Chapter D: A. Hall employs H. D. Snyder as traveling salesman for the purpose of (4)

=27.= It is as necessary in the brokerage business to know the condition of customers' accounts as it is in a bank, and perhaps a little more so, as fluctuations in the market may _wipe out_ his margin without his knowledge, and while it is not absolutely obligatory on the part of the broker to notify his customer, still it is very much to his interest to do so.

The margin clerk has the balance of each customer every morning. All orders to buy or sell received during the day pass through his hands and he makes the necessary memorandum against the customer's account. He keeps posted on the fluctuations of the market and immediately notifies the principals of any account which needs protection. After the trading for the day is finished, which on the board is 1:15 o'clock P.M. on any day except Saturday, and Saturday at 12:00 M., the margin clerk extends the balances of the various customers' accounts, these balances are checked by the bookkeeper from his accounts to prove their correctness, and a new list of the balances is made for the use of the margin clerk the following day.

This book is kept in most houses as a form of blotter, but the best form is a short sheet with numbered lines for the names of customers and a long sheet with similarly numbered lines divided into inch columns, with the balance column at the beginning and at the end, to be inserted under the short sheet, to care for the transactions of the day. By this means the names of customers will not have to be duplicated daily.

The sheets should be kept in a holder so that the names run alphabetically and the initial letter of the names on one short sheet should be penciled upon the long sheet each day. The bookkeeper can, if desired, have a duplicate set of the short sheets, shown in Fig. 11, to use for making up the balances for the succeeding day.

Where there are a sufficient number of accounts to warrant, they should be divided by tabbed index sheets with a leather tab projecting, in alphabetical arrangement, so that any account may be turned to instantly; for instance, if the account of L. S. Tucker & Co. is wanted, turning up the tab _T_ will bring to light all of the customers whose names begin with _T_. This index may be further subdivided if it is deemed advisable.

The sheets for each day's work should be dated at the beginning of the day and may be kept, if desired, for reference, although after they have been proven by the books, they are of no practical value.

Fig. 12. Ledger Account of Each Stock Handled
]

THE LEDGERS

=28. Stock Ledger.= Some brokerage firms, besides keeping the stock record, keep a stock ledger, opening an account with each line of stock bought or sold and posting therein daily from the orders. This ledger account, with each class of stock, indicates at all times just how much of each line is held by the house and is very necessary in order to show what may be sold if occasion demands. As a large amount of stock held by brokerage firms is usually deposited with their bank as collateral for loans, and, as it is frequently the case that portions of this stock must be delivered to customers or sold upon their order, it is necessary to frequently change the collateral deposited with the bank, substituting other stock for that taken from the bank.

BASEMENT SHIPPING PLATFORM, FARWELL, OZMUN, KIRK & CO. (WHOLESALE
HARDWARE), ST. PAUL, MINN.
]

Fig. 13. This Shows a Variety of Rulings for the Customers' Ledger
]

The stock ledger form in loose leaf is 13¾ by 14 inches, and the name of the stock should be inserted in the heading. It is ruled and printed to show: Date bought, preferred, common, extra column, price, account, date sold, preferred, common, extra column, and price, as shown in Fig. 12. Each sheet should have a number, and these numbers should follow consecutively. There are two ways of indexing these accounts. The one strictly in accordance with the theory of loose leaf is the insertion of the sheets in their proper alphabetical sequence. When the accounts are carried in this manner, leather tabbed index sheets appear at intervals throughout the ledger or ledgers. The division of the alphabet depends entirely upon how many accounts it is necessary to run and ledgers may be alphabetically subdivided into from twenty-five to two hundred divisions. The better the subdivision, the easier it becomes to turn to an account.

Since the majority of listed stocks are designated by initials or abbreviations in order to handle them with greater ease, some firms prefer to run the stock ledger on the numerical plan. By this plan each account is numbered and the accounts follow consecutively. Tabbed index sheets occur at intervals of from ten to twenty numbers, showing the location of any numbered account. With this arrangement it is necessary to keep a separate index of the various listed stocks, with their respective numbers, and to find an account the number of the stock must first be ascertained. By constant handling and entering, the bookkeeper becomes very familiar with the numbers and it is but little trouble for him to locate an account. The greater difficulty would be for someone who is unfamiliar with the books to find an account when wanted. Owing to this fact, the alphabetical arrangement is preferred.

=29. Customers' Ledger.= Brokers who deal in grain and other food products, cotton, and stocks, usually require ledger sheets slightly differing, to keep a record of customers' accounts. The different rulings are not frequently used for the same customer, as those who deal in grain are not often stock manipulators. As interest is charged to the customer for deferred payments upon stock deals, this item must be taken care of in the ledger. Upon grain transactions, the balance on the purchase price is not paid until the delivery of the goods, consequently there are no interest charges upon these accounts until after maturity.

Fig. 13 shows rulings of six ledgers used by prominent brokerage houses in Chicago and St. Louis, and a study of the different forms as to the columnar arrangement will show how varied are ideas in regard to ledger rulings. All of these forms are useful, and the choice is merely a matter of individual preference. One thing which should be borne in mind in regard to ledger rulings is that the information shown in the ledger account should be exactly the same as that which it is necessary to convey to the customer in his monthly or weekly statement. The reason for this is that it should never be necessary to refer to any book except the ledger in preparing customers' statements, and it will be noticed in the statement of Logan & Bryan, shown later, that it is not only a reproduction of the ledger account as to matter contained therein, but also follows it exactly in form and ruling.

This book is used the same as any other loose-leaf ledger with the exception that there is much more detail entered in these ledger accounts than is usual in a mercantile business.

Not more than one account should be entered on one leaf, for the reason that it is impossible to maintain a perfect alphabetical arrangement unless each account is absolutely independent.

After the names have been entered, the ledger sheets should be arranged alphabetically under each leather tabbed indexed subdivision. This arrangement should be carried, if necessary, to the fifth or sixth letter and when names are the same, like _Smith_, they are indexed alphabetically by initials. The brokerage business is one where there should be no loss of time in referring to accounts, hence the more perfect the indexing the more easily the account is located. Ledgers can be balanced daily by the aid of an adding machine without writing off the amounts of the balances.

The binders to use for this ledger are a current binder for active accounts and a transfer binder for closed accounts.

Postings should be made from the daily record sheet to the ledger as soon as possible after the consummation of the deal, and the postings from the cash book must also necessarily be kept up to date. At any moment the statement of the customer may be required, and it would be quite inconvenient for the broker if, on account of delayed posting, the statement were incomplete or incorrect. The number of customers' ledgers that should be kept depends entirely upon the number of customers. One loose-leaf ledger binder will accommodate at least five hundred accounts, and if the number exceeds this, two current binders should be used. By keeping the ledgers well gleaned and transferring closed accounts to a transfer ledger, the active accounts only remain in the current binder, which facilitates posting, statement making, and reference.

Fig. 14. Conventional Balance Form for General Ledger
]

Some firms use the vertical filing drawer for transferred accounts instead of placing them in another binder, as it is much easier to secure these accounts for replacement in the current binder in case the account is reopened.

=30. General Ledger.= A general ledger should be kept for the personal accounts of members of the firm, controlling accounts of subsidiary ledgers, controlling account of bills receivable and bills payable, and all impersonal accounts. This book may be in loose leaf if desired, although many firms prefer to use a bound ledger for this purpose. The best form is the regular four-column ledger, debit, credit, debit balance, and credit balance, as in Fig. 14.

The periodical statement of the condition of the firm is taken from the general ledger, and all subsidiary books controlled through its accounts must balance with the amounts shown therein.

Fig. 15. Broker's Statement to a Customer, Which is a Duplicate of his
Ledger Account
]

Most large brokerage houses have branches in different cities and it is necessary to keep accounts in the general ledger with each of these branches showing the expense of the branch and the receipts therefrom, taken from the regular statements furnished at whatever period required. It is very necessary that the profits or losses from these branches be readily computed as it might be deemed expedient, if it were known that the branch was not doing well, to discontinue it. Frequent statements, complete in their nature as to receipts and expenditures, should be demanded.

The principal expense accounts of a brokerage firm are salaries, rent, private telegraph wires, telephone booths, tickers, advertising, special commissions, and sundry expenses. As before stated, the receipts are from commissions and interest. Commissions accruing to brokers from the sale of stock are twenty-five cents per share—twelve and one-half cents for sales, and the same amount for purchases.

CUSTOMERS' STATEMENT

=31.= In a brokerage and commission business, customers are very likely to demand a statement at any time, and even should they not do so, it is deemed expedient to make statements to customers often enough to keep them fully posted regarding the condition of their accounts. The best form of statement to use for this purpose is shown in Fig. 15, and is an exact reproduction of the ledger account. As these statements are made very frequently it is unnecessary to provide blanks with more than nine or ten lines.

BILLS PAYABLE RECORD

=32.= Taking into consideration the large amount of money borrowed in this business, and the constant fluctuation of the amount due to banks, it will be seen that a careful, complete, and simple _bills payable record_ is a prime necessity. This usual record shows date of loan, call or time, from whom borrowed, to whose account, rate of interest, securities—amount, when paid; securities—when released. A more simple form of this record is shown in Fig. 16.

Fig. 16. A Detailed Record of Loans Payable During Each Month
]

Loans made should be reported immediately to the cashier in writing, and the data concerning them should be entered at once in the cash book and the bills payable record. In some cases, banks arrange with the brokerage firm for what is called a _blanket loan_ varying in amount—from $100,000.00 upward—according to the requirements of the firm. In increasing a loan of this character it is always necessary to keep upon deposit with the bank, collateral amply sufficient to cover the highest amount required, and any part of this collateral may be withdrawn by the substitution of other collateral satisfactory to the bank. In such a case there should be a blanket loan account kept in the general ledger showing, specifically, the collateral in the hands of the bank, and by the system of debit and credit, the record of that withdrawn and that substituted should be kept.

In case there is sufficient fluctuation in values to warrant, a bank can demand additional security at any time or the withdrawal of that held by them and the substitution of something more acceptable, or they may, upon call loans, demand a part or full payment at any time, in which case it is necessary for the broker to make arrangements to take up the loan at once.

JOURNAL

=33.= All orders received are copied from the order blank into the journal, as the order blank used is not of a character to allow its being numbered and filed consecutively, nor can it be readily adapted to the division of the buying and selling accounts.

The journal sheet should have debit and credit columns for each ledger used for customers, and a general ledger column as shown in Fig. 17. Entries from the orders are carried into the proper ledger column. If a man buys stock, he is debited in the stock ledger column; if he buys grain he is debited in the grain ledger column; and if he sells either, he is credited in the proper column.

In making a statement to the customer of purchase and sale, the profit or loss together with the commission charged is shown.

ILLUSTRATION
]

CHECK REGISTER

=34.= Most brokers have accounts with several banks; it is therefore necessary that a _check register_ be kept with each bank, showing the date, number, to whom issued, amount of each check drawn, the deposits, and the daily balance, as in Fig. 18.

Fig. 17. General Journal in Which All Orders are Entered
]

By using this register the account with each bank may be kept separately, and the necessity for filling out stubs in a check book entirely avoided. Many houses have given up the use of check books altogether, having their checks padded in numerical sequence and as the numbers follow consecutively on the check register, each numbered check must be accounted for. In case a check is spoiled, the line should be _voided_ in red ink, and the spoiled check filed with returned checks.

In case the _office cash_ carries an account for itself from which checks are made, a separate check register should be kept for this account, as its balance does not enter into the general cash balance of the firm.

Fig. 18. Check Register Showing Condition of Bank Account
]

In no just sense can a broker be held to be the owner of shares of stock which he purchases and carries for a customer, and it is a breach of trust to use this collateral to his own advantage. The certificate of shares of stock is not considered, according to the decision of the Supreme Court of the United States, property itself; it is but the evidence of the property in the shares.

To sum up, the accounting work in connection with the brokerage business is in taking care of the orders received from customers, being sure that they are correctly interpreted and promptly filled, noting the loans necessary to complete the contract, keeping a careful record of commissions and interest due the house, being watchful in regard to the margins of customers, and arranging all accounts with customers so that they may be kept up to date and instantly available.

GLOSSARY OF BOARD OF TRADE TERMS

=BEAR:= One who believes the conditions are ripe for a decline in
prices, or one who desires such an event. One may believe that
the price of a certain security is about to decline and
therefore is said to be a _bear_ on that particular security,
whereas he may not be so on others. The natural attitude of a
_bear_ is that of a seller but he may be so for the sake of
buying at a lower price later.

=BEARING THE MARKET:= An artificial lowering or forcing down of
prices.

=BID PRICE:= The price offered or bid for any security or commodity.

=BORROWING STOCK:= A broker borrows stock when he has made a
contract to deliver and the stock which he has sold, for any one
of various reasons cannot be delivered at the time agreed.

=BREAK IN THE MARKET:= A sudden and considerable decline in price.

=BROKEN LOT:= Same as _odd lot_ in reference to stocks and less than
ten thousand dollars par value in bonds.

=BUCKET SHOPS:= Offices run by irresponsible brokers not members of
any stock exchange and who do a marginal business upon one
dollar per share and upwards. As a matter of fact the stock
itself is neither purchased nor sold for the customer by these
operators. If the order is actually executed upon a _bonâ fide_
exchange then the _bucket shop_ puts in a contrary order for a
like amount. For example: This kind of a dealer would sell an
amount equivalent to a customer's purchase or purchase an amount
equivalent to a customer's sale, thus, in no event carrying
stocks.

=BULL:= One who believes that conditions are ripe for an advance in
prices or one who desires such an advance and talks _bullish_ in
consequence. One writer defines a bull as a man who has
something to sell, consequently he is anxiously waiting for
prices to go up that he may sell at a good price.

=BUY AT MARKET:= An order to buy at the lowest prices at which the
security can be obtained without any price limit being set by
the one giving the order.

=BUYER'S OPTION:= A contract under the terms of which the buyer of a
security need not receive delivery until the end of a specified
time, but he has the right to demand delivery at any time within
the period covered by the contract by giving the seller one
day's notice. The understanding is briefly expressed as "buyer
4," "buyer 10," the figures indicating the number of days
provided for in the agreement.

=BUYING ORDER:= An order given to a broker to buy a certain security
with or without limit as to price as the case may be. An order
to buy is good for the date for which it was given only, unless
otherwise specified. Sometimes an order is given "until
countermanded" or "until cancelled" by which the broker
understands that there is no definite limit as to time; but
brokers usually remind their customers regarding orders to be
sure that they still desire them to be kept in force.

=CABLES:= Telegrams from foreign countries on the conditions of the
market. Large brokers receive cables each morning from London,
Paris, and other points giving closing prices of grain and
provision in that market.

=CALL:= A privilege which one party buys of another to _call_
(receive) from him a certain amount of stocks, grain, etc., at a
certain price and date.

=CARRYING CHARGES:= The interest charged by brokers for the amount
of money advanced by them to customers in marginal transactions;
also used by a Chicago firm to indicate storage rates, interest,
and insurance on grain or provisions.

=CASH GRAIN:= Grain for delivery at once. _Spot grain_ has the same
meaning.

=COMMISSIONS:= The charge made by any broker for buying or selling
securities for someone else.

=CURB:= Securities which are not traded in upon the large stock
exchanges or new securities which have not yet been listed upon
such exchanges are handled in what is known as the _curb
market_. The reason for the existence of "curb market" in the
open rather than in some building is that if the latter plan
were pursued there would, in truth, exist another exchange, and
it would not be permissible for a member of the regular exchange
of the same city to be represented thereon as he frequently now
is upon the _curb_.

=CURBSTONE BROKER:= One who usually, not being a member of the stock
exchange, goes from office to office or transacts his business
on the curb.

=DELIVERY:= The actual turning over to the buyer of the thing
bought. If delivery is offered after hours, the buyer may refuse
it until the following business day, but the seller has no right
to demand interest for extended time.

=DIVIDEND:= A portion of the profit of a corporation authorized by
the board of directors to be paid to the stockholders.

=DUMP:= An amount of stock that is forced upon the market for the
purpose of getting rid of it. It does not mean so much the
disposing of an undesirable investment but in offering any
investment in large amounts.

=EVEN:= A broker is even on stock when he has contracted to receive
and deliver equal amounts of the same stock with another broker.
A settlement of the difference in prices is the only thing
called for.

=FLURRY:= A small panic. An excitement caused by a rapidly falling
market and advancing money rates.

=FUTURES:= Buying or selling grain for future delivery. Literally
speaking when you buy grain in February which is known as _May
grain_ you contract for delivery in May at prices then existing.

=IN SIGHT:= The amount of grain, coffee, cotton, tobacco, or any
commodity available for immediate use.

=LIMIT:= A price which a broker must not exceed in executing an
order for his customers. It may also be a restriction of the
amount to be purchased or sold.

=LISTED SECURITIES:= Securities before they can be listed upon any
board of trade or stock exchange must have complied with certain
rules of the exchange. This does not imply that listed stock has
any greater intrinsic merit than unlisted stock but it merely
shows that certain facts and figures in relation to the security
have been given more or less publicity.

=LONG:= One who holds stock or grain for a rise in price, or, one
who has a contract under which he can demand such stock or grain
on or before a certain day. The opposite of _short_.

=MARGIN:= An amount of money deposited with the broker to insure him
against loss; a part of the purchase or selling price.

=O:= The "Ticker" abbreviation for _offered_ when accompanied by
figures; for instance, "G. N. O. 76" would mean that Great
Northern Common Stock was offered at $76.00 per share.

=OPEN MARKET:= A market where any or all may buy or sell.

=OPEN ORDER:= An order which is good until cancelled.

=OPTION:= An agreement of purchase or sale, good only for a certain
time.

=PIT:= The portion of the board of trade where floor trades are
made. This term is particularly applied to Chicago. Other stock
exchanges set aside certain places signified by posts set in the
floor for trading and in these exchanges the trading points are
called _posts_ instead of pits.

=POOL:= A combination of buyers who work together and invest their
joint capital as one. (The different boards of trade have
enacted strict rules against pooling.)

=PUT:= A privilege which one party buys of another to _put_
(deliver) to him a certain amount of stock, grain, etc., at a
certain price and date.

=PUT AND CALL:= A _put_ and a _call_ may be combined in one
instrument, the holder of which may either buy or sell as he
chooses at a fixed price and date.

=REMARGIN:= To give more margin.

=RING:= A combination of brokers to offset and settle trades with
each other; also an exclusive combination of persons for a
selfish purpose as, to control the market. (Rings have the same
standing in the board of trade as pooling, if of the same
character.)

=SELL AT MARKET:= An order to one's broker giving authority to sell
stock or grain at market price.

SELL AT OPENING: An order to sell immediately after the opening of
the stock exchange at the best price obtainable.

=SELLING ORDER:= An order given to a broker to sell a certain
security with or without limit as to price, as the case may be.
A selling order is good for the day for which it is given only
unless otherwise specified.

=SETTLEMENT:= The payment of differences in trades between brokers.

=SHORT:= One who has sold for future delivery what he does not own,
but hopes to buy at a lower rate.

=SKYROCKETING:= Pushing the prices of securities up to unnatural
levels or forcing the price up with startling rapidity.

=SLUMP:= A sudden and a considerable fall in prices.

=SPREAD:= A "put and call" at differing prices.

=STOP LOSS ORDER:= This is a method of limiting losses by giving a
stop order to the broker to sell if stock declines below a
certain point. These are sometimes called _stock orders_.

=STRADDLE:= A "put and a call."

=SWEETEN:= To give more collateral or margin.

=TICKER:= A small printing machine operated by telegraph by which
the outside world obtains the reliable information as to the
prices of securities and commodities dealt in upon the principal
exchanges of the world. It is a never failing source of
information to the broker. The results are printed on a strip of
paper like a ribbon which automatically unwinds and after
passing under the printing device runs into a basket. The ribbon
is called the _tape_. All fluctuations in prices are thus wired
to the principal exchanges immediately.

=WASH SALE:= An illegitimate or fictitious transaction.

THE WHOLESALE HOUSE OF MARSHALL FIELD & CO., CHICAGO, ILL.
]

BILLING AND ORDER RECORDING[5]

=Introduction.= The survival of the fittest applies most forcefully to business men and their methods. The success of the men depends upon their methods; the efficiency of the methods, upon the men. Large corporations of to-day would be impossible without method. They plan their work, and method tells them daily whether they are working their plan successfully or unsuccessfully.

Footnote 5:

_Copyright, 1909, by American School of Correspondence._

It is commonly supposed by the smaller business men that method is a result of business growth. Sometimes it is. If a business grows fast, better methods become a necessity. Without method any business must remain small—with few exceptions, just as small as the capacity of the man at the helm. "To the extent which system is intelligently used, it multiplies one's powers of achievement in all directions."

The importance of the order billing and shipping departments, the amount of waste effort therein, and the relation of each to all other branches of the business, make them a most interesting and profitable study for the progressive business student, whether he be a beginner, an executive, or an owner. To attain quick results and to eliminate useless head, hand, and leg work, learn the capacity, capability, and usefulness of office machinery and the short-cut methods made possible thereby.

During the last eight years there has been a tremendous amount of improvement made both in this country and abroad in handling office work, changing from hand to machine methods. Most of these improvements have been literally forced upon the business men of the country by specialty companies having labor-saving devices for sale. Wide-awake merchants have in some cases left the installation of such devices to office people who feared the loss of their positions through the use of them.

One of the pioneers in the development of the class of work above mentioned is Hiram J. Halle, who overcame all obstacles, and gave the impetus to modern billing methods which has been such a help to our economic results in office practice. The typewriter companies have followed his lead and equipped cylinder machines with the necessary attachments for accomplishing almost any desired result, except writing in a bound book. In order to overcome this obstacle, the McMillan and the Empire and some other loose-leaf books have been invented. These books are loose-leaf only while they are being written upon; after completion they are permanently bound by a simple device, and become as secure as a sewed book.

In any book of this character, the student must consider the text as a series of problems, with explanations of how each has been solved. If the student does not learn to exercise his own powers of originality as a result of a study of this volume, he will fail to secure the result intended. Rarely, if ever, will two problems be met in two commercial establishments which will be alike. The judgment of the person installing the system will determine the best method to be used under certain conditions.

Before starting in on the regular work, it will not be out of place to give a comparison of the methods of business in various foreign countries.

The rush in the business life of the United States is accounted for by our fast growth and national desire to accumulate wealth. Commercial concerns have grown both fast and slowly to undreamed proportions. Strenuous efforts have been made to secure business, and then a corresponding effort has been made to effect the small economies which in a large business aggregate large sums. As a nation, we are rushing at headlong speed, seeking all the means which will give us results. In transportation we advance from steam to electricity; in social life we turn from horses and carriages to automobiles; in commercial life we use every known device to short-cut the work and effect economies—adding machines, typewriters, cash registers, envelope openers, envelope sealers, multigraphs, etc.

A distinct surprise awaits the person visiting Europe on a mission of introducing "short-cut" methods. While we are in business to make all the money we can, most of the Europeans are in business to make a living, or reasonable earnings.

Imagine the surprise of the writer when told by the managing director of one of the largest department stores in London that they did not care to save the services of thirty-five clerks (which was possible by modern methods) as they were making a certain amount of money each year, and did not care to make any more; besides, they did not wish to put these people out of positions. It is not an easy matter to secure positions in England. Employes are very diligent and pay strict attention to business. A manager of one of the large banks in London said that once a clerk is hired he is discharged for gross misconduct only—not even for incompetency. There are young men clerks (pronounced _clarks_) in the Bank of England who are doing the same work for the bank as done by their grandfathers. There are old men in the Bank of England to-day who still use quill pens and the sand box instead of a blotter. There are, however, adding machines being used there by the younger generation, and they are of more use to them than to us in a way, as their currency is so much more difficult to add.

Each year, more improved methods are being introduced into England. Typewriters have been used for a number of years, and of late years adding machines have made headway. It is more difficult there to introduce new methods, but, once installed, it is difficult to dislodge them for other ones.

Some of the wholesale houses have very old methods. In one house in London, an order was copied twenty-nine times from the time it was received until it was finally charged. The concern was over two hundred years old and had never made any effort to improve its methods. It had four boys whose duty it was to hunt orders lost about the warerooms. A system of manifolding was installed, which eliminated so much waste of time in copying and recopying orders that it was difficult to convince the firm that something had not been overlooked. After four weeks they were delighted.

An American going abroad is much impressed by the deliberation of Europeans and is inclined to criticise them for it. After a time, they can point out enough Americans who have worn out at forty years of age, and are in Europe seeking health, to convince them that perhaps the Europeans are not wholly wrong.

In Germany, the railroads are controlled by the government. When one attempts to introduce short-cut methods, he is confronted by the fact that work is needed to keep busy old soldiers for whom the government has to care. In asking an agent of an American firm dealing in labor-saving devices why he did not use any of the devices, the answer was given that in Germany the young men work three years for nothing; he did not feel the necessity of doing away with any of them. At the end of three years' work in an office, a young man receives a diploma for efficiency, if he has attained it. The government exercises a strict supervision over all commercial concerns, and inspects their books at periodic intervals. Commercial failures are therefore more rare there than at home. Fraudulent schemes are dealt with severely.

There are many large firms in Germany, both jobbers and manufacturers, that are striving to be progressive. The Siemens-Halske Electric Co. are just as progressive in their order and billing methods as any American firm in the same line. To show the attention to details given by the Germans—a managing director of one of the large department stores in Berlin, when asked how long he had lived in the United States, said he had never been there. Upon being complimented upon his American accent, he replied that when talking to an American he always used the American accent, slang, intonation, etc., and when talking to an Englishman he changed his accent, etc., to correspond. He had all the American devices in his accounting department which one would find in any department store in the United States, and sent out monthly typewritten bills the same as John Wanamaker, Altman, and others of New York, and the same as all large department stores do in all American cities.

In France, the commercial houses are very conservative and are subject to the same government supervision as practiced in Germany. In one of the railroad companies, the Chemin de fer du Nord, they use the manibill system of billing (whereby each shipment is billed separately and manifolded on a form of seven sheets) which is the shortest form of billing known, but which has never been adopted by American railroads on account of the bulk of papers increasing too rapidly. The present American method is to put several shipments on a way bill for shipments to any given town, and when the goods arrive at the given town, the receiving stations make out separate freight bills for each shipment, copying the information from the blanket way bill made out at the forwarding station. Some of the American railroads are now adopting the special roll machine for car accountants' work, as shown in Fig. 1.

Fig. 1. Underwood Special Roll Machine for Car Accountants' Work
]

The French people do not, as a rule, form large companies like the Americans and Germans and English. There are a large number of small manufacturers and jobbers in France. The large department stores, like the Louvre, in Paris, are run on a strictly cash basis.

MACHINES FOR MANIFOLDING

Neither the billing machines (book-writing machines) nor typewriters were originally intended for heavy manifolding work. The flat-bed billing machines were originally invented to write in books used for court records, sales books, etc. The book was to remain stationary and the machine was to travel over the books. The flat-bed machines are the only machines made for writing in bound books—the latter are being gradually replaced by loose-leaf books. A flat-bed machine for bound books is shown in Fig. 2.

Fig. 2. Flat-Bed Typewriter for Bound Books. _Elliott-Fisher Co._
]

The typewriter was originally intended to write on one sheet of paper only. If extra copies were needed, a copying ribbon was used, and a wet copy taken in a letter-press book. In the evolution from bound books (official record and commercial) to loose sheets, the book typewriter was equipped with devices for holding loose sheets of paper—used alone or in connection with books. In the evolution from letter-press copies to carbon copies, the typewriter was equipped with hard-rubber and brass platens for taking from one to twenty-five copies, and in some cases even more, with extremely thin paper and carbon paper.

The flat-bed billing machines are equipped with heavier type-bar springs than the cylinder machines. The operator in depressing the keys overcomes the additional resistance to the touch, due to the heavier type-bar springs, and strikes a heavy blow on the paper, making a good manifold copy in all cases. The operator on a cylinder billing machine strikes a heavier blow than usual to secure the heavy manifolding results. The heavier the blow, the clearer the result on a billing machine. The Underwood billing machine is shown in Fig. 3.

Fig. 3. Underwood Billing Machine
]

All typewriters equipped with special attachments for holding the sales sheets, invoices, and orders are called _cylinder billing machines_. The paper upon which the machine writes is held by, and passes over and around, a round rubber roll, the cylinder.

This is in contrast to the flat-bed billing machines (or book typewriters) on which the paper lies flat on a rubber plate while the machine moves over the paper.

=Development of Billing Machines.= This text has been prepared by taking the simplest forms of billing and order work, and leading up gradually to the more complicated forms. This is actually what took place in the improvement of office and factory work.

A bill and a copy were first made—an extra sheet was made for some additional purpose. The advantages of doing two or three things at once led to further investigation. This resulted in still additional sheets being used for other purposes. Every time an additional sheet was added, the labor of typewriting that sheet separately was eliminated.

Gradually it developed that it would be useful to copy a part only of the typewritten information on some of the under sheets. Means were found for accomplishing this. For instance, on an order form, it was desirable to have the prices show on the office copy, but not on the copy which was intended for the warehouse or factory.

In some cases it was desirable to write all the information on the top copies and split up the information thereon on the sheets underneath. The final development of all the above ideas is embodied in the compound form, in which all sheets for the office, customer, warehouse, factory, shipping room, and loading platform are typewritten at one operation, and the invoice and duplicate finished as a separate operation.

Wholesale and manufacturing lines are used mostly in this text to illustrate the evolution and improvement of billing and order work. Some of the conditions which have to be considered in installing office systems are as follows:

Whether the orders are received from customers or salesmen or both,
and which are in the majority.

Whether the goods are carried in stock or manufactured or bought
outside, or all of these.

Whether the orders can be filled completely, or nearly so.

Whether or not the factory may know the prices.

Whether the goods are shipped by freight, mail, express, or all of
these.

Whether copies of the bills have to be made for any other purpose.

Whether a copy of the sales sheet has to be sent to the home office,
or made for any department.

If additional copies of either are necessary, what colors to use for
readily distinguishing them.

How many ledger clerks, and how to sort their work to the best
advantage so that each clerk handles his work only.

How to file office and factory copies for quick reference.

How to plan all the above so that improper filing of sheets does not
destroy the chain of record.

The reasons for these considerations will be better appreciated after further progress is made.

If the business student learns the capabilities of office machinery, the advantage of manifolding, the use of colored papers, and the important feature of correctly grouping statistics (which is almost an art in itself), he will have accomplished much. He should learn also to develop his own power of originality and suggestion.

The natural order in which order billing and shipping ought to be presented is the way in which the transactions occur. Methods of billing (making out invoices) in many businesses govern the manner in which the orders are made up, and therefore will be considered first.

In order to more clearly bring out the advantages of new methods, it is deemed advisable to consider old-style methods and contrast them with the newer ideas. By showing the weak points in the older methods and why the new are better, the gradual evolution and improvements can be traced.

=Old-Style Method of Billing and Making Wet Copy in Tissue Book.= There are enough firms who still follow this plan of billing to resent the term "old-style." The best that can be said for this plan is that it is shorter than writing the bill-and-sales book, or sales journal, separately. The wet copy takes the place of rewriting the bill. One objection to this method of copying bills is that if all the bills are copied some of them are either blurred or are too light when the copy has dried on the tissue leaf. This is a difficulty which can be corrected by careful attention.

The worst feature is that one never knows whether all the bills have been copied, and there is no way of knowing this unless the copies in the tissue book are checked back with the orders from which the bills were made. Many firms spend thousands of dollars in advertising, traveling expense, labor, etc., ship out and bill large invoices of goods, "double check" the invoices, and leave the copying of the invoices in tissue books to a young office boy. They never think to check back the invoices with the orders to be absolutely certain that the goods have been _charged_ as well as invoiced (billed out).

Fig. 4. Old-Style Cloth Bath. _Underwood Typewriter Co._
]

If one should ask them how they know that all invoices are charged (or copied into the tissue books) the invariable answer would be, "Oh! we never lose any bills before they are copied." Ask them how they know none are lost and, after thinking a while, they will admit that they really do not know _for sure_. They begin to check back the tissue book after some customer brings in a bill for payment which has never been copied into the tissue book, and hence has not been posted to the customer's account.

Fig. 5. Old-Style Copy Press. _Underwood Typewriter Co._
]

Fig. 4 shows the old-style cloth bath, Fig. 5 the old-style copy press, and Fig. 6 the old-style sales book (tissue paper leaves).

LOOSE-LEAF SALES SHEETS AND INVOICES

This style of billing was the first variation from the plan of using copying ink, or pencil, on invoices and then transferring the ink to tissue paper books, by wetting the leaves with water and then absorbing the surplus water with paper blotters. Or this was done by placing damp cloths on the under side of the leaf and covering it with a leaf, placing the invoice downward on the tissue leaf, closing the book, and placing it in a copying press. The ink from the invoice was sufficiently transferred to the tissue paper to make an impression thereon.

Fig. 6. Old-Style Sales Book. _Underwood Typewriter Co._
]

If the person who did the copying did not use due care, the paper would be too wet and the ink would run and blur the copy and the invoice. If two invoices were accidently picked up by the person copying, the top invoice would not be copied on the tissue sheet. This is a most serious objection, for the reason that the copy in the tissue was used as record of the invoice for the purpose of posting into the ledger.

Another difficulty was the usual one experienced through the use of bound books in office work. Only one person can use a book at one time. If Fayette Henry, the accountant, was using the tissue-copy book, and Dave Pike, the order clerk, wanted to use it to see if all invoices had been copied by the office boy, he had to wait on Fayette Henry. The loose-leaf sales sheet shown in Fig. 7, with the pages serially numbered and placed in proper binders after each sheet has been filed, overcomes all of the difficulties mentioned—with many additional benefits.

Fig. 7. Loose-Leaf Sales Sheet and Invoices. No Ruling on Sales Sheet.
_Remington Typewriter Co._
]

The loose-leaf sales sheet and invoice were first used with the flat-bed billing machine, the sales sheet being held in position by being placed over studs (round metal posts), which fitted into the punched holes in the edge of the paper. These punched holes were used ultimately for fitting over the metal binder posts in the loose-leaf binders. The invoices were wider than the regular-size invoice and were perforated about 1 inch or 1½ inches from the left side, as shown in Fig. 8. To the left of the perforated edge were two small holes about 2¾ inches apart, which fitted over two small studs on a sliding bill-holder device. This plan provided a means of holding the large sheet and invoice in proper relation to each other. A piece of carbon paper the same size as the sales sheet was placed between the invoice and the sales sheet. This ruling of the sales sheet is shown in Fig. 9.

Fig. 8. Invoice for Use on Billing Machine
]

When an invoice was written on the billing machine, it was manifolded on the sales sheet beneath. When the invoice was finished it was ready to mail—no delay in copying invoices, no blurred invoices through careless copying. No fading of the manifolded copy where black carbon paper was used. Inks are not made of indestructible carbons as black carbon paper is made. A condensed billing or invoicing loose-leaf sales book for this purpose is shown in Fig. 10.

The following are some of the many good features of the condensed system, as it is in use to-day, briefly stated:

Fig. 9. Loose-Leaf Sales Sheet
]

Bill and entry in sales book are obtained at one operation.

Entries upon sales book agree absolutely with bill rendered.

The bill clerk becomes bill and entry clerk combined.

There is no danger of a bill being rendered without the proper
charge being made.

Entries under this system occupy but one-fourth the space required
for those written with the pen.

There is no waste space upon sales sheet.

Both sides of the sales sheet may be utilized.

The saving in vault space alone is worthy of special consideration.

Fig. 10. Condensed Billing or Invoicing Loose-Leaf Sales Book.
_Underwood Typewriter Co._
]

In recent years, the typewriter companies have placed devices on their typewriters which permit of the sales sheet being held independently of the invoices. This permits one to hold the large sales sheet in the machine until enough invoices have been manifolded thereon to cover the page, at which time the sales sheet is reversed. The invoices can be placed in the machine and removed therefrom after being written, without interfering with the sales sheet. No extra width of invoice is required, which permits of old stationery being used in the form of invoices. The flat-bed machines can use old stationery, but not quite so well. However, when billing by machinery, it is false economy to use stationery designed for pen work. The reasons for this will be touched upon later.

The use of two ledgers necessitates the use of two columns at the right side of the page. All names from _A_ to _L_ are placed in the first column; all names from _M_ to _Z_ are placed in the second. For instance, an invoice reading as shown in the sales journal, Fig. 11, illustrates the idea of writing the totals in the two columns at the right side of sheet according to the initials of the last name of the firm or the individual, as the respective ledgers are arranged in that manner. If at the end of the month the first column shows a total of $3,000.00 the bookkeeper knows that he has posted that amount into Ledger _A-L_, etc.

The above plan enables the bookkeeper to add separately the totals which are posted to the respective ledgers. The desire to separate the charges to a country ledger and a city ledger can be accomplished by using two columns in the same way.

The desire to place all credit memoranda in the sales book can be accomplished by using two columns in the sales book as noted above. The first column is used for the charges, and the second one for entering the credits. One difficulty arises in connection with this plan. Credits are liable to be entered in the debit column. To obviate this, the invoices are made just wide enough to reach over the first column, the credit memoranda are made wider to reach over the last column. When an amount is written in the last column of the invoice, it manifolds in the proper column of the sales sheet. The same is true of an amount written in the last column of a credit memo.

This subdivision of columns is carried a step further to permit of the analyzation of sales in several ways.

According to classes of goods, as follows:

LAMSON FOUR-INCH PNEUMATIC TUBE ORDER CARRYING SYSTEM FOR A LARGE
WHOLESALE ESTABLISHMENT OR A FACTORY
Lamson Consolidated Store Service Co.
]

Fig. 11. Sales Journal Arranged for Distribution to Two Ledgers
]

According to territory, as follows:

According to salesmen, as follows:

To separate the sale of regular goods from goods which are being sold on consignment, as follows:

Generally the invoice is wide enough to reach over the total column only, as shown in Fig. 12. Therefore, a total amount written in the total column of the invoice will manifold onto the sales sheet, and in the column marked _Total_.

A wide-carriage billing machine, if used, can be adjusted with tabulator stops to jump to any column desired. The total amount is then written therein a second time. The amount of the total column should always equal the total of all the columns placed to the right of the total column. This plan eliminates the old way of waiting until the end of the month, and then laboriously going over the sales book with one total column only, and picking out the various items according to the classification wanted.

Fig. 12. Loose-Leaf Sales Sheet and Invoices with Columns for
Distribution of Labor and Stock
]

The work should be planned in a manner which permits of each day's work being finished each day—leaving nothing to accumulate until the end of the month, necessitating the retracing of steps to secure certain statistical information.

In certain lines of business it is desirable to make two sales sheets, one of which is retained in a binder for an office record and the other is used for various purposes. It can be used as record of sales from a branch to a home office, each page being numbered in duplicate, and of a distinctive color. This is the plan used all over the world by the Standard Oil Company. As the sales sheets arrive at the home office, they are placed in their respective binders and are gradually made into a built-up book. The loss of a sheet would be instantly detected by the missing page number.

A large French perfumery firm in New York pursues this plan, and sends to Paris the duplicate sales sheet on thin paper. It gives the home office a fine record of every invoice sent out to any customer by the branch office or warehouse. As several invoices can be manifolded on each page, and on both sides of the sheet, it is the most economical method of billing as far as stationery is involved. The name _condensed billing_ indicates this fact.

In other instances, the duplicate sales sheet is wide enough only to allow quantity and description of goods to be manifolded thereon, prices and extensions not showing. This narrow sheet can be used for posting to the stock records without disclosing to that department the prices at which the particular goods have been sold. This form of the sales sheet is shown in Fig 13.