever any papers are wanted, and
nothing should be delivered without such a requisition. By placing this
requisition in the files, in place of the papers removed, the file clerk can
always trace missing correspondence.

Fig. 3. Requisition for Correspondence

Complaints and Changes of Address. In some lines of business,
complaints and notices of change of addresses are quite numerous. An
example is the business of publishing a weekly or monthly periodical.
Many complaints are received from subscribers who claim that they do not
receive the publication regularly. The great majority of these complaints can
be traced to carelessness on the part of the subscriber in failing to notify of
change of address.
In some businesses, the handling of complaints requires the services of
a correspondent, and a clerk to trace the complaint and gather the
information necessary before an adjustment can be made. In a smaller
business, the work of looking up the information usually falls on the
stenographer. But no matter who gathers the information, the correspondent
never should attempt to answer or adjust a complaint until he has made a
thorough investigation. Not until he understands all of the causes leading up
to the complaint, can he correctly judge of its merits.
The policy of having all complaints handled by one man is in keeping
with approved business practice. A man who makes a study of the subject
soon learns to handle complaints to the ultimate satisfaction of all
concerned. Being independent of the selfish interests of a particular
department, he is much more likely to serve the best interests of the house
than any other man in the organization. The sales manager, for instance, is
not the best man to adjust complaints of customers; he is likely to be more
liberal than is warranted, because of his fear of losing trade.

When a complaint has been investigated, everything possible should be
done to remove the cause, and to guard against a similar complaint in the
future. The seemingly little precautions count for much. In the matter of
changes of address, for instance, it is a small matter for the one who makes
the change to see that it is made not only on the ledger but on the sales list,
the collection card, and in every place where the address is permanently
recorded. Failure to make the change in one place may lead to endless
confusion.
Stenographer's Reference Index. Here is a suggestion for the special
benefit of the stenographer. Keep in your desk a reference index of names,
addresses, and telephone numbers. There are certain persons and firms to
whom your employer frequently writes letters. These are not in reply to
letters, but are written in the usual course of business. The names of these
persons should be on your index so that when you are told to write to Mr.
Hunter or Mr. Roberts you will not be obliged to ask the address.
Probably your employer will not ask you to keep such an index, but
surely will appreciate your knowing the addresses. When he finds that you
always know the telephone numbers of the printer, the bank, and other local
houses with whom he does business regularly, as well as the addresses of
prominent out-of-town correspondents, he will at least not place it to your
discredit.
But do not keep the addresses on sheets of paper that surely will soon
become confusing on account of changes and additions which make an
alphabetical arrangement impossible. Ask for a small card tray, holding
3"×5" cards, that will go in the drawer of your desk, a set of alphabetical
indexes, and a supply of blank cards. Such an outfit can be bought at any
first-class stationer's for a dollar or two. When you want to preserve an
address, write it on a card, and file it alphabetically. If your employer will
not supply the outfit, cut slips of paper and indexes to fit one of the small
compartments in the desk drawer. Have the index, even if you must devise
your own method of keeping it; you will at least have the satisfaction of
saving many minutes of your time. And in the formation of a systematic
habit you will be adding to your equipment.
Making Corrections. All stenographers make mistakes, and no
correspondent is entirely free from faulty dictation, which necessitates
corrections in letters after they are written. But the time of the stenographer

and, incidentally, expense to the house, can be saved if the correspondent
will exercise reasonable care in indicating the corrections to be made.
Do not deface the letter so that neat corrections will be impossible,
unless the mistake is so serious as to necessitate rewriting the entire letter.
When the wrong word has been used, draw a light pencil line under it and
write the correct word on the margin or the end of the letter; if the word is
misspelled, underline it and write the correct spelling at the end of the line.
This takes even less time than to deface the letter, and leaves it in such
shape that corrections can be made quickly and neatly.
To the stenographer it is well to say, "If you find it impossible to make a
neat correction, rewrite the letter." Nothing gives a more unfavorable
impression of a house than an untidy letter, and your employer is more
willing to overlook an occasional mistake than a letter filled with visible
erasures.

COPYING CORRESPONDENCE

Copies of outgoing correspondence are a part of the system of every
business office. There was a time when copies of important letters were
made by hand, and then came the copying press and tissue impression book
with many cloths, wringers, pans of water, and other paraphernalia for
moistening the sheets of the book. The copying press is an awkward
machine, difficult to operate, and altogether unsatisfactory, but, until a
better method was offered, it answered the purpose.
One of the greatest defects in the copying-book method is the
impossibility of making uniformly clear copies; some will be clear while
others are blurred, and the important letter is usually the one that is
illegible. The difficulty in securing clear copies is due to the impossibility
of securing uniform pressure. While the copying press is still found in a few
small offices, it is practically obsolete, and not used in offices where
modern efficient methods receive consideration.
Carbon Copies. A simple method of obtaining copies of outgoing
letters, invoices, orders, etc., is to make duplicates by means of carbon
paper. In its adaptability and far-reaching effect, the sheet of carbon paper
has proved to be one of the greatest of all aids to modern business methods.

Used in connection with a typewriter of modern construction, the carbon
sheet has revolutionized manifolding processes, making possible as many
duplicate copies of any paper as are required in ordinary business.
The carbon method of obtaining copies of letters has the merit of
economy in time. When the letter is written, the copy is made; if extra
copies, up to a half-dozen, are wanted, all are made at one writing. If the
last letter is being written when it is time for the mail to leave the office, it
need not be held to make a copy.
The carbon method is not expensive. Good carbon paper costs 2 cents or
less a sheet, and for 1,000 copies only about 30 sheets are required. A
satisfactory quality of plain paper for copies can be bought for $1.00 or less
a thousand. These prices are naturally subject to slight fluctuations,
depending on the quantities purchased and the locality.
A defect in the carbon method is found in the manner of making
corrections. It is not uncommon for a man to make a slight correction, or
add a note, in his own handwriting; such corrections and additions cannot
appear on the carbon copy. When corrections are made on the typewriter, it
is very difficult to obtain a clear copy of the correction on the second, or
carbon, sheet—the correction on the copy is very likely to be blurred. If the
correction is written directly on the copy, without using carbon paper, the
essential feature of the copy is destroyed; it is no longer a facsimile, and its
value as evidence is very materially lessened.
Mechanical Copiers. There are now on the market several mechanical
copiers, without the many disadvantages of the copying press, or the defects
of the carbon method. One of the most satisfactory and best known is the
roller copier. The fundamental principle of the roller copier is that of the
clothes wringer; the original letter, with a wet tissue sheet placed against the
written side, is passed between rubber rollers, to which just the right
amount of pressure is applied.
Working from the clothes-wringer idea as a basis, the inventor of the
roller copier set about to remedy the defects of the copying press. It was
found that clear copies could be obtained only under certain conditions; the
pressure must be absolutely uniform, and the tissue sheet must be
moistened evenly.

Fig. 4. Mechanism of the Yawman & Erbe Roller Copier

As to the pressure, it was found that too much or too little resulted in
unsatisfactory copies—some faint, others blurred—the very defect that had
made the use of the copying press objectionable. This was overcome by
using an adjusting screw by which the exact pressure required could be
obtained. But, if the pressure were left on all of the time, the rubber rollers
would soon be flat. So, an adjustment lever was added, by which the
pressure could be thrown on before copying, and thrown off when the
machine is not in use.
To adjust a single sheet of tissue paper so that it would lie smooth on the
letter, was out of the question. This difficulty was overcome by copying on
a continuous roll, and the problem of moistening was solved by passing the
paper through water, insuring equal moisture over the entire surface.
The mechanism of the roller copier is shown in Fig. 4. The paper from
the roll is passed under the dampening roll in the water tank, then between
the large roller and the wringing roller, over the same large roller and
between it and the copying roller, thence out over the flanged roller and
down to the winding reel. The pressure on the wringing and copying roller
is adjusted by the adjusting screws A and B, and the adjustment lever
throws the pressure on or off. The letter to be copied is laid face down on
the feeding shelf, the edge is placed under the copying roller, pressure
thrown on, and a turn of the crank carries the letter through into a receiving

basket, leaving a perfect copy. If additional copies are wanted—any number
up to a half-dozen—the operation is repeated for each copy.
The paper on which the copies have been
made passes to a winding reel under the copier,
as shown in Fig. 5. This is a large rectangular
reel on which the paper is stretched tightly, so
that it will be smooth when dry. The open
construction of the reel affords free circulation
of air, drying the copies very quickly. After the
day's copying is done, the action of the machine
is reversed by the turn of a thumbscrew, the
paper is broken above the last copy, that on the
Fig. 5. General View reel is brought back over the copier, and the
of the Yawman & Erbe letters cut apart with the cutting knife at the end
Roller Copier of the feeding shelf. The separate copies are then
ready for filing with the original letters, keeping
letters and replies together.
Among the advantages claimed for the machine are certainty of legible
copies, copies of all corrections, and economy of operation. The copies are
made after the letter has been written and corrected; consequently it must be
a facsimile. If a note is written at the bottom or on the margin, it is shown in
the copy.
Copying is the last operation before mailing. Frequently a man finds,
after the letter is written, that he needs additional copies. With the carbon
system it is necessary to rewrite the letter; with the copier, the copies can be
obtained any time before the letter is mailed.
The copier is economical in operation. The best quality of paper costs
50 cents a roll, and a little more than one roll, or about 60 cents' worth of
paper is required for 1,000 copies; and there is no carbon paper to buy. The
office boy can operate the copier, and it takes but a few minutes to copy the
day's mail of the average concern. If desired, the machine can be obtained
with an electric motor attached, but this power is really unnecessary unless
the correspondence averages 300 or more letters a day.

STENOGRAPHIC DIVISION

As has been stated elsewhere in this series of books, the modern plan
for a large organization is to have an independent stenographic division or
department. Instead of each department head and correspondent having one
or more stenographers in his office, to handle his work only, this plan
contemplates placing all stenographers and typists in one room, in charge of
a chief stenographer. Except where an executive officer has a stenographer
who acts as his private secretary, this plan is now carried out in the most
highly organized of our larger enterprises.
The stenographers are subject to the call of any correspondent, the chief
stenographer supplying the one who is first available. The plan is
sometimes modified to the extent of holding a stenographer for the work of
a certain correspondent during stated hours; the stenographer being, at other
times, available for any other correspondent.
The plan has proved to be economical and beneficial in many other
ways. It is economical, as it reduces the number of stenographers actually
needed to handle the work. Under the old plan, some of the stenographers
are idle a part of the time, or obliged to do copy work to keep busy. For
example, in a certain house, two departments were located in adjoining
rooms. The department heads each had more work than one stenographer
could do, but not sufficient to keep two busy all the time; it was necessary
for each to employ two stenographers—four in all—and let them fill in a
part of their time addressing envelopes, and similar work. The plan of
having a common stenographic force was tried, and three stenographers
handled the work of both departments, with some time to spare for the work
of other departments—a clear saving of 25%.
The stenographer is benefited by becoming familiar with the
correspondence of all departments. While not learning all of the secrets of
one department, the stenographer obtains a much better insight into the
business as a whole—far more valuable as a business training than a more
intimate knowledge of a single department.
Every correspondent is benefited by having several stenographers who
are familiar with his work. If a certain stenographer leaves, is ill, or takes a
vacation, he is not placed under the handicap of having his work stand still
until he can break in a substitute. The new stenographer can be given some
dictation in each department while becoming familiar with the work.

The work is more evenly distributed, with the result that the mail is out
on time and no stenographer is obliged to work after hours. When all work
together under one chief, the efficiency of the stenographic force,
individually and collectively, is materially increased.
Not the least of the many advantages of this plan is the one of having all
typewriters in one place, confining the noise. Employes in other
departments of the office are greatly benefited by working in comparative
quiet. Especially advantageous is the absence of the noise of the typewriter
in private offices.
When the stenographic division is installed, it is necessary to provide a
system of call bells, with a push button at the desk of each correspondent.
Each correspondent is assigned a signal by which he may summon a
stenographer. The chief assigns a stenographer to answer each call, or in the
absence of the chief, the one whose turn it is answers the call.
Records of Work. An independent stenographic division necessitates a
careful record of work performed. These records are required in order that
the expense may be distributed and the wages of the stenographers charged
to the proper departments. A distribution of office expense is just as
necessary as a distribution of factory charges. The records should show
exactly what it costs to conduct the purchasing, sales, or credit departments.
If a man divides his time between two or more departments, his salary
should be charged accordingly. In like manner, the wages of a stenographer
should be distributed.

Fig. 6. Stenographer's Weekly Record of Work, Distributed by
Departments

Elaborate or complicated records are not required; a record of the time
worked for each department is sufficient, though usually the number of
letters written is included. First, is the record of work done by each
individual. This should be a record covering a week's work, and may be
kept on a card. Fig. 6 shows a form designed for such a record. This is on a
5"×8" card, one of which is given to each stenographer, who keeps the
record from day to day.
This form provides for a record of the work of the stenographer each
day in the week. The columns from left to right are headed with the names
of the departments, but instead of having these printed in, it is best to leave
the spaces blank and write the names. The daily record shows the hours
worked and number of letters written, both morning and afternoon, for each
department. Space is also provided for a record of miscellaneous or special
work, which should be explained briefly. The total number of hours shown
by this record should, of course, agree with the time for which the
stenographer is paid.
These cards should be turned in to the chief stenographer, who will file
them under the name or the number of the stenographer, keeping all records
of each employe together. If preferred, daily reports can be used, though the
weekly report will prove satisfactory in almost every case.
On receipt of the individual reports, the chief stenographer should make
up a weekly report of the work of the entire division. The object of the
report is primarily to show the amount to be charged to each department for
stenographic work, but may also show the cost of each stenographer.
The form shown in Fig. 7 provides for a complete report. The work of
each stenographer for each day of the week is distributed among the several
departments, showing the number of hours worked, the number of letters
written, and the cost. A record for five departments with six stenographers
is provided for in the form shown. The footings of the columns show the
total cost to the departments and the total column at the right, which is an
extension of daily costs, shows the total cost for each stenographer. The
footing of the total column, and the cross-footing of the departmental

columns, must agree and exactly equal the amount of the pay-roll of the
stenographic division.

THE "IN-MAIL" DEPARTMENT WHERE 10,000 LETTERS ARE
RECEIVED DAILY AND SORTED FOR DISTRIBUTION AND
ATTENTION
The Larkin Co., Buffalo, N. Y.

Fig. 7. Departmental Distribution of Work of Stenographic Division

One valuable comparison shown by this report is the cost to handle the
work of one department or correspondent, when different stenographers are
used. The comparison must be based on the letters of one correspondent,
because, while they are not likely to vary materially, there is a marked
difference in the length of the letters written by different correspondents;

also, the dictation of some correspondents is much more easy to take than
others.
The form shown should be loose-leaf, and made in duplicate. One copy
goes to the comptroller and one is kept by the chief stenographer. The size
can be increased to accommodate a large number of departments or
stenographers, but rather than use a sheet that is bulky, it is better to use
more than one sheet. To provide for a monthly distribution of costs, these
reports should be closed on the last day of the month, regardless of the day
of the week.
Hints for Stenographers. Telegrams. When a telegram is sent, it is
safe to assume that its object is to secure quick action; otherwise a letter
would serve the purpose. Telegrams should, therefore, be transcribed and
dispatched immediately, regardless of any other work that may be on the
machine.
It has become the usual custom of business to confirm telegrams by
mail. The more usual custom is to write a letter, in which the telegram is
quoted, but the matter can be handled with less labor by the use of triplicate
telegraph blanks. The original is the regulation blank supplied by the
telegraph companies; the duplicate is on a sheet of the same size as the
telegraph blank, but printed as shown in Fig. 8; the triplicate is a blank
sheet of paper. The duplicate is mailed to the correspondent, while the
triplicate is filed with his correspondence. Unless some special explanation
is demanded, it is unnecessary to write a letter.
Don'ts. Don't keep your employer waiting while you hunt for, or
sharpen, a pencil. Always keep a supply of at least a half-dozen well-
sharpened pencils on hand. Keep them in a handy place and take them with
you when your employer calls you to his desk to take dictation. Remember
that his time is more valuable than your own.
Don't be afraid of working a few minutes overtime, when requested to
do so. Only an unreasonable employer will ask you to work after hours,
excepting when it is really necessary. But occasionally something will come
up at the last moment, making it necessary to write and mail a letter that
night. Remember that what seems to you a trivial matter, may be of the
utmost importance to your employer.
Don't overlook the important letters. If you handle a heavy
correspondence there will be many days when you will find it impossible to

transcribe all of the dictation you have taken, but some of the letters will be
important while others can be held over without loss. Write the important
letters first; if you are not sure which they are, ask your employer. He will
appreciate your interest.

Fig. 8. Confirmation of Telegram

Don't overlook the necessity of learning something about the business in
which you are employed. Every business has its own nomenclature—
technical terms peculiar to the business, with which you may be unfamiliar.
When you accept a new position, read the catalogs, circulars, and other
literature of the house; this is the easiest way to familiarize yourself with
the technical terms. You will find your position improved if you can
correctly transcribe the terms peculiar to the business.
Don't waste envelopes and postage. Your employer may write a half-
dozen letters to one firm the same day. This frequently happens in writing to
branch offices and agencies. See to it that all letters to the same address are
enclosed in one envelope. The saving in postage will be very considerable.
Don't underestimate the opportunities afforded by your position. There
really is no position offering better chances for advancement than that of the
willing and competent stenographer. There are many incompetents, and for
such salaries are small; but there are plenty of positions at good salaries
open to the really competent. A stenographer handles many confidential
matters, learns the business secrets of his employer, and has every
opportunity to learn the business. The stenographer who takes advantage of
the opportunities to learn becomes a private secretary, and rapidly advances
to even more important positions.

Don't betray secrets. This is the most important don't of all. Remember
that your employer dictates many confidential letters, imparting business
and private secrets. Do not, under any circumstances, impart these
confidential matters to others, and never talk about the business to those
outside the office.

FILING DIVISION

Only a small per cent of the records of a business are found in the books
of account; the larger part are in the form of business papers of various
kinds. And, since the records in the books are, in the main, based on the
records found in these papers, the papers themselves are not less valuable
than the books. Letters, orders, invoices, receipts, vouchers, contracts,
specifications, and estimates form the basis of the larger part of the business
transactions of all houses, giving authority for transactions and offering
proof that the transactions have been completed. The proper preservation of
these papers is, therefore, a necessity, and, since they form so important a
part of the records, they must be accessible.
The filing division is, therefore, one of the most necessary in the office
of any enterprise, and should receive the careful attention that its
importance deserves. Whether the equipment of the filing division consists
of a single file or many large cabinets, it should be located where it will be
accessible to all departments. It should be given as nearly a central location
as the general plan of the office will permit. In a very large enterprise a
separate room may be required, while in a small business the files may be
arranged along the wall or around a corner. But whatever its location, aisles
leading to the filing division should be left open, that it may be reached
conveniently from any part of the office. Since good light is not so essential
as for some other divisions, it is sometimes advisable to locate the filing
division where the light is not sufficient for another division—as the
bookkeeping division. At the same time, there must be sufficient light to
enable the file clerk to do the work properly.
As a general rule, all filing should be in one place, although under
certain conditions, which are referred to later, special departmental filing is
justified. It should be possible to obtain from the general files all papers that
have a bearing on a particular transaction, or all of the correspondence of a

given concern. More or less confusion results when certain of the papers are
missing. For example, if a part of the correspondence about an order is filed
in the sales department, the papers in the general file may not give a
complete history of the case, and the order may be accepted or rejected
under a wrong impression because the most important letter is missing.
When independent filing systems are maintained by the different
departments, it is sometimes difficult to determine just where certain papers
will be found. To say the least, it is quite difficult to collect all of the papers
referring to one subject, when the filing is handled in this manner.
Experience has demonstrated that a central filing division is really more
convenient for the department manager, than to maintain his own filing
system. If the system has been properly installed, he can obtain
correspondence or other papers from the general files about as quickly as
from his own files, with the added advantage of obtaining all of the
correspondence with a particular person. If another department has been in
correspondence with the same person, he has their letters as well as his
own. When the credit man, for example, reviews the correspondence of a
customer from whom he is trying to collect an account, he will not be
ignorant of the existence of a letter from the sales manager in which special
terms were offered to secure the order.
The File Clerk. The filing division should be in charge of a file clerk
and the clerk should have full control of the work of the division. In a large
business, a chief file clerk and several assistants will be required, while in a
small business it is customary for the stenographer to do the filing. No
matter what the extent of the filing, the principle is the same; if but two
persons are employed and one is expected to do the filing, the other should
neither file nor remove papers from the file. When a letter is wanted, the file
clerk should be asked for it.
The essential qualifications of a file clerk may be summed up as
follows:

A good memory;
The habit of accuracy;
The ability to read confusing chirography;
The ability to spell correctly;
Speed.

To these might be added the possession of a liberal amount of common
sense, the faculty of absorbing information, and ability to correlate facts
according to their importance.
A good memory is very necessary, for the papers that have been filed
must be found when wanted. Letters signed by an individual may be filed
with the correspondence of his firm. When the manager calls for "that letter
from Whitcomb," it is embarrassing to ask him with what firm Mr.
Whitcomb is connected; still more so to keep the manager waiting while an
index is consulted.
A comprehensive index is necessary, of course, and the efficient file
clerk will be fortified against all possible contingencies with proper
indexes, but a memory which will permit of ignoring indexes, except in
special cases, is a valuable asset. It may be stated as a rule that it should not
be necessary to refer to special indexes to locate the letters of a regular
correspondent.
Accuracy is another very necessary qualification. Accuracy is a habit—
the habit of first finding the right way to do a thing, and then doing it that
way every time. The habit of doing a thing the same way every time is very
important in filing. If the rule is to file all correspondence in the name of
the firm from whom it is received, no matter by whom signed, it is very
essential that all letters from the firm be filed in exactly the same way—not
a part of them in the name of the individual.
Accuracy is necessary also in placing letters in the files. Letters that
belong in the Be division of the index must be filed there—not in the Ba
division; letters intended for folder No. 19 are to all intents lost, if placed in
No. 91.
To be able to read confusing chirography is a talent that is much
appreciated in more than one line of endeavor; it is especially valuable to
the file clerk. The signatures of many men are notoriously difficult to read,
and large numbers of such signatures come to the filing division of every
concern having an extensive correspondence.
Spelling might seem to be an accomplishment not absolutely essential
to the equipment of a file clerk, but the ability to spell correctly is very
helpful. It is a great help in indexing. Especially when a finely subdivided
index is used, correct spelling is necessary to determine the division under
which a paper should be filed.

Speed is an absolute requirement. When the manager wants a letter, he
wants it at once. When the day's mail reaches the filing division, it must be
filed as quickly as possible. Some one may call for a letter within an hour
after it reaches the files, and to find it in the unfiled correspondence means
inevitable delay. Nowhere is prompt service more thoroughly appreciated
than in the filing division.
The importance of securing a file clerk with proper qualifications is
apparently overlooked in many offices. A girl is placed in charge because
she will work for a small salary, resulting—unless she is qualified—in very
poor service. An incompetent file clerk can, in a short time, get the files in a
demoralized condition almost impossible to straighten out. The necessity of
proper filing makes the position one of real importance. On the other hand,
the possibilities of the position are seldom appreciated by the clerk. This is
due, perhaps, to the policy of making the position one of the lowest in the
office from the salary standpoint; but the greatest possibilities of the
position lie outside of the salary question.
The position of file clerk is a sure stepping stone to something better—a
more responsible and better paid position. No clerk in the office has a better
opportunity to obtain a general knowledge of the business. From the
stenographer who files the manager's personal correspondence, to the clerk
in charge of an extensive filing division, each is intrusted with important
papers revealing the very secrets of the business. The position is a
confidential one, and the clerk who can absorb the information that must
inevitably come to his notice, and keep the information to himself, is surely
preparing to fill a higher position; he has a golden opportunity to
demonstrate his absolute trustworthiness.

FILING SYSTEMS

The evolution of methods of filing is itself an interesting study. From
the days when the merchant preserved his bills and important letters by
hanging them on a sharp-pointed hook, to the present with filing cabinets of
pleasing design and careful construction, in sizes to hold papers of all
shapes and kinds, there has been constant progress. The advance of business
methods, bringing with it an ever-increasing volume of papers to be
preserved, has resulted in a demand for more simple methods—more

scientific systems of filing. Those
confronted with a practical solution of the
problem, and those attempting to supply
the demand, have devoted much time to a
study of the subject. This has brought into
being the filing expert who makes a study
of the filing problems of concerns in all
lines of business. The manufacturer has
kept pace with the development, and now
Fig. 9. Flat Letter File. is prepared to furnish the right device for
Browne-Morse Co. filing any document from a small card to
the largest drawing or map.
In this discussion of filing systems, it is not necessary to consider the
obsolete methods, even though they have at some time been considered
standard. The purpose of this discussion will be better served by a study of
the more modern systems.
Flat Files. One of the filing systems still found in some offices is the
flat, or box file. This file is made in the form of a box, with a hinged cover,
as shown in Fig. 9. This box is of the right size to hold letters without
folding, and is equipped with an A to Z index. Letters and other papers are
filed between the index sheets in the order of their receipt. Sometimes an
attempt is made to keep all of the correspondence of one person together
but, since the letters are simply laid in the file, with no means of separating
those of the several correspondents filed in one subdivision, it is very
difficult to maintain this arrangement.
Cabinets are also made with box drawers of wood, the number of
drawers in a cabinet ranging from two to sixty. This permits of the use of a
more finely subdivided index, and better classification of the contents. Each
box in the cabinet is equipped with a spring compressor which holds the
contents in place. To file or remove papers it is necessary to release this
compressor. The index is removable, and when the drawer is full, the index
and contents are placed in one of the box files referred to, which then
becomes a transfer case. A new index is placed in the file, which is then
ready for current correspondence.
This style of cabinet was for long the best to be had, but when used for
filing an extensive correspondence, its defects became apparent. Among the

disadvantages of its use, one of the chief is the uneven filling up of the
separate divisions. Where the alphabet is divided among several drawers,
one may fill up in two months, while another is but half full at the end of a
year. This means that the transferring must be done whenever a single
drawer is filled, instead of transferring the contents of the entire file at one
time, adding to the difficulty of locating correspondence at a given date.
Other disadvantages are that correspondence is mixed together, making
it difficult to locate all of the correspondence of one person; to remove a
letter, the drawer must be taken from the file, and a search made through all
of the letters in a given subdivision of the alphabet. Frequent transfers are
necessary, resulting in an accumulation of transfer files which occupy
valuable space in the office.
Vertical Filing. The vertical system of filing takes its name from the
fact that papers are filed vertically, on edge, instead of being laid flat in a
drawer. Vertical filing is the result of a gradual evolution of filing methods.
Those who recognized the defects of the old systems, set about to
correct them. In the search for a remedy, all systems in use—for whatever
purpose—were carefully investigated, among others the so-called railroad
system. For years, railroads had been keeping all correspondence relating to
one subject together, attaching the letters to a strong backing sheet. The
sheet, with the letters attached, was folded twice, making a package about
3½"×9" in size, which package was known as a file. These files were
numbered, and kept in numerical sequence in pigeon holes, or in boxes
similar to the present-day document files. When the document boxes were
used, which was the case in the larger offices, the packages or files were
placed on end—filed vertically. This undoubtedly was the forerunner of the
present-day vertical file.
The plan of keeping together all correspondence about a given subject
naturally appealed to the investigator as being practicable for use in a
commercial house. Not a few houses adopted the system in its entirety,
which included an alphabetically indexed book in which a brief synopsis of
the correspondence was written. The book was also used for a cross-index
to the names of individual correspondents. It was really a system of
recording the principal contents of letters, with references to the files where
all of the correspondence could be found.

While the idea of keeping
all of the correspondence on
one subject, or with one
individual, together, was
excellent, this system was not
well adapted to commercial
use. Writing the contents of
letters in a book was entirely
impractical, and too much time
was required to open the files
and refer to the contents. But,
said someone, why not adopt
Fig. 10. The Principle of Vertical Filing. the numerical idea, and
Browne-Morse Co. substitute a numerical for the
alphabetical index in the box file; instead of index sheets printed with the
letters, why not have them numbered from 1 up? Then a number could be
assigned to each correspondent and all of his letters could be filed under the
index sheet bearing the corresponding number. An index book could be
used for the names and references to the numbers.
Next came the card-index man with a proposition to use his cards for an
index to the files. Not long ago the writer inspected a filing system
consisting of a number of box files indexed numerically, arranged on a
shelf. A card index supplied the cross-references. In this particular case the
system was designed by a card-index manufacturer to create a market for
card files.
But the use of card indexes furnished the final solution of the filing
problem. If small cards could be filed on edge, why not letters? With a
larger drawer, with index guides to fit, the card index idea could be adapted
to the filing of correspondence. Indeed, a flat file drawer, standing on edge,
as shown in Fig. 10, illustrates the principle of vertical filing.
To preserve the idea of keeping all correspondence of one individual or
firm together, folders are used. A folder, as shown in Fig. 11, consists of a
piece of heavy manila paper folded, with one edge higher than the other,
forming a pocket 9¾"×11⅞" in size. The higher or projecting edge of the
folder is used for writing the name of the correspondent or other reference;
or the folder may be made with a projecting tab for the purpose.

One of these folders is used for
each correspondent. Suppose, for
example, that correspondence
develops with Scott & Blake. The
name of the concern is written on the
projection of a folder, and all letters
from, with copies of all letters written
to, Scott & Blake are placed in this
folder in the order of their date—the
last letter in front. The folder provides
a complete history of the
correspondence with the concern.
Fig. 11. Folder for Vertical Filing
Browne-Morse Co.
The folders are filed on edge
between guides or index cards having
projections on which the indexes are
written or printed. The indexes are
fastened in a vertical file drawer, yet
are removable. On the bottom of the
guide, Fig. 12, is a square-cut
projection, punched with a round
Fig. 12. Guides for Vertical Filing.
Browne-Morse Co. hole. This projection drops into an
opening in the bottom of the drawer,
and engages a countersunk rod which is passed through the hole. The rod
holds the guide firmly in place, but since the rod is removable, the guide
can be taken out when it is desired to do so. The folders are not fastened in
any way, and any folder can be removed without disturbing the others, as
shown in Fig. 13.
Methods of Indexing. There are four
principal methods of indexing the vertical
file; namely, the numerical, alphabetical,
geographical, and subject. These four
methods, with their resulting
combinations, provide for the proper
indexing of any class of papers.

Numerical Indexing. Numerical Fig. 13. Vertical File Drawer
indexing was the method first used with Showing Folders and Guides
the vertical file, and still is extensively Browne-Morse Co.
used. With the numerical system of
indexing, the folders are numbered consecutively in the upper right-hand
corner. The folders are filed in numerical sequence between guides,
numbered usually by 10's, as shown in Fig. 14.
Each correspondent is known by a number, and all of his
correspondence—both original letters and copies of replies—is filed in a
folder bearing his number. To locate his folder, a cross-index is necessary,
as it is not possible to remember the numbers of all correspondents. The
index is provided by a card on which is written the name, the folder number
or file number, and any other memoranda that may be desired. The card is
filed in a card drawer behind the proper alphabetical index guide, where it
can be found very quickly.
Suppose, for example, that
correspondence develops with B. J.
Anderson. We will file his letter or a copy
of our reply in the next unused numbered
folder—which happens to be No. 545—
and this will be Mr. Anderson's number as
long as we have any dealings with him.
Before placing the folder in the proper
place in the file—following folder No.
544, back of guide 540—we will write Mr.
Anderson's name near the upper edge, and
Fig. 14. Numerical Indexing at the same time we will fill out an index
Browne-Morse Co. card as shown in Fig. 15. This card will be
filed in its proper place in the card index drawer, and whenever we wish to
refer to this correspondence we will turn to the card, which shows that it
will be found in folder No. 545.
When a letter refers to more than one person or subject, it is filed under
the most important. For example, when correspondence develops with a
firm, it should always be filed under the firm name, even though the letters
are signed by individuals. We will suppose that one of our correspondents is
the Norton Machine Co., and that folder No. 610 is assigned. Later, a letter
signed by T. J. Watson, Secretary, is received. Since the letter refers to the

business of the Norton Machine Co., it will be filed in their folder, and we
will fill out a cross-index card for T. J. Watson, Secretary, referring to the
company's folder, as shown in Fig. 16. This will be filed with the other
cards in the alphabetical card index, and will enable us to locate the
correspondence of T. J. Watson, even if we do not remember the name of
the company.

Fig. 15. Index Card for Numerical Filing

Alphabetical Indexing. The alphabetical is the simplest method of
indexing. The guide or index cards are printed with the letters of the
alphabet, providing an alphabetical index between which the folders are
filed. Sets of alphabetical guides with any number of subdivisions up to
4000 are to be had.

Fig. 16. Indexing Firm Correspondence for Numerical Filing

With the alphabetical system a folder is assigned to each regular
correspondent, as with the numerical system, but instead of a number, only
the name is written on the folder, or on the tab projection. The folder is filed
back of the proper alphabetical guide, as in Fig. 17, and is used exclusively
for that one correspondent.
It is the experience of every business
house that a small correspondence is
received from a large number of persons.
Perhaps but one or two letters will be
received, the person never developing into
a regular correspondent. This
correspondence is treated as
miscellaneous. For miscellaneous
correspondence a separate folder, on
which the index letters are written or
printed, is used for each alphabetical
subdivision. This may be placed either Fig. 17. File with 50
behind or in front of the name folders, as Alphabetical Subdivisions
in Fig. 18. Browne-Morse Co.
The miscellaneous folder should not
be allowed to become too full. When a sufficient number of letters are
accumulated with a firm or individual, or whenever the nature of the
correspondence indicates that it is likely to become permanent, it should be
transferred to a separate folder.
Geographical Indexing. When for any reason it is desirable to have
correspondence arranged according to territory, the geographical system of
indexing is used to excellent advantage. The plan is exactly like
alphabetical indexing, with the exception that the files are divided
according to territory. First, the files are divided by states by means of state
guides—indexes printed with the names of the states. A very large concern
may require guides for all states, while a smaller business will use only
three or four such divisions. Or a concern doing business in a half-dozen
states may find it advisable to arrange the correspondence from but two of
them territorially, indexing the balance alphabetically. The correspondence
from a single state may require two or more drawers; or one drawer may
accommodate that from several states.

To subdivide the states, guide cards
printed with the names of the towns are
used. These are arranged alphabetically
between the state guides.
Correspondence folders are filed back of
the town guides in alphabetical
sequence. If there is a large number of
correspondents in one town, the folders
are subdivided with a set of alphabetical
guides. The geographical method of
Fig. 18. Tab Folders. indexing is shown in Fig. 19.
Miscellaneous Folders in front.
Library Bureau
When the correspondence in a
state is scattered, with but few
correspondents in each town, a set
of alphabetical guides can be
substituted for the town guides. In
New York state, for instance, the
letter A would represent Albion,
Attica, and other towns the names of Fig. 19. Geographical-Alphabetical
which begin with that letter. If there Filing with Guides for
is a large town—as Albany—in States and Towns.
which there are a number of Library Bureau
correspondents, a town guide should
be inserted in its proper place in the alphabetical index. Then, if the
correspondence from Albany is sufficient, it can be subdivided with
alphabetical guides, but these should be of a different color than those
representing the towns. The geographical index can be expanded to any
limit by inserting additional town and alphabetical guides, wherever and
whenever needed.

ONE OF THE STENOGRAPHERS' ROOMS AT THE PLANT OF
THE POSTUM CEREAL COMPANY, LTD., BATTLE CREEK,
MICH.

Subject Index. The subject index is
used whenever the subject of the
correspondence is more important than the
name of the writer. Subject indexing may
be used in connection with the regular
correspondence.
When it is desired to file by subjects
indexed numerically, a numbered folder is
headed with the name of the subject, and
all correspondence pertaining to the
subject is filed in that folder. An index
card is then filled in with the name of the
subject and the number of the folder, and
filed alphabetically. Additional cross-
index cards are headed with the names of
Fig. 20. Subject Indexing
and Cross-Reference Notice correspondents, and refer to the subject
Memoranda on Index Cards and folder number. Several subject index
cards are shown in Fig. 20.
Library Bureau
Subject filing can be adapted to the
alphabetical index by inserting folders or guides headed with the names of
subjects, as shown in Fig. 21. These folders are used for correspondence

pertaining to a given subject, and cross-index cards are made for the names
of individuals.
Selecting the Index. The selection of the index for correspondence files
is important, and must be governed by the nature of the business, and the
correspondence to be filed. Subject indexing is the least used of any of the
methods described. Railroads, and a few large corporations determine as far
as possible a number of subject headings under which all correspondence
shall be filed, individuals being known only in the miscellaneous
correspondence; but these are exceptions, and this method of filing is not
adapted to the needs of the average business concern.
Geographical indexing is
quite largely used by jobbers,
and is a very practicable method
for a concern whose
correspondence is confined
within a definite territory. It is
also used to advantage in
connection with other methods
of indexing. For example, a
concern in Chicago, with a large
number of customers in Illinois,
Fig. 21. Subject and Iowa, and Wisconsin, might use
Alphabetical Folder Browne-Morse Co. a geographical index for those
states, while filing all other correspondence alphabetically.
This leaves alphabetical and numerical indexing from which to make a
selection. A thorough investigation, which has included consultations with
many leading filing experts, and examinations of the systems used by more
than a hundred representative houses, from the small retail store to the
largest corporations, leads to the conclusion that, except in special cases, the
alphabetical index is best. It is best because simplest; and to do a thing in
the most simple way is one of the cardinal principles of business system.
Alphabetical indexing adapts itself to every possible requirement.
Suppose, for example, that the correspondence of the Norton Machine
Company is filed alphabetically, and that you want to refer to the
correspondence of T. J. Watson, who is secretary of the company. A cross-
index card is headed with the name of the company. This would be exactly

like the cross-index shown in Fig. 16, except that the number would be
omitted.
There may be times when you will wish to keep together all
correspondence pertaining to a given subject—as a contract in which you
are interested. A folder can be made for this contract, headed with the
subject name, and filed in its proper place in the alphabetical index. Cross-
reference cards can be made, headed with the names of individuals, and
referring to the subject. Perhaps, when the contract is completed, there will
be no further reason for keeping the correspondence together, and it can
then be distributed according to the regular alphabetical arrangement.
Should you wish to adapt the geographical idea to any part of the
correspondence, the alphabetical index lends itself to the change without
disturbing the general arrangement of the files. It can be expanded to any
size; any class of correspondence can be segregated; and with properly
subdivided indexes, papers can be quickly located.
Probably the two most important advantages of the alphabetical over the
numerical system of indexing are its economy of operation and safety. As to
the first named advantage, there is a saving at the start in the outfit required.
Only the letter file and alphabetical index are needed—there is no
investment in a card-index outfit, unless it be a very small one for cross-
references. But the greatest saving is in the time required for its operation.
Without considering the operations involved in filing letters, compare
the two methods when a letter is wanted from the files. Suppose that the file
clerk has received a requisition for the correspondence of the Norton
Machine Company. With the numerical index, the following steps are taken:
(1) Open card index drawer;
(2) Refer to cards filed back of the N guide, and find index card showing that folder No.
610 holds the correspondence;
(3) Close card index drawer;
(4) Open vertical file drawer;
(5) Refer to folders back of the 600 index, find No. 610,remove folder;
(6) Close vertical file drawer.

When the alphabetical index is used, only the following steps are
necessary:
(1) Open vertical file drawer;

(2) Refer direct to folder of Norton Machine Company, back of the N guide, and remove
correspondence;
(3) Close file drawer.

Fig. 22. Alphabetical vs. Numerical Filing

This is merely an application of the principle that a straight line is the
shortest distance between two points, as illustrated in Fig. 22.
Alphabetical indexing is the safer for the reason that there is less
liability of filing a letter in the wrong place. With the numerical system, the
filing of letters in the wrong folder is not uncommon, and when this is done
the letters are practically lost.
The usual routine in numerical filing is first to place the folder numbers
on the letters, and then file according to these numbers without reference to
the name. Naturally, the file clerk commits to memory the numbers of a
large part of the active correspondents, and places them on the letters
without referring to the card index. Memory is ever fickle, and if the wrong
number is placed on the letter, it is probable that it will be filed accordingly.
In the use of figures, the most common of all errors is transposition, and
this is a constant source of danger in filing. Suppose, for example, that in
placing the number on a letter from the Norton Machine Company, a
transposition is made and the number reads 160 instead of 610. The letter is

filed in folder No. 160, just four hundred and fifty folders out of the way.
The letter is practically lost, for there is no way to locate it except to look
through all of the folders until it is found.
With the alphabetical index there is some danger of filing a letter in the
wrong place, but it is materially lessened by the fact that the name must be
kept in mind. If the letter is incorrectly filed, it probably will be placed in a
folder close to the right one. Almost without exception, it will be found
within two or three folders of its proper place; there is scarcely a possibility
that a letter from Norton will be filed in White's folder.

MISCELLANEOUS FILING

Salesmen's Correspondence. The correspondence from salesmen and
branch houses is, as a rule, more bulky than that from even the largest
customers. A sub-divison should be provided that will make it possible to
locate quickly a letter of any date, without looking through a great mass of
correspondence. The most simple way to accomplish this is to divide the
correspondence of each salesman or branch by months. A folder should be
used each month.
Sufficient space should be provided in the general files to hold
salesmen's correspondence for an entire year. If subdivided by months, old
correspondence can be located much more quickly than if scattered through
several transfer files.
One way to reduce the bulk of this correspondence in the salesmen's
folders is to require each salesman to use a separate sheet for each subject
about which he writes. Nine out of every ten letters from a salesman refer
specifically to transactions with certain customers, and are chiefly
important in connection with the correspondence of those customers. Such
letters should be filed in the customers' folders, where they will be found
when it is wished to investigate transactions with a customer.
The correspondence of some very large customers is also quite bulky.
This, also, can be subdivided by the use of a new folder each month. A
similar plan is used to advantage in connection with subject filing, a
separate folder, filed back of the subject guide, being used for each
correspondent.

Correspondence of Temporary Value. Every large enterprise receives
a considerable amount of correspondence which has no permanent value.
Inquiries for catalogs in response to advertising are of no value unless
further correspondence is developed. It is advisable to set aside sufficient
space in the files, and file such correspondence alphabetically, in
miscellaneous folders. Later, when further correspondence develops,
separate folders can be made and transferred to the regular files. After a
reasonable time—when the follow-up is abandoned—the inquiries can be
destroyed, saving space in the permanent files.
Orders. The manner of filing orders depends on the business and the
method of handling. It will depend on whether the greater part of the orders
are received direct from customers on their own blanks, on blanks supplied
by the house, or from salesmen on the blanks of the house.
When orders are received direct from customers, whether in the form of
letters or on the customers' blanks, it is customary to copy them on the
house order blanks, from which orders are filled and billed. The most
practical disposition of customers' original orders is to file them with their
correspondence, instead of providing a special file for them. There are
certain exceptions, as subscriptions received by a magazine and which, for
certain reasons, should be kept by themselves; but that outlined can be
regarded as a general rule. One reason for filing orders with the
correspondence is that, in case of dispute, it will very likely be necessary to
refer to past correspondence.
The manner of filing the house blanks depends on the number of copies
made. Some houses make but two copies of the order—one to be sent to the
customer as an acknowledgment, and one from which the order is filled.
This leaves but one copy for the office, and this should be filed numerically,
which also brings it in the order of the date. If the order copy is also used as
a posting medium, it should be filed in a loose-leaf binder; otherwise a
vertical file drawer can be used.
Another very satisfactory method is to enter the order in triplicate—one
copy as an acknowledgment, an office copy, and a shipping copy—leaving
two copies for the files. One copy should be filed numerically, the other
alphabetically. This provides a cross-index without the necessity of writing
a card index, showing how easy it is to provide valuable records by using

ordinary care. A complete order record is provided by making one extra
copy, which is done with no additional labor.
Orders received from salesmen on the house blanks are sometimes used
as a posting medium, in which case they are filed in a binder, by date.
Another method is to make the invoice in duplicate, and use one copy as a
posting medium. In such case, the copy of the order can be filed
alphabetically, bringing all orders from each customer together.
Invoices. The method of filing
invoices depends on whether or not a
complete voucher system is used.
When no voucher system is used, all
invoices should be filed alphabetically
in a vertical file. A folder should be
used for each firm or person from Fig. 23. Special Invoice
whom goods are purchased, so that all Folder—Open Browne-Morse Co.
of their invoices can be kept together.
Invoices should be filed in the folder in the order of their dates, the last one
in front.
With the voucher system, invoices are sometimes attached to the
voucher, in which case they are filed according to the voucher number and a
separate card index is kept for alphabetical reference. The more modern
plan, however, is to file the voucher numerically, retaining the alphabetical
index for invoices.
Invoices can be filed in the same file with the correspondence, or in a
special file. When the former method is adopted a folder of a special color
should be used. There would then be two folders for a firm, one for invoices
and one for correspondence. Special folders with double folds are largely
used for filing invoices, as shown in Fig. 23.
Documents and Legal Papers. For filing documents and legal papers,
there are two standard methods. The older of the two is to fold the papers
and file them on end in a document drawer, like the one shown in Fig. 24.
The drawer is equipped with a compressor or following block for keeping
the papers in an upright position, and either alphabetical or numerical
indexes. These drawers can be obtained singly or in cabinets containing any
number.

The more modern method is to file
documents and legal papers in a vertical file,
using document envelopes, as shown in Fig. 25.
These envelopes are of the right size to hold
legal papers flat, insuring convenient reference,
which is a decided improvement over the older
method of folding the papers. Any of the several
methods of indexing can be used, depending on
the requirements of the business.
As a
Fig. 24. Document File.
filing
Browne-Morse Co.
system for
the lawyer's office, this method is
unsurpassed. Every record of the
office is kept in one complete filing
system, yet each case is separate and
distinct. Every paper and all
correspondence relating to a given Fig. 25. Document File Envelopes
case is filed, unfolded, in one of the Browne-Morse Co.
document envelopes—or a folder can be used—bringing all papers on the
same subject together.
If indexed alphabetically, the papers are filed according to the name of
the client. When the numerical index is adopted, an alphabetical index card
with cross-references, including the docket index, is used. The folders may
be numbered by case or office numbers. Copies of opinions can be filed in
the same manner, making every opinion available whether given yesterday
or ten years ago. The usual confusion in the lawyer's office, incident to the
search for papers scattered through several files, is entirely done away with.
Clippings. The vertical system is the most practicable for filing
clippings, but, since they are liable to be lost through the open ends of the
ordinary correspondence folder, it is best to use either the envelope or the
invoice folder—preferably the former. Indexing for clippings should be by
subject, and if a file is used exclusively for clippings, it may be either
numerical or alphabetical. As a rule, the latter is most satisfactory, though
the former is used quite extensively.

An envelope should be used for each
subject. On the front of the envelope the
name of the subject and a list of the
contents is written. All clippings relating
to that subject are filed in the envelope,
which is placed back of the proper
alphabetical guide. Cross-references,
when needed, are provided by a card
index.
Drawings and Maps. A large concern,
especially a manufacturing enterprise, has Fig. 26. Drawing or Map File
a large number of drawings, blue prints, C. J. Lundstrom Co.
maps, and photographs to file. One
method is to file them in large folders, laid flat in a flat drawer, using a card
index for cross-reference.
A more convenient method is to file them vertically. The ordinary
vertical file drawer is too small for large drawings, but in Fig. 26 is shown a
special file which will accommodate drawings measuring 24"×36". The
drawings are filed in heavy folders, made to fit the drawer. This drawer is
hinged at its lower front edge, permitting it to be opened by simply tilting
the drawer forward, an operation which is accomplished with very little
exertion. The drawer is held in open position by an automatic catch which is
quickly released when it is desired to close the drawer. Each drawer is
provided with an adjustable follower which moves back as the space fills
up. When open the drawer exposes its entire contents, any of which may be
picked out instantly and again filed with the utmost convenience and
dispatch. When a large tracing is to be filed, it is desirable to first pull out
the folder to which it belongs and, after having placed the tracing therein, to
slip the folder back in its place. This prevents any accidental creasing of the
drawing.
Either an alphabetical or numerical index can be used, depending on the
class of drawings to be filed. In a machine shop, where all machines and
parts are known by number, the numerical index is best. In a publishing
house, where it is desired to keep all drawings used for each book, they
should be filed alphabetically by subject.

Credit Reports. Vertical filing is best for credit reports, as it brings
together all credit information about a customer. Unlike correspondence, it
is customary to fasten credit reports in the folder by using a drop of paste at
the top of each report. A folder is used for each customer, and all reports are
attached in the order of their date.
The index may be numerical, alphabetical, or geographical. When the
numerical system is used, a card index furnishes the cross-reference. The
card contains the name and the number of the folder, with a brief history of
the customer's dealings with the house.

FILING HELPS

Guiding. The importance of guiding should not be overlooked, for
guides are the great essential of a successful filing system. They must be
simple and correct. They must be inserted at sufficient intervals to guide
eye and hand instantly to the desired folder. A vertical file drawer holds
about 5000 letters, and, assuming that the average is 10 letters to a folder,
this would mean 500 folders. A general rule is to use 50 guides to a drawer,
or one guide for every ten folders.
The estimate of the number of guides required should be liberal. If there
are 500 regular correspondents, it is better to equip the files with a 60
subdivision alphabetical index than to confine it to a 50 subdivision index.
Guides must stand hard usage and remain legible; therefore the best
quality should be used. All manufacturers of filing equipment now supply
guides of heavy pressboard with metal tips. The metal tip guide is entirely
rigid and supports the papers or folders in the file, keeping them rigid and in
alignment. An important feature is that the index heading (name, letter, or
number) can be changed at any time by merely inserting a new slip in the
metal tip. Metal tip guides cost more than the old-style manila guide stock,
but in the end are more economical. The money paid for a filing outfit
should be regarded as a permanent investment; if the expense is to be cut
down, let it be in the purchase of supplies used for transfer, rather than in
the regular files which are used every day.
Transferring. Correspondence which is out of date should be removed
from the current file and filed in transfer files or boxes, indexed as in the

regular files. Transfers should not be made too frequently. It is often
advisable to use cabinets large enough to hold the correspondence for two
years, one part being used for current correspondence, the other for
correspondence one year back. At the end of the year, all of the
correspondence is removed from the older file, which becomes the current
file during the succeeding year.
Sorting. The work of the file clerk is
facilitated and greater accuracy insured by
the use of a sorting tray, as shown in Fig.
27. This consists of a wooden tray,
equipped with alphabetical or numerical
guides according to the system used. For
the alphabetical system a set of A to Z
guides—one for each letter of the alphabet
—is used.
Before attempting to file, the clerk Fig. 27. Sorting Tray
sorts the day's correspondence in this tray. All correspondence belonging in
one division of the alphabet is thus brought together, and can be quickly
filed.

SELECTING FILING EQUIPMENT

The selection of filing
equipment has been greatly
simplified by the manufacturers,
who have studied the filing
problem with the view to supplying
the demand for equipment to
accommodate every business paper.
As new problems have presented
themselves, new equipment has
been designed. The needs of the
smallest office, as well as those of
the largest corporation, have been
studied and met. Heavy cabinets of
solid construction have given way

Fig. 28. Showing Manner of Joining to cabinets built in sections, any
Upright Sections. one of which can be carried by the
Browne-Morse Co. office boy. The man who has but a
half-dozen letters a day to file finds
a section exactly suited to his requirements; as his business grows, he adds
other sections; the cabinet grows with the business, making one complete
system, no matter how small or how large.
The most universally used of all filing devices is the vertical file. As has
been explained in the preceding pages, it adapts itself to almost all of the
papers found in a business office. Vertical files are made with drawers in
three standard sizes: letter size, for ordinary correspondence, or papers up to
9½"×11" in size; legal or cap size, for legal blanks, reports, and other large
papers up to 10"×15" in size; invoice size, for invoices, orders, credit
reports, and all papers not larger than 5¼"×8". Papers 8"×10" can be filed in
the invoice size by folding once.
Styles of Construction. Two standard styles of construction are used
for vertical files, horizontal sections and upright sections or units. The
horizontal section is made one vertical file drawer high and either two or
three drawers wide. Upright units are one drawer wide, four drawers high
for letter and cap sizes, and five drawers high for the invoice size.
The upright unit is the newer and preferred style of construction; it is
more substantial, and for either large or small filing systems occupies less
floor space. Upright units are put together as shown in Fig. 28. Each section
is built with skeleton ends, and at each end of the cabinet—whether one or a
dozen sections—end panels are used, making one complete cabinet. The
sections are locked together, and can be separated at will. Fig. 29 shows
three upright sections, in the three standard sizes, joined together to make a
complete cabinet. This gives some indication of the possibilities offered by
this style of construction in building a cabinet to meet every requirement.
Upright units are also made with combinations of drawers for different
purposes. For a small business, an assortment of files for different purposes
is frequently desirable. An entire section filled with files of one kind may
not be needed, but a combination section offers a solution. The combination
illustrated in Fig. 30 contains one cupboard, six shallow storage blanks, two
double card-index drawers, and three document files. A vertical file drawer
can be substituted for the cupboard unit.

If vouchers, or other folded
documents are to be filed, the document
drawers shown in the combination unit
can be used, or provision can be made
for filing these papers in the vertical file.
The vertical file drawer is divided
lengthwise by partitions into
compartments of the same width as the
document file. Each compartment is
equipped with a follower block and
countersunk rod for holding guides.
W Fig. 29. Three Upright Sections
here a in Standard Sizes
large Browne-Morse Co.
numbe
r of folded documents are to be filed, as in
the office of a corporation using a voucher
system, this file is much more convenient
than the old style. An old-style document
file has a limited filing capacity, and must
be taken from the cabinet for consultation.
A vertical file drawer, legal size, provides
three compartments, each 24" in length.
This gives an actual filing capacity of six
feet in a single drawer. An upright section,
equipped for document filing, is shown in
Fig. 31. If an entire section is not needed
Fig. 30. Combination Cabinet for this purpose, one drawer can be
Browne-Morse Co. equipped for document filing, and the
others used for correspondence.
A style of construction designed to combine the expansion idea with
variety is known as the inter-inter cabinet. This cabinet consists primarily
of an outer cabinet or shell of standard height, depth, and width. This shell
is divided into compartments of standard height into which the filing
devices are fitted. The various filing devices are arranged in skeleton units
of standard dimensions, made interchangeable so that any desired

combination can be produced. Fig. 32 shows an
outside cabinet, card index, and vertical file
units, which fit the openings in the cabinet.
This
construction enables
the user to make a
combination of
small units of
various kinds to suit
present
requirements, all
housed in a single
case in a compact
form. Provision for Fig. 31. Upright Cabinet
future expansion is for Documents
unnecessary, since Library Bureau
an
additional
outside
cabinet can
be added at
any time,
and the
OUTSIDE CABINET units
rearranged at will to conform with
changes in the system.
An inter-inter cabinet shown in Fig.
33 suggests the variety of devices that
can be accommodated in a single shell.
This cabinet contains vertical file, card Fig. 32. Inter-Inter Construction
index, legal blank drawers, and Macey Co.
document files.
The need has been felt for a small filing cabinet, or stack of sections,
that would be complete and give the proper variety. The professional man,
the department manager, and the executive have need for a small cabinet for
personal correspondence, reports, statistics, records of matters requiring
personal attention, blanks and forms, private papers, and all matters of a