Chapter V: Part 5

Other wars have been wars of contention, but when men deal justly there will be no longer anything for which to contend. The goods of the world may be very rich and lovely, but they are worth neither the price of life nor the stigma of murder. It is better, even for nations, to have less and have it honestly, to possess less and live in a world safe for each generation and its posterity. When the hearts of men are right, our economic systems will also be right. Every man will get his share and be content with it when he gets it.

When the dream of world brotherhood has become a fact, we shall often think with a bitter surprise of the bickerings and misunderstandings of yesterday. The path to that time is the road of the heart. The only way to realize such an age is to begin to live its spirit. We shall have a world fraternity only when we all begin to be brothers. This will be a happy world when it becomes a kindly-hearted world, and it will never be a wholly happy one until it fulfills this law. The formula is simple and the conditions are plain.

The time has come for selfish men to surrender their selfish ways and purposes. The service of self and the road of malice have been proven failures. They offer nothing which is permanently worth while, and they lead to endless trouble. For ages we have talked love. Our words will remain a mockery until we adopt it as a principle and apply it in life’s affairs.

The time has come to take that forward step. The world is ready for anything that spells deliverance, and nothing will deliver humanity save rightness of heart. We had better make a garden of the world than to turn it into a vast cemetery for the bodies of the slain. Let us have a League of Nations, but let us build it on a safe foundation.

Is It Nothing to You (1929)

There is a type of mind which insists that it cannot understand why it matters to some of us what others eat, and drink, and do. It represents us as troublesome meddlers in the private affairs of our neighbors, and insists that none of the so-called evils of the time need trouble us in the least if we would attend to our own business.

Our motive in seeking legislation to control the various evils that plague society has little to do with the question of the private rights of others. We care because we wish people well and naturally prefer to see them doing credit to themselves, but that alone would never lead us to organize reform associations, agitate reform questions, and seek the enactment of sumptuary laws.

We do these things for three reasons. One is the fact that we too have to live in the world and be affected in many ways by the good or evil of its life. We have to help meet the cost of evildoing, endure the conditions which it creates, and suffer the general defeat of our ideals before its attack. The second reason is the fact that we care into what kind of a world we send our posterity to live. We may not care what a neighbor eats and drinks, but we do care very much what favorable or unfavorable conditions our children will have to meet when we are no longer here to help them. The third reason is the fact that what our neighbor eats, and drinks, and does, affects not only him, and not only us, but all mankind. Each individual transgression writes itself into the world life.

So far as we are concerned, regrettable as it is, the man who insists on poisoning his body might go on getting to the last whatever satisfaction it affords him. But we are concerned because he passes the poison on to his children and to other people’s children. He degrades the life of society, makes his community less desirable, and even lowers property values in his neighborhood. In all these things we also have an interest. By all these things we and ours are profoundly affected. Why should we not care?

What Makes a City? (1929)

There is an old story about a town that had a high cliff from which was visible a particularly beautiful view. The citizens of the town, being enterprising people, decided to capitalize on this natural asset, and so they proceeded at once to make it a talking point in favor of their city as a show place and one desirable for residence.

The advertising was effective. From far and near, people came to get a glimpse of the famous view. Needless to say, they spent their money while they were in town, and the business men around the square were able to note a change for the better in their bank balances.

It turned out, however, that viewing the scenery from this cliff was not without its dangers. The precipice was high, and at its foot, the rocks were hard and rough.

One day a visitor fell from the top of the cliff. His mangled body was picked up from the rocks below. The story went the rounds, and business began falling off. The merchants got together and agreed that they must do something. They decided to organize a campaign and raise money to build a hospital and provide an ambulance to take care of casualties. They did so, and with due advertising, business again picked up.

One day someone suggested that a better thing would be a railing along the top of the cliff to keep people from falling. The railing was built, and there were no more accidents.

But the people of the town shook their heads doubtfully and said that it seemed a great pity, after having gone to so much expense for a hospital and an ambulance and having advertised them so widely, to have no further use for them.

=Greatest Factors Are Not Bank Balances and Buildings=

What is of importance about a city? The most important thing is not its views, its parks and drives, its public buildings, nor its commercial leadership, but its people. And what makes a city? The greatest factor is not its bank clearings, its shipments of live stock, its factories, its stores, nor the extent of its public improvements, but the care it takes of and the safeguards with which it surrounds its people.

A city is not made of streets, but of those who walk on them; not of stores, but of those who trade in them; not of machinery, but of those who drive it; not of houses, but of those who live in them. A city is its people. It is exactly as good or bad, as strong or weak, as desirable or undesirable, as enduring or temporary, as are they. With them it will go forward or backward, be an object of admiration or contempt, stand or fall, live or die.

The most important question before a city is not what its population can be made by 1930, nor what advantages it can obtain from the next session of the state legislature, nor how much money the merchants can take in by organizing a bargain day or giving a street fair. The most important question is how well founded are the homes, how normal is the type of life, how idealistic are the labors of the people, and how safe are the children and youth wherever they may go about the town? How many are being helped? How few are being exploited?

When John Smith of Chicago or Abe Hopkins of Punkin Center considers moving to a town to reside, to accept a position, to go into business, or to put the children in school, the uppermost question in his mind is how good a place is it in which to maintain a home? How safe a place is it in which to rear children? In school, on the street, in their social contacts, will their best interests always be conserved?

Only one thing constitutes a satisfactory answer to these questions, and for it, there is no adequate substitute. It is high grade life lived by high grade human beings. Where that is present, it will reveal itself in every movement and institution. If it is absent, no boulevard mileage, or volume of business, or number of railroads can make up for the lack of it.

=Failure in Homes Breeds Necessity for Substitutes=

Cities often point with pride to the number and costliness of their substitutes for home life, but a far more prideworthy thing would be the prevalence of a home life so beautiful and adequate as to require no substitutes. The substitutes are all very well for those who are homeless or who are too crude and dull to appreciate the blessing of home, but they should not be needed by the mass of normal and average persons.

Practically all the institutions for social amelioration and correction are parts of a widespread and inadequate attempt to make up for the failure of the home. The family is unloading more and more of its responsibilities on the school, church, and community. Moreover, its unwillingness or inability to discharge its duty creates the necessity for and the expense of juvenile courts, reform schools, and crime waves.

Therefore, whenever one truly refers to a city as one of homes, he is making a statement of commanding importance. A real city of homes is one with a minimum of social problems because, as a rule, the highest grade of character and life is developed in the home atmosphere.

A city of homes is one whose people have some concern about the place occupied and the work done in the community both by themselves and their children. They are responsible citizens, and for such citizenship, there is no substitute. Such people constitute a railing at the top of the cliff.

All this may seem to be merely talk about ideals, and it is. Ideals are the most necessary and important things in the world, even for a city. Moreover, they have the highest cash value of anything with which we have to do.

=Lack of Idealism Is Expensive=

The lack of idealism is the most expensive thing the people of any city can have on their hands. The lower the level of idealism, the more bad bills are made at the stores, the greater number of thefts is committed with thievery’s double cost to the community, the greater is the amount of fraud, and the higher is the degree and, therefore, the cost of crime.

Speaking from the financial viewpoint alone, and taking no account of the other and greater values involved, anything that breaks down the idealism of a city costs it heavily in money. The business man who helps to inaugurate an evil with the thought that it will bring him profit will live to realize that, for every dollar of profit it brings him in trade, it will cost him a dollar in taxes and toward the suppression of crime and undesirable conditions. Such is the result of the coming of undesirable persons, practices, and situations to a community. The addition to the population, permanently or temporarily, of a rough and rude element with no ideals of conduct, no standards of sobriety, no regard for the sanctity of the Lord’s Day, and no respect for property rights has never profited a city yet. If you want thieves, hoodlums, and libertines, create a low standard of ideals in the community, and you will get them. Your jails, poorhouses, and insane asylums may serve in the place of a hospital and ambulance to take care of the casualties, but a high level of idealism would be a railing along the top of the cliff to save the people.

The history of the ages is the story of the progress of the human race from the Garden of Eden to the New Jerusalem, from the status of a perfect garden to that of a perfect city, from a simple but happy primal state to a complex but ideal social order.

The drift of life is to the city. The farm is giving its products, but it is also giving its sons and daughters to the town.

The drift of life is to the city. When the race has reached the climax of its progress, that condition will be a perfect city—a city of justice, righteousness, truth, faith, and brotherhood. It will have beautiful buildings, broad avenues, flowering parks, and prosperous institutions, but its real glory will be the quality of its people.

Destiny is waiting on the city to become all this. What dizzy distances it will have to travel. It will have to fling aside the acknowledged domination of Mammon. It will have to get spiritual ideals and human values back into the first place where they belong.

Each promoter of the interests of a city is advertising a precipice from which people may stumble to their doom, or pointing with pride to the beautiful hospital and ambulance provided by the magnanimous people to take care of the maimed and broken, or building railings along the tops of cliffs to keep people from falling and to make the place safe, even for the young, the weak, and the blind. Which one of these things are you doing for your town?

Capitalizing War for the Tobacco Trade (1919)

The effect of war in the battle zones themselves is hardly less definite than that which it exerts among the home populations of the nations involved. With no uncertain hand it writes its name across the commercial and social life of a country. There is hardly a phase of thought and activity which does not show marked reaction to war conditions.

For one thing, a war always offers a name and a flag under which profiteers and promoters undertake to sail. Some find their boats capsized early in the struggle. Others have a sufficient following to keep their business popular and are able to establish their enterprise in more or less permanent comfort. Vendors of wares both helpful and harmful take occasion to push the sale of their products in the name of patriotism. Riders of hobbies both innocent and perilous take excuse to encourage both their own habits and the weaknesses of their fellow citizens. This is always done in the name of patriotism, even though the effect may be altogether antipatriotic. A certain advantage can be taken at a time when everyone is afraid of being misjudged. Like the undertaker’s bill, such things are often brought forward at a time when everyone feels that he must swallow the dose and ask no questions.

During the recent conflict it became a widespread habit to advertise various products in the name of patriotism. We were told that the person who wanted to be patriotic must wear a certain brand of clothes, drink a prescribed blend of coffee, and shave with a given make of safety razor. If the Government gave an enterprise the slightest encouragement or patronage, it was featured to the limit. The tobacco companies were not long in taking advantage of the opportunity presented. During the war we were continually told that the soldiers in our splendid national army considered tobacco a necessity. Then not only the element possessing double-jointed moral convictions but also many who had stood for high ideals fell victims to the contagion. Even church workers took to sending to sons what their mothers had prayed might never enter their lives and what leading magazines have been refusing to advertise just as they have refused to advertise intoxicating liquors.

Naturally, the members of the national army who had considered tobacco a necessity at home also considered it so abroad. Just as naturally, those who had not used it at home would not have cared for it abroad. The demand was by no means of the one-hundred-percent variety. When I think of the number of men who never knew the taste of tobacco until it was forced upon them by some well-intentioned but misguided war agency, I cannot believe that the demand for it was universal. When I hear parents testify that their sons were untouched with the desire for tobacco until they were influenced to use it in the army, I cannot help feeling that much of the insistence upon it had its origin only in artificially induced public opinion.

The capitalizing of a war to the advantage of a trade depending for its profits on human weakness had an outstanding instance at the time of the Civil War. However wise a provision for the Federal finances the leaders of that day may have thought they were making, the fact is that the internal revenue on intoxicating liquors fastened the business on the country for many years. It so got its fingers upon our throat that we have not yet wholly shaken them loose. It has robbed us of far more money than it ever gave us. It has at the same time ruined what was worth much more to us than all our gold—the life and happiness of our people.

There are those among us who suspect that much of the late demand for tobacco did not come from the army at all but that it was conceived in the minds and fostered under the guiding care of representatives of the tobacco trade. So successful was this effort and so meekly did the country as a whole fall into line with the program that it now looks as if another taint is fastened upon us for at least the lifetime of the present generation.

Though it may be admitted that the evil is less serious than that of Civil War days, it is by no means to be considered negligible. The facts disclosed by the physical examination of millions of our men should have made us more careful instead of less so. The physical unfitness of much of our male population for service overseas had a number of reasons behind it. There is no doubt in many thoughtful minds, however, that among these reasons were the consumption of adulterated soft drinks and the widespread use of tobacco. Instead of discouraging these things in a time of national crisis, we encouraged them more than we ever did before.

No reasonable person is contending that the use of tobacco is a mortal sin. If no worse sins were committed, ours would indeed be a wonderful Nation. This, however, is no excuse for that which is a physical evil and, to some extent at least, a moral and religious evil. The real question is as to why we should encourage it at all. We do not get at the danger of any evil by comparing one evil with another. The question for a vigorous Nation in a trying time is not as to what is the harm in a thing but as to what is the good.

At least three undisputed facts must be recorded about the tobacco habit. We have allowed the war to make each of the three more outstanding than before. The first is that it is unclean. If it were true that neither physical nor moral questions were involved, some very important sanitary ones would still remain to be considered. It is not easy to see why anyone should insist upon making more stained teeth, repulsive breaths, malodorous bodies, and unclean mouths.

The second is that it is expensive. Our tobacco bill for a few years would pay the cost of the war. It would do a much better thing: It would provide agricultural reclamation, commercial development, and philanthropic beneficence on a world scale. The soldier cannot afford to pay this bill. Neither can the free-hearted public afford to assume that it is one of the necessities of war and pay it from benevolent funds. The 1917 tobacco crop of more than one billion pounds brought an average of twenty-five cents a pound. This was two-fifths more than the price during the preceding year and twice the price during the years between 1911 and 1915.

The third is that it is increasing. The 1917 tobacco crop was the largest in our history. Estimated at 1,196,451,000 pounds, it was an increase of 43,181,000 pounds over the crop of the preceding year. The output of cigars was 8,266,770,593, an increase of 876,587,423 over that of 1916. A total of 35,377,751 pounds of snuff were manufactured during 1917, an increase of two million pounds over 1916. Of smoking and chewing tobacco, 445,763,206 pounds were put upon the market, an increase of more than twenty-eight million pounds. Tax was paid on thirty billions of cigarettes, and nobody knows how many were rolled and smoked from prepared tobacco. The sale of cigarettes increased almost fifty per cent during 1917. This serves to show with what success our widespread pro-tobacco propaganda has met.

The internal revenue income on tobacco advanced fifteen million dollars during 1917. The total was $103,201,592.16. Thirty-eight million dollars of this was on cigarettes alone. Great as this income is, it cannot compensate for the lowered personal standards, the physical disintegration, and the unuttered regret that have resulted from it.

Creating a Demand (1919)

There are two ways of attacking the business problem. One is to take advantage of opportunities already brought into existence by the laws of chance or the work of others. The other is to make advantage by the creation of opportunities which would otherwise never have existed.

The first can be done by any person of average intelligence. It calls for no ingenuity. Its only demand is the time and effort necessary to buy goods on the one hand and sell them on the other. The second calls for a really high-grade of business ability. The man who can do it well has his success reasonably assured.

Business is ordinarily assumed to be subject to the law of supply and demand. It happens to be true, however, that the matter of supply and demand is more or less subject to conditions which can be either created or altered by human interference and guidance. The selfish and designing have long ago discovered means of so manipulating market conditions as to make supply and demand a negligible factor. Such, of course, is not the kind of business method which will be allowed to permanently survive.

There is a more worthy way of dealing with the question of supply and demand to the advantage of business. It often happens that, because of lack of public education or because of undeveloped or abnormal community conditions, demand for a given product has not yet been stimulated. The business specialist who has a really worthy article to market should be able to diagnose the situation, see what the hindering conditions are, and take steps toward that adjustment of things which will give rise to a normal demand. He need not be powerless in the face of the fact that people do not desire his product. Neither can he blame the public for rot needing it. He must make the public need it, make it see its need, and then supply it.

In all the history of American business, probably no better example of this sort of thing could be found than the action once taken by James J. Hill at one stage in the development of the Great Northern railway system through the Pacific Northwest. Mr. Hill, by the way, was a notable example of real commercial genius. Having a positive mind, he could plan, adapt, and build. The railway system which he developed stands as an enduring monument to his wonderful ability.

After the first lines of the Great Northern had been built and had been in operation for a while, Mr. Hill discovered that they were carrying very little livestock. There seemed no demand for that particular form of railway service. Looking into the question, he found a very definite reason for the fact. The farmers of the Northwest had never taken up stock-raising.

No one was to blame. The situation simply constituted a condition to be met. There was no reason why the farmers of the Northwest should not turn their attention to livestock. The country was good for grazing, and the range was almost limitless. The only difficulty was the fact that livestock had never been introduced into that section.

Mr. Hill began applying his remedy by doing the farmers a kindness. He bought several thousands of blooded cattle and hogs, and gave them to the farmers owning land along the right of way. There were two results. The first was that the Northwest rapidly developed into a leading stock-raising country, enriching the section and indirectly benefiting the railroad in many ways. The second was that within a few years the Great Northern was breaking the record among the railroads for the carrying of livestock. Finding no demand for the services of his road, Mr. Hill had created one.

This example serves to show up the true business man in his real character as a commercial engineer. His function is a larger one than the slavish routine of mere buying and selling. It is rather that of helping to build that larger and better commercial world in which all business will be at its best because all people are at their best.

Other engineers plan great mechanical projects. He plans and executes great commercial projects. The results of his work are no less magic than the results of theirs. The ability of the civil engineer is tested by his power to remove the impediments and bridge the chasms that lie in his way. The ability of the commercial engineer is tested in the same way. He must penetrate the hills of prejudice and bridge the chasms of unconcern.

There are some enterprises which may at times succeed by force of chance or circumstance. The only sustained and creditable success, however, must come from intelligent promotion. One has little ground for satisfaction over a mere random success. It is real achievement that brings enduring satisfaction.

It takes somewhat more than merely mental power, however, to plan and execute great commercial enterprises. The promoter must not only have a good mind, but it must also be of the affirmative type. Only the constructive thinker makes the great general, the great leader, or the great engineer.

There is as much of a place for originality in business as in any other field one could enter. It is sometimes avoided on the ground that it is prosaic and humdrum. It is not so for the person who senses its opportunity and enjoys the process of working out its larger possibilities. It offers a practically unlimited opportunity for the building of one’s powers into the fabric of an altogether necessary social institution.

Considered from this point of view, business is infinitely more than mere exploitation. Many have conceived the idea that it is nothing more because a great many selfish and misguided men have never really tried to make anything more of it. Fundamentally, however, business is a form of public service.

The market place was one of the earliest developments in our social scheme. Theoretically it is a means for the exchange of values to the mutual advantage of the parties to a transaction. The assumption of any person who enters a legitimate line of trade is that he has an article needed by the public. It follows that the degree of his public service is commensurate with the wideness of the sale of his product.

In taking steps, then, to create a legitimate demand for whatever he has to sell, one does not need to hesitate on the ground that it reduces his work to the level of mere exploitation. If he is in business as a public servant, then the larger the service he can render the better it is, both for him and for his patrons. The service of his patrons and his own success are commensurate because they are mutually dependent upon one another. Good business spells more than profit for the business man. It is also a help to the public, and a means of progress in the world.

There need be no fear, either, that most of the possibilities of business have been exhausted. The real world of commercial opportunity has hardly more than been entered. Our own country is still largely undeveloped in the use of many helpful products. There are backward communities to be informed and cultivated. Whoever undertakes this process is a positive factor in the making of civilization, for the need of these communities is the greater need concerned. It would be a blessing to them to have a demand for the tools of more efficient life and work created among them.

Then there are all the vast spaces of the world as yet largely untouched by these more advanced methods of civilization. There are more people waiting to be taught the use of means to comfort and efficiency than there are to manufacture and deliver the products to these prospective purchasers. Business men should support every sort of civilizing influence as a means of creating a demand in far countries for what they have to sell.

Should Prices Be Standardized? (1919)

Thus far in the economic history of America the scale of prices has been as temporary and uncertain as the indications of the mercury in a thermometer. Prices have gone up and down for all kinds of reasons, and indeed they have often seemed to do so without any apparent reason. An increasing number of people feel that this is not as it should be. It is not easy to formulate an unfailing remedy, of course. Neither is it possible to say whether price fixing would prove a success or a failure. It does look reasonably sure, however, that prices should be stabilized in some just and proper manner.

There are always those who are ready to tell us that it is not necessary to attempt to do anything about the price situation. They say that the scale of prices will automatically take care of itself according to the operation of the law of supply and demand. This sort of a situation might do very well if only it existed in some other world than that of fancy. There probably was a time in the earlier periods of the history of the market place when the law of supply and demand governed all prices. That time, however, seems to have passed.

Tradesmen have learned methods by which they can so successfully juggle the situation as to supply and demand as to entirely reverse the action of the time-honored law so often invoked in defense of the profiteer. The cold storage method of preserving eggs, for instance, has been used to make them cost most during that season of the year when they are most plentiful, and to be cheapest during that portion of the year when the greatest number of hens are on a vacation.

As a matter of fact, the law of supply and demand is not the rightful governor of prices. It does not take into account the one thing which should be the deciding factor in the cost of an article, namely the cost of production. It requires as much labor and as great an investment to produce a bushel of cheap wheat as it does to produce the same amount of wheat at a good figure. The cost of a bushel of wheat should always be the cost of production plus a fair rate of profit to the producer. The producer would then be sure of his profit, and the consumer would know how to estimate his expense.

A fluctuating price scale does not make for certainty in financial transactions and stability in commercial organization. Except in the most general way, no one is able to say today what things will cost or bring tomorrow. In considerable part, this condition has been brought about by the deals of speculators who make their living by the rise and fall of the markets and often by forcing prices up and down by arbitrary methods.

In other words, an uncertain system of prices not only makes it possible for a group of men to gamble upon them, but it does much to reduce all dealing to a process of gambling. Even if all other conditions are favorable. The producer does not know whether he is to gain or lose. Neither does the consumer know whether he is to be able to obtain things at a fair price.

Such a condition is unsatisfactory to both. For each advantage or disadvantage are alike possible, and they usually alternate. The advantage of one, moreover, must generally be brought about by the disadvantage of the other. Such is not a necessary state of affairs. One does not need to lose either in his buying or selling. Neither should his gain be abnormal. The establishment of prices upon a fair and permanent basis could make it possible for a transaction to be always to the mutual advantage of the seller and the purchaser. In other words, it would lift the markets above the gambling level.

There is another way in which an uncertain system of prices works a great injustice in the economic system. They offer no real incentive to industry, ability, and preparation. We have done and heard a great deal of preaching to the point that these things pay because the man who prepares best and works hardest will be best rewarded.

As things are now, the worst trouble with this claim is its falseness. A man may work ever so hard in almost any process of production and have his reward shrunken out of all proportion to his toil by some sudden slump in prices for which he was in no way responsible. On the other hand, he may neglect ever so important a task and at the last moment be favored with a rise in prices which will turn things to his profit.

On the one hand, he always stands a chance of failing to receive what rightfully should be his, a situation which does not represent good business. On the other hand, he also stands a chance of receiving what he does not earn, a situation which does not represent good business either. It should be possible by means of having a stable price scale to make it practically sure that every person concerned in the process of production would receive his due. Naturally the highest reward would come to the man of greatest earning power. The result would be the placing of a premium upon industry and efficiency. Until we do so we shall have no oversupply of either.

Uncertainty of prices has one serious social tendency. It produces a certain spirit of unrest on the part of the consumer. It may be true that the average person overdraws some of his conclusions on this question. It may be, too, that he bases some of them upon insufficient reasons. At the same time, however, his attitude is a fact which must be met and reckoned with.

What the consumer thinks is no inconsiderable matter. He is not a small minority without power or influence. He is a vast majority, swaying the very life of the State as he will, for in one way or another we are all consumers. Moreover, the consumer has the last word in every argument. He holds the purse-strings, and when he is tired of talking, he can stop buying. It does not bode well when he conceives the feeling that undue difficulty attaches to trying to exist on the planet.

He is not unreasonable. On the contrary, he is quite reasonable. He wants the other party, as well as himself, to have all that is his due. He has no objections to meeting the real cost of an article. He has some notions, however, as to what that cost should be. If prices go up, he expects them to have some proper reason for doing so. He works for his living, and he expects others to do the same. When he cannot count on what a day may bring forth, he cannot plan his financial future, for he has no idea one season what it is going to cost him to live the next. He has a feeling that it is time to get prices adjusted as they should be in fairness to all concerned, and then keep them so.

One of the worst difficulties with our fluctuating system of prices is the fact that it does not make adequate provision for the economic life of the country. Our commercial system has the same function in the service of society that the blood has in maintaining the life of the body. Its work is to carry supplies promptly, effectively, and regularly to all the points where they are needed.

The body is not in good health when the blood overfeeds it part of the time and starves it the rest of the time. It is not proper, either, to have congestion at one point and anaemia at another. The function of circulation must go on with uninterrupted constancy.

The world needs a practically fixed amount of food, clothing, and supplies for the maintenance of its life and activity. It has also a practically fixed amount of wealth to keep them moving. Unsteady prices are always changing the value of a dollar and making the necessities of life easier or harder to get. The world cannot, therefore, supply its wants with the same ease and in the same abundance at any two successive times. The value of supplies and the value of money should both be constant. The world could then meet its needs at every point. No worker would lose his reward; commodities would be certain to yield their worth; and no one would be any the poorer for the change.

The Home Budget (1920)

After he had gained the pinnacle of his success, some one asked Andrew Carnegie to formulate the secret of wealth. His reply was as significant as it was laconic. He said: “Pay as you go, and keep books.”

Each part of this formula is important. They are very closely related, but the second is the more fundamental. However important it is to pay as one goes, his chances for doing so are rendered very uncertain if he fails to keep books.

There are different ways, however, of keeping books. Some keep books only as a means of knowing where they stand with their finances and current bills. This is good as far as it goes, but it is possible to make the process of keeping books yield a much greater service.

Others realize this, and keep books as a means of keeping in the right relation to their financial affairs. They make their bookkeeping system represent their plan of operation. It then serves to keep them from getting too near the edge of any financial precipice. If one is to get on, one of the first principles he must learn is the necessity of keeping within his income—and a little more. Books can be kept in such a way as to enable one to do it. This is keeping books according to the budget plan.

Some one is always certain to say that bookkeeping systems and budget plans are very well for people who have adequate incomes. It is said that the rich have something to keep books on, but that it is of little use for those who tread the ragged edges of want to undertake anything of the kind.

This assumption is a grand mistake. Whatever benefits the budget system has are certainly common to all who care to adopt it. It is even more greatly needed by the home with an income below the normal level than by that with an income above the line of necessity. This is because its purpose is to enable one to make the most of the amount of money at command, whatever that sum may be. This service is not needed so much by those who have an abundance. It is calculated to help most those who must watch their corners and husband their resources. The budget system is a desirable plan in the home of wealth; it is a helpful thing in the home of moderate circumstances; but it is a necessity in the home where takes place an occasional battle with want.

The budget plan is a sort of blue print of what one proposes to do with the funds at his command. The builder can do his work properly only with suitable plans before him. The difference between the structure erected with a plan and that erected without one is great. The difference between the results of an income administered according to system and those of one spent at random is one of just about the same degree. To attempt any work without a well-formulated plan of procedure means several regrettable things. It means a waste of materials; it means poor co-ordination of effort; it means a haphazard and unsatisfactory result.

The budget plan is based on a system of appropriations. Such is the plan used by all successful business interests. The business is first analyzed and divided into departments. Then the amount of money needed for the work of each department is estimated. This amount, or as nearly this amount as the sum of money at command will permit, is then appropriated to the work of that department. It is left to keep its accounts up to the total placed at its disposal. It is, of course, held responsible for the use it makes of the funds given it. If at the end of the year it is found that the distribution was not equitable, the proportion can be changed.

The same plan can be adapted to home use, and it will do just as much for the guidance and welfare of the family treasury as for that of some great business corporation. The work may be done after about the same fashion. The needs of the family should be analyzed and divided into departments. The resources at command may then be estimated and apportioned to the various departments of expenditure in the same way. Expenses are then to be kept within the appropriation, and, if the division is found unfair to any interest, it can be changed.

If this is properly done, the benefits derived will be very great. If income is always consulted before outgo is determined, the effect of the system on the family resources will be found to be little less than magical. The funds in each department will so accumulate as to keep a surprising balance on hand all the time.

The reason for this certain growth in reserve funds is plain. One will not purchase a thing in a given department of expense until enough money has accumulated in that particular department to pay for it. Suppose, for instance, that one would like to buy a suit of clothes or an article of furniture. Ordinarily, he would get them if he could command the money to do so from the total at his disposal. Therefore, he would stand a chance of paying for it with money which really should have gone to something else. Moreover, the habit of buying anything he wants and can pay for keeps his funds down to the low water mark all the time.

When finances are cared for on the budget plan, the case is very different. Before one purchases a suit of clothes, an article of furniture, or anything else, he first looks at the page on which the finances of the department in question are recorded. If the money is on hand, he proceeds with the purchase. If the funds are insufficient, he waits until they have increased to a point where the purchase is possible.

This plan accomplishes two things. It keeps personal or family expenditures within the income from which they must be made. It also avoids the mistake of spending for one thing the funds which rightfully belong to something else. These, by the way, are two of the fundamental principles involved in the matter of getting from a dollar its full worth.

If the family income is fixed and regular, it can be divided arbitrarily among the different classes of things for which it is to be spent. So much may be appropriated to one class of things and so much to another. In this case the division is easy and simple.

However, in many homes the income is not regular as to either time or amount. In this case it can best be appropriated on a percentage basis. A certain percentage is set aside for each division of family expense. It is then credited to the account of the departments involved.

In making this division, a number of things have to be taken into account. Among them are the size of the income, the needs and tastes of the family, and the financial condition of the family when the plan is adopted. One home I know works on the following basis: Religion 10%, Indebtedness 10%, Savings 10%, Clothing 20%, Groceries and household supplies 30%, Home furnishings 10%, Miscellaneous Expenses 10%. Each home can choose its own plan. It can also change its plan at will.

It is well to get a loose-leaf book of suitable size and to have a page devoted to each division of expenses. The money is kept in one sum in the bank, but all receipts are credited and all expenditures charged under the proper headings. Then the bottom figure on each page represents the amount available for the particular department of expense represented there.

This plan simply provides for system in spending. It serves to balance expenditures. It also does the best that can be done to provide a reserve for every need. It helps the well-to-do to greater independence. It enables the poor to keep from growing poorer, and often enables them to reach comfortable circumstances. It does not make of a dollar more than a hundred cents. That is impossible. However, it does enable the owner of a dollar to get the full value of a hundred cents from it. It is a good way in which to “pay as you go, and keep books.”

Efficient Spending (1921)

In the common struggle to get on, many of us devote our attention too exclusively to the matter of earning money. We assume that the question of wealth is wholly one of income and that having is altogether a matter of getting. Such is not the case. Efficient spending is quite as important a consideration as is efficient earning. The question as to whether one can succeed depends not only on whether he can get and keep money. It also depends on whether he can accomplish the most with it after he gets it. The usefulness of money is a matter of getting a hundred cents of value from each dollar. Between the hoarding of money, on the one hand, and the reckless habits of the spendthrift, on the other, lies this golden mean. Three general principles relate to efficient spending.

The first is the importance of buying only what one really needs. A great many people are kept poor because they buy what they do not need enough to warrant its purchase. Non-essential industries are permitted to sap the labor and support which rightfully belong to more important things because of this popular willingness to spend good money for that which can bring no real equivalent in value.

Many needs are imagined, or assumed. They have their origin, not in any fact of necessity, but in the fever of a mind wrought up by envy or desire, until its possessor has joined in the general chase after that which is not bread. The chronic invalid of yesterday got a new disease each time she read over the list of symptoms in a patent medicine pamphlet. The spendthrift of today thinks of some new luxury to covet with each glance at a tastefully-decorated window, or an artfully drawn picture.

We must learn to let reason and not desire rule in these matters. Reason is sometimes a little forbidding, it is true, but we frequently need the touch of a restraining hand in the matter of spending. Unchecked desire would soon make paupers of us all.

The standard of living rises or falls according as desire is, or is not, stimulated. If it were gauged to necessity, there would be little variation. Necessity is a well-established thing and, therefore, practically constant. The scale of expenditure varies with the human desire for luxury and the human ability to obtain it.

The measure of real necessity is surprisingly small. When one finds the medium ground between profligacy and stinginess, he will realize that he can live there, even though his income may be moderate. Greater moderation in many things would leave us a healthier and happier race, to say nothing of what it would do for our bank accounts. Certainly, before buying a thing, one should honestly ask himself whether he needs it. He should, likewise, give himself an honest answer.

The second principle of efficient spending is that when one has honestly decided that he needs a thing, he should buy the best he can get. If one buys at all, it pays to search the market for an article of high quality. Moreover, he is very apt not to find an article of high grade unless he does search the market rather carefully.

The purchase of a cheap grade of goods, for any serious use, is very poor economy. Such goods soon give way, and the service they render, while they do last, is not satisfactory. To obtain a given amount of service, one will spend more money on articles of cheap grade than upon those that are better. The obtaining of the same amount of pleasure and satisfaction from the use of a cheap thing and a good one is an impossibility.

It is a fallacy to suppose that the market must be supplied with quantities of shoddy goods for the sake of people who have less money to spend. The very fact that one does have less money to spend is one of the chief reasons why he cannot afford to waste it on inferior things. If all except a really worthy and dependable grade of goods were removed from the market today, purchasers, both rich and poor, would be the gainers.

The selection of a high grade of products calls for some ability and skill in making a choice. It calls for no more, however, than every person should possess. The average citizen should train himself to be something of a judge of materials. Such ability will be of real service almost constantly in the task of living. One of the first things he is apt to learn is the fact that the showiest articles are seldom the best. A certain camouflage of outward appearance is often put on a thing to hide its real defects. Quality does not have to be painted up to show it off. It proclaims itself. The purchaser must learn to see through the outward appearance and judge a thing on its merits.

The third principle of efficient spending follows in logical order. It is that, having decided to buy a thing and having bought the best, one should use it until he has gotten from it the utmost service of which it is capable.

A certain antiquated notion of economy was that when things were purchased they should be put away and saved. The more valuable an article was, the more scrupulously it was kept. Good clothes were bought and hung away to be eaten by the moths instead of rendering their owners the service for which they were intended. Valuable articles were always rusting out and rotting out in the name of economy.

The fact is that disuse is bad for anything. Unused, a piece of machinery will soon become incapable of use. The worst thing that can be done with a piece of cloth is to fold it away and leave it alone. Service is the mission and the means to health of anything from a table fork to the biceps muscle. This is the thing an article is built for. Nothing save its possibilities for usefulness justifies the spending of money for it. If it were not to be used, good judgment would never sanction the purchase of it. It must be made to pay interest on the investment. Use alone proves its right to exist.

A thing should be used as long as there is any usefulness left in it. One of the points at which we are forever losing out in our attempts at economy is in our habit of not waiting until we have exhausted the usefulness of a thing before we put it aside and buy another.

This is the theory of the continual change taking place in styles. From the tip of a lady’s shoe to the shape of an automobile, things are kept continually changing in order to induce the public to buy new articles every so often, whether it needs them or not. This keeps trade going, but it keeps many people poor.