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 ENGINEERING LIBRARY 
 
1- A ^ »» -SS™*" University Libraiv 
 TA 190.B97 
 
 The commercial management of engineering 
 
 3 1924 004 021 154 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924004021154 
 
THE 
 
 Commercial Management 
 
 OF 
 
 Engineering Works. 
 
 FRANCIS G. BURTON, 
 
 Formerly Secretary and General Manager of the Milford Haven 
 Shipbuilding and Engineering Co.^ Ltd., 
 
 Author of " Engineering Estimates and Cost 
 Accounts," etc., etc. 
 
 PRICE 12/6 NET. 
 
 THE SCIENTIFIC PUBLISHING CO., 
 MANCHESTER. 
 
 1899. 
 
 AI,!, RIGHTS R^SERVno. 
 
PBBFACB. 
 
 A FLOOD of pessimism has been sweeping over this country 
 for the last few years, and book and magazine and news- 
 paper have been teaching that our trade is departing to 
 other and more progressive countries. The statistics of 
 "Made in Germany" have been accepted without the 
 enquiry, which Mr. Herbert Spencer says is always so 
 essential, into the facts which lie behind the statistics. 
 And this pessimism has been taken advantage of by some, 
 who are not perhaps altogether disinterested witnesses, to 
 press upon public attention their own pet theories, or the 
 measures which they imagine can alone remedy the present 
 situation. 
 
 That this is no exaggeration will be conceded by any 
 one who has read the evidence given before Lord Davey's 
 Committee and the Lords' Committees on the Limited 
 Liability Acts ; who has perused the reports of the 
 Inspector-General in Bankruptcy ; or who has looked 
 through the files of the Accountant. In all these pages 
 much will be found that is suggestive and valuable ; but it 
 is combined with many fantasies of doctrinaires. 
 
 It appeared to me that, notwithstanding the treatises of 
 various kinds which have appeared on subjects connected 
 Avith commercial management, there was room for one 
 which would suggest to the youthful engineer the diffi- 
 culties he would encounter whenever commercig,! duties 
 were thrust upon him, and offer suggestions which might 
 assist him, without dogmatically laying down any absolute 
 rules which must be adhered to under all circumstances. 
 Indeed, the great danger at the present time— and it is a 
 danger arising out of the pessimism to whiclj I have 
 
iv. PREFACE. 
 
 referred — seems to be reliance on rigid system, and 
 unthinking conformity to statutory or professional forms 
 of accounts. The best method of financial bookkeeping, 
 one that admits of perfect balancing, should always be 
 adopted ; but this does not debar such variations as will fit 
 it for the business to which it relates, or the special 
 requirements of the proprietor or manager. There is no 
 insuperable difficulty in making these variations if the staff 
 be properly trained. The great difference between the 
 professional accountant and his clerks, and ordinary 
 commercial bookkeepers is that the former are trained to 
 think, whereas the latter are taught, and often onlj- 
 permitted, to slavishly follow example. Yet alike in 
 methods of bookkeeping, in formation of cost accounts, in 
 details of office arrangements, in management of men, and 
 in distribution of profits, there must be such variations as 
 will fit those methods to the peculiar circumstances of the 
 individual firm. There must, on the one hand, be no want 
 of system, no imperfect recording of accounts or statistics ; 
 and on the other there must be no sacrifice of the substance 
 to the shadow : no abandonment of necessary particulars to 
 the fanciful exigency of interlocking them with a balance- 
 sheet. In the following pages I have honestly and to the 
 best of my ability endeavoured to hit this happj^ mean, 
 and allow sufficient elasticity for most establishments of 
 moderate size, and for ordinary engineering undertakings. 
 I have sought to indicate the manner in which the clerical 
 staff may be made to render valuable services to their 
 employers, without encroaching upon the work of the 
 technical officers, or assuming duties and authoritj^ for 
 which they are not qualified, either by education or 
 training. The book is for the youthful engineer, the 
 student and junior foreman ; the general manager who 
 has fought his way to the topmost rung of the ladder will 
 have already formed his own system and stereotyped his 
 own ideas : his very personal success will be his warranty 
 for them. 
 
PREFACE, V. 
 
 I take this opportunity of acknowledging my indebted- 
 ness to two members of the Institute of Chartered 
 Accountants, Mr. Alfred Shuttleworth and Mr. John 
 Wilson, both of Manchester, for the many suggestions 
 they have made to me during the progress of the work, 
 for perusal of some of the more difficult accountancy 
 problems, and, above all, for the kindly encouragement 
 they have extended to me at times when I was labouring 
 under personal difficulties and depression. Had it not 
 been for their sympathetic countenance this handbook, 
 whether it be good or whether it be ill, would probably 
 never have been completed. 
 
 Francis G. Burton. 
 
 Manchbstbe, 
 
 10<7i December. 1898. 
 
CONTENTS 
 
 PAGE 
 
 Chapter T.— The Directors and Secretary . i 
 
 Introductory — Commercial Management — Directors' 
 Duties and Responsibilities— Signing of Documents — Seal 
 of the Company — Rules for Meetings — Officers' Attendance 
 — Appointment of Officers — Secretary and his Duties — 
 Books and Forms, &c. 
 
 Chapter II. — The Auditor 16 
 
 Qualifications — Preparation of Balance Sheet — Examination 
 of Books and Accounts — Not Qualified for Management — 
 Summary of Duties — Monthly Audits. 
 
 Chapter III. — The General Manager 20 
 
 Duties and Qualities of the Manager— Capacity for 
 Justice — Discipline — Routine Duties — Selection of Staff — 
 Qualifications as Engineer — Interviews. 
 
 Chapter IV. — The Draughtsman and Subordinate 
 Officials — Requisitions for Materials ... 26 
 
 Subordinate Officials — Drawing Office — Scientific Investi- 
 gations — Purchases and Sales — Drawing Office Requisi- 
 tions — Storekeeper's Requisitions — Passing of Stores 
 Requisitions. 
 
 Chapter V. — Purchases and Inspection of 
 Materials 32 
 
 Forms of Order — Placing of Order — With Favoured Firm — 
 The Cheapest Market — Record of Catalogues and Ten- 
 ders — The Card System — Illicit Commissions — Date of 
 Delivery — Penalty Clause — Inspection of Materials in 
 Progress. 
 
VIU. CONTENTS. 
 
 PAGE 
 
 Chapter VI. — Receipt of Materials and Passing 
 OF Invoices, &c 39 
 
 Keceipt of Materials at Works— Receipt by Storekeeper— 
 The Storekeeper — Delivery Notes — Test of Materials — 
 Invoices — Examination in OfiBce — Passing for Pay- 
 ment — Correction of Invoices — Returns and Rejections — 
 Debit and Credit Notes — Packages and Discounts- 
 Invoice Book — Posting of Invoices — Stores Ledger — 
 Invoices not Rendered — Payment of Accounts — The 
 Accountant— The Cashier— Monthly List of Creditors- 
 Sanction by Directors and Drawing of Cheques — Form of 
 Cheque — Vouchers— Petty Cash. 
 
 Chapter VII. — Cost Accounts — ^Recapitulation of 
 Arrangements for Purchases 67 
 
 Cost Accounts — Nature — Division — Invoice Debits to Cost 
 Accounts— Freight and Cartage — Temporary and Branch 
 Establishments — Recapitulation. 
 
 Chapter YIII. — Sales Department 79 
 
 Sales Department — Advertising — Catalogues — Travellers 
 — Collection of Accounts by Travellers— Daily Reports — 
 Personal Solicitation — Reputation of the Firm — Division 
 of Sales. 
 
 Chapter IX. — The Correspondent and his Duties. 87 
 
 The Correspondent — His Authority — Registration of 
 Letters — Distribution of Letters — Departmental Letters — 
 Telegrams — The Typewriter — Lady Clerks — Register of 
 Addresses — Printed Memorandums — Postal and Telegram 
 Register — Filing Letters — Quotations by Standard Prices. 
 
 Chapter X. — The Preparation of Estimates. . . 98 
 
 Nomenclature of Machine Details — Estimate Clerk — Cata- 
 logue Estimates — Average Cost of Materials — Weight of 
 Materials— Establishment Charges — Profits on Standard 
 Machines — Estimates in General — Data for Estimates — 
 Order of Estimate — Labour and Materials — Quantities of 
 Materials — Approximations from former Constructions — 
 Boiler Specification. 
 
CONTENTS. IX. 
 
 Chapter XL — Peepaeation of Estimates {con- ^^'^^ 
 tinned) — Tendees sent out — Orders Received. 113 
 
 Price of Materials — Unstable Equilibrium — Estimation of 
 Labour — By Technical Experts — Cost Accounts — Fore- 
 men's Records — Steamship Estimate — Establishment 
 Charges — Profit — Estimates sent to Customers — Tender 
 Copybook — Pursuing Tenders — Tender Index-book — Esti- 
 mates and Commercial Records — Orders Received and 
 Register — Recapitulation. 
 
 Chapter XII. — Drawing Office Oedees Foe 
 Work — Stock Oedees 132 
 
 Drawing Office Orders for Work— Stock Orders — Drawing 
 Office Order Book — Shop Orders and Lists — Form — Name 
 Plates — Shop Drawings — Parts to be Supplied — Patterns 
 Required — Supplementary Shop Orders — Drawing Register 
 — Drawing Numbers — Pattern Numbers — Form of Register. 
 
 Chapter XIII. — Alternative Plan of Register — 
 Alteration of Drawings and Patterns — 
 Filing Drawings 148 
 
 Alternative Plan of Register — Shop Drawing Numbers — 
 Pattern Numbers — Weights — Index to Register— Special 
 Contract Drawings — Alteration of Drawings — Alteration 
 of Special Contract Drawings — Alteration of Standard 
 Drawings — Alterations of Patterns — Drawings for 
 Works — Preparations of Shop Drawings — Separate Draw- 
 ings — Examination — Return of Tracings and Prints — 
 Temporary Sketches — Tracings sent Away — Shop Draw- 
 ings Diary.— Filing Drawings — Sketch Books, &c. 
 
 Chapter XIV. — The Works Manager and His 
 Duties — Dealings with Workpeople . . . 163 
 
 The Works Manager — Relations with Drawing Office- 
 Workmen and Factory Rules— Works Manager's Order 
 Book— Clerk— Conferences — Shop Appointments— Work- 
 men's Characters — Attainment of Character — Incentives to 
 Productive Energy — Profit Sharing — American Methods — 
 Fixed Piecework Rates— Analytical Piecework Rates — 
 Differential Piecework Bates— Effects of Automatic 
 Grading of Men— Quick Returns Essential— Piecework 
 Prices not Cost Accounts — Contract System. 
 
X. CONTENTS. 
 
 PAGE 
 
 Chapter XV. — Wages Accounts — Issue of Mate- 
 rials — Stores Books and Returns 180 
 
 Timekeeping — Time o£ Staff and Foremen — Admission of 
 Workpeople — Time Ciiecks — Check Boxes — Rough Time 
 Book — Time Tickets — Wages Book — Abstract of Wages — 
 Checking of Wages Book — Piecework — Checking Rates — 
 Checking Time — Payment o£ Wages — Disputes as to 
 Wages — Payment of Absentees — Unpaid Wages — Issue of 
 Materials — Removal of Materials from Stores — Determina- 
 tion of Relative Transport Costs — Collection of Materials — 
 Stores Issue Book — Posting of Stores Issued — Return of 
 Stores Issued for Accountant — Posting of Stores Issues in 
 Financial Ledger.- 
 
 Chapter XVI. — Cost Accounts — Depreciation. 
 Interest — Establishment Charges . 208 
 
 Necessity of Detailed Cost Accounts — Cost Sheet A — 
 Management Expenses, Form A — Debits to Account — 
 Credits to Account — Direct Charges for Special Purposes — 
 Cartage, Coal, and other Establishment Charges — Depre- 
 piationr-Cepreciation by Individual Machines — Interest — 
 Later Departmental Sheets — Sheet A — Transfers from 
 Departments — Estimated Charges — Credit Transfers to 
 Sheets — Materials and Expenses — Salaries and Wages. 
 
 Chapter XVIL— Cost Accounts (continued) . . 230 
 
 Sheet B, Form of — Scrap Material — Balance of B Sheets — 
 
 C or Contract Summary Sheet — Arrangement of Debits 
 
 Credits — Closing of C Accounts — Quantities in C 
 Account — Trade Debits and Credits— Transfers to Plant 
 Sheets — Recapitulation. 
 
 Chapter XVIII. — Monthly Profit and Loss 
 Account — Claims — Loose Tools 245 
 
 Monthly Profit and Loss Account— Works Instruction 
 Book— Shop to Shop Orders— Claims Against Railway 
 Companies, &c — Form of Claims Book— Loose Tools— 
 Electrically-driven Tools— Schedule of Loose Tools— Goods 
 en Bloc. 
 
CONTENTS. XI. 
 
 Chapter XIX. — Goods Manufactured for Stores ''*"'' 
 AND Warehouse — Travellers' and Special 
 Expenses 257 
 
 Goods Manufactured for Stores — Form of Order — Alterna- 
 tive Form of Order — Goods Manufactured for Warehouse 
 — Requisitions from Warehouse —Orders for Warehouse 
 Goods — Stocks in Stores and Warehouse — Warehouse 
 Book — Charges to Warehouse —Warehouse Accounts — 
 Travellers and Catalogues— Charges in Advance of Orders 
 — Charges in Advance on Foreign or Public Contracts. 
 
 Chapter XX. — Sales in Commercial Books — 
 Reports to Board — Diagrams 272 
 
 Instructions to Warehouseman — Delivery Book — Marking 
 Packages — Advice of Deliveries by Warehouseman — In- 
 voices to Customers— Copies of Invoicas — Day Book — 
 Monthly Statements— Monthly Reports to Board — Diagram 
 Accounts — Diagram of Cost Accounts — Technical 
 Diagrams — Custody of Diagrams. 
 
 Chapter XXI. — Stocktaking — Branch Houses — 
 Customs and Shipping Regulations — Reserve 
 Funds. . . 286 
 
 stocktaking — Brandh Houses — Foreign Houses — 
 Foreign Cost Accounts — Customs Regulations— Shipping 
 Regulations — Reserve Funds — Investment of Reserve 
 Funds — Recapitulation — Conclusion. 
 
Chapter I. 
 
 THE DIRECTOES AND SECRETARY. 
 
 Introductory. — So many treatises have been issued of 
 late years, by all sorts and conditions of men, instructing 
 manufacturers and merchants on the best and most 
 economical conduct of their business, that an additional 
 homily may appear superfluous. The story of the old 
 man and his ass is the fabulists' warning against the hasty 
 adoption of every passing device recommended by the 
 latest empiric ; but another eminently wise man assures us 
 that " in the multitude of counsellors there is safety." 
 There is no real antagonism between the fable and the 
 proverb, though there may appear to be some at first sight. 
 The old man lost his ass, not because of the volume of 
 advice poured upon him, but because he did not use his 
 brains to sift it, and consistently to follow that which he 
 found good. We therefore venture to enter on our self- 
 appointed r61e of commercial experts without any mis- 
 givings as to our ability to render valuable services in that 
 character, but with the distinct warning to our readers 
 that if they fail to profit thereby the fault will be theirs!, 
 not ours ; they must themselves sift the chaff from the 
 wheat; they must form their own judgments as to which 
 of our suggestions are useful, and which superfluous, 
 unpractical, or prejudicial. 
 
 Commercial Management. — ^The term " Commercial 
 Management " is a very comprehensive one, and includes 
 a great deal more than making office arrangements, com- 
 piling catalogues, purchasing stores,' and selling products. 
 It cannot be understood without taking cognizance of tact 
 and temper, of character and dispositions of workpeople, 
 of situation of works, of facilities of transit and possibility 
 of extending railway and canal connections, as well as 
 filing of letters and making out invoices. It has its content 
 in a profitable workshop, and therefore includes every- 
 thing which affects the profit and loss account, whether it 
 
2 THE DIRECTORS AND SECRETARY. 
 
 be initially of a technical or commercial character. It is 
 supreme over technic, in so far as the employment thereof 
 is concerned ; no science, no ability, can be justified in a 
 workshop where ruin would follow on its use; it is sub- 
 ordinate to technic, because no commei'cial management 
 can in these days be successful which is purely empiric in 
 character, and neglectful of scientific deduction and know- 
 ledge. The problem presented is a very wide one, and 
 requires in its solver broad and extensive observation of 
 men as well as books, as well as the possession of personal 
 qualifications which may be indicated but cannot be 
 imparted. 
 
 Value of System. — System there must be, and proper 
 subordination of persons and authority; but, while it is 
 possible to indicate a system, and suggest the gradations 
 of officials, it must always be remembered that no cast-iron 
 regulations should be pedantically adhered to without care- 
 ful consideration of their suitability to the particular case in 
 point. If disorder is Charybdis, rigidity is equally Scylla. 
 The true course is the middle one- — the equal steerage 
 which avoids both rocks. If the Bankruptcy Court too 
 frequently records failures accelerated, if not induced, by 
 indifferent bookkeeping, the Admiralty, Ordnance, and 
 other Government departments exhibit the dangers of an 
 apotheosis of clerkism, and the baneful results arising from 
 the paramount influence of an office establishment. After 
 all it is a new form of the old, old problem of the workman 
 and his tools. It is the man behind the gun, quite as often 
 as the character of the gun, which decides the battle. 
 
 Directors' Duties and Responsibilities. — Most of the 
 
 large, and many of the small, engineering undertakings of 
 the country are now incorporated as limited liability 
 companies ; those which are not now so incorporated must 
 become so under the stress of modern legislation. It is, 
 therefore, convenient to regard the management from a 
 company point of view, merely premising that the same 
 system of management will apply to a private concern, the 
 proprietors being in such case substituted for the directors, 
 and exercising the authority and powers usually under- 
 taken by the latter. It is hardly necessary to inquire 
 into the distinction between private and public companies: 
 a very able parliamentary committee has been unable to 
 define it, and the law at present affords little more latitude 
 to the directors of the one kind than to those of the other. 
 
--. THE DIKECT0R8 AND SECRETARY. 3 
 
 Both ars regarded as agents for the company — indeed, by a 
 kind of legal metaphor, as trustees — and they are subject, 
 therefore, to many of the obligations of an agent to his 
 principal. In the case of Parker v. McKenna (10 Ch. 96) 
 the directors were compelled to refund profits made by 
 them on certain dealings -with a new issue of shares of the 
 bank. Lord Justice Cairns, in delivering judgment, said: 
 " Now the rule, as I understand it, as to agents is not a tech- 
 nical or arbitrary rule. It is a rule founded on the highest 
 and truest principles of morality. No man can, in this 
 court, acting as an agent, be allowed to put himself into a 
 position in which his interest and his duty will be in 
 conflict." Lord Justice James, in concurring, said: "I do 
 not think it is necessary, but it appears to me very impor- 
 tant, that we should concur in laying down again and again 
 the general principle that in this court no agent, in the 
 course of his agencj^ in the matter of his agency, can be 
 allowed to make any profit without the knowledge and 
 consent of his principal; that this rule is an inflexible 
 rule, and must be applied inexorably by this court, which 
 is not entitled, in my judgment, to receive evidence, or 
 suggestion, or argument, as to whether the principal did 
 or did not suffer any injury in fact by reason of the dealing 
 of the agent ; for the safety of mankind requires that no 
 agent shall be able to put his principal to the danger of 
 such an inquiry as that." 
 
 Particular Agents. — But the directors of a company 
 are not only agents, they are also particular agents ; that 
 is, they can only exercise the powers delegated to them, 
 and in the manner prescribed by law, and can only 
 exercise such powers as are within the scope of the 
 company's business and sanctioned by its memorandum 
 of association. Lord Cairns, in one of his judgments 
 (Ashbury, &c., Co. v. Riche, L.R. 7, H.L. 653), remarked: 
 " With regard, therefore, to the memorandum of association, 
 if you find anything which goes beyond that memorandum, 
 or is not warranted by it, the question will arise whether 
 that which is done is ultra vires, not only of the directors 
 of the company, but of the company itself. "With regard 
 to the articles of association, if you find anything which, 
 still keeping within the memorandum of association, is a 
 violation of the articles of association, or in excess of them, 
 the question will arise whether there is anything more 
 than an act extra vires the directors but intra vires the 
 .company." 
 
4 THE DIRECTORS AND SECRETARY. 
 
 Sir Henry (now Lord) Thring, in his treatise on 
 company law, advises that any person dea,ling with a 
 corporation must, to ensure safety, be satisfied of the 
 following points : — 
 
 1st — That the contract is within the scope of the com- 
 pany's powers ; 
 
 2nd— That the directors, or other agents engaged in 
 making the contract, are duly authorised by the company ; 
 and 
 
 Lastly— That the contract is under the seal of the 
 company, or in such form as may be prescribed by Act of 
 Parliament ; or, if not, that the company is a trading cor- 
 poration, and the contract relating to matters incident to 
 the purposes for which the corporation was created. 
 
 Limitations by Memorandum and Articles of Asso= 
 ciation. — It will readily be seen that the office of director 
 involves duties and responsibilities which must be rigidly 
 discharged if the director is to save himself from legal 
 entanglements. It is absolutely necessary for his own 
 protection, as well as that of his company, that he should 
 make himself thoroughly acquainted with the nature 
 and character of the business sanctioned by the memo- 
 randum and articles of association. It is hardly to be 
 supposed that a company promoted for building an Eiffel 
 tower will indulge in shrimping operations ; such a gross 
 violation of its character is not to be anticipated, and yet 
 it would not legally be more wrong than for a carrying or 
 tramway company to sell coals, when it had not taken 
 powers to do so in its memorandum of association. It will 
 also be seen that acts which may not be ultra vires the 
 company, may yet be beyond the powers delegated to the 
 directors, and may involve them in serious personal 
 liability. 
 
 Payment of Dividends out of Revenue or Capital. — 
 The right of a shareholder to dividends is governed by 
 the regulations of the company, and by any stipulations 
 incident to the issue of the shares ; but one universal rule 
 applies, that dividends shall be paid only out of profits, 
 that is, out of the excess of ordinary receipts over expenses 
 properly chargeable to revenue account. If directors order 
 the payment of a dividend when no profits have been made, 
 and without expressly saying that they are paying it with- 
 out having earned it, a gross fraud is practised, "and the 
 directors are not only liable to those whom they have 
 
THE DIEECTORS AND SECBETARY. 5 
 
 deceived and injured, but ate guilty of a conspiracy, for 
 which they are Uable to be prosecuted and punished." If 
 a fraudulent and delusive balance sheet is prepared by 
 their authority; and dividends paid thereunder, they will 
 be compelled by the High Court to refund the amount of 
 dividends they have themselves received ; indeed, directors 
 who have paid dividends out of capital have been ordered 
 to replace the amount of all the dividends so paid, together 
 with interest thereon, but without prejudice to their right 
 of. recovery from the shareholders. (See Ranee's case, 
 Stringer's case, and Evans v. Coventry). The tendency of 
 judicial dicta and of modern legislation is to increase 
 rather than diminish the responsibility of directors in all 
 matters connected with the management of the company, 
 whether expressly done or only permitted by them. 
 
 Directors Act as a Board. — Directors can act only as 
 a board or in exercise of powers specially delegated by 
 the board, and the execution of which they should report 
 thereto. When they act on their own initiative, without 
 the sanction or subsequent ratification of the board duly 
 recorded in the minutes, they may incur serious personal 
 responsibility. The dictum of Lord Cairns on extra vires 
 and intra vires should be remembered, with the con- 
 sequences which may follow thereon. It is in many, and 
 more particularly in private, companies usual to appoint 
 one or more members of the board as managing director or 
 directors. In such cases the authority delegated to the 
 managing director should be clearly set forth in the minute 
 or deed appointing him. It sometimes happens that the 
 managing director is also manager of the company, dis- 
 charging all the duties of that officer, and taking a very 
 intimate share in the management of the place. There is 
 here a combination of two distinct offices, and great care 
 is sometimes necessary to avoid legal complications in con- 
 sequence. One safeguard, which should not be neglected, 
 consists in exhaustive reports to the board, as full and 
 complete as if the transactions were directed by an officer 
 not having a seat thereat. 
 
 Signing of Documents and Contracts. — Care should be 
 Exercised in the manner of signing important documents, 
 so as to distinctly signify that they are only signed on 
 behalf of the company. In accepting a bill of exchange, 
 addressed to the Clydesdale Engineering Company Limited', 
 it is not sufficient to add after the signatures the words 
 
6 THE DIEECTORS AND SECRETARY. 
 
 " Directors," or " Directors of -the Clydesdale Engineering 
 Company Limited." Such wording has been held to be 
 merely descriptive, and not to exclude the personal 
 liability of the signatories in the event of the compa,ny 
 not meeting the bill in due course. The correct wording 
 would be: — ■ 
 
 Accepted. Payable at the 
 Union Bank of London Limited, 
 Chancery Lane, 
 London. 
 
 For and on behalf of 
 
 The Clydesdale Engineering Co. Limited. 
 
 p-i;'' I Directors. 
 G.H., Secretary. 
 
 Or the following form may be adopted ; it is the usiial one 
 with some companies : — 
 
 Accepted. 
 
 For The Clydesdale Engineering Company 
 Limited, and by its a.uthority : payable at the 
 Union Bank of London Limited, Chancery 
 Lane, London. 
 
 A.B., 
 
 G.H., Secretary. 
 
 pW' \ Directors. 
 
 The same form of words (For, &c. — or. For and on behalf 
 of, &c.) should be adopted lor all important documents not 
 under seal, when there is no provision in the body thereof 
 barring any personal liability on the part of the directors, 
 or expressly declaring that they act only as agents of the 
 company, Many companies adopt a hand stamp for this 
 purpose, and also for correspondence signed by their 
 directors, agents, or managers, and the use of such a stamp 
 is very desirable for letters and documents of importance, 
 or which may possibly lead up to a contract. 
 
 Seal of the Company. — Closely connected with the 
 matter of signatures is the seal of the company, a remnant 
 of mediaeval want of scholarship which may be regarded 
 as the signature of the corporation. It must be used in 
 strict accordance with any rules made by the company or 
 

 
 THE dire(;tors and secretary. 7 
 
 the board of directors limiting or regulating its use. 
 Usually the seal is confirmed by an attestation clause, 
 thus : — 
 
 The seal of the company was 
 
 affixed hereto in the preseoce 
 
 of 
 
 ri t-\ y -Uirecfcor-!. 
 
 Countersigned, G.H., Secretary. 
 
 The safe custody of it, and security from improper or 
 unauthorised use, is a matter of great importance, and in 
 most companies the official seal is provided with three 
 distinct locks, with separate keys (not interchangeable), 
 which keys are in the several custody of two of the 
 directors and the secretary. The seal itself is kept ia the 
 secretary's safe, but cannot be used without the three 
 custodians of the keys being present. The exchange of 
 these keys from one director to another should be effected 
 in a formal manner, and recorded ia the board minutes, 
 otherwise some unpleasant complications may ensue. We 
 remember a case where an endeavour was made to render 
 a director liable on some debentures sealed during his 
 absence ia Japan, on the ground that he was one of the 
 key directors, and had not returned his key to the board 
 before his departure, but had handed it privately to a 
 brother director. 
 
 Rules for Directors' Meetings. — As we before 
 remarked, the directors act as a board, and it is desirable 
 that they should adopt a code of rules for their proceedings, 
 and record these rules in the minutes of one of the earliest 
 board meetings. It is also advisable to fix a quorum, so 
 as to avoid the necessity of requiring all the directors, to 
 concur in the transaction of business. The following regu- 
 lations, suggested by Francis B. Palmer, Esq., of the Inner 
 Temple, barrister-at-law, are of a yery simple but useful 
 character : — 
 
 1. A board meeting shall be held every day at 
 
 o'clock. Such meetings shall be called ordinary 
 board meetings. Other meetings shall be called 
 special. 
 
 2. Every ordinary meeting shall be held at the regis- 
 
 tered office of the company. Special meetings shall 
 
8 THE DIEECTOES AND SECEETAEY. 
 
 be held at such time and place as may be deter- 
 mined by the chairman. 
 
 3. An ordinary meeting shall be competent to transact 
 
 the folio-wing business, namely: To- &c.,.&c. 
 
 All other business shall be transacted at a special 
 meeting. 
 (Note : The business to be transacted at an ordinary 
 meeting should be very fully expressed, bo as to 
 include all the ordinary affairs of the company, the 
 purchasing of materials, the regulation of wages, 
 the consideration of estimates and tenders, and the 
 acceptance of ordinary trade contracts.) 
 
 4. Any director may, and upon the requisition of any 
 
 director the secretary shall, convene a special 
 
 meeting ; not less than hours' notice shall be 
 
 given thereof to each director. Every such notice 
 shall state the time and place fixed for the meeting, 
 and the business to be brought forward for con- 
 sidei'ation thereat. 
 
 5. The quorum of an ordinary meeting shall be two 
 
 directors, and of a special three directors. 
 
 6. No cheque for more than £ shall be signed at a 
 
 meeting unless directors are present. 
 
 7. The common seal shall not be affixed to any document 
 
 except in pursuance of a resolution of the board, 
 and the sealing shall be attested by two directors, 
 and countersigned by the secretary. 
 
 8. A meeting at which not less than directors are 
 
 present may suspend, rescind, or modify these 
 directions. 
 
 The routine of proceedings at the board meetings is as 
 follows: The chairman of the company, if there is one, 
 takes the chair ; in his absence this is taken by the deputy- 
 chairman, or by one of the other directors elected by his 
 ■colleagues then present. The secretary reads the minutes 
 ■of the previous meeting, which, if approved as correct, are 
 isigned by the present chairman. Some directors invariably 
 add the date of signing, and this is a good and safe practice, 
 which, in certain emergencies, may prove of the utmost 
 value. No discussion should be permitted as to the policy 
 of the proceedings recorded ; the minutes are simply sub- 
 mitted for approval as a correct record of what has already 
 transpired, and unless their accuracy is impeached they 
 
THE DIRECTORS AND SECRETARY. 9 
 
 should be passed and signed without comment. If, however, 
 any director objects to the policy expressed therein, he can, 
 after the minutes have been signed, move a resolution in 
 reference to it ; as, for instance, that the resolution of the 
 previous meeting be cancelled, and the matter be further 
 considered by the board at a special meeting to be held 
 
 ; ov that it be referred back to the manager for 
 
 further report. 
 
 The chairman will then call attention to the various 
 items of business, taking them seriatim as they appear on 
 the agenda. It is well to provide each director with an 
 agenda paper, but the chairman and secretary should be 
 provided Avith agenda books, the left-hand side of which 
 contains the heads of the business to be transacted, with 
 suflBcient space left between each item, whilst the right- 
 hand side is used for taking those notes from Avhich the 
 minutes are subsequently prepared. Resolutions of any 
 importance should be drafted and submitted to the meet- 
 ing at the time in the exact wording intended for the 
 minutes, so as to avoid any subsequent disputes as to the 
 decisions actually come to. 
 
 Directors' Committees. — Where a board is large and 
 unmanageable, or where the business requires daily 
 attention from some of the directors, but not necessarily 
 from all, it will bo found convenient to appoint a com- 
 mittee or committees for such detail work, subject to 
 regular and full reports of their proceedings being made to 
 the board. Minutes of proceedings of such committees 
 should be Icept exactly in the same manner as those of the 
 board, and the procedure of the latter will be found 
 generally applicable to its sectional committees. 
 
 Officers' Attendance at Boards and Committees.— 
 
 It is extremely desirable that heads of departments should 
 be present at all board and committee meetings at which 
 their duties are to be reviewed, but considerable discretion 
 must be exercised in calling them into the boardroom. 
 The secretary will usually be present during the whole of 
 the meeting, and the manager also, unless requested to 
 withdraw for a time whilst the directors are considering 
 some complaint specially directed against him, or debating 
 some point of discipline wherein he is interested as one of 
 the parties. It would be both foolish and unjust to con- 
 sider such points as these without hearing all he has to 
 say, and listening to any explanations he may have to 
 
10 THE DIRECTOES AND SECEETAEY. 
 
 make ; in general, it would be unwise to take any measures 
 which might degrade his authority, or even temporarily to 
 appear to doubt his ability, but it may sometimes be 
 desirable to debate his conduct in his absence, and he 
 must then be requested to temporarily withdraw. On the 
 other hand, it would be absurd to have the accountant 
 seated at the table during a long discussion on the provision 
 of increased motive power, or whilst a determination was 
 being arrived at on the merits of a quarrel between the 
 master smith and the mould loft draughtsman ; nor would 
 the efficiency of the office staff be promoted by the chief 
 draughtsman or works manager being present during the 
 time the accountant was receiving a reprimand for a 
 seeming omission in a complex series of accounts, or was 
 endeavouring to explain the succession of entries by which 
 he had sought to make some particular transaction intelli- 
 gible in the books. These subordinate officials should all 
 have right of access to their directors ; they should all be 
 present when their conduct or work was under review b}' 
 either committee or board ; but they should only be in the 
 room when, either in justice to themselves, or for the 
 benefit of the company, their presence is desirable ; during 
 the rest of the time they will be much better employed at 
 their ordinary duties. 
 
 Directors' Attendance Book. — A directors' attendance 
 book should be kept, which must be signed by each 
 director as he enters, or at all events before ho leaves the 
 room. A page or half a page can be devoted to each 
 meeting, according to the number constituting the board. 
 Each should be headed showing whether it is a committee 
 or board meeting, the place at which it is held, and the 
 date, and ruled for signatures. In some companies it is 
 usual for this book to be signed by the officers present; as 
 well as by the directors. In such case a red ink line 
 should be drawn under the directors' signatures, and those 
 of the officers placed beneath it. 
 
 Appointment of Officers.— One of the most important 
 duties devolving on the board is the appointment of 
 officers, as on the wisdom displayed in the selection of these 
 assistants will largely depend the prosperity of the 
 company. The officer most iminediately and closely 
 brought into contact with the directors and shareholders 
 is the secretary, and although he cannot well be termed 
 the principal official, his duties are of such importance as 
 
THE DIRECTORS AND SECRETARY. 11 
 
 to make his selection a matter of some moment. The exact 
 authority and precedence granted to him vary considerably, 
 and the tendency of late years has been to diminish them 
 by transfer of all executive authority to the technical 
 manager. Time was when Mr. Saunders, the secretary, 
 was styled, and truly styled, " Mr. Great Western," but it 
 would be difficult to find an instance of the kind at the 
 present time. 
 
 The Secretary and his Duties. — He is the official 
 mouthpiece of the board of directors, and usually replies 
 to communications immediately addressed to the board. 
 He must attend all meetings of the company, and of the 
 directors ; take proper minutes of the proceedings, and 
 write them up in the minute books for permanent record. 
 He will issue all notices to members and others relating 
 to meetings, or to arrangements affecting capital or divi- 
 dends ; he will conduct all correspondence with share- 
 holders in regard to calls, transfer or forfeiture of shares, 
 and re-arrangements or consolidation of shares, stocks, or 
 debentures. Certain of the company's books should always 
 be kept by him, or under his immediate and personal 
 direction, viz. : — 
 
 1. The Eegister of Members. 
 
 2. The Share Ledger. 
 
 3. The Numerical Register of Members. 
 
 4. The Ceitificate Book. This contains forms of 
 
 certificates of title, and the particulars of each 
 certificate issued must be entered on the coun- 
 terfuil. 
 
 5. Register of Transfers. 
 
 6. Minute Book of General Meetings. 
 
 7. Directors' Minute Book. 
 
 8. Register of Mortgages. 
 
 It is essential that the secretary should have some 
 acquaintance Avith joint-stock company law, sufficient at 
 least to ensure that the statutory regulations will not be 
 neglected through sheer ignorance. One or tAvo of these 
 requirements demand special attention. By section 25 of 
 the Companies Act, 1862 (25 and 26 Vict., c. 89), it is 
 enacted : — 
 
 Register of flembers. — " Every company under this 
 Act shall cause to be kept in one or more books a register 
 of its members, and there shall be entered therein the 
 following particulars : — 
 
12 THE DIRECTORS AND SECRETARY. 
 
 (1) The names and addresses and the occupations, if 
 
 any, of the members of the company, with the 
 addition, in the case of a company having a capital 
 divided into shares, of a statement of .the shares held 
 by each member, distinguishing each share by its 
 number ; and of the amount paid or agreed to be 
 considered as paid on the shares of each member ; 
 
 (2) The date at which the name of any person was entered 
 
 in the register as a member ; 
 
 (3) The date at which any person ceased to be a member. 
 
 And any company acting in contravention of this section 
 shall incur a penalty not exceeding five pounds for every 
 day during which its default in complying with the pro- 
 visions of this section continues, and every director or 
 manager of the company, who shall knowingly or willully 
 authorise or permit such contravention, shall incur the 
 like penalty." 
 
 Annual List of Members. — The following section (the 
 26th) contains directions for an annual list of members 
 to be filed with the Registrar of Joint-stock Companies 
 twenty-one days after the date of the first general meeting 
 in each year, the penalty for neglect being similar in 
 character and amount to that for the non-keeping of the 
 register. 
 
 By section 32 of the Act of 1862, this register of mem- 
 bers is required, under a penalty, to be kept at the regis- 
 tered office of the company, and during business hours 
 (but subject to such reasonable restrictions as the company 
 in general meeting may impose, so that not less than two 
 hours in each day be appointed for inspection) to be open 
 to the inspection of any member gratis, and to any other 
 person on payment of one shiUing. The company shall, if 
 required, supply any such member or other person with a 
 copy of the whole or any portion of the register on pay- 
 ment of sixpence for every hundred words copied. 
 
 Official Notices. — In addition to the annual returns the 
 following notices may have to be forwarded to the registrar 
 at various times during the history of the company : — 
 
 1. Notice of situation of registered office. 
 
 2. Notice of change of office. 
 
 3. A printed copy of every special resolution. 
 
 4. Notice of increase of capital. 
 
THE DIRECTORS AND SECRETARY. 13 
 
 5. Notice of conversion of shares into stock. 
 
 6. Notice of consolidation of shares. 
 
 7. Copy of order of court, and minute on reduction 
 
 of capital. 
 
 8. Consent of Board of Trade to change of name. 
 
 9. Letter requesting registrar to issue certificate on 
 
 change of name. 
 
 10. Notice of ratification of register by the court, 
 
 11. Copy winding-up order. 
 
 12. Final order for dissolution. 
 18. Liquidator's final return. 
 
 14. His coDsent to the registration of new company by 
 same name. 
 
 The notices from 10 to 14 inclusive will, however, 
 seldom be required from the secretary, unless he be also 
 appointed liquidator. 
 
 Minutes of Meetings. — The minutes should clearly 
 and distinctly record the proceedings at meetings and 
 the resolutions passed by the directors or shareholders. 
 Resolutions of special importance are usually drafted 
 by the company's solicitor, and his wording should be 
 implicitly followed. Resolutions proposed by a shareholder, 
 whether adverse to the board or supporting their policy, 
 should always be written out by the proposer, and the chair- 
 man should insist upon this beiog done before submitting 
 them to the meeting; the exact wording must be followed 
 in the minutes. The ordinary resolutions of the board of 
 directors, or of committees of the board, will be merely 
 noted on the agenda paper or agenda book (a book is 
 preferable), and the secretary will have to record these in 
 the minutes in fitting language. He should remember that 
 it is most fitting when as concise as is compatible with 
 clearness : company minutes are not exercise books for 
 amateur eloquence. The following will be useful examples 
 of records of the exercise of the directors' powers : — 
 
 A call is made by passing a resolution : 
 
 " That a call of £ — '— per share be and the same is 
 hereby made on the members of the company, such call to 
 be payable on, &c., at, &c." 
 
 A resolution for forfeiture may be : 
 
 "That the shares numbered, &c., of A.B. be and the 
 same are hereby forfeited." 
 
14 THE DIRECTOES AND SECRETARY. 
 
 This, however, is one of the cases in which the solicitor 
 of the company should be consulted, and should draft the 
 minute. 
 
 Resolutions to appoint a committee may be in one of 
 the following forms : 
 
 " T^hat Messrs. ■ — '■ and '■ be and they are 
 
 hereby appointed a committee, with power on behalf 
 of the company, &c., &c." 
 
 "That Mr. be and he is hereby appointed 
 
 a committee for the purpose, &c. ; and that the following 
 powers and authorities be delegated to him. (1) power 
 to, &c ; (2) power to, &c." 
 
 " That Messrs. — and : be and they are 
 
 hereby appointed a committee for the purpose of settling 
 
 with Mr. • the terms of an agreement for, &c. ; and 
 
 that they be and they are hereby authorised to execute, on 
 behalf of the company, an agreement in writing embodying 
 such terms." 
 
 With reference to contracts the resolutions may be : 
 
 " That the seal of the company be affixed to a contract 
 dated between, &c." 
 
 " That the offer of Evans, Drury, and Company Limited 
 
 to supply the company with be and the same 
 
 is hereby accepted, and that the secretary do give Evans, 
 Drury, and Company Limited notice of this resolution." 
 
 It must be remembered that one matter ma}', before it 
 is finally concluded, come before the board several times. 
 Thus, when a resolution has been passed to borrow money, 
 it will be necessary to either issue a prospectus or apply to 
 some person or persons to lend it on security offered. The 
 prospectus, when prepared, should be submitted to the 
 board, and a resolution passed approving of it, and in some 
 cases it is advisable to so submit and obtain sanction to 
 the letter applying for the loan. Again, when the lender 
 has been obtained, and the security and terms mutually 
 agreed upon, it will be neceisary for the directors to pass a 
 resolution approving thereof, and directing the common 
 seal to be affixed to the contract. Afterwards, when the 
 seal is affixed and witnessed by two directors, it is 
 necessary that this fact be properly recorded in the 
 minutes. 
 
 Reports on Directors' Resolutions It is the duty 
 
 of the secretary to ascertain that the resolutions and 
 
THE DIEECTOES AND SECEETAEY. 15 
 
 instructions of the directors are carried into effect by the 
 proper officers, and to see that those officers make reports 
 of their attention to the next succeeding board meeting. 
 The carrying out of this duty demands considerable tact, 
 so as to avoid clashing with the manager, for whilst the 
 secretary is both mouthpiece and eyes and ears of 
 the board, he is not the executive officer charged with 
 the carrying of their resolutions into effect. Nor is he 
 usually qualified to do so. It is by no means necessary 
 that he should be fitted for engineering work in order 
 to discharge his office ; indeed, the resources demanded of 
 him are too frequently neglected by some engineers ; but 
 it is absolutely necessary that he should be endowed with 
 tact, patience, memory, common sense, and unfailing good 
 temper. 
 
Chaptee II. 
 
 THE AUDITOR. 
 
 Qualifications of tlie Auditor. — Perhaps the considera- 
 tion of the auditor ought to be deferred to a later period. 
 His duties commence where those of the other officials 
 end, and the proper place for him would therefore appear 
 to be the last chapter in the book. But, on the other 
 hand, he is an officer (the Courts have now decided that 
 he is an officer of the company) of supreme importance, 
 and his influence pervades every part of the clerical .organ- 
 isation. So much depends on his personal character that 
 it is impossible to exercise too great care in the selection 
 of him. In a report by the Council of Associated Stock 
 Exchanges to a Departmental Committee appointed by the 
 Board of Trade a useful suggestion is made. It has been 
 tried for many years past, m a slightly modified form, on 
 the London and North-Western and other railways, and has 
 been found to work admirably. It is : " We also recom- 
 mend (1) the statutory institution of audit committees, 
 consisting of shareholders, who should have power to 
 appoint a professional auditor and fix his remuneration ; 
 and (2) that any adverse report by the auditor should be 
 sent to the shareholders with his certification of the 
 accounts, or in lieu of his certification, if such has not been 
 given." The practice of appointing audit committees is 
 not general, and may possibly require some modification 
 of the articles of association, which are usually modelled 
 on Table A of the Act of 1862, and state that : " Once at 
 least in every year the accounts of the company shall be 
 examined, and the correctness of the balance sheet ascer- 
 tained by one or more auditor or auditors." This Table A 
 requires that the election of auditors shall be made by the 
 company at their ordinary meeting in each year ; that they 
 may be members of the company, but that no person shall 
 be eligible for the position who is interested otherwise 
 than as a member in any transaction of the company ; and 
 that no director or other officer of the company s'hall be 
 eligible during his continuance in office. 
 
THE AUDITOE. 17 
 
 Preparation of Balance Sheet. — The table directs 
 that: "Every auditor shall be supplied with a copy of 
 the balance sheet, and it shall be his duty to examine the 
 same, with the accounts and vouchers relating thereto." 
 It has, however, become quite usual in small companies,, 
 and even in some of the more important corporations, for 
 the auditor to prepare the balance sheet himself, and 
 afterwards examine, vouch, and certify to the correctness 
 of that which is, practically, his own work. 
 
 Examination of Books and Accounts, — The auditor is 
 to have delivered to him a list " of all books kept by the 
 company," and at all reasonable times to have access to the 
 books and accounts of the company, and he may, in rela- 
 tion to such accounts, examine the directors or any other 
 officer of the company. He is also to state in his report to 
 •the shareholders (if the regulations of Table A are adopted) 
 whether, in his opinion, the balance-sheet is a full and fair 
 balance-sheet, properly drawn up so as to exhibit a true 
 and correct view of the state of the company's affairs ; and 
 also, in case he has called for information or explanation 
 from the directors, whether they have been given by the 
 directors, and whether they are satisfactory. 
 
 Auditor not Qualified for Management. — The office 
 of auditor is thus a most important one, demanding not 
 merely knowledge and skill, but also unwavering honesty, 
 and sometimes considerable courage. The auditor must 
 be independent, proof against undue "influence (which, 
 however, is never attempted in respectable and stable 
 companies), and also free from any participation in the 
 management. This is recognised by the Legislature in the 
 model a/rticles of association. Table A, attached to the Act 
 of 1862, which says that although he may be a member of 
 the company, he must not be interested otherwise than as 
 a member in any of its transactions, nor shall he be 
 eligible as auditor during his continuance in office as a 
 director or other officer of the company. But there is 
 a deeper reason for dissociation of the auditor from 
 managerial functions than any clause in an Act of Parlia- 
 ment. The office of the auditor is critical ; his work is to 
 protect the shareholders and the public by reviewing 
 the acts of the managers, and detecting and pointing out 
 their errors and irregularities, not by superseding them in 
 executive duties. It is a defect inherent in human nature 
 to look kindly on our own suggestions and on our own 
 c 
 
18 THE AUDITOR. 
 
 work, and from this defect accountants are no more free 
 than other men. To them, as to the whole race, the old 
 adage applies — every grey goose thinks her goslings 
 swans. As thought, conception, advice precede and control 
 action, it is almost impossible for an auditor to adversely 
 report on any policy which has been undertaken in com- 
 pliance with his suggestions, or to condemn expenditure, 
 contracts, or financial operations he has himself recom- 
 mended. 
 
 Limits of Auditor's Knowledge of Business. — But 
 there is a further consideration, arising out of actual 
 practice, which tends to render the interference of an 
 auditor in the management of a company extremely 
 UD desirable, if not actually mischievous. To the Depart- 
 mental Committee already referred to, several of _ the 
 Chambers of Commerce have recommended that auditors 
 should be public accountants — chartered or incorporated. 
 There is certainly a growing tendency at the present time 
 to appoint public accountants to that office. Whether or 
 not tne London and North-Western system of an audit 
 committee of shareholders is a better one, assisted if 
 needful by a professional accountant, it is unnecessary to 
 inquire; it is not suitable for any but large companies 
 with a long roll of shareholders, and even then the 
 professional accountant has a great advantage over the 
 ordinary shareholder in his extensive acquaintance with 
 various forms of_ account. Yet his knowledge of any 
 business he audits is necessarily of a very limited nature 
 if his practice is a large one. This is evidenced by a 
 clause in a memorandum by Mr. Frederick Whinney, of 
 Messrs. Whinney, Smith, and Whinney, one of the most 
 reputable firms of chartered accountants in the city of 
 London. It reads: "That it is desirable and necessary, 
 especially for large companies, that auditors should be 
 skilled accountants, with staffs of trained clerks, and that 
 it should be recognised that it is impossible for an auditor 
 to supervise all the details of every business." Translated 
 into ordinary every-day English, and explained by the 
 usual practice of eminent and successful accountants, this 
 means that the auditor shall be expected to deal personally 
 with the accounts only in their final forms ot revenue 
 account, profit and loss account and balance sheet, and 
 base his report on the figures he finds therein, and on the 
 information he can cull from more or less expert clerks, 
 who have examined and ticked the books. This may be, 
 
THE AUDITOR. 19 
 
 and, assisted bjr his specialised accountancy training, 
 probably is, sufficient for general critical purposes; but it 
 certainly will not render him a desirable or safe guide in the 
 commercial arrangements of the company, or the general 
 direction of its policy. 
 
 Summary of Duties. — The auditor, then, is one of the 
 most important, if not the most important functionary of 
 the company ; exploring, either personally or through his 
 clerks, the records of all its transactions, and reporting to 
 the shareholders whether they are properly presented or 
 not. He reviews the transactions of the directors equally 
 with those of the meanest official ; he is entitled to require 
 from the directors and officers such information and 
 explanations as may be necessary for the performance of 
 his duties ; and if these are not forthcoming, he can report 
 the laches to the shareholders. His powers, within the 
 limits of his office, are absolutely draconic, and we must 
 confess that they are generally used wisely, and for the 
 advantage of his clients. When he fails it is usually 
 through the directors imposing upon him, or his vanity or 
 covetousness inducing him to assume duties which are 
 inconsistent with his critical functions ; such as rendering 
 active assistance in executive details, or recommending for 
 adoption his own pet theories of trade management or 
 manufacture. 
 
 Monthly Audits. — It is well to arrange, whenever it 
 can possibly be done, for a monthly or continuous audit. 
 In a thorough audit (and these will, in future, be the rule 
 rather than the exception) it is necessary that every entry 
 in the ledger, journal, cash book, and purchase and sales 
 books, together with those of any important subsidiary book, 
 should be compared and ticked, vouchers examined, and 
 all additions checked. This takes up considerable time, 
 especially in large establishments, and, if it is all left to 
 stocktaking, may seriously interfere with the legitimate 
 work of the office. A considerable portion of this routine 
 and detail work may, however, be done month by month, 
 and the inconvenience of the audit will not then be felt so 
 much at balancing time. There is a further advantage in 
 a continuous audit causing a speedy detection of errors ; 
 they are thus frequently discovered before they cause 
 unhappy complications, whilst merely clerical errors, or 
 inaccurate and improper postings, are most easily corrected 
 wbilst the facts are fresh in mind. 
 
Chapter III. 
 
 THE GENERAL MANAGER. 
 
 Duties and Qualities of the Manager. — The general 
 manager — ^or, as he is frequently termed in minutes and 
 correspondence, The manager— is the officer on whom, above 
 all others, the profits of the company depend. His duties 
 cannot be defined, and are limited only by the articles of 
 association. Within those articles (and it must be remem- 
 bered that no one can travel outside them without 
 incurring personal liability) he is an autocrat, controlling 
 and directing everyone connected with the concern except- 
 ing the secretary and auditor, and himself subject only to 
 his directors. Every servant of the company, from the 
 works manager to the youngest rivet boy, or the office boy, 
 is subject to his influence, and must be more or less 
 inspired by it. Esprit de corps, so necessary for successful 
 working, will only permeate the mass of employees 
 when it first starts with him, and no supervision, no 
 regulations, no system, can fully supply the place of it. 
 Mr, Ruskin's ideas on economics are frequently open 
 to grave question, but he occasionally, m his own 
 unequalled manner, throws light on some obscure point of 
 them, which may be profitably pondered by practical men. 
 As for instance : " The universal law of the matter is that, 
 assuming any given quantity of energy and sense in master 
 and servant, the greatest material result obtainable by them 
 will be, not through antagonism to each other, but through 
 affection for each other." And again : " Supposing the 
 captain of a frigate saw it right, or were by any chance 
 obliged, to place his own son in the position of a common 
 sailor, as he would then treat his son, he is bound always 
 to treat everyone of the men under him. So, also, sup- 
 posing the master of a maniitactory saw it right, or were 
 by any chance obliged, to place his own son in the position 
 of an ordinary workman, as he would then treat his son, 
 he is bound always to treat everyone of his men. This is 
 the only effective, true, or practical rule which can be civen 
 on this point of political economy." And which universal 
 
THE GENERAL MANAGER. 21 
 
 law and practical rule, strange as it may appear, can be 
 equally found in tlie musty tomes of dryasdust economists, 
 if we only take the trouble to search for and understand 
 them. They are the foundations of equal justice, the only 
 method by which men can be ruled short of force. and 
 compulsion, which nowadays are impossible. 
 
 Capacity for Justice. — The first and most important 
 necessity for a manager is, therefore-, the capacity to be 
 just, which comprises the ability to see the workman's side 
 of the case as well as the employers, and the courage to 
 hold an even balance between the two. He will find 
 plenty of scope for the exercise of this talent, both in 
 adjusting differences between the foreman and workpeople, 
 and also in training his subordinates to equal justice. 
 British working men, with all their faults, appreciate this 
 quality, and when men attribute it to their employers it is 
 easy to settle many otherwise irritating complaints and 
 disputes. The feeling permeates the mass, slowly it may 
 be, but none the less surely. 
 
 Necessity ol Discipline. — On the other hand, he must 
 be a firm disciplinarian. He must rule Avith an iron hand, 
 although he wears a silken glove over it. When once he 
 has come to a decision he must not waver ; having given 
 careful attention to all the circumstances, he must adhere 
 to the decision he gives, and not revise or vary it at every 
 fresh importunity. Nothing so rapidly creates contempt 
 in the minds of workpeople as a jelly-fish state of mind, 
 impressionable by every fresh influence brought to bear on 
 it. He must, when passing through the shops or standing 
 on the galleries, watch the general conduct of the men, and 
 draw immediate attention to, and sternly rebuke, any 
 idling, inattention or unsteadiness at work, or larking. 
 Bad timekeeping should be reproved by the timekeeper 
 and shop foreman, or leading men ; but it is possible that 
 they may be occasionally guilty of it themselves. The 
 manager should, therefore, himself take an occasional 
 survey of the time kept by the employees of all ranks and 
 conditions. 
 
 Routine Duties. — The routine duties of the manager 
 are many and varied. All business correspondence — that 
 is all the correspondence of the firm not specially relating 
 to the board, &c., which will be taken charge of by the 
 secretary — will come under his notice. Part of it will be 
 retained by him for the replies to be dictated to his own 
 
22 THE GENERAL MANAGER. 
 
 shorthand writer ; the remainder will be distributed to the 
 various officers who have to deal with them. It is desirable 
 that all letters sent away from the works should be signed 
 by the manager, excepting those emanating from the 
 secretary's department; but whether this is practical or 
 not depends on the size of the works and the arrangement 
 of the buildings. It is quite feasible where the works are 
 small or the offices concentrated ; it would be a reckless 
 waste of time and energy to attempt to sign every memo- 
 randum and docket issuing from extensive works, with 
 offices necessarily wide apart so as to be near the depart- 
 ments they serve. It is important to remember that the 
 manager may do as much harm by ill-directed, fussy 
 meddling as he can by procrastination or neglect of details. 
 There is a happy mean to be hit, which is not always 
 attained by the youthfiil and ambitious but injudicious 
 neophyte. 
 
 Selection of Staff.— The selection of the staff rests with 
 the manager, and unless he has, either naturally or by attain- 
 ment, the faculty of selecting the best men for the various 
 posts, he will involve himself in much after-trouble, and 
 probably bring some of the departments into confusion. 
 We are assuming the office staff to be under his control. 
 In some firms it is usual to place the accountant and 
 cashier, and all other officers so far as accounts are con- 
 cerned, under the supervision of the secretary, and possibly 
 this is the better plan. There need be no difficulty nor 
 clashing in such an arrangement. On most railways there 
 are station-masters who are also goods agents, and these 
 report to the superintendent of the line on traffic matters, 
 and to the goods manager on goods and mineral affairs, 
 without any confusion or overlapping arising. It must, 
 therefore, be understood that what is said respecting the 
 manager in connection with the office staff will be equally 
 applicable to the secretary when that gentleman takes 
 charge of the accounts branch of the work. So far as 
 the works proper and drawing office are concerned, the 
 manager, however, will be the " fountain of honour," and 
 will either make or recommend the promotions to be made. 
 With these promotions or recommendations the directors 
 should be careful not to interfere without very grave 
 reason, and then in such manner as will not militate against 
 the authority of the manager, an authority which depends 
 almost as much on what is imputed by his sub- 
 ordinates, as on written agreement and the acknow- 
 
THE GENEEAL MANAGER. 23 
 
 ledged constitution of his ofSce. We have all heard 
 of an " uncrowned king " who ruled more autocratically 
 than an emperor, his power being founded on the 
 wisdom attributed to him by his subjects, and this "un- 
 crowned kingship " may be found in all associations of 
 men. Where a works manager is in being, the general 
 manager should consult with him on all promotions and 
 changes within the works : where there is only one manager 
 he should take counsel with the foremen. Even if he 
 overrides their advice, and follows his own opinion, he 
 flatters by consulting them, and thus renders easier the 
 position of his protdg^. Most men are human, and vanity 
 is a very human quality ; the astute Machiavelli says, " it 
 is to be observed, men are either to be flattered and 
 indulged, or utterly destroyed," and the flattery which the 
 Italian recommended his prince to employ cannot be 
 unwise in lesser men. One axiom should always be 
 remembered by the manager, and impressed by him on 
 those whom he consults, namely, that the promotion shall 
 be dictated by the man's fitness for the new appointment, 
 and not conferred merely as a reward for past services. 
 These are frequently the best credentials for good work in 
 the future, but they must be deemed only credentials to 
 be scrutinised and compared, and not absolute claims to 
 advancement. Where, however, promotion can be given 
 within the works it should be preferred to bringing in a 
 new man from outside. Nothing tends so much to 
 promote indiflerence and stagnation as the conviction that 
 no work, no industry, no ability will procure advance- 
 ment, and that the only way to obtain it is to leave the 
 firm. 
 
 Selection of Office Staff. — The promotion of the office 
 staff is frequently more difficult to deal with than even 
 that of workmen and foremen. A man may be an excellent 
 correspondence clerk, or a most exemplary cashier, and 
 yet be unable properly to grasp the many complicated 
 questions which come before the accountant for settlement. 
 He naturally expects the promotion when a vacancy 
 occurs ; his necessities make him covetous of the increased 
 emoluments ; but the services he has rendered in the past, 
 the satisfaction which he has given in his present post, 
 must not be permitted to govern the appointment to the 
 prejudice of the firm if he is not qualified, nor even if he 
 is less qualified than another, for the new duties. The 
 saying may seem a hard one, but is equal justice. 
 
24 THE GENERAL MANAGER. 
 
 Qualifications as Engineer,— It is almost superfluous 
 to say that the manager should be a highly - qualified 
 engineer ; not necessarily an eminent specialist, but a good 
 all-round man, who has sufficient grasp of all the depart- 
 ments to appreciate at their proper worth the reports and 
 suggestions made by those immediately in charge of them. 
 He may not be so clever a mathematician as the draughts- 
 man, nor so skilled in foundry practice as the foreman 
 moulder, nor so practised a woodworker as the pattern- 
 maker ; but he must be more than any of these one things — 
 by his general technical knowledge and common sense he 
 must be able to reconcile their conflicting claims, and 
 direct them all to the making of a profitable revenue 
 account. Only by scientific ability can this be done in 
 the present days of fierce competition, but it must be 
 ability which duly estimates the correlation of all forces, 
 not the monastic scholarship which severs its own indi- 
 vidual researches from all others. 
 
 Working to Time. — Finally the manager must see that 
 all work is done to time, both in the factory and in the 
 ofiice. As far as possible overtime should be avoided. 
 Men cannot work extra hours for any continuous period 
 without their energies flagging, and this produces either 
 inferior work or decreased rate of speed. It is unnecessary 
 to discuss the merits of any suggested or desired limitation 
 of hours : whilst there is a minimum, below which it will 
 not pay to run the machinery, there is also a maximum, 
 beyond which any man's services become unremunerative. 
 In an office no overtime should be permitted except in case 
 of an emergency, or possibly at . stock-taking. It will 
 generally be found to arise either from bad office organisa- 
 tion or through deficiency of staff. In either case it 
 conduces to carelessness in work, to procrastination, and to 
 general irregularities, which frequently permeate other 
 departments of the establishment. No capable manager 
 will permit slovenly and dilatory office arrangements any 
 more than he will tolerate a badly laid or late breakfast 
 table. He will see that a sufficient staff is provided, and 
 will then insist that they do their work. 
 
 Interviews. — One portion of the manager's business 
 frequently causes him considerable trouble, and it is 
 certainly difficult to properly deal with. We refer to 
 interviews with people calling at the works, and desiring 
 to see him on business. It is certainly annoying to a 
 
THE GENERAL MANAGER. 25 
 
 busy man to lose time in listening to the maunderings 
 of a sanguine inventor with an impossible ratchet brace, 
 or the importunities of a commercial traveller, recom- 
 mending some newly-imported brand of oil, or improved 
 make of engine packing ; such men are ubiquitous, and 
 frequently elude the gatekeeper's vigilance. On the 
 other hand, it is especially annoying to a possible 
 customer, or an important visitor to be stopped at the 
 gate, and cross-examined by the pensioned soldier or 
 policemen stationed there, as to the business which makes 
 him seek an interview. The manners of such men rarely 
 err on the side of obsequiousness ; their daily environ- 
 ment of workpeople forbids it; and an error of judgment, 
 or passing fit of petulance on their part, may lose 
 the firm an order or contract. It is better for the 
 manager's shorthand writer, when he has one for his own 
 special work, to see them, and either procure them an 
 interview, or pass them on to the official of the yard, 
 with whom, rather than with the general manager, their 
 business lies. Where there is no shorthand writer (or 
 private secretary) specially allocated to the manager, then 
 one of the clerks of the general office should be detailed 
 for this duty. It will be understood, of course, that this 
 arrangement requires the offices to be at the entrance 
 to the yard, as no visitor should be allowed to enter 
 the works and wander about at his own sweet will. By 
 some means or other, however, it is very desirable that 
 the manager should obtain the reputation of being 
 accessible, and, paradoxical though it may seem, he will 
 best maintain the reputation by not deserving it. 
 
Chapter IV. 
 
 THE DRAUGHTSMAN AND SUBORDINATE OFFICIALS. 
 REQUISITIONS FOR MATERIA.LS. 
 
 Subordinate Officials. — The directors and secretary, 
 the auditor, and the general manager form the brains of the 
 firm ; they occupy towards it the same position which the 
 general staff does to the German army ; on their delibera- 
 tions and determinations the policy of the company is 
 framed, and its success secured. There are, however, other 
 subordinate officers, who render services of great utility, 
 but who act under instructions rather than on their own 
 initiative. It is, therefore, not necessary to discuss the 
 qualifications they should respectively possess, as these will 
 be judged by the secretary or manager who recommend 
 them for promotion ; nor to detail their several duties, as 
 these will be referred to as the work which passes through 
 the factory is reviewed. A list of them will suffice. They 
 are : — 
 
 In Secretary's Department. 
 The Accountant. | The Cashier. 
 
 In Manager's Department. 
 
 The Chief Draughtsman. 
 
 Draughtsmen and Tracers. 
 
 Correspondence Clerks. 
 
 General Office Clerks. 
 
 The Works Manager. 
 
 Shop Foremen. 
 
 Storekeeper. 
 
 Warehousemen. 
 
 Timekeeper. 
 
 Gatekeeper, and Night Watchman. 
 
 Drawing Office. — In one respect, this classification of 
 the subordinate officers is perhaps imperfect. It is easy to 
 trace the connection between a skilful and energetic 
 manager and a profitable balance sheet ; it is difficult to 
 see how much of this success is due to the assistance 
 rendered by an able and painstaking chief draughtsman. 
 Indeed, when orders fall off, and profits are consequently 
 endangered, one of the earliest retrenchments made is a 
 reduction in the drawing office staff, and this economy is 
 
DRAUGHTSMAN AND SUBORDINATE OFFICIALS. 27 
 
 too frequently attempted by dismissing the most highly 
 paid draughtsman or draughtsmen, and promoting juniors 
 and pupil-apprentices so fall the places. Surely this is a 
 strange method of securing prosperity. The very salva- 
 tion of the firm depends on the facility it possesses for 
 developing improvements on existing designs or modes of 
 manufacture ; other firms are striving to compass such 
 improvements, and any which neglects the endeavour will 
 assuredly fall behind in the race. The actual process of 
 manufacture will usually be dealt with best in the work- 
 shops — by the works manager and his foremen — but the 
 variations of, and improvements m, designs most frequently 
 proceed from the drawing office. 
 
 Scientific Investigations in Drawing Office. — It is 
 utterly wrong to think of this office as a mere workroom 
 for tracers, and copyists of former designs ; it is this false 
 appreciation of the quiet and patient workers in scientific 
 deduction which so frequently places our English manu- 
 facturers at a disadvantage as compared with German 
 works. The phlegmatic Teuton has discovered the value 
 of science, and consistently applies it to the problems of 
 his work-a-day life. He knows that keen competition can 
 only be met by avoiding waste in manufacture, by using up 
 every bit of scrap whicn can be put to further service, by 
 substituting the untiring machine for the exhausted work- 
 man. If he has not the knowledge himself he purchases 
 it, and regards no portion of his wages sheet witn greater 
 complacency than that which is expended on research 
 work. Crefeld, Darmstadt, Dresden, Ludwigshafer, and 
 Nuremberg all bear testimony to the advantages which 
 have been obtained through the development of higher 
 technical education in Germany. Unfortunately, in 
 England we have only half learned the lesson presented 
 to us ; our educational experts and captains of industry 
 appear to think the chief need is schooling for the work- 
 men, and that by teaching a fitter to produce imperfect 
 drawings, or a working dyer to read a chemical equation 
 without a blunder, great progress will have been accom- 
 plished. Much more than this is necessary to maintain 
 our manufacturing and commercial supremacy, or what is 
 left of it ; but it is chiefly in the manufacturer's apprecia- 
 tion of the scientific branches of his establishment, and of 
 research work that the need lies. We require more 
 employers with Captain Cuttle's admiration of the man 
 chock full of science. 
 
28 REQUISITIONS FOR MATERIALS. 
 
 Instead, therefore, of placing the chief draughtsman 
 among the subordinate officials, we might more properly 
 consider him the aide-de-camp and most trusted ally of 
 the manager. 
 
 Purchases and Sales. — Whilst the several oflScers we 
 have named have distinct and varied duties to perform, 
 duties which must not conflict or overlap, they are all 
 engaged in two great divisions of trade : first, in purchasing 
 materials and stores to undergo further manipulation ; and 
 secondly, in transforming them into finished machines, and 
 selling the completed product. In the purchasing depart- 
 ment, we must consider not only the materials purchased, 
 but also the ordering, receiving, and examining them ; all 
 tests of raw materials and research work, instituted for the 
 purpose of effecting improvements in, or substitutes for 
 them ; and also such work in the drawing office as may be 
 a needful preliminary to the ordering of plate, forgings, or 
 other articles for some particular contract or specification. 
 In the sales department we must consider the finished 
 article sold, andalso all work in the drawing office which is not 
 an absolute essential for the purchase of stores ; all research 
 work instituted for the purpose of improving the design 
 of any machine, or other product ; all advertising and 
 other solicitation for the extension of the business ; and all 
 the varied services connected with the packing, forwarding, 
 and recording of the articles sold. The distinction is not 
 a mere academic or fantastic one : it has a practical appli- 
 cation, and though the lines of demarcation may appear 
 blurred, the manager must not forget that they exist. 
 Losses may arise from two causes : either from injudicious 
 method of purchasing, or from insufficient prices obtained 
 for the finished goods, the latter cause being affected by 
 and including excessive expenditure in workmanship, or 
 establishment charges. It is, therefore, important that the 
 directors and manager should not only locate their losses or 
 diminished profits to a department of the works, such as 
 the smithy, joinery, or machine shop, but should also 
 determine whether they arise through improper or 
 injudicious purchases, or accrue entirely after the materials 
 are in the possession of the firm. 
 
 Inception of Orders for Purchases. — It is necessary 
 that the actual orders to vendors should be issued only 
 from one source, and that is, the general office, where the 
 invoices for the goods are afterwards checked and passed 
 
REQUISITIONS FOR MATERIALS. 29 
 
 for payment. No effective control could be maintained 
 over the purchases of the firm if every shop foreman were 
 permitted to pledge its credit for anything he might at 
 the moment require. On the other hand, the clerks in the 
 general office can only act upon requisitions furnished to 
 them, and these must come either from the drawing office 
 or the storekeeper. 
 
 Drawing Office Requisitions. — Drawing office requisi- 
 tions will only be issued for stores or materials required of 
 special quality, construction, or dimensions, and which are 
 not in the possession of the storekeeper, nor usually kept 
 by him. In some branches of general engineering busi- 
 ness they will seldom be required; in others, as where 
 special forgings are required, made to drawings or templets, 
 or where plates or angles of special and varying sizes are 
 wanted, they will be more numerous. Such orders demand 
 special care in their preparation, and careful examination 
 and comparison of the dimensions with drawings or models; 
 it is therefore better that they should be written out in the 
 drawing office, either by, or under direction of, the draughts- 
 man in charge of the job, and sent to the manager for 
 signature. If multiple copying is used a press copy can 
 be taken in a book retained in the drawing office, and a 
 second copy in a book kept in the general office. After 
 the second, or general office, copy is taken the order will be 
 sent out — that is, issued — from that office in the ordinary 
 course. The following form of order sheet was found 
 suitable for some portion of the orders for a shipyard, 
 and with trifling modifications may be adopted for a 
 general engineering factory : — 
 
 Order No Date 189 
 
 To 
 
 Please supply the following to be 
 
 delivered at our works, carriage paid, on or before the 
 
 , 189 
 
 For the Clydesdale ENGmEERiNG Company Limited. 
 , General Manager. 
 
 No. 
 Required. 
 
 Length. Breadlh. I ™ck- 
 
 Quality. i! Marks. 
 
i50 REQUISITIONS FOE MATERIALS. 
 
 Storekeeper's Requisitions. — The storekeeper's requi- 
 sitions will, however, be a much more constant quantity, 
 and will comprise a vastly greater number of articles. He 
 will require to keep his various stocks supplied, so that 
 there may be no delay in the progress of work through 
 some of them being run out. The storekeeper should be a 
 man of considerable intelligence, with sufficient experience 
 to enable him to forecast the probable demands which 
 will be made upon him, and with capacity for estimating 
 rapidly the quantities or weights of articles in his posses- 
 sion. His stores ledger will give him the approximate 
 balance on hand, but with the numerous duties he has to 
 compass he cannot constantly turn over its pages and add 
 up the receipts and issues : his eye must be the guide to 
 the waning bin, and the ledger merely confirmatory of 
 what he has previously seen and appreciated. As, how- 
 ever, the demands he makes will be for stock articles, and 
 do not require such conformity to special directions as do 
 the drawing office requisitions, it is not necessary, nor even 
 desiraTjle, for him to fill up the order himself. A stores 
 requisition book should be compiled from time to time by 
 him, and sent to the general office for the several orders to 
 be made out under the authority of the manager. 
 
 This stores requisition book should be ruled with six 
 columns, for the following particulars to be inserted : — 
 
 1. Date of requisition. 
 
 2. Description and quality of goods required. 
 
 3. Quantity required. 
 
 4. By what date required. 
 
 5. Quantity now in store. 
 
 6. From whom ordered. 
 
 The particulars for the fifth column can easily be obtained 
 from the stores ledger, whilst the last will be filled up bj- 
 the order clerk before the book is returned to the store- 
 keeper. 
 
 Passing of Stores Requisitions. — No doubt the 
 responsibility for ordering material rests primarily with 
 the manager, but undoubtedly the directors should also 
 exercise some sufficient control over the issuing of orders ; 
 if they neglect this they will subject themselves to serious 
 animadversion in the event of any loss or financial 
 difficulty arising in consequence of reckless, or even 
 injudicious, ordering of materials. Both the draughts- 
 man and storekeeper should therefore be required to so 
 
REQUISITIONS FOE MATERIALS. 
 
 31 
 
 arrange the times of their requisitions that they may be 
 submitted to the board before the orders are issued ; and 
 any special requisitions which may be necessary in the 
 intervals should be specially noted, and the confirmatory 
 sanction of the directors obtained to them. It will 
 certainly be a little saving of clerical labour to place on 
 the board table the copy letter book, of the draughtsman, 
 and the requisition book of the storekeeper, but it is 
 probably better to compile a list in the following form, so 
 so that the directors more readily see what goods they are 
 ordering, and also their estimated value. 
 
 THE CLYDESDALE ENGINEERING CO. LTD. 
 
 The sanction of the Directors is requested to the 
 ordering of the following supplies : — 
 
 Date. 
 
 The f ol 
 by auth 
 
 Description. 
 
 lowing have alrea 
 ority o£ the mana 
 
 Quantity 
 wanted. 
 
 dy been 
 ger. 
 
 Estimated 
 price. 
 
 ordered 
 
 Estimated 
 Cost. 
 
 Proposed to be 
 ordered from 
 
 .General Manager. 
 
 This sheet should be initialed by the chairman or one 
 of the directors, and a minute passed and recorded in the 
 following or similar form : — 
 
 " The manager submitted list of supplies required, and 
 of those ordered by his authority since the date of last 
 board meeting, the estimated cost of which amounted to 
 
 £ , and the ordering of same is hereby 
 
 sanctioned and confirmed." 
 
Chapter V. 
 PURCHASES AND INSPECTION OF MATERIALS. 
 
 Form of Orders. — Different firms use various forms for 
 their orders. Some employ either counterfoil books or 
 carbon copy-books, whilst others prefer loose order sheets 
 of which copies are taken in a press copy-book. It is 
 purely a matter of convenience, which should be regulated 
 by the conditions and requirements of each firm. Where, 
 however, either counterfoil or carbon books are employed, 
 the books as well as the orders should be numbered — thus, 
 37/96, — signifying order No. 96 in book 37. This will 
 permit of two or three books being employed at the same 
 time (a matter of some convenience during a pressure of 
 business) without much difficulty arising in checking the 
 invoices or tracing the orders. In the same manner the 
 press copy-books should be numbered, so that the particular 
 book may be readily found afterwards, although only one 
 of them should be in use at the same time. The books 
 should in all cases be thoroughly and carefully indexed. 
 
 Whichever method is adopted, the order should always 
 contain the following particulars, viz, : — 
 
 The number and date ; 
 
 Name of the firm to whom given ; 
 
 The conveyance by which the goods are to be 
 
 forwarded ; 
 The particulars of the materials ordered ; 
 The tests, if any, required ; 
 The date delivery is wanted ; 
 The marks to be placed on the goods ; 
 and sometimes 
 
 The purchase price ; 
 
 but this, however, is not always necessary or desirable. It 
 should either be signed by the general manager, or, in his 
 absence, by some person authorised to sign on his behalf, 
 
 Copyable Printing Ink,— If loose sheets are used they 
 should be printed in copyable printing ink ; indeed all 
 forms of which it is intended to take press copies should 
 be printed in this manner. Many of the railway and other 
 
PURCHASES AND INSPECTION OF MATERIALS. 33 
 
 ■carrying companies now have their invoices and bills of 
 lading so printed, and find it of considerable convenience. 
 In case of disputes it is well to have complete copies of all 
 documents, and not merely of the written matter, leaving 
 that which is printed to be surmised from the context. 
 
 Placing of Order.— Before the order can be jplaced with 
 ^ny vendor, there are some steps to be taken which are of 
 more iniportance than the clerical detail of filling up the 
 form. It will be observed that the name of the firm to 
 whom it has been given has to be filled in the storekeeper's 
 requisition book by the order clerk in the general office. 
 Ey what principles or instructions must he be guided in 
 selecting this name ? 
 
 Orders Specially Placed with a Favoured Firm. — 
 
 It occasionally happens that an order has to be placed 
 in the hands of some particular firm irrespective of any 
 ■comparison between the prices they ask, and those 
 demanded in the general market. Sometimes this is part 
 of the contract for the sale of the finished article, and arises 
 from the requirement of the ultimate purchaser. The 
 Admiralty, for instance, require that shipbuilders who are 
 not on the list of engine builders shall submit for approval 
 the name of the firm whom they propose should engine a 
 warship ; and, in like manner, the specifications of some 
 merchant vessels require that certain portions of their 
 equipment should be obtained by the builders from par- 
 ticular firms. Such special stipulations, however, are not 
 very frequent ; they are, or should have been, provided for 
 in the estimate, and the manager will himself indicate 
 the firm to whom the order should in such cases be 
 addressed. Exceptional matters of this sort must not be 
 left to the determination of the order clerk. 
 
 The Cheapest Market. — More usually, however, the 
 destination of any order will be ruled by the price asked 
 for the article by competing firms; it will go to the 
 cheapest vendor. Sometimes this price is ascertained by 
 ■comparison of different catalogues ; at others by direct 
 inquiries previously addressed to two, or three, or more 
 makers. In some instances the quoted market price will 
 be the figure asked by any maker in the trade, and it is 
 only needful to refer to a daily paper for this figure ; the 
 cheapness will be determined by the relative qualities of 
 the article which the competitors turn out. In all cases, 
 however, considerations ot technic and polity arise, which 
 d3 
 
34 PUECHASES AND INSPECTION OF MATERIALS. 
 
 are utterly beyond the comprehension of any ordinary- 
 clerk, and the name of the vendor must be inserted in 
 the order, and afterwards in the requisition book, under 
 the direct instructions of the general manager or one of 
 his authorised and qualified engineer assistants. 
 
 Record of Catalogues and Tenders.— The very slightest 
 consideration should show that it is desirable to keep such 
 a register of catalogues and tenders as -will facilitate 
 reference to them : a few days' experience in an estimating 
 office will satisfy even the tyro that this is imperative if he 
 is to comfortably and quickly get through his work. For 
 this purpose an index book may be used, but it should be 
 on the dictionary plan, and register both the name and 
 description of the article quoted for, and the name of the 
 maker quoting. Thus quotations are received from Messrs. 
 Howard and Smith for two machines, and they will b& 
 indexed in three places as under : — 
 
 (1) Howard and Smith — Screw-cutting 
 
 Lathe, Milling Machine 1st Aprils 1897. 
 
 (2) Lathe, Screw-cutting — Howard and 
 
 Smith 1st April, 1897. 
 
 (3) Milling Machine — Howard and 
 
 Smith 1st April, 1897. 
 
 This index, however, fiirnishes nothing but the name of 
 the machine, of the maker, and the date of quotation or 
 catalogue. It is true this may be extended into a short 
 description of the machine, with its price, but this will 
 involve so much unnecessary labour that the index itself 
 will speedily be permitted to fall into arrear. Next to the 
 index, which furnishes the clue, it is desirable that the 
 original quotation or catalogue should be readily available. 
 For this purpose, letter quotations may be filed in alpha- 
 betical order, on Shannon, Amberg, or other like files, 
 whilst catalogues may be placed in suitable pigeon holes, or 
 box files, under the first letter of the name of the firm 
 supplying them. Thus, when a price is wanted for a. 
 milhng machine, a reference to the index will show that, 
 they have not only been quoted for by Howard and Smith,, 
 but also by Brown and Jones, Robinson and Sons, and 
 Evans and Griffiths ; whilst if it is required to ascertain 
 whether Mclntyre and Dunlop supply anything beyond 
 steel rails, a reference to the index letter M will show that, 
 they have also quoted for steel blooms, billets, and slabs,, 
 spring steel, and planished steel bars for shafting. 
 
PURCHASES AND INSPECTIOK OF MATERIALS. 35 
 
 The Card System.— The objection to a book index is 
 the difficulty of dividing it so that sufficient room shall be 
 available for all the letters, and that one letter shall not be 
 exhausted whilst the others are still almost intact ; and 
 this difficulty is greatly increased when the dictionary 
 method is adopted.. The card system of the Library 
 Bureau Limited, or the Ceres Company (Mr. T. Bowater 
 Vernon), obviates this, and will be found more rapid in 
 manipulation and reference than any book. The Ceres 
 system of filing letters and pamphlets also affords one of 
 the most convenient forms of putting away quotations and 
 catalogues to be available for future use. The advantage 
 of the card system and Ceres file is that obsolete quota- 
 tions can easily be removed from both index and file 
 without interfering with the other papers, thus reducing 
 the number which have to be searched through on any 
 future occasion. 
 
 Illicit Commissions. — In determining the firm with 
 whom any order shall be placed there is one grave con- 
 sideration which really affects the question of the 
 "cheapest market." It is the giving to the employes of 
 the purchasing firm secret commissions on the amount of 
 the purchases. Fortunately this pernicious practice is not 
 so common in England as in some countries abroad, but 
 even here there are far too many instances of it in connec- 
 tion with a few trades, and it is not unknown in certain 
 branches of engineering. The effects are so disastrous 
 on any firm subject to its influence, whether as giver or 
 receiver, that both directors and managers should use 
 every effort to stamp it out. Whether it be merely a fat 
 goose at Christmas or 2^ per cent commission on the turn- 
 over to a storekeeper or sub-manager, the immediate effect 
 is usually to pass inferior goods at an enhanced price, and 
 the later result to depreciate the quality of work turned 
 out by the purchasing firm. If for no other reason than 
 this, that these secret and illicit commissions are occa- 
 sionally passed (though we believe not to any large extent 
 in Great Britain, and seldom, if ever, with reputable 
 firms), it is desirable that the directors and general 
 manager should exercise very close supervision over the 
 orders sent out, and determine to whom they shall be 
 allotted. 
 
 Date of Delivery. — The date of delivery inserted on 
 the order is an important portion of it, and any delay 
 
36 PUECHASES AND INSPECTION OF MATERIALS. 
 
 beyond the allotted time may in some eases have serious 
 results. If the goods are required for any particular 
 contract their late delivery may cause the contract to be 
 behind time in completion, and thus involve the firm in 
 difficulties with the ultimate purchaser. Some method must 
 therefore be adopted for ensuring this date being complied 
 with, or at least of the attention of the vendors being 
 drawn to the fact that the goods are overdue. In some 
 establishments a register is kept of all orders sent out, and 
 these are marked off with the date of completion. This 
 system is effective, but very troublesome, and in small 
 establishments either increases the cost of management 
 unnecessarily, or causes other duties to be neglected. It 
 will in general be found sufficient to mark off on the 
 counterfoil, or the press-copy order book, the goods 
 received, and at stated intervals, say once a month, to go 
 through the book and extract particulars of uncompleted 
 orders. The several suppliers should then be written to 
 by the order clerk, and the list kept before him until 
 cleared, for the purpose of repeating the applications at 
 frequent intervals. Printed forms may be used for this 
 purpose, but they are open to the objection that, like the 
 acknowledgment notes of railway companies, they are 
 soon regarded as meaningless routine, and so are dis- 
 regarded. Although it is rather more trouble, it is better 
 to use a written or typed letter, the wording of which 
 may be varied with the circumstances and urgency of the 
 case. 
 
 Penalty Clause. — It is, perhaps, well to remember 
 that in few cases will a penalty clause inserted on the face 
 of an order be of any avail in case of delay in delivery of 
 the goods. Even the use of the expression "as and for 
 liquidated damages" does not appear to overcome the 
 difficulty. Mr. Josiah W. Smith, Q.C., formerly a County 
 Court Judge, says : " The construction of the agreement 
 will not depend on the name given in it to the sum ; for it 
 may be construed to be a penalty, though expressed to be 
 a sum payable by way of liquidated, that is, ascertained 
 damages, and not by way of penalty ; or it may be 
 construed to be liquidated damages, though expressed to 
 be a penalty." Cases may, and do sometimes, arise where 
 it is absolutely necessary that the vendor should be fixed, 
 under liability to damages, to a certain date for delivery of 
 goods or materials, but such cases should be dealt with 
 under specific agreement, and not by a mere remark on 
 
PURCHASES AND INSPECTION OF MATERIALS. 37 
 
 the face of the order ; and the agreement should always be 
 prepared by, or under the advice of, the solicitor to the 
 company. 
 
 Inspection of Materials in Progress. — The giving an 
 order is the first active step in procuring materials or 
 goods ; the inspection of them prior to acceptance is the 
 second. In some cases it is desirable, and at times abso- 
 lutely necessary, to inspect finished, or partly finished, 
 materials during the progress of their manufacture, and 
 not to rely on the detection of faults by an examination 
 after delivery at the works. An instance of this is where 
 large forgings of complex or irregular shapes have to be 
 procured from another manufacturer, and where great 
 inducement exists to "jump on" some of the parts, 
 instead of forging the whole piece out of the solid. The 
 most effectual safeguard against such practices is to keep 
 an inspector at the producing works to watch the forging 
 during its progress. Some firms are truly said to be above 
 suspicion, and these are largely patronised by the 
 Admiralty ; yet even at such works the omnivagant inspec- 
 tor from Whitehall may be found just as frequently as at 
 smaller or less reliable factories. The practice is a good 
 one, and one of the few Government regulations which 
 may, with advantage, be copied by the private engineer. 
 
 When the purchasing firm are shippers, either as 
 merchants or as engineering contractors supplying their 
 own requirements for concessions abroad, the necessity for 
 inspection during the progress of the work becomes more 
 imperative. Faulty workmanship, or irregularities in con- 
 struction, cause far more trouble when discovered at the 
 destination in China, Egypt, or South Africa, than when 
 discerned and remedied at home. If the goods are for a 
 customer, such defects lead to claims, irritating correspon- 
 dence, and sometimes to loss of connection ; if they are for 
 some foreign contract, undertaken by the firm itself, the 
 results may prove equally disastrous, since the completion 
 of a large extent of important work may be delayed, and 
 heavy penalties or other losses incurred. 
 
 There is a difference, however, between the two inspec- 
 tions, which to some extent modifies the qualifications 
 needful for the men selected as inspectors. In the case of 
 forgings, or other articles purchased for use in England, 
 the conditions of manufacture are usually comparatively 
 simple, it being necessary only to see that the proper 
 quality of raw material is used, and that the patterns and 
 
38 PURCHASES AND INSPECTION OF MATERIALS. 
 
 specifications furnished by the purchasing firm are strictly- 
 adhered to. Tor this purpose, a man may be selected from 
 the particular trade concerned of sufficient ability to justify 
 his promotion to foreman's rank, if there were a vacancy : 
 an assistant foreman, or senior and reliable leading man 
 should be admirably fitted for such a post if the staff of the 
 establishment were efiicient and trustworthy. It must, 
 however, be remembered that tact, and certainly some 
 degree of courtesy, are essential if the inspector is to 
 perform his duties without causing unnecessary friction 
 between the two firms. He should have impressed upon 
 him, before commencing his journey of inspection, that he 
 is merely an inspector, charged with the duty of seeing 
 that certain conditions, already agreed to, are strictly 
 complied with, and that he has no authority to interfere 
 with the management of the works to which he is pro- 
 ceeding, nor to make impertinent suggestions for 
 improvements in methods of working. Engineers of all 
 grades are usually glad to discuss various systems of 
 construction, and even of shop management, but, whilst 
 open to discussion, they naturally resent outside criticism 
 of their own particular adoption. The inspector of foreign 
 work, however, requires something more than skill in the 
 technic of his own branch of the trade, and tact in the 
 execution of his office. He will be, or should be, furnished 
 with a complete specification, every detail of which 
 he has to See complied with ; he will receive packing 
 and forwarding instructions, which he has to see 
 carried out in all cases (and they are the majority) where 
 the goods are forwarded direct from the manufactory to 
 the port of shipment, and not passed through the purchas- 
 ing works for examination, or further operations thereon. 
 Now, for this duty it is evident that a better and more 
 widely trained man is desirable than would be needful for 
 inspection of a forging for home use. The latter should 
 be a skilful, if not indeed a perfect, forgeman. The former 
 should be a thorough mechanical engineer, Avith a 
 complete knowledge of the methods of packing and 
 forwarding for the different markets. Whilst he will, in 
 these respects, be guided by the instructions he receives 
 from the manager, just the same as the storekeeper at 
 home is, he will yet be compelled to rely and act upon his 
 own judgment, and answer, without reference to his 
 superiors, many questions in reference to the interpreta- 
 tion of these requirements. 
 
Chapter VI. 
 
 KECEIPT OF MATERIALS AND PASSING OF 
 INVOICES, &c. 
 
 Receipt of Materials at Works. — The greater portion 
 of the materials and stores required by the engineer will, 
 however, be delivered at his works. This is the case even 
 with stores required by railway and mining engineers, 
 building contractors, and ship and marine engine builders, 
 who frequently have temporary premises far away from 
 their main works. For the moment we must consider these 
 temporary establishments as following the same routine in 
 the receipt of materials as obtains at headquarters. 
 
 The first person who admits the goods into the yard is 
 the gatekeeper. Whilst in relation to the removal of 
 material of any description from the premises he has to be 
 almost a military martinet, his duties in relation to 
 receiving thereof are much less onerous. Briefly, he must 
 see that no absolutely improper carts are admitted, an 
 impeditive which he will seldom need to exercise, and that 
 all admitted proceed directly to their respective stores or 
 other places of delivery. When, however, the cart weighing 
 machine is at the entrance gate, he must also see that all 
 goods in bulk, such as coal, coke, hay, straw, lime, and iron, 
 when forming a complete load, are properly passed over 
 it. To facilitate reference to the weights thus obtained, a 
 record book should be kept, which may be in either of two 
 forms. For the first a foolscap book, of cheap paper, which, 
 however, must admit of writing with ink, may be used, and 
 if it be ruled in the following form it will be found 
 convenient and inexpensive : 
 
 From 
 whom. 
 
 ConTefance 
 
 Gross, 
 cwts. qra, lbs. 
 
 Tare, 
 cwts, qvB. lbs. 
 
 Kett. 
 cwts, qrs. lbs. 
 
 By 
 
 whom 
 weigbed. 
 
40 RECEIPT OF MATERIALS. 
 
 This form necessitates a journey by the accountant, 
 storekeeper, or other oflficial, every time he wishes to make 
 any reference to the firm's weigh-book. Another method 
 may therefore be adopted, and that is, to keep a counter- 
 foil book for inward weighings, the same as for outward! 
 weighiiJgs, and to tear ofi the slips for each delivery and 
 send them to the storekeeper, who will thus have the 
 necessary record always at hand in his own office. The 
 form should be the same as the ordinary outwards book 
 (which may be procured at any commercial stationers), the 
 words " received from " being substituted for " delivered 
 to." It is convenient that weigh-books should be a diffe- 
 rent colour for received and Helivered goods, and as the 
 received weights are in the nature of a credit to the vendor 
 it is better to use the same colour as for credit notes, which 
 is usually red, leaving the delivery weighing-books of their 
 natural colour of white. 
 
 Receipt by Storekeeper.— The person who really accepts 
 the goods on behalf of the firm is the storekeeper, and by 
 him the preliminary examination has to be made. It is 
 important that this should take place, if the goods are 
 delivered by rail, canal, or other common carrier, before he 
 signs for them, so that he may notify in the book any 
 visible marks of damage, otherwise any subsequent claim 
 may be repudiated on the ground of "good' signature. 
 When the goods are packed in matting or other covering 
 which cannot conveniently be removed at the time, it is 
 advisable to protect the firm by a remark, "condition not 
 known." 
 
 A more particular examination must be made, and the 
 result of it placed on record when the materials are passed 
 into store. It is almost unnecessary to say that this should 
 be the same day they arrive in the yard, unless some great 
 temporary pressure of business interferes. A goods 
 received book must be kept by the storekeeper, in which the 
 goods are entered immediately they are accepted. A book, 
 ruled in the following form, will answer the purpose in the 
 majority of engineering works. It need not be expensive 
 in paper or binding, as it has not such continued references 
 made to it as to a ledger ; but, on the other hand, it should 
 not be too thick, as, lying continually on the counter or 
 desk, it is apt to get very dirty if kept long in use. 
 
RECEIPT OF MATERIALS. 
 
 41 
 
 
 Prom whom 
 received. 
 
 Order 
 No. 
 
 Deecription 
 of Stores. 
 
 Number 
 received. 
 
 Weiglit 
 
 INVOICED. 
 
 Date. 
 
 received. 
 Cwt. Qr. Lb. 
 
 Number. 
 
 Weight. 
 Cwt. Qr. Lb. 
 
 Price. 
 
 Amount. 
 £ . s. d. 
 
 1898. 
 Jan. 9 
 
 Kvan and 
 Daniel. 
 
 37/96 
 
 3 in. Rivets. 
 
 - 
 
 
 
 - - 
 
 
 
 
 
 
 
 
 
 >t 
 
 Roger 
 Bacon. 
 
 36/437 
 
 Crown 
 Deals. 
 
 1 Stand. 
 
 - 
 
 - ; - 
 
 
 
 
 
 
 
 
 
 
 James 
 Smith. 
 
 37/97 
 
 1 in. Hose 
 Piping. 
 
 90 yds. 
 
 
 
 
 
 
 
 
 
 
 
 
 The entries are made without any classification, either 
 of character of goods, or of orders for which they are 
 intended. Those articles which are purchased by weight 
 must be passed over the weighing machine (there must 
 always be one or more in the stores), those purchased by 
 number or measurement must be counted or measured ; 
 and the weights, numbers, or measurements so arrived at 
 must be those entered in the receipt book in the columns 
 " number received " or " weight received." Goods weighed 
 in bulk at the entrance gate will be entered, after inspec- 
 tion and receipt by the storekeeper, in accordance with the 
 gate weight ticket, or weight book. Deals, and timber of 
 that class, will usually be accepted on the vendor's measure- 
 ment, but care should be taken to check it occasionally 
 when stacked, more particularly if it has been conveyed by 
 rail, or canal. 
 
 The Storekeeper. — It is absolutely necessary this work 
 should be discharged with great care and conscientiousness, 
 because any perfunctory performance of it may lead to 
 great trouble and loss. On the one hand, if the goods are 
 underweighed or undercounted, a long correspondence and 
 irritating dispute may arise with the vendors, and a claim 
 made upon them may eventually have to be withdrawn, with 
 great discredit to the purchasing firm ; on the other hand, if 
 short weights or short measurements are not detected, the 
 profits may be reduced through materials being paid for, 
 and never received. And the worli has to be done in the 
 midst of other conflicting duties equally important, and 
 Tvhilst all the clatter of store issuing is going on around. 
 It will, therefore, readily be seen that the choice of a store- 
 keeper is a matter of considerable moment for the smooth 
 working of an engineering firm. Some managers favour 
 
42 RECEIPT OF MATERIALS. 
 
 the appointment of retired or pensioned non-commissioned 
 officers of the navy and army for the post, on account of 
 their accustomed submission to routine and discipline, and 
 happy method of enforcing on others the orders entrusted to 
 them. More, however, is needful for a good storekeeper 
 than rigid adherence to instructions, and blind submission 
 to orders. Some knowledge of the trade should most 
 certainly be possessed by him, although it is not necessary 
 that he should be a trained journeyman fitter, or mill- 
 wright, or electrician. It is perhaps easier to impart to 
 the retired soldier or sailor some knowledge of trade, than 
 it is to implant in the ordinary British labourer or mechanic 
 habits of discipline and obedience. The preference for 
 non-commissioned officers is therefore well founded on the 
 excellent characters they have already obtained, and the 
 qualities of adaptability they have displayed, but the selec- 
 tion must be a judicious one. All men are not equally 
 worthy who have worn stripes on their arm. 
 
 Delivery Notes. — Most firms forward delivery notes at 
 the same time as the goods, and these, when received, 
 should immediately be handed over from the general office 
 to the storekeeper to be checked. It will be observed that 
 the goods received book has on the right-hand four 
 columns for number and weight, price and value of goods 
 invoiced. None of these must be filled in from the 
 delivery note ; they must all be entered from the monied 
 invoice, which will in due course be received through the 
 accountant's department. But any discrepancy between 
 the goods received and those entered on the delivery note 
 must be marked on the latter in red ink, whether the 
 difference be in quality or quantity. The notes must be 
 retained by the storekeeper until the monied invoices are 
 received, and returned to the accountant attached to the 
 invoices when the latter are checked and certified. 
 
 Tests of Materials. — There are certain materials which 
 cannot finally be accepted by the storekeeper until they 
 have been tested for strength, and sometimes for chemical 
 purity, by. the technical officers of the company. The 
 more delicate tests should be made in a properlj^ fitted 
 engineering laboratory set apart for that purpose, and by 
 men throughly qualified by scientific training to take and 
 tabulate exact observations, and appreciate the value of 
 any variations therein. It is difficult to set any limit to 
 the benefits which Messrs. Denny have derived i'rom their 
 
PASSING QF INVOICES. 43 
 
 experimental tank at Dumbarton, or the advantages which 
 shipbuilders in general have gained from the investigations 
 there conducted. Such laboratories are, however, expen- 
 sive and difficult to construct, and can only be indulged in 
 in a complete form by wealthy firms. But even on a very 
 small scale they are most serviceable, and exert an invalu- 
 able influence in inducing precision of work throughout the 
 establishment. In general engineering establishments, how- 
 ever, the majority of tests of materials will be conducted 
 in the workshops, and by the ordiaary working staff. It 
 is necessary that in these workshop tests the same delicacy 
 of treatment, and accuracy of observation, should be used 
 as would be adopted by the technical or scientific officers 
 in their own operations ; and the best way to secure this 
 is to regard all tests, whether for the general manager, the 
 drawing office, the stores, or workshop use, as strictly 
 scientific operations demanding the utmost possible care in 
 manipulation. Such care, if the works manager insists 
 npon it in all cases, soon becomes a matter of habit, but 
 much depends on the way in which- it is regarded by him. 
 We remember a case where a large number (30,000) of 
 yellow metal ship bolts from one of the first copper works 
 in South Wales were almost condemned, because nothing 
 would induce the works manager to make the agreed tests 
 of them with sufficient delicacy and care ; near, or near 
 enough, was his constant motto. A threat of official con- 
 demnation at length induced him to have the work 
 performed in proper manner, and they were then found to 
 be, as from the first they had been, fully up to Admiralty 
 requirements. These requirements were undoubtedly, and 
 properly, very stringent, but the case illustrates the 
 advantage of making nicety of manipulation a matter of 
 liabit. Had it been so in this instance the temporary 
 irritation which arose, and threat of official censure, would 
 have been avoided. 
 
 The earliest possible opportunity should be taken of 
 making these tests. Many stores and materials are 
 purchased on short terms of payment, and it is desirable 
 that any claims for rebates and allowances, or notices of 
 rejection, should be rendered before the monthly statements 
 are sent in. 
 
 Invoices. — In some instances invoices will be sent with 
 the goods ; in others they will be rendered at the end of 
 the month. Let us follow these invoices. In some firms 
 it is usual to register them as they come in, and affix a 
 
44 PASSING OF INVOICES. 
 
 consecutive number to each ; but, as this is merely a 
 pedantic addition to clerical work, it cannot be recom- 
 mended. It is, however, desirable to enter such invoice and 
 statement, and indeed all documents received, in the letter 
 register hereafter described. The invoice passes first to 
 the accountant's department, and is therti marked at the 
 foot with a rubber stamp in the following! manner. The 
 stamp should be as small as is conveniently possible. 
 
 Goods received by 
 
 Goods passed by 
 
 Marked off Order-book by. 
 
 Prices checked by 
 
 Calculations checked by . 
 Passed for payment by .... 
 
 .Manager Director. 
 
 The stamp indicates the course which should be pursued. 
 The invoice is sent to the storekeeper, who examines it 
 with his goods received book, and if it agrees therewith, 
 affixes his initials. It will be remembered that in the 
 received book there are two columns (on the right-hand 
 side of the page) for quantities, prices, and values of goods 
 invoiced. These can now be completed from the invoice, 
 and must exactly agree therewith. Of course, in a quantity 
 of general stores, or of iron and timber delivered to the 
 firm at various times, but charged in the one account at 
 the end of the month, the invoice amounts will be scattered 
 in various places through the book, but the totals of the 
 two will agree. The next blank in the stamp will be filled 
 by the storekeeper's initials when the invoice is for such 
 general stores as he himself enters in his requisition book, 
 and examines and passes on deliverj^ When, however, 
 it is either wholly for, or includes any special stores which 
 have been ordered through the drawing office, or other 
 technical department, or any machine, or part of machine, 
 the invoice must be passed from the storekeeper to the 
 technical {i.e., engineering officer) who has examined the 
 stores or machine, so that he may certify that the goods 
 have been passed by him, as agreeing with the order given. 
 
PASSING OF INVOICES. 45 
 
 and being up to the specified standard of quality in both 
 material and workmanship. 
 
 Examination in Office. — The invoice will then be 
 returned to the accountant's office- for the checking of it to 
 be completed there. First, the various orders affected 
 must be marked off on the counterfoils, or in the press 
 copy book, as executed or partly executed. In the latter 
 case the quantity received must be inserted. In order that 
 the clerk may have a more speedy check on the supply of 
 goods ordered than would be afforded him by the monthly 
 invoice, it is a good plan to have the delivery notes 
 received with them sent to him daily after being checked 
 by the storekeeper, to whom they must, of course, be 
 returned. He will then mark them off on the counterfoil, 
 or copy of the order by a tick, crossirig this tick when the 
 invoice has been passed by him. This plan causes very 
 little clerical work, and prevents duplicate invoices being 
 passed for any order. 
 
 The next care is to check the prices at which the goods 
 are charged. We have seen that it is important to place 
 the order in the cheapest market, and that to secure this 
 end catalogues and tenders must be obtained, and carefully 
 filed and recorded. It is evidently equally important to 
 see that these quoted prices, on which possibly calculations 
 and estimates have been based, are adhered to by the 
 vendors. Naturally these prices must be checked, and, if 
 necessary, corrected, before the calculations are examined, 
 but when this has been done the extensions of the amounts 
 charged must be carefully gone over before the invoice is 
 ready to be passed for payment. Any corrections necessary 
 should be made in red ink. 
 
 Now, there is one point which must not be overlooked 
 in connection with the checking of invoices. The store- 
 keeper enters his received book from the invoice as it 
 comes from the vendor, but it is necessary that this book 
 should agree with the amount debited to stores account 
 in the general ledger. If, therefore, any alteration is 
 made in an invoice the nature and extent of the alteration 
 must be notified to the storekeeper, who will correct his 
 book accordingly. These notifications must always be in 
 writing. 
 
 Passing for Payment. — A space will be noticed on the 
 stamp " passed for payment by." This is for the use of 
 the head of the accounts branch of the office, either the 
 
46 PASSING OF INVOICES. 
 
 accountant or the secretary. Where the two offices are 
 distinct, it is certainly desirable that the invoice should be 
 generally overlooked by the accountant, and this memo- 
 randum signed by him. The object of these signatures is 
 to fix responsibility. The secretary has other and more 
 important duties to discharge than examining invoices, 
 and he should not be asked to certify to a service which 
 has been performed by another officer. The accountant, 
 on the other hand, has to make himself acquainted with 
 every detail of the accounts, and to watch that every person 
 about the premises who has anything to do with them 
 treats them in a proper manner. His signature on the 
 invoice is a certificate that he has satisfied himself that it 
 has been properly dealt with, and that, as corrected if 
 necessary, it is ready for payment when due. 
 
 Places for two other signatures are appended, for the 
 manager and a director. Whether the manager should or 
 should not sign all invoices is a matter of much dispute 
 and variation in practice, and depends greatly on the size 
 and nature of the works. The signing of all invoices 
 certainly gives him a control over the purchasing depart- 
 ment which it would be difficult to otherwise obtain, and if 
 they are placed before him at regular intervals the tax on 
 his time is not very great. It must be clearly understood 
 that it is not intended thereby to express any detailed 
 scrutiny by the manager. The director's signature should 
 be affixed later, and merely signifies that the proper 
 officers have examined the invoice, and found it correct. 
 
 The examination by the manager and director would 
 thus appear to be of a very perfunctory kind, and on this 
 ground it is sometimes objected to. But any gross error 
 in purchasing, any manifest error or overcharge in price, 
 will probably be noticed by one or other of them ; whilst the 
 mere knowledge that they will both inspect the invoices 
 before they are paid will tend to promote care on the part 
 of their subordinates. 
 
 Correction of Invoices. — We have referred already to 
 the correction of invoices, and recommended that altera- 
 tions therein should be made in red ink. If only ordinary 
 double-entry accounts were kept it would be sufficient to 
 post the invoices for the amount for which they are 
 rendered, and to either forward debit notes to the vendors 
 or obtain from them credit notes for any differences which 
 may be discovered. But in engineering works the com- 
 
PASSING OF INVOICES. 47 
 
 plication of cost accounts must ahvays be remembered, and 
 proyision must be made from the very first stage of the 
 transactions for facilitating their working and securing 
 their correctness. Moreover, the capabilities of the store- 
 keeper must be remembered ; there are works of such 
 magnitude as enable him to be furnished with an efiScient 
 staff of clerks, and where his position is rather that of a 
 departmental manager than of an ordinary storekeeper, 
 but these are the exceptions rather than the rule. The 
 usual storekeeper has neither the capacity nor the leisure 
 for the niceties of correcting entries, nor should he have, 
 under ordinary conditions, such additional labour thrust 
 upon him. Taking into consideration air these factors, the 
 better plan is to make the correction on the face of the 
 invoice and advise the storekeeper thereof, so that he may 
 make his goods received book agree therewith. 
 
 Returns and Rejections. — Precisely the same remarks 
 apply to goods rejected or returned. They have not been 
 taken over by the purchasing firm, they will not be paid 
 for, they ought not to appear in the stores ledger either as 
 received or issued, never having been, in a true sense, 
 stores at all ; and the most satisfactory course is to strike 
 them out of the invoice. An additional, though possibly 
 minor, reason may be found in the fact that if they are first 
 posted to the credit of the vendor, and afterwards to his 
 debit on their return, they improperly increase the totals 
 of both purchaser and sales. 
 
 Debit and Credit Notes. — But it is equally necessary 
 that the vendor should not remain under any delusion as to 
 the amount at which his invoice has been passed ; he should 
 at the very earliest moment be advised of the correction 
 which has been made. For this purpose it is desirable to 
 use a specific form of debit note, an example of which we 
 give below. 
 
 THE CLYDESDALE ENGINEEKING COMPANY LTD. 
 
 189... 
 
 Debit Note. 
 
 To 
 
 Please note that we have made the following corrections 
 in your invoice dated 189... 
 
48 
 
 PASSING OF INVOICES. 
 
 Particulars of Correction. 
 
 Amount 
 Deducted. 
 
 We have passed your invoice for £ and 
 
 shall be glad if you will correct your books accordingly. 
 
 Yours truly, 
 For The Clydesdale Engineeeing Company Ltd., 
 General Manager. 
 
 Possibly the vendors may in reply forward a credit note, 
 that procedure being necessary for the completion of their 
 own method of bookkeeping, and in such case the note 
 may be filed along with the corrected invoice : it is useful 
 to retain as evidence that the allowance or correction 
 has been agreed to. 
 
 Packages and Discounts. — We fear we shall, by most 
 accountants and bookkeepers, be considered heterodox in 
 the suggestion we make for the treatment of packages, but 
 as it has been practically tried in several firms with which 
 we are acquainted and found successful, we can recommend 
 it to our readers. It is simply to strike the charge for 
 packages out of the invoice, and post to the credit of the 
 vendor the amount as corrected. Of course this only applies 
 to such of them as it is intended to return ; if it is deemed 
 advisable to retain them for future use, or if they have to 
 be sent abroad, then they must be continued in the invoice, 
 paid for in due course, and charged to a package account. 
 
 The simplicity of the method is the chief recommenda- 
 tion of it. The chief object which any respectable firm 
 has in charging packages is to ensure their return, and it 
 is quite right that in sending them away they should pro- 
 tect themselves against loss. But it is perfectly absurd to 
 increase clerical work in the purchasing office by passing 
 packages through the invoice book, posting them in the 
 ledger, entering them when returned in the day book, and 
 again making another ledger entry to clear the first debit. 
 
PASSING OF INVOICES. 49 
 
 It is impossible to urge too strongly that bookkeeping 
 never makes profit. Its utmost merit is to prevent losses ; 
 and, therefore, any unnecessary addition to it for the mere 
 purpose of producing uniformity " or completeness of 
 system is a tax upon the earning departments, and a tax 
 which a judicious manager or board -will sedulously 
 discourage. It is sufficient to return the cases and 
 wrappers as soon as they are empty, accompanying them 
 with an advice note, but neither return nor advice should 
 be neglected or delayed, or troublesome correspondence 
 may arise, and the advantage of the reduced clerical 
 labour be lost. 
 
 Discounts are of two kinds — trade discount, which is 
 usually a percentage reduction of standard lists, and the 
 ordinary cash discount. The former should always be 
 deducted from the invoice, and given effect to in the 
 storekeeper's goods received book. Thus, if the stan- 
 dard price per unit is 60s., with 40 per cent discount, the 
 discount must be deducted from the invoice, if not already 
 done by the vendors, and the goods received and entered 
 by the storekeeper at 36s. per unit. The cash discount is 
 more troublesome to deal with, as to reduce all the prices 
 by 2| or 5 per cent would involve an immense number of 
 calculations, and produce figures of fractions or decimals 
 which would be most difficult to deal with in re-issuing 
 the stores. It is quite true that it is done in some chemical 
 works, but there the whole consignment of any material is 
 charged to one process, and not issued by pounds and 
 half pounds, or dozens and half dozens, as is the case in an 
 engineering establishment. The preferable plan is to treat 
 cash discount as an establishment item, and so divide it in 
 the cost accounts, over the various departments affected. 
 
 Invoice Book. — The invoices, after final examination, 
 must be at once placed in the invoice guard book, or 
 secured in such position as will both keep them safely and 
 render them available for ready reference. It is some- 
 times desirable to substitute a register for the guard book, 
 entering and dissecting the invoices therein in the same 
 manner, but keeping the invoices on files or in mechanical 
 binders. This is particularly the case in some foreign 
 countries, where the legal requirements as to invoices 
 are stringent, and where insufficiency of stamps entails 
 penalties on both the issuer and receiver. But there is 
 undoubtedly a great objection to a separate register; it 
 e3 
 
50 
 
 PASSING OF INVOICES. 
 
 involves additional trouble in referring to the invoices and 
 creates risk of their being mislaid or lost. In this country, 
 at all events, the guard book is the most convenient and 
 economical method of keeping them. Of course, the 
 invoices must be neatly folded and endorsed outside with 
 the name and date. Sometimes a clerk will endeavour to 
 " improve " on the endorsement, and save himself trouble, 
 by folding the paper so as to display the invoicing firm's 
 name, but this should never be permitted. Invoice head- 
 ings are now printed in such variety of styles, and with 
 such variation of space in printing, as to dissipate all 
 uniformity where they are displayed. Another error to 
 be guarded against is folding the invoice into too small a 
 size, and in consequence crowding the book. This may 
 seem a small matter, but such attempted economy 
 generally results in inconvenience, and sometimes in 
 troublesome blunders in posting or analysis. 
 
 The book should be ruled with vertical columns in the 
 following manner, and paged only on the right-hand page 
 of each folio. The left side of the book will generally 
 contain the invoice and the process column; the right side 
 will be apportioned to the analysis. 
 
 Dbobmbbr, 1898. 
 
 ^3 
 
 Invoice, endorsed with 
 
 Date and 
 
 Name of Vendor. 
 
 ' o "5 S 
 
 O , Hi EC 
 
 n' « a 
 
 P. ^" 
 t>i 
 o 
 
 K 
 
 Now, it is evident that we have here a very complete 
 and useful form of journal, so far as purchases are 
 concerned' — much more useful, indeed, than the orthodox 
 journal would be, and far less troublesome. It is hardly 
 necessary to say that the totals of the analysis columns 
 must agree with the total of the first column — the amount 
 
PASSING OF INVOICES. 
 
 51 
 
 of invoices. The process column is for the purposes ol 
 the cost accounts only. 
 
 Posting of Invoices.— The invoices are posted to the 
 credit of the vendors individually, and this should be done, 
 for such as are passed and placed in the book, by the 
 ledger clerk daily. The analysis columns are only posted 
 to the debit of the various expenditure accounts in their 
 monthly totals. All this is ordinary bookkeeping, but 
 with an invoice book properly arranged, and judiciously 
 handled, much more information may be obtained than is 
 usually supplied. The first point to be considered is the 
 amount of detail intended to be given in the trading 
 account of the firm. If the purchases of various kinds, 
 such as iron and steel, forgings, smiths' iron, are therein to 
 be separately specified, then columns must be provided 
 for each class. In any case there must be provision made 
 for such charges as freight, rates, taxes and insurance, and 
 royalties ; and also for capital expenditure of the nature of 
 new machinery or tools. But apart from the trading 
 account, and even where the total purchases are therein 
 stated in one sum, it is convenient for the directors and 
 manager to be able readily to ascertain the amount of their 
 expenditure on the various classes of material. 
 
 We are, however, supposing a stores department to be 
 in existence, and most of the invoices to be debited to the 
 storekeeper, and credit given him for his issues, the 
 difference between the two amounts at any date represent- 
 ing, approximately, the value of the stores on hand. 
 Several of these analysis columns will, therefore, be 
 debited to stores account, and the most satisfactory method 
 of making the entries is to treat them individually, and 
 not to run the risk of clerical errors by summarising them 
 in one item. The debit ledger entries will, therefore, be as 
 follow : — 
 
 2)r. 
 
 STORES ACCOUNT. 
 
 Jan. 31 
 
 To Purchases — Iron and Steel 
 
 do. Forgings 
 
 do. Smiths' Iron 
 
 do. Timber 
 
 do. Sundry Stores 
 
 do. Freight & Cartage 
 
 Invoice 
 
 
 * 
 
 Book. 
 
 
 
 19 
 
 256 
 
 7 
 
 
 103 
 
 17 
 
 
 46 
 
 5 
 
 
 10 
 
 16 
 
 
 135 
 
 17 
 
 
 16 
 
 5 
 
52 PASSING OF INVOICES. 
 
 This disposes of the majority of the columns in our 
 model invoice book; the others do not affect the stores 
 accounts, and will therefore be posted direct to_ the 
 expenditure accounts in the ledger; the ncAV machinery 
 to machinery (capital) account, the new tools to loose tools 
 (capital) account, and the rent, rates, and insurances, and 
 royalties and legal expenditure to the accounts bearing 
 those headings. 
 
 Our readers will perceive that we thus obtain a 
 thorough check on the stores account, and can also, by a 
 summary of twelve lines only, ascertain the money value 
 of iron and steel, forgings, or smiths' iron purchased 
 during the twelve months. 
 
 It will be observed that all freight and cartage is 
 debited to stores account. This is necessary for costing 
 purposes. Carriage forms part of the cost of goods pur- 
 chased, and should, whenever it can be earmarked, be 
 included in the issue price. Part of the freight may, 
 however, be for capital expenditure, the materials for 
 which do not pass through the stores books. Such carriage 
 should be at once debited in the stores issue book to capital 
 account, particulars being given of the goods to which it 
 refers. By this method we can readily ascertain the total 
 amount of carriage and cartage for the twelve months, a 
 result which could not be arrived at mthout considerable 
 difficulty if part of it were debited direct to a capital 
 expenditure account (new machinery, for instance) through 
 the invoice book. 
 
 It may possibly be said that the same information may 
 he obtained from the stores ledger, but when the minute 
 subdivisions of this ledger are considered, when it is 
 remembered that such a class as smiths' iron will be there 
 divided into a dozen accounts, according to sizes, it will be 
 apparent that the use of the columnar method may be 
 made of considerable service to the engineering manager,, 
 whilst at the same time saving clerical labour. 
 
 Stores Ledger. — There is, however, another posting to 
 be done, and another or subsidiary ledger to be kept, and 
 this ledger must agree in total, though not in detail, with 
 the stores account m the general ledger. It is usually kept 
 as a single-entry book, but it may be readily arranged on a 
 double-entry plan, and the additional accounts and entries 
 for effecting this can be made by any practical bookkeeper. 
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PASSING OF INVOICES. 
 
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54 PASSING OF INVOICES. 
 
 maybe recommended by egotistical professional accountants 
 and professional auditors who desire to magnify their office, 
 and imperfectly understand the business they are auditing, 
 but it will increase the work of the clerkly class, and add 
 to the cost of the unremunerative workers. The totals of 
 the stores received and issued books can be compared by 
 the accountant with his stores account in the general 
 ledger, and should agree therewith. If the entries from 
 these into the stores ledger are correctly made, it is evident 
 that the total balances of the latter at any given date should 
 agree with the financial stores account. 
 
 The work of keeping the stores ledger, and subsequent 
 references to it, will be greatly facilitated by having it 
 ■ specially ruled. Indeed, this is almost imperative when 
 the storekeeper is not a trained accountant. Some store 
 ledgers are exceedingly elaborate in their accumulated 
 varied columns, whilst others possess only the sweet 
 simplicity of a cash ledger. We have found the foregoing 
 to be a 'happy and workable compromise between these 
 two extremes. 
 
 At the moment we are concerned only with the receipt 
 side of the ledger, and this must be posted from the stores 
 received book, and not from the invoices or delivery 
 notes. This will ensure agreement (subject, of course, to 
 the detection and correction of clerical errors) with the 
 accountant's ledger in the general office. 
 
 Invoices not Rendered. — It must have occurred to our 
 readers that there is one difficulty in the stores received 
 book which has not been dealt with. There must always 
 be a gap between the end of the month and the closing of 
 the invoice book for the month, arising from the fact that 
 in no business can all invoices be obtained from the 
 vendors by, or on, the last day of the month. In some 
 cases indeedj particularly with sub-contractors who are 
 both workmen and masters, the delay is very great, and it 
 is often difficult to obtain invoices until many months 
 after the goods or services are rendered. The accountant 
 may, however, do much to obviate this trouble if he mil 
 press for prompt rendering of invoices, more especially 
 directing his attention to those from the smaller and 
 dilatory people. But whatever precautions are taken 
 there will always be some goods entered in the stores 
 received book, the invoiced particulars of which cannot be 
 completed before that book, and the general office invoice 
 
PASSING OF INVOICES. 55 
 
 book, are closed for the month. "When, therefore, the 
 invoices are received, the entries in the stores received 
 book should be completed in red ink, and an entry made 
 in the current month in black ink so as to be included in 
 the monthly total of the amount column, as under : — 
 
 Goods entered in January from John Storm ...£13 i 6 
 „ February „ Eleazer Warlow 14 3 
 
 By this device the monthly totals of the invoice book and 
 stores received book will agree, whilst the storekeeper will 
 still have details, in chronological order, of all the goods 
 he receives. Of course the ledger pastings must be com- 
 pleted by him at the same time, and also any entries of 
 issues which are waiting the invoices in order to enter 
 the values. 
 
 Payment of Accounts. — The invoices for goods received 
 have been examined, and charged either directly to various 
 expenditure accounts, or to the storekeeper for him to 
 debit to sundry contracts when the goods are issued, and 
 on the other hand have been credited to the personal 
 accounts of the parties from whom they are received. 
 These person%,l accounts have now to be cleared by entries 
 from the cash book, that is, by the posting of payments of 
 the amounts to the parties to whom they are owing. It 
 must be clearly understood that the examination and 
 certification of every invoice must be completed, and the 
 invoice itself be pasted in the guard book before it is paid. 
 When a payment has to be made before the debit has 
 been finally accepted as correct, it must be treated as a 
 " payment on account," and so marked in the monthly list 
 of creditors submitted to the board, and in all such cases 
 care must be taken to retain a sufficient reserve to amply 
 protect the purchasing firm. It has been seen that all 
 stores and materials should be purchased under authority 
 of the board. It is equally important that for all payments, 
 the same sanction should be obtained, and to ensure this a 
 board meeting, or meeting of the finance committee, should 
 be held on a fixed date each month, at which a list of 
 accounts becoming due shall be presented to the directors. 
 It is convenient, in considering this list, to review the 
 officers preparing it. 
 
 The Accountant. — The position and authority of the 
 accountant will depend greatly on his relationship to the 
 secretary and general manager. If the secretary has 
 
56 PASSING OF INVOICES. 
 
 charge of the whole of the financial books and accounts 
 of the company, in addition to his exclusively secretarial 
 duties, then the accountant will frequently degenerate 
 into a mere bookkeeper, acting entirely on the directions 
 of the secretary, and possessing no initiative authority 
 himself. On the other hand, if the manager supervises 
 all the office arrangements excepting the secretary's own 
 special office, the accountant will probably enjoy greater 
 latitude in his work ; and have more responsibility thrust 
 upon him. The division of work varies considerably under 
 different circumstances ; the accountant of a small general 
 workshop in a country town is vastly inferior, not only in 
 salary and social position, but also in official influence, to a 
 like-named clerk on a large railway system, or at one of the 
 large shipbuilding, locomotive, or textile machinery 
 establishments of the country. He has much the same clerical 
 work to perform, but he is certainly not permitted the 
 same range of initiation or criticism. There are, however, 
 some general principles which must guide the selection 
 and work of every accountant whether the factory be 
 a large one, or merely an improvised shed with a dozen 
 or two workmen in it. He must, of course, be a thoroughly 
 qualified bookkeeper, not merely able to correctly foUotv 
 any system laid down for guidance, but also capable of 
 inaugurating a new or improved system if the necessity 
 should arise. He must understand the theory, as well as 
 the practice, of double entry ; must be capable of building 
 up nominal accounts in such manner as to turn single into 
 double entry books ; and must exercise such discipline in 
 his office as will ensure each day's work being cleared off" 
 before the office is closed at night. He must also keep a 
 close supervision over the officers and clerks holding a 
 position quasi-independent but. subordinate to him, on the 
 cashier, the storekeeper, timekeepers, and warehousemen, 
 and see that their work is daily kept up to its proper 
 status. SuSh a system is only a matter of routine ; bank 
 tellers have to balance their cash and books each night 
 before they leave the premises, and this involves the 
 completion of the day's transactions ; there is no greater 
 difficulty in an engmeering firm's "records" being so 
 completed, if the accountant insists upon it, and the staff 
 is sufficient for the work. 
 
 For purposes of discipline, as well as of account, he 
 should be the chief of the general office staff, reporting to 
 his immediate superior, i.e., the secretary or manager, any 
 
PASSING OF INVOICES. 57 
 
 irregularities which may arise. He should, as part of his 
 daily work, and not at irregular intervals, check the 
 entries of his assistants, and also of the storekeeper and 
 timekeeper so far as to see that they are in exact con- 
 formity with the system of the firm. The cashier's 
 receipts and payments should be checked, either by the 
 secretary or accountant, daily into the cash book. It is 
 true this will be done by the auditor and his clerks when 
 they examine the books, monthly or half-yearly as the 
 case may be, but it is important to verify all cash trans- 
 actions as soon as possible after they occur, and any 
 additional examination is a further safeguard against 
 irregularity or fraud. Of course, it must be understood 
 that the accountant has no authority to give directions to 
 the cashier in the matter of payments, all such instructions 
 coming direct from the board, or, in case of emergency, 
 from the manager or secretary. His relation to the cashier 
 will be strictly critical, and in the nature of a preliminary 
 or internal audit. 
 
 The Cashier. — The cashier should always be an officer 
 distinct from the accountant or bookkeeper. • In small 
 firms the cash duties are frequently undertaken by the 
 secretary, but there is an obvious objection to this in the 
 absence Avhich it creates of any internal control. No 
 inferior officer in the service of the company can be 
 empowered to supervise the secretary, Avhose authority and 
 dignity as the representative of the directors must always 
 remain unimpaired. Whenever the magnitude of the 
 work will permit it, a clerk of thoroughly reliable character 
 should be appointed cashier, and confined strictly to his 
 own proper duties of receiving and paying cash, cheques, 
 drafts, and bills of exchange. It is not necessary that he 
 should be a clerk of commanding ability, but strict 
 integrity, sobriety, methodical habits, and correctness in 
 his work are essential. He should not make any payment 
 or advance of cash, not even to a director or the general 
 manager, without due authority, or without obtaining a 
 receipt; and he should immediately record in his cash 
 book all cash he receives or pays, unless it be advances for 
 wages or expenses, which are temporarily treated as cash 
 on hand. A rough cash book is sometimes kept into which 
 the receipts and payments are hastily entered as they are 
 made, and from this rough book the permanent cash book 
 is entered up in the course of the day as opportunities 
 occur. There are both advantages and disadvantages in 
 
58 PASSING OF INVOICES. 
 
 this plan, but the latter are usually greater than the former; 
 when, however, it is adopted, an imperative rule should be 
 made that the permanent cash book be entered up before 
 the close of the day, and that this book, and not the rough 
 one, be balanced each night with the cash in hand. 
 
 Selection of Cashier. — It will be seen that the appoint- 
 ment of cashier is peculiarly one which may be filled up by 
 promotion of some member of the staff, who by past 
 industry and integrity has proved himself worthy of it. 
 Such a man will be better than an outsider, for his character 
 will be known to his principals, and his conduct will have 
 satisfied their prior scrutiny. The salary should be a 
 sufficient one to induce continuance in honesty, and the 
 position will thus become a coveted one in the office, 
 where lady clerks are employed, they will generally be 
 found, from their steady and regular habits, and strict con- 
 formity to rule and discipline, admirably qualified for 
 cashiers, although they are generally quite unfitted for the 
 more responsible and exacting duties of accountant. Such 
 an appointment will, however, entail greater supervision 
 than with a male cashier, and, in other ways, requires much 
 consideration before it is made. Some engineering firms, 
 who formerly engaged lady clerks, have now dispensed 
 with them, finding the disadvantages attending their 
 employment greater than the advantages. 
 
 Montlily List of Creditors.— These two officers, the 
 accountant and the cashier, will be immediately con- 
 cerned in the preparation of the monthly list of creditors 
 for the board, and in carrying out the board's instructions 
 thereon. Some directors require such elaborate returns of - 
 financial matters as utterly defeat their object ; their very 
 complexity prevents examination, and the entire statement 
 is passed, for payment of accounts, or as the case may be, 
 on the mere assurance of some official that it is all right. 
 At the present we are dealing only with creditors, a list of 
 whom must be prepared from the personal ledger. We 
 strongly recommend this being written in a separate book, 
 or on separate sheets to the list of debtors, as the journal 
 form is perplexing to directors who are not very proficient 
 in bookkeeping. In addition to the amounts owing to 
 ordinary trade creditors appearing in the personal ledger, 
 the list should include the bank overdraft, if any, and 
 interest, rents, rates, and temporary loans owing and 
 accruing due for payment. The wages estimated for pay- 
 
PASSING OF INVOICES. 
 
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60 PASSING OF INVOICES. 
 
 ment up to the date of the next monthly board should also 
 be added, and also all bills payable falling due -vyithin the 
 like period. But such a list, -without any further note or 
 explanation, would prove misleading unless all goods were 
 purchased on the same terms as to date of payment; as 
 these vary, and sometimes considerably vary, it is needful 
 to make a note of the day when payment falls due. It is 
 convenient to make a total at the end of the trade creditors, 
 adding the other amounts below, and making a grand 
 total at the foot. If a book is used it may be ruled to 
 serve for three months or six months, and thus save a 
 little clerical work, as well as affording a ready means of 
 comparison between one month and another. This, how- 
 ever, is solely a matter of convenience, and while distinctly 
 advantageous in one place will prove equally inconvenient 
 in another. The form given on page 59 is a suitable one. 
 
 Sanction by Directors. — The directors have a very 
 onerous duty to perform when this list is placed before 
 them. They have to assure themselves that the payments 
 they are asked to sanction, and which dviring the meeting 
 they do sanction, are correct so far as they can ascertain 
 by the exercise of " reasonable care and prudence." Their 
 responsibility . in this respect may not be very patent to 
 many directors, but it is very real, and will be surely 
 brought home to them in the event of legal proceedings 
 arising. But reasonable care and prudence do not mean 
 the checking of every calculation, or of every description 
 in an invoice, nor the weighing or measuring by the 
 directors themselves of every article included in it. These 
 are duties which they employ clerks and storekeepers to 
 discharge, and for which they pay them wages in exactly 
 the same way as they pay the blacksmith for smithing a 
 piece of iron. But it does mean such supervision and 
 control as will ensure a reliable system of examination 
 being adopted and enforced. And this is not a difficult 
 task, if only directors will take the trouble to attend to 
 the work they have undertaken. Either the day previous 
 to the board meeting, or early on the same day, one of the 
 directors (they may take it by rota) should compare the 
 list with the invoices in the guard book, initialing both the 
 invoice and the list at the same time. When the board 
 pass the accounts for payment some distinctive mark should 
 be made in order that the cashier may know what cheques 
 he is authorised to draw. A record of the payments thus 
 
PASSING OF INVOICES. 61 
 
 sanctioned should also appear in the minutes, and although 
 this may appear a useless multiplication of records and 
 clerical work, the advantage of it will be apparent in case 
 of any after dispute among the directors. 
 
 Drawing of Cheques. — We assume that all payments, 
 with the exception of petty cash payments, wages, and 
 travelling expenses, will be made by means of the firm's 
 own cheques. Payments in cash, or by transfer of cheques 
 or bills received, are exceedingly objectionable, and the 
 small sum thereby saved in bank commission is infi- 
 nitesimal in comparison to the risk of error, and even 
 fraud, involved. It has also the advantage of preventing 
 an accumulation of cash in the ofiice. All monies received 
 by the cashier can, and should be, banked either the day 
 of receipt or, at latest, the following day. If, therefore, 
 our assumption is correct, the next step is for the cashier 
 to write out the cheques which have been sanctioned. 
 
 Form of Cheque. — Various special forms of cheques 
 have been adopted both by large private firms and by 
 joint-stock companies. The ordinary form of bankers 
 cheque may be used, and in such case the following 
 wording should be either printed or stamped with a 
 rubber stamp thereon : — 
 
 For and on Behalf op the Clydesdale Engineering 
 Company Limited. 
 
 y Directors. 
 
 Secretary. 
 
 The following form, which was invented many years 
 ago by the audit office of one of the large English railway 
 companies, is, however, a much better one, and prevents 
 any tampering with the amounts written on cheques, as 
 the bankers are advised direct of them, and compare the 
 receipts presented with the list they hold. 
 
62 
 
 PASSING OF INVOICES. 
 
 THE CLYDESDALE ENGINEERING CO. LIMITED. 
 
 ■vr Vulcan Works, Hopetown, 
 
 .189.. 
 
 8 
 
 HO 
 
 To Messrs. Kingwood and Co., 
 Sheffield, 
 
 Inland 
 
 Revenue 
 
 Stamp. 
 
 Id. 
 
 
 « a Dear Sirs, 
 
 The Union Bank of London Limited, Chancery 
 s ^ Lane, London, has been instructed to pay you the 
 § g amount named on the annexed receipt, on your 
 1 presenting the same duly stamped and signed. 
 
 g 
 
 .Secretary. 
 
 No .....189... 
 
 Received from The Clydesdale Engineering Com- 
 pany Limited the sum of pounds 
 
 shillings and pence 
 
 in settlement of our account for 
 
 The blanks must be filled in by the cashier before 
 the advice or cheque is presented to the secretary for 
 signature. 
 
 The real authority to the bankers for payment of the 
 money is contained in the advice sent them, and "vvhich 
 should reach them before the notices to the payees are 
 
PASSING OF INVOICES. 
 
 63 
 
 sent out. It should be signed by two directors and the 
 secretary the same as the ordinary, or banker's cheque, 
 would be. 
 
 THE CLYDESDALE ENGINEEKING CO. LIMITED. 
 Vulcan Works, Hopetown. 
 
 189... 
 
 To the Union Bank of London Limited, 
 Chancery Lane, London. 
 
 We have this day passed the following [fourteen] 
 accounts for payment, and you will pay the amounts named 
 to the several firms specified, on presentation of our letters 
 of advice, with the receipts attached duly signed by themj 
 and debit same to our current account. 
 
 For and on behalf of the Clydesdale Engineering 
 Company Limited. 
 
 > Directors. 
 Secretarv. 
 
 No. of 
 Advice. 
 
 Address. 
 
 A third method, which is really a modification of the 
 last, is sometimes adopted, but as it lacks the independent 
 advice to the bankers it does not possess the same elements 
 of safety. It has also the disadvantage of not bringing 
 before the directors the amounts for which ^hey are 
 signing cheques so graphically as the second plan, and it 
 aflords greater facility for passing the cheques from hand 
 to hand. It, however, gives less trouble to the bank 
 tellers, and will therefore be preferred by them. It is 
 usually in the following, or some similar style : — 
 
64 
 
 PASSING OF INVOICES. 
 
 THE CLYDESDALE ENGINEERING CO. LIMITED. 
 jq'Q Vulcan Works, Hopetown. 
 
 .189... 
 
 Inland 
 
 Revenue 
 
 titamp. 
 
 Id 
 
 S !. 
 
 
 o 
 
 CO 
 
 To the Union Bank of London Limited, 
 Chancery Lane, London. 
 
 Pay to ; 
 
 or order, the sum named in the receipt below, on its 
 presentation, duly signed by them. 
 
 For and on behalf of 
 
 The Clydesdale Engineering Co. Limited. 
 
 > Directors. 
 ...Secretary. 
 
 No 189... 
 
 Received from The Clydesdale Engineeeing Com- 
 pany Limited the sum of pounds 
 
 shillings and. -. pence, 
 
 in settlement of our account. 
 
 In preparing the list of stores required for submission 
 to the monthly board, provision was made for reporting 
 to the directors any ordered in the interim between the 
 meetings under the authority of the manager. In like 
 manner cheques will at times be drawn and payments 
 made for goods purchased on immediate terms of payment 
 without the sanction of he board being first obti ned , or for 
 
PASSING OF INVOICES. 65 
 
 oLher urgent needs. This can, however, only be done under 
 the authority of at least one director, even in cases where 
 cheques are signed by one director only and the secretary, 
 or under the authority of two directors where the general 
 rule of signature is adopted. All such payments should, 
 however, be confirmed by the board, and the confirmation 
 entered on the minutes. For the purpose of this report a 
 separate sheet, or page of the book, may be used, or the 
 amounts may be entered on the ordinary list of the ledger 
 balances — creditors — and in the column, due for payment, 
 a remark made in Red ink " paid on " 
 
 Vouchers. — After the cheques have been prepared and 
 signed, they must be sent out by the cashier, accompanied 
 by a letter, the greater part of which may be printed, 
 leaving only such blanks as the amount and details of pay- 
 ment to be filled in. There is no difficulty in the cashier 
 doing this ; indeed he will require to have the necessary 
 information in order to complete the forms of receipts he 
 sends out. Monthly statements are usually forwarded by 
 the vendor firms in addition to, or as summaries of, their 
 invoices, and these- statements after being checked, cor- 
 rected, and reduced by cash discounts in tlie accountant's 
 office, should be passed to the cashier. If no statement 
 has been received for an account passed by the directors 
 for payment, then a memorandum giving these particulars 
 of it must be made out in the accountant's office. 
 
 The letters forwarding cheques should be copied in the 
 cashier's letter book. He will have very few other letters 
 to write, but it is convenient for him to have them all at 
 hand for reference. 
 
 If receipts attached to the cheques are employed they 
 should, when received back, be pasted on to the counterfoil 
 cheques. Other receipts (they will not be many) must be 
 placed in a guard book in date order. Where receipts are 
 taken apart from the cheques, they should be placed in a 
 a guard book in date order, whilst the cheques returned by 
 the bankers should be fastened to the counterfoils. 
 
 Some cashiers number their vouchers consecutively to 
 agree with the entries in the cash book, and many 
 accountant's text books recommend this plan. There is not 
 the least necessity for it. No auditor can have any difficulty 
 in tracing vouchers filed in date order. If, however, the 
 cashier has not sufficient work otherwise to occupy his 
 time there can no harm in thus employing himself. 
 f3 
 
66 PASSING OF INVOICES. 
 
 Petty Cash. — For petty cash transactions a separate 
 book should be used whether the petty cash is disbursed by 
 the firm's cashier, or by a subordinate clerk. By far the 
 most simple and effective plan is to set apart a fixed sum 
 for petty cash at the commencement of the month ; and to 
 make an analysis of such payments, and charge them 
 through the credit side of the cash book at the close of the 
 month. When an amount equal to the sum of such 
 analysis is transferred from general cash to petty cash the 
 latter will be restored to the amount at which it originally 
 stood. This will obviate the necessity for a " Petty Cash 
 Ledger Account," but whether it be adopted, or the ledger 
 form be used, the monthly analysis should be insisted upon, 
 so that the proper expenditiire accounts may be debited. 
 
Chapter VII. 
 
 COST ACCOUNTS. RECAPITULATION OF 
 ARRANGEMENTS FOR PURCHASES. 
 
 Cost Accounts. — No system of bookkeeping can be 
 satisfactory in an engineering factory which does not lead 
 up to, and permit the preparation of, detailed cost accounts. 
 Many lectures have been delivered, and treatises written 
 by professional accountants, indicating methods by which 
 this may be done, but nearly all are complicated by 
 interlocking the financial books with the cost accounts, a 
 ■complication which generally results in rendering the 
 former more abstruse, whilst limiting the detailed informa- 
 tion to be gained from the latter. The first effort, with 
 which we are acquainted, to grapple with the subject on 
 these lines was the excellent treatise on " Factory 
 Accounts : their Principle and Practice," by Messrs. 
 Emile Garcke and J. M. Fells, published in 1887, and of 
 which a revised edition has recently been issued. Although 
 we differ in many respects from Messrs. Garcke and Fells, 
 we must express our admiration for the honest and 
 laborious manner in which they have endeavoured to solve 
 a very difficult problem ; if they have not entirely 
 succeeded, they have at least explained its intricateness, 
 and insisted upon the necessity for correct and scientific 
 method., if the cost accounts are to be of any practical 
 Talue. Probably the failure which most public 
 -accountants make in dealing with this matter arises from 
 their utter ignorance of the requirements of engineers, 
 .and of the purposes for which cost accounts are used. 
 That they should balance with the financial books is 
 beyond dispute, for such agreement is necessary to prove 
 their correctness, but that they should be interlocked 
 therewith, and form part thereof, though an endless 
 succession of subsidiary ledgers and transfer books and 
 journals, is surely discarding their primary intention. 
 The very perfection of such a system, when, by great 
 expenditure of clerical labour it is fully carried out, will 
 introduce such rigidity of results as will deprive them of 
 jnuch of their value. The necessities of the engineer 
 
m 
 
 COST ACCOUNTS. 
 
 THE IMPERIAL SPINNING 
 
 Trading Account fob Year 
 
 1897. 
 Jan. 1. 
 
 Dec. 31. 
 
 To Stock— Cotton 
 
 Yarn, &c 
 
 „ Purchases — Cotton 
 
 Yarn, &c 
 
 „ Discount 
 
 ,, Paper 
 
 „ Petty Cash 
 
 „ Wages 
 
 ,, General Bepairs 
 
 „ Tie Yarn 
 
 „ Carriage 
 
 „ Cases 
 
 ,, Waste 
 
 „ Salaries 
 
 ,, Subscriptions 
 
 „ Charges 
 
 ,, Stationery 
 
 „ Timber 
 
 ,, Packing 
 
 „ Rates and Taxes 
 
 „ Gas 
 
 „ Water 
 
 „ Coal 
 
 ,, Tube 
 
 ,, Sundries 
 
 „ Oil 
 
 ,, KoUer Covering 
 
 ,, Cleaning Waste 
 
 „ Banding 
 
 „ Bobbin and Skewer 
 
 ,, Boiler Repairs 
 
 ,, Shafting do 
 
 ,, Cardroom Repairs 
 
 „ Engine do , 
 
 „ Spinning do 
 
 ,, Leather • 
 
 „ Interest 
 
 „ Mechanics' Repairs 
 
 „ Chief Rent 
 
 „ Brush 
 
 „ Cardroom Brush 
 
 „ Machinery i 
 
 „ Twine ! 
 
 ,, Skip i 
 
 „ Depreciation of Buildings and 
 
 Machinery 
 
 „ Profit, transferred to Profit and' 
 
 Loss Account 
 
COST ACCOUNTS; 
 
 COMPANY LIMITED. 
 
 ENDING December 31st, 1897. 
 
 1897. 
 Dec. 31 
 
 By Sales — Cotton .... 
 Yarn, &e. 
 
 ,, Cottage Rents 
 ,, Waste 
 
 Stock on hand — Cotton 
 
 Yarn, &c. 
 
70 COST ACCOUNTS. 
 
 demand that he shall be able to revise and alter his 
 " costings " without introducing confusion and anarchy 
 into the accounts of the company. 
 
 Nature of Cost Accounts. — ^It is well to consider what 
 it is the engineer really requires for his own guidance, and 
 in what respects it difiers from the information which the 
 directors must supply to the shareholders, or to the official 
 receiver in the event of an unfortunate ending to the career 
 of the firm. The latter consists chiefly of a statement of 
 the total amount of material purchased, of the salaries and 
 wages expended in working it, and of the general stores 
 and management expenses incurred in carrying on the 
 business, on the one hand, and on the other of a summary 
 of the amount received from sales of finished products, and 
 of other sundry receipts obtained from sale or hire of the 
 company's assets. This will be readily understood from 
 the accompanying example of the trading account of a 
 textile mill. 
 
 Now it is difficult to imagine a trade account more 
 detailed than this, and equally impossible to conceive its 
 serving any purpose for which engineers use detailed cost 
 accounts. This accotmt deals with everything in the 
 aggregate, and displays no proportion between any of the 
 individual debits and any item of production, or even any 
 process of manufacture. Spinners do arrive at such know- 
 ledge, it is true, but it is by a different method, and based 
 on different observations of data, to that on which the 
 trade account is founded. 
 
 The engineer's requirements are much greater than the 
 spinner's ; his business is more complex and varied, and 
 the opportunities for financial blunders are much greater. 
 Whilst the spinner, knowing the cost and selling price of 
 32's twist, can instinctively arrive at the analogous figures 
 for 40's, 50's, or 60's twist, the engineer can find no natural 
 analogy between either cost or selling price of a steam 
 hammer and a screw-cutting lathe, both of which are pro- 
 duced in his establishment. To be on equal terms for the 
 financial management of his business with the textile 
 manufacturer, he must incur greater trouble in compiling 
 his costs. 
 
 Division of Cost Accounts. — The information required 
 is of a threefold nature, the first of which may be arranged 
 for in the ordinary ledger, but only by the sacrifice of 
 other particulars which are generally deemed essential for 
 
COST ACCOUNTS. 71 
 
 ordinary bookkeeping purposes, or by the use of transfer 
 entries, whicb greatly increase the work of, and perplex 
 and worry the bookkeeper. The three divisions are :— 
 
 (A) The cost of the various departments, such as offices, 
 mould loft, joiners, blacksmiths, fitters, labourers, &c. 
 
 (B) . The cost of the various portions of a machine or 
 engine, such as cylinders, cylinder coverings, pistons, con- 
 necting rods, crankshaft, boiler shell, boiler tubes, boiler 
 fittings, &c., &c. 
 
 (C) The total cost of each separate contract as it is 
 completed and ready for delivery to the purchaser. 
 
 It is also desirable always, and in some cases it is 
 absolutely imperative, that the directors and general 
 manager should be able to ascertain the profit or loss of 
 each department considered as an independent concern, 
 and selling its productions to the firm, or to other depart- 
 ments of the firm, at current market prices. 
 
 All this cannot be worked out on one sheet or on one 
 set of sheets ; the results may be thrown into diagrammatic 
 form eventually, but their compilation week by week is 
 tedious work, and demands much paper and patience. 
 The most satisfactory and practical method is to adopt the 
 threefold division into — 
 
 Form A for departmental accounts. 
 
 Form B for process accounts. 
 
 Form C for contract accounts, 
 which will lead from one to the other in natural sequence. 
 
 Invoice Debits to Cost Accounts. — At present we have 
 only to consider debits which arise directly in the invoice 
 book : by far the greater proportion of the costs debits will, 
 however, arise in a subsequent stage of the transactions, 
 when various materials are issued by the storekeeper, or 
 when labour is expended on their manipulation, which is 
 paid for through the wages book. It will be observed that 
 in the form of invoice guard book already given there is a 
 column headed "process." By this term process is meant 
 the sub-division of a contract, an engine, a machine, or even 
 one piece of work, such as a length of shafting, into such 
 component parts or classes of labour as the manager may 
 deem needful to be separately stated for his information. 
 But in the invoice book it has a supplementary signification, 
 and is used to indicate the department, or contract, or 
 service to which the invoice is to be charged in the cost 
 
72 COST ACCOUNTS. 
 
 sheets. Thus, in three invoices for iron from the Dowlais 
 Iron Company, the first being in compliance with an order 
 prepared in the drawing office for the shell of boiler 
 No. — will be entered (in the process column) to that 
 contract, the second, being for smiths' iron, will be entered 
 to stores department, while the third, for iron for roofing 
 of a new shed, will be entered to capital account. Again 
 an invoice for iron and steel received from another firm 
 contains iron for two separate contracts, specially ordered 
 for them, a,nd a third lot for general consumption in the 
 yard ; these three lots must be dissected and apportioned 
 in separate amounts in the process column. In like 
 manner invoices, or portions of invoices, will appear for new 
 machinery, and new tools Avhich must be entered to capital 
 account, and for rents, rates, insurances, legal expenses, 
 and other charges which must be entered to management 
 expenses in the process column. 
 
 This arrangement may be modified so far as to pass all 
 stores ordered for contracts through the storekeeper's books, 
 and this is by many accountants considered the better plan 
 in any establishment dealing with work of minor dimen- 
 sions, as machine tools and electrical plant. For bridge 
 construction, shipbuilding, tankmaking, and work of that 
 description, it is more convenient to charge the specially- 
 ordered material to the contract, both m the financial 
 books and the costs accounts, carefully notifying the store- 
 keeper in each instance of this being done. In all cases, 
 however, the capital charges and management expenses 
 should be collected from the invoice book, and not passed 
 through the stores account. 
 
 When the accountant, or the cost accountant when a 
 special clerk is detailed off for that purpose, is preparing 
 his several " A" cost accounts, he will enter on the debit side 
 all the invoices, as they are marked in the process column. 
 It is, however, evident that the boiler plates marked to 
 Contract No. — cannot be charged immediately to that 
 contract, for in that case the debit would go direct to the 
 " C " sheet, which is to show the completed cost of the entire 
 work, and would be deposited metaphorically on a sort of 
 Tom Tiddler's ground, being in no man's particular charge. 
 His first care, therefore, must be to consider which depart- 
 ment will commence operations on the material in question — 
 in the case instanced it will be the boilermakers — and then 
 to charge it to that department, but for the special con- 
 tract for which it was ordered. The material in question 
 
COST ACCOUNTS. 73 
 
 will thenceforward be in charge of the foreman of the 
 boilermakers, or other trade affected, who will be respon- 
 sible for its being used for the purpose for which it was 
 ordered, and for no other. 
 
 Freight and Cartage. — In the model form of invoice 
 book there is a column for freight and cartage. Railway in- 
 Toices are, however, frequently so A^oluminous, and trouble- 
 some to check, that it is better to keep a special guard book 
 for them into which they can be pasted flat. The analysis of 
 them is very troublesome, especially for detailed cost 
 accounts, if averages and percentages are to be abolished 
 or reduced to a minimum. It is evident that the carriage 
 on such material as is ordered for new buildings or 
 machinery, or extension of the works, should be charged at 
 once to capital account. It is part of the cost incurred in 
 increasing the value of the premises, and should no more 
 be debited to revenue account than should the iron used in 
 the erection, or the wages paid for putting it up. In like 
 manner the carriage on plates, angles, and girders, specially 
 ordered for and charged direct to such constructions as 
 bridges or ships, should be debited to the same contract or 
 process. It is not, however, quite so clear what is to be 
 done with the carriage on general goods which pass 
 through the storekeeper's hands, and the difficulty is 
 increased by the fact that such charges form the greater 
 part of the carriers' accounts against a mechanical engineer- 
 ing firm. The cost of an article is the invoice price of it 
 plus the amount which has to be paid for delivery at the 
 works, and on the cost thus arrived at, the issue price of it 
 by the storekeeper should be based. The carrier's invoice 
 will be passed through the storekeeper's received book 
 (less the proportion of it charged direct to capital or con- 
 tract accounts), but will be divided so as to show each class 
 of goods comprised in it. The example on the following 
 page will perhaps better explain the entries to be made in 
 the stores received book. 
 
 These items will, of course, be posted in the stores 
 ledger, to the same accounts as the vendors' invoices, for 
 the stores, and therefore increase the issue price of the 
 stores by the amount of the freight. Undoubtedly there is 
 a considerable amount of labour involved in this method, 
 but it eliminates one of the charges which, in some firms, is 
 passed into general expenses and other like accounts, 
 which are averaged over the ordinary expenditure accounts 
 
74 
 
 COST ACCOUNTS. 
 
 
 
 
 
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COST ACCOUNTS. 75 
 
 as divisible charges. It is always desirable to reduce 
 these averages as much as possible in accounts ; they are 
 frequently misleading, and invariably afford a loophole for 
 getting quit of an obscure charge Avithout ascertaining 
 what it is really for. 
 
 But railway and other carriers' accounts demand much 
 more careful attention than is necessary for a correct record 
 and disposition of them in the books. Rightly or wrongly the 
 railway companies have obtained an unenviable character 
 for making overcharges in their bills, and endeavouring to 
 introduce rates which are not justified by the conditions of 
 the traffic, nor even, in all cases, authorised by their parlia- 
 mentary tolls. Sometimes these complaints arise through 
 pure misunderstanding; the railway classifications are very 
 intricate, the exceptions and variations are niimerous, 
 and freighters feel aggrieved at charges which they imagine 
 are excessive and incorrect, when the real difficulty is that 
 the rate book, or some of the exceptions in it, have not 
 been properly interpreted by them. It is therefore desirable 
 that one clerk in the office should be specially trained to 
 keep a record of all railway rates affecting the firm, and to 
 note all alterations made therein ; and that this clei'k 
 should be charged with the duty of checking all railway 
 accounts rendered. It will be necessary to refer to the 
 orders given to ascertain that materials has not been con- 
 signed "carriage forward" when purchased delivered at the 
 works, but errors of this kind are few in comparison with 
 those which arise through the charging of incorrect rates. 
 
 The best form of rate book is that used by the railway 
 companies themselves, ruled with columns for the various 
 classes and with a space for special and exceptional rates. 
 The stations should be arranged in the order they stand 
 on the several railways, as in a Bradshaw's guide, and not 
 alphabetically. This facilitates comparison of the com- 
 panies' charges from various districts, and greatly assists 
 the freighters in presenting their claims for reduction of 
 any unequal rates which press unfairly on a particular 
 district, and hamper its traffic. The anomalies are not so 
 numerous now as formerly, but they still exist, and arise 
 almost automatically through changing conditions of 
 localities, and consequent diversion of traffic. 
 
 Temporary and Branch Establishments. — The branch 
 establishments of railway and building contractors, ship- 
 builders, &c., have been incidently mentioned. These 
 
76 ARRANGEMENTS FOR PURCHASES. 
 
 differ from the separate works confederated under one 
 board, worked under almost independent management, 
 and keeping their own individual accounts, which are 
 sometimes found in the great modern " trusts " or 
 "combines." The branches to which we refer are temporary 
 in character, without any fixed plant, and visually supplied 
 with an imperfect and inefficient office staff. The accounts 
 should be made as simple as possible, subject to the 
 maintenance of an efficient check on the expenditure. 
 
 The best plan is to treat the branch as a department, 
 and debit it with all materials and money sent to it, 
 in exactly the same way as stores are debited to the stores 
 department. The foreman in charge of the branch will 
 have to account for this cash and material in his weekly 
 wages sheet, and his monthly returns to the head office. 
 The wages sheet will be in the form adopted at the home 
 establishment ; any other cash spent will be accounted for 
 in a pett}' cash return to the cashier at the close of the 
 month ; and the stores and material consumed will be 
 exhibited in a monthly statement similar to that made by 
 the storekeeper to the accountant, as hereafter explained. 
 The only books necessary will be a cash book, a stores 
 received book, and a stores issue book, with perhaps a stores 
 ledger if the branch is a large one, or a lengthy period of 
 time has to be occupied in the work. 
 
 But the control of such a branch requires much more 
 than bookkeeping ; it demands on the part of the foreman, 
 though on a smaller scale, much the same qualities as make 
 the efficient general manager or works manager. He 
 has to anticipate his requirements, to see that his local 
 storekeeper sends proper demands for them, to superintend 
 the inspection of all materials received, much of which will 
 come direct from the vendors, and to examine and certify 
 all invoices before they are sent to head office for payment. 
 On a smaller scale, he has himself to perform the various 
 duties of several officers at the home works, and must of 
 of necessity become a sort of miniature " Admirable 
 Crichton." It is evident that the selection of such a 
 superintendent requires the greatest care and consideration 
 on the part of the directors and general manager ; it is not 
 every shop foreman who will creditably fill the post. 
 
 Recapitulation. — The commercial management of an 
 engineering establishment may be separated into two 
 great divisions, purchases and sales ; and to superintend 
 
ARRANGEMENTS FOE PURCHASES. 77 
 
 these operations there are officers of various degrees, each 
 with distinct duties to perform, but all working for the 
 prosperity of the company, from the directors, secretary^ 
 and manager down to the timekeeper and gatekeeper. 
 The orders for purchases are issued in pursuance of requisi- 
 tions from the drawing office or storekeeper, siibmitted 
 through the general manager to the board of directors for 
 their sanction. The placing of the order with any 
 particular firm or firms is determined by the manager, 
 who is in general guided by the consideration of buying in 
 the cheapest market ; the cheapness being, however, 
 determined by consideration of relative qualities supplied 
 by competing firms, as well as by the lowest price. After 
 an order for supplies has been issued it is necessary to 
 inspect the goods furnished in response, sometimes during 
 the progress of their constructions, and always on receipt 
 at the works ; and this inspection is occasionally of so 
 technical a nature that it can only be properly discharged 
 by duly qualified engineers. The storekeeper, when the 
 goods are accepted for use, at once records them in his 
 stores received book, which is so ruled that he can 
 complete the entry with the purchase cost of the goods^ 
 when the vendors' and carriers' invoices are handed 
 to him for examination and certification. The invoices 
 for goods purchased or charges incurred are subjected to a. 
 minute examination, as indicated by a stamp or label placed 
 thereon in the general office, and are finally submitted to 
 the board, certified by the manager and a director, for their 
 payment to be sanctioned. These payments should all be 
 made by cheque on the bankers of the firm, and although 
 several forms of cheques may be adopted, one which gives, 
 to the bankers a direct and independent notification of the 
 amount to be paid is preferable to one more open to altera- 
 tion. Vouchers for payments have to be obtained by the 
 cashier, and filed by him in date order, whilst petty cash 
 payments have to be analysed by him, and the amounts of 
 such analysis entered in his general cash book at the end 
 of the month. But whilst these sj'^stematic arrangements 
 are necessary, or at least desirable, in all commercial 
 concerns, a further development of accounting is needful 
 for the engineer, who has to deal with conditions of 
 increased difficulty and complexity. For this purpose 
 cost accounts are used, prepared from the same subsidiary 
 books as the ledger, but not interlocked therewith ; and 
 these cost accounts display, first, the expense of the various. 
 
78 ARRANGEMENTS FOR PURCHASES. 
 
 departments ; secondly, the expense of the various sections 
 or parts of a machine or engine, &c. ; and thirdly, the total 
 cost of the finished contract. An examination of the 
 system of accounts heretofore suggested will show that 
 the directors and manager have in the books of the firm 
 the following varied information always available. 
 
 (1.) The estimated value of stores and materials ordered 
 month by month. 
 
 (2.) The total amount of invoices rendered to the firm 
 each month, and the same amount divided, as they may 
 direct, into various classes of materials and expenditure. 
 
 (3.) The total of the creditors each month, divided into 
 an amount paid or to be paid, and an amount carried 
 forward for mture payment. 
 
 (4.) A summary of the kind of payments which have 
 been made throvigh petty cash. 
 
 (5.) Particulars (through the cost accounts) of the 
 invoices debited to the various departments, thus affording 
 them an additional notification of materials ordered for 
 special contracts as distinguished from general stores. 
 
 If the directors have records such as these placed 
 before them, and give proper regard to the lessons they 
 teach, they will possess the means of discharging their 
 responsibilities, with respect to the purchases of the firm, 
 with that "reasonable care and diligence," or prudence, 
 which the law imposes upon them. The manager also, 
 as their chief executive officer, will leave ready means of 
 comparing the purchases at different dates, without the tax 
 on his memory, or the delay and trouble of laborious 
 searches, which lack of system would entail. But this is 
 the mere fringe of "commercial management." Whilst it 
 is undoubtedly necessary to exercise great care in pur- 
 chasing materials it is chiefly on the manipulation and 
 further evolution of such materials, and on the constant 
 succession of remunerative orders that the profits of the 
 firm will depend. This, therefore, brings us to the second 
 division of our subject, a division which, when completed, 
 is equivalent to the bookkeeper's credit side of his ledger^ 
 just as the purchase portion is to the debit side. 
 
Chapter VIII. 
 
 SALES DEPARTMENT. ADVERTISING, CATALOGUES, 
 TRAVELLERS, &c. 
 
 Sales Department. — Steady succession of orders is 
 really a necessity for successful management of engineering 
 works during periods of ordinary business conditions. 
 Special pressure, and the increased prices obtainable under 
 such pressure, may at the time aiford enhanced profits to 
 certain branches of the trade, but these profits will dis- 
 appear if a period of depression should succeed : it is the 
 old story of the lean kine swallowing the fat ones. But all 
 classes of engineering works will not share in this tempo- 
 rary prosperity ; the makers of machine tools of standard 
 patterns, who publish catalogues and advertise their prices, 
 cannot revise such quotations each time there is a brisk 
 demand for their particular class of products. There is a 
 commercial advantage in these fixed prices; they enable 
 local agents, travellers, and special representatives to quote 
 with facility, without the delay of references, and without 
 fear of blundering, and these facilities cannot safely be 
 thrown away to snatch an ephemeral advantage in price. 
 Continuity of work, steadiness of employment for his tools, 
 progressive but permanent development of his business — 
 these are the ends which should be kept in view by the 
 engineering factory manager, and to the attainment of 
 which the selling part of the management should constantly 
 be directed. 
 
 The business of any firm can only be sustained by con- 
 stant attention, sometimes taking one form of solicitation 
 and sometimes another, but always bringing its claims 
 before customers and possible customers. The modes are 
 varied : advertising, circulation of catalogues, travellers, 
 personal solicitation, correspondence, and the good reputa- 
 tion of the firm are all employed ; but the object of each is 
 the same, to secure new orders for goods or work. 
 
 Advertising. — The end sought in advertising is 
 publicity, but it must be publicity of the right kind. It is 
 
80 ADVEETISING. 
 
 useless to recommend slotting machines to shoemakers, or 
 steam hammers to railway porters, although they are both 
 very useful machines to those who require them; and a 
 wise advertiser would therefore not place notices of 
 machinery in a paper read chiefly by such classes of the 
 community. On the other hand it must be remembered 
 that many users of machinery, particularly of machines of 
 the smaller types, do not indulge in trade or technical 
 journals, and have greatly to rely on notices in their own 
 local general paper. Provision must be made for attracting 
 such stray customers, but it must be of an economical 
 nature, since the trade is of an intermittent and uncertain 
 nature. 
 
 Indeed, to obtain the full advantage of advertising (by 
 which at present we refer to advertisements in newspapers 
 and magazines), it should be conducted on a carefully- 
 designed plan. Probably the most satisfactory way is 
 to determine, at the commencement of the financial jenv, 
 the sum to be expended on this service during the 
 coming twelve months ; it will vary with the develop- 
 ment of the firm, but it should always be remem- 
 bered that a saving of advertising expenses generally 
 means a much greater reduction in the amount of 
 orders. The total expenditure having been determined, 
 the next consideration must be given to its apportionment. 
 The first place must undoubtedly be given to the technical 
 and trade journals, as these are read by the best class of 
 purchasers, and frequently referred to by occasional 
 purchasers, when they want some particular class of 
 machine, or desire to learn the names and addresses of 
 several makers thereof. But the selection of trade 
 journals should not be a narrow one. Some manufacturers 
 appear to think they have done sufficient if they insert 
 a notice in the paper or papers devoted to the interests of 
 their own particular trade, utterly regardless of those which 
 deal with business of an allied character. A shuttle manu- 
 facturer will weekly or monthly announce the excellence 
 and cheapness of his wares in the textile papers, but will 
 deem it an utter waste of effort and money to offer any 
 attractions in the electrical or mechanical engineering 
 papers. And yet the man who reads the one is likely 
 occasionally to see the other, and if he understands it less, 
 to be more impressed by what appears in it. In advertis- 
 ing it is well to remember the ignorance of the average 
 reader, and to take full advantage of it. The shuttle 
 
CATALOGUES. 81 
 
 maker who advertises in an engineering paper undoubtedly 
 exercises a wiser discrimination than one who neglects to 
 do so. 
 
 After the trade and technical journals have been 
 satisfied, and only after this has been fully done, provision 
 must be made for the daily or weekly newspapers and 
 magazines of a general character. The selection of the 
 papers will be governed by the character of work done by 
 the firm, and also by its general polity in regard to the 
 districts it will operate : if a local trade is desired, then 
 only local papers will be chosen, both to reduce expense and 
 also because such papers promise the best assistance in 
 obtaining the business wanted. At the present time the 
 weekly illustrated papers, which circulate so largely in 
 country houses, are by many machinists preferred to the 
 daily papers, and the preference appears to be justified. 
 They find their way to a large circle of buyers, and a wet 
 day in the country causes them to be read throvigh, 
 advertisements and all. 
 
 Catalogues. — Closely allied to advertising, as limited 
 in the previous paragraph, are the illustrated catalogues 
 now so customary with engineering firms. Some of these 
 are models of artistic skill and delicate engraving, and 
 most of them are very costly to produce. It is therefore 
 necessary to limit the circulation to customers, or probable 
 customers, of the firm. The " probable " customers, how- 
 ever, constitute a difficulty. It is hard to say, when an 
 enquiry comes from a stranger, whether it is merely a 
 curious enquiry, from which there is no possibility of 
 business resulting, or whether it affords fair prospect of a 
 sale being effected. It is unsafe to treat it with pure 
 pessimism, as an order, and possibly a profitable connec- 
 tion, may thereby be lost. On the other hand, sending 
 catalogues to inquirers is a heavy tax on the firm, but it is 
 a tax frequently, and possibly wisely, submitted to in pre- 
 ference to the risk of losing business. Where, however, 
 the standard products of an engineering firm are 
 numerous, and of varied character, something may be 
 done to reduce the expenses by having the catalogues 
 printed and bound in sections, and even by having 
 additional sheets printed for the most prevalent machines, 
 so that the entire list need not be sent in response to every 
 stray enquiry. 
 
 It is really important that both the letterpress and 
 g3 
 
82 TRAVELLERS, ETC. 
 
 plates in these books should be handsome and artistic 
 work. Some of them, as we have already said, are models of 
 good taste, but others still remain which are a disgrace both 
 to the printers producing and the firms using them. There 
 cannot be any doubt that, in the absence of other factors 
 for judgment, a pretty picture will frequently determine 
 the selection of a machine. The appreciation of this by 
 the better commercial firms is evidenced by their adver- 
 tisements in the trade and other journals, where they 
 display engravings which appeal quite as much to the eye s 
 appreciation of beauty as to the technical understanding of 
 the constructions. These pictures are frequently enlarge- 
 ments of catalogue plates, and clearly show how greatly the 
 aesthetic cult has invaded our trade methods. 
 
 Correctness of detail, both in description and picture, 
 is, however, as necessary as artistic beauty. Possibly this 
 remark is more necessary in relation to foreign catalogues 
 than for those circulated in this country. We have seen 
 engineers' lists sent from this country to Central and South 
 America printed on bad paper, from worn-out type and 
 blocks, and with letterpress incorrect in technical details, 
 although possibly devoid of grammatical blunders ; and in 
 rivalry with these the circulars and advertisements of 
 United States firms, on highly-glazed paper, and dis- 
 paying all the beauties of the printer's art. The bad 
 paper and bad printing are inexcusable ; they are parsi- 
 monious blunders which lose trade to the issuers of them ; 
 but for the errors in translation there is some palliation. 
 The linguists who execute this work seldom understand 
 the trade, or the terms used in connection with it ; their 
 translations should, therefore, always be submitted to the 
 revision of an engineer, when one can be obtained, who is 
 sufficiently versed in the language concerned. 
 
 Travellers. — Advertisements and circulars have to be 
 followed by further solicitation, if the full benefit of their 
 circulation is to be obtained. In some departments of the 
 trade this is more important than in others, hence the 
 necessity under which some houses labour of employing 
 regular travellers on the road ; it is chiefly the question of 
 the wares supplied which determines their use or other- 
 wise. But where these are employed they should be 
 selected for their tact and courtesy, their pertinacity, their 
 alertness, and not for their qualifications as engineers. Of 
 course, it is necessary that they should know something of 
 
TRAVELLERS, ETC. 83 
 
 machines and other goods they are hawking, sufficient at 
 least to talk about them intelligibly ; but is far more 
 needful that they should possess patience, good temper, 
 imperviousness to rebuffs, and that quick insight into 
 character "vvhich will enable them to read their customers' 
 characters and detect their foibles. When they are 
 employed they must never be permitted to despair of any 
 ground over which they travel, and must be made clearly 
 to understand that they must sow their seed again and 
 again until they reap the reward of orders. 
 
 Collection of Accounts by Travellers. — It is very bad 
 policy to let the duty of collecting country accounts 
 devolve on travellers ; it frequently leads to irregularities, 
 and always tends to interfere with their orders. Many 
 Continental manufacturers do not permit their representa- 
 tives, whether peripatetic or stationary, to receive money 
 on their behalf except under special circumstances, and 
 the regulation has been found to work well. Accounts are 
 required to be remitted, when due, to head office, and the 
 chief labours of the representative are directed to securing 
 a continuance of them through further orders, and to 
 ■opening transactions with new customers. 
 
 When, however, travellers do collect accounts on their 
 journeys, every possible precaution should be taken against 
 fraud. The statements sent to the customers should be 
 posted direct from the accountant's office, and not handed 
 to the traveller, who should be merely furnished with a 
 list of them. He should be required to remit his collections 
 home daily, or to pay them to the credit of his firm at one 
 ■of their banker's agencies, and he must not be permitted 
 ever to use such monies for travelling expenses, salary, or 
 other payments. He must daily send the cashier a state- 
 ment of the amounts he receives, and of the disposal of 
 them, and on this statement he must notify and explain 
 any deductions he allows, in manner following : — 
 
84 
 
 TBAVELLEKS, ETC. 
 
 THE CLYDESDALE ENGINEEKING CO. LIMITED. 
 1898 
 
 I have this day received accounts as follows :- 
 
 
 From Jones and Watson 
 
 17 
 272 
 
 g 
 
 9 
 
 6 
 
 
 Discount allowed 9s. 
 From Evan Daniel 
 
 
 
 
 AlUowed for bad brazing of pipes, 
 
 as per his letter of £7. 
 
 Discount, £13 19s. 
 
 Remitted jou per draft on London 
 
 
 
 £289 
 
 18 
 
 6 
 
 DAVID WILLIAMS, Representative. 
 
 The receipts given must be from a numbered counter- 
 foil receipt book, and a notice may be printed across the 
 face of the receipt that a further acknowledgment will be 
 forwarded to the payer, from the head office of the firm, 
 in the manner adopted by one, at least, of the large rail- 
 way companies. This precaution is, however, of little value, 
 and should not be much relied upon. When a customer 
 pays an account, and obtains a valid receipt for it, he will 
 seldom trouble himself to seek a confirmation of that 
 receipt merely to satisfy the system of the firm. Whether 
 it is possible to limit the discharge given by a collector's 
 receipt is a legal question, but it is certain that no such 
 limitation is imposed by the form at present adopted. 
 When the agent is permitted to collect money, his receipt 
 binds his principal. 
 
 Daily Reports. — Daily reports should be required from 
 each traveller. They should be dated at the top from the 
 hotel and town at which he is staying, and should give his 
 anticipated postal address for the next three days, so that 
 letters and telegrams may be forwarded him. This report 
 should state the journey or journeys made during the day • 
 the firms visited, with remarks on their several complaints, 
 enquiries, or expectations of trade ; and a list of the orders 
 enclosed. Each order should, for convenience of ofiice 
 record and reference, be written on a separate sheet. The 
 
TRAVELLEES, ETC. 85 
 
 report should also contain any information the traveller 
 can gather as to the condition of trade in the locality, and 
 the financial condition of any of the traders or manu- 
 facturers in it. 
 
 There is another point on which the traveller should 
 be encouraged to report freely and fearlessly, although it 
 may not always be pleasant reading to the directors and 
 manager at the works. In his journeys, in his intercourse 
 with his customers, and even in the commercial room of 
 his hotel, he will gather much knowledge of the estimation' 
 in which his firm is held, and of the efforts their competi 
 tors are making, either by reduced prices, better terms of 
 payment, improved workmanship, or improved designs, to 
 steal away their custom. All this he must carefully and 
 fully report, and, if necessary, repeat again and again, so 
 that if his principals lose their trade it will be through 
 their own folly, and not from his neglecting to warn them. 
 
 Personal Solicitation. — The advantage of personal 
 intercourse between the principal and his customers was 
 fully understood in former days, and some of the most 
 prosperous English firms owe much of their early success 
 to attention to this form of courtesy. It derives its force 
 from an inherent .quality of human nature, and however 
 manners may change, or methods of business alter, the 
 love of flattery will still remain. Of course it is impossible 
 for the directors or manager of a large modern tool making 
 or agricultural implement works to regularly take a journey 
 as a traveller, but it is not impossible for them to 
 occasionally visit their principal customers. 
 
 Much depends on the character of the business : where 
 it consists chiefly of large orders or contracts there is little 
 excuse for neglect of this personal effort, nor is it usually 
 neglected in such cases. Where the business is of a 
 general character, and depends on distribution through 
 retailers, or on numerous small orders from consumers 
 extending over a large area, and which necessitates the 
 constant employment of commercial travellers, it is more 
 difiicult for the principals to be induced to take the trouble 
 which it involves. No certain rule, applicable to every 
 case, can be laid down. There is an advantage most 
 certainly in the personal solicitation of the principals. It 
 is for them to judge, in each individual case, how it may 
 be effected without neglect of other, and possibly more 
 important, duties. 
 
86 TRAVELLERS, ETC. 
 
 Reputation of the Firm. — The good reputation of the 
 firm is a potent agency in procuring orders, but it must 
 be remembered that reputation is of dual character : it is 
 built up by commercial integrity, courtesy, tact, and atten- 
 tion to such office details as correspondence and correctness 
 of accounts, as well as by excellence of -workmanship, or 
 quality of materials. Ihese office details are of more 
 importance in a general business, with numerous and 
 widely scattered customers, than in one relying on large 
 contracts or a limited clientele. It i^ certainly more easy 
 to escape animadversion for neglecting a letter relating to 
 a large railway contract, or a heavy ironclad, than for one 
 referring to a wall pump or a portable drilling machine. 
 Thus it occurs that the smaller firms are handicapped as 
 much by the more onerous obligations imposed upon their 
 office staff, as by the difficulty of sufficiently remunerating 
 that staff so as to keep it thoroughly efficient. 
 
 Division of Sales. — It is necessary, however, to con- 
 sider more particularly the nature ot sales, in order to fully 
 appreciate the methods of effecting them. As the business 
 of an engineering firm may be separated into the two 
 great divisions of purchases and sales, so the latter may be 
 further subdivided into sales by standard or list prices and 
 sales by tender or contract, which really amounts to the 
 old fashioned plan of " higgling the market." The sales 
 on list prices depend on the judgment and ability dis- 
 played in advertising and distributing catalogues, on the 
 pertinacity of travellers, and on the reputation of the firm 
 for good workmanship, and upright and courteous dealing. 
 The sales on tender or contract involve the preparation of 
 estimates, each one of which requires a more or less care- 
 ful review of the circumstances of the firm at the particular 
 moment, of the desirability of procuring additional work, 
 and of the limitations under which it will be accepted. 
 But prior to preparing the estimate, or rendering the 
 tender, there is generally some amount of correspondence 
 to be undertaken, and as it is part only of the work of an 
 important department of the general office staff it is 
 convenient to consider the duties of that department in 
 their entirety. 
 
Chaptek IX. 
 THE COREESPONDENT AND HIS DUTIES. 
 
 The Correspondent. — The secretary has been referred 
 to as the medium through whom the directors communi- 
 cate to the shareholders and others the views and decisions 
 of the board. The chief correspondent occupies much the 
 same position with respect to the manager: he is the 
 manager's medium of communication with customers, 
 contractors, enquirers, on all the thousand and one matters 
 which are nowadays made the subject of letters. He 
 holds a confidential position in the ofifice ; has access to 
 papers which must be kept inviolate, and can often forecast 
 events which it is not desirable to disclose throughout the 
 works by anticipation. His first and most imporrant quali- 
 fication is therefore a capacity for secrecy; if he cannot 
 control the " unruly member " all his other acquirements 
 will count for little. Shorthand, of some description or 
 other, is now so usual with the clerkly class that it would 
 be absurd to employ a correspondent who did not use it : 
 but, unfortunately, modern languages, which are equally 
 necessary, are not so frequently known to them. The 
 marked linguistic deficiencies of English clerks have caused 
 the frequent employment of Germans in lieu of them, but 
 the substitution is not altogether satisfactory. We have 
 met the Teuton in all parts of the world, and found him 
 painstaking, hardworking, and clever, but ever and always 
 more careful of Ijis own interests than of his employers', 
 whenever the two conflict. It must be remembered that 
 the youthful clerks who come over to England for 
 experience, and accept abnormally small wa^es for very 
 useful services, take back to their own friends in Father- 
 land information which is jealously concealed from all 
 English competitors. In mediaeval legends we are told 
 that the gifts of the evil one ended in the disaster of the 
 recipient ; the same unfortunate termination frequently 
 follows the employment of the foreign clerk who comes to 
 this country merely to complete his training, and not for 
 permanent residence and occupation. 
 
88 THE CORRESPONDENT AND HIS DUTIES. 
 
 The most useful languages are German, French, and 
 Spanish ; there are no\? good classes in most large towns 
 for all of them ; indeed German and French are frequently 
 taught in the public elementary schools. In all these 
 languages, and more particularly in Spanish, there are 
 modes and forms of technical expression which are not 
 literal translations of English phrases, and neglect of these 
 idiomatic peculiarities may lead to considerable incon- 
 venience. The clerk who has merchantile or technical 
 foreign correspondence to conduct should therefore take a 
 special course of lessons therein, however well versed he 
 may be in the literature of the country. 
 
 Authority of the Correspondent. — The position and 
 authority of the correspondent should be carefully and 
 exactly defined. He holds a confidential place in the office, 
 and is apt to usurp an ascendancy therein, and in the 
 works generally, which is not entirely for the benefit of the 
 firm. In a railway traffic office, a manager's chief corres- 
 pondent is to some extent, and sometimes nominally, his 
 assistant ; but it must be remembered that he is much more 
 than a writer of letters from dictation — he is versed in all 
 the details of the working and management of the line, and 
 has to undertake superintendence of men, and arrange- 
 ments of trains, rates, and supplies, in addition to answering 
 letters. In an engineering or other constructive works, 
 however, the conditions are entirely different. The clerk 
 has to write his letters chiefly from dictation, and seldom 
 has the opportunity or inclination for mastering the details 
 of the business, either on its technical or accountancy side. 
 He is merely a clerk ; a trusted one undoubtedly, but of 
 much less official importance than the draughtsman, or 
 even than the accountant. 
 
 Registration of Letters. — It is undoubtedly convenient 
 that all letters and telegrams addressed to the firm 
 should be opened by one officer, and one officer only. The 
 secretary appears marked out for this duty by his position 
 as representative of the directors, and by his usual daily 
 attendance at the office. To whomsoever the duty is 
 delegated, however, it is most important that it should 
 receive attention at an early hour in the morning, so that 
 the letters may be ready for the various officers immediately 
 they arrive at the works. One of the correspondents 
 (the chief preferably) should be present at the opening of 
 the letters, so that he may register them, and sort them 
 
THE (;ORKESPONDENT AND HIS DUTIES. 
 
 89 
 
 into bundles or baskets for distribution to the various 
 departments. 
 
 The difficulty of finding papers in a large office after 
 the lapse of a few months is well known, and many 
 elaborate systems of registration and filing have been 
 invented to overcome it. The best form of register is 
 probably one adopted some years ago by Mr. Lapper, of 
 the general manager's office, Euston, an office where 1,000 
 letters a day were at that time received, and which was 
 found to be convenierit, effective, and simple. He used a 
 book alphabetically arranged, as in a ledger index, with a 
 few additional pages for sub-divisions or special writers, 
 and ruled as under : — 
 
 Date of 
 Receipt. 
 
 Date of 
 Letter. 
 
 Name. 
 
 Subject. 
 
 To 
 whom 
 sent. 
 
 File 
 No. 
 
 The first four columns explain themselves. When the 
 letter was entered in the register it was stamped with the 
 date of its receipt, and forwarded to the officer to whom it 
 referred, and whose name was then entered in the fifth 
 column. The correspondence on any subject was retained 
 in the office dealing with it until it was completed, all 
 letters on that one matter being pinned together, and it 
 was returned to the registration office for filing in such 
 compilations. When it reached there the next progressive 
 number was stamped thereon, back and front, and this 
 progressive number marked in the last column of the 
 register against every letter in the bundle, no matter what 
 the date of its receipt might be. If any bundle of cor- 
 respondence was subsequently required by any office, a 
 slip was placed in the rack in lieu of it, giving the register 
 number, the subject, and the name of the clerk or officer 
 removing it. 
 
 This system of filing ^ill probably be found cumber- 
 some in an ordinary engineering office, and may be super- 
 seded by one or other of the methods mentioned hereafter. 
 In that case the last column of the register — -the file 
 
90 THE CORKESPONDENT AND HIS DUTIES. 
 
 number — may be omitted, but it will still be found an 
 advantage to retain the alphabetical arrangement, and to 
 stamp the letters with date of receipt. We have seen 
 letter registers which contained columns for date of answer, 
 and page of copy letter book, and for date filed, in 
 addition to columns for names of officers lent to, date of 
 return, and remarks. This is useless and wasteful routine. 
 The date of reply to a letter can be marked on the face of 
 it, and a properly indexed letter book is easy and ready of 
 reference. It may be said thai this amplified index 
 enables the manager immediately to see what letters are 
 unanswered ; but if he has a staff so undisciplined and dis- 
 loyal as to neglect correspondence, and is therefore com- 
 pelled to inspect the register to see that his clerks have 
 answered letters, he can hardly be deemed a model chief. 
 He may possess order, loyalty, and energy himself, but he 
 has certainly failed to impress them on his subordinates. 
 
 If the received letter register is kept it must contain 
 entries of every letter, telegram, and specification which 
 reaches the office ; indeed, drawings, tracings, and trade 
 catalogues should be entered in it under the date of 
 receipt. A metal or rubber stamp should be used for 
 dating the letters as they are registered : rubber stamps 
 are preferable, and cheaper. Important letters and tele- 
 grams, where time is of the essence of the matter, should 
 have the time of receipt as well as the date marked on 
 them, and initialled bi/ the receiving officer. 
 
 Distribution of Letters.— After the letters have been 
 registered, but only after this has been done when a register 
 is kept, they must be distributed to the various depart- 
 ments. Those for the secretary and directors will be sent 
 immediately to the secretary's office (or retained by him if 
 he opens the letters), but the other departmental letters 
 should be placed before the manager for his inspec- 
 tion and remarks before they are distributed. The 
 greater portion of the business correspondence will, 
 however, be dealt with by the correspondent under his 
 direction, or from his dictation. In a well-ordered office 
 all letters received before noon are answered, or at least 
 acknowledged, on the date of receipt, and this can only be 
 done when they are dictated to the correspondent early in 
 the day. We have, therefore, no hesitation in placing 
 prompt attention to his correspondence on his arrival at 
 the work among the most important duties of the manager. 
 
THE CORRESPONDENT AND HIS DUTIES. 91 
 
 It should take precedence of any inspection he may make 
 of the shops or of contracts in progress. 
 
 Letters arriving after noon, or after the early afternoon 
 postal delivery, may be reserved for attention the folloAving 
 day. Urgent letters and telegrams should, however, be 
 acknowledged or answered in some form or other the day 
 of their receipt, whatever time they arrive. 
 
 Departmental Letters. — The methods of dealing with 
 correspondence will depend on the size of the works ; 
 indeed, as already intimated, many variations will arise in 
 practice between large and small factories. Where the 
 works are of small or moderate size, employing up to 500 
 or 600 hands, it is undoubtedly better to write all the 
 letters in the manager's or general office. In any case, 
 a considerable proportion of the letters circulated to the 
 departments will be merely for the heads thereof to note 
 them or make their remarks thereon, and these should be 
 promptly returned to the general office to be there further 
 dealt with in accordance with the manager's instructions. 
 There are others, however, to which it is more convenient 
 for the departments to indicate the exact reply to be given, 
 but it is not convenient, nor conducive to the reputation of 
 the firm, for these replies to be written by a subordinate 
 clerk employed for other departmental work, nor is it 
 advisable to impose the duty on the foremen or sub- 
 managers. In such factories it is better for the correspon- 
 dent (or one of his assistants, if he has any) to visit the. 
 various departments with his note book, and take down 
 the dictated answers, or a precis of them. 
 
 In establishments of greater size and pretensions, where 
 the heads of departments are really managers de facto, 
 and colleagues rather than subordinates of the general 
 manager, this plan cannot be adopted, nor is it usually 
 necessary. The letters will be written in the departmental 
 offices, but they should be transmitted to the central .one 
 to be copied and despatched. If good copying ink is used, 
 two copies may be taken of each letter — one in the letter 
 book, the other to be sent to the department affected, there 
 to be pasted in a skeleton letter guard book. Where the 
 railway system of keeping all letters affecting one subject 
 fastened together, and retaining them on hand until the 
 matter is finished Avith, the duplicate copies may be 
 attached to them, and the correspondence will then be 
 complete both in received letters and replies. 
 
92 THE COERESPONDENT AND HIS DUTIES. 
 
 It is undoubtedly desirable that the general manager 
 should, so far as possible, sign all letters except those 
 emanating from the secretary's department ; but the estab- 
 lishments "we have last referred/ to may constitute an 
 exception. The matter is one for the consideration and 
 determination of the directors, and explicit instructions 
 should be issued in reference to it. It should, however, 
 be remembered that an agent binds his principal to the 
 extent of his implied authority, and that if " a general 
 agent exceeds his authority, or violates the orders given 
 him, his principal is bound, provided his acts are within 
 the usual dealing and scope of the business. And a 
 principal cannot, unknown to parties dealing with his 
 general agent, restrict the agent's authority to perform all 
 things customary in the firm." (Smith's " Manual of Com- 
 mon Law," par. 1,121.) It is, therefore, important that 
 care should be exercised in delegating the signature of the 
 firm, even in the larger joint-stock companies. 
 
 Telegrams Forwarded. — All telegrams sent away should 
 be confirmed by the following post. The triplicate tele- 
 gram books, which can be obtained from any commercial 
 stationer, are useful for this purpose, or a memorandum 
 form may be used, stating that the following telegrams 
 have been exchanged during the day, and are now con- 
 firmed. In the latter case the forms should be printed, 
 and divided by a line down the centre, the left-hand por- 
 tion being used for telegrams received, and the right-hand 
 for those forwarded. It must be signed by the manager or 
 secretary, and copied in the letter book.. 
 
 The Typewriter. — The typewriting machine has become 
 almost indispensable where much correspondence or copy- 
 ing has to be done. It has a double advantage : it is more 
 expeditious than the pen, and also turns out cleaner and 
 neater work. We believe Mr. Yarrow, of torpedo boat fame, 
 was one of the first, if not the first, introducer of the writing 
 machine to this country ; it is now the exception for any 
 large mercantile oflSce to be without one. In the hands of 
 a clever manipulator it may be used for all classes of work ; 
 letters, invoices, bills of lading, accounts current, tenders, 
 specifications, and statistical tables may all be executed on 
 it, and several duplicate copies may be obtained at the 
 time of writing by means of carbonised paper. This is 
 an advantage which will be appreciated by engineering 
 firms having work in progress abroad, which frequently 
 
THE COREESPONDENT AND HIS DUTIES. 93 
 
 necessitates two or three copies of letters being despatched 
 to the firm's agent or the purchaser. 
 
 It IS, however, hopeless to expect good work out of the 
 complicated abortions which have at various times been 
 placed upon the market as cheap machines. A good type- 
 writer is an expensive article, but it will repay the outlay 
 if carefully looked after and kept clean. There are several 
 before the public which might be recommended. Each has 
 its own peculiar points of vantage, and the makers or their 
 representatives are always prepared to expound them. 
 
 Lady Clerks. — Ladies undoubtedly make good, if not 
 indeed the best, typists. Where the office is sufficiently 
 large to employ a clerk or clerks merely to type letters 
 from dictation, and other documents from copies, the 
 employment of ladies for the work is advantageous ; they 
 are steady and contented workers, and facile with their 
 fingers. Whenever it is possible, however, a separate room 
 should be provided for them, for very obvious reasons. 
 There are some drawbacks to their employment owing to 
 the limited range of work on which they can be engaged. 
 A large engineering firm in North Britain, some years ago, 
 employed a number of girls as tracers in their drawing- 
 office, and were so pleased with the result that they 
 endeavoured to further educate them to independent 
 labours on such work as stability calculations by Amsler's 
 integrator, and others of like nature, but the efiort was a 
 failure. The calculations were so inaccurate as to be 
 worthless, and they were reluctantly compelled to confine 
 their ladies to mechanical duties, in which they acquitted 
 themselves admirably. Certainly some of the best and 
 neatest work we have seen done, either in tracings or 
 copies of machine and ships' drawings, or in typewriting, 
 has been done by women, and it has frequently been per- 
 formed at a speed which no ordinary man could excel. 
 It is often said that they generally appear to possess no 
 ambition ; plenty of vanity, perhaps, which impels them 
 to a certain nicety and finish in their productions, but not 
 the ambition which induces continuous work and steady 
 drudgery as a preparation for after, and far off, promotion. 
 Possibly the increased employment of women m various 
 offices may call forth in them some, as yet, undeveloped 
 qualities; or, possibly, as in the past, they may prove 
 qualified only for the discharge of routine and mechanical 
 duties ; time only can determine. 
 
■94 THE GOEEESPONDENT AND HIS DUTIES. 
 
 Register of Addresses. — It is essential in a large office, 
 more particularly where many of the customers are abroad, 
 that a register of addresses should be kept. In a small 
 •office the ledger may be made to serve the purpose, but 
 there are objections to this plan ; it entails extra wear and 
 tear on a valuable book, and is apt to cause delay, or friction 
 between the correspondent and bookkeeper. Where a 
 separate register is kept it should be in an alphabetical 
 index book — the Schlicht system of sub-divisions is 
 excellent — and the book must contain telegraphic and 
 -cable, as well as postal, addresses, and kept entered up to 
 date. The Circe card systena will, however, be generally 
 found more convenient than any book. 
 
 Printed Memorandums. — The railway companies em- 
 ploy a great variety of partly printed memorandum forms, 
 naving blanks to be filled in with particulars of the exact 
 matter in question or information required. Similar forms 
 may be used in engineering works, but they should be 
 ■employed with great caution. In the first place, they may 
 be so multiplied as actually to waste the time of the clerk 
 in seeking the proper form to use ; in the second place, 
 they are not generally popular with the public. The 
 irritation caused, by the printed acknowledgments sent out 
 by post-office officials is only too well known, and the 
 feeling is not a desirable one for a trading firm to raise. 
 When printed forms are permitted in the office they must 
 be judiciously used, and with proper respect for any known 
 prejudices. 
 
 Postal and Telegram Register. — It is necessary to 
 keep a register of all letters and telegrams sent away, on 
 which postage is paid, for cash purposes, but it is cer- 
 tainly not necessary to enter in it all letters delivered by 
 messenger. It is quite true that solicitors and public 
 .accountants do so, in order to secure evidence of delivery, 
 but trading firms do not often require such evidence, 
 nor need to waste time and stationery in invariably 
 .securing it. The book may be a very simple one. 
 On the left-hand side there must be a column for cash 
 received from the cashier — the date of posting, and name 
 and address must follow ; and on the right-hand side a 
 column- for the amount of postage. After this, however, 
 there must be a column for remarks, for the purpose of 
 noting any postages to be charged to customers or others. 
 These will usually be inserted by the accountant in his 
 
THE CORRESPONDENT AND HIS DUTIES. 95 
 
 periodical examination of the book, as the office boy or 
 junior clerk who keeps it will not have sufficient know- 
 ledge of the terms of contracts or sales to do so correctly. 
 
 This book should be balanced once a week, and the 
 balance produced to the cashier in stamps or cash. It 
 should be' treated merely as a memorandum account, and 
 the cash advanced by the cashier posted direct to the 
 debit of postages and telegrams in the commercial books 
 of the firm. 
 
 The postages and telegrams chargeable to customers and 
 others can be credited to postages, &c., if deemed desirable, 
 by an analys.s of the sales book, but the amounts will 
 usually be so trifling that it is hardly worth the trouble. 
 
 Filing Letters. — Whether a received letter register be 
 kept or not, it is evident that some system must obtain of 
 filing letters so that they can be readily found. When 
 there is an excessive number to deal with, and numerous 
 references have to be made to them for years afterwards, 
 or where accuracy of record is essential, as in some 
 government offices, it is more convenient to mark each 
 letter with a register number, and file it according 
 to that number. This method may, however, have 
 numerous modifications, but if the register number is 
 adopted, Lapper's system in its entirety (with use of file 
 numbers) will probably prove the most convenient. It 
 must be observed that the progressive file number is only 
 inserted as the letters are put away, and there is, therefore, 
 no unpacking of old bundles, except for the occasional 
 return of papers taken out for reference. 
 
 But in a general engineer's office, as in most mercantile 
 offices, it will usually be found more convenient to file 
 letters by date in alphabetical divisions, thus saving the 
 trouble of searching the register each time one of them is 
 required. Pigeon holes and box files of various kinds 
 may be used for this purpose, but there are three files 
 which are pre-eminently adapted for it — the Shannon, the 
 Amberg, and the Ceres. The Shannon and Amberg are of 
 American make, and well known for their excellent work- 
 manship, but there are now some good English makes on 
 the market constructed on the same principles. In the 
 former the letters have two holes punched in them by a 
 small punching machine, and by these they are held in 
 place in the file ; the Amberg, on the other hand, does not 
 mutilate the papers in any way. Both have their admirers, 
 
96 THE COEEESPONDESTT AND HIS DUTIES. 
 
 and each possesses advantages peciiliarly its own. The 
 Ceres is a more recently introduced file, of English manu- 
 facture, and the invention of. Mr. T. Bowater Vernon. 
 Like the Amberg it does not mutilate the papers, and it 
 possesses such advantages over its American competitor in 
 elasticity in use that it will probably become- the more 
 popular when generally known. The capacity of these 
 files is so real and considerable that they are much less 
 expensive than appears at first sight ; their general conve- 
 nience, and the number of papers they will hold, should 
 be considered as well as the price. 
 
 The railway companies now almost invariably adopt the 
 method of keeping all the letters on one subject pinned or 
 otherwise fastened together, and many engineers find it 
 convenient to do so. It no doubt saves trouble in searching 
 through a number of dates, but is liable to cause diflficulty 
 unless it is associated with a register number, or care is 
 taken to file the correspondence under the initial letter of 
 the principal writer. It is usual with the railway system 
 to keep the letters on hand in baskets or drawers in the 
 correspondent's desk until the matter is completed, and 
 then file them. Subject to this modification, all letters 
 should be placed on the file the date they are answered. 
 It is impossible to maintain order, or get the work promptly 
 dealt with in this department, if letters and papers are 
 allowed to accumulate in bundles waiting to be put away. 
 It is hardly necessary to say that all original letters and 
 documents miist be returned to the general ofiice to be 
 filed ; when it is necessary to do so the departmental and 
 subordinate officers must take, or be furnished with, copies 
 for future reference. 
 
 Quotations by Standard Prices. — Now all this work 
 in the correspondence office is merely subsidiary to other 
 work of greater importance to the profits of the firm : 
 first, to the purchase and delivery of materials; and, 
 secondly, to the effecting of sales. The first portion has 
 already been considered, and the second portion now 
 claims equal attention. 
 
 When any application is received for a quotation for a 
 machine . of standard pattern, included in the published 
 catalogue of the firm, there can be little difficulty in dealing 
 with it. These catalogues are sometimes published with 
 prices inserted, and the correspondent can then either send 
 a copy or give the quotation. When the catalogues are 
 
THE CORRESPONDENT AND HIS DUTIES. 97 
 
 published with blank prices there should be kept in the 
 ofHce a completed copy, accessible to the correspondent 
 and other authorised clerks, and the reply will then be 
 equally easy.. It, however, frequently happens that manu- 
 facturing engineers employ accredited agents in various 
 districts, and an application may come from one of these 
 agents for a price for a particular machine, with a request 
 for increased commission or increased discount, in which- 
 ever form the allowance may be made. This really amounts 
 to a reduction in price — a local or temporary reduction 
 possibly, but still a reduction. A question at once comes 
 up which must be dealt with by the manager of the firm, 
 and dealt with on the same principles which rule prices 
 generally. 
 
 Foreign correspondence in reference to orders from 
 standard lists will involve this factor of variation more 
 frequently than do home enquiries. It is all very well to 
 send price lists to Chili, China, or Peru, and say " these are 
 our prices ; " the purchasers there are entirely of the way 
 of thinking of the Austrian school of economists, that the 
 consumer fixes the value, and they endeavour to do this by 
 setting off one maker against another, and taking the offer 
 of the cheapest. Most frequently the order, or proffered 
 order, will come through the firm's agents abroad, accom- 
 panied by an intimation that an extra discount must be 
 allowed to the purchaser, or an extra commission given the 
 agents, out of which they can satisfy his appetite for back- 
 sheesh. With some descriptions of trade, and with some 
 countries, these demands for reductions from list prices are 
 so frequent as to practically render the lists useless, and the 
 trade a mere " higgling of the market " for every machine, 
 from a compound vertical engine to a noria or a chaff- 
 cutter. Sometimes the decision has to be made on the 
 very spur of the moment, and the answer given by 
 telegram. It is therefore expedient for the manager to 
 keep in his own possession a catalogue marked with the 
 ordinary quoted list prices, and also with the lowest prices 
 which the firm can afford, under pressure of competition, 
 to accept. 
 
 These lowest prices must be based on the actual cost of 
 construction, ascertained from time to time by the detailed 
 accounts kept for that purpose by the firm. 
 
 h3 
 
Chapter X. 
 THE PREPARATION OF ESTIMATES. 
 
 Nomenclature of Machine Details. — We are thus 
 reverting to the important subject of estimates and 
 tenders, but before proceeding therewith it is desirable to 
 consider the names given to machine details. No system 
 of naming them appears to have received general assent in 
 either this country or America, and the catalogues of one 
 maker are, partly in consequence of this lack of system, 
 difficult of comparison with those of another. Whether any 
 universal nomenclature can be secured is problematical, 
 but at all events, one very honest, and apparently successful 
 fittempt, has been made in America to provide a reasonable 
 scheme. 
 
 The system to which we refer has been in use for a long 
 time past at the Ferracute Machine Works, Bridgeton, 
 N.J., and was some years ago described by Mr. Oberlin 
 Smith, the President of the works, in a lucid paper read 
 before the American Society of Mechanical Engineers. A 
 reprint of the paper will be found in Messrs. Garcke and 
 Fell's work on factory accounts (published by Crosby 
 Lockwood and Co.), at page 152 of the 1887 edition. He 
 describes very clearly the difficulties attending the ordinary 
 uinsystematic nomenclature, and the use of synonyms and 
 of technical words in more than one sense. Even when an 
 effiart is made for orderly and scientific method, the result 
 hardly seems satisfactory to him, although probably the 
 absurdities were then more pronounced on the other side 
 of the Atlantic than they now are on this. " A perusal of 
 some machinery catalogues," he says, " which give detailed 
 lists of parts, is very harassing to a systematic mind. They 
 are apt to derive one part name from another, prefixing the 
 latter as an adjective each time, until some such pleasant 
 title as ' lower-left-hand-cutting-blade-set-screw-lock-nut ' is 
 evolved. If there are symbols provided, they consist of 
 
THE PEEPAEATION OF ESTIMATES. 99 
 
 some unknown combination of letters part way down the 
 list, and then change to arbitrary numbers, or perhaps 
 to nothing at all. It will often be noticed tnat no 
 particular order appears to be followed in numerical 
 arrangement, similar parts being scattered at random 
 through the list." 
 
 The Ferracute Company tried vario.us methods : small 
 letters, capital letters, and figures, and combinations of the 
 three. They eyen ventured on the Greek alphabet, but 
 had to abandon it, as it excited suspicions among their 
 more ignorant workmen of something diabolical being inter- 
 ceded. Finally they adopted what they term their symbol 
 system, which is as follows : 
 
 Machine names and piece names are carefully selected 
 by the designer of the machine ; piece being a part reduced 
 to the last condition of sub-division, or so welded or ghied 
 together as not to be again taken apart. It is evident that 
 the success of the system will very greatly depend on the 
 ability displayed by the designer in thus naming them ; no 
 two machine names must be alike, the machines being 
 different, and not merely of varied sizes, and no two piece 
 names must be alike in the same machine. A machine, 
 symbol consists of a group of three arbitrary capital, letters. 
 A piece symbol consists of an arbitrary number, and follows 
 the machine symbol, connected therewith by a hyphen. 
 Thus the symbol for the handle of a force pump, of the 
 .smallest size would be F. F. A. — -2 ; whilst the symbol for 
 the pump itself would be F. P. A. The last letter in the 
 combination represents the size of the machine (there will 
 seldom, if ever, be more than 26 sizes of any one machine 
 made in any shop); the first two letters should, for 
 the sake of suggestiveness, be initial, as in this instance, 
 .and where the initial connection can be maintained 
 by changing the title of a machine, it is perhaps advisable 
 to make the change. Thus F. P. , A. would stand either 
 for force pump A, or foot press A, but Mr. Oberlin Smith 
 alters the name of the latter machine to treadle press, 
 an ecjually appropriate and suggestive title, and which 
 permits the use of the symbol T. P. A. 
 
 The elasticity of the system will be seen from the fact, 
 that the permeations of three letters throughout the 
 iilphabet : will permit of 17,000 symbols, and its compara- 
 tive brevity is shown from the following Table A taken 
 from his paper : 
 
100 
 
 THE PREPARATION OF ESTIMATES. 
 
 TABLE A. 
 
 1st. 
 
 2nd. 
 
 3rd. 
 
 4th. 
 
 5th. 
 
 6th. 
 
 Full Name of Machine and 
 Piece. 
 
 Our Symbol 
 for It. 
 
 Symbolic name as 
 often used. 
 
 
 
 m o 
 
 6" X 4' EDgine Lathe, \ 
 spindle head J 
 
 No. 4 Power Press, \ 
 frame J 
 
 7" X 14" Steam Engine, 1 
 crankshaft / 
 
 Buckeye Mowing Ma- \ 
 chine, left axle nut / 
 
 No. 3 Glass Clock, \ 
 main spring J 
 
 One-hole Mouse Trap, \ 
 choker wire f 
 
 E.L.A. -4 
 P.P.D. -1 
 
 S.E.G-51 
 M.M.D. - 81 
 G.C.C. - 105 
 
 M.T.A.- 3 
 
 Engine Lathe, A - 4 
 Power Press, D - J 
 
 Steam Eng)ne,6 - 51 
 
 / MowingM'chine. 1 
 t D-81 / 
 
 / Glass Mantel \ 
 \ Clock, C - 105 / 
 
 / Wooden Mouse "1 
 \ Trap, A- 3 / 
 
 4 
 4 
 5 
 5 
 6 
 4 
 
 13 
 
 12 
 14 
 16 
 20 
 
 17 
 
 9 
 
 8- 
 
 11 
 14 
 13 
 
 Table B, which hereafter follo^Ys, is taken from th& 
 same paper, and is a specimen of a part of a page of the 
 Ferracute Machine Company's " symbol book." It almost 
 explains itself. The machine symbol letters stand at the 
 top of the page, and therefore are not repeated in the first 
 column. " Same as " refers to a part of some other 
 machine, with which the part in question is identical. The 
 quantity column tells the number of pieces of a kind 
 required. The last weight column, added upwards, shows- 
 the total weight of the machine, a very useful adjunct to 
 catalogue information. The piece numbers are gapped 
 after each kind of material, and also at the ends of 
 groups, so as to allow of future changes and additions, and 
 also to ensure the same piece numbers being used for 
 identical portions of other machines, which are similar in 
 general design and construction, but which have a few- 
 more parts in them. 
 
 The order in which the pieces are numerically arranged, 
 cannot be determined in all cases by positive rules, but th& 
 instructions of the company appear to be very elaborate, 
 and are probably modified from time to time as necessity- 
 arises. Generally speaking there is a double classification, 
 as in Table B. First, by materials, a gap being allowed in 
 the numbers (and also, we presume, in lines) after each. 
 
THE PREPARATION OF ESTIMATES. 
 
 101 
 
 P.P.L. 
 
 TABLE B. 
 No. 3 Foot Press. 
 
 Weight. 
 
 1 
 
 2 
 
 3 
 
 4 
 
 5 
 
 ■6 
 
 7 
 
 8 
 
 9 
 
 10 
 
 21 
 
 26 
 
 Same 
 
 F.P.H. ■ 
 
 F.P.H.-IO 
 
 F.P.J. -26 
 
 
 
 >, 
 
 Piece name. 
 
 Material. 
 
 § 
 
 Frame 
 
 
 3 
 
 Cast iron 
 
 
 Gib 
 
 side bar 
 
 Front leg 
 
 Back leg 
 
 
 
 Treadle 
 
 
 
 Lever 
 
 Lever weight.. 
 
 Pitman 
 
 
 2 
 
 Clamp sleeve.. 
 
 Lever pin 
 
 Steel 
 
 1 
 
 Treadle and 
 
 Iron 
 
 3 
 
 Pitman bolt 
 
 
 
 Rough 
 weight. 
 
 Finishel 
 weight. 
 
 220 
 10 
 45 
 30 
 40 
 17 
 85 
 
 5 
 12 
 
 3 
 
 ^ 
 
 200 
 
 9 
 40 
 30 
 40 
 15 
 80 
 
 5 
 10 
 
 2i 
 
 2 
 1 
 
 
 200 
 9 
 40 
 60 
 40 
 15 
 80 
 20 
 10 
 
 44 
 
 2 
 
 14 
 
 material is exhausted. Secondly, by grouping, the pieces 
 of the same general order being placed together, and in 
 natural machine-shop order — first planing, then drilling or 
 boring, then turning, the heaviest and most important 
 pieces coming first. Between each group a gap is left, in 
 the same manner as between each class of^ material. 
 
 For indicating alterations of parts of a machine a sup- 
 plementary symbol is adopted. A small letter after a 
 piece symbol (as F.P.L. — 21 — a) signifies that the piece is 
 obsolete, the standard F.P.L. — 21 having been altered. 
 Mr. Smith admits that this is not quite correct, or, as he 
 terms it, " strictly logical, as it gives the same symbol to a 
 piece in present use which, in a previous year, was given 
 to a somewhat different one now obsolete." This defect 
 may, however, have now been corrected. It could easily 
 be done by adding the small letter (a for a first alteration, 
 b for a second, and so on) to the altered piece, and making 
 
102 THE PKEPAEATION OF ESTIMATES. 
 
 reference thereto in the symbol book opposite to the original 
 number. Of course, a remarks column would have to be 
 added for this purpose, but such a column is useful in 
 any case. 
 
 A further supplementary symbol is used, for purposes 
 of internal accounts only, by the Ferracute Machine Com- 
 pany, which may best be described in Mr. Oberlin Smith's 
 own words : " It is to indicate the number of an operation 
 in the construction of a piece, and is written thus ; 
 F.P.L-21-lst F.P.L-21-2nd, &c. Its use is of 
 
 freat value on detail drawings, time cards, and cost records, 
 t enables any operation (no matter how trivial) or any 
 piece of any machine to be identified by a symbol alone. 
 An operation we define as any work which is done by one 
 person at one time, before passing the piece along and 
 commencing upon another." 
 
 The symbol system of the Ferracute Company has 
 undoubtedly many advantages, not merely in saving of 
 clerical labour (which is an economy always to be aimed 
 at), but also in the greater facilities it afiords for references. 
 In order, however, to obtain the full advantage which it 
 presents, it should not only be adopted in the drawing 
 office and works for technical records, but should also be 
 used throughout the commercial department and in the 
 catalogues of the firm. But here arises a difficulty. Com- 
 mercial clerks are very seldom qualified to describe a 
 machine or its varied details in an intelligent manner ; 
 indeed, the average commercial clerk has proved himself 
 so unfitted for anything beyond routine duties that a large 
 proportion of his own proper work has perforce passed into 
 the hands of outside experts. To permit the nomenclature 
 to be fixed in the commercial department would, therefore, 
 be to render confusion worse confounded. It is evident 
 that there is no other satisfactory method of compiling 
 Table B than entrusting it to technical officers, and since 
 none of the officers about the works possess such facilities 
 for constant access to drawings and other records as the 
 draughtsman does, it would appear that the drawing office 
 is the proper place for the compilation of the table. 
 
 The names and symbols when fixed should be recorded 
 in a permanent book, and written copies thereof sent to 
 the various officers and departments of the works. These 
 copies should be fastened, for future reference, in skeleton 
 guard books, and carefully and fully indexed. The original 
 record book in the drawing office "will be subject to con- 
 
THE PREPARATION OF ESTIMATES. 
 
 103 
 
 siderable wear and tear, and should therefore be of thick 
 hand-made paper, and strongly bound ; indeed, it would 
 be better also to have the copies sent to the works written 
 or typed on hand-made paper, of good quality. 
 
 Estimate Clerk. — The estimate clerk should be 
 thoroughly reliable and experienced. His work is so inti- 
 mately connected with costs that it may possibly be 
 desirable to have both estimates and costs supervised by 
 the same officer. No clerk of the commercial department 
 should, however, be permitted to complete any estimate 
 according to his own knowledge or anticipations. He must 
 be merely an intelligent compiler and recorder of facts 
 furnished to him by the technical officers, and must finally 
 submit his work to them, or one of them. Proper forms 
 of estimates will, however, assist him to arrive at an orderly 
 compilation. 
 
 Catalogue Estimates. — For every machine or other 
 item in a trade catalogue or list a proper estimate should, 
 in the first instance, be prepared in the same manner as for 
 an individual tender. It should also be prepared in such 
 form that a corrected future estimate may be readily placed 
 • in comparison with it, not merely in total amount, but in 
 those numerous details through which that amount is 
 arrived at. This may be done by keeping the list estimates 
 in one or more bound volumes, and having the books so 
 ruled that both the first and also the subsequent figures 
 may appear on the same page. The following ruling will 
 answer the purpose, the number of estimates allowed for 
 being limited only by the width of the pages, but -not 
 beino- less than three — more were better : — 
 
 
 * 
 
 ■§<§ 
 
 MS 
 
 bo 
 
 1 
 
 
 Estimate 
 
 189. 
 
 
 It 
 
 
 Estimate 
 
 
 
 
 
 
 
 
 Names of 
 Parts. 
 
 Mate- 
 rials. 
 
 ^aties and 
 Wages. 
 
 ' Mate- 
 rials. 
 
 Salaries and 
 Wages. 
 
 
 1 
 
 1 
 
 1 ° 
 
 i 
 
 a 
 
 i 
 
 
 
 o 
 
 i 
 
 o 
 
 i 
 
 i 
 
 
 
 
 
 
 
 
104 THE PREPARATION OF ESTIMATES. 
 
 The page should he headed with a complete description 
 of the machine, the catalogue wording being usually the 
 most suitable for adoption. It should also contain a full 
 list of all the details to be supplied with the machine. 
 
 The column marked "names of parts" should be 
 divided into as many as conveniently possible. And here 
 will be seen the advantage of using Mr. Oberlin Smith's 
 nomenclature. The representative symbols used for any 
 part will then have a distinctive meaning, not merely in 
 relation to its own particular machine, but also in relation 
 to any other machine for which a similar part, even of 
 different dimensions, may be required. 
 
 It will be observed that this calculation gives the esti- 
 mated cost, of material, and also the estimated wages given 
 under the heads of the various trades, which may be 
 increased to any number the manager requires separately 
 shown as employed on the work. At the foot a summary 
 must be made in manner following : — 
 
 Total wages f 
 
 Add cost of materials . . . 
 Total estimated nett cost 
 
 Add — 
 
 Use of machinery and tools at a fixed ^ 
 proportion of % j 
 
 Management expenses, including 
 superintendence, rent, insurance, gas, 
 water, &c., at a fixed proportion of % 
 
 Total' estimated gross cost 
 
 Add for profit 
 
 Catalogue price £ . 
 
 Now this, as indeed all estimates are, is but an antici- 
 pation, a forecast, of expected results, and cannot be 
 supposed to strictly agree with the financial books of the 
 firm, as cost accounts must do. But, exactly in the same 
 way as in detailed cost accounts, and in the accountant's 
 ordinary ledger, no profit should be permitted to be made 
 on the stores issued, or on the wages paid ; so in all 
 estimates, the actual cost of stores to be consumed, and of 
 
THE PBEPARATION OF ESTIMATES. 105 
 
 labour to be employed, should be placed against each item 
 as nearly as they can be anticipated. This is necessary for 
 comparison with the completed results, and desirable to 
 enable the manager to judge of the actual amount of profit 
 he can make on the machine. 
 
 Averaging Cost of Materials. — In fixing the prices of . 
 materials for catalogue estimates, it must be remembered 
 that the calculation is made for a considerable time ahead, 
 and not only for the immediate future. Care must there- 
 fore be taken to average the prices, especially of such 
 valuable and widely fluctuating materials as copper, tin, 
 and their compounds, and to compute this average over a 
 sufficiently long period of time to make it reasonably safe 
 for practical purposes. 
 
 Weight of Materials. — The approximate weight of 
 materials required must, in the first instance, be furnished 
 by the draughtsman from his calculations. These drawing 
 office calculations have now been elaborated to such nicety 
 as to give little difference between the calculated and the 
 actual weights. When, however, any new machine, or new 
 size of standard machine, is made, each part of it should be 
 carefully weighed or measured, and the results recorded in 
 the column of the estimate for "Actual weight or quantity 
 used." This column, and not the estimated column, must 
 be taken as the data for any subsequent estimates. 
 
 Establishment Charges.— It will be observed that the 
 establishment charges for use of machinery and tools, and 
 for management charges, are added " at a fixed proportion 
 
 of %" As we shall see later, in 
 
 ordinary estimates this percentage is based on the propor- 
 tion the present establishment charges bear to the wages 
 on contracts running, and on tenders rendered, which it 
 is expected will be accepted. But when ive remember that 
 catalogue estimates are to extend over a considerable 
 period ; that the revision of them may probably be under- 
 taken at irregular intervals ; that during these intervals 
 times of trade depression and trade advancement may alter- 
 nate ; and that questions of extra commissions, or special 
 allowances will frequently arise, and be decided before they 
 are revised, it will appear that a commercial question of some 
 complexity arises. The cost accounts will exhibit these 
 variations, but in the present instance it is not variation we 
 require, but a stable figure. 
 
106 THE PREPARATION OF ESTIMATES. 
 
 During the time -when the works are only partly 
 enaployed, and there is no immediate prospect of new 
 contracts, such charges as interest on machinery, deprecia- 
 tion, current repairs, management salaries, rent, insurances, 
 and taxes, will bear a greater proportion to the wages for 
 direct labour than they would if the yard were full of 
 engines and machines in progress. This increased dead- 
 Aveight charge cannot, however, be obtained from the 
 customers : it must come out of the profits of the firm, 
 and must be so dealt with in the estimate. Many engineers, 
 therefore, assume the works to be in full progress, and on 
 the labour wages thus estimated they calculate the per- 
 centage of establishment charges. This certainly gives the 
 best figure on which to arrive at the amount of profit 
 which will be obtained, but it has the disadvantage of 
 giving establishment charges which may not approximately 
 agree with the completed costs. A reconciliation may, 
 however, be effected by preparing the summary already 
 given in dual form. In the first the use of machinery and 
 management expenses must be taken at the proportion 
 they bear to the wages under the present and immediately 
 anticipated conditions of the establishment. This will be 
 the basis for comparison with the cost accounts. In the 
 second the same charges must be added at a fixed propor- 
 tion, which they would bear to the labour wages under full 
 conditions of work in the factory, and the figure thus 
 arrived at will be the minimum which can be accepted for 
 the machine, &c., without incurring actual loss. This 
 figure may be entered on the manager's private catalogue 
 as his minimum price. 
 
 Profits on Standard Machines. — There is a line "Add 
 for profit " on the foregoing summary. We are dealing 
 now with catalogue prices, and with standard patterns of 
 machines, which are frequently made for and sold from 
 stock. With goods of this class the engineer has little 
 opportunity of fixing the profit himSelf : he is bound by 
 the prices which his competitors in trade are charging, 
 which they advertise in their lists, and which are well 
 known to his customers. He must fix his catalogue prices 
 by those ruling in the market, and he must arrive at his 
 estimated profit by taking the difference between those 
 figures and the estimated gross cost. 
 
 Estimates in General. — When we come to consider 
 those estimates on which tenders of a more general and 
 
THE PEEPAEATION OF ESTIMATES. 107 
 
 competitive character are rendered we shall find greater 
 difficulties confronting us. The variations in purely com- 
 mercial conditions are greater ; many of the factors -which 
 determine the conclusion of the contract are unknown; 
 and consideration has to be given to items which in 
 standard machines may be neglected in order to secure the 
 advantage of a constant, or apparently constant, price to 
 place before the customers. 
 
 And, first, it must be remembered that the superior 
 equipment of a firm will give it no advantage over 
 another in market price for equal work. No doubt the 
 good reputation of a firm will frequently determine the 
 allotment of a contract in its favour ; indeed, reputation 
 sometimes gives a firm, or group of firms, the practical 
 monopoly of a particular market for a time, but this 
 determination or monopoly will not result in more than a 
 temporary advantage in price, for it will pass away 
 immediately it is apparent that equally good work can be 
 produced by other firms at lower prices. Nor is " good 
 reputation " synonymous with superior equipment. It 
 may probably include it, but it also includes, and in reality 
 is more dependent on, superiority of management, skilful 
 training of workpeople, and faithful observance of obliga- 
 tions, than on perfection of workshop tools. These are an 
 advantage to the possessors of them, but rather by reduc- 
 ing the cost of production, and thus securing a larger 
 margin of profit, than by obtaining a price higher than 
 the ordinary and usual market quotation. . 
 
 If, therefore, superior equipment affords little or no 
 opportunity of gaining payment higher than current rates 
 for equal work, it is evident that the estimator must make 
 himself acquainted with those current rates, and note their 
 variations. It is, however, needful that he should bear in 
 mind the significance of the term " equal work." If, either 
 by superiority of supervision, by superiority of workman 
 skill, or through the more complete furnishing of his factory, 
 he can turn out a better engine or machine than his com- 
 petitors, he will be entitled to ask, and in general will 
 secure, a higher price than they can obtain. He is offering 
 his customer something more than others do, and he is 
 entitled to be paid for this increased value. The possibility 
 of higher price is, however, limited by the customer's 
 demand ; by the consideration whether he desires a better 
 article, or whether the inferior one will serve his purpose 
 equally well. 
 
108 THE PREPAKATION OF ESTIMATES. 
 
 Data for Estimates. — There are three methods on 
 which the preparation of estimates may be based, namely : — 
 
 1. On approximations to the supposed tenders to be 
 
 made by competing firms. 
 
 2. On calculations of anticipated cost of materials and 
 
 labour, with such profit added as it is thought the 
 work should reasonably yield. 
 
 3. On an examination of the cost of former work of a 
 
 similar character, adjusted by allowances for differ- 
 ences in dimensions, in rates of wages, and in 
 market price of materials, with reasonable profit 
 added to such corrected cost. 
 
 The first way is mere guesswork — though even in 
 guessing some men are more expert than others — and may 
 therefore be dismissed as eminently unsatisfactory. In 
 some foreign tenders, particularly when they are for foreign 
 governments or municipalities, the guessing is supple- 
 mented by information obtained by bribery from the 
 government agents or the competitors' employees. We do 
 not imagine our readers will be guilty of such dishonest 
 practices, but it is well to warn them that firms do exist 
 who are so unscrupulous as to resort to them, and it is 
 therefore necessary to scrupulously guard the figures of 
 •estimates and tenders from being prematurely disclosed. 
 
 The third method is really more useful as a means of 
 checking independent calculations than as sole datum for 
 a tender. In subsequent paragraphs the essential features 
 and results of detailed cost accounts will be dealt with, and 
 an examination of them will disclose the extent to which 
 they may be used without any further verification. It may, 
 however, be said that as a means of corroboration ; as a 
 comparison of actual results with previously-anticipated 
 costs ; as a warning against additional expenses and 
 leakages which are often overlooked, they are of the 
 titmost service. For this subsidiary purpose they will be 
 cherished and referred to, both by the experienced esti- 
 mator and by the general manager to whom his completed 
 Avork is submitted for approval. 
 
 The second method of estimating therefore remains as 
 most deserving of consideration, and as it involves one 
 very potent factor in the profit or loss of the firm, it 
 demands considerable study on the part of the young 
 engineer. The prices of engines or machines may from 
 
THE PREPARATION OF ESTIMATES. lOQ' 
 
 time to time alter, and the charges for repairs or renewals. 
 may Tary in different places, but the same general 
 
 Erinciples should guide the estimator in fixing them, 
 •etails, so far as they are affected by either time or dis- 
 trict, may be acquired by him from various sources, the 
 local conditions especially demanding consideration. 
 There is some excellent information given in " Engineering 
 Estimates, Costs and Accounts, by a General Manager, '' 
 published by Crosby, Lockwood, and Co., but in using this, 
 or any other work quoting actual prices, due allowance 
 must be made for changes in the markets for materials, 
 for rise or fall in wages, and for the gradual evolution of 
 labour-saving devices, as well as for the situation of the 
 factory or works. 
 
 Order of Estimate. — The advantages which result from 
 following in the estimates the same divisions into parts or 
 sections which will be, or are usually, adopted in the cost 
 accounts, will be apparent when the facility of comparison 
 thereby afforded between anticipated and actual expendi- 
 ture is considered. There is a close connection between 
 the two, and when there is any material increase in actual 
 cost over preconceived cost, the reason for it should be 
 minutely investigated by, or under the directions of, the 
 manager. 
 
 Now there is a certain natural sequence in which it will 
 be found convenient to place these particulars, the order 
 being, to a large extent, that in which the work is per- 
 formed. It will be seen most vividly in one of the larger, 
 and more complex structures, but it is equally to be 
 found in the smallest machines. If, for instance, the 
 tender is asked for a large cargo steamer, it is evident to 
 the merest tyro that the preparation of some of the draw- 
 ings, of the working model, and the laying off in the mould 
 loft, are the earliest portions of the work which will be 
 done under the contract when secured. After these 
 follow laying blocks ; then the keel, stem, and sternpost ;. 
 then the frames, and afterwards the plating and riveting 
 of the frame and bulkheads. The most reasonable and 
 natural order to follow in the estimate, is to commence 
 with these items, to follow with other work which will 
 progress in the shops ready for fitting in place when the 
 ship is prepared to receive it, or which will be proceeded 
 with immediately the framing, and plating are sufficiently- 
 advanced ; and then to finish with such later work as. 
 
110 
 
 THE PREPARATION OF ESTIMATES. 
 
 decks, hatches, deck and other fittings, cabins, boats, masts 
 and rigging, &c., &c. The sequence in the Form B of the 
 system of cost accounts, hereafter suggested, will closely 
 follow the same order, and thus render it easy to make 
 detailed comparisons. 
 
 Labour and Materials. — The cost of any work consists 
 of two items : materials used for it, and the salaries and 
 wages paid for preparing and finishing such materials for 
 their ultimate purpose. Here there is a distinct line of 
 cleavage, of which advantage should be taken to effect an 
 additional sub-division of the estimate. To ensure this the 
 form should be ruled with double cash columns, in the 
 following manner : — 
 
 Particulars , 
 
 Weig;ht or 
 quantity. 
 
 Materials. 
 
 Salaries and 
 Wages. 
 
 Quantities of Materials. — It has already been stated, 
 in reference to catalogue or list estimates, that the weight 
 or quantity of materials must be supplied by the draughts- 
 man. This is more especially the case with the estimates 
 now under consideration, in which the weights will vary 
 not only in relation to the total size of the construction, 
 but also in relation to its design. 
 
 There is really no excuse for errors in quantities, not 
 even when they are so sub-divided as to render actual 
 measurement from drawings difficult or impossible. When 
 these smaller weights are estimated (and they may 
 frequently be estimated very closely, if not exactly, from 
 former machines of the class) they must be checked by 
 references to the total weight. If the aggregate of the 
 machine does not approximate very closely indeed to an 
 aggregate arrived at from the drawings or former records, 
 then the draughtsman must make a search for the 
 discrepancy, and continue to search until he finds it. 
 " Near" or " near enough " is not scientific, and must not 
 be permitted in the scientific office of the firm. 
 
 Approximations from Former Constructions. — Where 
 the data of a former contract are used as the foundation for 
 an estimate, whether in figures of cash . or quantities, and 
 
THE PREPARATION OF ESTIMATES. Ill 
 
 additions made thereto for increased size, there is great 
 necessity for extreme care being exercised. Errors have 
 at various times arisen through increased length being 
 added, without any allowance for increased circumference. 
 In one case, we remember a mistake involving the loss of 
 over £5,000 to the shipbuilders, in consequence of the 
 estimater allowing for an increased length of a ship without 
 considering that she was also to possess greater beam and 
 depth. The error is more easily made, particularly in some 
 classes of work, than the reader will readily imagine, and 
 more especially when a tender has to be hastily rendered, 
 or the directors or manager are pressing for figures on 
 which to base it. One precaution may be taken in all cases, 
 and should never be neglected in these approximations, 
 and that is a revision of them by the chief draughtsman. 
 The simpler calculations, and sometimes all of them, are 
 usually prepared by one of the ordinary draughtsmen, of 
 course by one with a sufficient amount of knowledge and 
 experience, and it is therefore only an exercise of ordinary 
 care to have them all submitted to the head of the ofiice, 
 before they are passed to the commercial department for 
 any action involving financial results. 
 
 Boiler Specification. — The pitfalls which surround the 
 subject will be seen by a cursory consideration of a Lanca- 
 shire boiler. It is one of the simpler forms of construction 
 from a commercial point of view, and does not present the 
 difficulties which are met with in gas, oil, or steam engines, 
 in electrical machinery, in steamships, or in that mass of 
 complexities which go to make up a modern railway. 
 Simple, however, as it is, we find in a specification prepared 
 by one of the boiler insurance companies such materials as 
 the following : — 
 
 Boiler Shell, 
 
 Flue Tubes, 
 
 Ends and Stays, 
 
 Angle Iron, 
 
 Steam Eeceiver, 
 
 Manholes, 
 
 Safety Valves, 
 
 Feed Valve and Pipe, 
 
 Blow-off Pipe and Tap, 
 
 Fusible Plugs, 
 
 Grate Bars and Doors, or Mechanical Stokers, 
 
 Footplates, Dampers, &c., &c., &c. 
 
112 THE PREPARATION OF ESTIMATES. 
 
 Now, it is well known to engineers that the labour expended 
 on these materials will vary considerably, that some of 
 them will demand workmanship of different character, 
 and of greater extent than other portions, and that, 
 indeed, some, such as fusible plugs, will be purchased in a 
 finished state from other manufacturers who devote their 
 attention to those particular articles. If, therefore, the 
 draughtsman gave the total weight of the boiler only 
 instead of dividing it into parts, it is evident that the 
 estimator would be at considerable disadvantage in fixing 
 the amount for labour, and liable either to overlook some 
 of the highly-paid but more obscure portions of it, or in 
 an excess of zeal to charge the whole at too high a rate. 
 Nor, apart from the labour, would it be convenient to 
 group the material into one or two lots, since it is of vary- 
 ing character, and consequently of varying prices. If it 
 be desirable, in a simple form of construction like 
 Lancashire boilers, to divide the estimate into different 
 classes of materials and labour, in order to arrive at a near 
 approximation to anticipated cost of completion, it must 
 be far more important to do so in structures which have a 
 far greater number of parts, and greater differences in the 
 construction, finish, and materials of those several parts. 
 
Chaptee XL 
 
 PREPAKATION OF ESTIMATES {continued). 
 
 TENDERS SENT OUT. ORDERS RECEIVED AND 
 
 RECAPITULATION. 
 
 Price of Materials.— It is equally necessary that the 
 price at which materials are charged in the estimate should 
 be a correct one as that the proper quantities should be 
 given. We have already said that no profit should be made 
 on either materials or labour in the body of the estimate, but 
 that both must be entered at the actual cost to the firm ;. 
 but this does not quite represent the whole of the case. 
 The firm may have in stock stores left over from former 
 contracts which will be used on the intended work, but the 
 market prices of which have fallen since they were pur- 
 chased. As there will probably be one or more competitors 
 who are not hampered with such stocks, and who are there- 
 fore free to buy in the open market at the lowest prices at 
 present available, it will be useless estimating for more 
 than these prices. Any difference between the two will 
 form a reduction of the firm's profit ; a loss of some of the 
 money they would make out of the work if they were 
 more happily situated. On the other hand, it may occasion- 
 ally happen that stock will be held which has been 
 purchased at less than current prices, and in this case a . 
 like course must be followed, and the present values be 
 inserted in the estimate form. A remark should, however, 
 be made in the margin, where the quantity and amount is 
 material, showing that a difference exists between the 
 actual purchase and present market price and the amount 
 thereof, so that the manager or directors may give to it 
 such consideration and effect as they deem necessary when 
 fixing the sum to be added for profit. 
 
 Unstable Equilibrium. — We have, however, not yet 
 
 exhausted the question of price. It must be remembered 
 
 that every market is usually in a state of unstable 
 
 equilibrium, and that its quotations vary from day to 
 
 i3 
 
114 THE PEEPAEATION OF ESTIMATES. 
 
 ■day. Sometimes these fluctuations do not very greatly 
 depart far from a common centre : the tendency one day 
 "will be to a little harder quotation, and the next to a 
 slightly easier one, but the average will continue about the 
 same from week to week. At another time the beats will be 
 stronger in one direction than the other, and although part 
 of a day's loss or gain in price may have to be abandoned 
 later in the day, some of it will always be retained, and the 
 morrow will witness a repetition of the process. We have 
 thus the condition of an ordinary rising or falling market, 
 a condition which will continue until such time as demand 
 and supply shall equal each other at the price then 
 .attained, and under the circumstances and anticipations 
 then subsisting. When this stage has been arrived at the 
 market will once more revert to its normal state of unstable 
 •equilibrium. The causes for a rising or falling market are 
 many and varied, and comprise currency conditions, 
 political disturbances, and fluctuations of discount and 
 ■exchange, as well as the quantity of available material, or 
 the immediate demand there may be for it. The prescience 
 which enables some men to discern and take advantage of 
 these market changes is most valuable, and should be 
 sedulously cultivated. It is more a commercial instinct than 
 the result of workshop training, but it is an instinct which 
 no true business man will fail to cherish and develop. 
 
 There are, it is true, at times sudden, unexpected, and 
 momentous changes in prices which are almost in the 
 nature of panics, and are frequently closely connected with 
 financial crises. The effect is generally disastrous, and 
 ■causes great dislocation of business, but they are too 
 irregular and uncertain, both in inception and duration, 
 for any effect to be given to them in ordinary estimates. 
 
 We may, therefore, amend our rule, and state it in 
 these terms : No profit must be taken in the body of the 
 ■estimate on either materials or wages ; both inust be calcu- 
 lated at current market prices, modified, however, in a 
 rising or falling market by allowance for the anticipated 
 ■extent of such variation during the continuance of the 
 contract. 
 
 Estimation of Labour. — The second money column of 
 the estimate is more difficult to deal with than the first. If 
 the market for materials is occasionally subject to panic 
 fluctuations, the force and duration of which cannot be 
 foretold, the cost of labour is in a constant state of unrest. 
 
THE PREPARATION OF ESTIMATES. 115 
 
 arising not only through demands for increased wages, but 
 also through the modern pretensions of trade unions to a 
 limited partnership, and therefore to the control of the 
 labour employed. This restless condition of the labour 
 market, and the difficulties which arise therefrom in antici- 
 pating the productive value of the men's time, make this 
 portion of the estimate more difficult of correct adjustment 
 than formerly; and most managers of experience will 
 admit that it always presented sufficient perplexities. 
 Workmen in different localities, or trained under varying 
 conditions, both of workshop practice and equipment, and 
 home and social influences, will render, one from another, 
 a distinct tale of work. Whilst, therefore, most foremen 
 and managers can determine from their own experience 
 the time and number of men which will be occupied on any 
 piece, in like circumstances to those to which they have 
 been accustomed, these circumstances are now constantly 
 changing, under stress of development of machinery, of 
 perfection of appliances, and of the workmen's aspirations 
 and demands, and this changeableness must be carefully 
 remembered when the future value of it is under review. 
 
 Estimated by Technical Experts. — It seems scarcely 
 necessary to say that the labour must be estimated by 
 technical experts — that is, by foremen and sub-managers — • 
 just as the quantities are furnished by the draughtsmen. 
 And yet the caution is not wholly unnecessary when we 
 think of the trend of modern business. Year by year 
 private firms of even small dimensions are transformed into 
 joint-stock companies, and in many of these companies the 
 banking, money lending, and dividend-seeking element is 
 predominant. The directors during their tenure of office 
 are compelled to turn their attention to immediate profit, 
 rather than to those improvements in design, or manage- 
 ment, or equipment, which yield only deferred gain. The 
 approval of the auditor is most essential to such a board, 
 .since he is primarily the representative of the bankers and 
 investors, and the auditor relies on the clerks, with whom 
 he is brought into immediate contact, rather than on the 
 expressions or advice of foremen, whom he will generally 
 understand very imperfectly. There is grave danger that 
 a tendency may be created to rely too greatly on the 
 knowledge of the cilerkly class, and to credit the members of 
 it with the ability to use the tables and statistics they so 
 neatly and carefully compile. The difficulties already 
 
116 THE PREPARATION OF ESTIMATES. 
 
 pointed out in the computation of the cost of labour ought- 
 to convince either directors or manager that no ordinary 
 clerk is capable of dealing with this part of the estimate, 
 and that it should be left to the officers who have the 
 direct oversight and management of the workmen. 
 
 Cost Accounts. — One of the clerks can, however, render 
 great assistance to the technical officers, and that not merely 
 m a subordinate capacity, but in actual consultation with 
 them : we refer to the cost accountant. He has, or should 
 have, in considerable detail, particulars of the expenditure- 
 on former machines, or works of like or analogous character, 
 and if he is properly versed in his work he can point out 
 variations therein, and the extent to which they have arisen 
 from changes in rates of wages, or in working overtime. 
 These costs and explanations, if judiciously used, will be of 
 material assistance in filling up the second money column. 
 Whenever it is possible they should be consulted before 
 any tender is sent out, since they very graphically point 
 out the capabilities of the firm gathered from its actual 
 efforts on previous occasions. 
 
 Foremen's Records. — But cost accounts are not always- 
 available. By most firms they are jealously guarded, and 
 very properly so, from inspection by any but a few trusted 
 and trustworthy officials, and sub-managers and foremen 
 are not always included in this category. As, however, 
 they may at any moment be called upon to complete the 
 labour portion of an estimate, or revise one previously pre- 
 pared, it is desirable that they should be permitted, and 
 even encouraged, to keep their own records of the time- 
 occupied on any work. They have access to the pay sheets, 
 and might conveniently and advantageously be permitted 
 access to the analysis of them, and can therefore readily 
 prepare their own records from the firm's official documents. 
 
 It must be clearly understood that these records, even 
 in the attenuated form recommended, are confidential 
 documents, and must not be disclosed to the prejudice of 
 the firm. There will be little danger of this breach of trust 
 if the foremen are carefully and judiciously selected, and a, 
 spirit of thorough loyalty and truthfulness is cultivated 
 throughout the works. 
 
 The records may be kept in any convenient book : an 
 ordinary foolscap book, faint lined, will be found suitable 
 for permanent record, and the pocket memorandum book 
 
THE PREPAEATION OF ESTIMATES. 117 
 
 -will serve for temporary note of any extracts or explana- 
 tions to be afterwards transferred to it. 
 
 The follo-vving particulars should be obtained, but so long 
 as these are available, the exact form in which they are 
 written down is immaterial. Ruling vertical columns for the 
 different trades may probably be found to save time and 
 trouble. 
 
 1. The engine, machine, or other construction must 
 be stated in sufficiently definite terms and dimensions to 
 identify it at any future time. 
 
 2. The work must be divided into, at least, as many 
 parts as are separately stated and dealt with in the 
 specification. This division may, however, be carried 
 much further in the foreman's own record book, as his 
 object should be to ascertain the time spent on each 
 detail of a machine, and not the total on the whole 
 machine. 
 
 3. The record should be of time only, and not of money, 
 so that in future references the compfications arising from 
 alterations of rates of wages, and from overtime, may be 
 eliminated. 
 
 It must be clearly understood that accuracy must be 
 attained through the exercise of great care, as the book- 
 keeper's test of " balancing " can hardly be resorted to. 
 These time records are kept for a special purpose, for the 
 information of the foreman in charge of the work, and it 
 will be found a waste of energy to multiply them over and 
 over again, in cases of standard machines wherein there is 
 no practical variation of the labour expended. 
 
 It is essential that any temporary causes which interfere 
 with the labour on any job, either retarding or accelerating 
 it, should be noted, so that the record of time occupied 
 will not be misleading when such causes are removed. 
 
 Steamship Estimate. — There are other items which 
 demand consideration and adjustment before the estimate 
 is complete, but it will be convenient to consider these in 
 a model form. Probably a steamship contains as many 
 complications as will be encountered by the average 
 engineer, and will therefore be most suitable for the pur- 
 pose of example. Simpler constructions will present no 
 difiiculties if the more complicated ones be understood. 
 Some of the following details are taken from an actual 
 specification given by Mr. John Grantham, M. Inst.C.E., 
 from which it will be readily observed that a considerable 
 
118 
 
 THE PREPARATION OF ESTIMATES. 
 
 number of items have been omitted, but there is no need 
 to specify them since they do not demand special notice ; 
 the same methods will apply to them as to frames, bulk- 
 heads, plating, and cabins and fittings. 
 
 ESTIMATE FOR A STEEL PADDLE STEAMER FOR MESSRS. 
 LLOYD, JOHNS, AND CO. TO BE BUILT UNDER LLOYD'S 
 SPECIAL SURVEY. FIVE LONGITUDINAL BULKHEADS. 
 
 DiMENSIOKS— 
 
 Length 450 ft. 
 
 Beam .- 54 ,, 
 
 Depth below cabin 8 ,, 
 Height of cabin... 10 ,, 
 Height under plat- 
 form 
 
 10 , 
 
 Drawings, lajing off, 1 
 and model J 
 
 Laying blocks 
 
 Keel, stern, and stern- "1 
 post J 
 
 Frames 
 
 Stringers 
 
 Beams 
 
 Plating and riveting 
 
 Rudder 
 
 Bulkheads 
 
 Main deck 
 
 Lower deck :.... 
 
 Platform deck 
 
 Cabins and fitf iugs 
 
 Saloon 
 
 Engineers' berths 
 
 Sidelights 
 
 Steerage apparatus 
 
 Anchors, chains, &c 
 
 Painting 
 
 Outfit (detail, unless 1 
 it is the usual one)., j 
 
 Cost of survey 
 
 
 '53 p 
 
 Less, scrap metal 
 
 Salaries and Wages. 
 
 P.4 
 
 Add — Cost of materials 
 
 Total Estimated Nbtt Cost 
 
 Add -Use of machinery and tools .. 
 
 Management charges (including superintendence, rent. 
 
 rates, insurance, gas, water, &c ) 
 
 Total Estimated Gross Cost 
 
 Add for Profit ] ' 
 
 Tender £ 
 
 Total 
 Wages. 
 
 Wages and Salaries.— It will be observed that the 
 salaries and wages are divided under five heads ; in some 
 cases, and for some forms of work, it may be desirable to 
 
THE PKEPAKATION OF ESTIMATES. 11& 
 
 adopt a' greater number of divisions, whilst for others it 
 is sufficient to use only the single cash column for wages 
 and salaries. Convenience and common sense must be the 
 guide. 
 
 The salaries and fees of partners, directors, and mana- 
 gers, and the wages of draughtsmen, foremen, clerks, 
 timekeepers, storekeepers, &c., should not be divided over 
 the several items ; they are included under the head of 
 establishment charges. Where, however, the work is of 
 such a nature as to require the exclusive services of one or 
 more draughtsmen or foremen, then their wages must be 
 entered as a special item, care being taken that the charge 
 does not again appear under some such head as drawings, 
 laying off, and model. 
 
 Drawings, &c. — In many instances it is necessary to 
 prepare some of the drawings before making a tender — in 
 a ship, for instance, a midship section is invariably got 
 out — in others the drawings will only be commenced after 
 the contract has been secured, and continued as may be 
 necessary for the work to proceed. In either' case the 
 contract or order should bear the expense, and where it is 
 possible to isolate the anticipated cost it is better to 
 include it separately in the estimate. It will be so shown 
 in the cost accounts, and for purposes of comparison it is 
 desirable to follow the same course at the beginning. 
 
 Blocks, &c. — In shipbuilding, blocks are a heavy item 
 of expenditure, and few qualified estimators would over- 
 look them in such a yard ; but they are also a charge, more 
 or less heavy, against other engineering constructions, and 
 must not then be forgotten. The estimate should be only 
 for the extent of destruction and deterioration anticipated, 
 and not for the full value of those employed. The 
 possibility of such a blunder is greater in small structures 
 than in large ones ; where the number of blocks employed 
 on a job is great the inclusion of the whole value of them 
 in a single estimate could only arise through gross 
 carelessness. 
 
 Sundry stores have frequently to be added to save 
 inconvenient detail, and care must be taken not to 
 duplicate weights in such cases. 
 
 Scrap metal should be deducted in instances where 
 materials have been charged at full weight without 
 allowance for it, as in the case of plates taken at their 
 ordered dimensions, but which afterwards undergo 
 
120 THE PKEPAEATION OF ESTIMATES. 
 
 punching and shearing. Scrap should, however, be 
 deducted at its price in that condition, and not at the 
 purchase price of the metal. 
 
 By adding the two money columns, " Cost of materials " 
 and " Wages," together we arrive at the estimated net cost 
 of the work. 
 
 Establishment Charges. — The question of establish- 
 ment charges is a difKcult one. It is evident that they must 
 fluctuate with the amount of work in progress, and yet no 
 effect can be given to such fluctuations in the charge for the 
 product. A customer will not pay more for a machine 
 because the manufacturing yard is only half full of work, 
 and the engineer who indulges any such expectation will 
 show himself a very bad commercial manager. He must 
 reduce the ratio by increasing the work in progress. 
 
 There can be little doubt that the percentage of 
 establishment charges should be calculated on wages, and 
 not on materials and wages or materials alone. Materials 
 do not merely vary in price, but also in the condition in 
 which they are bought; sometimes being purchased in 
 the crude state and at others in the condition of finished 
 fittings and forgings ready lor erecting in place. When 
 variations of this kind occur (and all engineers know that 
 they do occur), and when stores are purchased on which 
 the machine tools of the firm never pass, it is almost 
 impossible to maintain a true ratio between establishment 
 charges and materials ; the more correct way undoubtedly 
 is to distribute them according to wages paid. 
 
 Now there are three constituents in the charge for use 
 of machinery and tools, viz. : 
 
 1. The interest on the capital expenditure for machinery 
 and tools. Such expenditure must be taken at the balance 
 appearing in capital account, after allowance of deprecia- 
 tion to date. 
 
 2. The amount of current depreciation as detailed in 
 the cost accounts. Such depreciation should reduce the 
 value of the respective machinery and tools to scrap price 
 at the end of their respective lives. 
 
 3. The amount of current repairs, not being in the 
 nature of renewals, sufficient to prolong the useful lives of 
 the tools, &c., to the longest possible period. 
 
 The sum of these three items will be the charge for 
 machinery and tools. But to avoid the inconvenience of 
 
THE PEEPAEATION OF ESTIMATES. 121 
 
 making a distinct calculation for each estimate, they 
 should, be reduced to a percentage each year : the annual 
 stocktaking will be a convenient period for doing this, as 
 the completed cost accounts will then be available for 
 reference. 
 
 The wages expected to be paid must be estimated thus: 
 
 On contracts already accepted they will 
 
 amount to £9,000 
 
 On machines to be made for stock they 
 
 will amount to 4,000 
 
 Tenders have been rendered, and are 
 expected to be accepted, on which they 
 w-ill amount to 3,500 
 
 £16,500 
 
 The interest (1) is £450 
 
 Depreciation (2) is 230 
 
 Repairs (3) are 150 
 
 £830 
 
 This will give an amount equal to 5 '03 per cent of the 
 estimated wages to be added to any tender rendered. 
 
 The remainder of the management charges, such as 
 general salaries and wages, rent, rates, insurance, coal, 
 lighting, water, &c., should be ascertained in the same 
 manner, and apportioned as a percentage over the same 
 amount of wages. 
 
 In the management charges nothing must be included 
 for the personal withdrawals of the proprietor (if a private 
 concern), or for fees and other emoluments to directors in 
 excess of that which would be paid by any other firm for 
 equal management services. 
 
 Interest is a difficult problem, and it is probably better 
 to include it in the profit, except such portion as is already 
 estimated for interest on machinery and tools; and, in 
 cases where the works are the property of the firm, four 
 
 fer cent on the cost of land and buildings in lieu of rent, 
 n the North of England a system has grown up of debiting 
 trade account with interest, generally at five or six per 
 cent, on all capital before arriving at the profit. This, 
 however, introduces an unnecessary complication, in the 
 financial advantage which one firm may possess over 
 
122 THE PEEPAEATION OF ESTIMATES. 
 
 another through the nice adjustment of working capital 
 to its necessities. As such advantage does not in the least 
 concern or benefit the customer, whose only desire is to 
 obtain the best possible construction at the lowest possible 
 price, it should certainly not be permitted to interfere 
 with the estimate, at least not until after the figure of 
 total estimated gross cost has been arrived at. 
 
 It must be remembered that these establishment charges 
 and wages are essentially problematical, and there is great 
 difficulty in arriving at a correct ratio when they have to 
 be anticipated for so long a period as twelve months. The 
 cost accoLints of the firm, which furnish actual results, are 
 therefore most valuable for checkiDg them : they give the 
 percentage which has been incurred during the previous 
 twelve months, and with very little trouble the same 
 information may be obtained from them for the current 
 period at the end of each six or twelve months, without the 
 labour of stocktaking. 
 
 Profit. — The last item on the model estimate is profit. 
 The profit on catalogue machinery is determined, as we 
 have already seen, by the prices charged by competing 
 firms, which are well known. The profit on general 
 contract, is limited in like manner by the prices which 
 other firms will accept, but which prices are generally 
 unknown. The minimum price which can be accepted, 
 with any pretence to safe and sound trading, is the total 
 estimated gross cost ; the amount to be asked beyond this 
 is modified by many purely commercial considerations. 
 One of the most important of these is the necessity for 
 keeping the machinery and permanent staff fully employed, 
 so as to reduce the rates of establishment charges to the 
 minimum. Then comes the condition of the market, 
 although in certain states this may become the paramount 
 consideration. As the market, for materials purchased is 
 always in a state of unstable equilibrium, or rising or falling 
 from one such state to another, so is the market for 
 finished materials. If it is rising, and general conditions 
 indicate an advance in prices likely to be maintained for 
 some time, it is possibly better to let machinery remain 
 idle for a week or two, and wait the flowing tide, than to 
 accept present prices. This, however, is a question which 
 can only be determined by close observation of markets, 
 and of the manifold conditions affecting them, and not on 
 any abstract principles. And thirdly, it must be 
 
TENDERS SENT OUT. 123' 
 
 remembered that whatever doubts and difficulties beset 
 the mind of the manager of any particular iirm, his 
 competitors equally suffer under the same difficulties. In 
 such case the victory is to the man who makes the fewest^ 
 blunders. 
 
 Estimates Sent to Customers. — The estimates so far 
 dealt with are only for the use of the firm in their own 
 offices. There is some ambiguity in the use of this word 
 " estimate ; " it is sometimes used for the calculations of 
 anticipated cost of work, as it has been in these pages ; and 
 at others it is employed for the specifications and tenders 
 sent to customers. The term " tender " might more 
 properly be used for the latter documents, but the matter 
 IS not of great importance, and as verbal correctness of 
 expression is not so essential in engineering as in meta- 
 physical philosophy, ordinary usage may be conformed to. 
 
 But it is of great importance that the actual sending 
 away of the tenders should be properly dealt with. First, 
 it is essential that time should be considered, for time is 
 frequently of the essence of the order. It has already been 
 said that a clerk in the office deputed for the work can 
 furnish catalogue quotations ; and it is almost unnecessary 
 to insist that such quotations should be sent off the same 
 day the application is received, unless some exceptional 
 circumstances prevent it. In the case of tenders for which 
 estimates have to be prepared, the letter from the applicant 
 should be suitably acknowledged on the day of its receipt, 
 and the completed tender sent away immediately it can be 
 got ready. Advertisements for tenders frequently specify 
 the date on which they are to be rendered, and this date 
 must be rigidly observed ; attention is rarely given to any 
 received after the specified time, more particularly if 
 the intending purchasers are municipal or government 
 authorities. It is annoying at any time to lose a coveted 
 contract, but it is particularly galling to lose it through 
 neglect of punctuality and ordinary attention to specified 
 conditions. 
 
 The tender should always be dated, and it is desirable 
 to use paper headed with the firm's name and address. 
 Foolscap is the most suitable size, though some firms use 
 large letter paper for the purpose. Only one side of the 
 paper should be written on. It should commence by giving 
 the name of the person, firm, or authority to whom it is 
 rendered ; and the conditions as to delivery, whether at 
 
124 TENDERS SENT OUT. 
 
 works, free on rail, or free on board, and also as to erection, 
 or any supplementary work to - be performed at the 
 destination. 
 
 The details of the machine, engine, or work should be 
 carefully and accurately expressed. Here again arises 
 a distinction between catalogue machinery and other 
 engineering erections or work. The former can be copied 
 from the list kept in the office by any correspondence clerk 
 of ordinary care and intelligence ; the latter can only be 
 described by a technical expert, unless the firm is prepared 
 to incur the risk of loss through ignorant blundering. As 
 few engineers will care to run this risk, the descriptive 
 portion of the tender should be drafted in the drawing 
 office, subject, in all important contracts, to revision by 
 the general manager before it is written out or typed to 
 send away. 
 
 Particular care must be taken to mention the exact 
 amount of work to be performed in the removal of any 
 old machinery, and the labour which the purchaser has to 
 provide either in removing the old or erecting the new 
 machinery. This point is of great importance in govern- 
 ment or municipal contracts, for, strange though it may 
 appear, official red tapeism is usually strained to its utmost 
 limits against the contractor when any disputed questions 
 arise. 
 
 The amount of the tender must be fixed by the general 
 manager, either with the express sanction of the directors, 
 or, in minor contracts, on his own delegated authority. It 
 should be written in words as well as in figures. 
 
 Tender Copybook.— All tenders should be copied in a 
 special press copy letter book, which should be kept in a 
 locked drawer in the manager's office, to which only the 
 manager and accountant have access, This is better than 
 a locked book, as the latter is frequently out of order, and 
 the privacy of it destroyed. 
 
 The office estimates should in like manner be filed in 
 a locked drawer in the manager's office. A Ceres file may 
 be arranged in such a drawer for the estimates (and it will 
 be found most convenient for the purpose) and a space 
 also left for letter copy book. 
 
 Pursuing Tenders. — All tenders should be kept under 
 observation, and judiciously canvassed, until such time as 
 all hope of securing them has expired. For catalogue 
 tenders this is a mere matter of routine. If the firm have 
 
TENDERS SENT OUT. 
 
 125 
 
 a traveller on the round, he must be notified of the enquiry 
 and the reply, so that he may call upon the anticipated 
 customer : where a resident agent has the monopoly of the 
 district he must in like manner be advised of the possible 
 customer. A courteously worded reminder (written or 
 typed, but certainly not printed) must also be sent, after 
 sufficient lapse of time, from the head office. 
 
 There is more difficulty with special tenders, and 
 although travellers or local representatives may sometimes- 
 suffice for the purpose, it will frequently be advantageous to- 
 use the personal influence of the partners or directors 
 of the firm, or the personal solicitation of the manager. In 
 the case of government contracts, particularly for the 
 Admiralty or War Office, no ordinary representative must 
 be permitted to approach the officials. They love deference 
 and Latin tact, and skilful humoring of their foibles will 
 frequently determine a contract. 
 
 Tender Index Book. — To facilitate reference to tenders 
 sent out and quotations given, an index book should be 
 kept. It is most convenient cut into ledger index form, 
 for alphabetical indexing of the names of the customers 
 and others to whom they are sent, but when the tenders- 
 are entered consecutively an index should certainly b& 
 added. The book should be ruled to the following or 
 other like pattern, and a firm red ink line drawn between 
 each entry. 
 
 INDEX TO TENDERS SENT OUT. 
 
 Date 
 
 of 
 
 Tender. 
 
 Name. 
 
 Refer- 
 ence to 
 Letter 
 Book. 
 
 Description of 
 
 Machine or 
 
 Work. 
 
 Estimated 
 Gross Cost. 
 
 Tender 
 Pi ice. 
 
 Conditions 
 
 of Pay- 
 ment, and 
 Remarks. 
 
 No more time should be wasted in filling the particulars 
 in this book than is absolutely necessary for the purpose of 
 facilitating reference ; any details required can be obtained 
 from the press copy letter book with very little trouble,. 
 
126 ORDERS RECEIVED. 
 
 ;and it is useless occupation of a clerk's time to re-copy into 
 such an index the full details of every specification and 
 tender sent out. 
 
 If the two money columns are filled in, the book should 
 be kept under lock ; if it is intended to be- left open for 
 general inspection, then these columns should either be 
 omitted or left blank. 
 
 The index to tenders sent out is required for general 
 engineering and contracting factories, but is not so essential 
 for those which chiefly manufacture goods for stock, and 
 sell from stock at fixed, or nominally fixed, prices. Even 
 to such manufacturers it will sometimes prove convenient, 
 and the trouble of keeping it will not be great if the 
 description column is curtailed. 
 
 The results of the tenders should be noted in this book 
 as they are ascertained. It is also convenient to mark 
 them with blue pencil in the press copy tender book. 
 
 Estimates and Commercial Records. — There is no 
 interlocking connection between estimates for work, or the 
 tenders founded on them, and the commercial records of 
 the firm. It is not convenient to make any entry of them 
 in the ledgers, nor indeed could any such entry be of 
 service, since it would merely be a diary record, and would 
 not in any degree affect the profit and loss account or 
 balance sheet. And yet, in the preparation of the balance 
 sheet and the directors' report thereon, the undetermined 
 tenders must be taken into consideration by the board, 
 although not by the auditor. This is particularly the case 
 where the manager and selling agents are energetic, and 
 every effort is being made to stimulate the turnover. It is 
 a question of future polity, not of past profits, but none the 
 less of some consequence to the firm. With a considerable 
 amount of work under tender, more especially if likely 
 to be under successful tender, it is important that the 
 directors should consider whether their machinery and 
 equipment and working capital are sufficient to compass, 
 on the most economical terms, the efforts they are making, 
 or whether the time has arrived for proposing to the 
 shareholders the raising of additional capital. Indeed, it 
 is probably desirable that the index book to tenders sent 
 out, should be produced to the board for inspection and 
 consideration once a month. 
 
 Orders Received. — It is certainly more important to 
 secure orders than to record them, yet the latter work 
 
OEDERS RECEIVED. 127 
 
 must not be neglected if the office duties are to carried 
 on without unnecessary trouble and irritation. Orders re- 
 ceived from customers should, for security and convenience 
 of reference, be filed separately from other correspondence ; 
 pasting in a guard book is a very good method when it 
 can be adopted. There is not much difficulty when the 
 orders are for standard machines, and do not involve 
 reference to long specifications and previous correspondence. 
 Where, however, they are the result of previous negotia- 
 tion, the outcome of specifications prepared by the 
 tendering firm, and possibly amended by letters passing 
 between the two contracting parties, and by interviews and 
 conversations between their managers or representatives, 
 the case is one of greater difficulty. And it is just in these 
 latter orders that after disputes, and inadmissible demands, 
 are most likely to arise. It is therefore necessary that not 
 only the order itself, but also all the correspondence 
 amending or altering it, should be readily available. 
 
 Under no circumstances should any pages be removed 
 from a letter copy book ; it is as suspicious a proceeding as 
 cutting away the leaves of a ledger or cash book, and will 
 be so criticised in the event of any after dispute. Indeed, 
 we may add, that in some countries it is a criminal offence 
 to mutilate books of record or of evidence in this manner. 
 If the order is therefore founded on a specification prepared 
 by the tendering firm, either a complete copy of it must be 
 made, or a memorandum giving reference to the number 
 and page of the copying book where it is to be found. To 
 this must be annexed copies of any letters to the purchasing 
 firm, and either copies of, or original letters from them, 
 which in any way modify the original specification. When 
 the letter giving the order, or intimating acceptance of the 
 tender, is attached, the order will be complete. In such 
 condition it can either be pasted in a guard book or filed in 
 a Ceres or Shannon file, having firsi been distinctly marked 
 with the number appropriated to it in the register. 
 
 Orders Received Register. — It is necessary that the 
 orders should be registered, both that they may readily be 
 found after lapse of time, and that they may each be fur- 
 nished with a distinctive number or denomination, which 
 distinction it must carry throughout all subsequent 
 transactions and records. The commercial office will receive 
 the first intimation of the acceptance of the tender ; that 
 is, it will come to the manager in the ordinary course along 
 
128 
 
 OEDEES RECEIVED. 
 
 with his other letters. If approved by him (for it must be 
 remembered that in such an acceptance conditions may be 
 annexed which cannot be agreed to) it will be passed to the 
 clerk in the general office who is charged with the care of 
 the register of orders received, to be by him completed in 
 manner aforesaid, and then registered. 
 
 The entries should be consecutive, to avoid the danger 
 of duplicate numbers. An index of customers' names 
 must be provided, which must be promptly entered, and 
 give reference to order numbers, not pages. The book 
 should be of stout hand-made paper, and strongly bound, 
 so that it may be in good condition after many years' hard 
 wear. Various forms of ruling may be used, but the 
 requirements of most firms will be met in the annexed 
 specimen. It will be convenient to have the pages divided 
 into spaces by horizontal red lines, and the consecutive 
 numbers printed in each space : this increases the cost, 
 but is a safeguard against wrong numbering. 
 
 REGISTER OF ORDERS RECEIVED. 
 
 Left-hand 
 
 page. 
 
 
 
 Order No. 
 
 Date of 
 Order. 
 
 Name. 
 
 Description of Goods Ordered, or Contract. 
 
 5746 
 
 
 
 N.B This need not be in great 
 
 detail, as the book is a register to 
 enable a speedy reEerence to be 
 made to origioal documents. 
 
 Right-hand page. 
 
 Contract 
 
 Price. 
 £ ... d. 
 
 Conditions of 
 Payment. 
 
 How delivery 
 to "be made. 
 
 Bates wben 
 
 deliveries 
 
 made. 
 
 Remarks. 
 
 In some instances columns are provided for cash and bills 
 received, and also for charges for any extras provided, so 
 that the register may show the financial condition of any 
 order or contract completed or in progress. This, how- 
 ever, is merely duplicating information already available 
 in the ledger, and increases the office expenses; whilst the 
 
ORDERS RECEIVED. 129 
 
 Avriting up of such columns is frequently neglected or 
 deferred by the staff, who are perfectly aware that they 
 are unnecessary. There is a further and greater objection 
 to it. The register of orders has frequently to be inspected 
 by men who would not be permitted access to the ledgers : 
 it is undesirable that they should be furnished through its 
 pages with just the same information which they could 
 get from the ledger, respecting the payments made by. a 
 customer. It is not the title of a book, but the nature of 
 its contents, which makes secrecy necessary. 
 
 Recapitulation. — In the second division of the com- 
 mercial management of an engineering establishment, the 
 sales department, the steady succession of orders is neces- 
 sary for successful management ; and continuity of work, 
 steadiness of employment for tools, and progressive, but 
 permanent development of the business of the firm, are 
 ends which must be constantly kept in mind by the 
 engineering manager. There are several means which may 
 be adopted, either independently or in conjunction, but in 
 the proper use of them considerable discretion will have 
 to be employed. They include advertising, circulation of 
 catalogues, employment of travellers, personal solicitation, 
 and the good reputation of the firm ; and whilst they may 
 all be used, no certain rule, applicable to every case, can 
 be laid down. Their efficacy frequently depends upon 
 courtesy and tact, as well as on engineering skill or 
 excellent work. To secure orders and their continuity it 
 is needful to have proper arrangements in the general 
 ofiice, and the clerk most immediately concerned with 
 this portion of the work is the correspondent, who is 
 responsible for the replies to the numerous letters and 
 inquiries received. His position is a confidential one, and 
 it is needful that he should have a special capacity for 
 keeping inviolate the private information entrusted to 
 him ; but as he has to act under the definite instructions 
 of the manager, he must not be permitted to usurp 
 authority in the ofiice or works, an usurpation which 
 would not be for the benefit of the firm. He must be 
 methodical, both in his registers of letters, of addresses, 
 and of postages, and also in his distribution of letters, and 
 answering them in accordance with dictated replies. To 
 some applications for quotations of prices he can reply at 
 once, having merely ,to send a catalogue, or extract from a 
 catalogue, but other letters, even for standard machines,. 
 k3 
 
130 OEDEES RECEIVED. 
 
 will demand the attention of the manager, since they 
 really ask for a reduction in price, and amount to a 
 "higgling of the market." This is particularly the case 
 with foreign trade. But, in general, letters of this kind 
 involve the preparation of estimates, and in considering 
 these we are confronted, in machine designs, with avoid- 
 able difficulties created by want of a scientific nomenclature 
 of details. An attempt at solving this perplexity has been 
 made by the Ferracute Machine Company, of America, 
 whose method is deserving of consideration, if not of adop- 
 tion, by English engineers. Estimates for catalogue prices 
 necessitate averaging the cost of materials, and also require 
 the establishment charges to be entered at a percentage 
 which would be correct if the yard were full of work. The 
 difficulties attending estimates of a more general and com- 
 petitive character are, however, greater. Of three methods 
 which may be adopted for preparing them, the one which 
 yields the most satisfactory results, and is therefore most 
 worthy of examination, is the careful calculation of antici- 
 pated cost of materials and labour, with such amount 
 added for profit as it is considered the work should reason- 
 ably yield. In this calculation labour and materials should 
 be separated. The weights and quantities should be fur- 
 nished by the draughtsmen, who are now sufficiently 
 skilled experts to render any blundering therein inex- 
 cusable. The prices are to be cost prices in the open 
 market, as nearly as can be ascertained by enquiries 
 and published lists, but in this connection it is needful 
 to remember the unstable equilibrium which is the 
 usual condition of every market A like instability attends 
 the labour market, and is further complicated by the 
 modern demands made by trade union leaders; it is 
 therefore desirable that labour should always be estimated 
 by technical experts — that is, by the foreman and sub- 
 managers brought immediately into contact with the 
 men, and not by office clerks. The amount to be added 
 for profit is subject to various limitations, most of which 
 are of commercial rather than engineering character. It 
 is limited by the prices which will be accepted by com- 
 peting firms, by the necessity for keeping the machinery 
 and permanent staff fully employed, by the general condition 
 of the market, and the prospects which exist of a rise or 
 fall therein; and lastly, by the eciual chaos which will 
 exist in the minds of competitors seeking a solution of the 
 same problem. Finally, the estimate (which so far has 
 
ORDERS RECEIVED. 131 
 
 been for internal office use only) has to be reduced to the 
 form of a tender, and sent away to the enquirer, whilst 
 the order, if an order be secured, has to be recorded in 
 the books of the iirm in a manner which will ensure ready 
 reference to it, and to all letters or documents varying or 
 affecting it on any future occasion. In any of these 
 requirements and arrangements there are numerous office 
 details, some of which may be neglected, though only at 
 the price of considerable inconvenience, but they are also 
 intermingled with matters of commercial import, and 
 technical knowledge, which cannot, in these competitive 
 days, be passed by on one side without serious detriment 
 to the prosperity of the firm. 
 
Chapter XII. 
 
 DRAWING OFFICE ORDERS FOR WORK. 
 
 STOCK ORDERS. DRAWING OFFICE ORDER BOOK. 
 
 DRAWING NUMBERS. 
 
 Drawing Office Orders for Work. — We have, however, 
 now reached a portion of the subject in which it will be 
 apparent that design, construction, and management and 
 control of workmen, are of such supreme importance that 
 it is necessary mere clerkism should be relegated to a 
 secondary place, and all working arrangements emanate 
 from the scientific portion of the staff. Theoretically, the 
 originator of all workshop movement should be the 
 manager, but he can only be practically so through the 
 medium of his staff, and by a proper delegation of duties 
 and authority to them. Such delegation must, however, 
 be within the strict meaning of the word ; it must be an 
 appointment to act as a deputy, and not a cessation of 
 decent order and method. To ensure methodical record, 
 or even methodical progress, it is needful that all orders 
 for work should proceed only from one office, and that 
 ofiice should undoubtedly be one of the technical offices of 
 the establishment. 
 
 The draughtsman has already been referred to as " the 
 aide-de-camp and most trusted ally of the manager," and, 
 this definition granted, it naturally follows that all orders 
 for work should be issued through the drawing office. 
 Every detail of the design has to be planned there, and 
 plotted out on drawings to which the actual construction 
 must strictly conform, and the draughtsmen have therefore 
 a more complete knowledge of the necessary requirements 
 than any other of the working officials. 
 
 Of course, in large works, the technical department 
 may be differently constituted, and a chief may be 
 appointed to it, holding the position and authoritj^ of 
 deputy or assistant manager. This, however, is only a 
 modification of personality and title ; it is one of those 
 variations of practice which cannot be entirely anticipated 
 in any general treatise. 
 
STOCK ORDERS. 133 
 
 Stock Orders. — When the tirm manufactures and ware- 
 houses a number of machines or articles of various sizes, 
 ready for delivery as required, a slight modification of the 
 general system may usefully be employed in order to save 
 clerical labour. An order should be prepared in the 
 following form, forwarded to the drawing office for record, 
 and thence transmitted to the warehouseman : — 
 
 THE CLYDESDALE ENGINEERING COMPANY 
 LIMITED. 
 
 To THE Warehouseman 189... 
 
 Please deliver the following goods : — 
 
 Order No. 5746. Drawing Office No. W 
 
 Name and Address 
 
 Article 
 
 Catalogue Number 
 
 Packing and Marks 
 
 Conveyance and Forwarding Instructions 
 
 Carriage Paid or to Pay 
 
 „ , I Order Clerk. 
 
 Jintered. < 
 
 ( Draughtsman. 
 
 Forwarded per 
 
 Warehouseman. 
 
 A carbon copybook may very well be used for these 
 stock orders, and if duplicate orders are sent to the drawing 
 office one can be kept there (pasted in a guard book), 
 and the other initialed by the chief or other authorised 
 draughtsman, and forwarded to the warehouseman. The 
 drawing-office numbers must be consecutive, as the orders 
 are received and filed, and should be preceded by a large 
 W. or W.O. to indicate that they are warehouse orders. 
 The guard book should be indexed under the names of 
 purchasers. 
 
 When the goods are sent away the form must be 
 returned by the warehouseman to the general office, with 
 date and particulars of delivery inserted. 
 
 Drawing Office Order Bool<. — The stock orders are 
 interloped here because they do not pass through the 
 
134 DRAWING OFFICE ORDER BOOK. 
 
 ordinary order book of the drawing office : they are a 
 matter apart from the transactions there recorded, and 
 indeed have already been dealt with in that book when the 
 goods were manufactured, as will be seen later when treat- 
 ing of warehouse transactions. But for the due enforce- 
 ment of an orderly and adequate system of arranging work 
 to be performed in the shops, the first necessity is a drawing 
 office order book. The order book and records in the 
 general office are complete with specifications and varia- 
 tions thereof, with all stipulations as to time, method, and 
 conditions of delivery, and arrangements as to inspections 
 and tests, attached thereto. Complete copies of these 
 papers must be prepared by the general office, and sent to 
 the chief draughtsman with a docket attached : — 
 
 Order No. .5746. 
 
 Date 189... 
 
 Name 
 
 Delivery 
 
 Forwarded to drawing office on 189... 
 
 It is both unnecessary and undesirable to give any par- 
 ticulars of prices or terms of payment, as these do not 
 concern the drawing office ; the clerk who prepares the 
 copies (or extracts) should be taught to do so with intelli- 
 gent discrimination. 
 
 The form of the book may be varied, but it is essential 
 that it should contain certain specific information which 
 will show the exact position of any order, so far as the 
 technical department is concerned. It should be written 
 up daily, with as great regularity and exactitude as a cash 
 book is entered by a competent cashier ; and the writing 
 should be invariably clean and neat. It is a permanent 
 record, which will be frequently and constantly referred to 
 for many years, and should be kept in a manner worthy of 
 the office which, before all things, ought to be distinguished 
 by neatness and accuracy. 
 
 The book will suflEer great wear and tear, and should 
 therefore be of good hand-made paper, not too light in 
 weight, and strongly bound. It will be found conducive 
 to legibility if the various lines of division are ruled in red. 
 The following model form will explain what is essential 
 to it, and to avoid increasing the size and cumbersomeness 
 of the book it is better to use the right and left hand pages 
 for each order. 
 
DRAWING OFFICE .ORDER BOOK. 
 
 135 
 
 DRAWING OFFICE ORDER BOOK, 
 Left-hand page. 
 
 Order No 
 
 Page 1157. 
 
 Date of Order 189... 
 
 Name of 
 Customer 
 
 Particulars of order 
 
 Date 
 
 ■ Delivery 
 
 189... 
 
 
 
 
 
 
 
 Tracings Received. 
 
 
 
 
 
 
 
 
 
 Tracings Sent Away. 
 
 
 
 
 
 Dates of issue of instructions, shop orders, &c.,. 
 
 Right-hand page. 
 
 Shop Dbawinss Required. 
 
 Page 1157. 
 
 Drawing 
 Numbers. 
 
 Description. 
 
 Date Sent 
 into Shops. 
 
 To Whom Sent. 
 
 Drawing Office Notes. 
 
 Foremen's Advices. 
 
 Completed 189... 
 
 Tested 189... 
 
 Delivered 189... 
 
136 DEAWING OFFICE ORDER BOOK. 
 
 The order number will be that given to it in the 
 general office order book, and marked on the docket ; 
 No. 5746 in the specimen given. The drawing office 
 order book should be folioed, not paged, for convenience 
 of indexing. The indexing will be best on the dictionary 
 system, which gives both machine or other contract 
 name, and purchaser's name ; although this entails two, or 
 . sometimes three, entries instead of one, the convenience 
 of it in future searches is very great. The date of order 
 and name of customer are also obtained from the docket, 
 always assuming the latter to be correctly filled up. 
 
 The particulars of order must be in sufficient detail to 
 enable the draughtsman or manager referring to it, to 
 readily appreciate any peculiarities of design or variation 
 from previous models. Here, again, differences in the 
 class of work undertaken by the firm will modify the 
 wording of this portion of the order book. A shipbuilder, 
 for instance, will seldom construct above one replica, if 
 indeed one, of a previous ship ; whereas a toolmaker will 
 produce scores of lathes the exact counterparts of those 
 previously made, even when he does not make them to 
 stock. The " particulars of order " will therefore usually 
 demand greater detail in the former class of work than in 
 the latter. No attempt must, however, be made to copy 
 the specification here, nor even to insert a copious abstract 
 giving ordinary details : there is not space for it, and it 
 would also be a waste of time when there is a copy of the 
 specification itself to refer to. The date for delivery should 
 be given, so that a reference to the page may not only 
 display the present position of the order, so far as the 
 drawing office is concerned, but also the date fixed for 
 completion. 
 
 There are spaces for "tracings received" and "tracings 
 sent away," each divided into four columns, the first being 
 for the date of receipt or forwarding ; the second for the 
 name of the firm or person from whom received or to 
 whom sent ; the third for particulars of the tracing ; and 
 the fourth for the registered number. In some of the 
 larger structures the tracings passing between contractor 
 and purchaser are so numerous that no ordinary apportion- 
 ment of space would suffice for recording them. We have 
 known a dozen tracings and suggestions sent to the 
 Admiralty, for a scarph in the stern post of a composite 
 vessel, before one was finally approved, and many engineers 
 
DRAWING OFFICE ORDER BOOK. 137 
 
 have to suffer similar difficulties with some of their 
 customers who have particular fads as to arrangement, or 
 who desire to introduce an excess of power or tools into a 
 limited space. A record book should be kept in the ofiSce 
 for all tracings sent away, and only such (whether received 
 or forwarded) as furnish finally approved modifications of 
 the original design, and such as are sent to sub-contractors, 
 should be entered in the order book. 
 
 The spaces for "Dates of issue of instructions, shop 
 lists, &c.,' and for " Drawing office notes," explain them- 
 selves. The former will enable the chief draughtsman to 
 see immediately whether the shops are being supplied 
 with the information which they require from his office, 
 and show him whether the draughtsmain in immediate 
 charge of the job is keeping his work up to time. The 
 drawing office notes inserted in the order book should 
 only be those of permanent utility, as it is not intended 
 that this book should by any means be a mere memoran- 
 dum record. 
 
 The space, " Shop drawings reqiiired," should be 
 entered up as soon as possible after receipt of the order, so 
 that the draughtsmen may at any time ascertain what are 
 required, and take steps for preparing them. The descrip- 
 tion column should be completed with all the drawings 
 which are known to be required ; others which may sub- 
 sequently be wanted must be added from time to time, as 
 the necessity arises. Then the column, " Shop drawing 
 numbers," must be filled up with all the drawings which 
 are already in existence, which in the case of machines of 
 general type, and of standard patterns, may probably be 
 all in the list. When this is done the other drawings 
 wanted will appear as blanks in the first column, and must 
 be proceeded with in the usual office course. 
 
 The two last columns will show what shop drawings 
 have been actually sent into the works, and what are 
 required there at any given date for further progress on 
 the job. A general examination of the book should there- 
 fore prevent any work in the shops being avoidably delayed 
 through the laches of the technical department. 
 
 The foreman's advices are merely dates when the 
 machine, or other work, is completed, tested, and 
 forwarded; the latter date being, of course, furnished by 
 the warehouseman, and not by any of the shop foremen. 
 It is the date of actual delivery which is wanted, and not 
 
138 DRAWING OFFICE OKDEE BOOK. 
 
 the date when the goods are sent from the constructive 
 shops to the warehouse. None of the dates really concern 
 the drawing office, unless the chief draughtsman is also 
 deputy or assistant manager, or in some way discharges 
 the duties of works' manager, but the drawing office order 
 book is so extremely useful for further reference, that it 
 will be a great convenience to have them inserted. All 
 reports of this kind should be furnished in writing, as 
 verbal statements are frequently neglected, and sometimes 
 give rise to disputes which it is desirable to avoid, both in 
 the interest of discipline, and of the good fellowship 
 which should exist among the various officials. 
 
 Shop Orders and Lists.- — Whether it is desirable to 
 issue orders for work to be done in the shops, apart from 
 the details of the work contained in what are sometimes 
 termed shop lists, is a moot point with engineering 
 managers. Many firms formerly issued a sheet of general 
 instructions to the foreman in whose department Avork on 
 the job was first commenced, which sheet was to be trans- 
 ferred from shop to shop along with the machine or other 
 work under construction ; whilst at the same time the 
 various foremen were furnished with memorandums, more 
 or less detailed and complete, of the work required to be 
 done in their several departments. The sheet of general 
 instructions was used in such cases as a prime cost sheet, 
 the time of the men employed, and the materials consumed 
 in the work, being entered on the back of it. This system 
 is still in vogue in many small factories, but the larger 
 firms have long abandoned it, at least so far as the cost 
 accounts are concerned, in favour of more elaborate 
 systems. It, however, seems possible to combine in one 
 form the shop or works order, and the shop list, and as 
 the abandoning of any office forms or routine which can 
 be safely dispensed with has a tendency to promote sim- 
 plicity, this single form appears to be the more desirable 
 practice. 
 
 Form of Shop Order.— The sheet must, however, be 
 very complete, so as to affijrd the foremen all the informa- 
 tion they could obtain from the works orders and shop 
 lists when both were employed. It is better to have 
 the sheets printed; good machine-made paper, tough in 
 texture, should be used, as the orders will frequently 
 receive some rough usage in the works. The accompanying 
 form appears to serve the purpose. 
 
DRAWING OFFICE OEDER BOOK. 
 
 18& 
 
 Shop Oedee. 
 Order No. 5746. Draughtsman. 
 
 Particulars of machine. 
 
 Makers. 
 
 Name Plates, 
 I Customers. 
 
 
 Shop 
 
 Drawing. 
 
 No. 
 
 
 Shop 
 
 Drawing. 
 
 No. 
 
 
 Shop 
 
 Drawing. 
 
 No. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Parts to be be supplied from stores, or from other 
 makers 
 
 Patterns required. 
 
 General remarks. 
 
 .189... 
 
 Chief Draughtsman. 
 
140 DRAWING OFFICE OEDER BOOK. 
 
 A copy of this list must be sent to the works manager, 
 to each foreman who will be engaged on the order, to the 
 pattern maker, and the storekeeper. If a warehouseman 
 is entrusted, apart from the storekeeper, with the delivery 
 of goods made to order, then a copy must be sent to him 
 also, so that he may check off the several parts of the 
 machine as they come in from the shops, and satisfy 
 himself that it is complete before it is sent away. 
 
 The order number will be that given in the general 
 order book, and which, as we have already said, must 
 folloV the order all through its career. The name of 
 the draughtsman in charge of the work must be written 
 ■at top, so that the foreman may be under no misappre- 
 hension as to whom they are to apply in the drawing 
 office. The particulars of the machine, &c., must be 
 general, such as indicate its character and size, and also 
 any special peculiarities to which it may be needful to 
 draw attention. Beyond this it is not necessary to go ; if 
 it is absolutely requisite, a copy or an extract of the 
 specification must be attached for the information of the 
 foreman or foremen requiring it. 
 
 Name Plates. — The exact wording of these plates 
 must be given, and also the dimensions, and where special 
 design is required a sketch of it should be attached. 
 
 Shop Drawings. — The whole of the shop drawings 
 which can, by anticipation, be assumed will be required, 
 should be inserted in this portion of the order, both by 
 description and number. It is probably that only a 
 portion, and in some cases a very small portion, of them 
 will be ready to accompany the order, but the record, on 
 the face of it, of those which are to follow, will enable the 
 foreman to see what he is to expect, and so not only to 
 plan out his work, but also to prevent delay through waiting 
 drawings for any portion of it. 
 
 The "general arrangement plan" will appear among 
 the shop drawings, but not necessarily for circulation 
 among the foremen. In many cases it is better to confine 
 it to the works manager, or the principal foreman ; in 
 others it may be desirable to let all the foremen have access 
 to it. The determination of this is largely a matter of 
 internal discipline and arrangement, and will be materially 
 affected by the character and status of the officials, and by 
 the class of work under execution. Under no circumstances 
 
DRAWING OFFICE ORDER BOOK. 141 
 
 however, should the- general body of the ■workmen have 
 free access to these ultimate plans. 
 
 Parts to be Supplied from Stores or Other Makers. — 
 
 This portion of the shop order should be as complete as 
 possible, both to facilitate the arrangement of work in the 
 shops, and to enable the foreman to prepare his stores 
 requisitions in sufficient time to avoid delay in delivery 
 from the makers. Special parts of machinery, and also 
 material of special dimensions or form, should be ordered 
 from the drawing office, as already explained, and in such 
 case, a remark that this will be done should appear on the 
 face of the shop order. 
 
 Patterns Required and General Remarks. — Under the 
 head of patterns required, not only must particulars of any 
 new patterns be inserted, but also the numbers of any 
 standard patterns which will be required for the job, and 
 of any which can be altered to suit, so as to avoid making 
 entirely new ones. Alteration of patterns is, however, so 
 frequently of doubtful advantage, and depends so much on 
 the condition of the pattern, and the difficulties it may 
 present to the workman altering it, that no instructions of 
 this kind should be inserted in the order without previous 
 consultation with, and advice from, the patternmaker. 
 
 The general remarks are intended to draw attention to 
 any special features of the machine, or any stipulations in 
 the order or contract^ which are not, and cannot be, 
 sufficiently or properly explained on the face of the 
 drawings. Where the contract specifies that the work 
 shall proceed under inspection, or that it shall be subject 
 to tests which shall be conducted in the presence of the 
 purchaser or his agent, a notification of the condition 
 should here be made. The shop foreman thereby affected 
 will be responsible for advising the drawing office when 
 the work is sufficiently advanced for such tests. 
 
 The orders must be dated and signed by the chief 
 draughtsman before they are issued. 
 
 It will be observed that no provison is made for 
 recording time and material on the orders for costing 
 purposes, nor are they in any way interlocked with the 
 commercial or cost accounts of the firm. These are 
 compiled from other records, equally essential, but devoted 
 to financial and cost purposes alone, and no useful end will 
 be served by muddling together on one sheet, or in one, 
 
142 DKAWING OFFICE ORDER BOOK. 
 
 set of books, technical instructions for work to proceed, 
 and an abstract of the cost incurred in executing it. 
 
 Supplementary Shop Orders. — It will sometimes occur 
 that an alteration has to be made in a shop order after it 
 has left the drawing office, or additional drawings and 
 instructions have to be added. This may be done in three 
 ways : — 
 
 First, by issuing a supplementary order on a similar 
 form to that used for the original one, marking it at the 
 top, after the words shop order, with the additional designa- 
 tion " Supplementary." 
 
 Second, by issuing the additional instruction on an 
 ordinary memorandum form, also marking it at the top 
 with the order number, 5746 or as the case may be, and 
 also with the words " Shop Order — Supplementary." 
 
 . Third, by recalling the original orders, and correcting 
 them in red ink. 
 
 The adoption of one or other of these methods will be 
 largely determined by the local environment, and the 
 suitability of the one adopted to the particular instance 
 dealt with. There is no especial reason against using all 
 three in the same works for various orders, care being 
 taken that the order number always appears on the 
 amending sheet. 
 
 Shop Order Copy Book. — Copies must be taken in a 
 press copy book, kept in the drawing office, of all shop 
 -orders which are issued, whether they be original or supple- 
 mentary. In any instance where the third method before 
 referred to is used, the copy book must be amended in blue 
 or red lead to correspond with the re-issued order. 
 
 Registration of Drawings. — A glance at the shop 
 order will show that the most important portion of it will 
 generally be contained in the space which gives the shop 
 drawing numbers. These drawings are the real instruc- 
 tions to the foremen and workmen to proceed with 
 the work. These drawings are the real specifications of 
 what work is required to be done, and should contain 
 within themselves all that is necessary to be known 
 respecting it. The parts to be supplied by the stores, 
 or by other makers, are supplementary, and generally of 
 secondary importance to the work to be executed in the 
 shops, whilst the drawing office notes should be few in 
 number, and ought never to be used in lieu of proper 
 
DRAWING OFFICE ORDER BOOK. 143 
 
 completion of the drawings. And, as in many establish- 
 ments the same drawings may be used over and' over again 
 for repeat orders, whilst in others they will be often 
 referred to, and employed as examples for constructions 
 similar in design but differing in size, and modified in 
 some details, it is essential that there should be some ready 
 method of finding them. It is true that when the order 
 number is once found, all the shop drawing numbers affect- 
 ing it are obtained in the space devoted to that purpose ; but 
 beyond the difficulty which sometimes arises in finding the 
 particular order wanted, it must be remembered that 
 drawings are frequently prepared in advance of orders, 
 and sometimes indeed prepared for tenders which never 
 secure acceptance. Such draughtsmanship may therefore 
 not appear in the order book at all, or at least not until 
 after some delay, and thus there is a possibility of trouble 
 and delay arising through the hunt entailed among 
 unrecorded and unnumbered papers. It is necessary to 
 have some further index, which shall comprise all drawings, 
 if loss of time and temper is to be avoided. It is well to 
 remember that small obstructions and trifling annoyances 
 are more destructive of life's energies than greater obstacles, 
 and it is therefore desirable to remove them out of the 
 way as much as possible. Draughtsmen in a certain sense 
 are artists, and frequently share the impatience and 
 irritability of temperament which accompanies artistic 
 genius. 
 
 Drawing Register. — The register of drawings should 
 consist of two parts, the index and the register proper. 
 The former is necessary to facilitate reference to the more 
 detailed information contained in the latter portion of the 
 book, for such a reference may be wanted many months or 
 years after the drawings have been prepared, and when the 
 searcher has only a hazy memory of their date. The index 
 should, of course, be alphabetical under machine or other 
 structure titles, and it is probably better to use a separate 
 book for the purpose, of ample dimensions, which may 
 serve for several registers. It should be specially ruled in 
 the following manner, so as to furnish date and description 
 of the drawing required, and the number of the register. 
 The "Ceres" or other like system of cards may be used 
 for this index, instead of a bound volume ; but as it has 
 to last for many years, it is probably inexpedient to risk 
 the loss of some of the cards. The index must not only be 
 complete, but it must be permanent in its completeness. 
 
144 
 
 DRAWING NUMBERS. 
 
 Description. 
 
 Lathe-chasiDg, Sin. x 5ft. bed, open spindle ., 
 9 in. X 6 ft. 6 in. bed,, ,, 
 10 in. X 8 ft. bed „ 
 
 Sin. X 4 ft. bed, hollow spindle. 
 Tin. X 16ft. bed, ,, ,, 
 6 in. X lift, bed, ,, ,, 
 
 Drawing 
 Reference. 
 
 Drawing Numbers. — Before the form of register can 
 be decided it is necessary to determine the method of 
 numbering, or otherwise earmarking the drawings. It 
 is absolutely essential that the marking should be 
 perfectly distinct, so that there may be no confusion of one 
 machine with another, and it is also needful that all detail 
 drawings should bear on the face of them the number or 
 symbol adopted for the general arrangement plan, with a 
 subsidiary number or mark for the detail sketch. We will 
 first consider a method frequently adopted, with more or 
 less variation to suit the fancies of the draughtsman, for 
 this purpose. 
 
 The drawing numbers should be in numerical progres- 
 sion from one upwards, whatever description the machine, 
 engine, or contract may be. On the general arrangement 
 plan (or plans in such complex structures as steamships) 
 the jjrogressive number should, for the sake of distinction, 
 be preceded by a bold D, thus, 
 
 D 1147 
 The same number must appear on all shop or detail 
 drawings, with another number underneath to mark the 
 particular portion of the work which it represents, which 
 latter number may conveniently be preceded by the letter S. 
 So, the twelfth detail or shop drawing of the general plan 
 referred to above will be marked 
 
 D1147 
 S12 
 There is thus an inseparable connection between the 
 general drawing and the shop drawing, which in practice 
 will be found infinitely more convenient than the use of 
 duplicate sets of numbers, or the keeping of two registers. 
 The drawing number is sometimes divided into two 
 parts by a' line or decimal point in order to indicate the 
 special cupboard, drawer, or other receptacle in which it is. 
 
DRAWING NUMBEES. 145 
 
 to be found. Thus, the drawing before quoted might be 
 marked D 11 "47 or D 11/47, signifying that it is drawing 
 47 in drawer or shelf No. 11. This, however, is an objec- 
 tional complication, which not only increases the possibility 
 of wrong tiling, but gives considerable trouble when any 
 re-arrangement of drawers or cupboard is undertaken. It 
 serves no useful purpose ; any little advantage which might 
 be obtained from it can be equally secured without the 
 disadvantages by placing labels on the drawers, which are 
 easily removed or amended, and it had therefore better be 
 avoided by any draughtsman or manager who wishes his 
 own peace of mind to be undisturbed. 
 
 Pattern Numbers. — It is equally desirable to connect 
 the patterns in the shop with the dominant drawing as it 
 is to identify the detail drawings with it. The pattern 
 should therefore have on it a label bearing the progressive 
 number, the same as the shop drawings do, but with a sub- 
 ordinate number preceded by the letter P, or a progressive 
 letter, instead of the S number previously mentioned. If 
 there is a pattern required for the detail named in shop 
 
 drawing -g-^^, it will be marked 
 
 D 1147 D 1147 
 
 ■YJ2- °^ -L- 
 By thus numbering the patterns it will always be possible 
 to select from the pattern store those required when once 
 the number of the drawing is obtained ; and this can easily 
 be done if the drawing office register is properly kept. 
 
 Form of Register. — We have now to collect into a. 
 convenient focus all these various references ; in a book 
 which, whilst giving the numbers, will also contain a 
 sufficient description of the machine or engine in question. 
 The most convenient size for the book is foolscap, and it 
 should be of hand-made paper, strongly bound in Eussia. 
 leather or vellum. Large books are cumbersome, and 
 should be avoided whenever smaller ones can be contrived 
 to serve the purpose, whilst a cheap book made of poor 
 paper and indifferently bound will be a constant source of 
 annoyance when used for such a purpose as this. A folio 
 should, in general, be allotted for each set of drawings, so- 
 that ample space may be left for the details ; it is only in 
 a few cases that two sets can be got on the same folio> 
 The ruling will be as follows : — ■ 
 l3 
 
146 
 
 DBA WING NUMBERS. 
 
 Left-hand page. 
 
 No. OF DRAWING 
 
 General description : — ■ 
 Pair of beam condensing 
 engines, automatic gear, 
 controlled direct by 
 governor. 
 
 -D 1024. 
 
 Kight-hand page. 
 
 X 
 
 Cylinders 
 
 N.H.P 
 
 I.H.P 
 
 Boiler pressure lbs. 
 
 Revolutions 
 
 Description. 
 
 Shop or 
 
 Detail 
 
 Drawing 
 
 Numbers 
 
 Cylinders X 
 
 Walking Beam, C.I. 
 
 D1024 
 SI. 
 
 D1021 
 
 S5 
 
 Pattern 
 Num- 
 bers. 
 
 ni02J 
 ' A 
 
 D1024 
 
 Remarks, 
 
 General Arrange- 
 ment Drawing. 
 
 Commenced 189. 
 Finished ....189. 
 
 The first thing which must be done in commencing a 
 drawing or set of drawings is to fix the index or registered 
 number, and this quite irrespective of the purpose for 
 which the drawing is required. It is just as necessary that 
 this number should be fixed for drawings prepared for a 
 tender, or in explanation of suggestions made to a possible 
 purchaser, or even in support of evidence in an arbitration 
 case, as for those prepared for an actual contract secured, 
 or for the working patterns of a standard machine. This 
 number must be progressive. The- register will fix the 
 progression, if care is taken to enter the description, or so 
 much of it as is then available, each time a number is 
 appropriated. There is then no need to waste timie and 
 labour in keeping a list of numbers apart from the book. 
 
 The general description should give all the salient 
 points of the machine or structure in question ; as far as 
 possible the same method should be used, as variations 
 therein are misleading. 
 
 The column headed " description " is for particulars of 
 detail drawings or patterns, the nvimbers of which appear 
 
DRAWING NUMBERS. 147 
 
 in the two following columns. The register -will thus give 
 the numbers of the general arrangement drawing (D 1024) 
 of the various shop or detail drawings, and of the several 
 patterns. The space for remarks will allow of any revised 
 or amended drawings or patterns being noted therein. 
 
 It is convenient to insert the dates of commence- 
 ment and completion of the general arrangement drawings, 
 but it is neither necessary nor desirable to extend this' to 
 the detail drawings and tracings. It is quite true it is 
 ■done in some offices, but this is reducing a book of perma- 
 nent record to the character of a drawing office diary, and 
 one also of a very imperfect and useless description. 
 
 It will be noticed that the order number does not 
 appear in this register. In some cases there is a very 
 sufficient reason for its absolute omission ; iii the case of 
 drawings for standard patterns of machines for the con- 
 struction of which, either on effected sale or for stoick, 
 orders will be constantly issued, it would be absurd to 
 insert the first order and omit the others ; whilst to note 
 all of them would probably require a substantial addition 
 to the size of the book. In the case of special structures, 
 isuch as an iron or steel bridge, or a steamship, it may 
 possibly be convenient to keep a record of the order in 
 the drawing register, and this can easily be done in the 
 remarks column ; common sense and a sense of the fitness 
 of things must be the draughtsman's guide. 
 
Chapter XIII. 
 
 ALTERNATIVE PLAN OF EEGISTEB. 
 
 ALTERATIONS OF DKAWINGS AND PATTERNS. 
 
 FILING DRAWINGS. 
 
 Alternative Plan of Register. — Where numbers are 
 used, they should undoubtedly be progressive, as already 
 explained, and only one series should be employed for 
 all the various manufactures of the firm. It may seem at 
 first sight convenient to have separate number series, 
 distinguished by some marks or letters for different classes- 
 of machinery, but in actual practice this doctrinaire 
 suggestion will be found productive of much trouble and 
 waste of time. Drawings will frequently be filed in the 
 wrong series of numbers, and the search will not add to- 
 the " sweet reasonableness " of the draughtsman. 
 
 There is, however, an alternative method to that of 
 progressive numbers, which appears to have many 
 advantages to recommend it: it is the symbol system of 
 the Ferracute Company, of New Jersey, already described 
 under the heading of " Nomenclature of Machine Details."' 
 It is essential, for the efficient working of this system, that 
 the symbols and numbers should be fixed by a technical 
 expert, and not by a commercial clerk, and none of the- 
 technical officers have equal facilities with the draughts- 
 man for the discharge of this duty. It is also essential that 
 these symbols should be fixed before any work is com- 
 menced on the machine, before, indeed, the drawings,, 
 which are a preliminary part of such work, are put in 
 hand, so that they may from the first bear the distinctive 
 symbol by which they are to be known. This requires the 
 opening of a page in the drawing register, just as the 
 progressive number method does, but it is in a different 
 form of register to that previously given ; a form which 
 will not only anticipate -drawings required, but which will 
 also admit of "gapping" for the after insertion of any 
 which may have inadvertently been omitted. As it is 
 always most desirable to prevent unnecessary multiplica- 
 tion of books and records, it is better to combine the 
 symbol book of the Ferracute Company, and the ordinary 
 
REGISTER OF DRAWINGS. 
 
 Xieft-hand page. 
 
 Machine Symbol, F.P.L. 
 
 Bight-hand page. 
 
 Description : — 
 No. 3 Foot press. 
 
 Dimensions : 
 
 
 
 
 
 Same 
 as 
 
 Piece Name. 
 
 Material. 
 
 1 
 
 Weight. 
 
 Piece or 
 
 Shop 
 Drawing 
 
 Nos. 
 
 S'O 
 
 
 ■a 
 
 1 
 
 Hi 
 
 pi 
 
 S2 
 
 -1 
 
 1 
 
 
 
 Cast Iron. 
 
 1 
 1 
 1 
 2 
 1 
 1 
 1 
 4 
 1 
 2 
 
 ■220 
 10 
 45 
 30 
 40 
 17 
 85 
 
 5 
 12 
 
 3 
 
 200 
 
 9 
 40 
 30 
 40 
 16 
 80 
 
 5 
 10 
 
 2} 
 
 200 
 9 
 40 
 60 
 40 
 15 
 80 
 20 
 10 
 4i 
 
 1 
 With 1 
 With 1 
 
 4 
 With 4 
 
 6 
 With 6 
 
 9 
 
 1 
 
 2 
 
 
 Jib . . . 
 
 2 
 
 3 
 
 
 Side Bar 
 
 8 
 
 4 
 
 
 
 4 
 
 6 
 
 
 Back Leg 
 
 5 
 
 6 
 
 
 
 6 
 
 
 
 
 7 
 
 8 
 
 P.P.H. 8.. 
 
 Lever Weight 
 
 
 g 
 
 
 9 
 
 10 
 
 P.P.H. 10. 
 
 
 
 11 
 
 
 
 12 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 15 
 
 
 
 
 
 
 
 
 
 
 16 
 
 
 
 
 
 
 
 
 
 
 17 
 
 
 
 
 
 
 
 
 
 
 18 
 
 
 
 
 
 
 
 
 
 
 19 
 
 
 
 
 
 
 
 
 
 
 20 
 
 
 
 
 
 
 
 
 
 
 21 
 
 
 
 steel 
 
 1 
 
 2i 
 
 2 
 
 2 
 
 With 6 
 
 
 r 22 
 
 
 
 
 23 
 
 
 
 
 
 
 
 
 
 
 24 
 
 
 
 
 
 
 
 
 
 
 25 
 
 
 
 
 
 
 
 
 
 
 26 
 
 1?; 
 
 P.P.J. 26.. 
 
 Treadle and Pitman Bolt 
 
 Iron. 
 
 3 
 
 
 I 
 
 H 
 
 With 6 
 
 - 
 
 28 
 
 
 
 
 
 
 
 
 
 
 fl>) 
 
 
 
 
 
 
 
 
 
 
 sn 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Total Weight 
 
 
 
 
 
 
 
150 ALTERNATIVE PLAN OF EEGISTEK. 
 
 drawing register of the English engineering firm, when- 
 ever it can be done without raising some local difficulties. 
 The annexed form appears to answer this purpose. For 
 the purpose of comparison the same machine and parts 
 are given as in the previous Table " B," taken from the 
 company's symbol book. 
 
 The very lucid explanations of Mr. Oberlin Smith, 
 before quoted, should render the use of this form a matter 
 of no difficulty. 
 
 Shop Drawing Numbers.— The piece or shop drawings 
 (" piece being a part reduced to the last condition of sub- 
 division, or so welded or glued together as not to be again 
 taken apart ") must all bear the symbol of the machine and 
 size, and also the number of the part. For economy sake 
 two or three pieces are frequently placed on the same 
 sheet of paper, and in such case the symbol and piece 
 number must appear above the particular drawing affected. 
 Thus, in the foot-press in question, one sheet of paper con- 
 tains drawings of 
 
 The frame. 
 
 The jib, 
 
 And the side bar. 
 
 The first drawing must have placed immediately over it 
 the symbol, F.P.L. — 1; the second, F.P.L. — 2; and the third, 
 F.P.L. — 3. In this instance the piece numbers are assumed 
 to be consecutive, but they are not always so. It will be 
 seen later that pieces No. 21 and No. 26 are on the same 
 sheet of paper as piece No. 6. The column, " Piece or shop 
 drawing numbers," must be filled up as they are completed, 
 either with the number of the piece, if it occupies the 
 whole sheet, or by a reference to some previous number, if 
 it occupies part of the same sheet with it. Care should 
 be taken always to make such references from the latest to 
 the earliest number, and not up and down at haphazard. 
 
 When the second column, " Same as," bears a reference 
 there is no occasion to make a drawing for that piece, as 
 one is already in existence, and a pattern also, if a pattern 
 be necessary. The pen can therefore be at once drawn 
 through the columns for piece drawing numbers and 
 patterns required. There is no further drawing-office work 
 required on these particular details. 
 
 Pattern Numbers.^ — ^The pattern numbers, which must 
 be either painted on the patterns themselves or on labels 
 affixed thereto, will in like manner be the symbol of the 
 
ALTERNATIVE PLAN OF EEGISTEK. 151 
 
 macliine, and the piece number thereof, and a reference to 
 the last column of the register will show whether any 
 particular pattern is in existence, or has been ordered to 
 be made. Thus, a pattern is required for the casting of 
 the frame of the foot press, and when the needful instruc- 
 tions have been issued to the pattern maker, a number 1 
 will be written in the last column, whilst the pattern itself 
 will be marked F.P.L. — 1. The register to patterns will 
 thus be as complete as in the progressive number example, 
 and the patterns themselves will always remain identified 
 with, and placed in the allotted pattern space for, the 
 original machine for which they are constructed. Pattern 
 F.P.H. — 8 will be used for the lever weight of machine 
 F.P.L., but when that temporary user is over, it will be 
 placed again in the receptacle for the patterns of F.P.H. 
 
 Weights. — The three weight columns are taken from 
 the symbol book of the Ferracute Company. They are 
 not essential to the register, but will be found of frequent 
 convenience. 
 
 Index to Register. — The index to the register also 
 requires a little modification. The letters F.P. must never 
 be used for any other machine than a foot press, and the 
 third letter L must never be employed for any other 
 size of foot press than that to what it was originally 
 appropriated. The index there must be of such a character 
 as will prevent duplication ; not only must it be alphabetical 
 with respect to the first letter, but the same arrangement 
 must be followed with the second lettter so that there may 
 not be much danger of its use a second time. In addition 
 to the drawing reference it is necessary to give the page in 
 the register, which is not so much required when the 
 progressive number is used. It certainly will be a great 
 convenience, if indeed it may not be considered absolutely 
 necessary, to have the index in a separate book when the 
 symbol system is adopted, so that it may last for many 
 years, and also that sufficient " gaps " or spaces may be 
 left between the different machines, after the manner in 
 which such spaces are left in the drawing register, or 
 symbol book, between various materials and trades. 
 Overcrowding in such an index will be fatal to its 
 usefulness. 
 
 The register, with its index, will serve the combined 
 purposes of the Ferracute Company's symbol book, and a 
 register of drawings, and thus obviate the waste of time 
 
152 
 
 ALTERNATIVE PLAN OF REGISTEE. 
 
 and energy which would arise through keeping books 
 which, in many respects, would be duplicates. 
 
 Special Contract Drawings. — Either of the methods 
 of registration described will serve the purposes of an 
 ordinary machine, or land engine factory. There is a little 
 difficulty, however, with firms which construct more 
 complex engines or erections such as ships, marine or 
 locomotive engines, or railways. It is not merely that the 
 register itself will become inconveniently crowded, if an 
 attempt were made to get all the drawings for such a 
 contract into one ordinary page, but there is also to be 
 considered the desirability of collecting them into a 
 distinct drawer or drawers, or cupboard, so that they may 
 be readily found without the trouble of turning over 
 numbers of general and irrelevant drawings to find them. 
 
 Contract No. 
 
 For H.M.S. Acorn, composite, screw, barque-rigged. 
 Length, 167 ft. ; beam, 32 ft. ; mean draught, 14 ft. 
 
 Engines to be built by Maudsley, Sons, and Field, to 
 Admiralty specification. 
 
 Date. 
 
 Description. 
 
 Profile and general arrangement 
 
 Deck plans 
 
 Cabin plans 
 
 Drawing 
 Number. 
 
 D642 
 D647 
 D724 
 
 Contract No. 
 
 For section A of Mexican Southern Eailway from 
 Puebla to Oaxaco. 
 
 Date. 
 
 Description. 
 
 Survey — Puebla, to section 14 
 Survey — Section 15 to Oaxaco 
 Siding arrangement — Puebla 
 
 Railway station — Puebla 
 
 Siding arrangement— Oaxafo , 
 
 Drawing 
 Number. 
 
 D304 
 
 D357 
 
 D378 
 
 D391 
 
 D397 
 
ALTERATIONS OF DRAWINGS AND PATTERNS. 153 
 
 Indeed, work of this character -will divide itself almost 
 automatically into sections, each of -which will be equal, or 
 more than equal, in number of parts and Avork involved 
 to a machine tool, or large agricultural machine. It will 
 found better, probably, to give a separate progressive 
 number or symbol (whichever method may be adopted) to 
 each such section, and then follow the ordinary course in 
 the drawing register as though the section were a distinct 
 order or contract. It is needful then to have some way of 
 assembling the drawings for all the sections into one 
 record, especially as the work may, in certain cases, extend 
 over months, or possibly even over two or three years. A 
 supplementary index is therefore useful in such cases. It 
 may be very simple, and kept in an inexpensive foolscap 
 book, as it will not undergo severe service. We suggest 
 the form on the preceding page. 
 
 Alteration of Drawings. — All these careful records will 
 be rendered delusive if drawings can be altered or amended 
 after being once completed, without any record of such 
 alteration being kept. The drawing-office staff should not 
 merely be the designers for the firm, but also its historians, 
 in the same way as the German General Staff officers compile 
 authentic records of the movements and results of the 
 campaigns they had previously arranged. A drawing, 
 once completed and inked in, should exactly represent 
 the machine, &c., as it leaves the works, and, both for 
 the convenience of repeat orders and for facilitating the 
 making of parts for repairs, it must never afterwards be 
 altered in such a way as to destroy its original character. 
 
 Alteration of Special Contract Drawingfs. — When the 
 drawings are for a large and complex contract, such as a 
 steamship, or large railway or road bridge, it will seldom be 
 found economical to alter them for a second order of a 
 similar kind. In the former instance, the variations 
 demanded by the owners, even after the contract is signed 
 and the ship well on her way towards completion, are so 
 numerous and diversified, that an altered drawing for a 
 second ship would speedily become unintelligible. The 
 draughtsman has generally to exercise all his skill, and all 
 his common sense, to keep his drawing true to the work 
 for which it is specially prepared. The best plan in such 
 cases is to take the bull by the horns, and prepare a fresh 
 set of drawings for the new and varied contract. In a few 
 cases, however, some of the sectional or piece drawings 
 
154 ALTEEATIONS OF DRAWINGS AND PATTERNS. 
 
 prepared for shop use niay be amended and used afresh, 
 and when this is done a record of the alteration must be 
 made in the manner hereinafter named for standard 
 drawings. 
 
 Alteration of Standard Drawings. — It is in these 
 standard drawings that the greatest difficulty arises, and it 
 is with respect to them that the necessity for a complete 
 and lucid method of record is most evident. The original 
 drawings are archetypal representations of work which has 
 been executed, frequently many times over, and as the 
 work cannot be recalled and pulled to pieces, neither 
 should the representation be plastered over with features 
 which did not originally appear on it. When a machine 
 or engine has to be amended in design so that the general 
 arrangement is altered to any material extent, there cannot 
 be any doubt of the desirability of preparing fresh 
 drawings. The old ones cannot be altered to fit the new 
 design without interfering with their value as records of 
 the original work, whilst the laboLir expended in the effort 
 will probably be as great as that required for entirely fresh 
 work. Even then the result will frequently be a disgrace 
 to the draughtsman ; it will almost certainly be so when 
 two or three revisions are superadded. It is, however, 
 desirable that a reference to the new drawings should be 
 marked on the face of the old ones, so that a new, inex- 
 perienced, or even careless draughtsman may have due 
 warning of the change in design. 
 
 When only a portion of the engine or machine is 
 redesigned it will suffice to make a new drawing for that 
 portion. This will really be a sectional, piece, or shop 
 drawing, and must be re-marked accordingly. The better 
 plan appears to be to put on it the same number or symbol 
 as on the original, and to add to it a small letter " a " for a 
 first alteration, " b " for a second, and so on. Thus, to take 
 our last example, the renumbering or marking of the 
 drawing of an amended pitman, under the two methods 
 of registering drawings, would be : — 
 
 , ' , D 1342 
 
 by numbers — ==- 
 
 ■^ S9a 
 
 by symbols F.P.L. — 9a 
 
 Another way may be adopted when numbers are used, and 
 
 that is to mark the new drawing with the next shop 
 
 D 1342 
 
 drawing number, thus q ^i^ . but the addition of the 
 
ALTEEATIONS OF DRAWINGS AND PATTERNS. 155 
 
 small letter appears the preferable mode. The original 
 drawing or drawings will have marked on the face of them 
 " Corrected by S 9a " or " Corrected by F.P.L.— 9a," as the 
 case may be. A similar remark must be made on the face 
 of the general arrangement drawing, immediately over the 
 .portion altered. The new sketch will be marked "in 
 correction of S 9 " or " F.P.L. — 9." All these notes should 
 be very clearly and neatly made ; to ensure distinctness it 
 is well to use carmine colour for the purpose, and to 
 surround them with an oval or other distinctive mark, also 
 in carmine. It will be convenient to keep this distinctive 
 mark unaltered when once it has been selected, but the 
 exact form of it is not of great importance. 
 
 Of course, the cross referencing must be carried 
 throughout, both to the altered drawings and the first one, 
 in the event of a second or third correction. All the 
 tracings and prints must be marked in like manner. 
 
 Notes of the altered drawings must be made in the 
 register, and for this purpose it is expedient to have a 
 "remarks" column, although for economy of space we 
 have not shown it on the examples previously given. It 
 will probably also tend to clearness to make such notes in 
 red ink, but it must be good red ink, which will not 
 discolour, as so many of them do, with age. 
 
 Alteration of Patterns. — When patterns are altered 
 so as to destroy their original purpose, a note of the 
 destructive revision must be made in the register in the 
 same way as with drawings. The labels on the patterns 
 must also bear references in like manner, so that the 
 pattern maker may readily trace the history of the changes 
 made. However, it will probably be found objectionable 
 to alter the original patterns for the majority of standard 
 machines, even when such alteration can be effected with- 
 out difficulty. The manufacturer has to be prepared to 
 execute repairs and renewals of parts of those already 
 supplied by him, and the demands for such renewals will 
 probably continue for several years after he has placed an 
 improved form on the market. Again, he may receive 
 repeat orders, which his customers may insist shall be 
 identically on the old lines, and though mechanical 
 engineers may properly advocate the value of their 
 improvements, they should remember the truth of the 
 Austrian theory so clearly expounded by Dr. William 
 Smart, of Glasgow University, " That value is determined 
 
156 ALTERATIONS OF DBA WINGS AND PATTERNS. 
 
 by the appreciation and requirements of the consumer, 
 and not by the skill or labour expended in the production 
 of the article." _ Great, therefore, as is the nuisance of 
 storing obsolete patterns, it must often be endured unless 
 old customers are to be offended and lost. 
 
 Drawings for Works. — All this elaboration of registra- 
 tion and record will be undertaken by the draughtsman, 
 not for his own amusement, but to facilitate his work in 
 supplying information to others — that is, to the foreman and 
 workpeople who have to transmute ideas into machines. 
 No drawing office work will, therefore, attain its content 
 unless it assists the execution of that done in the shops. 
 
 Preparation of Shop Drawings. — The preparation of 
 working drawings for the shops deserves greater attention 
 and care than are sometimes given to it. The drawings are 
 sometimes hastily sent out in an incomplete form, and 
 the result is loss of workmen's or foremen's time, and 
 frequently explosions of bad temper. This lack of finish 
 and correctness does not generally arise through bad 
 management in the drawing office ; it is more frequently 
 caused by the office being inadequately stafled, and the 
 chief draughtsman being compelled to rush his work with 
 such aid as he can get from indifferent and badly- 
 trained assistants. There is commercial danger as well as 
 technical trouble in such management as this, and no wise 
 board, no thoughtful and prudent directors, will permit its 
 continuance. 
 
 These shop drawings are to contain all the draughts- 
 man's study of the specifications ; all the results of his 
 consultations with the general manager, or with the pur- 
 chaser and his inspectors ; and all the improvements or 
 alterations which may thereby have been effected in former 
 constructions. The draughtsman, who is responsible for the 
 designing, has a perfect right to expect conformity to his 
 designs, but then he must see that they are intelligibly 
 and clearly portrayed ; he must remember that the 
 workman is not already in possession of the knowledge he 
 has been laboriously acquiring. 
 
 The drawings from which shop tracings are made should 
 be completed in pencil, leaving the inking in to be done 
 when the machine, &c., is finished. This will prevent 
 unsightly erasures through alterations which may com- 
 pulsorily arise during the progress of the work. But the 
 completion must be actual and not merely approximate ; 
 
ALTEEATIONS OF DRAWINGS AND PATTERNS. 157 
 
 not only must all the necessary lines and details appear 
 exactly as they would in the finished drawing if then inked 
 in, but all the dimensions must also be inserted. Workmen 
 should never be expected, nor permitted, to work to scale, 
 and the only way to prevent this is to furnish them with 
 all the dimensions on the face of the working drawing. 
 
 No drawing or tracing must be permitted to leave the 
 office without the progressive number or symbol on it; 
 indeed no drawing should be commenced until this has 
 first been placed on the sheet of paper. Stencil plates are 
 best for this purpose ; rubber stamps generally smear and 
 look dirty on such work, though they do well enough 
 for commercial, accountancy, or auditing purposes. 
 
 Separate Drawings. — On reference to the symbol 
 register of drawings, F.P.L., it will be noticed that in the 
 column "Piece or Shop Drawing No." a remark is made 
 " With No. 1," or " With No. 6." This means that two or 
 more piece numbers are placed on the same sheet of paper. 
 In genera], however, it will conduce to economy of time, 
 both on the part of the workman himself, and of his fore- 
 man, if each detail or piece drawing is printed off for the 
 shop on a separate sheet of paper. John Smith has a 
 recurring desire to chat a few minutes with Bill Jones, 
 working perchance a few benches away from him, and if 
 the two men have to take their instructions from the same 
 sheet, he has an ever-ready excuse for his peregrinations. 
 
 Examination of Drawings. — Finally, all drawings 
 must be carefully and minutely examined by the chief 
 draughtsman, or a senior and reliable assistant, before they 
 are permitted to pass to the print-room or workshops. 
 Such examination must be certified by the examining 
 officer affixing his initials, in ink, so as to prevent any after 
 evasion of responsibility. 
 
 Return of Tracings and Prints. — All tracings and 
 prints must be returned from the shop to the drawing- 
 office, to be filed for future use, after the work has been 
 completed for which they were issued. 
 
 Temporary SIcetclies. — Pen and ink sketches, and even 
 partially completed or Outline drawings, have frequently 
 to be made to send to customers Avith suggestions, or to 
 other manufacturers with orders or enquiries. Again, our 
 readers know, alas too well, the crotchety purchaser who 
 will insist on some trifling alteration from standard design. 
 
158 ALTERATIONS OF UKAWINGS AND PATTEENS. 
 
 too insignificant for a completed drawing, and of too 
 doubtful utility for permanent adoption. In this latter 
 case some sort of drawings must be made for the men to 
 work to, but, generally speaking, very rough sketches will 
 serye the purpose if dimensions are carefully and accurately 
 marked thereon, and the shop drawings, which are modified 
 thereby, accompany them. Of course, if the alterations 
 are extensive, or at all complex, the sketch should be fully 
 completed, so as to avoid the necessity of referring to the 
 original drawing — a necessity which may involve waste of 
 the workman's time. The British machinist is usually a 
 splendid fellow, but he must not be credited with possession 
 of " all the talents " — that would be too great an imposition 
 on his abilities. 
 
 All these temporary sketches should be prepared in 
 copying ink. It is better to use the stronger preparations 
 which the railway companies adopt for their Clearing 
 House returns, so that copies may be taken some time 
 afterwards. These sketches should, before leaving the 
 drawing office, be copied in a large sized copying book, 
 provided with a good index. A reference should be placed 
 on each such sketch ; they are only of a temporary 
 nature, it is true, but it is desirable to have a ready means 
 of identifying them. When they relate to, or are modifi- 
 cations of, existing contract or standard drawings, the 
 number of such drawing should be placed at the top, or 
 top right-hand corner of the sketch, and underneath it the 
 page of the copying-book preceded by the word " Sketch"; 
 and in the case of those which do not refer to any previous 
 drawings the word " Sketch " and the page of the copy- 
 book only must be used. Thus, for a slight modification 
 of the side-bar of the foot-press, already referred to, the 
 
 marking will be „ 
 
 ^ F. P. L.— 3 
 
 Sketch 47"; 
 
 whilst a tracing sent to an inquirer, with a suggestion in 
 reference to a machine or work for which there are no 
 existing drawings (and some such will from time to time 
 crop up), the reference will merely be. 
 
 Sketch 48. 
 
 The index of the copy book must be kept entered up 
 closely to date, and should be on the dictionary plan, so as 
 to show both the name of the machine, and that of the 
 inquirer or purchaser. 
 
ALTERATIONS OF DRAWINGS AND PATTERNS. 
 
 159 
 
 Tracings Sent Away.— It is important that the drawing 
 office staff should exercise sufficient control over sketches 
 and tracings sent away, and a record of them in distinct 
 form will assist in this. It has also been stated that all 
 tracings and prints should be returned from the shops 
 to the drawing office to be filed, when the purpose for 
 which they were issiied has been completed. To ensure 
 this being done, the drawing office must keep some register 
 of them, and this registration is better in a distinct book 
 than in the drawing register, although the latter might be 
 modified so as to serve the purpose. The disadvantages of 
 such a method are, however, far greater than any tem- 
 porary advantage which might be obtained. 
 
 For tracings sent to customers, manufacturers, or others 
 of the like kind, a book ruled in the following form should 
 be used. 
 
 TRACINGS SENT AWAY. 
 
 Date. 
 
 To whom sent. 
 
 Reference 
 
 Ko. . 
 
 ParticularB. 
 
 Remarks. 
 
 When a print or tracing is sent with a tender, the fact, 
 with particulars for identification, must be noted on the 
 tender form. 
 
 When a tracing is sent to another manufacturer with a 
 request for his tender, it must be likewise noted in the 
 letter to him. When it accompanies an order it must be 
 noted on the order form. 
 
 When finished drawings are forwarded to a customer in 
 accordance with a clause in the contract the fact should be 
 recorded in the drawing office order book. 
 
 But all these tracings, prints, or drawings must be 
 entered in the book for . tracings sent away, in date order, 
 as they leave the drawing office. The remarks column will 
 serve to record the means by, or purpose for which they 
 are forwarded. 
 
 5hop Drawings Diary.— Tracings and prints sent to 
 the works should be entered in a diary, or kind of sundries 
 ledger ; those sent to foremen or workmen employed away 
 from the establishment must be also entered in it. The 
 book should be ruled with vertical columns for the follow- 
 ing particulars : — 
 
160 FILING DRAWINGS. 
 
 Date sent to shop, 
 
 To whom sent, 
 
 Number and description of tracing, print, or sketch,"] 
 
 Date when returned. 
 
 The blank space in the last column will show what 
 tracings, &c., are out in the works. It will assist in trac- 
 ing these if each page has a blue lead line ruled across it 
 when the date returned column in it is completed. 
 
 Both these books may be of an inexpensive character, 
 as they will seldom entail references of a kind to destroy 
 them ; of the two, the latter (shop drawings diary) will 
 probably undergo the greater wear and tear. 
 
 Filing Drawings. — It has already been said that all 
 drawings, tracings, and prints must be returned to the 
 drawing office to be filed. By the use of the drawing 
 register the numbers, or symbols, of these drawings can 
 easily be found, even after the lapse of many years, but 
 unless they are systematically put away in their proper places, 
 the drawings themselves will not be found. It is impos- 
 sible to lay down specific and detailed rules for this filing ; 
 much will depend on the character of the work ; still more 
 will be regulated by the fittings and accommodation of the 
 office. It is, however, absolutely necessary that any 
 method which may be adopted should be adhered to, and 
 that continued variations of it should be sternly forbidden. 
 All drawings must be filed in their proper receptacles 
 immediately they are finished with ; there must be no 
 tossing them into the top of the drawer, or into a sorting 
 drawer, to be properly filed at that " convenient season ' 
 which never comes to the untidy or dilatory man. The 
 following suggestions will be found useful : — 
 
 All drawings, &c., should be filed in accordance with 
 their progressive numbers ; original completed drawings 
 in one drawer or cupboard, and tracings, or prints there- 
 from, in another. When the symbol form is used, the 
 alphabetical arrangement will take the place of the pro- 
 gressive numbers ; the manner of filing will be the same, 
 and there will be no difficulty in working it. 
 
 All drawings or tracings should be filed flat ; shallow 
 trays fitting in a cupboard, or shallow drawers, will be 
 found most convenient for this purpose. When deep 
 receptacles are used, the drawings are apt to get torn, 
 whilst on unprotected cupboard shelves they soon become 
 damaged by dust. 
 
FILING DfiAWINGS. 161 
 
 Each drawer, or tray, should bear a well-defined and 
 distinct label, showing what the contents are. Thus : — 
 
 101 200 
 
 or M.P.A T.D.H. 
 
 The labels will, of course, be changed when obsolete 
 drawings are removed from these drawers and trays to 
 other receptacles. 
 
 When it is deemed desirable to keep a separate drawer 
 or tray for any particular contract, it must be labelled with 
 the name of such contract, thus : — 
 
 H.M.s. ACORN; or, 
 
 BALTIMORE AND OHIO EXTENSION RAILWAY. 
 
 It should, however, be remembered that the registers 
 and index of drawings will enable any of them to be 
 discovered in the general lile without difficulty, and the 
 use of a separate file is of doubtful advantage ; it is apt to 
 ■create difficulties and irregularities in filing. 
 
 When shop tracings and prints vary much in size it is 
 sometimes desirable . to have different receptacles for the 
 various sizes of paper used. When this is done, the outer 
 labels should specify whether the drawers contain large, 
 medium, or small-sized drawings, as the case may be, as 
 these divisions will usually be effected by internal partition" 
 boards. 
 
 Standard drawings and other important documents 
 .should be carefully protected against the risk of fire. 
 When this can be accomplished by placing them in a 
 strong room adjoining the drawing office it will be the 
 most convenient way, but the feasibility of this will depend 
 on the construction of the offices ; in many cases it will 
 not be possible to make any better arrangement than 
 placing the drawings in the general strong room, or in safes 
 in the drawing office. In any case, the method of 
 arranging the drawers and shelves already described 
 should be used in these fireproof receptacles. 
 
 No draughtsman must be permitted to remove any 
 ■drawings or documents from the works, either for purpose 
 of study or any other reason, without the special permission 
 of the general manager. 
 
 Each drawing table should be provided with shallow 
 drawers underneath, so that drawings in progress or in use 
 may be placed there at night. A large linen sheet should 
 m3 
 
162 FILING DRAWINGS. 
 
 also be provided to cover each table, to protect drawings 
 left upon it at night, or during the temporary absence of the 
 draughtsman. 
 
 Sketch Books, &c. — Before leaving the drawing office, 
 there are one or two points which may usefully be remem- 
 bered. And one of these is the necessity of substituting 
 mechanical appliances for human labour, whenever it can 
 be done, not merely on account of the saving of time, but 
 also because of the greater average accuracy thereby 
 obtained. The modern form of shde rule is extremely 
 handy, as it can easily be carried in the waistcoat pocket, 
 and yet comparatively few English engineers use it. It is 
 chiefly left m its older form to the workman and the 
 rule-of-thumb foreman. Yet it is capable of use for an 
 immense variety of purposes, and of saving, in the use, a 
 great number of troublesome calculations. We have seen 
 an American engineer emploj' it for calculations of simple 
 exchanges, and even for arbitration of exchange, as well as 
 for more strictly engineering details. In some ways our 
 trans-Atlantic cousins are far in advance of us, in adopting 
 the mechanical appliances which the drawing instrument 
 maker now prepares for saving human labour. 
 
 Sketch books, again, should always be ruled with 
 sectional lines, and each draughtsman should be provided 
 with one. They should be neatly kept, as untidiness in 
 them is apt to become a habit, which in time extends to 
 finished work, and the registered numbers of the drawings 
 should be marked in them; but, on the other hand, 
 valuable time must not be wasted in pedantic compliance 
 with these rules. The sketch books are merely temporary 
 memoranda, the value of which is largely depreciated 
 when permanent drawings are made. Abbreviations are 
 frequently used in these books, and in other drawing 
 office documents, to indicate the nature of drawings, the 
 material to be used, or the patterns required. It is not 
 very important that these abbreviations should be deter- 
 mined on any exact plan, or according to any scientific 
 rule, but it is extremely desirable that the same should be 
 used throughout the office, and that when once adopted 
 they should not be varied. They will frequently appear on 
 the face of permanent drawings, and for this reason 
 uniformity and continuity of practice is necessar3^ 
 
Chapter XIV. 
 
 THE WORKS MANAGER AND HIS DUTIES. 
 DEALINGS WITH WORKPEOPLE. 
 
 The Works Manager. — It has already been stated that 
 a copy of each shop order must be sent ■ to the works 
 manager. A httle explanation of the title seems necessary, 
 since in some establishments it will be totally unknown, 
 whilst in others it will be separated into three or four 
 divisional titles, such as engine works manager, electrical 
 manager, and shipyard manager. In all cases the duties 
 have to be performed, whatever the man performing them 
 may be called, and much the same characteristics will be 
 essential, whether the general manager does the work, or 
 deputes it to one of the shop foremen. To continue the 
 military simile : just as the drawing office represents the 
 general staff of the firm, the works manager may be com- 
 pared to the corps commander. He is the chief of the 
 executive departments — the officer who has to carry into 
 actual execution the brain monitions of the mere student ; 
 to transform conceptions, designs, and drawings into 
 actual working machines, instinct with motion and power. 
 He must be as truly a scientist as the draughtsman, but of 
 a different type. 
 
 Relations with Drawing Office. — It is a frequent com- 
 plaint, in other forms of business as Avell as engineering, 
 and even in political circles, according to Mr. Herbert 
 Spencer, that the scientific man and practical man fail to 
 understand, and therefore mutually despise, each other. 
 This should not be. There is a duality in their work, 
 sometimes difficult of reconciliation, but which must be 
 made to serve the prosperity of the firm by mutual consul- 
 tations and concessions. If the chief draughtsman and 
 works manager are equally well versed in their respective 
 duties, and are intelligent men, devoid of egotistical estima- 
 tion of their own powers, these consultations will arise 
 naturally, and almost as a matter of routine. If, however. 
 
164 THE WORKS MANAGER AND HIS DUTIES. 
 
 they do not so arise the general manager must insist upon 
 their institution, even if he has to call a daily levee of the 
 principal officers, and preside over it himself. 
 
 Qualifications. — The works manager must have a 
 thoroughly practical acquaintance with all branches of 
 engineering conducted in the establishment, and this 
 necessity renders the appointment of an ordinary foreman, 
 who has risen from the ranks, of doubtful benefit, and 
 sometimes positively hurtful to the firm. Some 'of the 
 American firms largely attribute their success to the 
 extreme care they have bestowed on adapting the working 
 conditions, speed, and equipment of every machine and 
 tool in the shop to the special work it has to do. Such 
 adaptations as these can, however, only be carried out 
 by a man who is versed in all the varied operations which 
 are carried on ; by one who in the truest sense is an 
 engineer, and not merely a highly skilled fitter or turner. 
 
 Worltmen and Factory Rules. — Xor do his difficulties 
 end with the user of machinery to the best advantage of 
 the firm; this indeed forms but the least of his trials. 
 Subject to the ultimate control of the general manager, a 
 control which, however, should never be lightly or 
 incautiously paraded, the superintendence and discipline 
 of the workmen will devolve upon him. It is easy to com- 
 pile elaborate rules for regulation of every detail of the 
 men's work ; even Government establishments in their most 
 demoralised days did that ; the important thing is to see 
 that whatever rules are made shall be strictly enforced, and 
 that they shall not be irritatingly numerous. The law 
 maker must also be the law observer, and impress his 
 regulations on the men quite as much by force of example 
 as by distributing them over the shops' walls. 
 
 But whilst the internal regulations of the factory are 
 best expressed in a few concise rules, carefully selected, and 
 draconically enforced, the Factory Act regulations must be 
 exhibited in the actual legal phraseology adopted by 
 Parliament. They must be both sufficiently posted in 
 convenient places, and maintained in good order ; no 
 Home Office Inspector will complain of the profusion of 
 them, but he will regard as an unpardonable offence the 
 omission of half a stipulated sentence. 
 
 The works manager must also make himself acquainted 
 with local bye-laws, and the extent to which the authori- 
 ties of the municipalities interfere, or are empowered to 
 
THE WORKS MANAGER AND HIS DUTIES. 165 
 
 interfere, with the worlds within the area in which he is 
 then engaged. A method has grown up, during late 
 years, of obtaining special powers under local.acts, and the 
 practice of the authorities may in many ways difier in 
 Leeds from that followed in Glasgow. Should a manager, 
 therefore, remove from one town or district to another, he 
 should at once make himself acquainted with any changes 
 in local requirements, and should also ascertain with what 
 activity they are enforced. The inspectors of the 
 progressive Corporation of Beckton-on-Tyne will probably 
 be much more energetic than those employed by the 
 aldermen and councillors of Old Sarum. 
 
 Works Managers' Order Book. — Exactly as an order 
 book is essential in the drawing office, to enable the 
 draughtsman to follow out an orderly system of preparing 
 his drawings and arranging his work, so it is desirable that 
 the works manager, in works of moderate size, and most 
 certainly in large ones, should have an order book in his 
 own office. In small establishments, where office cost is an 
 important factor in the profit and loss account, he may be 
 satisfied with access to the drawing office order book, but 
 this course, although it may save something in wages and 
 stationery, is open to many objections. The particulars 
 required by the draughtsman and works manager are 
 different ; and in many respects the duties of the one 
 commence where those of the other end. 
 
 The book to be used for this purpose may be an 
 ordinary faint lined foolscap one, but it is more convenient 
 when properly ruled in the following or other like form. 
 
 The works manager, as well as the foremen con- 
 cerned, is furnished with a copy of each shop order 
 issued, and from this he can obtain the particulars of the 
 shop drawings required. The blanks in the column for 
 date received will show him what di'awings remain, at any 
 date, unissued by the drawing office, and enable him to 
 apply to the chief draughtsman for an explanation of any 
 delay there may be. The patterns required can also be 
 obtained from the same source, and this will give him 
 control over the pattern maker's work. 
 
 The right-hand page of the book will, however, be 
 found most useful to the works manager, as it brings before 
 him, in very plain language, the danger of delays which 
 may be caused by the non-delivery in due time of materials 
 on order from other manufacturers. It is not usually 
 
im 
 
 THE WORKS MANAGER AND HIS DUTIES. 
 
 WORKS MANAGER'S ORDER BOOK. 
 
 Left-hand page. 
 
 Order No Date of Order 189. 
 
 Name of Customer. 
 
 Particulars of Order. 
 
 Date of delivery 189 .. . 
 
 
 
 Shop Drawings. 
 
 
 
 Particulars. 
 
 Refe- 
 rence, 
 
 Date 
 received. 
 
 Particulars. 
 
 Refe- 
 reuco. 
 
 Date 
 received. 
 
 
 
 
 
 
 
 
 
 Patterns Required. 
 
 
 
 Particulars. 
 
 Refe- 
 rence. 
 
 Date ! 
 completed. \ 
 
 Particulars, 
 
 Refe- 
 rence. 
 
 Date 
 completed. 
 
 j 
 
 i 
 
 
 
 
 Bight-hand page. 
 
 
 
 Materials on Order. 
 
 
 
 Date 
 ordered. 
 
 Order 
 No. 
 
 From whom 
 ordered. 
 
 Particulars. 
 
 Date of 
 delivery 
 required. 
 
 Date 
 
 received. 
 
 
 
 
 
 
 
THE WORKS MANAGER AND HIS DUTIES. 167 
 
 necessary to enter on this page those materials of a general 
 character which are ordered in bulk by the storekeeper, to 
 be delivered out of stock by him for any and every con- 
 . tract for which they may properly be demanded : such a 
 duplication of the storekeeper's requisitions and general 
 office order book would too frequently be a waste of valuable 
 time. But there are occasions when the prompt delivery 
 of such general stores is of the utmost importance : the order 
 book is an important memorandum of work required to 
 be done, but is not in any sense a permanent book of 
 record ; these special and specific requirements of general 
 stores should, therefore, be noted in it, under the head of 
 each order for which they will be required, so that their 
 urgency may be constantly before the works manager, and 
 that he may, through the proper office channels, continually 
 press for their delivery. 
 
 Works Manager's Clerk. — The manager's time is too 
 valuable to be wasted in clerical work, or occupied in filling 
 up order, and other office books. It will usually be found 
 more economical, and indeed in works above a very 
 moderate size, it will be absolutely imperative to provide 
 him with a clerk ; not necessarily a very accomplished 
 commercial one, but a man who can do minor engineering 
 calculations with accuracy, and make a rough sketch, 
 under instructions, without blundering. This clerk should 
 keep the works manager's order book posted up, and for 
 this purpose should daily visit the general office and obtain 
 particulars of orders sent out ; whilst from the foreman and 
 storekeeper he should also secure the dates of receipt by 
 them of drawings and materials. If he be intelli- 
 gent and willing, he can relieve the manager of much 
 irksome detail work, but he must not be permitted to 
 assume, even by signature, the position of an assistant. 
 Here, as elsewhere, the apotheosis of clerkism must be 
 carefully avoided. 
 
 Conferences. — The control of the works manager over 
 the different departments will be materially increased by 
 the arrangement of weekly conferences at which the work 
 in the yard can be discussed with the technical and subor- 
 dinate officers, who should be present at it. Formerly the 
 large carting companies attached to the railways held such 
 conferences daily, but the conditions of engineering works 
 are so different that a daily meeting would be unnecessarily 
 troublesome ; once a week would probably suffice for the 
 
168 DEALINGS WITH WOEKPEOPLE. 
 
 purpose. The chief subject matter for discussion will be 
 the progress of the various orders in hand, and the causes 
 which may be operating to delay them. When the 
 draughtsmen, the -foremen, the storekeeper, and the order 
 clerk lire all seated round the same table, there will be 
 little opportunity for a game at battledore and shuttlecock 
 with shuffling excuses, the unsatisfactory result of which is 
 that no one is to blame for the dilatory progress, and that 
 no one is responsible for work being behind time. The 
 orders in hand .should be taken by the works manager in 
 regular sequence, and each investigated independ€ntly ; 
 the inquiry should be so thorough as to expose completely 
 any neglect or avoidable delay. 
 
 These conferences will also form a convenient medium 
 for discussing the new orders received. It is imperative 
 that ways and means should be considered at the earliest 
 possible moment, and that the various officers who will be 
 engaged on the work should thoroughly understand each 
 other, and the time which each department will require 
 for its portion of the work. The danger of departments 
 waiting for, or being delayed by, others is thus reduced 
 to a minimum : five minutes round a table will clear away 
 more difficulties than a host of memorandums, indispensable 
 as the latter are for communicating facts or figures for 
 record, or for the men to work to. 
 
 Shop Appointments. — The procedure adopted by 
 different firms and companies for the appointment and 
 promotion of the staff varies with the peculiar circum- 
 stances of each ; nor is this surprising when it is 
 remembered that modern engineering enterprises include 
 such diverse forms as private firms, single-man companies, 
 private limited companies, syndicates, and public limited 
 companies. In all such enterprises, however, the works 
 manager will usually be consulted with respect to 
 the engagement, pay, promotion, and dismissal of the 
 workpeople and petty officials. Indeed, it is sometimes 
 contended that he should have uncontrolled power to 
 appoint and dismiss all such men, as otherwise he cannot 
 be held responsible for any adverse state of affairs 
 which he is not only powerless to prevent, but possibly 
 had actually predicted and protested against. Such 
 a contention, however, opens the door to grave evils, 
 and frequently accentuates the difficulty of dealing with 
 the trade unions, which, under any circumstances, is 
 
DEALINGS WITH WORKPEOPLE. 169 
 
 sufficiently great. What is really required is, that no 
 change in the working staff, no promotions, no advances of 
 or reductions in wages, no alterations of classification shall 
 be put into force without the works manager being 
 consulted, and his opinions being duly considered. He is 
 in more immediate contact with the subordinate officers 
 and men than either the directors or general manager ; to 
 neglect or refuse to .listen to him 'would, therefore, be to 
 close one of the most valuable avenues to knowledge of 
 the staff. 
 
 To discharge this portion of his duties with satisfaction 
 to his employers and credit to himself, it is essential that 
 the works manager, equally with the general manager, 
 should be endowed with a "capacity for justice." It is a 
 capacity which can be largely cultivated. 
 
 The foremen over the different departments are in 
 their several spheres miniature works managers, and will 
 frequently be consulted by him, and by the general 
 manager, on points connected with the staff. They 
 should, therefore, like their superiors, be actuated by the 
 truest esprit de corps, and a desire to render to every man 
 that recompense which his conduct deserves. 
 
 Workmen's Characters. — In two ways the works 
 manager is called upon to report on the conduct of the 
 men under him ; first, in advising the directors and 
 general manager on promotions, changes, or dismissals to 
 be made ; secondly, in the replies which he makes, or 
 supplies information for, to other firms who send enquiries 
 respecting workmen who have left. It is, however, 
 difficult for him to remember the character of every work- 
 man about the place, especially when large numbers are 
 employed, and frequent changes are made ; and without 
 a very distinct memory of the man it is unsafe to give an 
 applicant a character. Kecent social movements, which it 
 would be extremely foolish to ignore, favour the workman 
 in every possible way at the expense of the employer, and 
 an adverse report on a man who has left will probably 
 have to be proved " up to the hilt " if the writer and the 
 company are to escape any penalty for it. Great caution 
 must be exercised both in giving characters and in con- 
 cealing from prying eyes those which may be received. 
 The documents are given in confidence by the former 
 employer, and ordinary business rectitude would demand 
 that they should be preserved inviolate. 
 
170 DEALINGS WITH WORKPEOPLE. 
 
 When a workman seeks employment an application 
 should be made to his former employer for his 
 character. Such applications may be made by means 
 of a printed for^n, with the questions on the flyleaf, 
 and space for the answers to be inserted. These questions 
 should ask the period for which he was employed, and in 
 what capacity, his ability as a workman, and his conduct as 
 regards honesty, industry, and sobriety. Until a satisfac- 
 tory reply has been received he should only be temporarily 
 employed as from day to day ; when it arrives an intimation 
 should be given to the foreman and timekeeper that the 
 man can be regarded as regularly employed. 
 
 This character will be the foundation for another to be 
 
 fiven to the man when he leaves, modified, of course, by 
 is conduct in the interim. It should therefore be entered 
 in a workmen's staff or record book, and afterwards safely 
 placed under lock and key. The staff book must also be 
 kept in a locked drawer, or safe, so as to be guarded from 
 improper or curious inspection. It should be cut in index 
 form, to facilitate reference, and ruled with columns in 
 which to insert the following particulars : 
 
 Date of engagement. 
 
 Name of last employer. 
 
 Character from last employer. It will be sufficient to 
 insert in this column its general purport, such 
 as " satisfactory," " indifferent," " bad time 
 keeper," &c. 
 
 The full name and address of the workman ; the 
 address must be corrected whenever he changes 
 his residence. 
 
 The trade on which he is engaged, and rate of wages. 
 
 Dates and variations of wages. 
 
 Date and cause of leaving'. 
 
 Abilities as a workman, and character for honesty, 
 sobriety, and industry. 
 
 Sufficient room must be left between each of the names to 
 permit of proper record of the variations in wages, and it 
 IS better to ensure this by dividing the book by horizontal 
 red ink lines into definite spaces, one of which must be 
 apportioned to each workman. It is advisable also to keep 
 a separate book for the apprentices, and to remove the 
 
DEALINGS WITH WORKPEOl^LE. I7l 
 
 names into the . workmen's book as the several periods of 
 apprenticeship expire. 
 
 The Ceres card system may be substituted for an index 
 book, a separate card being used for each workman. It 
 will be found very convenient for this purpose if properly 
 printed cards are employed. 
 
 Attainment of Character. — The efforts of every person 
 connected with a manufacturing or other producing 
 establishment must be constantly directed to the develop- 
 ment of character in the employ^; not necessarily by 
 moral injunctions, nor even by any apparent efforts, but by 
 constant study to fit the general tone of the establishment 
 to the improvement of the workpeople. The three 
 essentials of character to which we have already referred 
 are honesty, sobriety, and industry. Honesty is fortunately 
 characteristic of most Britons ; it is not confined to any 
 one class, and may be expected in the workman as fully as 
 in the peer. Any departure from it will necessarily entail 
 sharp punishment, if not indeed dismissal. Sobriety, again, 
 is much more general in these days than it was formerly, and 
 it is only in exceptional cases that there will be any cause 
 for complaint of intemperance. But the third essential of 
 character, industry, is much more a development, a growth, 
 an evolution, than inherent in the individual, and it is 
 desirable not only to remove impediments to its cultivation, 
 but also to constantljr afford encouragement to it. 
 
 Incentives to Productive Energy. — One of the most 
 difficult problems in the commercial management of 
 factories is the institution of some plan whereby the pro- 
 ductive powers of the workmen may be stimulated to the 
 utmost limit. This problem is becoming increasingly 
 difficult in consequence of the frequent amalgamations of 
 large works now so prevalent, and the large bodies of men 
 thereby brought under one management. In the olden 
 days of cottage and village industries, and in the succeeding 
 times of small workshops, the master worked alongside his 
 men, or from a point of vantage in the room supervised 
 their industry throughout the day. There was no shirk- 
 ing, for the master's eye was roaming everywhere, and no 
 man could escape detection of his neglect. The factory sys- 
 tem has altered all this, in many ways for the better, but in 
 some for the worse. The division of labour, more particu- 
 larly in the largest establishments, tends to make both 
 master and men specialists in their respective branches; far 
 
172 DEALINGS WITH WOEKPEOPLE. 
 
 more expert than those of a generation back in their own 
 particular work, but less capable than, their predecessors of 
 transferring themselves from one class of work to another. 
 We include employers in this indictment, for it too 
 frequently happens that the clever and cultured engineer, 
 who can grapple with the most abstruse questions presented 
 by his professional duties, is ignorant as a child of financial 
 matters, of cycles of supply and demand, of the influence 
 of currency on trade, for good or evil, and of the ultimate 
 effect which government measures may prodiice on the 
 commerce of the country. Nor is it possible, even with 
 the best intentions, for the master to watch details with 
 the same lynx eyes the former working employer did, or 
 scrutinise his accounts, scattered through a dozen books of 
 much complexity, with the same ease the olden blacksmith 
 read off his hieroglyphical lists of debtors and creditors on 
 his smithy door. 
 
 The modern factory system demands a different 
 method to the old-fashioned watchfulness of the one man, 
 and requires an incentive which appeals to men's natural 
 cupidity, and converts each workman into his own task- 
 master. Whatever difficulties may have hitherto attended 
 co-operative production, and they are probably inherent 
 and inseparable from democratic co-operation, the move- 
 ment has this element of truth in it ; it affords to the 
 workmen, both individually and collectively, encourage- 
 ment to employ in their work their utmost industry and 
 ability. 
 
 Profit Sharing. — The English endeavour to solve the 
 difficulty has, apart from some partial attempts at 
 co-operative production, taken the form of profit sharing. 
 The best and most successful example is that introduced 
 at the South Metropolitan Gas Company's Works, by the 
 managing director, Mr. Livesey. So far as can be judged 
 from the length of time it has been in operation, and 
 from the testimony of Mr. Livesey himself, it has induced 
 the men to work more vigorously, and rendered them 
 more contented with their employment than did the old 
 system of fixed wages without any bonus dependent on the 
 profits. It is, however, a question whether this system is 
 an ideal one for engineering works of mixed character, or 
 indeed whether it can be applied there with equal justice 
 to all the hands unless a very complicated system of 
 accounts is instituted. The profits of a firm arise from the 
 
DEALINGS WITH WORKPEOPLE. 173 
 
 aggregate of its transactions, but it is easy to imagine that, 
 whilst a profit may be made over the whole of its 
 transactions, this may be exceptioually heavy in some 
 departments, and very small, if indeed a loss is not incurred, 
 in others. To pay all the men an equal percentage 
 on their wages would be to perpetuate the baleful 
 endeavour made by some trade unions to carry the 
 indifferent or unsuccessful workmen on the shoulders of 
 the more skilful men. The success which, however, has 
 followed its introduction into the Gas Company's works, 
 and also in a lesser degree into other manufactories, recom- 
 mends it to the consideration of engineers : if it has not 
 yet arrived at perfection of treatment, it may possibly be 
 modified so as to remove some of its present defects, and 
 adopt it to the requirements of an engineering factory in 
 the absence of an alternative and better plan. 
 
 American Methods. — Our American cousins have made 
 more strenuous efforts to solve the problem than any we 
 have attempted, and they claim in different directions to 
 have been successful. In the year 1896, C. E. Richards, 
 in the Pratt Institute Monthly, gave an interesting account 
 of the industrial organisation in the works of the National 
 Cash Register Company, of Dayton, Ohio. The first step 
 in the " new factory system " of that firm was the replace- 
 ment of the superintendent by a committee of five heads 
 of departments, upon whom the responsibility of manage- 
 ment was placed, and this was shortly supplemented by 
 sub-committees of foremen and sub-foremen, who were 
 entrusted with the largest possible amount of responsibility 
 and initiative. The employees are encouraged, by a 
 generous system of rewards, to offer suggestions for 
 improvements in design or manufacture, whilst "the 
 payment of high wages is also an integral part of this 
 system of individual incentive ; for the company have 
 found that nearly all workmen increase their daily output 
 when sure of an increased return." Mr. Richards claims 
 entire success for this system, which appears to be a 
 modified form of co-operation, with the shareholders in the 
 position of bankers or mortgagees ; but he also indicates 
 several factors which diminish the possibility of its general 
 adaptability. In the first place, a large number of the 
 hands are women, and it is well known that women will 
 accept lower wages, and are content with a lesser standard 
 of comfort than men workers ; the complaint made against 
 
174 DEALINGS WITH WOIIKPEOPLE. 
 
 them by most employers is that they are too easily satisfied 
 with their present living, that they have less ambition to 
 rise from their initial or normal position than men have, 
 and will not so patiently and consistently strive for that 
 end, A large proportion of women to men in a factory, 
 where the manufacture is of a routine character, will 
 undoubtedly modify, to a large extent, the tendency to 
 labour disputes ; and this appears to be the position of the 
 National Cash Register Company. The «aanufacture of 
 their goods had become so perfected, their workpeople so 
 thoroughly trained and skilfiil, that the. factory had arrived 
 . at a condition analogous to that termed by economists 
 " the stationary state." The very success which they 
 attained before adopting their new factory system renders 
 it of doubtful expediency in a more competitive and 
 struggling concern. 
 
 Fixed Piecework Rates. — If this were the only con- 
 tribution made by the Americans to the question of 
 economy of labour, it would interest the co-operator or the 
 speculative philosopher more than the practical engineer ; 
 but thev have too ardently endeavoured to reduce cost of 
 production to rest content with a result which, though it 
 may prove serviceable under certain limited conditions, 
 cannot be generally adopted. The Engineering Maga- 
 zine of New York, Vol. XII. (1897), contains papers 
 giving six examples of successful shop management, 
 wherein the influence of fair and just dealing, of isolation 
 and environment, and of careful detailed supervision and 
 definite contracts, upon the prosperity of the factories and 
 the contentment of the workpeople are cleverly traced. 
 The success is, however, in most cases, that of isolated 
 works under the dominance of exceptionally skilful 
 managers, who impress their own rectitude and personality 
 on the establishment, rather than of any system which 
 recommends itself for general adoption. One paper, 
 however (Vol. XII., page 831), contains some pregnant 
 remarks on the increase of output through the stimulus of 
 unfettered piecework rates, and is deserving of the most 
 grave consideration by English managers and workmen. 
 It is entitled " Pre-eminent Success of the Differential 
 Piece-rate System." The justice and economy of piece- 
 work, even under fixed and absolute rates, is admirably 
 expressed : " Not only does the fast man do more work, 
 but that work is done at a reduced fixed-charges cost, and 
 
DEALINGS WITH \V(JRKPEOPLE. 175 
 
 the intelligent manager discovers that he must greatly 
 increase the pay of the speedy man or decrease the pay of 
 the slow man to make each eqnalty profitable. Under 
 these conditions the piece-rate at once suggests itself as a 
 remedy. The piece-rate stimulates the slow artisan, and 
 justly rewards the_ quick worker, tends to increase the area 
 output, and lessen the fixed-charges drawback on profits." 
 In two of the shops taken as examples, that is, in the Baldwin 
 Locomotive Works, ' and -the widely -known establishment 
 of Messrs. William Sellers and Co., piecework rates are 
 seldom altered, unless some general reduction has been 
 accepted throughout the country, or a manifestly improved 
 process of manufacture has been adopted. Indeed, in the 
 Baldwin Works some rates have remained unchanged for 
 the past twenty years, and a workman is there more highly 
 esteemed when he can, by his own exertions and ability, 
 increase his weekly earnings. He has an absolute incentive 
 to increase his output as much as he possibly can, because 
 he knows that he will not, by increasing his own income, 
 lead to cutting piece-work rates, and so be forced to make 
 still further exertions in order to maintain the same weekly 
 wage. There is a case mentioned where, under the 
 encouraging influence of an unchanging piece-work rate, 
 twenty-two men eventually turned out more work than 
 forty-four men had originally done, thus increasing their 
 own earnings, and at the same time reducing the ratio of 
 establishment charges to direct wages. 
 
 Analytical Piece=work Rates. — But American 
 engineers have applied system and scientific observation 
 to the determination of these piece-work rates, and do 
 not leave them to rule-of-thumb determination. The 
 Sellers' shops produce a large variety of machine tools, as 
 well as specially designed work, and the Baldwin shops 
 turn out many varied descriptions of locomotives, each 
 variety having an immense number of parts ; yet in both 
 places we find piece-work sub-division carried out to a 
 much greater extent than in England ; as, for instance, in 
 the case of a common nut, where nut-tapping, nut-facing, 
 and the finishing of nut sides are each a separate step in 
 the manufacture, with a piece-work rate of its own. The 
 way in which this is determined so as to afford equal 
 justice to both employer and employed is by the analytical 
 or elementary method, of which the accompanying is an 
 example for planing a surface on a piece of cast iron. 
 
176 DEALINGS WITH WORKPEOPLE. 
 
 WORK DONE BY MAN. 
 
 Minutes. 
 Time to lift work from floor to planer table 
 
 level and set work on table 
 
 put on stops and bolts 
 
 remove „ „ 
 
 „ piece to floor 
 
 clean machine 
 
 WORK DONE BY MACHINE. 
 
 Time to rough cut J in. deep surface, 4 ft. long 
 
 2J in. wide 
 
 ,, rough cut l^in. deep, 3 ft. long, 12 in. 
 
 wide 
 
 „ finish cut -i ft. long, 2| in. wide 
 
 „ finish cut 3 ft. long, 12 in. wide 
 
 Total 
 
 Add per cent for unavoidable delays. 
 
 It will be seen that such an analysis as this can only be 
 of value when carefully and conscientiously worked out. 
 It demands exact observation of the time occupied by a 
 good, but not exceptional, workman on any particular 
 piece of work. But more than this, it requires exact know- 
 ledge of the capacity of any tool with which he may be 
 working, not merely as employed in an ordinary easy-going- 
 workshop, but as used in a progressive and scientific one, 
 where the conditions under which it will work most 
 eifectively and economically will be accurately determined. 
 At the Midvale Steel Works the investigations of the piece- 
 work rate fixing department revealed the fact that none of 
 the lathes, planers, boring machines, &c., which were of 
 standard patterns, and supplied by the best makers, were 
 designed and speeded so as to cut steel to the best 
 advantage. The company, therefore, demanded variations 
 from standard designs in almost every machine they sub- 
 sequently purchased, and in many cases specially designed 
 the machines they required for their own purposes. Thus 
 an investigation, originally intended merely to arrive at 
 a scientific basis for paymBnt of workmen, eventually 
 
DEALINGS WITH WORKPEOPLE. 177 
 
 resulted in improvements in machines, or in methods of 
 using them. There can hardly be a more forcible illustra- 
 tion of Mr. W. H. Mallock's theory, that the production of 
 modern wealth is the result of abilitjr and not of un- 
 directed labour. 
 
 Differential Piece -worl< Rates. — We have here an 
 example of the assiduous care exercised by American 
 engineers in determining the cost of work in their 
 factories, and ascertaining the best methods of reducing it. 
 They have long recognised that the most efficient way of 
 reducing percentage of cost is to increase the ratio of out- 
 put to the labour employed. The indirect charges, such 
 as rent, taxes, insurance, depreciation, interest, salaries, 
 office expenses,, and cost of power, are seldom curtailed 
 when trade is slack, or when the amount of work turned 
 out is below the average ; nor are they materially increased 
 when the factory is doing its productive best. It, there- 
 fore, becomes more important to stimulate the workpeople 
 to work their best, and maintain the highest possible 
 speed of production, even by the payment of high wages, 
 than to effect a saving in the wages bill. The system of 
 " differential piece-work rates " was first applied to a part 
 of the work in the machine shop of the Midvale Steel 
 Company, in 1884. So successful was it in the immediate 
 results it produced that it was rapidly extended throughout 
 the works, with the mutual approval of both employers 
 and employed ; and it has been continued up to the 
 present date. Indeed, the secretary of the company 
 writes, under date of December 28th, 1897, " Under no 
 circumstances whatever would we go back to the system 
 prevailing prior to its adoption. The merit of the system 
 is so self-evident that there is nothing that we might say 
 about it would increase its value." 
 
 The system consists in paying a higher price per unit 
 of work if it is completed m the shortest possible time, 
 and without imperfections, than if it takes a longer time, 
 or is imperfectly done. It is admirably illustrated by Mr. 
 Frederick W. Taylor, to whom must be credited its intro- 
 duction and development at the Midvale Works. In an 
 article in Gassier s Magazine for February, 1898, he says: 
 " Suppose 20 units or pieces to be the largest amount of 
 work of a certain kind that can be done in a day. Under 
 the differential rate system, if a workman finishes 20. pieces 
 per day, and all of these pieces are perfect, he receives, say, 
 n3 
 
178 DEALINGS WITH WORKPEOPLE. 
 
 7d. per piece, making his pay for the day 7 x 20 = lis. 8d. 
 If, however, he works too slowly and turns out, say, 
 only 19 pieces, then, instead of receiving 7d. per piece, 
 he gets only 6d. per piece, making his pay for the day 
 6 X 19 = 9s. 6d. instead of lis. 8d. per day. If he succeeds 
 in finishing 20 pieces, some of which are imperfect, then 
 he should receive a still lower rate per day, say 5d. or 2W. 
 per piece, according to circumstances, making his pay for 
 the day about 8s. or only 4s. instead of lis. 8d. It will 
 be observed that this style of piecework is directly the 
 opposite of the ordinary plan." 
 
 Effects of Automatic Grading of Men. — The advantage 
 of piecework in stimulating production is known to most 
 English engineers, even under the adverse conditions 
 which affect and limit it in this country. It is only just 
 that the good and industrious workmen should receive for 
 his efficiency the best reward the work will allow ; it is 
 equally as just that the inefficient or lazy man should suffer 
 for his want of skill or industry. The method of grading 
 or classifying men according to their ability has been tried, 
 and always created dissatisfaction; it is opposed to both the 
 ethics and methods of the unions, and invariably creates 
 suspicion of favouritism. The differential rate, however, 
 classifies the men automatically, and on their work tickets 
 they themselves fix their position in the labour market. 
 If they are skilful and active, they are rewarded for the 
 saving they effect in establishment charges ; if dilatory, 
 they mulct themselves for the loss they cause to their 
 employers. 
 
 Quick Returns Essential. — Mr. Taylor very pertinently 
 remarks that the workman should be encouraged by 
 immediate knowledge of the result of his exertions ; and 
 that, whenever it is possible, he should each day know 
 what progress he has made during the previous day. This 
 necessitates rapid inspection of the work, and immediate 
 returns ; but the necessity entails a further advantage, as 
 the office men, who too often are procrastinating in their 
 methods of working, are thereby compelled to keep up 
 their daily tale of work. 
 
 Piecework Prices not Cost Accounts. — It may almost 
 appear superfluous to warn our readers that the fixing of 
 piecework prices, either on the analytical system alone, or 
 on the analytical and_ differential system combined, is not 
 analogous to the keeping of cost accounts. In the one 
 
DEALINGS WITH WORKPEOPLE. 179 
 
 ■case it is an estimate of the wages cost of production, jvist 
 as in a more complex way an estimate is for a tender ; in 
 the other it is a record from dissected wages sheets, stores 
 accounts, and cash book, of the amount which has been 
 spent on the production. The former account admits of, 
 and sometimes requires, a certain element of supposition, 
 which should be rigidly excluded from the latter. 
 
 Contract System. — The method of sub -contracting, 
 which is in vogue in some English works, is still to be 
 found in many of the New England, and was only dropped 
 by the Singer Company in 1883, after it had been in force 
 for 15 years. That company found that the substitution 
 of piece-work mechanics, with foremen at fixed rates of 
 wages, tended to reduce cost of production below that 
 obtained under the contract system. 
 
 The great object of the works manager should, however, 
 be to study all methods of encouraging the men to increased 
 exertion, and maintaining their desire to secure a large 
 output, and to adopt such of them as appear most suitable 
 to the particular factory at which he is employed. There 
 is no absolute design for all bridges, under all conditions ; 
 nor is there any unalterable and sole method by which the 
 "workman can be induced to part with his best labour. 
 
Chapter XV. 
 
 TIMEKEEPING. WAGES ACCOUNTS AND RETURNS. 
 
 PAYMENT OF WAGES. ISSUE OF MATERIALS.. 
 
 COLLECTION OF MATERIALS. STORES BOOKS. 
 AND RETURNS. 
 
 Timekeeping-. — Whatever inducements are held out to 
 the men to increase the output, whatever assistance may 
 be rendered them by the supply of new or improved 
 machinery to attain that end, it is imperative that pre- 
 cautions should be taken against their being paid for time 
 they do not work, or for services which they do not render. 
 In common with most other factories, the workmen of an 
 engineering establishment are admitted through the gate- 
 keeper's office, or past his window, and the system of metal 
 discs or tickets now so generally adopted affords an 
 excellent check on the total time worked by each man. 
 More than this is necessary, it is true, for the compilation 
 of detailed cost accounts, but this check on the time, which 
 will be contributed to by the men themselves, should never 
 be neglected. 
 
 Time of Staff and Foremen. — It is essential that the 
 office and managerial staff should keep good time, both for 
 that force of example already insisted on, and for the 
 avoidance of delay m the workshops whilst the men are 
 waiting their instructions. They cannot, however, without 
 loss of authorit}^ be treated in the same manner as 
 ordinary workmen, and required to take up or deposit a 
 
 1 ticket each time they go in or out, and some other means. 
 
 \must be adopted for giving the general manager sufficient 
 icontrol over their arrival aiid departure. Probably the 
 most convenient and effective plan is the attendance book, 
 which may be ruled in the following form : — 
 
 Signature. 
 
 fast. 
 
 Arrive. 
 
 Depart. 
 Diuner. 
 
 AiTive, 
 
 Depart, 
 
 Night. 
 
 
 
 
 
 
 
TIMEKEEPING. 181 
 
 All the officers, excepting the secretary and general 
 manager, should be required to enter their arrival and 
 departure in this book, a separate space (which may be 
 divided off by a red ink line) being taken for each day, 
 and the names appearing consecutively according to time 
 of arrival in the morning. 
 
 The book may be kept at the gate, but this is only 
 convenient in small establishments, and where the gate- 
 house is so arranged that foremen and clerks using the 
 book shall not block the way for the workpeople. Where 
 the officers are numerous it is probably better to keep it in 
 one of the general offices, and in some cases to have two 
 or more books, so that foremen and draiightsmen can be 
 signing that kept for their use, whilst the clerks are using 
 the other. Details like these are modified by the numbers 
 employed. 
 
 Even when it is kept in the gatehouse, there should be 
 no imperative rule requiring signature in the presence of 
 the gatekeeper. In the first place such a regulation would 
 interfere with his watching the workman take up and 
 deposit their tickets : in the second, it would give him an 
 appearance of authority over those who are really 
 his superiors, and possibly induce him to make 
 impertinent remarks to them. The class of men from 
 whom gatekeepers are usually selected is not one to be 
 entrusted with any semblance of authority over technical 
 officers or competent clerks. But there is a further, and 
 even greater, objection to converting the gatekeepers into 
 a spy over them : these technical officers and clerks have 
 to discharge duties which it is very difficult to reduce to 
 units of time, as the work of a machine, or the workman 
 attending it can be ; they have to be trusted, to a very 
 large extent, to perform their work in the best and most 
 conscientious way they can for the benefit of the firm, 
 and it is better to inculcate a high sense of honour in all 
 their dealings, than to set a man to watch part of them. 
 Of course any attempt at fraudulent entry should be 
 reported, by whomsoever it may be detected, but the 
 general regulations of the firm should be such as promote 
 the feeling noblesse oblige. 
 
 Admission of Workpeople. — No such delicacy must, 
 however, be exhibited with the workpeople, who, under 
 modern conditions of employment and trade unionism, 
 are usually devoid of any strong devotion to their masters, 
 
182 TIMEKEEPINO. 
 
 and unfortunately' include many black sheep in their ranks. 
 At the appointed time the gates must be closed and no 
 one admitted until the next appointed time of opening 
 for workpeople. Of course, if a body of men are passing 
 into the yard at the moment the clock is striking, the gate 
 must not be closed in the face of those who are then out- 
 side it, and only waiting their turn to pass in. This would 
 be outrageous and demoralising tyranny. A system of 
 fines may be arranged for late arrivals, but it is very 
 difficult to maintain against modern union objections and 
 the emotional sympathies of government officials for work- 
 ing men. Fines seldom attain the end for which they are 
 instituted, and it is probably better to shut out the late 
 arrivals until the next time of opening the gates for work- 
 men's admissions. If this method is adopted it may be 
 modified by admissions at half time, so that the men be 
 not mulct of the whole of one division of the day, but this 
 modification is a matter for the determination of each firm 
 according to its own special circumstances. 
 
 Time Checks. ^ — Automatic time-checking machines are 
 generally distrusted by the men, and cannot be regulated 
 so as to prevent injustice to those who, although actually on 
 the premises before the stroke of the clock, are prevented 
 approaching the time machine by pressure of others in 
 front who are at the moment passing it. Probably there is 
 nothing better than the old-fashioned method of time 
 checks, but some recent improvements in the ways of 
 working them add considerably to their usefulness. The 
 checks should be made in four different shapes, for the 
 different portions of the day, instead of uniformly round, 
 and should be stamped with the numbers 1, 2, 3, .4, as the 
 case may be, as well as with the workman's number. Thus 
 
 No. 1 will be for the time before breakfast ; No. 2 for after 
 breakfast ; No. 3 for after dinner ; and No. 4 for overtime. 
 
TIMEKEEPING. 183 
 
 When night shifts are worked, it is better to employ a 
 distinct series of checks for them, and these may either be 
 of separate shapes, or the same shapes as the day shifts, 
 with the letter N stamped on the check in front of the 
 
 divisional time number, as 
 
 542- 
 
 The checks must be placed on boards, in number order, 
 and these boards must be conveniently disposed at the 
 entrance to the yard. When large numbers are employed 
 it will sometimes be better to have two or more entrance 
 gates, but the advisability of this will depend on the 
 general arrangement of the yard, and the situation of the 
 buildings within it. It is not generally approved in JI.M. 
 dockyards. But where additional entrance gates cannot 
 be provided, it is frequently possible to arrange separate 
 entrance passages, so that the men from 1 to 200 can go 
 through the one, and those from 201 to 400 through 
 another, and so on, the checkboards being placed so as 
 to be convenient for each passsage. This will prevent 
 delay in entering the yard and commencing work. 
 
 Care should be taken, in stamping the tickets, to pro- 
 vide for a sufficient number of workmen of each degree. 
 The men of each class should be numbered together, 
 joiners, platers, riveters, machine-men, fitters, labourers, 
 etc., so that their numbers may fall consecutively into the 
 proper portion of the pay sheet. To ensure this it is 
 necessary to adopt the system of " gapping," already 
 referred to when dealing with the register of drawings. 
 
 Check Boxes. — Four check boxes (or four sets where 
 more than one entrance passage is used) must be provided, 
 and placed in a convenient position near to, but beyond, 
 the check board. As the workman enters he will remove 
 his check from the board, pass forward a few steps, and 
 deposit it in the box. These boxes, like the checks, will 
 be exchanged for each portion of the day or night, and it 
 will be found convenient, although it is not essential, to 
 have the shape of the ticket painted in white on the front 
 of the box. The boxes must be locked before use, and 
 have a slit in the top of each through which the tickets 
 may be dropped. 
 
 Immediately the gates are closed for admission of 
 workmen the gatekeeper must remove the boxes from their 
 place, and put them in a convenient spot for the time- 
 
184 TIMEKEEPING. 
 
 keeper. As soon as can conveniently be arranged after 
 each time of closing, the timekeeper must take the boxes 
 to his ofifice, and enter the time of the men in his rough 
 time book from the tickets he finds in them. 
 
 Rough Time Book. — The rough time book may be of 
 a very cheap order. It will not be required for reference 
 after the week or other period for which it is kept, and if 
 the paper will stand writing at all it is quite sufficient. It 
 should be ruled with columns for the different days of the 
 Aveek. 
 
 The time must be entered in this book for each division 
 of the day. There are various methods of doing this, but 
 marks of some kind in lieu of figures will be found con- 
 venient. Thus the day will be divided into three working 
 portions, in which the number of hours may vary at 
 different periods of the year, but the exact duration of 
 which will always be known to the timekeeper. Three 
 strokes may be used — the first, for the time before break- 
 fast, sloping from right to left ; that from breakfast to 
 dinner time from left to right ; and a horizontal stroke 
 being employed for the afternoon. A completed day will 
 then be represented ■^ . Or the three strokes may slope 
 the same way if found more convenient, / / /, but this often 
 tends to confusion. An absolute rule cannot be laid down, 
 and the use had better be left to the timekeeper's 
 discretion. 
 
 Overtime should be entered separately in the book (it 
 can be underlined below the mans name if the space is 
 sufficient) by hours, and not by divisions of time. The 
 working of overtime is often irregular, and the time the 
 men are kept at it is not defined with the same certainty 
 and exactitude as the ordinary hours of employment. 
 
 No man must leave the works before the ordinary hours 
 without a pass-out slip signed by his foreman. These slips 
 must be handed to the gatekeeper, and by him passed 
 to the timekeeper, who will give effect to them in his 
 accounts. 
 
 The rough time, book will thus contain a complete 
 statement of the time Avorked by each man, and if 
 ordinary care is exercised in collecting and recording the 
 tickets it should be an accurate statement. By this book 
 the time keeper can check the wages book, which will be 
 compiled hj him from information supplied by the men 
 themselves. 
 
TIMEKEEPING. 185 
 
 Time Tickets. — For cost accounts it is needful to know 
 the description of work upon which a man is employed, as 
 well as the number of hours he makes during the day ; 
 indeed, some such information is requisite for the compila- 
 tion of accurate departmental and contract accounts, even 
 when detailed cost accounts are not kept. Hence the 
 necessity for the workmen's time tickets usually employed 
 in engineering establishments. 
 
 Each workman has a number given him when he enters 
 the service. This will be the number of the time check 
 which he takes from the board and places in the check 
 boxes each time he enters the yard. He must also be fur- 
 nished with a board for his time tickets, and the same 
 number will be painted on this board. 
 
 The boards should be planed smooth, and the top portion 
 only painted. They should be about 6 in. long by 3 in. 
 broad, and rounded at the top, and at the two bottom 
 corners. Six strips of paper 5 in. by 3 in. should be 
 gummed to the board, one for each day in the week, on 
 which the man has to insert the time he is engaged on each 
 job: on the time so entered, unless it is in excess of that 
 shown by the checks, he will be paid ; any time he omits 
 should not be paid for withovit sufficient inquiry and 
 explanation, and the enforcement of this rule will usually 
 be sufficient to ensure care in filling up the papers. Some 
 firms use only boards chalked over, and the men write 
 their time on these and exchange them daily. This will 
 suffice where division of costs is not carried to any minute 
 nicety, but is unsuited to a firm which requires great detail ; 
 the men cannot be expected to always know the exact 
 border line between one portion of a job and another. 
 
 The course to be pursued then is this : The foreman is 
 
 starting a man at work on the table of a milling machine, 
 
 size B, the symbol reference for which will be (if symbols 
 
 are used) M.M. B — 4 : the order number, which appears 
 
 on the shop order is 5746. The foreman takes the man's 
 
 5746 
 
 time ticket and writes on it „-i^w-^-p, -., and this is an 
 
 M.M.B. - 4' 
 
 authority to the man both to proceed with the work, and 
 
 to charge it to the special portion of the contract indicated 
 
 — that is, to No. 4 portion of a milling machine B, being 
 
 constructed for order 5746. The same course must be 
 
 followed each time the man's job is changed. 
 
 At the end of the day the workman will remove from 
 
186 WAGES ACCOUNTS AND EETUENS. 
 
 his board his ticket for that day, and place it in a letter 
 box, or other suitable receptacle, which should be provided 
 for each shop, except on the last day of the week, when 
 he will deposit there both the board and last slip, receiving 
 a new board the following work morning for the ensuing 
 week. A girl or girls should be employed in the time 
 office to renew the slips weekly, and for this purpose two 
 sets of boards must be used. 
 
 When the workman removes his ticket for the day he 
 must write the reference on the next day's sheet if he con- 
 tinues work on the same job. He must also mark each 
 ticket with the date to which it refers. 
 
 Wages Book. — The timekeeper has now two sources of 
 information before him, which, if they are correctly dealt 
 with by the men, should agree. He has the time checks 
 deposited on entrance to the yard (modified, of course, 
 by the pass-out slips, in the few cases where these are 
 given), which furnishes the total time worked, and the 
 time tickets, which give the details of each man's work. 
 From the latter the wages book is compiled, but only after 
 they have been compared with the rough time book, and 
 any discrepancies investigated and corrected. 
 
 The wages should be prepared by departments. The 
 men's names should be entered in numerical order, to 
 agree with the numbers given them on entering the yard, 
 and which numbers, it will be remembered, are " gapped " 
 between different trades. Spaces must be left in like 
 manner in the wages book, but they need not be so great 
 as in the numbers. The latter must be sufficient for an 
 increase to the very fullest capacity of the works to employ 
 men of any trade, even during the most pressing emer- 
 gency ; the former need only provide for the additional men 
 expected to be engaged during the week, or, if the book is 
 ruled for a month, during the ensuing four weeks. 
 
 In order to provide for the payment of the men, and 
 also for details of the various jobs upon which they are 
 engaged, two cash columns are desirable. Many forms are 
 in use at various works, for pay or time books, but the 
 following will probably be found convenient for the purpose. 
 It has the advantage of having been practically tried m an 
 engineering establishment, and found to answer. 
 
 In the column headed " process " the numbers 5746, 
 5616, and 5730 are the order numbers, the machines on 
 which these workmen are employed being already ordered 
 
WAGES ACCOUNTS AND RETURNS. 
 
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188 WAGES ACCOUNTS AND EETURNS. 
 
 by customers of the firm. The words table, frame, or bed- 
 plate indicate the special detail of the machine on which 
 work is being done by them. Under the symbol system 
 the order number would be used, but the symbol of the 
 part would be used as given in the shop orders, and by the 
 foreman to the woi'kman on his ticket. Thus order 5746 
 is for a milling machine, size B ; and the entry on the time 
 ticket and in the wages book for Thomas Jones' time will be, 
 
 5746 M.M.B.— 4. 
 
 Work done for the firm itself, and which, of course, 
 does not bear any order number, must be set out in such 
 manner as to distinguish its character, and the particular 
 building or other structure or machine on which it is done. 
 Thus :— 
 
 " Buildings. — Repairs of smithy roof." 
 
 " Repairs of machinery. — Countershafting in machine 
 shop." 
 
 " New machinery. — Headstock of 12 in. screw cutting 
 lathe." 
 
 " Expenses. — ^Assisting storekeeper." 
 
 Where the symbol system is in use, and a symbol is 
 available, it must be used instead of a description in 
 words, thus : — 
 
 " New machinery. — S.L.D. — 5." 
 
 The example given provides only for one week, but the 
 book may be ruled for four or five Aveeks. In this case the 
 first two columns need not be repeated, but those from 
 process inclusive, to total wages per man, must be ruled 
 for each weelc. 
 
 Abstract of Wages. — An abstract of the wages book 
 will be required, both for the ordinary commercial books 
 of the firm, and for the cost accounts. It will generally be 
 found convenient to make a separate total in the wages 
 book for each department therein, and at the end a sum- 
 mary of the whole of the departments, the total of which 
 summary will agree with the wages paid for the week by 
 the cashier. 
 
 The abstract is most conveniently prepared on large 
 sheets of paper ruled with perpendicular red lines, in 
 manner following : — 
 
WAGES ACCOUNTS AND RETURNS. 
 
 189 
 
 5616 
 
 5730 
 
 5746 
 
 Bed 
 Plate. 
 
 Table. 
 
 The space marked A is for the order numbers ; that 
 marked B for the symbol or other designation of the detail 
 of the order. 
 
 Each man's pay must be entered separately in the 
 abstract ; taking, for instance, the Samuel Davies of the 
 "wages book, his pay will be abstracted in the manner given 
 above. The same course will be followed with each man 
 in the department until that portion of the book is 
 exhausted. The abstract will then show, for fitters, the 
 money value expended on the various portions of contracts 
 Nos. 5616, 5730, 5746, and any others then in progress, 
 whilst the total of these several columns will agree with 
 the total paymejit to fitters in the wages book. Similar 
 information will be supplied for turners, blacksmiths, 
 carpenters, and other trades, and also for labourers and 
 subordinate officials paid weekly wages on subsequent 
 sheets of the abstract. The total of all the sheets of the 
 abstract for the week will agree with the weekly total of 
 the wages book. To ensure accuracy it is desirable to 
 have it checked by a clerk other than the one making it. 
 
 The expenditure will find its way from these subsidiary 
 books and papers into the commercial (or financial) ledger 
 and into the cost accounts. 
 
 Checking of Wages Book. — Before the wages are paid, 
 and also before the weekly abstract is prepared, the wages 
 book must be carefully checked. This is so obvious a 
 portion of intelligent clerkly routine that there seems little 
 necessity for referring to it, but it should be remembered 
 that the checking may be so perfunctory as to afford Httle 
 protection against blunders, unless they are very gross. 
 
190 WAGES ACCOUNTS AND RETTJENS. 
 
 and none against attempted fraud ; there are, therefore, 
 certain requirements which should not be overlooked or 
 neglected. 
 
 Piece Work. — It is necessary that a careful check be 
 kept over piece-work payments. The rates will be fixed 
 by the works manager, or by a department under his 
 immediate direction if the analytical piece-work system is 
 adopted. The necessity for continuity of piece-work rates 
 has already been referred to ; the best work will never be 
 obtained from any set of men who feel that increased 
 diligence, or greater intelligence will tend to impose upon 
 them heavier burdens in order to maintain their weekly 
 wage. They must, when fixed, be recorded in a rate book, 
 available for reference by the officers who require access to 
 them for the due discharge of their duties. 
 
 Where piece-work practically takes the form of sub- 
 contracts, as it occasionally does in shipyards on cargo 
 steamers, or caisson work, an account may be opened in 
 the ledger with the sub-contractor. In this account he 
 will be debited with the various weekly payments on 
 account, the entries being : — 
 
 Thomas Ford (plating contractor) Dr. 
 
 Wages Account Cr. 
 
 When the contract is completed this ledger account will 
 be credited with the amount thereof, less any deductions 
 for incomplete or inferior work, and finally debited with 
 the amount paid him through either the cash book or 
 wages to balance the account. The weekly " subs." will be 
 passed through the wages book in the usual way — the 
 abstract heading being, however, " Thomas Ford," and not 
 the order number and designation of the portion of the 
 ship or other construction. The cost accountant will 
 obtain the particulars for his records from the commercial 
 journal, exactly in the same way as he has to procure other 
 like information from the cash book. 
 
 In general, however, it will not be necessary to open 
 ledger accounts with the man — certainly not with indi- 
 vidual men who do not employ others to assist them. 
 Thus a unit of work is given to Evan Jones at the piece- 
 work price of £6 5s. 8d. He draws £2 for each of the first 
 two weeks, and completes the work by the end of the 
 third: his wages for that week will be £2 5s. 8d., and the 
 respective entries will be as indicated in the table following. 
 
WAGES ACCOUNTS AND RETURNS. 
 
 191 
 
 
 
 
 
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192 WAGES ACCOUNTS AND RETURNS. 
 
 It will certainly facilitate his work if the clerk who 
 makes the extensions keeps a rough memorandum book of 
 each piece work job which extends for a larger period than 
 the week ; and when the greater portion of the work of 
 the establishment is conducted on the piece-work system, 
 such a book is absolutely necessary. In the latter case it 
 may be of larger size, and provided with an index for the 
 men's names. 
 
 Checking Rates. — The rates of pay must be checked 
 weekly, both to detect clerical errors and prevent fraud. 
 So far as piece work is concerned, the piece-work rate 
 book must be referred to, both for the final payment and 
 also for the weekly "sub." sanctioned by the works 
 manager. If this has not been inserted in the rate book, 
 then he must be applied to for instructions before any 
 amount is entered for payment. It will probably be better 
 to obtain his initials to each piece-work rate, and payment 
 on account, when only a small portion of the men are so 
 paid : when piece work is the general rule of the shop it 
 maybe found inconvenient to require this, but his signature 
 should be obtained at the end, and must be understood to 
 certify that he has satisfied himself of the careful examina- 
 tion of the wages and piece-work rates, and has determined 
 any doubtful points. 
 
 The ordinary day rates must be compared and checked 
 from the previous week's wages list. If any new men 
 appear, or any alterations are made in rates, they must be 
 confirmed by reference to the workmen's staff or record 
 book, and the works manager should, as an additional 
 precaution, initial all such variations. 
 
 The wages book should always be looked through, and 
 signed by the works manager at the end, to certify that he 
 is satisfied with its general correctness. It should also be 
 examined by the accountant, before the wages are paid, to 
 ascertain that the routine of comparison and signature has 
 been complied with. 
 
 Checking Time. — The checking of time worked is 
 more difficult, particularly in the event of any collusion 
 between the timekeeper and the workpeople. It is almost 
 impossible to set a clerk belonging to the accountant's 
 department to check the time every day : this in eflect 
 would be making him into an additional timekeeper. But 
 a trustworthy and smart clerk may at irregular times, and 
 without any prior notice, be sent into the time office to 
 
PAYMENT OF WAGES. 193 
 
 check, in every particular, the timekeeping for the day ; 
 the afternoon or evening should be usually selected for this 
 purpose, as the timekeeper will then have most of his day's 
 record entered up, but it should also be varied by an 
 occasional inspection in the morning, before the checks for 
 the first quarter of the day are returned to the gate office. 
 This is in accordance with the plan adopted by the railway 
 companies of surprise examinations of tickets, and derives 
 its force as much from the fear it inspires of detection as 
 from the detections which it actually effects. 
 
 Payment of Wages. — It is decidedly better to pay 
 wages at one or two places in the yard, which the men pass 
 on leaving, than to send the money into the various shops 
 during the time they are at work. The latter plan causes 
 confusion and disorder, which may sooner or later entail 
 accident, and the employers' heavy liability for accidents 
 must now be remembered. The cashier should, on pay 
 day, prepare a paper showing the number of sovereigns, 
 half sovereigns, florins, &c., &c., which he will require, and 
 the amount thus shown must agree with the total of the 
 wages book. The method of doing it is well known to 
 most pay clerks in textile and other manufacturing works, 
 as well as engineering establishments ; we have even seen 
 it used by a ha;lf-caste paymaster on the Besagile del 
 Mexico. 
 
 The wages for each man should be counted out and 
 examined before the pay commences. Boards with holes 
 sunk in them may be vised for the purpose, or little tin 
 boxes. Whichever plan is adopted they must be arranged 
 by numbers, and the men must apply for their pay by 
 numbers instead of by name. When the tin boxes are 
 used it is better to have boards arranged into which 
 they fit. 
 
 For either plan it is desirable to put in with the money 
 a slip containing the man's number, and the amount of his 
 pay, after the manner of the textile factories. In one of 
 these we have seen an excellent plan of working. The 
 numbers were printed on perforated slips, and the pay 
 clerk took his wage book and called out to an assistant the 
 amount of each man's wage which was entered on his slip. 
 A summary of the totals of the various columns of these 
 slips was made on a sheet of scrap paper to prove their 
 , agreement with the total of the wage book. The money 
 was then distributed into the tins from these slips, and not 
 o3 
 
194 PAYMENT OF WAGES. 
 
 from the wages book, and by this means two or three 
 clerks could be employed on the work at the same time — 
 one for each board, if needful. 
 
 When the money has been sorted out by the pay clerk, 
 the secretary or general manager (according to the 
 authority they respectively take over the office staff), may, 
 with the assistance of the accountant, or a reliable clerk 
 from the general office, occasionally compare a number of 
 the receptacles, taken up and down the boards at random, 
 with the wage book. It is not necessary to do this every 
 week, but if it is adopted in the nature of a surprise visit, 
 which may come any week, and will come some time or 
 other, it will tend to prevent intentional mistakes being 
 made. It is dangerous to substitute sixpence for a half 
 sovereign if the secretary may come in any moment, 
 and possibly pick up that particular box, and count the 
 contents. 
 
 Disputes as to Wages. — The men should form a 
 queue, and call out their numbers as they pass the office 
 window, and walk on immediately they receive their 
 money. No disputes as to rates of pay, time, or calcula- 
 tions must be permitted at the immediate time, if their 
 money agrees with the slip. They must wait until the pay 
 is over, then complain of the error to the pay clerk, and 
 receive from him an appointment for their attendance the 
 next morning, when the dispute can be investigated, and 
 adjusted. 
 
 Payment of Absentees. — When men are working 
 away from the factory their wages can be remitted to them 
 by the cashier, with a note of the amounts for each man ; 
 or arrangements may be made for their payment by the 
 customer, such payment being subsequently arranged as a 
 matter of account between the two firms. No difficulties 
 can arise in either way as a mere matter of bookkeeping, 
 if proper care is taken, nor do either of them present any 
 great danger of loss of the money. When men are absent 
 through sickness, or on leave of absence, or from any other 
 cause, their wages must only be paid to some person 
 authorised by them to receive the money, and who presents 
 on each occasion a duly-signed written authority. A receipt 
 must be signed on this note, and such payments should, 
 therefore, to avoid delay, only be made after the ordinary 
 pay is completed. Of course, there is an obvious exception 
 to this rule ; if the workman is so ill that he cannot write 
 
ISSUE OF MATERIALS. 
 
 19.5 
 
 or sign his name, the money should be handed to his 
 reasonable representative ; he should not be further 
 punished for his misfortune. 
 
 Unpaid Wages. — Unpaid wages should be picked off 
 the boards by the cashier, and the men's numbers and 
 -amounts entered in a small memorandum book. They will 
 be paid afterwards when applied for at the cashier's office, 
 but should not be added to the sums placed on the boards 
 the following Aveek. Should any remain unpaid for a 
 length of time, and apparently unlikely to be applied for, 
 they can at stocktaking be transferred to the cash in hand, 
 and through a cash book entry credited to one of the 
 ■expenditure accounts: management wages and salaries 
 would be a suitable one. 
 
 Issue of Materials, — It is quite as important that 
 materials should be systematically dealt with, as that the 
 work of men should be properly regulated and recorded. 
 Workmen's neglect and loss of time will injure the firm and 
 reduce its profits, but loss or Ayaste of materials will equally 
 inflict damage. The first need in the system is that they 
 should not be drawn from the stores without sufficient 
 authority. And this authority must in all cases be a 
 written document, and not a verbal order. 
 
 Each foreman must be furnished with an order book, 
 with counterfoils to retain for his own reference. The 
 form may be very simple, thus : — 
 
 The Clydesdale Enginekking 
 Co. Limited. 
 
 189... 
 
 Please supply 
 
 Order No. 
 
 , Forpinnn. 
 
 The Clydesdale Engineering 
 Co. Limited. 
 
 189... 
 
 Please supply 
 
 Order No. 
 
 . Foremnn 
 
 The particulars given of the materials required must, how- 
 ever, be sufficiently complete to ensure the storekeeper 
 issuing just what is required, and the order number and 
 detail (process) must invariably be inserted. Carbon 
 ■ duplicate books may be substituted for the counterfoil form, 
 but there is one trifling objection to them, the carbon 
 papers will generally be missing just when they are wanted. 
 
196 ISSUE OF MATEEIALS. 
 
 Removal of Materials from Stores. — The transfer of 
 small and light articles from the stores to the shops 
 presents few features of interest. The order will usually 
 iDe sent to the stores by an apprentice or a boy, who 
 will return with the rivets, nails, portions of steel, or 
 other goods demanded. There is little room here for 
 economy by the substitution of mechanical appliances for 
 manual labour, though something may be effected by 
 judicious issuing of orders, so as to avoid unnecessary 
 journeys. But when the goods are either bulky or heavy,, 
 considerable economy may be obtained by the use of light 
 tramways, or overhead conveyors, or frequently by a com- 
 bination of the two. Nor is the saving in wages the only 
 gain to the firm. By the use of appliances of this kind the 
 danger of accidents will be reduced, and this has become an 
 important consideration to employers under stress of recent 
 legislation. If the tramlines are only for running light 
 trollies within the works they will be of narrow gauge, and 
 laid with light rails ; and the cost will be so trifling in com- 
 parison to the advantages, that no hesitation should be felt 
 m extending them throughout the yard, and into the 
 ground floors of all the workshops. The lines should always, 
 be kept free from obstructions, and this regulation should 
 be draconically enforced. Labourers are inclined to deposit 
 bulky and heavy articles in any place they may deem con- 
 venient, without consideration of the trouble they may 
 cause to others following them. 
 
 The form of the overhead conveyors must be determined 
 by technical considerations, and by the construction and 
 disposition of the buildings. The facilities afforded by 
 modern electrical appliances may frequently prove the 
 most convenient and economical method of load transport. 
 The commercial question is the substitution of mechanism 
 for manual labour ; the manner and kind of substitution is 
 a matter for the decision of the technologist. 
 
 Determination of Relative Transport Costs. — It may 
 
 sometimes be desirable to compare the relative costs of 
 manual and machine transport, and indeed of other 
 machine substitutions, in greater detail than can be 
 obtained from ordinary cost accounts. The analytical 
 method, suggested for piece-work prices, may be employed 
 for this purpose. The men's time must be reduced to 
 units of work and cost, to ensure the comparison being 
 made only on such work as is being transferred from the. 
 
COLLECTION OF MATERIALS. 197 
 
 •men to the machine. The value to be attributed to the 
 machine (it matters not whether it be a tramline, electric 
 carrier, or overhead wireline, they may all be termed 
 " the machine " for present purposes,) is not the amount of 
 work which it can discharge if forced to its full capacity, 
 but the amount available for it in the yard or shops, and 
 which is within its capacity to perform. 
 
 The basis for calculating the cost of working the 
 machine, for comparison with the cost of manual labour, 
 is as under : — 
 
 1st. Interest on the amount paid for the machine, and 
 all necessary appliances, erected and fixed in place. When 
 debentures or preference shares have been issued, the 
 interest will be the same as that paid on such debentures 
 or preference shares ; where the capital of the company 
 has all been raised in ordinary shares, or where it is a 
 private firm, it will be the rate at which money can be 
 borrowed, if needed, for machinery purchases or exten- 
 sions, usually not less than 4 or 5 per cent. 
 
 2nd. Depreciation, calculated on the estimated life of 
 the machine. 
 
 3rd. Repairs of the machine, such as are necessary for 
 keeping it in running order, but not for developing or 
 improving it. 
 
 4th. Cost of operating the machine, including not only 
 the wages of the man or men working it, but also coals, oil, 
 tallow, &c., or power supplied for that purpose. 
 
 The amount thus arrived at must be reduced to the 
 same units of work and cost as the manual labour, and a 
 comparison of the two methods will show the relative gain 
 or loss by the adoption or proposed adoption of machinery. 
 
 It will be observed that nothing is added to either 
 calculation for management, or those miscellaneous items 
 which make up what are usually termed establishment 
 charges. The reason is obvious. Although the incidence 
 of the charge may be altered a little, the alteration in 
 working will effect no reduction in office expenses, in 
 lighting, in rates, taxes, and insurance, nor affect the 
 receipts or allowances of discounts. The payments will go 
 on just as before, and to include them in these calculations 
 is to introduce a pedantic complication. 
 
 Collection of Materials.— It is important that sufficient 
 arrangements be made for the collection of materials, both 
 
198 COLLECTION OF MATERIALS. 
 
 those for use in the shops, and those which are completed, 
 and merely waiting erection. 
 
 The primary collection is in the stores, and ample floor 
 space, and convenient fittings should be provided there. 
 The exact form of the stores, and of the shelves and cup- 
 boards therein, will vary in different works ; the important 
 matter is that they should be sufficient to accommodate all 
 the materials without overcrowding. In most engineering 
 stores it is desirable to provide a large number of small bins 
 or pigeon holes, so that nails, rivets, screAvs, and small 
 articles of that kind may be conveniently placed for issue. 
 No storekeeper can properly discharge nis duties, and 
 execute his orders rapidly, unless his store room is suffici- 
 ently and thoroughly equipped for its special purpose. 
 
 But it is equally desirable to have proper collecting 
 places in the shops themselves, both for deposit of materials 
 on which work has to be performed and for storage of 
 machine parts which have undergone some process. 
 Although some of the more modern workshops in England 
 are fairly well arranged in this respect, many of the older 
 shops have no proper receptacle wherein to place either 
 stores drawn for work or finished materials. It is not now 
 always possible to arrange a better plan, as the shops are 
 crowded with machinery, and afford no room for further 
 permanent erections without extension of the general 
 boundaries of the buildings. In such unfortunate position 
 there is no alternative but to store the materials against 
 walls, in corners of the room, or on other unoccupied 
 places on the floor ; but even then something may be done 
 to avoid disorder by collecting all the articles for each 
 order into a separate group. 
 
 It is to America, however, that we must turn for 
 example of the order, and even beauty, which may be 
 imparted into the workshop by the provision of a few 
 cupboards and bins. The Americans are inventive of 
 labour-saving devices for office work; some of the most 
 useful desks, files, and indices are the result of their busy 
 brains ; and all these devices are but the carrying out of 
 our old adage : " A place for everything, and everything 
 in its place." They have continued the same principle 
 into the workshops, and excelled the generality of our 
 English works in this — that they have been careful to , 
 provide " the place " as well as insist upon things being 
 placed in it. It is a positive pleasure to walk through one 
 of their rooms and see the absence of unsightly piles of 
 
STORES BOOKS AND RETURNS. 199 
 
 materials not in actual use, and to turn to the cupboards, floor 
 bins, and other receptacles, and there view each order, or 
 portion of an order, collected in its own proper place. 
 These receptacles are usually labelled with the number of 
 the order, and this is an easy way of preventing confusion. 
 There is more than immediate time saving in such 
 methods as these. It is well known that literary men, 
 artists, and even clerks are more irritated by little obstacles 
 to their work, by removal of their materials, or loss of some 
 of their papers, than by much greater difficulties. It is 
 exactly the same with the workman. The man who will, 
 unmurmuring, hour after hour work with file and chisel to 
 complete a difi&cult fitting will break into expletives if a 
 tool or trifling scrap of metal is missing from its accustomed 
 spot. Disorder causes irritation, and irritation breeds 
 delay or bad work, and the firm loses more than managers 
 imagine, or than statistics will show, because an infini- 
 tesimal expenditure on workshop accommodation has been 
 niggardly refused. 
 
 Stores Issue Book. — Keverting once more to the issue 
 of stores by the storekeeper on presentation of the fore- 
 men's orders, it is apparent that a record must be kept of 
 those issued with the same exactitude as of those received. 
 The giving out of such goods is frequently carried on 
 under great pressure ; men and boys are arriving mth 
 orders, and impatient to have them executed, for their 
 leading men and foremen are keeping note of tbeir absence 
 and return. It is therefore frequently difficult to make 
 entries in a permanent book of record at the moment of 
 issue, and the issuer (whether storekeeper or one of his 
 assistants) must content himself with marking on the fore- 
 man's order the exact weight or quantity given out. Such 
 orders should be placed on an upright wire file, kept con- 
 veniently near to the issuing counter. But this expedient 
 must only be regarded as temporary, and as soon as there 
 is a lull in the work the entries must be made in the per- 
 manent issue book. 
 
 A convenient and practical form of book for this 
 purpose is the one on the following page. 
 
 The date will, of course, be the date of issue, and the 
 next column will contain the name of the foreman signing 
 the order for the goods ; he has demanded them, and from 
 the time they leave the stores he is responsible for their safe 
 custody, and for their proper use in the service of the firm. 
 
200 
 
 STORES BOOKS AND RETURNS. 
 
 STORES ISSUE BOOK. 
 
 
 a . 
 
 
 
 
 
 
 
 
 
 
 
 
 n 
 
 IE 
 
 i^ 
 
 
 
 
 Total 
 
 u" 
 
 
 
 ■a 
 
 s 
 
 Quantity. 
 
 Price. 
 
 Amount. 
 
 issues 
 
 per 
 process. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 And for the purposes of accounts this " proper use " means 
 use for, or on the particular section of work for which they 
 are issued. It may seem a small matter that stores issued 
 for the section of order 5746 represented by the symbol 
 M.M.B — 6 should be used for a detail of order 5739, or for 
 repairs of some part of the company's plant ; it is legiti- 
 mately used in the service of the firm, and for its benefit ; 
 and indeed such user has the advantage of saving a journey 
 to the stores. But a moment's consideration will show that 
 such irregularities will absolutely prevent the correct 
 keeping of cost accounts, and if cost accounts are kept at 
 all they must be as nearly absolutely correct as human 
 forethought and careful effort can make them. 
 
 The entry in the column " For what process," will be 
 made from the foreman's order, which contains a space 
 marked " order number." It will be remembered that 
 when starting a man on a new job, or when changing him 
 from one job to another, his foreman is to mark his time 
 ticket with the number of the order, and symbol of the 
 special detail (or as we term it in this issue book, and in 
 the cost accounts, " process ") of the work, thus : — 
 
 5746 
 M.M.B.— 4. 
 
 A similar marking must be made on the stores orders 
 he issues, so that both the order and process may be 
 identified with the goods issued. 
 
 The quantity will, of course, be the actual number, 
 length, measure, or weight of the articles issued. The 
 price, however, requires some little consideration. It has 
 already been said, when considering freight and cartage in 
 reference to cost accounts, that " the cost of an article is 
 the invoice price of it plus the amount which has to be 
 
-STORES BOOKS AND RETURNS. 201 
 
 paid for delivery at the works, and on the cost thus arrived 
 at, the issue price of it by the storekeeper should be based." 
 This involves calculation, and when this has been made 
 the result should be entered at the top of the stores ledger, 
 so that it need not be made afresh every time there is a 
 delivery to the shops. 
 
 There is another point to be remembered in connection 
 with this price. Goods bought at various times will vary in 
 their cost, some classes only slightly, but some kinds very 
 considerably. Markets, it must be remembered, are in a 
 state, or approaching a state, of unstable equilibrium, and 
 this constant condition affects the purchases made by the 
 firms, as well as its sales. Now as to special purchases for 
 a particular contract, such as steel plates and angles for a 
 caisson, or railway bridge, or compressors for a steamer, 
 these will be charged in the invoice book to the department 
 first receiving them, and for the order and process for 
 which they were specially procured. No difficulty, will 
 therefore arise with them. But with general stores, such 
 as screws, rivets, oil, paint, and the thousand and one 
 articles which pass under the storekeeper's ken, the case is 
 different ; it is sometimes hard to ear-mark any particular 
 issue, and say from which identical purchase it is made. 
 As a rule, therefore, it must be assumed to be from the 
 oldest purchase of which any portion remains in stock, 
 and the issue price will remain unaltered until the lot has 
 been exhausted ; and so on from purchase to purchase. 
 
 Ill actual practice it will sometimes be found difficult 
 to obtain a workable fraction for the issue price, and so 
 long as our coinage remains on its present basis, it is not 
 advisable to adopt decimal points. The only way to do is 
 to adopt the nearest workable fraction, and if it be 
 practicable, to make an adjustment in fixing the next issue 
 price. It is desirable that these prices should be checked 
 by the accountant, or a clerk from his office, except in those 
 large establishments where the storekeeper is the head of 
 an independent department, and assisted by an efficient 
 staff of bookkeepers and clerks. Even then an internal 
 audit has its advantages. 
 
 The first money column, " Amount," will be a calcula- 
 tion of each item at the price fixed for issue. The second 
 money column is inserted to facilitate the work necessary 
 for keeping the cost accounts, and for returns to the 
 accountant. In any one day there may be several issues 
 for one process, and it is convenient to summarise these 
 
202 
 
 STOKES BOOKS AND RETURNS,. 
 
 Amount. 
 
 Total Issues 
 Process. 
 
 per 
 
 Name of Process. 
 
 
 
 
 
 13 
 
 6 
 
 o74B/ M. M. B 4 
 
 
 
 
 
 1 
 
 4 
 
 2 
 
 6746/ M. N. B.— 2 
 
 
 
 
 
 18 
 
 9 
 2 
 1 
 2 
 
 6 
 
 1 
 6 
 
 1 
 
 5750/ S. E. D.— 6 
 5746/ M. M. B.— 3 
 6747/ M. M. D.-7 
 5749/ S. E. E.— 2 
 
 
 
 
 
 i 
 
 1 
 
 6 
 
 5849/ S. E. F.-13 
 
 
 in the second cash column at the end of each day, the last 
 column serving to indicate the process or details against 
 which the summarised accounts are chargeable, as shown 
 in preceding table. Additions of both money columns 
 must be made, and the two must agree in total amount. 
 
 Posting of Stores Issued. — The stores issued must be 
 posted to the credit side of the stores ledger, just as those 
 received were posted to the debit side. It is always 
 objectionable to multiply books, if by any means the 
 increase can be avoided, and it is therefore better to make 
 the postings direct from the stores issued book, if this 
 can be managed without the ledger entries being incon- 
 veniently or unmanageably long. This, however, is 
 diflacult in a general works making a large variety of 
 articles, and is almost impossible in a large establishment. 
 For posting purposes it is better to prepare an abstract 
 (form annexed) on wide sheets of paper, and to post the 
 weekly or monthly totals of this abstract to the several 
 stores ledger accounts. 
 
 It may possibly be asked why an analysis of this kind 
 cannot be made in the issue book, and so save the trouble 
 of an additional book or sheets. The answer is very 
 simple. There would not be sufficient space in any 
 possible book for the number of columns required. In 
 most works two, three, or more abstract sheets will be 
 found requisite for this purpose, even when a large size of 
 paper is employed. 
 
 Return of Stores Issued for Accountant.— The wages 
 abstract will usually be available for use in the accountant's 
 
STORES BOOKS AND RETURNS. 
 
 203 
 
 
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204 
 
 STORES BOOKS AND RETUENS. 
 
 office, and it may not be needful in many establishments 
 to make a copy or summary of it for such purpose. With 
 the stores account, however, it is different. The store- 
 keeper cannot spare his books away from his own office ; 
 he is constantly requiring them, and must always have 
 them ready at hand to employ his leisure in completing 
 the entries. If he had to send them to the general office 
 some junior clerk would be asking for them at inconvenient 
 times, and it would be impossible for the storekeeper 
 always to ascertain that he had not some superior authority 
 for the requisition. It is just such trifles as these which 
 lead to friction, and they should be avoided on all possible 
 occasions. 
 
 The storekeeper should therefore furnish the accoun- 
 tant with a monthly abstract or return, which may be made 
 out on a sheet or sheets of ordinary double column foolscap. 
 This can be used for the purposes of both the financial 
 books and the cost accounts, if sufficient information be 
 given, and it will therefore save time and trouble to give 
 full details in the first instance, in manner following : — 
 
 EETURN OF STORES ISSUED FOE, MONTH ENDING 
 30th SEPTEMBEB, 1898. 
 
 
 On what account. 
 
 £ B. 
 
 d. 
 
 £ 
 
 8. d. 
 
 
 .5746 M. M. B.— 4 
 
 2 
 
 12 
 
 
 
 
 
 
 
 —2 
 
 3 
 
 12 
 
 6 
 
 
 
 
 
 „ -3 
 
 
 10 
 
 5 
 
 
 
 
 
 —7 
 5750 S. E. D. —6 
 
 1 
 20 
 
 10 
 
 7 
 
 2 
 
 1 
 
 8 
 
 o 
 
 1 
 
 
 —8 
 5747 M. M. D.— 7 
 
 
 10 
 12 
 
 4 
 6 
 
 20 
 
 17 
 
 5 
 
 
 —8 
 5749 S. E. P. —2 
 
 1 
 
 2 
 
 1 
 
 1 
 
 2 
 8 
 
 1 
 
 13 
 
 8 
 
 
 „ -i 
 
 
 1 
 
 ( 
 
 
 
 
 
 „ -13 
 
 5 
 
 2 
 
 1 
 
 7 
 £38 
 
 4 
 
 1 
 
 11 
 
 1 
 
STOEES BOOKS AND RETURNS. 
 
 205 
 
 It will be seen that the return contains only a summary 
 of the issues during the month for each order, and the 
 process, or detail, of the order ; the process issues being 
 needful for the cost accounts. The storekeeper can have 
 no difficulty in preparing this summary from his issue 
 book ; it is only making a few additions on some scraps of 
 waste paper, and it is quite unnecessary to encumber the 
 return with all the figures. The total must agree with the 
 total of the issue book for the month. 
 
 Posting of Stores Issues in the Financial Ledger. — 
 
 If we refer back to the stores account in the financial 
 ledger it will be seen that it is debited with all materials 
 received and handed over to the storekeeper's charge, and 
 that the amounts so debited must each month agree with 
 those in the stores received book. It is necessary to now 
 credit this account with the stores issued, so that it may 
 show, as already intimated, the balance of stores on hand 
 at any date to which it is written up. 
 
 But before this can be done the directors, or secretary, 
 or the manager if he has control of the accounts, must 
 determine the form of the trade account, at least to a 
 sufficient extent to allow of the ledger accounts being so 
 arranged as to supply the information reqviired for that 
 purpose in a convenient form. Of course it could always 
 be obtained by an analysis, but this involves additional 
 unremunerative expense. 
 
 The stores account (or, as some accountants term it, 
 " the general stores account ") will be credited by trans- 
 ferring the amount issued to one or more expenditure 
 accounts. Thus, taking the example last given (which, 
 however, will only represent a minute portion of the 
 month's issues if it be compared with the purchase example), 
 the amount may be transferred to an account termed, 
 
 "Stores Expended Account," 
 
 and the entries in the two accounts will then be. 
 
 Stores Account. 
 
 Cr. 
 
 1898. 
 Sept. 30. 
 
 By Stores Expended 
 
 Led. 
 53 
 
 38 
 
206 
 
 STORES BOOKS 
 
 AND RETURNS 
 
 . 
 
 
 
 
 Dr. 
 
 Stores Expended Account. 
 
 1898. 
 Sept. 30. 
 
 To stores a/c 5746 
 5750 
 
 Led. 
 17 
 
 >1 
 
 8 
 20 
 
 5 
 
 17 
 
 1 
 5 
 
 
 
 
 
 5747 
 
 ,. 
 
 1 
 
 13 
 
 8 
 
 
 
 
 
 5749 
 
 " 
 
 7 
 
 4 
 
 11 
 
 ■38 
 
 1 
 
 1 
 
 It will be noticed two money columns are used in the 
 latter account, and it may be observed that double money 
 columns are the most convenient form for the nominal 
 ledger accounts throughout. A journal can be used for 
 these transfer entries, but is not absolutely necessary ; 
 indeed, it may safely be assumed that the journal can 
 advantageously be dispensed with in the great majority of 
 entries of this kind. It is heterodox to say so, but is 
 perfectly true in practice. The best public accountants 
 seldom use journals in drafting their entries. 
 
 In a large establishment, however, the " stores 
 expended account," would become unmanageably cuber- 
 some, and would altogether fail to show, in the official 
 records of the company — that is, in the books submitted to 
 the auditors investigating them on behalf of the share- 
 holders — the direct expenditure onany contract orcontracts. 
 A far better method is to open a ledger account for each 
 contract, and debit it with the stores purchased for and 
 charged to it through the invoice book, or issued for it by 
 the storekeeper. The same account would be debited with 
 the wages directly paid on that contract, and also with any 
 cash book expenses, but not, in these accounts, with any 
 
 Eortion of the management expenses. We should then 
 ave in the financial books such expenditure accounts as 
 the following : — 
 
 Directors' Fees. 
 
 Salaries. 
 
 Rent, Rates, Taxes, and Insurance. 
 
 Royalties and Legal Expenses. 
 
 Stationery. 
 
 Gas, Water, and Coal. 
 
STORES BOOKS AND RETURNS. 207 
 
 Oil and Waste. 
 Machinery Kepairs. 
 Travelling Expenses. 
 Loose Tools. 
 New Machinery. 
 Contract No. 5746. 
 
 5747. 
 
 5749. 
 
 5750. 
 
 These contract accounts would show the gross expen- 
 diture on each several contract, and also the amount 
 received for it, the difference between the two sides being 
 the gross profit or loss. There would not, however, be 
 included in them any portion of the management 
 expenses. 
 
Chapter XVI. 
 
 COST ACCOUNTS. DEPRECIATION. INTEREST. 
 ESTABLISHMENT CHARGES. 
 
 But, as already stated, it is needful that the engineer 
 should have, in the form of detailed cost accounts, more 
 minute information than he can obtain from his ordinary 
 business books. The keeping of accounts is not "com- 
 mercial management," but only a portion of it ; such 
 accounts are, however, a very necessary portion, since they 
 exhibit the actual results in money, of the technical 
 arrangements made in the works, and exhibit the profit 
 or loss in various sub-divisions or sections arising from 
 such arrangements. It is therefore desirable to examine 
 the form and conditions of these cost accounts in greater 
 detail than has hitherto been done. 
 
 Cost Sheet A. — Of the three-fold division of cost 
 accounts, to which we have already referred, the most 
 difficult is the first or A account, because in it the distri- 
 bution of the wages and materials has to be made over the 
 various contracts, repairs, and other jobs in the yard. The 
 cost accountant has no easy task in compiling this sheet ; 
 he will need unwearying patience, great care, and accuracy, 
 and the kindly co-operation of the technical officers. It is 
 desirable, and indeed almost essential, that he should have 
 considerable knowledge of the business of the firm and 
 acquaintance with the class of machinery on which it is 
 usually engaged ; not, indeed, in a technical sense, but in 
 a very complete commercial manner, sufficient to qualify, 
 or even more than qualify him in this respect for a very 
 excellent commercial traveller. He must know the different 
 parts of a machine and the names by which they are 
 described in the drawing office and the works ; and when 
 the symbol system is used he must be acquainted with all 
 the sjnnbols employed. Indeed, in the latter case it is 
 better for him to have a symbol book at hand for reference : 
 it can be copied from the drawing-office book without any 
 great labour. 
 
 There is a sequence in the division of cost accounts, the 
 
COST ACCOUNTS. 209 
 
 first taking the wages and materials as they pass into (to 
 the debit of) a department, and passing them out again 
 dissected into charges against various machines or portions 
 of machines ; while the second section collects the charges 
 against each indiyidual item from all the various depart- 
 ments of the yard, and the third finally collects the several 
 accumulations of the second section into a total charge 
 against the completed machine or other construction. So 
 also there is a sequence in the first or A sheets, some of 
 them being cleared by transfer to subsequent sheets of the 
 same class, whilst these latter ones are only cleared by 
 transfer to the second, or B class of account. We will deal 
 with the former description first. 
 
 Whether books should be used for the purpose of cost 
 accounts, or loose sheets, is a matter for determination of 
 each individual firm, according to the special conditions of 
 the work done by it. Books are certainly more permanent, 
 and less liable to misplacement than loose sheets, but the 
 matter is one on which no definite rule can be laid down. 
 One firm, which only required the A form of account (it 
 was not an engineering firm) always used loose sheets, and 
 the conditions and variations of the work were such that a 
 book would undoubtedly have been inconvenient. In such 
 case, however, the sheets of the first division should be 
 made up into monthly bundles, and placed in a convenient 
 and locked drawer, cupboard, or safe. It is unnecessary to 
 say that cost accounts are very confidential documents, both 
 in their custody and compilation, and that the contents of 
 them must never be disclosed to any unauthorised person : 
 the general defect is to raise this secrecy into a kind of 
 fetish, and withhold the cost accounts from technical 
 officers who might be most forcibly admonished by them. 
 
 Management Expenses : Form A. — Among the earlier 
 series of A accounts will be such as office expenses, carting 
 establishment, storekeeping, timekeeping, drawing office, 
 and management expenses. The number and titles of 
 these accounts will be a matter for internal arrangement 
 by each firm ; they will all be apportioned over others at a 
 later stage, and may be either under half a dozen different 
 headings or included under management expenses. The 
 account will be more easily understood by example, and 
 a model form is therefore annexed. The title used is 
 management expenses, but it must be understood to 
 include general office expenses, timekeeping, &c. 
 p3 
 
210 
 Sheet A. 
 
 COST ACCOUNTS. 
 
 MANAGEMENT 
 
 DEBITS. 
 
 Quan- 
 tities. 
 
 Materials and Salaries and 
 Expenses. Wages. 
 
 Trade 
 Debits. 
 
 Stock, January 1st, 1898 . 
 
 Purchases — 
 
 Alexander Thompson, Stationery 
 Hudson and Kearns, do. 
 
 Salaries and Wages — 
 
 Directors' Fees 
 
 Secretary's and Manager's Salaries 
 
 General Offices 
 
 Subordinate Officials 
 
 Cash Payments — 
 
 Postage and Receipt Stamps 
 
 Travelling Expenses 
 
 Petty Cash payments 
 
 106 10 
 
 15 6 
 1 
 
 106 10 
 
 16 6 
 19 6 
 
 
 
 50 
 
 
 
 
 
 50 
 
 
 
 100 
 
 
 
 
 
 100 
 
 
 
 71 
 
 6 
 
 8 
 
 71 6 8 
 
 
 
 33 
 
 6 
 
 8 
 
 33 6 8 
 
 5 4 
 
 2 
 
 
 
 
 5 4 2 
 
 37 9 
 
 8 
 
 
 
 
 37 9 8 
 
 18 4 
 
 2 
 
 
 
 
 18 4 2 
 
 184 3 
 
 6 
 
 254 
 
 13 
 
 4 
 
 438 16 10 
 
 The account ■will be seen to follow the usual outlines of 
 an ordinary departmental trading account, except that the 
 materials and expenses are separated from the salaries and 
 wages, distinct cash columns being used for the two 
 characters of expenditure. This is in accordance with the 
 principle on which the estimates are framed, and furnishes 
 an additional division, which is extremely useful in judging 
 of the financial results of the, working, and of the abilities 
 displayed by the various officials exercising authority 
 witnin the establishment. A third cash column is added 
 for trade debits, or credits, the use of which will be 
 considered at a later period. 
 
 Debits to Account. — If the debit side of the account 
 be first considered, it will be noticed that the first entry is 
 stock on hand on the 1st January. This is the same 
 amount as was shown for the closing entry of the credit 
 side of the account on 31st December, 1897. It arises 
 through the general office expenses being, in this example, 
 included with the management expenses, and represents 
 the value of the stationery on hand at that date. 
 
COST ACCOUNTS. 
 
 211 
 
 EXPENSES. 
 
 January, 1898. 
 
 CREDITS. 
 
 Quan- 
 tities. 
 
 Alaterials and 
 Expenses. 
 
 Salaries and 
 Wages. 
 
 Trade 
 Credits. 
 
 Transfers to Departmeuta — 
 
 Pattern Makers tu--- 
 
 
 2 5 4 
 
 4 10 8 
 
 9 14 
 
 13 12 
 
 15 16 10 
 
 25 17 4 
 113 
 
 10 16 8 
 21 13 4 
 43 6 8 
 65 
 75 16 8 
 
 38 
 
 13 2 
 
 Moulders ^... 
 
 Blacksmiths -.^o... 
 
 Turners -^xi--- 
 
 26 4 
 52 8 
 78 12 
 
 Fitters A... 
 
 91 13 6 
 
 Transfers to B and C Sheets— 
 
 B Sheet, Milford Dock gates, ex- 
 penses for Estimate and Tender... 
 
 Stock, January 31st, 1898 
 
 63 17 4 
 113 
 
 
 
 
 184 3 6 
 
 254 13 4 
 
 438 16 10 
 
 The next items are for purchases. All purchases are 
 obtained from the invoice book, the analysis columns on 
 the right-hand side of the book furnishing the amounts. 
 We have not in this instance assumed any issues from the 
 stores for office use, but these will occasionally be made. 
 When they are the amounts will appear as " transfers from 
 departments," and follow the items for salaries and wages. 
 
 The salaries and wages will be gathered from two 
 sources of information, namely, the cash book, and the 
 abstract of wages compiled from the wages book. It will 
 be evident that directors' fees, and the salaries of the 
 general manager, the works manager, or the secretary, 
 will not be passed through the weekly wages account ; nor 
 will the salaries of the accountant, cashier, correspondent, 
 and principal general office clerks, in factories of any 
 pretensions. These must be obtained from the cash book, 
 or from a salary book, if such a record is kept of the 
 monthly salaries paid. On the other hand, the junior 
 clerks, office boys, messengers, with writers and assistants of 
 various degrees, will be paid weekly, and the total amount 
 
212 COST ACCOUNTS. 
 
 so paid to them will appear on the wages abstract under 
 the head of " Management expenses " or " General office 
 expenses," &c. 
 
 The cash payments shown in this example are all 
 obtained from the analysis made of the petty cash book, 
 divided into postage and receipt stamps, travelling 
 expenses, and general petty cash payments. It is 
 seldom that any other payments of this kind will pass 
 through the general cash book, either for management 
 expenses or for any of the departments. No doubt for the 
 departments there will be, at times, purchases of materials 
 to be used on some special contract which do not pass 
 through the stores account, but the debits for these are 
 obtained from the invoice book under the head of 
 purchases ; the cash paid will pass to the debit of the 
 personal accounts of the vendors. An analysis of the petty 
 cash expenditure has to be made each month by the 
 cashier, as already explained when referring to his duties. 
 
 Credits to Account. — The debit side of a sheet requires 
 great care on the part of the cost accountant, but does not 
 involve much calculation. The purchases and wages are 
 already dissected for him in the invoice book, and wages 
 abstract, whilst the cash payments are also analysed by the 
 cashier ; all he has to do is to copy the figures cor- 
 rectly into his sheet. When, however, he comes to the 
 debit side, he has both to exercise this clerkly care, and 
 considerable discretion in dealing with any temporary or 
 special expenditure, and has also to make a few simple 
 calculations to arrive at the apportionment to the several 
 departments. In the example given we have supposed the 
 total departmental wages to be divided into twenty parts, 
 one of which has been spent on pattern makers, two on 
 moulders, four on blacksmiths, six on turners, and seven on 
 fitters. It is in these proportions, therefore, that the 
 management expenses will be divided. 
 
 It has already been stated that the percentage of 
 establishment charges in estimates should be based on the 
 wages, and not on the materials, or on wages and materials 
 combined. If this is necessary in estimates, it is equally so 
 in dealing with the results of them, not only because, as 
 already stated, materials considerably vary both in price 
 and condition purchased, but also to secure an easy com- 
 
 {larison between the anticipated and the actual expenditure. 
 t must, however, be always remembered that in the former 
 
COST ACCOUNTS. 213 
 
 case both estalishment charges and wages are hypothetical, 
 although based on the best information obtainable at the 
 time by the estimator, whilst in the latter they are actual 
 money paid, or liabilities incurred ; there must be no 
 guess work in cost accounts. 
 
 The debits for materials and expenses, including the 
 stock on hand on 1st January, amount to £184 3s. 6d., 
 from which must be deducted £113, the value of 
 the stock remaining on hand at the end of the month. 
 This leaves the expenditure at £71 8s. 6d. Daring the 
 month, however, the directors have been negotiating for 
 the construction of dock gates at Milford, and the expenses 
 of the directors and staff engaged on the work for travelling, 
 postages, &c., amounted to £25 l7s. 4d., which must be 
 deducted from the last-named amount, in order to arrive at 
 the balance properly divisible over the general work of the 
 establishment. The amount then left is £45 6s. 2d., which, 
 as will be seen, has been apportioned to the departments in 
 the proportions named of one, two, four, six, and seven 
 twentieth parts. When this has been done it will be seen 
 that the debits and credits for materials and expenses 
 balance each other. 
 
 The same method has to be pursued with salaries and 
 wages, though here there will not usually be any such item 
 as appears in the previous columns for stock. It is usual to 
 allow, in trade accounts, for the portion of a week existing 
 between the date of the last pay sheet and the end of the 
 financial year, in addition to the last week's wages if then 
 unpaid, but it is unnecessary to do this every month in 
 cost accounts. An adjustment of the kind can be made at 
 the close of the financial year, or half-year, in order to make 
 them agree with the trade account of the firm. 
 
 Salaries and wages, including directors' fees, are 
 £254 13s. 4d., from which must be deducted £38, the pro- 
 portion chargeable to the Milford Dock gates, leaving a 
 balance of £216 13s. 4d., which is divided over the depart- 
 ments in the same manner and in the same ratio as the 
 materials and expenses. 
 
 Direct Charges for Special Purposes. — There is some- 
 times diflaculty in arriving at such charges as those indicated 
 for the dock gates, and the cost accountant must obtain 
 the aid of the technical officers, and others concerned, in 
 fixing them. The expenses are usually easily obtain,ed, 
 since the cashier should have particulars of the work 
 
214 COST ACCOUNTS. 
 
 respecting which journeys are made, or payments incurred, 
 on the receipts given him : but the time is more diflScult 
 of apportionment. The directors, for instance, and the 
 manager also, -vyhen taking a journey to South Wales 
 would employ their time in consultations upon the general 
 work of the firm, as well as the particular dock gates they 
 were seeking to secure ; and the charge to be made must 
 therefore be largely a matter of adjustment, viewing all the 
 circumstances of the particular case. Such adjustment 
 must not be attempted by the cost accountant ; he must 
 obtain the information from the secretary on behalf of the 
 directors, and from the other technical officers so employed. 
 Of course it would be possible to allocate the time of those 
 employed on the management staff, by requiring them to 
 keep diaries of their work, after the manner of solicitors, 
 but would the result be worth the trouble incurred ? The 
 manager, for instance, would find a considerable portion 
 of his day employed in writing up his diary. 
 
 Cartage, Coal, Water, Drawing Office, and other 
 Establislinient Costs. — All the various establishment 
 charges of the firm must in similar manner be collected 
 into A sheets, in the first instance, and transferred from 
 there to departmental A sheets, or to B sheets opened for 
 the purpose of any special contract. It is possible to have 
 only one account for all these varied classes, and call it 
 management expenses, or any other convenient title, but 
 this is doing exactly what engineers invent cost accounts 
 in order to avoid, namely, grouping together a number of 
 items so as to give one generic result, but without showing 
 the details upon which it is based. It is desirable to have 
 such costs as that of a carting establishment, or of the 
 drawing office, or even of fuel and water, in a form which 
 will show them separately, and the incidence of each to 
 the wages expenditure when transferred to the depart- 
 mental accounts. The form and method of compilation 
 and transfer will, however, follow the same general lines as 
 the example already given. 
 
 The few deviations which are desirable may readily be 
 indicated in considering the sheet for a carting establish- 
 ment. It must be understood that no capital charges, 
 either debits or credits as capital, shall appear in the cost 
 accounts ; they are revenue accounts pure and simple, and 
 even when a new machine is made for the works, and 
 appears on the credit side of the account eventually as an 
 
DEPRECIATION. 215 
 
 addition to machinery, this entry is merely in the nature 
 of a transfer from revenue to capital, and does not require, 
 nor permit of, any mixture of the two accounts. The 
 stocks at the commencement and end of the period must, 
 therefore, not include such things as loose tools, horses, 
 carts, harness, or ropes and boats. The stock -which is, 
 however, permissible, should be set out in some detail, as 
 for instance — 
 
 T. 0. q. lb. £ s. d. 
 
 Hay 6 7 21 3 4 
 
 Straw 8 6 11 12 8 
 
 Beans 5 1 3 
 
 Indian corn 1 6 9 
 
 Peas 1 10 9 
 
 £40 14 9 
 
 The cash payments will hardly comprise anything 
 beyond carters expenses when away from the works, and 
 these should be restricted as much as possible. It is better 
 for the carter to take a bag of feed with him than to purchase 
 it at a roadside inn. In the former case the horses are 
 pretty sure to have the benefit of it ; in the latter, at least a 
 portion of the charge may be appropriated by the driver. 
 
 The transfers to B and C sheets will be more numerous 
 than in the sheet for management expenses. Whenever 
 a journey is made for one sole purpose, and for one sole 
 order, or even when goods for two orders are involved, and 
 the services can be apportioned, the cost of the journey 
 must be charged to such order or orders. This reduces' the 
 amount of divisible charges, a result always desirable. Of 
 course the cost of bringing miscellaneous goods into the 
 yard for general stores purposes cannot be charged to that 
 department, as it would involve an enormous increase in 
 the work of calculating the issue prices. It must be 
 divided over the several departments after the manner of 
 the management charges. 
 
 Depreciation. — Before proceeding to the departmental 
 accounts there are two establishment items which require 
 attention : these are depreciation and interest. The first 
 is a difficult one to deal with, more particularly as it has, 
 unfortunately, got largely into the hands df auditors and 
 bookkeepers, who deal with it according to their own 
 limited knowledge and entirely as a matter of account. 
 Depreciation is much more than this, and can only be 
 properly adjusted by an engineer who has thorough 
 knowledge of his profession and intimate acquaintance 
 
216 
 
 DEPRECIATION. 
 
 "vvith the particular buildings and machinery with which 
 he is at the moment dealing. Two methods may be 
 ado;pted : first, that of writing off a percentage from the 
 original cost ; secondly, that of reducing the original cost 
 of each item by a fixed yearly sum, which shall, in a certain 
 number of years, to be determined by the estimated life of 
 the item, entirely extinguish it. 
 
 But, whichever method is adopted, it is essential that 
 a proper schedule of the plant be kept, and that this 
 schedule should show the variations which may from time 
 to time take place. Table A of the Companies' Act, 1862, 
 says : " The directors shall cause true accounts to be kept 
 of the stock-in-trade of the company ..." Whatever 
 the present legal interpretation may be, there is no doubt 
 Parliament intended at the time that " stock-in-trade " 
 should include machinery and mill gearing, whether or 
 not it also comprised the buildings holding them. Apart 
 from the legal obligation, however, such a record is neces- 
 sary to enable the management to keep proper control 
 over the plant on the premises, more particularly over 
 such portions of it as may, occasionally, be removed from 
 one shop to another. Such an article as a lathe is not 
 likely to be stolen, or taken from the premises without 
 
 MACHINE 
 
 Class. 
 
 Date 
 
 of 
 
 Purchase. 
 
 DESCRIPTION. 
 
 Purchase 
 Cost. 
 
 A 
 
 
 
 162 
 
 
 
 
 
 
 
 
 178 
 
 
 
 
 
 
 
 
 154 
 
 
 
 
 
 
 
 
 57 
 
 
 
 
 
 
 
 
 81 
 
 
 
 
 
 
 
 
 84 
 
 
 
 
 
 
 
 * 
 
 
 
 
 
 
 
 44 
 
 
 
 
 
 
 
 Total of Class A 
 
 60 
 
 
 
 
 
 
 820 
 
 
 
 
 
DEPRECIATION. 
 
 217 
 
 sufficient authority, but it may appear twice in stock-taking 
 if proper record is not in existence. We have actually 
 known such a case. In December a lathe was entered on 
 the valuation of Koom C, where it was at the time fixed ; 
 in the following June it was continued on the Room C 
 valuation and also entered on the Room E list, it having 
 been removed there in the interval. In the case of a 
 liquidation a blunder like this might subject the officials 
 to an unpleasant inquisition. The schedule should, there- 
 fore, be complete by rooms or shops, and not be merely 
 an unbroken list for the entire works. 
 
 When the percentage method is adopted the buildings 
 and plant should certainly be divided into different classes, 
 and this division should be made after taking into account 
 the probability of improvements in any of the machines, 
 as well as the extent of wear and tear. We know one firm 
 which divides its plant into six classes, the depreciation on 
 which ranges from 6 per cent to 22 per cent per annum. 
 The particulars required are the date of purchase, the des- 
 cription of the machinery and appurtenances, the purchase 
 cost and the depreciation written off. Many firms will no 
 doubt have such records already in existence. To those who 
 have not, the accompanying form will be found useful. 
 
 SHOP 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Balance 
 brought 
 forward. 
 
 Tear ending Dec. 31, 189S. ii Tear ending Deo. 31, 1899. j 
 
 1 
 
 Tear ending Dee. 31, 1600. 
 
 Depreciation. 
 
 Balance 
 
 carried ' Depreciation, 
 forward. 
 
 1 
 Balance 
 
 carried Depreciation, 
 forward. 
 
 Balance 
 carried 
 forward. 
 
 710 
 
 
 
 
 
 35 
 
 10 
 
 1 
 
 
 674 
 
 10 
 
 
 
 33 14 
 
 
 
 6 
 
 i 
 640 
 
 15 
 
 6 
 
 32 
 
 
 
 9 
 
 608 14 
 
 9 
 
218 
 
 DEPEECIATION. 
 
 _ In this example it will be seen that the purchase cost 
 is inserted for each machine and a total made at the foot 
 of the class concerned. The depreciation, and resultant 
 balance, are, however, only entered against the total, thus 
 giving one calculation only for the class, whilst keeping a 
 description and record of each machine. 
 
 Depreciation by Individual Macliines, &c. — Deprecia- 
 tion by classes is undoubtedly a great improvement on the 
 method frequently, if not, indeed, generally, adopted, of 
 writing off the same percentage from all buildings, and 
 a second rate from all machinery, without any considera- 
 tion of the special circumstances which may affect and 
 curtail their life. It is also a more satisfactory method 
 than revaluing the fixed plant at each stock taking, which, 
 when made by a member or interested official of the firm, 
 is unconsciously computed in the most favourable manner. 
 Every inducement, and certainly every facility, for 
 manipulating the profit and loss account by means of 
 depreciation, should be removed ; since errors in judgment, 
 and blunders in management may be disguised by such 
 
 BUILDINGS AND 
 
 
 
 
 
 JANUARY. 
 
 Febsuart. 
 
 Description. 
 
 V-iiue, 
 Jan. 1st, 1894. 
 
 Dep-ia- v,,„e,3Ut. 
 
 Deprecia- ' 
 tion. 
 
 £ s. d. 
 
 Value, 28lh. 
 
 
 
 
 
 £ « d. : £ a. d. 
 
 £ ». d. 
 
 Building of fitting shop.. 
 
 162 
 
 10 
 
 »{ 
 
 Lite, twenty 
 1 2 11 161 7 1 
 
 J ear?, i from 
 
 1 2 11 !l60 i 2 
 
 10 in. centre gap lathe, ■> 
 
 No.i ; 
 
 57 
 
 
 
 H 
 
 Life, i tvrenty 
 7 11 ' 56 12 1 
 l>om fl'- rer's cost 
 
 years, from 
 
 7 11 56 4 
 sheet 4 10 
 
 Bradbury Bhearer and ' 
 puncher 
 
 81 
 
 
 
 i 
 
 Life, twenty 
 11 3 80 8 9 
 
 years, from 
 
 11 3 ! 79 17 6 
 From , fitter's 
 
 10 in. centre plain 
 lathe, No. 2 
 
 8i 
 
 
 
 °{ 
 
 Life, twenty 
 8 9 S3 11 3 
 
 year- , 
 
 8 9 
 
 from 
 
 83 2 6 
 
 5 in. centre Bradbury " 
 capstan lathe, No. 3. 
 
 u 
 
 
 
 »( 
 
 Life, 1 twenty 
 
 i 7 ; 43 15 5 
 
 years, 
 
 4 7 
 
 from 
 43 10 10 
 
 Tin. centre Bradbury' 
 capstan lathe, No. i. 
 
 60 
 
 
 
 »{ 
 
 Life, 
 
 6 3 
 
 twenty 
 59 13 9 
 
 years, 
 6 3 
 
 from 
 
 59 7 6 
 
DEPRECIATION. 
 
 21f> 
 
 means, and the improper valuations, whether intentional 
 or inadvertent, are most difficult of detection by the 
 auditor. 
 
 There are, morever, additional advantages in dealing 
 with such machines individually. The depreciation of the 
 machinery used in any department is part of the expenses 
 of that department, and, as will be seen, is debited to it in 
 the cost accounts, But if the calculation is made by classes 
 a double classification will be required to effect this pur- 
 pose. First, a classification by shops or departments ; and 
 secondly, by the classes within those shops, and the saving 
 in tjouble will thus be reduced to a minimum. Again, 
 when a machine is removed from one place to another, the 
 transfer, if made, requires a fresh calculation of the balance 
 on both pages, and if two or three removals are made in 
 one year the alterations will be unsightly, and probably 
 perplexing. But the greatest objection arises from the 
 research and developments of modern engineers ; from the 
 restless spirit of improvement which actuates them, and 
 which may at any time put a particular machine out of 
 date for economical use. All machines are not affected to 
 
 PLANT.— FITTING SHOP. 
 
 March. 
 
 April. 
 
 May. 
 
 De 
 
 JUNF. 
 
 Deprecia- 
 tion. 
 
 Va'ue, 81st. 
 
 Deprecia- 
 tion. 
 
 Value, SOtll. 
 
 Deprecia- 
 tion. 
 
 Value, 31st. 
 
 rz""' ^"^'"^. 3»"^- 
 
 £ ». d. 
 
 £ ». 
 
 d. 
 
 £ 
 
 a. d. 
 
 £ s. d. 
 
 £ 8. d. 
 
 £ s. d. 
 
 £ 
 
 s. d. £ 5. d. 
 
 January, 
 
 1 2 11 
 
 188.5. 
 159 1 
 
 3 
 
 1 
 
 Cost 
 2 11 
 
 £300, less 
 
 157 18 4 
 
 old bricks, 
 
 1 2 11 
 
 £25. 
 156 15 5 
 
 1 
 
 2 11 
 
 155 12 6 
 
 January, 
 
 7 11 
 7 
 
 1888. 
 60 5 
 
 8 
 
 
 
 Pur- 
 
 8 6 
 
 chased at 
 
 59 17 2 
 
 £100, less 
 
 8 6 
 
 scrap, £5. 
 
 59 8 8 
 
 
 
 8 6 
 
 59 2 
 
 January, 
 
 11 3 
 
 cost sheet. 
 
 1888. 
 79 6 
 
 3 
 
 
 
 Pur- 
 11 3 
 
 chased at 
 
 78 15 
 12 
 
 £145, less 
 11 3 
 1 10 
 
 scrap, £10. 
 90 1 11 
 
 
 
 13 1 
 
 89 8 10 
 
 January, 
 
 8 9 
 
 1892. 
 82 13 
 
 9 
 
 
 
 Pur- 
 
 8 9 
 
 chased at 
 
 82 5 
 
 £115, less 
 8 9 
 
 scrap, £10. 
 81 16 3 
 
 
 
 8 9 
 
 81 7 6 
 
 January, 
 
 4 7 
 
 1892. 
 43 6 
 
 3 
 
 
 
 Pur- 
 
 4 7 
 
 chased at 
 
 43 1 8 
 
 £60, less 
 4 7 
 
 scrap, £5. 
 
 42 17 1 
 
 
 
 4 7 
 
 42 12 6 
 
 January, 
 6 3 
 
 1889. 
 59 1 
 
 3 
 
 
 
 Pur- 
 6 3 
 
 chased at 
 
 58 15 
 
 £80, less 
 6 3 
 
 scrap, £5. 
 
 58 8 9 
 
 
 
 6 3 
 
 58 2 6 
 
220 INTEEEST. 
 
 the like extent. Some which would be contained under 
 class B would for many years be left untouched by improve- 
 ments, whilst others in the same class would, perhaps, only 
 .a year or two after erection, become obsolete, and of little 
 more value than scrap iron, and yet it is probable that all 
 would continue in the list wherein they first appeared. 
 
 Taking all facts into consideration, the safest and best 
 plan appears to be to deal with each machine separately, 
 to fix its rate of depreciation at the time it is erected, and 
 to permit no reduction of this rate without the sanction of 
 the directors first obtained. Should an improved machine, 
 of any of the kinds used in the works, at any time be 
 placed upon the market, the manager must consider the 
 effect it will have on the continued use of those under his 
 control, must estimate the shortened period of time for 
 which they may be kept at work under the new conditions, 
 and must accelerate the rate of depreciation accordingly. 
 
 The rate should be based on the estimated life of the 
 machine ; thus, for an article which costs, fixed in place 
 and ready for working, £120, it is assumed that it will, 
 with reasonable care, last for twenty years, and at the end 
 of that time be worth £10 for scrap material ; then the 
 annual amount to be written off will be £5 10s. When, 
 however, repairs are effected to the machine which are in 
 the nature of renewals of the worn-out portions of it, or 
 improvements of some part, in either of which cases its 
 working life receives a new lease, then the cost of such 
 work must be added to the value standing in the schedule, 
 and a new rate and length of depreciation calculated. The 
 annexed example, which first appeared in an article by 
 the writer in Engineering, on January 19th, 1894, will 
 better explain the method of keeping the account which 
 is here suggested. 
 
 This depreciation account will be prepared in separate 
 schedules for each department of the works, and a total must 
 be made at the foot each month, so as to show both the 
 monthly amount of depreciation written off, and the present 
 value of the buildings and machinery on the premises. 
 
 Interest. — It has already been stated that interest 
 constitutes a difficult problem, which, in the case of 
 estimates, had better be dealt with as a portion of the 
 profit than estimated under establishment charges, except 
 in the items of interest on machinery and tools, and on cost 
 of land and buildings where these are the property of the 
 
INTEREST. 221 
 
 firm, and not rented from an outside landlord. In cost 
 accounts, however, this evasion is no longer permissible. 
 They must, in some form or other, contain all the expendi- 
 ture of the firm allocated to each department, and 
 interest is part of that expenditure. The first step to be 
 taken is to ascertain the total interest to be paid during 
 the month. This will include : — 
 
 Interest on partners' capital in private firms. 
 
 Interest on debentures in limited companies. 
 
 Interest on preference stock (though termed divi- 
 dends) when this is a fixed rate, and not fluctuating 
 with the profits of the company. 
 
 Interest on loans, on bills receivable or payable, and 
 bank commission or interest. 
 
 The fixing of this total amount will require considerable 
 care and ability on the part of the accountant, particularly 
 if the bill transactions are numerous or complicated. The 
 object sought to be attained is to debit to the various 
 departments each month the proper share of the interest 
 incurred during that month; whatever skill maybe displayed 
 in doing this, it is pretty certain that an adjusting debit 
 or credit will be required at the close of the year or half 
 year, but it should not be for a very lai'ge amount if proper 
 precautions are taken. The interest account should be in 
 the form given on page 222. 
 
 The first five columns are for the purpose of arriving at 
 the due proportions which each department should bear, 
 and, in fact, represent its capital. The first three columns 
 can be obtained from the depreciation account, of which an 
 example has already been given ; the land is not there 
 represented, but it will be included in the accounts of all 
 companies holding a freehold, and in those possessing 
 leasehold land, which, apart from the erections upon it, has 
 a value in excess of the chief rent paid. The stock will be 
 taken from the cost account form A, and will be the stock 
 in hand at the commencement of the month. 
 
 There is a space at the foot of the account for " Work in 
 progress." In an ordinary factory, where textile machinery, 
 machine tools, electrical fittings, or millwright work, are 
 the chief constructions, this will seldom be required ; work 
 of this kind, although under progress, is included in the 
 stock held by the department. But there are other 
 establishments where the work is of greater complexity, 
 and where a portion, at least, of that in progress cannot be 
 

 INTEEEST. 
 
 m 
 
 w 
 o 
 
 Q 
 
 <! 
 
 H 
 CD 
 
 H 
 H 
 
 O 
 
 >^ 
 
 03 
 
 ■uoi'jBioajdaQ 
 
 ?g 
 
 ■:js9.ia^ux 
 
 
 
 00 
 t— 1 
 
 1 
 
 2; 
 
 
 
 
 
 
 
 •Ii^ioj, 
 
 1 
 1 
 
 ^ 
 
 
 
 O 
 
 -1— 1 
 
 H 
 1— < 
 
 
 
 
 
 
 •5[aois 
 
 w m 
 
 h^ b 
 
 ■S S 3 § 
 
 O m m f^ 
 
 
 o to 
 
 » a 
 
 2 « -s .•" 
 
 tC pq Ol ^ 1-3 fq 1^ 
 
INTEREST. 228 
 
 carried forward as departmental stock. Instances of this 
 kind may frequently be found in shipbuilding, and one 
 actual example will serve to illustrate the matter. It had 
 reference to a composite vessel, with steel frames, and teak 
 planking, the contract conditions for which were very 
 stringently specified. The third instalment was payable 
 when the beams were in place, three-quarter deck stringers 
 and sheer strakes worked, and deck deals on the 
 premises ; the fourth when all the deck stringers and sheer 
 strakes were worked, and all teak and other planking on 
 the premises. With the exception of some unimportant 
 and inexpensive work, these two instalments were qualified 
 for, and applied for, in September, but in consequence of 
 these trifling omissions less than half of each instalment 
 was paid in October, and the balance not until the following 
 March. By that time the fifth instalment had been served 
 and certified for by the inspector, but the payment of the 
 previous instalments having been delayed, this was in con- 
 sequence kept back until June. Another case occurred in 
 connection with the construction of a foreign railway. The 
 contractors for the excavation and levelling of a large 
 section had completed their work to the satisfaction of the 
 superintending engineer, and, indeed, obtained his certifi- 
 cate for payment; but, in consequence of some dispute with 
 the superior authorities respecting freight of materials, 
 the money was withheld from them for some months. 
 Now, in both these cases the contractors incurred a loss 
 of interest. If they did not actually pay it for money 
 borrowed (which would be the case with some firms under 
 such circumstances) they lost the interest they would have 
 received on investments, or on deposits in a bank. But it 
 is evident that no department ought to bear the penalty 
 of this interest. In the first case the delay was the result 
 of yard, as distinct from departmental, management ; in 
 the second it arose from a dispute which in no way 
 affected the actual work. In such cases as these no 
 department should be saddled with interest on the work 
 unpaid for, through its appearing in the stock carried 
 forward under the head of " Work m progress." It should, 
 when finished, be transferred to B sheets, and thus 
 disappear from the departmental stock. 
 
 Indeed, it may be assumed that all establishments 
 engaged on complicated structures must make provision of 
 this kind for work completed in sections, but not paid for, 
 or only partly paid for, until the whole equipment is 
 
224 ESTABLISHMENT CHARGES. 
 
 finished. Such sections of the work as are ready for 
 delivery, or for fitting in place, will be transferred from 
 the departments to B sheets, but unless they are taken 
 into the estimate for apportionment of interest the 
 remainder of the work will bear an undue proportion of 
 it, and the several shops be debited with a charge which is 
 purely and simply the result of financial arrangements. 
 The charge will, in general, be carried direct to the C 
 sheets, as a difiiculty may arise in defining the particular 
 portions of the contract which are properly and justly 
 subject to it. 
 
 The last item on the summary is " Balance of interest." 
 This is to cover imemployed capital on which interest has 
 to be paid to shareholders, debenture holders, or, in case 
 of private firms, to one or more of the partners themselves. 
 The charge incurred on such capital increases the cost of 
 work throughout the yard, just as an increased price for 
 gas or water would, but no single department can properly 
 be charged with it. The burden is a general one, which 
 should be shared by all, and the amount must be trans- 
 ferred to the management sheet, thence to be apportioned 
 over the departments with the rest of the management 
 charges. The amount of unemployed capital must be 
 inserted in the total column. 
 
 The total amount of interest for the month has thus 
 been determined, and the total column will give the items 
 over which it has to be proportionally distributed. From 
 the column " Interest " the charges will be transferred to 
 the several cost accounts. 
 
 The last column, " Depreciation," is merely inserted to 
 afford a convenient summary of those charges, collected 
 from the plant and depreciation accounts, of which an 
 example has been given. At the end of any financial 
 period the amount of depreciation appearing in the trading 
 account should be the total of these monthly summaries 
 during such period. 
 
 Later Departmental Sheets. — We are now in a position 
 to consider the later departmental sheets : those concerning 
 the actual constructive work, and which are not, except in 
 some exceptional instances, cleared by transfer to any 
 further or other department. The exceptions are in the 
 few cases where one department does work which strictly 
 ought to be done by another, or where, for instance, a 
 blacksmith or machineman is called upon to remedy some 
 
ESTABLISHMENT OHARGES. 225 
 
 blunder of the fitter. In such case the work done really 
 belongs to the fitting department, and is a portion of the 
 cost, directly or indirectly, incurred in that shop ; in others 
 it properly belongs to the department doing the work, and 
 is, therefore, transferred from it direct to the B sheet. 
 
 Sheet A. — An example of the fitters' sheet (which is 
 only supposed to give a few items, and not all passing 
 through the shop for the month) will explain the method, 
 of making the entries and transfers in this portion of the 
 cost accounts (pp. 226, 227). 
 
 The stock brought forward on the 1st January is sum of 
 the last items appearing on the credit side of the Deceniber 
 account ; it includes any unused and unappropriated stores 
 on hand in charge of the foreman, as well as any uncom- 
 pleted work in progress. If it is more convenient to the 
 cost accountant, the details can be given in the new account, 
 but it is entirely a matter of convenience ; it must be remem- 
 bered that he has the former account to refer to. The 
 purchases are only those items specially ordered for a specific 
 contract ; as in this case, piimps for use in connection with 
 dock gates, and the particulars will be obtained from the 
 invoice book. On reference to the form of invoice book, 
 already given, it will be noticed that a column marked 
 " Process" is introduced, which is additional to those found 
 in most invoice books. The majority of the invoices will 
 be for materials for delivery into stores, and re-issue from 
 there, and the word " Stores " will be written opposite 
 them in this process column. In those cases where materials 
 are specially ordered for a particular contract, and pass 
 immediately on receipt into the custody of a foreman of 
 department, and not through the stores, the title or number 
 of such contract will be entered in this column thus: 
 " Order 5713," or " Milford Dock Gates." The invoice 
 clerk will seldom be able, nor should he ever be permitted, 
 to do more than this. The cost accountant must supply 
 the title or symbol of the process, and though this may 
 sometimes entail a little enquiry and thought upon his 
 part, it is well within his duties. When he degenerates 
 into a mere automaton, capable of movement indeed but 
 only in one well-defined groove, he becomes worthless to 
 his employers. 
 
 The wages are a very simple matter; they are the 
 amounts obtained from the analytical abstract of wages, 
 stated under the head of the difi'erent portions of the work. 
 q3 
 
226 
 Sheet A. 
 
 ESTABLISHMENT CHARGES. 
 
 FITTERS. 
 
 To Stock, January 1st, 1898. 
 
 PUROHASBS — 
 
 Gwynne& Co.— Pumps— 5713— D.G. A.— 15 
 
 Wages- 
 
 5713— D.G.A. —15.. 
 
 „ - „ -12., 
 
 5718-F.P.L. — 1. 
 
 5719— M.M.B 4. 
 
 Piant— S.G.C 10. 
 
 Quantities. 
 
 Transfers from Dbpaetments- 
 
 Stores— 5713-D.G.A.— 15 
 
 5718— P.P. L.— 1 
 
 5719— M.M.B.— 4 
 
 -Process- 
 
 Transfers FROM Departments- EsTAB 
 LiSHMENT Charges — 
 
 Management charges 
 
 Motive Power 
 
 Cartage Department 
 
 Drawing Office 
 
 Estimated Charges — 
 N. B.Kailway-i — Freight- 
 
 Interest 
 
 Depreciation 
 
 5713— D.G.A.— 15 
 
 Materials and 
 Expense!. 
 
 Salaries and 
 AVages. 
 
 17 6 7 , 31 2 
 112 
 
 2 1 6 
 2 8 7 
 1 6 4 
 
 3 6 10 
 
 20 1 4 
 
 10 6 
 
 110 
 
 17 6 7 
 5 fi 2 
 3 14 
 
 185 15 9 
 
 60 5 
 
 13 1 
 
 31 6 
 
 18 1 
 
 2 1 
 
 16 5 2 
 
 2 5 6 
 
 ]'2 2 
 
 7 6 
 
 181 19 .6 
 
 Trade 
 Debits. 
 
 Transfers from Departments. — The transfers from 
 departments are divided into two parts, " Process " and 
 " Establishment charges." The titles of the departments, 
 or anterior A sheets which come under the same 
 category, should always be stated. In this example the 
 process charges are all from the stores department, and 
 the various sections of work affected are properly and con- 
 veniently stated, just as they are' under the head of wages. 
 As already explained, there will be very few inter- 
 departmental transfers in an ordinary engineering factory ; 
 each department's costs must be made up separately in 
 the A sheets, and as the several sections of work are 
 completed the cost must be transferred thence to the B 
 sheets. Occasionally some job will be done by one 
 department for another, either to assist the latter in its 
 own proper work on some particular job, or render help in 
 some renewal work for the shop. In such case the 
 
ESTABLISHMENT CHARGES. 
 
 FITTERS. 
 
 227 
 Sheet A. 
 
 By Estimated Chabgbs. 
 
 Tbanspers to Sheets— 
 
 B Sheet-5713— D. G. A 12 . 
 
 5718— P. P. L.— 1 . 
 5719— M.M.B.— i . 
 
 Teansfers to Plant Sheets — 
 S.C.C— 10 
 
 Quau titles. 
 
 Stock Januaey 31st, 1898. 
 5713— D.&.A 15— la progress., 
 
 estimated.. 
 
 Materials and 
 Expenses. 
 
 ir 6 7 
 
 3 9 10 
 
 10 16 1 
 
 6 2 7 
 
 10 
 
 130 3 i 
 17 6 7 
 
 185 15 9 181 19 
 
 Salaries and 
 Wages. 
 
 15 16 I 
 37 18 1 
 21 17 3 
 
 2 9 8 
 
 103 18 5 
 
 Trade 
 Credits. 
 
 amount will appear on the credit side of the account of 
 the ■working department, and on the debit side of that of 
 the worked for department. With such engineering 
 works as building, railway, canal, and dock constructions 
 these transfers may, however, be more numerous, and will 
 then demand considerable attention from the accountant. 
 
 The establishment charges are generally of a simple 
 character. A sample has been given of the sheet for 
 management expenses, and the others will follow the same 
 course. 
 
 Estimated Charges. — These are estimates for goods 
 consumed but invoices for which have not been received. 
 In the present instance it will be observed that the stock 
 on January 1st includes, under the head of materials and 
 expenses, an item of £17 6s. 7d., and that on the other 
 sid!e of the account this amount is placed to the credit of 
 the department. Lower down the same item will be seen 
 
228 
 
 ESTABLISHMENT CHARGES. 
 
 again brought to debit as estimated for freight on goods 
 for order No. 5,713, item of work D. G. A. 15, the invoice 
 being still wanting from the railway company at the end 
 of January. The reason for these entries will be apparent 
 to the book-keeper. Whilst it is necessary to guard 
 against dangers of omission by entering immediately to 
 the debit of a job any goods used for it by an estimated 
 charge, if an invoice has not been received from the sup- 
 pliers, this must necessarily be regarded as a temporary 
 expedient to be corrected by the permanent debit through 
 the stores issued book or invoice book when the invoice 
 is received. It is therefore necessary to credit the depart- 
 ment with any estimated charges of the previous month, 
 and if any of these are still in abeyance to re-debit them 
 as estimated for the current month. 
 
 The debits for interest find depreciation are obtained 
 from the account of which a specimen has been previously 
 given. 
 
 Credit Transfers to Sheets. — The total debits to the 
 fitter's department having been arrived at, the amount has 
 now to be cleared by transfer to the second series of 
 accounts, the B sheets, of all completed work, and to the 
 stock in hand of work still in progress. This, of course, 
 requires the distribution of establishment charges over the 
 work executed in proportion to the direct wages paid. 
 
 Materials and Expenses. — ^The establishment charges 
 in this column (including interest and depreciation) amount 
 to £33 6s. 2d. The direct wages are £124 16s. Taking- 
 these proportions we arrive at tlae following results : — 
 
 Materials 
 
 and 
 
 
 Exp 
 
 enses. 
 
 £ 
 
 a. 
 
 d. 
 
 114 
 
 1 
 
 6 
 
 2 
 
 8 
 
 7 
 
 1 
 
 6 
 
 4 
 
 
 
 Add Proportion 
 of Establish- 
 ment Charges. 
 
 Amount 
 
 to 
 
 Credit. 
 
 5713.— D.G.A.— 15 
 5713.— D.G.A.— 12 
 5718.— F.P.L.— 1 
 5719.— M.M.B.— 4 
 Plant.- S.C.C— 10 
 
 £ s. d. 
 16 1 10 
 
 3 9 10 
 8 7 6 
 
 4 16 3 
 10 9 
 
 £ s. d. 
 130 3 4 
 
 3 9 10 
 
 10 16 1 
 
 6 2 7 
 
 10 9 
 
 The first item is work still unfinished, and is therefore 
 carried to stock at January 31 as work in progress. The 
 
ESTABLISHMENT CHARGES. 
 
 229 
 
 next three items are finished so far as the fitters are con- 
 cerned, and the amounts are therefore included under 
 transfers to sheets, being placed to the debit of the B 
 accounts for the several jobs by the cost accountant. The 
 last item is for repairs, in the nature of addition or renewal, 
 to a machine belonging to the firm, and is transferred to 
 the plant account in the manner already shown. These 
 transfers, with adjusting entries for estimated charges, will 
 exactly balance the debits to the department for materials 
 and expenses. 
 
 Salaries and Wages.— On reference to the debit side of 
 the account it will be seen that the direct Avages amount to 
 £124 16s., the establishment charges to £26 3s. 4d., whilst 
 £31 Os. 2d. was brought forward from the previous month 
 under the head of stock. This latter amount was for 
 work in progress on order 5713 — D.G.A. — 15, which, it 
 will be seen, was still unfinished on the 31st January, and is 
 therefore again carried forward at that date as stock. It 
 must, however, be observed that as the direct wages on 
 this portion of work bore their due proportion of establish- 
 ment charges for December, nothing more is added to them 
 on that account for January ; the establishment charges for 
 any one month are distributed over the direct ivages for 
 that month, and over no other. The amounts to be credited 
 will therefore be : — 
 
 5713— D.G.A. -15 
 12 
 5718— F.P.L.— 1 . 
 5719— 1I.M.B.— 4 . 
 PlaatS.C.C.-lO . 
 
 31 2 
 
 Direct 
 Wages. 
 
 60 5 6 
 
 13 1 4 
 
 31 6 8 
 
 18 1 6 
 
 2 10 
 
 Proportion Of 
 
 Eatabli^hment 
 
 Charges. 
 
 12 12 9 
 
 2 14 9 
 6 11 5 
 
 3 15 9 
 
 103 18 6 
 
 15 16 1 
 
 37 18 I 
 
 21 17 3 
 
 2 9 8 
 
 These, it will be seen, are the amounts which appear on the 
 credit side of the account, and which exactly balance the 
 debits to it. 
 
Chapter XVII. 
 
 .COST ACCOUNTS {continued). 
 
 Sheet B. — The A sheets are the foundation for the 
 cost accounts ; the debits to the various departments are 
 there entered, and on the opposite, or credit, side of the 
 sheet apportioned to the various items of work undertaken 
 during the month or other period under consideration. 
 But they do not conclude the process. It will be seen, 
 from the example previously given, that portions of three 
 orders have been completed, so far as the department of 
 fitters is concerned, and transferred from a charge against 
 that department to a charge against some other department 
 or thing appearing on a B sheet. Now, if we took up any 
 other departmental sheet for the same month, say, for 
 instance, that relating to the turners, or blacksmiths, we 
 should find charges tnere against orders 5713 — D.G.A. — 
 12 ; 5718— F.P.L.— 1, &c., &c. We want to know the total 
 cost of the first item or detail, that is, of the frame of the 
 machine F.P.L., and not merely the sums, in material and 
 labour, expended on it in the fitting shop. As the A sheet 
 has been a summary and subsequent analytical transfer of 
 numerous items appearing in previous books, so the B 
 sheet must be a summary of items from the A sheets, and 
 finally a transfer of them to a further evolved form of 
 summary. 
 
 Form of B Sheet. — The form of the B sheet will differ 
 slightly from that previously adopted, inasmuch as the 
 record may extend over several months instead of one. 
 It is therefore necessary to provide a column for the date. 
 The annexed example will show what is required. 
 
 The items of " purchases " are only for such stores or 
 materials as are obtained expressly for some particular 
 work on which no further labour has to be expended in 
 the yard, and which are, therefore, charged in the invoice 
 book (column "process") direct to that work, and not to 
 some department for it. Although in the example they 
 are shown each month, such purchases will be exceptional, 
 and will hardly arise in an ordinary machine tool or mill 
 fitting shop. 
 
COST ACCOUNTS. 
 
 231 
 
 ;j 
 
 -* 
 
 H CO 
 
 M to 
 
 t3 
 
 
 Trade 
 Credits. 
 
 
 
 
 
 
 Salaries 
 
 and 
 Wages. 
 
 
 
 Materials 
 and 
 
 iExpenses. 
 
 
 
 a ^ 
 
 
 
 '3 
 o 
 
 1 
 
 By Stores account 
 for scrap Iron 
 and Steel 
 
 „ transfer of bal- 
 ance to C sheet 
 5713— D.G. A. 
 
 Date. 
 
 1893. 
 March. 
 
 April. 
 
 Trade 
 Debits. 
 
 
 
 Salaries 
 
 and 
 Wages. 
 
 
 Materials 
 
 and 
 Expenses. 
 
 
 
 ■ 
 
 
 CO 
 
 1 
 
 J Purchases . 
 , Ulacksmiths. 
 
 , Turners 
 
 . Fitters 
 
 , Purchases ... 
 
 , Moulders 
 
 , Turners 
 
 . Fi tters 
 
 , Purchases ... 
 
 , Moulders 
 
 , Blacksmiths . 
 . Fitters 
 
 
 
 |b 
 
 
 i 
 1 
 
 
 
 
 
 
232 COST ACCOUNTS. 
 
 The transfers from departments will be sufficiently 
 imderstood from the explanations already given under the 
 head of A sheets. In general there will only be one 
 transfer from each department, as any unfinished job will 
 be carried forward in the departmental accounts as " work 
 in progress," and only transferred when completed. When, 
 however, a number of articles of like kind are made for 
 the contract, such being completed in different lots in 
 different months, the transfers may extend over several 
 months, as is assumed in the example. 
 
 Scrap Material. — It is desirable to credit scrap material 
 to the exact item of work on which it is made, whenever 
 this can be done, but it must be admitted that there is 
 great difficulty in practically adjusting these credits. When 
 it is possible they should be credited in the A sheets, so as 
 to reduce the cost in that department of any one or more 
 items from which they arise. Where the item is known, 
 but the departments contributing the scrap cannot be 
 determined, the credit must be given in the B sheet for 
 such known item, in the manner shown in the last example. 
 Where only the order or contract is known, but not the 
 particular item or items, the scrap must be credited in the 
 sheet. After this process of exhaustion there will still 
 remain scrap material in the yard which cannot be allocated 
 either to any contract or any portion of a contract. Such 
 remaining scrap must be credited to one of the establish- 
 ment sheets, such as management expenses, and thus 
 reduce the debit of such charges to the various construc- 
 tive departments of the yard from which the scrap arises. 
 
 Balance of B Sheets. — The balance, that is, the cost 
 after deduction of the credit for scrap material, will only 
 be transferred to the final summary, the C sheet, after all 
 work on the item has been completed. So long as there is 
 anything to do to complete the 14th detail of D.G.A., 
 Order 5713, the B sheet must be left unclosed, even though 
 work may be suspended on it for many ndonths. The 
 purpose of this and other like accounts is to ascertain the 
 exact cost of the special item, part, or detail, to which 
 they refer, and this cannot be done uriless they are kept 
 open until the work on such items is actually completed. 
 
 C, or Contract Summary Sheet. — It is part of the 
 essence of this method of cost accounts that, as work is 
 completed in certain stages, it should be transferred from 
 
COST ACCOUNTS. 233 
 
 a more simple form of account to a more evolved one, that 
 it should be synthetical in operation. Thus, from the first 
 set we ascertain the cost of work performed in the various 
 departments during the month, and the particular items 
 on which it has been expended. In the second set we 
 collect the costs of these various departments into groups, 
 each of which groups is one of the items or details in a 
 contract or order. Finally, we have to collect all the 
 groups belonging to one contract or order into an account, 
 which will show the total actual cost of it to the firm. 
 The annexed form (which appeared in Engineering for 
 February 16th, 1894) is the means by which this final con- 
 centration is effected. The items taken are some of those 
 for a war vessel, but the form will equally apply for any 
 other form of enginee'ring construction. 
 
 Arrangement of Debits. — The account which will be 
 most frequently referred to for preparation and checking 
 of future estimates, for comparison with later costs of 
 machines of the same class, and for other similar purposes, 
 will be the third, or C account. It is therefore im- 
 portant to exercise considerable care in framing it, so that 
 the debit side may contain all the details for which B 
 accounts are opened ; these must be at least as numerous 
 as the heads and sub-heads contained in the estimates ; in 
 most cases there will be more such lines in the final cost 
 account than in the original estimate. Where an estimate 
 line is divided into two or more in the C account the 
 latter should be placed together, and connected with a 
 bracket to indicate that they refer to one item in the 
 estimate. 
 
 After the general debits are finished interest is entered. 
 This is for interest on overdue instalments, as previously 
 explained. Where it is practicable the interest must be 
 charged in the B account, on the general principle that all 
 charges and variations should be entered at the earliest 
 possible stage ; but there are many cases where the interest 
 arising from causes affecting either the whole contract or 
 so large a portion of it as to render it impossible to charge 
 it in any other than the final account, In this interest 
 entry any charges arising on overdue or renewed bills, or 
 on payments made in stock or shares which are not yet 
 earning dividends, must also be adjusted. 
 
 Credits. — The credit side of the account contains the 
 eight instalments by which the ship is paid for, and which 
 
234 
 
 COST ACCOUNTS. 
 
 Sheet C. 
 
 Dr. 
 
 H.M.S. 
 
 i Materials 
 and 
 
 To 
 
 Laying Blocks 
 
 Keel, Stem, and Sternpost, 
 
 Frames 
 
 Deck Beams 
 
 Bulkheads 
 
 Watertight Doors 
 
 zine 
 
 Spirit Room 
 
 Cabin Fittings 
 
 Laying Decks 
 
 Hammock Nettings 
 
 Davits 
 
 Steam Steering Gear, &c... 
 Interest 
 
 Add Materials 
 
 To Balance — Profit 
 
 Salaries 
 
 and 
 Wages. 
 
 Trade 
 Debits. 
 
COST ACCOUNTS. 
 
 235 
 
 Sheet C. 
 
 ACORN. 
 
 Cr. 
 
 mcnt 
 
 By First Insta! 
 
 , Second 
 
 , Third 
 
 , Fourth 
 
 , Fifth 
 
 , Sixth 
 
 , Seventh 
 
 , Eighth & Last Instalment, 
 
 Scrap Material 
 
 Haterials 
 
 and 
 Expenses. 
 
 I 
 
 Add Materials (viz., Instalments for 
 Engines and Boilers) 
 
 By Balance — Loss 
 
 Salaries 
 
 and 
 Wages. 
 
 Trade 
 Credits. 
 
236 COST ACCOUNTS. 
 
 are entered there from the cash book as, and when, the 
 money is received from the purchasers. There is also kn 
 entry in the example on both debit and credit side of the 
 account, "Add materials," which at first may appear a 
 little perplexing, but which entry is sometimes necessary 
 for the proper completion of the record. For instance, 
 the tender for a ship, more particularly for the British or 
 a foreign admiralty, has frequently to be made in some 
 such form as this : — 
 
 For the hull and equipment complete of steam- 
 ship , as described in the fore- 
 going specification £ 
 
 For the engines, boilers, and machinery of the ship, 
 
 to be constructed by Messrs. . 
 
 as described in the machinery specifica- 
 tion £ 
 
 In such case the several instalments received on account 
 of the engines and machinery will be entered on the credit 
 side of the account in the column for materials and 
 expenses, and these credits must be balanced by an entry 
 on the opposite side, " For materials," of the amount paid 
 to the machinery contractors. 
 
 Closing of C Account. — In this account the item of 
 profit or loss appears for the first time. It will be seen 
 from the nature of the previous accounts that it cannot 
 enter into them, as they are merely entries and adjust- 
 ments of expenditure transferred from account to account 
 until they finally appear in the C sheet. Here we have a 
 summary, on the one side, of all the debits and payments 
 incurred on account of the contract ; and on the other, all 
 amounts received for it, either by way of payments on 
 account, instalments, or for sale of waste material. The 
 total of the column, materials and expenses, must be 
 brought into that for salaries and wages on both sides of 
 the account, and the difference between these debits and 
 credits will be the gain or loss on the contract. 
 
 This, the C, portion of the cost accounts cannot be 
 closed until the contract or order, or job, is completed ; 
 that is to say, until all the work has been finished and 
 charged, delivery effected, all trials completed, and also all 
 payments made. It is hardly safe to close until any bills 
 of exchange given in payment have run off, in case these 
 
COST ACCOUNTS. 237 
 
 are not met as they fall due, and have to be renewed, and 
 this would require a further adjustment of the charge for 
 interest. 
 
 Quantities in Cost Accounts. — It will be observed 
 that in the A and B accounts a column is inserted for 
 " quantities," which is allowed to fall out of the C account. 
 The reason for this omission is that all the several sections 
 of work are completed. before they are entered in the latter 
 account, and there is no utility in making an entry Avhich 
 can only signify such completion. But in the two former 
 accounts it is necessary that the manager should have 
 information of the amount of work done, as well as the 
 expenditure upon it, in order that he may be able to judge 
 of the progress of the cost. Now, " quantity," in the cost 
 account sense, need not necessarily be weight or dimensions 
 of materials : it may be represented by a proportion of the 
 total work to be done in the A sheet by the department in 
 question, and in the B sheet by the whole of the depart- 
 ments, on the particular detail or job. After careful 
 consideration, it appears impossible to suggest any general 
 rule which will apply to all cases; the object sought will, 
 under some circumstances, be best obtained by weight or 
 measurement, whilst in others the proportional estimate 
 will be more appropriate ; the immediate conditions must 
 determine the usage. But it is the manager, that is, the 
 engineer, who requires the information, and therefore he, 
 and not the accountant or clerk, must decide what form or 
 forms it shall take. When the form, whether weight, cubic 
 contents, or proportion, has been decided, the actual figures 
 must be obtained by the cost accountant from the foremen 
 or other technical officers, and not inserted in the sheets 
 from his own guesses. 
 
 Trade Debits and Credits. — Columns for trade debits 
 and trade credits will be found in all the cost accounts, 
 A, B, or C, of which examples have been given, but the 
 method of filling up these columns, and the service they 
 can render to the engineer, have not been considered. So 
 far as the accounts have yet been dealt with, it is evident 
 that only actual figures of wages, purchases, and expenses 
 are dealt with ; that when estimated accounts are used in 
 any month, it is only for a temporary purpose, and with a 
 view to correction in the following month by substitution 
 of the actual figures. A profit or loss is shown on any 
 particular contract, but none on a department, nor on any 
 
238 COST ACCOUNTS. 
 
 particular section or detail of a contract. It is, however, at 
 times essential that the\vorking of a department should be 
 gauged in terms of money, and judged by the profit made, 
 and not merely by the extent of work turned out. 
 
 It is true that many firms open departmental accounts 
 in their commercial ledgers, and endeavour to turn these 
 into miniature trading accounts by debiting them with 
 proportions, more or less arbitrary, of the establishment 
 charges, and crediting them with assumed values (not 
 exceeding in the total the selling prices) of the work done 
 in each department. The cost accounts furnish more 
 ready and accurate means than this of obtaining the 
 information desired, whilst particulars are left open in 
 the commercial books which would otherwise be lost 
 sight of. 
 
 Trade Debits. — The object is to ascertain the profit of 
 a department, considered as a portion of the firm's estab- 
 lishment it is true, but working independently of the other 
 manufacturing shops, and obtaining such prices "for com- 
 pleted work as would be paid for it to outside vendors, 
 or would be charged to other constructors if it were done 
 for them. 
 
 The two columns, " Materials and Expenses " and 
 " Salaries and Wages," are amalgamated in the trade 
 debits and credits. The stock brought forward on the 1st 
 January will be the sum of the stock on hand shown on 
 the credit side of the third column of the previous account 
 at 31st December. It will generally be the same as in the 
 cost accounts proper ; if the stock consists solely of 
 materials on hand it must undoubtedly be so ; if work in 
 progress is included it should usually be taken at actual 
 cost, as in the previous columns, since profit, or estimated 
 profit, accrues on completion of the work. " Purchases, 
 Wages, and Transfers from Departments — Process," will 
 be the same as in the former columns. They are the exact 
 payments of money for those services. It has already 
 been said that transfers from one constructive department 
 to another will seldom arise ; when they do occur they will 
 form an exception to the foregoing rule, as the blacksmiths 
 of the firm are entitled to the same charges when working 
 for the fitting shop as when working for any outside cus- 
 tomer. The "Transfers from Departments — Establish- 
 ment charges " will in most instances be the sum of the two 
 previous columns. It is quite clear that no profits should 
 
COST ACCOUNTS. 239 
 
 be assumed on charges for management, motive po"wer, 
 or drawing office, but cartage is really governed by the 
 same consideration as the blacksmiths already referred to. 
 The charges for use of horses and carts to the fitting or 
 machine shops should be the same as would be paid to an 
 outside carter, and this will yield a profit if the stables are 
 properly managed. Estimated charges, interest, and depre- 
 ciation will be the same as in the ordinary cost accounts. 
 It will therefore be seen that on the debit side of the sheet 
 the differences between the sum of the first two' and the 
 third columns are not very numerous, and do not involve 
 any great amount of labour. 
 
 Trade Credits. — The credit side of the account will 
 not merely demand more attention from the cost 
 accountant than the debit side, but will also require more 
 correspondence with, and information from, the technical 
 officers. The estimated charges are merely an adjusting 
 entry, and do not need comment. The " Transfers to 
 Sheets," and "Transfers to Plant Sheets," will, however, 
 be based on the actual market charges for such work, and 
 not on the cost of materials, wages, and expenses. As 
 charges so estimated are not for finished items of work, or 
 completed machines, but only for the labour, &c., expended 
 by the fitters in their contribution to such items, it will be 
 necessary to consult the technical officers as to the value of 
 the contribution ; that is, as to the amount they would, 
 under ordinary circumstances, charge to an outside firm 
 for it, or which they would pay to such firm to do the work 
 if it could not be executed m the yard. Thus, in the case 
 of a heavy forging, the point for consideration, so far as the 
 trade credit is concerned, is not the cost in direct and 
 indirect charges, but the amount at which it would be 
 invoiced to a customer of the firm, or which would have 
 been charged for it had it been made at a Staffordshire, 
 Mersey, or Clyde forge. It is a case of competition, the 
 department against other manufacturers, and the depart- 
 ment is entitled to all the benefit of these competitive 
 prices, but to no more. The difference between the two 
 sides will be the profit or loss of the department, computed 
 on an ordinary commercial basis. 
 
 The transfers will follow precisely the same course as 
 in the original cost accounts, and it will therefore be seen 
 that neither profit nor loss will arise in the B sheets. 
 When we come to the C sheets the profit will probably be 
 
240 COST ACCOUNTS. 
 
 a small one, since it has already been absorbed in the 
 working of the departments ; indeed, the balance may, in 
 many cases, be there turned into a loss. However, if the 
 profits and losses of the various departments, and of the 
 completed contract (C account) are extracted, the result 
 will be exactly the same as that shown in the second 
 column of the C account, that is, assuming the clerical 
 work to be done correctly. 
 
 And now the engineering manager will have before 
 him, in very convenient and vivid form, both the actual 
 cost of work in the yard, under minute sub-divisions, and 
 those same costs compared with the prices he would have 
 to pay outside firms, or which he could obtain from them 
 for the same work. He will be able, at the same time, to 
 see which departments are profitable to him, and which, if 
 any, require overhauling and reorganisation. 
 
 Transfers to Plant Sheets. — For the purposes of " trade 
 credits " it is correct to allow a profit on work done in 
 making or erecting new plant for the firm's own use ; 
 without such profit it would be impossible to correctly 
 gauge the earning capacity of the department. But in the 
 ordinary books of the firm, that is, in the accounts on 
 which the dividends of the company or the partners' 
 withdrawals are based, it is undoubtedly the soundest 
 finance to reckon no profit, but to charge only actual cost 
 of material, labour, and proportional establishment charges 
 on new buildings, machinery, or other erections, and on 
 renewals for the firm's own use. 
 
 Recapitulation. — Having now arrived at the conclusion 
 of the three-fold form of cost accounts, it is convenient to 
 recall the ground passed over. Although theoretically the 
 manager should be the originator of all workshop move- 
 ments, he could only practically become so through proper 
 delegation of duties, and the drawing office appears the 
 most convenient medium through which orders for the 
 works can pass. For goods to be supplied from stock, a 
 short order to the warehouseman, giving sufficient particu- 
 lars of the article demanded, and of forwarding instruc- 
 tions, will be prepared in the general office and merely 
 recorded in the drawing office. But orders from stock do 
 not form the chief portion of the work in the general 
 engineering factory. In such an establishment the tran- 
 sactions are chiefly specific orders for special machines, 
 &;c., even when such machines are of standard patterns. 
 
COST ACCOUNTS. 241 
 
 For the purpose of an orderly and adequate system of 
 arranging work to be performed in the shop, the drawing 
 office order book is an absohite necessity. Part of the 
 particulars for this order book will be obtained from papers 
 lurnished to the draughtsman from the general office, but 
 those more important portions which have reference to 
 tracings received or sent away, instructions to the shops, 
 and preparation and issue of shop drawings will arise within 
 the drawing office itself. This book, therefore, if properly 
 kept, will show what information and instructions nave 
 been furnished by the technical department to the works 
 at any particular date, and what are still required to 
 be supplied. Shop orders have to be supplied to the 
 various foremen which must advise them of the work to 
 be done, and of any special conditions affecting it. Copies 
 of these orders will also be sent to the pattern maker, 
 storekeeper, and warehouseman, and will enable them to 
 proceed with any portion of the work affecting their 
 departments without causing them to delay the workshops. 
 Alterations have occasionally to be made in these shop 
 orders, and supplementary instructions have to be issued, 
 which may be done in one of three ways. A reference to 
 the shop order will show that the most important portion 
 of it is contained under the head of drawing numbers, 
 such drawings being the real instructions upon which the 
 working portion of the establishment will proceed, and as 
 many of them may be used for several orders, it is 
 necessary that a proper record should be kept of all 
 drawings prepared or received by the firm. This register 
 should contain the initial number of the drawing, which 
 is really the number of the general arrangement plan, and 
 it should also contain the supplementary letters or num- 
 bers by which the shop or detail drawings and the patterns 
 are distinguished. An alternate form of register is 
 stiggested which presents some advantages over the usual 
 one : simple letters being substituted for the progressive 
 drawing number of the former method. It is, indeed, an 
 adaptation of the symbol system of the Ferracute Company 
 of New Jersey, and in the majority of cases will shorten 
 the clerical entries in the wages sheets and stores issue 
 book. Whatever form is, however, adopted an adequate 
 index should be used with it, and provision made for 
 dealing with drawings for special contracts of abnormal 
 size. In course of time it will be found necessary to make 
 alterations in both standard drawings and patterns, and 
 e3 
 
242 (;OST ACCOUNTS. 
 
 these alterations must be so noted from drawing to drawing, 
 or pattern to pattern, as to form a history of the facts. In 
 preparing drawings for the shops, it must be remembered 
 that, they are to contain all the draughtsmen's knowledge 
 of the- -specification, and they must therefore be very 
 complete and marked, with all dimensions. A record book 
 of tracings sent away and a shop drawings diary must 
 be kept, and careful provision made for the filing of 
 drawings. 
 
 When we come to the works manager, it is found 
 desirable that an order book should be kept in his office so 
 that he may readily ascertain the executive conditions of 
 work in progress. ' The institution of conferences will also 
 assist him in preventing delays through imperfect office 
 management, and facilitate inter-departmental arrange- 
 ments. But office arrangements are more easy to grapple 
 with than the management of workmen, and the problem 
 of the present day is the stimulation of their productive 
 energies. This has been attempted in England by the 
 system of profit-sharing, but it is in America that the most 
 strenuous efforts have been made to solve the problem. In 
 one case it is attempted by committees and sub-committees 
 of foremen and sub-foremen, with generous awards to 
 workpeople for any suggestions they make. In another it 
 is by the adoption of fixed piecework rates, which insure 
 the workmen against the danger of lowering prices when 
 he could, by his own exertions and ability, increase his 
 weekly earnings. But the third method is worthy of the 
 most careful consideration, because it has the effect of 
 automatically grading the men, by increasing their 
 emoluments in proportion to their energies and ability, 
 and not by decreasing them as they fall short of a fixed 
 standard of work. The great object of the works manager 
 should be, however, to study all methods, and adopt 
 whichever is best suited to the special conditions of his 
 firm, and of the workpeople with whom he is immediately 
 concerned. 
 
 The next points considered are the admission of work- 
 men, the recording of their time, and the preparation of 
 the wages books to facilitate financial and cost-book records. 
 An abstract of wages must be prepared. In like manner 
 the issue of materials by the storekeeper must be 
 systematised so that the ultimate charge may be made 
 against proper contracts or details of contracts. For this 
 purpose a proper stores issue book must be kept, from 
 
COST ACCOUNTS. 243 
 
 which the store ledger may be posted, and a monthly 
 return of stores issued prepared for the accountant and the 
 cost accountant. 
 
 The arrangements and records hitherto referred to are 
 necessary in an engineering works where only ordinary 
 finance books of account are kept, but it is needful that 
 the engineer of the present day should have, in the form 
 of detailed cost accounts, more minute information than he 
 could obtain from his ordinary books. Those recommended 
 are of a threefold character. The first of such divisions 
 form departmental accounts, but some of those departmental' 
 accounts, such as management charges, motive power, and 
 drawing ofSce expenses, are divisible charges which have to 
 be transferred to the later departments, to the blacksmiths, 
 moulders, and fitters, &c., in proportion to the wages 
 expended therein. It is also necessary, in order to arrive 
 at accurate costs of details, that depreciation and interest 
 should be charged in the A accounts each month, so that 
 the items of work executed during that month may each 
 bear their proper proportion. If depreciation is calculated 
 by percentage on the capital expended, then the buildings 
 and plant should be divided into several classes, and the 
 percentage adjusted to their varying rates of wear. But it 
 is suggested that a preferable method is to make very 
 complete schedules of the buildings and plant, and write 
 off depreciation on each individual building or machine, 
 calculated on the estimated life of it. The interest also 
 must be divided over the several departments, and pro- 
 vision made for interest on work in progress and unemployed 
 capital. As work on any detail or machine, or other order, 
 is complete in any department, the cost of it, inclusive of 
 the proportionate establishment charges, is transferred 
 from the A to the B sheet, so that the latter forms a 
 summary of the cost of each item or portion of the 
 machine. Finally, as the various sections of the machine 
 are complete, the B sheets are transferred to the C sheets, 
 which form profit and loss summaries of each particular 
 order or contract. We have thus in this threefold division 
 of the cost accounts the following particulars : — 
 
 Departmental costs. 
 
 Costs of portions of machines. 
 
 Costs of completed machines. , 
 
 For the purpose of ascertaining the value to the firm 
 of any particular department in the works, as compared 
 
244 COST ACCOUNTS. 
 
 with work purchased from outside producers, columns aire 
 added to the several cost accounts for trade debits and 
 credit. In these columns the work is valued at such prices 
 as would be charged for it to an outside purchaser, or paid 
 to an outside manufacturer, and so the profit or loss of 
 the department, working as a separate and independent 
 concern, is arrived at. The figures in these columns are 
 merely computations ; but they are computations framed 
 on such a method that the final result in the C' sheet will 
 be the same as that arrived at by the previous method of 
 costing. 
 
Chapter XVIII. 
 
 MONTHLY PROFIT AND LOSS ACCOUNT. 
 CLAIMS AND LOOSE TOOLS. 
 
 Monthly Profit and Loss Account. — It will probably 
 occur to bookkeepers that the cost accounts, of which we 
 have given examples, are not prepared on the double entry 
 system, and therefore do not, within themselves, prove 
 their own correctness. It has already been explained 
 that, for specific reasons, they are not interlocked with, 
 and made part of, the financial books of the firm, and it 
 would be easy to show that the labour involved in double 
 entry would be much greater than the advantage obtained, 
 although at the same time such a system might be intro- 
 duced without in any way departing from the present 
 principle of working the cost accounts distinct from, but 
 parallel with, the ordinary business accounts. This does 
 not mean, however, that there need be no plan adopted for 
 proving the correctness of the cost accountant's work. 
 Such means can be adopted, and they will, at the same 
 time, afford other advantages in the conduct of the 
 business. For this purpose the accountant should prepare 
 each month an approximate profit and loss account. The 
 form adopted is practically that of an ordinary trading 
 account, and an example is hereto appended. On the 
 debit side of the account the first entry is for stock on 
 hand at the commencement of the month. This will 
 include not only the stock in the stores, but also any which 
 may be in charge of the various foremen, and any work 
 which might have been estimated in progress in the shop 
 at the end of the previous month, and in that month 
 taken into departmental stock. The purchases will be the 
 total amount shown in the invoice book for the month. 
 The salaries and wages will be obtained respectively from 
 the cash book or salary book, and the wages book. 
 Carriage and cartage will be obtained from the carriage 
 invoice book, if a separate one is used ; but if carriage 
 
246 
 
 MONTHLY PROFIT AND LOSS ACCOTJNT. 
 
 
 
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MONTHLY PKOFIT AND LOSS ACCOUNT. 247 
 
 invoices are passed through the general invoice book,, then 
 the amount will appear in the general item of purchases. 
 The sundry expenses will be got from the cash book, or 
 petty cash book. Of course the competent bookkeeper 
 will readily fall into the method of using the nominal 
 accounts of his ledger so as to facilitate this portion of the 
 work. The interest and depreciation are got from the 
 accounts already referred to as prepared for the cost 
 sheets. It will be seen that interest is thus debited 
 monthly, although it would probably be paid each six 
 months, and therefore care must be taken not to debit the 
 amount again from the cash book to these approximate 
 profit and loss accounts. 
 
 The other estimated charges follow the same rule as 
 interest and depreciation, that is, they must be debited in 
 proportional monthly parts, and care must be taken that 
 they are not inchided again when the oflficial debit is 
 passed to the invoice book or the payment is entered in 
 the cash book. In the cost accounts they will appear in 
 one of the preliminary A sheets — either one headed rents, 
 taxes, insurances, &c., or in management expenses — and 
 be thence divided over the several departments. 
 
 On the credit side of the account the ' first entry is for 
 sales, the amount of which will be obtained from the day- 
 book, or from any record kept which is equivalent to, and 
 'in the nature of, a day book. The additions to plant are 
 'the amounts added to the value of the plant during the 
 month, obtained from the cost accounts, and which appear 
 in the several schedules of buildings and plant. If these 
 additions to plant are passed through the day book, as in 
 many firms they are, then the amount of them must be 
 deducted from the day book total, so as to prevent duplicate 
 credit being taken in the first item of sales. The estimated 
 charges for work in progress must include all such work, 
 no matter what its condition or where it appears in the 
 A, B, or C sheets, if the debit for it to the customer has 
 not been passed through the day book so as to be included 
 in the item of sales. It is desirable to state these estimated 
 charges of work in progress under the heads of the several 
 contracts, but it is not absolutely necessary for mere 
 purposes of account ; if only balancing is required one line 
 would be sufficient. It will further be noticed that the 
 stock includes, not only materials in the stores, but also 
 those in the fitters', blacksmiths', and other shops, the 
 values of which can be obtained from the cost accounts. 
 
248 MONTHLY PEOFIT AND LOSS ACCOUNT. 
 
 When this account has been finished, the profit or loss 
 shown in it should agree with the total profits or losses 
 shown in the cost accounts. If this agreement is not 
 arrived at some error must have occurred in working, 
 for which search must be made until it is discovered. 
 
 One or two points deserve a little attention, although 
 they are more desirable for facilitating the easy arrange- 
 ment of work, than absolutely necessary for the working 
 of the commercial system. 
 
 Works Instruction Book. — In most works it will be 
 convenient to enter instructions of a general character in 
 a foolscap book, instead of issuing separate memorandums, 
 exactly the same in wording, to each of the ofiicers. The 
 book should have a marginal space down the right-hand 
 side for the initials of the several parties reading the 
 orders. This is the method followed m the British army 
 and navy for brigade, regimental, and ships' orders, and is 
 found to work well. 
 
 Shop=to=Shop Orders. — It is evident that no orders 
 from one shop to another are necessary with respect to 
 ordinary contracts, or ordinary work on stock goods. 
 Instructions are issued by the drawing office to each fore- 
 man simultaneously, and there is therefore no necessity, 
 nor excuse, for one endeavouring to instruct another. 
 Unity of action is secured through the weekly conferences. 
 But work may be required in one shop on behalf of 
 another which does not arise strictly out of the drawing 
 office instructions, such as repairs of some plant or building, 
 or remedying defects arising through bad workmanship in 
 the requisitioning shop. In such cases it is necessary that 
 both foremen should relatively control the expenditure ; 
 that is, the requisitioning foreman should sanction it in 
 proper form, and the executing foreman should see that it 
 is debited to the proper department. There is no 
 necessity to multiply forms for this purpose. The order 
 book used for drawing materials from the stores can be 
 used also for the purpose. The order should state the 
 account to which the work has to be charged, as " Eepairs 
 of No. 7 lathe, machine shop," or "Fitting shop, 5,713 — 
 D. G. A — 12," the latter being an instance where the work 
 is done for, or to repair some of the defects of, the fitters. 
 
 Claims against Railway Companies, &c. — A little 
 difficulty arises in connection with claims against railway 
 
CLAIMS AND LOOSE TOOLS. 249 
 
 companies and other carriers, and also against manufac- 
 turers for inferior goods, or on goods not complying with 
 the conditions of the specification. They are always open 
 to dispute, and even when admitted have frequently to be 
 settled for less than the amounts first claimed. It there- 
 fore appears unwise to take credit for them, especially 
 if they amount to a large sum, until such time as they 
 are actually paid. Instead of debiting them to the 
 Great Midland Railway, the Northern Central Railway, or 
 Alfred Sommers and Co. Limited, in their respective per- 
 sonal accounts in the general ledger, the better plan 
 appears to be to keep a claims book, and enter in it each 
 claim as it is made. When it is paid the cash received 
 will appear on the debit side of the cash book, and from 
 there be posted to the credit of the account entitled to 
 receive it, which in most instances will be the stores 
 account. If the claims book be treated merely as a 
 memorandum book, the transaction will only come into the 
 accounts of the firm when the cash has been received, 
 and there is no possibility of its being recalled. 
 
 In those exceptional cases where the amount claimed 
 is a heavy one, and one which should be brought under 
 the notice of the proprietors or shareholders, it may be 
 specially included in the balance sheet as a " claim pend- 
 ing." If this is done, a like allowance must be made in 
 summarising the profits collected from the cost accounts. 
 
 Form of Claims Book. — The book may either be in 
 ordinary ledger form, or may be specially ruled for the 
 purpose. We have seen a very useful record kept in the 
 form on page 250. 
 
 Loose Tools. — A still greater difficulty arises in connec- 
 tion with loose tools, and it is almost impossible to evade 
 it by means of memorandum entries. The tools are 
 debited to the storekeeper when purchased, and after- 
 wards included in his return of stores issued ; they must 
 therefore appear, when in use, in the departmental stocks. 
 The depreciation on them is very great ; they not only 
 sufifer from legitimate wear and tear, but are frequently 
 lost, more particularly when they are used on repair work, 
 or are taken by the men to execute jobs and new erectiofis 
 away from the yard. Some of them are very valuable, 
 and are really machine tools, but portable, and employed 
 as portable machines. Again, there is some difiiculty in 
 distinguishing betweed fixed and loose tools, arising not 
 
250 
 
 CLAIMS AND LOOSE TOOLS. 
 
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LOOSE TOOLS. 251 
 
 merely through their merging one into another, but also 
 through the varying practice as to their user. Whilst 
 there would be no doubt in any works as to the respecting 
 classifications of a screw cutting lathe and a cold chisel, 
 the determination of portable forges would not be quite so 
 clear ; in some works they might be moved from spot to 
 spot in the smith's shop, but never out of it, whilst in 
 others they would be constantly passing outside the yard 
 through the gates. Again, whilst a centrifugal or wall 
 pump would undoubtedly be placed in the schedule of 
 builctings and plant, as being secured to the premises, it is 
 by no means so evident what should be done with a 
 pulsometer steam pump, which may be employed at many 
 places outside the factory. 
 
 The constant additions made to the loose tools in use 
 by issues from the stores further complicate the matter. 
 When a factory is once fully equipped, new machines and 
 additional fixed appliances will only be required at 
 intervals, whereas new loose tools will be issued almost 
 daily. 
 
 Electrically=driven Tools, — The development of elec- 
 tricity as a motive power has conduced to many mobile 
 tools, so operated, being substituted for machines fixed to 
 the premises, and there appears strong indication that 
 such substitution will greatly increase in the future. Mon. F. 
 von Kodolitsch has introduced many of them in the 
 works of the Austrian Lloyd Steam Navigation Com- 
 pany, at Trieste, and in a descriptive paper in Gassier s 
 Magazine shows the advantages in working the shipyard 
 which have been derived from the change. But the tools 
 he refers to really partake, commercially, more of the 
 character of permanent plant than of loose tools. Thus 
 there are electric boring machines of various types, bolt- 
 hole reaming machines, electric punches, and machines 
 for cutting keyways ; electrically-driven tube expanders, 
 electric stacking cranes, winches, and fans ; electric pump- 
 ing outfits, cold saws for cutting castings, cylinder boring 
 machines, lifts, and capstans. It is evidently wrong to 
 speak of such articles as these as " loose tools," although 
 they are not fixed to any specific platform or bed ; they 
 are just as much part of the " plant " of the establishment 
 as one of the old-fashioned, immovable punching and 
 shearing machines would be. There is a further reason 
 for dealing with electrically-driven tools in the schedule of 
 
252 LOOSE TOOLS. 
 
 plant and buildings, where each is separately recorded, and 
 treated on its own individual merits, than in one of the 
 accumulative schedules of tools, which are depreciated by 
 an average percentage. M. von Kodolitsch anticipates 
 still further extensions in this field of electrical activity, 
 but he adds that the shape these extensions shall take can 
 often be decided [only] by the engineer himself, as much 
 depends upon special conditions and circumstances. It 
 is, therefore, evident that for some time to come there will 
 be considerable danger of the special depreciation which 
 arises from new inventions, and that care should be taken 
 to provide for it. 
 
 Such tools and machines as are here referred to should, 
 therefore, be placed in the buildings and plant schedule of 
 the department having initial charge of them, and only 
 those tools which under the old steam regime would have 
 been classified as loose be included in the schedule next 
 mentioned. 
 
 Schedule of Loose Tools. — It is quite impossible to 
 keep a record of these articles individually in the same 
 manner and form as has been recommended for plant, or 
 to so estimate the life of each separate article, each 
 hammer and chisel, and base the depreciation on such life. 
 There is no alternative but to adopt an average rate or 
 rates. An endeavour may, however, be made to secure 
 the nearest possible approach to accuracy by dividing the 
 tools into several classes, after the manner already men- 
 tioned for machinery. In consequence, however, of the* 
 greater number of articles and issues, and the consequent 
 variation in value each month, some little modification of 
 the schedule there recommended is necessary. The 
 accompanying form is based on one used by a large firm 
 of electrical engineers, but presents, we venture to think, 
 some features which are improvements on the original. 
 
 It will be seen that the depreciation on Class A is taken 
 at 24 per cent per annum, but calculated monthly on the 
 monthly balances, and that on Class B at 12 per cent per 
 annum, calculated in the same way. The amount of 
 depreciation on tools must be charged to the various shops 
 exactly as the depreciation on plant and buildings, and for 
 this purpose it is convenient to add a column for " loose 
 tools ' in the summary of interest and depreciation. 
 
 The classification of the tools and rate of depreciation 
 must be fixed by an engineer, either the works manager 
 
LOOSE TOOLS. 253 
 
 THE CLYDESDALE ENGINEERING CO., LIMITED. 
 
 Schedule of Loose Tools in Chaege of Fitting 
 Department. 
 
 Class A. 
 
 Date. 
 
 No. 
 
 Particulars. 
 
 Price. 
 
 Amount. 
 
 Jany. 
 
 
 .QaJance and Issues (to be 
 detailed) 
 
 
 150 
 3 
 
 6 
 
 
 4 
 
 
 Less Depreciation 2% 
 
 Issues (to be detailed) 
 
 3 
 
 Feby. 
 
 147 
 20 
 
 6 
 6 
 
 1 
 
 8 
 
 
 Less Depreciation 2% 
 
 And so on. 
 
 
 
 167 
 3 
 
 12 
 4 
 
 9 
 3 
 
 
 164 
 
 8 
 
 6 
 
 THE CLYDESDALE ENGINEERING CO., LIMITED. 
 
 Schedule of Loose Tools in Charge of Fitting 
 Department. 
 
 Class B, 
 
 Date. 
 
 No. 
 
 Particulars. 
 
 Price. 
 
 Amount. 
 
 Jany. 
 
 
 Balance and Issues (to be 
 detailed) 
 
 
 200 
 2 
 
 
 
 
 
 
 
 Less Depreciation 1% 
 
 Issues (to be detailed) 
 
 
 
 Feby. 
 
 198 
 37 
 
 
 10 
 
 
 
 
 
 Less Depreciation 1% 
 
 And so on. 
 
 
 
 235 
 2 
 
 10 
 
 7 
 
 
 
 1 
 
 
 233 
 
 2 
 
 11 
 
254 LOOSE TOOLS. 
 
 or draughtsman, of course under the direction of the 
 general manager, and not by an accountant or storekeeper. 
 The rate should be sufficient to cover any reasonable loss 
 through tools being mislaid, or left behind on jobs outside 
 the works, as well as through fair wear and tear. The loss 
 through carelessness on outside work may be reduced if 
 each man taking such tools out of the yard has a pass given 
 him by his foreman or storekeeper, on the face of which 
 each tool is entered, and is required to produce such pass 
 on his return, with the tools he brings back, so that they 
 may be checked with it. If the tools are issued from the 
 workshop the pass should be issued by the foreman — they 
 are tools in his charge — but if a stock is kept by the 
 storekeeper for this purpose, the pass will be issued by 
 him. In the latter .case, the stock of loose tools, for 
 temporary or separate use must be kept distinct from new 
 tools in store, and the tools so issued by the storekeeper, as 
 custodian of the whole stock, to himself as keeper of 
 this stock in use, must be charged to a " Schedule 
 of Loose Tools in charge of Stores Department," Class A, 
 B, &c. The depreciation will come into the summar}' in 
 the, usual way under the title of stores department, and 
 will be divided over the different working department in 
 the same manner as other stores' general charges are 
 apportioned. 
 
 The money balances in the schedules should show the 
 value of loose tools on hand at stocktaking, theoretically, 
 but it is quite certain they will never do so. If, however, 
 the rates of depreciation have been carefully fixed, and full 
 consideration has been given to all the facts of the case, 
 any glaring discrepancy at stocktaking will demand expla- 
 nation. Whether it arises from improper usage, or careless 
 mislaying of tools, an excessive depreciation should Ije 
 probed to the bottom, so that it may be remedied in future 
 
 Qoods en bloc— The examples hitherto considered 
 are lof inachines, or portions of machines, which in 
 themselves are sufficiently large to be dealt with separately 
 in the cost accounts. Many factories are, however, engaged 
 upon productions which cannot possibly be dealt'' with 
 individually ;_ others make, in large quantities, portions of 
 machines which, although they eventually appear in the 
 accounts as part of the cost of many machines, cannot be 
 conveniently dealt with individually at the time they are 
 
LOOSE TOOLS. 255 
 
 manufactured. If, as an instance, we consider an ordinary 
 loom, it is obTiousthat it would be impracticable to apportion 
 the labour and material to each individual wheel in the 
 loom, and to earmark the wheel from the moment work was 
 commenced upon it, until it reached its final destination in 
 the machine, and was delivered therein to the customer 
 purchasing it. Such wheels are often made in hundreds, 
 and the exact time and materials consumed on each cannot 
 be defined without great and useless expense.- 
 
 But it is necessary that the cost of manufacture should 
 in some way or other be ascertained ; indeed, it is apparent 
 that the cost accounts cannot be completed unless provi- 
 sion is made for all work passing through the shops, and 
 that must include work of this description. Nor is the 
 difficulty insuperable. If a thousand change wheels have 
 to be made they should be treated as one item ; if a 
 second thousand have to be made they should become a 
 second item. In this way the cost of them en bloc may be 
 ascertained, just as that of rivets, purchased at a fixed 
 price per cwt., is ascertained from the invoice. Exactly 
 the same method can be used for brass bolts or screws, or 
 steel pins, or any of the thousand and one trifles which 
 engineers make in quantities for their stores or warehouse. 
 Of course the initial number per item need not be 1,000 ; 
 it may even be varied for different classes of goods. 
 
 At the end of the month the 1,000 wheels will have 
 cost a certain amount in labour and material, ascertainable 
 from the ordinary records of wages sheets and stores issues. 
 Of these, however, only 700 are completed, the remaining 
 300 are still in progress, although some work may have 
 been done on them. So far as the cost accounts are con- 
 cerned, and the ordinary books of the firm will follow the 
 same method, there are two ways of dealing with the 
 charges thus accruing to the end of the month. All the 
 1,000 wheels can be carried forward in the A sheet as 
 stock in hand (work in progress) in the department, or the 
 completed wheels may be charged to the stores account, 
 leaving only the 300 incomplete ones to be carried 
 forward as work in progress. The latter way requires 
 enquiries on the part of the cost accountant ; he cannot 
 divide the cost in the proportions of 7 and 3, because 
 more work has been done on the former than on the 
 latter portion. The foreman in charge of the work must 
 be consulted as to the proportions of work done on each 
 
256 LOOSE TOOLS. 
 
 section, and as to the extent of labour required to com- 
 plete the 300 unfinished wheels. Any discrepancy will be 
 automatically adjusted the following month, it is true, but 
 at the same time it is necessary that every possible precau- 
 tion should be taken against discrepancies. In many 
 cases it is preferable to adopt the second course, because 
 the finished articles will be sent to the stores, and actually 
 re-issued before the close of the month, and to retain 
 them in the departmental stock would therefore give rise 
 to complications. 
 
Chaptee XIX. 
 
 GOODS MANUFACTURED FOR STORES AND 
 
 WAREHOUSE. 
 
 TRAVELLERS' AND SPECIAL EXPENSES. 
 
 Goods Manufactured for Stores. — The question arises 
 how the foremen are to be instructed to manufacture goods 
 for the stores department. Such work cannot be left to 
 their own unaided initiation, nor can the storekeeper be 
 permitted to issue his own requisitions direct to the 
 technical officers. 
 
 We have seen that " a stores requisition book should 
 be compiled from time to time by the storekeeper, and 
 sent to the general office for the several orders to be made 
 out under the authority of the manager." Among these 
 requisitions will naturally be included demands for articles 
 to be manufactured in the works. These articles may be 
 distinguished by having an M, or other appointed letter, 
 prefixed, either by the storekeeper for such articles as he 
 knows are made in the works, or by the manager or his 
 assistant for other goods they may determine shall be so 
 made, when examining the book. The goods which are 
 required from other manufacturers are entered on a list to 
 be submitted for the approval of the directors ; the M 
 articles should also be included in a similar list for their 
 sanction, so that they may have sufficient opportunity of 
 checking any tendency to unduly increase the quantity of 
 stores on hand. 
 
 Form of Order. — After the sanction of the directors has 
 been obtained, or pending it in cases of emergency, orders 
 must be issued to the executive of the works for the manu- 
 facture of stores materials, just as orders are issued to the 
 vendors for stores purchased. The form adopted may 
 simply be a modification of the ordinary order form, 
 giving— 
 
 The number and date ; 
 
 Particulars and quantity of the materials required ; 
 
 The tests, if any, required ; 
 
 Date completion is wanted ; 
 
 Marks, if any, to be placed on the goods. 
 s3 
 
258 
 
 GOODS MANUFACTURED FOE STORES. 
 
 When this method is adopted, the order will be addressed 
 and sent to the drawing office, and the usual shop order 
 will be issued from there. In the cost accounts, both as. 
 regards materials and direct wages, and also establishment 
 charges, precisely the same course must be followed with 
 these orders for stores, as for those for a customer. 
 
 Alternative Form of Order. — There is, however, another 
 form of order which may, in many works, be used to the 
 saving of clerical labour, although it is not adapted to all. 
 The form is as follows : — 
 
 The Clydesdale Engineering Company, Limited. 
 
 Order for Goods for Stores. 
 
 Order No. 
 
 Draughtsman. 
 
 Particulars of goods to manufacture. 
 
 Quantity 
 Marks . . 
 
 
 
 ; • 
 
 
 ..General Manager. 
 
 
 Shop 
 
 Drawing. 
 
 No. 
 
 
 Shop 
 
 Drawing. 
 
 i\o. 
 
 
 Shop 
 Drawing. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' 
 
 
 
 
 
 1 
 
 
 
 
 
 1 
 
 Patterns required 
 
 General remarks. 
 
 .189... 
 
 Chief Draughtsman.. 
 
o 
 
 GOODS MANUFACTUKED FOR WAREHOUSE. 259 
 
 These orders' need not be of suchi large size as the 
 ordinary shop order, as the various particulars required to 
 be given in them will usually be very short ; for instance, 
 it will not be necessary to give many shop drawing 
 numbers in an order of this kind for 1,000 screw bolts. 
 Carbon copying books should be usedy and by. employing 
 thin transfer sheets, which should be perforated at the 
 binding edge, as many copies as necessary may be obtained 
 by one use of the style. There should be a copy each for 
 the drawing office, for the works manager, for the foreman 
 concerned m the manufacture, for the pattern maker, and 
 the storekeeper. The order will- be prepared in the 
 general office down to the . signature of the general 
 manager ; one copy will be left in the book for future 
 reference, and the rest will be pinned together, and sent to 
 'the drawing office. They will be completed, and dis- 
 tributed from there in exactly the same manner as 
 ordinary shop orders. The drawing office copy should be 
 pasted in a guard book kept for that purpose. 
 
 A separate series of numbers should be employed for 
 these manufacturing orders, which numbers should be 
 distinguished by a letter ; it does not much matter which 
 letter so long as it is not used for any other conflicting 
 purpose, but it should be the same as that appointed for 
 marking the requisition book. 
 
 Goods Manufactured for Warehouse. — Somewhat 
 similar conditions to those last considered present them- 
 selves with respect to goods manufactured for the ware- 
 house. By warehouse is meant the department in which 
 finished materials are stored until such time as orders are 
 received for them from some customer, or to ■ which 
 finished products are sent by the various departments, of 
 the works for delivery to the customers ordering them, 
 and for whom they were constructed. At present it is 
 under -the former aspect we are considering it. 
 
 Requisitions from Warehouse. — Some method must be 
 devised by which the warehouseman may notify to the 
 manager what machines and other goods he has in stock, 
 and submit requisitions for the further supplies he 
 requires. Here again arises the difficulty of suggesting a 
 plan which may be equally suited for warehouses stocking 
 only a limited number of articles, and those stocking a large 
 number of diverse machines, and parts of, and appliances 
 for, such machines. The information required by the 
 
260 
 
 GOODS MANUFACTUBED FOE WAREHOUSE. 
 
 management is the same in both cases ; the question is 
 how it can best be furnished. 
 
 The author adopted the following form for a firm of 
 engineers and contractors abroad who also did' a merchant 
 business, and found it very useful. It was used_ for 
 merchandis,e stores and machines only, but it contained 
 all the stores then in stock, whether additional quantities 
 were required or not. 
 
 Return of Stores on hand, and of Stores required, 
 on 189 
 
 Description. 
 
 Stores on hand. 
 No. rwt. qr. Vi. 
 
 Stores now required. 
 No. cwt. qr. lb. 
 
 Date when 
 ordered. 
 
 It should, however, be stated that the variety of goods 
 kept in stock was not large, and included such items as 
 threshing machines, ploughs, and portable engines, rather 
 than the smaller articles of hardware. The return was 
 prepared by the stockkeeper monthly, a day or two before 
 the mail. 
 
 It is evident that a vast expenditure of useless clerical 
 labour will be incurred if such a return were employed in 
 an engineering factory stocking a large number and large 
 variety of manufactured articles, particularly if repair and 
 repeat portions of the machines were kept in the warehouse. 
 In such case a great deal must be entrusted to the watch- 
 fulness and prescience of the warehouseman, and the 
 manager must ascertain or check the condition of the stock 
 by personal inquiry and inspection, and reference to the 
 stock book, it is, however, necessary that he should 
 furnish a requisition, just in the same way as the storekeeper 
 does, for any articles which he finds it necessary to procure, 
 either by manufacture in the works, or from other manu- 
 facturers. This requisition may either be in a book (which 
 is preferable), or on loose sheets, and should give — 
 
GOODS MANUFACTUEE.U FOR WAREHOUSE. 261 
 
 The date of requisition ; 
 
 Description of the machines or other articles required ; 
 
 Number or quantity now on hand, or on order, or 
 
 under construction ; 
 Additional number or quantity now required. 
 
 A column should be left for the manager's instructions, 
 and another for the date of order to works or other vendors. 
 
 The articles approved for manufacture, or purchase, 
 should be entered on lists to be submitted to the directors 
 for sanction or confirmation, in precisely the same manner 
 as those demanded by the storekeeper, so that they may 
 exercise the same control over increase of stock in the 
 warehouse as they do over that in the storerooms. In 
 the case of the warehouse return, it is desirable to show 
 the quantity of machines, &c., on hand of the description 
 demanded ; there is always a temptation to increase finished 
 stock during times of depression, in order to keep the 
 machinery moving. From a financial point of view, stock 
 is capital (or borrowed money) locked up for the time being, 
 whether the goods are in the stores, the warehouse, or in 
 some departmental workshop. 
 
 Orders for Warehouse Goods. — It must be remem- 
 bered that two orders are required in connection with 
 warehouse goods. The first is for their manufacture ; and 
 the remarks in the foregoing paragraphs respecting goods 
 for stores will apply equally to those for the warehouse. 
 A separate series of numbers, distinguished by some letter 
 not used for any similar purpose, must be employed, so 
 that warehouse goods may be distinguished in all the 
 records of the firm from those of the stores, and from 
 customers' orders or contracts. Some of the articles kept 
 in the warehouse for re-sale will be purchased from other 
 manufacturers. In that case it will be found convenient 
 to specifically mark on the counterfoil orders the word 
 " warehouse," or some other intimation that the goods are 
 intended for re-sale, and not for use on the premises. 
 
 The second order is an authority and instruction for 
 the warehouseman to deliver certain machines or goods 
 to some customer. A form for this has been given in 
 dealing with drawing office orders (page 133), and it is 
 unnecessary to add anything further. 
 
 Stocks in Stores and Warehouse. — It is necessary 
 that the stocks in the stores and in the warehouse should 
 
262 GOODS MANUFACTURED FOE WAEEHOUSE. 
 
 be kept absolutely distinct. There is a radical difference 
 between them : the one is for use in the yard, generally for 
 further labour to he employed on them; the other is .for sale 
 to customers. Under no circumstances must any issue be 
 made direct from the warehouse to any working department 
 in the yard. When any articles are required which are not 
 in store, but are in the -vvarehouse, they must be transferred 
 from the latter to the former, and then dealt with as 
 though they had been purchased originally for the pur- 
 pose. The manner of dealing with these transfers will be 
 considered later in connection with the ordinary commer- 
 cial books. 
 
 It will be observed that a considerable number of the 
 goods kept in the warehouse will be catalogue goods. The 
 arrangement of the flooring space, shelves, and bins should 
 be such as will suit the catalogue lists ; that is, a milling 
 machine must not be kept on one part of the floor, and 
 the change wheels, chuck and key, extra bar and tube, 
 and second swiDg frame, and screw keys, belonging to it 
 dispersed up and down the place, or possibly in receptacles 
 on another floor. Whenever it can be so arranged, each 
 machine, with its " extras " complete, must be placed 
 ready for packing and deliver}^ so that there may, be 
 no unnecessary loss of time in searching through the 
 rooms when the order arrives. The warehouse is also 
 frequently used as a show room, and this must be 
 remembered in arranging it. " Window dressing " is not 
 required in such a room, but orderly arrangement, and the 
 placing of the goods in such position as will admit of coii- 
 venient inspection, are absolute^ essential. 
 
 Warehouse Book. — A stock book is as necessary for the 
 warehouse as for the stores proper. The most effective 
 plan is 'to keep received and issued books, and ledger (with 
 machine, &c., titles) on the same plan as in the stores 
 department, but without the money columns. 
 
 Charges to Warehouse.— There is a reason for omitting 
 the money columns in the warehouse books, which does 
 not apply to those kept in the stores. If the finished articles 
 are debited to the warehouse at the cost of manufacture, 
 the accounts will disclose to the warehouseman the profit 
 made on them, as he will always be able to ascertain the 
 selling price of most' of them from the catalogues of the 
 firm. On the other hand, if the debit is made at the selling 
 price, there is danger of the warehouse stock appearing 
 
GOODS MANUFACTUEED FOR WAREHOUSE. 263 
 
 in the books of the firm at its maximum value, and credit 
 thus being taken for unrealised profits. A compromise 
 may be made, by debiting the finished articles at assumed, 
 and fixed prices, but this course is really open to both 
 objections : it partially enlightens the warehouseman as to 
 the profits made on them, whilst at the same time it does 
 not wholly obviate the danger of over valuation. 
 
 But whether the warehouseman knows the debit prices 
 or not, it is necessary, for the purpose of account keeping, 
 that they should be fixed. Probably the better method is 
 to adopt the compromise, and debit the warehouse at fixed 
 prices, which should both allow a profit to the manufactur- 
 ing department if prudeiitly managed, and also to the selling 
 department, regarded merely in its merchant capacity, but 
 to make these entries in the general ofiice books only. 
 There does not appear, however, to be any fixed per- 
 centage by which these adjusted prices may be determined 
 for all works ; it must vary with the class of goods made 
 and sold, and the following suggestions can only be offered 
 for the consideration of the manager, whose own individual 
 judgment must finally determine the matter. 
 
 1. Goods purchased from an outside manufacturer, for 
 resale only, should be debited to the warehouse at the 
 invoice price. 
 
 2. Goods manufactured in the works for sale stock 
 should be debited to the warehouse at the nett catalogue 
 
 price, less ■ per cent discount. This discount should be 
 
 the same as the firm would allow to a selling agent who 
 undertook all the trouble and cost of procuring orders, 
 and delivering the goods to the purchasers. 
 
 3. This total amount of the discount thus allowed for 
 the year should be sufiicient to cover all the expenses of 
 the warehouse, including travellers engaged in stock or 
 •catalogue goods, if it is to prove a remunerative portion of 
 the firm's commercial transactions. 
 
 Warehouse Accounts. — An account should be opened 
 in the general (financial ledger) of the firm, entitled 
 " Warehouse Account." This must be debited with all 
 articles purchased or manufactured for the warehouse, 
 and, as there is no check by balance of money, the items 
 so debited must be compared by the accountant, or one of 
 his assistants, with the warehouse received book to see 
 that quantities and descriptions agree. The invoices for 
 
264 TEAVELLEES' AND SPECIAL EXPENSES. 
 
 goods purchased on this account from other manufacturers 
 must be checked by the warehouseman, and not by the 
 storekeeper, and to this extent he will become acquainted 
 with prices paid. But if it should be desirable to withhold 
 any particular invoice from him it can be compared with 
 his received book by one of the accountant's clerks, who- 
 will then make a remark on it to show that he has been 
 satisfied of the receipt of the goods. 
 
 Articles delivered from warehouse stores must be 
 credited to "Warehouse Account" from the day book. 
 The day book for such deliveries should be entered up 
 daily, either from the issue book or from a return of issues 
 supplied by the warehouseman. There is not the same 
 difficulty in obtaining this book for use in the general 
 office for a portion of the day as there is in the case of the 
 stores issue book, because there is not the same continuity 
 of deliveries throughout the day in the warehouse as in 
 the stores. 
 
 Similarly in the cost accounts an account must be 
 opened for the warehouse department, which must be 
 debited with purchases, with transfers from manufacturing 
 shops and stores, and with proportion of establishment 
 charges, in the same manner as fitters or blacksmiths 
 would be. The C account will be credited with sales, 
 the amounts being . obtained from the day book, and will 
 thus show the benefit which the merchant business of the 
 firm is to it. 
 
 Travellers and Catalogues.— There are some diffi- 
 culties in connection with the expenses for travellers, 
 catalogues, and other forms of advertising. A consideration 
 of these difficulties will show the necessity for the exercise 
 of great skill in the apportionment of the charges. The 
 difficulties and conditions vary in different factories, and 
 the cost accountant must display his ability to apply 
 general principles to specific cases. 
 
 So far as catalogues are concerned, it will generally 
 be found that they are properly charges against the 
 merchandise (warehouse) department solely. They refer 
 to standard forms of machines and other goods, such as 
 are usually stocked for sale ; and although orders may 
 frequently be obtained by means of them which require 
 special manufacture, they would not have been secured 
 had it not been for the existence of the standard types. 
 The point, however, is one which requires watching. 
 
TKAVELLERS' AND SPECIAL EXPENSES. 265 
 
 Other forms of advertising introduce greater complica- 
 tions. As an instance, we will take the advertisement of 
 Evan Campbell, engineer, of Southwell, which announces 
 him as : 
 
 Maker to specification of heavy machine tools for 
 stationary, locomotive, and marine engineers, boilermaker, 
 millwright, artillerist, shipbuilder, &c. ; 
 
 And offers quotations for standard horizontal and 
 vertical milling, boring, drilling, and planing machines, 
 for lathes, and special water motors. 
 
 Now, it is evident that the first half of the advertise- 
 ment is entirely for the promotion of the general business 
 of the firm, and is intended to catch orders for construc- 
 tions requiring special specifications and drawings quite as 
 much as those for standard machines. The second, on the 
 face of it, is an offer of catalogues or catalogue quotations, 
 and has therefore special reference to goods stocked in the 
 warehouse. The cost of such an advertisement should be 
 divided into two parts, the first being debited to the 
 general establishment account under which such charges 
 are grouped, and the second being debited to the ware- 
 house account. 
 
 The difficulty of adjusting travellers' salaries and 
 expenses is still greater. We have already referred to the 
 subject in treating of directors' travelling expenses. There 
 is little doubt that a firm largely employing travellers will 
 do so chiefly for the sale of standard types of productions, 
 and if in their cost accounts a distinction is made between 
 manufacturing and mercantile accounts, then the cost of 
 the travellers should be charged to the latter. But this 
 rule is subject to an exception. Some of the travellers 
 may find a considerable portion of their time occupied in 
 negotiations which bring no direct orders for stocked 
 machines, nor even orders at all through the firm's 
 peripatetic representatives, but result in inquiries which 
 eventually secure large contracts for the firm. It is evident 
 that this portion of the traveller's time and expenses is 
 properly a charge against a specific contract ; that it should 
 be extracted from the total payments to him, and charged 
 to that contract ; and the balance only be debited against 
 the warehouse. 
 
 For such analysis as this it is necessary that the cost 
 accountant should be thoroughly trusted by his employers, 
 and should have access to such records as reveal the 
 expectations of the firm, as well as completed sales and 
 
266 travellers' and special expenses. 
 
 arrangements. A loyal man must be secured for the post, 
 but a servant of such character having been obtained, it is 
 idle to expect proper work from him if he is denied the 
 necessary materials. It would be a repetition of the old 
 story of the pyramidical brickmaking. 
 
 Limitation of Wareliouse Transactions. — It must be 
 remembered that there is a limit to warehouse sales, in 
 procedure rather than quantity. Most manufacturers who 
 stock goods in large varieties and quantities, either have 
 acknowledged agents up and down the country, or deal 
 with retailers. Such employment of middlemen forbids 
 direct transactions with the public, except under such 
 conditions as afford them no advantage over the selling 
 price of the agent. As the agent or retailer usually obtains 
 his profit through a discount allowed him off the list price 
 at which he sells, any direct sales to the public should be 
 at the latter price, without allowance of any discount. 
 Even then the agent should be credited by the firm with 
 his commission on the sale when it is to a person in his 
 district. It is very easy to ruin a lucrative business of this 
 character (in the absence of an absolute monopoly), by 
 unfair dealing with the agents. Perfect loyalty to them is 
 necessary in order to secure their best services, and best 
 orders. The danger is not an imaginary one ; it has been 
 incurred, with disastrous results, in more than one instance 
 which might be quoted. 
 
 There is another variation in internal method which 
 may be mentioned, although it has perhaps suggested 
 itself to the reader. The sale stock may be so limited in 
 variety or quality as to render the employment of a 
 Avarehouseman unnecessary, and the duties may be allotted 
 to the storekeeper. In such case the warehouse books 
 may be kept by him in the way already described ; 
 although he is only one man, he acts in a dual capacity. 
 Or the articles, as manufactured, may be charged to the 
 stores department at their selling price, a debit note being 
 employed as a substitute for an invoice, and included in 
 the stores issue return when delivered to any purchaser. 
 This method, however, does not apportion profits between 
 the manufacturing and selling departments, and can 
 therefore only be usefully employed in those firms where 
 sales from stock are of a strictly subordinate character. 
 
 Cliarges in Advance of Orders.— There is one portion 
 of the expenditure of a firm on which considerable differ- 
 
TEAVELLERS' :AND SPECIAL EXPENSES. 267 
 
 «iice of opinion may arise, and which, indeed, requires 
 treating somewhat differently in the cost accounts to the 
 way adopted in the ordinary commercial books. It has 
 already been incidentally referred to in dealing with the 
 A cost . account for management expenses, • where the 
 desirability of separating direct charges for special 
 purposes is pointed out. The charges, however, which 
 are now under consideration are not merely for a special 
 purpose, but for a special purpose of which the benefit will 
 not accrue until some future time. 
 
 In the. case of an improvement in one of the specialities 
 of a firm, as, for instance, a new or better form of pump 
 br ram, devised by pump makers, the expense of 
 placing it properly on the market Avill be very great. The 
 advertisements and catalogues alone will probably exceed 
 in cost the total amount of the first year's sales of the 
 pump ; indeed, it is quite possible they may do so for two 
 or three years. In addition to these advertisements, it is 
 possible that extra travellers may be employed, or, at least, 
 that present travellers may be urged to greater exertions 
 by payment of increased gratuities or allowances. It is 
 hardly fair to debit such additional charges as these to the 
 •cost accounts of the year in which they are incurred, when 
 the manufacture of the articles in paying quantities will 
 only commence the next year. Such " extra-advertise- 
 ment charges," inclusive of additional travellers, should be 
 transferred from the initial A sheet to a B sheet, entitled 
 " Additional advertisement expenses," or " New pump 
 advertisement expenses," and a note made thereon of the 
 term of years over which it is intended the charge should 
 be spread. Great caution must be exercised in fixing this 
 term : it should be sufficient to permit of a reasonable 
 growth of business, if it is to grow at all, but not so long as 
 to relieve the immediate period at the expense of produc- 
 tion long after the new business has been, or should have 
 been, established on a profitable scale. 
 
 So far as cost accounts are concerned, this appears to 
 be a reasonable and correct method of dealing with charges 
 of this kind. The object of these accounts is to ascertain 
 the cost of manufacture, or other working, and not tb 
 furnish a basis for payment of dividends. But the trading 
 account of the firm involves a different consideration, 
 because on the result of it the directors of a limited 
 company recommend the payment of dividends, or the 
 individual proprietor or partners base their drawings. 
 
268 TEAVELLEKS' AND SPECIAL EXPENSES. 
 
 The expenditure has been incurred; and no hopes or 
 anticipations can bring the money back into the cash box 
 or cancel the obUgations if the bills are unpaid. Only very 
 exceptional circumstances can justify the carrying forward 
 of such items to a future profit and loss account. Each 
 year's trading should display its own actual results, leaving 
 anticipations to appear therein when they are realised. 
 Of course, advertisements paid in advance may be carried 
 forward exactly the same as insurances and taxes are, but 
 this is merely an ordinary adjustment of account, and not 
 a postponement of expenditure already incurred. 
 
 Charges in Advance on Foreign or Public Contracts. 
 
 Although the consideration of the subject of commercial 
 management has been chiefly directed to mechanical 
 engineering works, it will be readily seen that the sugges- 
 tions made are also applicable to such larger constructive 
 works as railways, docks, wharves, and public buildings, 
 with some modifications which may be necessary to suit 
 the special conditions of the country (when abroad), or to 
 furnish additional information required by the head office 
 at home. Any engineer or accountant accepting an 
 appointment abroad, particularly in the Spanish- American 
 countries, should remember that English manners and 
 modes of working will not do there. Equal honesty, equal 
 energy, equal determination to overcome obstacles are 
 necessary, but the mailed hand must always be concealed 
 by the silken glove. Nicolo Machiavelli is as desirable as 
 Molesworth in the travelling bag for such a journey. 
 
 Foreign contracts of large proportions are seldom 
 obtained without long negotiation, and the expenditure 
 of a considerable sum on preliminary expenses. Officials, 
 senators, governors, and even higher authorities have to be 
 approached and conciliated, and the process is generally a 
 costly one. And after the advantages to the country of 
 the proposed works are admitted, surveys have to be made, 
 plans prepared, and quantities and estimates got out, 
 before the concession will be granted in legal form. So far 
 as the accounts are concerned, these expenses must be 
 considered under the two aspects of cost account, and of 
 the commercial trade account and balance sheet. Whether 
 they are summarised in England, or in the books of a 
 branch house abroad, does not materially matter ; the 
 principles of treatment will be the same in either case. 
 
 It must be remembered that in cases of the kind in. 
 
TRAVELLERS AND SPECIAL EXPENSES. 269 
 
 question, especially when they involve large amounts or 
 important contracts, the cost to the firm will be more than 
 the salaries and expenses of the engineers, agents, and 
 men employed abroad. The directors and manager will be 
 using all their energies to carry through the contract, and 
 will leave to the subordinate staif the duties connected 
 with the ordinary routine of the establishment. A portion 
 of the charges of the home officials must therefore be 
 debited to the contract. So far as the A sheets are 
 concerned, no difficulty can arise ; it is merely a question 
 of transfer, which must be determined by subsequent 
 sheets. The B accounts will be opened for divisions of 
 work, just in the same way as they would be if an actual 
 concession had been granted and contract signed. -For 
 instance, the Toluco and Luis Potosi Railway are under 
 negotiation and survey, and the following B accounts will 
 be required. 
 
 1. Negotiation expenses, to include salaries of officials 
 
 engaged on this work, and travelling expenses. 
 
 2. Negotiation commissions, to include payments to 
 
 bankers, agents, and merchants assisting in the 
 work, and also to Government officials, legislative 
 representatives, and governors and presidents 
 who require propitiating. 
 
 3. Survey. — Travelling expenses, for steamer and rail- 
 
 way fares of staff proceeding on survey duty. 
 
 4. Survey. — Horses, saddlery, harness and carriages. 
 
 5. Survey. — Tents and other furniture. 
 
 6. Survey. — No. 1 section, No. 2 section, and so on ; 
 
 the salaries and other expenditure incurred for 
 each section being apportioned to it separately. 
 
 These are only given as indications of accounts to be 
 kept, and on many proposed undertakings it will be 
 desirable to increase them. It will be seen that the first 
 and second items are of such a nature that they cannot 
 well be divided over the later ones, whilst the third is 
 equally difficult to justly and fairly apportion, from the 
 varying times at which the staff will be sent out, and the 
 frequency with which some, at least, of them may be 
 removed from one section to another. Horses and their 
 fittings, and tents and furniture, have separate accounts 
 allotted to them because the payments under those heads 
 are for purchase of property, which will have some value 
 
270 TRAVELLEES' AND SPECIAL EXPENSES. 
 
 or other when the work is finished. The same objection' 
 exists to treating them as divisible charges as in travelling 
 expenses : there is irregularity in their use both in time 
 and distribution. On the other hand, all the cost of 
 transporting such plant and materials, of their repairs, and 
 of keep of norses, should be charged to the section of the 
 survey on which they are for the time employed. 
 
 Eventually all such B sheets will be cleared by transfer, 
 in the usual manner, to the C sheet for the contract, or 
 for the sought for but unobtained concession. 
 
 Little difficulty, except in working out details, arises in 
 the cost accounts, but a very real one exists when we turn 
 to the ordinary commercial trade account. In treating of 
 extra advertisement expenses for a new invention, or new 
 development, the beneht of which may not be felt until a 
 later period, it has already been said that only very 
 exceptional circumstances can justify the carrying forward 
 of such items to a future profit and loss account. Equal 
 care is needful with these foreign concession expenses, and 
 none of them should be carried forward to a future period 
 without the special sanction of the directors, nor should 
 such sanction be accorded without the most careful 
 inquiry into, and consideration of, all the circumstances of 
 the case. 
 
 Negotiation expenses, and negotiation commissions 
 should undoubtedly be charged to the year in which the 
 payment is made. The money has gone, for good or ill, 
 and it will not in any case come back into the coffers of the 
 firm. Whatever anticipations there may be of future profits 
 on ordinary work arising from present exertions, no sound 
 firm thinks of taking credit as a forward charge for any 
 portion of the salaries or wages incurred in such exertions ; 
 the sa,me safe rule should certainly be followed when the 
 efforts" have been employed to secure a foreign contract, or 
 even a large home public contract, the ultimate result of 
 which must always be exceedingly doubtful. 
 
 Survey travelling expenses should likewise be debited 
 against the trade account of the year in which they are 
 incurred. 
 
 Horses, harness, tents, and furniture, &c., should be 
 reduced on the lines already given for depreciation 
 accounts, and the amount of such depreciation debited to 
 the trade account for the period, the oalance being taken 
 credit for as stock in hand. 
 
travellers' and special expenses. 271 
 
 The survey of sections presents the greatest difficulty, 
 more especially as under this head the heaviest amounts 
 ■will be involved. We have known instances where such 
 expenditure has been sufficient to absorb, or even more 
 than absorb, all the profits of the firm on their ordinary 
 business, and place the result of a successful year's trading 
 on the wrong side of the balance sheet. Shareholders very 
 naturally would resent such a treatment of the matter as 
 this, and would prefer a dividend with a small future risk 
 to none at all with the risk removed. The question is one 
 to be decided by each individual firm, but it should be 
 decided after carefully weighing every factor affecting th& 
 case. 
 
Chapter XX. 
 
 SALES IN COMMEECIAL BOOKS. KEPORTS TO 
 BOARD. DIAGRAMS. 
 
 Sales in Commercial Books. — We are now in a 
 
 position to deal with the deliveries of the various articles 
 to customers, whether in pursuance of a contract entered 
 into, or order accepted, for work to be done in accordance 
 with specified directions and requirements, or in pursuance 
 of an order for stock or catalogue goods. There is no 
 material difference, so far as the booklveeping is concerned, 
 and the questions of costs have already been disposed of. 
 
 Instructions to Warehouseman. — The warehouseman 
 can have no difficulty in arranging for deliveries if he 
 properly attends to his duties. Orders from stock are 
 delivered in accordance with a special form of instruction 
 issued from the general office, and sent through the draw- 
 ing office for registration. This has to be returned to the 
 eneral office, when delivery has been made. Orders or 
 contracts for specially manufactured machines or other 
 articles are supplied to him by means of the shop order 
 form. Instructions as to mode of conveyance, address, or 
 marking, insurance, and prepaj'ment or forward freight, 
 must be inserted on the warehouseman's copy of this 
 document. 
 
 o 
 
 Delivery Book. — A delivery note must accompany all 
 goods sent by the warehouseman to a customer. A very 
 simple form will do for this purpose, and a carbon duplicate 
 book is probably best for it. It is inconA'enient and expen- 
 sive to multiply copying presses throughout the yard, and 
 on the other hand much time would be wasted by the man 
 running to the general office to make a press copy every 
 time he issued a delivery note. The form on page 273 
 will serve the purpose. 
 
 When the purchaser's works are in the same town as 
 those of the manufacturer, the delivery note should be 
 handed the carter to accompany the goods. When they 
 have to be forwarded by rail, canal, or steamer, a consign- 
 ment note, on the railway or canal company's form, must 
 
SALES IN COMMEliCIAL BOOKS. 273 
 
 THE CLYDESDALE ENGINEERING CO. LTD. 
 Clydesdale Works, 
 
 Dumbarton, 1899. 
 
 Delivered to Messrs. Evans and Foster, 
 
 Globe Engine Works, Lambeth, S.W. 
 
 No. 
 
 Description. 
 
 Marks. 
 
 
 Hydraulic Mandrel Press, 
 No. 376. 
 
 /\ 
 
 1 
 
 \/e. F.\/ 
 
 3794 
 
 Per Caledonian Railway, for delivery at Globe Engine 
 Works, Lambeth. 
 
 Oarriage paid (or to pay) 
 
 Packages 
 
 For the Clydesdale Engineering Co. Ltd. 
 
 be made out, and this will accompany the goods on leaving 
 the yard. A delivery note on the foregoing form must be 
 made out at the same time, and sent into the general 
 office, to be transmitted thence to the purchaser. 
 
 Marking Packages — Special care must be taken to 
 mark all packages in accordance with the purchaser's 
 instructions, and not to let any name appear thereon con- 
 trary to his wish. This is occasionally a matter of supreme 
 importance, particularly in the shipping trade. Merchants in 
 London, Manchester, and Glasgow frequently order 
 machines, &c., to be delivered to their order f.o.b., and. 
 require that no information should reach the ultimate con- 
 signee as to the origin of them. It is therefore 
 imperative that no marks or names, beyond those furnished 
 by themselves, shall appear on either machine or packing, 
 _and any neglect of their wishes in this respect will cause 
 'a rupture of the connection. The marking of the machines 
 will affect the constructive departments, and they will act 
 upon the instructions contained in the shop orders ; 
 the marking of the outer packages will be done by the 
 warehouseman, and he must be equally careful that the 
 instructions given him are complied with. 
 t3 
 
274 
 
 SALES IN COMMEECIAL BOOKS, 
 
 It -will be evident from this that the indiscriminate 
 enclosure of circulars or price lists in merchants' shipping- 
 packages is a dangerous practice. They are far better 
 omitted altogether from distribution in this manner, and 
 forwarded only from the general office by post. The same 
 necessity for caution does not exist in the home trade, but 
 even here it is essential that such lists are not enclosed 
 with goods on which the maker's name is not to appear. 
 
 Advice of Deliveries by Warehouseman. — There are 
 two classes of deliveries by the warehouseman, both of 
 which require note and further record in the general office. 
 So far as the warehouse stock goods are concerned, the 
 particulars of their delivery can be obtained from the issue 
 book, and this book can be checked Lj^ the warehouse 
 orders returned to the general office, with particulars of 
 delivery marked upon them. With respect to specific 
 orders manufactured in the works, a written report of their 
 delivery has to be made to the drawing office for entry in 
 the drawing office order book. It is, however, necessary 
 for invoicing purposes that some particulars of delivery 
 and marks should be furnished to the general office also, 
 and the most satisfactory method is for the warehouseman 
 to render a daily return. If a form similar to the following 
 is used, and carbon duplicating books are employed, three 
 copies ma}' be obtained at one operation, the first of which 
 must be sent to the general office, the second to the drawing 
 office, and the third left in the book for future reference. 
 
 THE CLYDESDALE ENGINEERING CO. LTD. 
 Deliveries from warehouse, Nov. 17th, 1898. 
 
 Order 
 No. 
 
 Name. 
 
 Particulars of 
 Machine, &c. 
 
 Marks of 
 Case. 
 
 Conveyance by 
 ■which sent. 
 
 .warehouseman. 
 
SALES IN COMMERCIAL BOOKS. 275 
 
 Some common sense must, of course, be employed by 
 the warehouseman. For instance, one delivery may be 
 comprised in twenty casfes. The return must specify the 
 exact contents of each case, as well as its mark, so that 
 this information may be given on the invoice. All these 
 details are not required in the drawing ofBce, but they are 
 occasionally useful, and time and labour is saved by using 
 carbon copies in this way. 
 
 This return must be examined and verified by one of 
 the accountant's clerks. The delivery book must be com- 
 pared with both the warehouse issue book and the return. 
 The cost accounts (C sheets) must also be checked with 
 the returns for the month to ascertain that all completed 
 orders have been entered therein. All this internal 
 auditing may, to some, seem additional and unnecessary 
 work, but the element of human fallibility must always be 
 borne in mind, and no risk must be run of goods being 
 delivered without being charged to the customer. 
 
 Invoices to Customers.— The first use to be made of 
 the return received in the general office from the warehouse 
 is to prepare an invoice for the customer. . It is not abso- 
 lutely necessary in all cases that this should be sent away 
 the same day as the goods ; the delivery note, if properly 
 made out, is sufficient notice of the forwarding of the goods. 
 No unnecessary delay should, however, be permitted, and 
 in the case of goods for shipment abroad the invoice or 
 invoices (for they have generally to be rendered in dupli- 
 cate or triplicate), should be always sent off the day the 
 goods leave. There is another instance where prompt pre- 
 paration of invoices is essential, and that is the case of 
 repairs of a steam or sailing vessel. The captain's signa- 
 ture, certifying to the details of the work executed, has to 
 be obtained to the bill before the ship leaves the dock or 
 river, and these details are often very prolix. In many 
 shipyards it is usual to keep the bills written up as far as 
 possible during the progress of the work, leaving only the 
 lime, stores, and closing items to be entered when the work 
 is finished. When this is done, extra strong copying ink, 
 which will copy after several days, must be used, if the 
 invoices are written ; if they are typed there will be no 
 difficulty in obtaining presses after some little delay. 
 
 Copies of Invoices. — All invoices should be copied 
 before they leave the office. A special book should be used 
 for the purpose, and it must be kept indexed to date under 
 
276 
 
 SALES IN COMMERCIAL BOOKS. 
 
 customers' names. In this book, as indeed in all others, 
 perfect copies must be insisted upon. We have seen 
 engineers' invoice copy books where some of the particulars 
 of the work are unreadable, or the figures of the charges 
 indistinct, or altogether wanting. Such carelessness as this 
 must be sternly repressed by the accountant or other 
 immediate head of the general office. 
 
 Day Book. — It is extremely inconvenient to post direct 
 from the invoice copy book to the ledger, and even if this 
 could be done, it would be necessary to prepare a summary 
 for the nominal accounts, or else load them with individual 
 entries. A day book should therefore be kept, which will 
 form a convenient medium from which to post the personal 
 debits, and at the same time provide a summary for the 
 nominal entries. Two books may Ije used: one for specifi- 
 cation orders, or contract sales, the other for warehouse 
 orders and sales. A better plan, however, is to use a book 
 with double cash columns, one for warehouse, and the 
 other for specified sales. The entries may be very concise, 
 as the following example will show, and no heading is 
 necessary. A suitable book may be obtained at any com- 
 mercial stationers. 
 
 
 
 Warehouse. 
 
 General. 
 
 
 
 £ 
 
 s. 
 
 d. 
 
 1 
 £ ! s. d. 
 
 476 
 
 Donkin and Everitt — 
 
 
 1 8" standard lathe, No. 476, 
 1J% in 3 mouths, copy B, 3/478. 
 
 110 
 
 
 
 
 
 
 j 
 
 39 
 
 Adams and Jones— 
 
 
 
 
 i) 
 
 «> 1 I' 
 
 
 I Crank axle to specification, 
 2J% in mouth, copy B, 3/479. 
 
 
 
 12 
 
 10 
 
 
 If it is desired to make a further analysis of the sales, 
 the right-hand pages of the book may be ruled for that 
 purpose. This will entail a special book, but not neces- 
 sarily special printing. The clerk who enters up the day 
 book can easily head the columns as the work proceeds. It 
 must, however, be observed that in this analysis, as in the 
 columns of the left-hand page, a clear distinction must be 
 maintained between general and warehouse sales. 
 
 As the debits to customers will be posted from this day 
 book, and not from the copy book, it must be compared 
 
SALES IN COMMERCIAL BOOKS. 277 
 
 "with the original copies of invoices by a senior clerk of the 
 accountant's department before any postings are made, 
 and the auditor should also be required to check the two 
 books, and see that they agree. Of course there is some 
 little chance of errors being discovered through the pay- 
 ment of the accounts by customers, but this should not 
 greatly be relied upon ; it opens the door to fraud. 
 
 The totals of the several columns must also be posted 
 to the credit of the accounts concerned from the day book. 
 If no analysis is made, the amount of the first column will be 
 placed to the credit of warehouse sales, and that of the 
 second to the credit of general sales. If an analysis is 
 made the postings will be to the several accounts of such 
 analysis. Thus, the right-hand page may be ruled with 
 seven vertical cash columns, respectively headed : — ■ 
 
 W. Lathes. 
 
 W. Machine Tools. 
 
 W. Small Tools. 
 
 W. Pumps. 
 
 G. Gas Engines. 
 
 G. Oil Engines. 
 
 G. General Goods and Kepairs. 
 
 The intention is that separate sale accounts shall be 
 opened in the ledger for deliveries from warehouse stock 
 ot lathes, and so on ; and for general goods manufactured 
 to specification or special order under the divisions of gas 
 engines and so on. The sum of the first four columns 
 must agree with the total of the warehouse column on the 
 left-hand page, and the sum of the last three with the 
 general column. 
 
 Monthly Statements. — It will be seen that, if his books 
 are properly and closely posted up, the accountant has in 
 his ledger debits to customers for all the invoices sent out. 
 The terms of payment, when varying from the ordinary 
 conditions of the market or firm, should be marked in the 
 ledger. Thus, in the instances given in the day book, 
 2J per cent discount for pajanent in a month may be 
 deemed the usual terms of the firm, and therefore no note 
 is needed in the ledger. The 1^ per cent discount in three 
 months, however, is a special condition agreed to in order 
 to secure an order against competing tenders, and the 
 ledger entry should therefore be : 
 
 "To Lathe, No. 476— IJ per cent, 3 months, £110 : : 
 
278 REPORTS TO BOARD. 
 
 With the ledger posted in this manner all the necessary 
 information is ayailable for making out the periodical 
 statements for accounts due during the month, and such 
 statements should invariably be prepared from the ledger, 
 and not from the day book. 
 
 Monthly Reports to Board. — In the purchasing depart- 
 ment of the concern certain returns have to be made 
 monthly to the directors, to enable them to keep a proper 
 control over that portion of the business ; other returns are 
 necessary to secure to the board a proper grasp of the 
 selling department, and also of the business in its complete 
 aspect. A summary of the sales, taken from the day book, 
 should be placed before them ; as the important matter, so 
 far as they are concerned, is the amount of deliveries and 
 debits to customers during the month, it will usually be 
 sufficient to notify the totals of the day book, and to have 
 the book itself ready for inspection by the directors, or any 
 of them who may desire to see it. A list of debtors should 
 also be prepared in the same form as that of creditors, 
 showing the amount due from each, and the expected date 
 of payment. If any debts are due from directors or officers 
 of the company, they should be shown separately after a 
 total made of the ordinary trade debtors. A summary 
 should be made at the foot of a return, say, for January, 
 giving the following particulars : — 
 
 Amounts due for payment in February. . . £ 
 
 „ „ ,, March £ 
 
 „ „ „ April £ 
 
 „ ,, „ at subsequent \ « 
 
 dates j 
 
 due from directors and emploj-^s £ 
 
 Total (to agree with the foregoing list \ ^ 
 of debtors) J 
 
 The directors can thus see what money they are hkely to 
 receive during the following three months, on account of 
 work already executed and debited. 
 
 In addition to these returns, the approximate profit 
 and loss account, by which the correctness of the cost 
 accounts is tested, should be placed before the board each 
 month. The directors will thus have before them at their 
 monthly meeting a requisition of the materials required to 
 
DIAGRAMS. 279 
 
 be ordered for the firm ; a list of the creditors and debtors, 
 arranged so as to show the several dates when payments 
 have to be made, or to be received ; and a summary result 
 of the previous month's working, agreeing with those 
 detailed cost accounts from which the most minute parti- 
 culars can be gleaned when needed. Such returns will 
 give the directors, or, in a private firm, the proprietors, 
 considerable control over the business they supervise, and 
 aSord them sufficient warning of commercial mismanage- 
 ment. It is necessary again to accentuate that returns, and 
 accounts, and submission of requisitions, are not the most 
 important matters for the directors to consider ; they are 
 really only the preludes to the more difficult questions of 
 wages rates, of economy of labour, of improvements in 
 machinery, and of increase in output and sales, which are 
 more especially the duties of the engineer than of the 
 office. It is not the clerk, the careful compiler of returns, 
 the neat and correct bookkeeper, who is all-important ; 
 no doubt he has his place and value in the establishment, 
 but it is a subordinate one ; the real determinator of profit 
 and progress is the engineer, the administrator who takes 
 the returns and accounts into his hands, and practically 
 applies the lessons they contain. It is to the administrator, 
 the scientist, the manager, and not to the mere account- 
 monger, the directors must turn for advice and guidance. 
 
 Diagram Accounts. — The use of diagrams has become 
 popular with engineers of late years. They have long been 
 employed by actuaries and statisticians, and eSbrts have 
 recently been made by several engineers to put them to 
 increased use in cost accounts. An extremely able paper 
 on the subject was last year read before the Institution of 
 Mechanical Engineers by Mr. John Jameson, of Newcastle- 
 on-Tyne, to which reference may be made with great 
 advantage. The diagrams given with the paper are : 
 
 Fig. 1. — Machinery employment diagram. 
 
 Fig. 2. — Nine years' work. 
 
 Fig. 3. — Eight contracts in bad year. 
 
 Fig. 4. — Five periods of work. 
 
 Fig. 5. — Quarterly water consumption. 
 
 Fig. 6. — Thirty foundry orders. 
 
 The second of these diagrams exhibits in graphic form 
 the result of the working of the establishment over a series 
 of years. The corrected actual output is represented by 
 
280 DIAGRAMS. 
 
 a fluctuating line, on -wliich the percentage of charges is 
 calculated, but which is reduced to a straight line, 100, for 
 the purposes of the diagram. Percentage lines are then 
 plotted out for wages, stores, issues, establishment, and 
 machinery, which, when amalgamated in one line, furnish 
 the total costs. The difference between this line of total 
 costs and the line 100 of output shows the profit or loss 
 each year. Again, the fifth diagram displays the rising 
 percentage of wages to output in years when the output is 
 falling — a fact which, in the second diagram, is supple- 
 mented by a corresponding rise in the percentage of 
 establishment charges. When displayed in such form as 
 this, the changes in trade results, arising from increase or 
 decrease in money value of output, are brought very 
 clearly before the management, and lead to the institution 
 of inquiries into the causes of decreasing profits. They 
 should, however, be prepared from, or in conjunction with, 
 detailed cost accounts, and not substituted for them. 
 
 Diagram of Cost Accounts. — The cost accounts sug- 
 gested in this treatise may be represented diagrammatically, 
 but it will be found easier to do so in a series of diagrams 
 than in one. The anterior section of the A sheets need not 
 be thrown into diagram at all ; they will appear under the 
 several costs of the worldng departments in the propor- 
 tions they bear to the direct wages paid therein, and this 
 is the form in which they will be most useful to the 
 manager. The second section of A sheets, those for 
 moulders, blacksmiths, machinemen, fitters, &c., should be 
 plotted out in separate diagrams, as shown in the page 
 opposite. 
 
 This form is prepared by years, which will require a few 
 ordinary additions of monthly charges to be made by 
 the cost accountant. It may, however, be made out monthly, 
 January, February, &c., being substituted for the years in 
 the top line ; but this will involve some trouble with 
 adjustments, as will be seen on examining the items. 
 
 The " Output " entered on the first line should be the 
 total output of the establishment at selling prices, and not 
 the value of work done in the department as shown in the 
 cost account. The line, " Total Costs," will therefore only 
 aflord a comparison between the amount expended in 
 one department and that earned in all the departments. 
 The remainder of the costs of production will appear in 
 other like diagrams. 
 
DIAGRAMS. 
 
 281 
 
 E-i 
 I— I 
 
 bb 
 
 1 
 
 CO 
 
 5t! 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 1 
 
 I 
 
 
 
 
 
 
 — 
 
 — 
 
 — 
 
 " 
 
 — 
 
 
 ~ 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 s 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 in 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 — 
 
 — 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 o 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 i 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 § 
 
 s 
 
 — 
 
 — 
 
 
 — 
 
 — 
 
 — 
 
 
 
 
 
 
 
 - 
 
 — 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 1 
 I 
 
 
 
 
 1 
 X 
 
 S 
 I 
 
 
 
 ' 
 
 a 
 
 c 
 
 1 
 
 t 
 s 
 
 c 
 
 1 
 
 p 
 
 I 
 
 1 
 
 6 
 
 c 
 c 
 
 
 -g 
 
 1 
 
 ci 
 
 
 3 
 
 1 
 
 g 
 
 c 
 
 B 
 
 1 
 
 
 
 
282 DIAGRAMS. 
 
 The line, " Stores and Materials," will represent an 
 amount obtained from the cost account, as under : 
 
 Stock, January 1st, so far as it repre- \ 
 sents actual material, and not -work > £ 
 in progress J 
 
 Purchases £ 
 
 Transfers from stores department — that \ ^ 
 is, material drawn from there j 
 
 Less — 
 
 Materials returned, and stock on hand ^ 
 at December 31st (not being work V£ 
 in progress) 3 
 
 £ 
 
 The several lines, management, drawing office, carriage 
 and cartage, motive power, gas and water, and rents, rates, 
 and taxes, will be obtained from the amounts appearing 
 under those heads in the departmental cost accounts, both 
 for materials and expenses, and salaries and wages. This 
 is a little different to the form adopted by many engineers, 
 but we think the departure is justified. In the form now 
 suggested the line of stores and materials will represent 
 those actually used in manufacture, leaving the stores for 
 use in the offices and stables, and the fuel for running the 
 machinery, to appear under the lines appropriated to those 
 divisible charges. 
 
 Wages, depreciation, and interest will be lines obtained 
 from the amounts appearing in the cost accounts. Both 
 depreciation and interest are as truly part of the cost of 
 manufacture as rent and gas are, and the latter line is so 
 liable to fluctuation in firms labouring under certain 
 financial conditions, that it should undoubtedly be graphi- 
 cally displayed in the costs diagrams. 
 
 Estimated charges must be brought into the calculations, 
 but will not involve much trouble in an annual diagram. 
 Estimated debits for goods received, but for which invoices 
 have not been rendered to the firm at the time of stock- 
 taking, must be added to the amount on which the line 
 " Stores and Materials '' is plotted out. If such estimated 
 amounts are for any of the divisible charges, they must be 
 added to the sum of such charges actually paid. On tlie 
 other hand, estimated amounts for work in progress will be 
 
DIAGKAMS. 283 
 
 added to the amount on which the line " Output " is based, 
 and estimated stores on hand will be included in the 
 amount deducted for stock in hand at December 31st. If 
 the diagram is made out monthly, these estimations must 
 be computed each month, and this necessarily causes some 
 additional trouble. 
 
 The whole of these diagrams may be brought together 
 in one " summary " sheet. The output will, of course, be 
 the same as in the other diagams, as it is the total output 
 of the yard, but the several lines of costs will be the totals 
 of the several departments. 
 
 There will seldom be any jiecessity to reduce the 
 B sheets to the forms of diagrams. It can undoubtedly 
 be done, but it is a question whether the minute lines, 
 which would be involved in such drawings of comparison, 
 would not be too fatiguing to the eye to be of any real 
 service. They should extend over a considerable period, 
 and cover a number of reproductions, in order to be useful, 
 and such details are so numerous in large machine shops 
 that very small sheets would have to be used for the 
 purpose. 
 
 The C sheets will probably serve all the practical 
 purposes of any B accounts when displayed in 
 diagrams, and even with these it is a question whether it is 
 desirable to so display them in all cases, or only in special 
 or typical instances, which will be valuable for actual con- 
 sultation. The form must be varied from that previously 
 given, and although many others may be employed the 
 following adaptation of some statistical forms will probably 
 serve the purpose. The details are those previously used 
 in the example of C cost account, but are only part of 
 those needful for the actual slip. 
 
 The sterling divisions will vary according to the 
 character of the contract : For a lathe they will be sufficient 
 if arranged from £1 to £150, and can advance by pounds 
 sterling ; for a steamship they may reach to £20,000, or even 
 more, and the advances may then be by £10 for the first 
 £100, and by hundreds afterwards. Each of the sterling 
 divisions of this example should, in practice, be sub- 
 divided into ten. A line drawn through the perpendicular 
 divisions will indicate the amount of the contract, or the 
 expenditure on the particular item named in the first 
 column. These lines will be for the combined sums of 
 wages and materials. 
 
284 
 
 DIAGRAMS. 
 
 H.M.S. ACOKN. 
 
 Sterling. 
 
 
 
 
 
 
 1 
 
 I 
 
 
 
 
 Contract Price 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Con 
 
 ;imie 
 
 d. 
 
 
 
 
 
 
 
 
 
 
 
 
 Lajring Blocks 
 
 
 
 
 
 
 
 
 
 
 
 Keel, Stem, and 
 
 
 
 
 
 
 I 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 ! 
 
 
 
 
 
 
 
 ! ! 
 
 
 
 
 1 
 
 1 1 
 
 
 Bulkheads 
 
 
 
 
 
 1- 
 
 
 
 
 
 
 
 Water-tight Doors 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 Spirit Boom 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Cabin Fittings 
 
 
 
 
 
 
 
 
 
 
 
 Laying Decks 
 
 
 
 
 
 
 
 
 
 
 Hammock Nettings . . 
 
 
 1 
 
 
 
 
 
 
 
 Davits 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Steam Steering Gear . . 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIAGRAMS. 285 
 
 The engineer will have in such diagrams : — 
 
 1. The separate cost of the various manufacturing 
 
 departments, both under the head of the total 
 charge against the department, and also divided 
 under the more salient items of expenditure. 
 
 2. The total of such expenditure throughout the yard, 
 
 arranged in similar manner. 
 ■'I The contract price, and the cost, of any particular 
 contract or order, which it may be desirable to 
 represent in separate diagrammatic form. 
 
 More detailed information is obtainable from the cost 
 sheets than from the diagrams, but, as the two should agree 
 they can be used conjointly when necessary, and in mutual 
 explanation of each other. 
 
 Technical Diagrams. — It is quite outside the scope of 
 this treatise to deal with those diagrams which relate to 
 the actual working of the factory ; which record the 
 amount of work obtained from any machine, or form of 
 machinery ; which contrast the various methods of trans- 
 muting energy into motion ; or which analyse the several 
 modes of dragging out stored up energy, and rendering it 
 the servant of man. But it is permissible to remind the 
 reader that all such diagrams, though originally prepared 
 for other purposes, may convey many lessons to the general 
 manager for use in the commercial department. Loss or 
 reduction of applied power is reduction of profit, and the 
 manager in seeking for the cause of the one should bear 
 in mind the effect on the other. 
 
 Custody of Diagrams. — As diagrams of the nature 
 described are of a confidential character, and reveal much 
 of the private working of the establishment, it is necessary 
 to make the most careful arrangements for secrecy and 
 safe custody. 
 
Chapter XXI. 
 
 STOCKTAKING. BRANCH HOUSES. 
 
 CUSTOMS AND SHIPPING REGULATIONS. 
 
 RESERVE FUNDS. 
 
 Stocktaking:. — The great opportunity for testing the 
 accuracy of the account-keeping of a firm is the yearly or 
 half-yearly stocktaking. Any important irregularities 
 in the issue of stores, any careless bookkeeping, any 
 deficient rates of depreciation, shoiild then coDie to light, 
 if the stocktaking and balancing are properly done. In 
 many establishments, not only in engineering and allied 
 trades, but in other manufacturing and merchant busi- 
 nesses, the work is unfortunately performed in a per- 
 functory and careless manner, and so the advantages 
 obtained from it are not so great as they might be. The 
 difficulties of a thorough stocktaking are undoubtedly 
 great, unless the factory can be stopped for the purpose, 
 but the benefits are sufficient to justify an effort for it. 
 
 The stock in the stores should be counted or weighed, 
 as the case may require ; nothing should be taken from 
 the stores ledger as being the correct quantity. As each 
 bin, case, or other receptacle is examined, the exact con- 
 tents should be marked on a ticket, and attached to it. If 
 the counting or weighing occurs some days before the 
 actual date of stocktaking, or even early on that day, any 
 variations through issues of materials should be marked on 
 the ticket, so as to show the quantity still left in stock. 
 When it is possible to so arrange it, this weighing and count- 
 ing should be done by, or under the inspection of, some of 
 the clerks of the general office, and not entrusted to the 
 storekeeper's staff without supervision. They may be 
 thoroughly honest and reliable, but it must be remem- 
 bered that the object of stocktaking, as of all other forms 
 of auditing, is to detect and remedy careless or fraudulent 
 errors, and should not, therefore, be entrusted to the very 
 men compromised by such errors. 
 
STOCKTAKING. 287 
 
 The stock list should be taken down on the actual date 
 of the balance sheet from these tickets on to sheets of 
 foolscap. The sheets should be ruled for the following 
 particulars : — 
 
 Quantity (weight or numbers). 
 
 Description. 
 
 Purchase price. 
 
 Present price or value. 
 
 Valuation at latter price. 
 
 The valuation should be worked out either by the store- 
 keeper or the clerks in the general office, after the remain- 
 ing portion of the sheets have been filled up, and carefully 
 checked by a reliable clerk of the accountant's department. 
 In all cases the bases of valuation should be fixed by the 
 directors or general manager. 
 
 The stock in the warehouse should be obtained and 
 valued in precisely the same manner. Much less difficulty 
 will be experienced in dealing with this than with the store 
 stock, since it does not consist of such a variety of articles, 
 nor is it usually spread over so large a space, nor distributed 
 into so great a number of receptacles. 
 
 The lists of both stores and warehouse stocks should 
 be compared with the books kept in those offices. When 
 they do not agree explanations must be asked, and if needful 
 a scrutiny must be instituted. 
 
 The machinery, both fixed and removable, and the loose 
 tools, must be taken down on similar sheets, room by room, 
 and carefully compared with the schedules kept in the 
 offices. Lathes, milling machines, and other similar 
 machines, must each be completed, with a set of cutters 
 and other tools belonging to it, before the stocktaking is 
 attempted. 
 
 The machinery of the factory need not be valued every 
 year if schedules, such as those already referred to, are 
 properly kept. But such a valuation should be made at 
 definite intervals, say each five years, in order to ensure 
 that sufficient depreciation is being written off. Loose 
 tools, alike from their own inherent tendency to waste, 
 and the provocation they give to pilfering, should be care- 
 fully valued at each stocktaking, and the result compared 
 with the schedules kept in the office. The difference 
 between the two records should not be great if the books 
 have been properly kept, and sufficient allowances, based 
 on the experience, of previous years, have been niade. 
 
288 BRANCH HOUSES. 
 
 All sheets should be initialled by every j^erson who has 
 been employed upon them, and a short note made of the 
 work he has done : thus, 
 
 " Quantities taken," D. S. 
 
 " Prices checked," C. M. W. 
 
 " Calculations checked," E. W. and C. M. W. 
 
 Branch Houses. — The system of management to be 
 adopted for branch works must be determined by indi- 
 vidual circumstances, and by the special qualifications of 
 the officers controlling them. It will also be considerably 
 modified where resident directors are appointed, or a local 
 board of directors exists. In such oases it would obviously 
 be improper, and indeed absurd, for the board at the head 
 office to attempt the same minute supervision as it would 
 when only an ordinary manager, skilful indeed as an 
 engineer, but untrained in commercial arrangements, is 
 appointed to the control of the branch. In all cases it is 
 essential that a complete system of bookkeeping should 
 exist, and that the stores issues, warehouse deliveries, 
 wages arrangements, and cost accounts should follow the 
 example of the head office. It will generally be found 
 advantageous to complete the accounts of each branch as 
 an independent concern, and so bring out a separate profit 
 and loss account and balance sheet for it, which eventually 
 may be incorporated with the head office accounts in a 
 general balance sheet. There is no difficulty in doing this ; 
 indeed, it is a plan already adopted by numerous firms in 
 various trades. 
 
 Keports, returns, and statistics will be required by the 
 central board and officers from the branches, but the nature 
 and extent of these will necessarily be modified by the 
 extent of the authority entrusted to the local officers, and 
 will probably be changed from time to time, as the require- 
 ments and conditions of the business change. Although 
 no general rules can, with any degree of wisdom, be laid 
 down, some guidance for their formation may be gleaned 
 from the examples of the great English and Scotch railway 
 companies. The London and North- Western Railway Com- 
 pany, for instance, has a central board, with committees, at 
 Euston, and a staff of accountants, auditors, and store- 
 keepers, who there focus the accounts of the whole line. 
 There is also a general manager, with a goods manager and 
 superintendent of the line as his assistants, by whom all 
 negotiations with foreign companies are conducted, and 
 
BRANCH HOUSES. 289 
 
 the general polity of the railway directed. But in addition 
 to these, district goods managers and district superin- 
 tendents are appointed at the more important trade 
 centres, so as to map out the -whole extent of line between 
 them. These district officers are entrusted with a very 
 large amount of local authority ; they carefully watch the 
 working of each station and train within their own districts ; 
 maintain the discipline of the staff ; suggest improvements 
 in administration, and submit to Euston any recommenda- 
 tions which they think will tend to advance the interests 
 of the company. The system is found to work admirably, 
 but it is not the sudden and unaided initiation of any one 
 man : it is a growth, a development during many years, 
 passing through many changes during the period which 
 has elapsed from its commencement, under Captain Mark 
 Huish, to its perfection at the present day. This is the 
 way in which branch establishment rules should be framed ; 
 it IS perhaps more troublesome, but it will certainly be 
 found more serviceable than the institution of cast-iron 
 regulations " which altereth not." 
 
 Foreign Houses. — Whilst the same remarks apply in 
 some degree to branch establishments in foreign countries, 
 it must be remembered that it is necessary to grant the 
 managers in such places considerable latitude with 
 respect to details. The laws regulating commercial trans- 
 actions are in some countries widely different to those of 
 England, and insistence upon the English method of book- 
 keeping would probably lead to the infliction of heavy 
 penalties. We have known cases where auditors in 
 England, and accountants of great eminence too, have 
 sent instructions to Spanish-American countries in regard 
 to accounts which, if complied with, would have subjected 
 the officials there to fine and imprisonmerit. In these 
 over-sea factories the proper plan is to select a faithful and 
 efficient staff, and then very largely to trust them. 
 
 Foreign Cost Accounts. — There is no reason whatever 
 why cost accounts should not be kept in any foreign 
 country, provided the legal commercial account books are 
 kept in addition. It is true they cannot usually be 
 employed as legal evidence, but then that is not the 
 primary object of keeping them ; they can very well serve 
 their purpose without being brought into court. When 
 such cost sheets are kept, copies of them should be sent to 
 the head office at home by the first mail after completion. 
 v3 
 
290 CUSTOMS AND SHIPPING REGULATIONS. 
 
 The directors, sitting quietly in their boardroom, will thus 
 have a clear idea of the progress of the "vvork and of its 
 cost under their executive agents abroad. Regularity of 
 transmission is, however, essential, and should be rigorously 
 insisted upon. 
 
 Customs Regulations. — When any firm ships direct to 
 foreign countries, and not through the medium of a 
 merchant in England, it is absolutely essential that the 
 customs regulations and tariffs of the country shipped to 
 should be thoroughly understood. The tariffs are generally 
 fairly well known, even to engineers who do not them- 
 selves ship goods direct, but the conditions under which 
 those tariffs are administered are frequently unknown or 
 neglected. These regulations and methods of computing 
 and collecting the duties are of great importance, and any 
 changes therein should be carefully observed. Information 
 respecting them is published by the Government in the 
 London Gazette, the Board of Trade Journal, and in 
 Consular Reports. 
 
 Shipping Regulations. — Contracts entered into abroad 
 involve shipments of goods, sometimes by regular lines of 
 steamers, at others by ocean " tramps," and occasionally by 
 vessels specially chartered for the purpose. When the 
 shipments are by regular lines, or even by tramps open for 
 general cargo, the bill of lading usually forms the contract 
 between the parties, both with respect to carriage and 
 delivery of the goods, and payment of freight. In such 
 cases little difficulty is likely to arise, as the construction 
 of such documents is usually sufficiently known to mer- 
 chants and manufacturers who are in the nabit of shipping. 
 But a ship is sometimes chartered by her owners to a 
 broker or merchant, and put up by the charterer as a 
 general ship ; and in the bills of lading a reference is made 
 to the charter party, and a stipulation for payment of 
 " freight and other conditions as per charter partjr." 
 When this is done the shipper is bound by such of the 
 provisions of the charter party as are referred to in the 
 bill of lading. Again, when the ship is chartered by 
 the shippers themselves, all the conditions of her user, 
 of demurrage, and of payment of freight or hire, will be 
 regulated, as between the owners and charterers, by the 
 charter party, and not by the bills of lading issued. It is, 
 therefore, important in all these latter cases that the 
 charterers should have, at least, a general knowledge of the 
 
EESERVE FUNDS. 291 
 
 obligations upon which they enter, and of the privileges 
 they acquire. 
 
 An epitome of the law bearing upon this subject would 
 occupy too great a space to be here incorporated, nor 
 would it be satisfactory. Shipping law has monopolised 
 the efforts of the greatest legal intellects in the world, and 
 can only be properly explained by a writer trained by long 
 experience to appreciate legal difficulties and distinctions. 
 An excellent work on the subject is Maude and Pollock's 
 " Compendium of the Law of Merchant Shipping," the 
 fourth edition of which was edited by the Hon. Baron 
 Pollock and Gainsford Bruce, Esq. Chapters VI. and VII. 
 (each in two parts), on " Contract of Affreightment and its 
 Incidents," and on " Insurance," will be found especially 
 useful. The work is voluminous and expensive, but 
 exceedingly valuable from the thorough and reliable 
 manner in which every point of the subject is treated. 
 Should a smaller or cheaper book be desired, a " Manual 
 of Common Law," by Josiah W. Smith, B.C.L., Q.C., will 
 be suitable. Chapters VIII. and IX., on " Shipowners 
 and Charterers," and " Insurers and Insured," treat those 
 subjects very ably. 
 
 Both the works are sufficiently lucid to be understood 
 by a layman of average capacity, and warn him of the 
 pitfalls which beset him in his capacity of charterer. The 
 whole subject, however, bristles with difficulties, and the 
 shipper should not attempt to grapple with them too 
 deeply ; payment of the lawyers' fees is usually the cheapest 
 way in the end. 
 
 Reserve Funds. — Finally, it is necessary to consider 
 the various conditions of those funds which are set apart, 
 before division of profits, to meet future contingencies, 
 and which are usually denominated "Reserve Funds." 
 These are of three kinds : — 
 
 (1) For equalisation of dividends, and reserve against 
 
 general contingencies. 
 
 (2) To meet depreciation in buildings. 
 
 (3) To provide for replacement of machinery. 
 
 It must be remembered that we are dealing with 
 engineering works, and that the consolidation of the three 
 funds in one, after the general practice of banking or 
 merchant houses, will be most unwise in firms which are 
 so entirely dependent on the efficiency of their machinery 
 for future prosperity. If only one reserve fund appears 
 
292 RESERVE FUNDS. 
 
 on the balance sheet, the whole of it will be regarded by 
 the shareholders as available for dividend in a meagre 
 year, and the directors may possibly have great difficulty 
 in defending it against encroachment. 
 
 The accumulation of this first reserve should be on the 
 principle usually adopted in banks and merchant busi- 
 nesses ; that is, by setting aside to it the difference between 
 the amount available for dividend and the dividend actually 
 declared. Thus, if £10,000 is the amount of nett profits 
 in any one year, and an eight per cent dividend is declared, 
 which will absorb £8,000, the balance of £2,000 should be 
 placed to No. 1 reserve fund, instead of being carried 
 forward into the next year's accounts, so as to then increase 
 the amount for distribution. But there must be no mistake 
 in building up this reserve. The £10,000 must be the 
 balance which can be divided among the shareholders after 
 making ample provision for reserve funds Nos. 2 and 3 — 
 that is, for depreciation and necessary replacements of 
 buildings and machinery. 
 
 The fund is properly a dividend one ; it is intended 
 merely to help poor years, periods of bad trade, or strikes, 
 and of adverse market conditions, with some of the money 
 kept back in prosperous years; but it is not intended to meet 
 any great or sudden emergency, to combat a financial crisis, 
 or to conceal a disastrous loss. All bad debts, all losses on 
 the year's trading, all reductions in values of stores must 
 be written off this reserve fund when they constitute or 
 create an adverse balance, and not carried forward in the 
 profit and loss account to the following year to be made 
 good out of the profits of that year. It is surely absurd to 
 show a reserve of £5,000, brought intact from a previous 
 account, in a year when a loss of £500 has been made on 
 the trading, and to carry forward such loss to the follow- 
 ing account on the assets side of the balance sheet. The 
 reserve in such case is only £4,500, and should be so 
 entered. It may seem a small thing to enter it the other 
 way when the ultimate result is the same, but it is mislead- 
 ing to those shareholders who are not well versed in 
 accounts, and care should be exercised to avoid anything 
 which may give them a false impression. When the fund 
 correctly represents an amount which is available for 
 dividend purposes and ordinary contingencies only, it may 
 very safely be used in the business of the company. It 
 will probably earn more profit when thus employed than 
 it would invested outside the business. 
 
EESERVE FUNDS. 293 
 
 The second and third reserve funds differ from the first 
 in this, that whilst the first reserve is built up out of 
 surplus profits, the others should be debited to the trade 
 account irrespective of the results it shows, and so set 
 aside before any profits are calculated. The method of 
 estimating depreciation by anticipated lives of buildings and 
 machines has already been set forth, and the amount so 
 arrived at should be the sums added to reserve funds Nos. 
 2 and 3 respectively. It is a usual practice with manu- 
 facturing firms to represent their building and machinery 
 on the assets side of their balance sheets at decreasing 
 values in manner following : — 
 
 Machinery as per last balance sheet £88,456 
 
 Less. Depreciation at 5 per cent per annum 4,423 
 
 84,033 
 Add. New machinery, purchased and 
 
 erected 5,703 
 
 £89,736 
 
 This is correct, so far as it goes, since the machinery 
 appears at a value which is supposed to be arrived at by a 
 sufficient allowance for the wear and tear it has undergone. 
 The amount to be written off should, however, be the total 
 sum of the schedule of machinery already explained, and 
 the entry on the balance sheet should be — 
 
 Less. Depreciation as per schedule 
 transferred to reserve fund. 
 No. 3 per contra £4,423 
 
 The entry on the liability side of the balance sheet 
 will then stand : 
 
 Reserve fund No. 3 (machinery), as per 
 
 last balance sheet £13,290 
 
 Transferred from profit and loss account... 4,423 
 
 £17,713 
 
 This will require a balancing entry, the nature of which 
 will appear when the question of investment is considered. 
 
 Investment of Reserve Funds. — The method of dealing 
 with these reserve funds is much more than a matter of 
 bookkeeping; it is essentially a matter of commercial 
 management, and although the manner we suggest may 
 appear superlatively cautious, it only corresponds with that 
 
294 RECAPITULATION. 
 
 adopted by prudent bankers. In limited companies it is 
 certainly the proper course, especially when the increased 
 and increasing responsibility of directors for the exercise 
 of prudent management is considered. 
 
 To ensure security, to "earmark" the amounts as 
 available only for a specific purpose, and to satisfy share- 
 holders and investors that their capital expenditure could 
 be restored to its original proportion by fresh purchases 
 out of existent moneys at any time when necessary, it is 
 desirable to invest the reserve funds in convenient 
 securities outside the company's own business. Such 
 investments should be in high-class securities, not liable to 
 frequent or rapid fluctuations, and for which there is 
 always a good stock exchange market. Consols, municipal 
 loans, railway debentures, and preference stocks answer 
 these conditions. Mortgages are usually good security 
 when judiciously chosen, but there is the objection to them 
 of not being readily turned into hard cash. They should 
 therefore only be selected for the investment of the No. 2 
 (buildings) reserve fund, and to a limited extent for No. 
 3 fund. 
 
 The entry on the assets side of the balance sheet will 
 then be : — 
 Mortgages on real property in Great Britain, ") 
 
 being investment of reserve fund No. 2 per > £3,710 
 
 contra J 
 
 Government and corporation securities, and^ 
 
 money on deposit at bankers, being invest- V £17,713 
 ment of reserve fund No. 3 per contra J 
 
 These recommendations may be old-fashioned, and 
 seem to sacrifice the higher rate of interest which might 
 be gained by throwing the money into the business in 
 hotch-potch. The determination of the point must be left 
 to the directorate, but we certainly consider the advantages 
 of unquestioned and readily available security should 
 decide it. 
 
 Recapitulation. — To resume the recapitulation from the 
 termination of the cost accounts, we found that in order to 
 ascertain that such accounts are correctly compiled, it is 
 desirable to prepare from the commercial books a monthly 
 profit and loss account, the result of which shall agree with 
 the cost sheets. Certain other points demand attention, 
 not so much from absolute necessity, as to facilitate the 
 easy arrangement of work. Of these are the institution of 
 
RECAPITULATION. 295 
 
 a works' instruction book, and the proper arrangement of 
 shop-to-shop orders, so as to ensure continuity of order 
 numbers and symbols. Claims against railway companies 
 and other carriers are better kept in a separate claims 
 book, a suitable form for which is a specially ruled ledger, 
 which, however, is only to be considered a memorandum 
 entry. Loose tools are a pecuharly difficult portion of the 
 factory equipment to deal with, since the number of 
 articles comprised in them, and the rapid rate of deteriora- 
 tion to which they are subject, render the fixing of any 
 rate of depreciation difficult, and compel the adoption of 
 an average one. Something may be done to increase the 
 accuracy of the writing down by dividing the tools into 
 classes, and giving an appropriate rate to each class. The 
 manufacture of goods en bloc also requires some little 
 adjustment of the ordinary way of apportioning wages and 
 stores, so as to meet the special conditions of these whole- 
 sale orders. Goods manufactured for stores or warehouse 
 should be undertaken only after official approval of requisi- 
 tions for them, and in compliance with a works' order 
 duly issued. This order may either be on the ordinary 
 form of the company, or a special form, of which an 
 example is given, may be more conveniently employed. 
 In the warehouse it is desirable to keep received and issued 
 books, and ledger, similar to those used in the stores 
 department, and the requisitions from the warehouseman 
 must show the quantity he has on hand of the particular 
 goods demanded. Money debits and credits should be 
 omitted from the warehouse books, to avoid any revelation 
 of the profits made on catalogue and other goods : these 
 money transactions should be dealt with in the general 
 office by opening a warehouse account in the commercial 
 ledger. 
 
 The next point is one of considerable importance, and 
 frequently necessitates a divorcement in treatment between 
 the general books of the firm and the cost accounts : it 
 relates to the charges incurred in advance of orders both 
 at home and abroad. The initial rule is that all expenditure 
 should be debited to the period in which it is incurred, 
 but there are exceptions to this in such cases as " extra- 
 advertisement " charges for a speciality or improvement 
 only just put on the market, and survey expenses in con- 
 nection with a foreign concession, the legal formalities for 
 which have not been completed. Such exceptions, how- 
 ever, shall only be allowed after most careful consideration 
 
296 RECAPITULATION. 
 
 on the part of the directors : they affect the management 
 and financing of the company or firm, and not its book- 
 keeping only.' 
 
 The instructions to the warehouseman for dehvery of 
 goods should be sufficiently explicit to enable him to 
 properly mark and forward them. He must be provided 
 with a delivery book, and must make out a note for each 
 parcel of goods leaving the yard. Particular care must be 
 exercised in marking the packages, so that the instructions 
 of the purchasers on this point may not be violated. A 
 return of all deliveries must be prepared by him for the 
 drawing and general offices, and from this return the 
 invoices to customers can be made out. Press copies of 
 all these invoices should be taken, but for purposes of 
 bookkeeping they must be entered into a day book ruled 
 with double cash columns, for warehouse and general 
 sales. The bookkeeping thus suggested will enable the 
 accountant to submit to the directors, monthly, a list of 
 debtors, with anticipated dates of payment, similar to that 
 previously named for creditors ; and he Avill also be in a 
 position to supplement this by an approximate profit and 
 loss account. 
 
 Diagrams have become popular of late years with 
 engineers, and a very able exposition of the uses to which 
 they can be applied in connection with accounts has 
 recently been read before the Institution of Mechanical 
 Engineers. The cost accounts suggested in the present 
 treatise may also be represented diagrammatically, but it 
 is not needful to so display all the divisions of them. 
 Some of them are merely kept for collective and distribu- 
 tive purposes, and the results which are presented in 
 ultimate sheets are those which are required by, and are 
 most useful to, the engineer when thrown into diagrams. 
 Two forms are suggested for this purpose : the first show- 
 ing the results of departmental expenditure and charges, 
 being equivalent to the later A sheets, and the second 
 showing the total expenditure on completed contracts, or 
 of such completed contracts as may from time to time be 
 selected, either on account of their special importance, or 
 because they are representative of classes of work or 
 orders. Technical diagrams are outside the scope allotted 
 to this treatise, but the reader is reminded that such 
 diagrams, though originally prepared for other purposes, 
 may convey many lessons to the manager for use in the 
 1 cmmercial department. 
 
CONCLUSION. 297 
 
 The yearly or half-yearly stocktaking is pointed out as 
 the great opportunity for testing the accuracy of the 
 account-keeping of the firm, and also for detecting irregu- 
 larities in the issue of stores, or deficient rates of depre- 
 ciation. Suggestions are made for precautions to be taken 
 in order to make the stocktaking really effective and 
 approximately correct, and for fixing the responsibility for 
 definite portions of the work on individual ofiicers or 
 clerks. 
 
 The arrangements desirable for the conduct of business 
 in branch houses or works, or foreign houses, so far as they 
 differ from_ the principal works regulations, are dwelt upon, 
 and attention drawn to the difficulties involved in customs 
 regulations and the intricacy of shipping laws. The 
 question of reserve funds is entered upon, the various 
 classes of them noted, and the appropriate forms of 
 investment considered. The advantages of investing the 
 reserves for replacement of buildings and machinery in 
 securities outside the business of the firm, and which can 
 be readily turned into hard cash, are deemed to be greater 
 than the difference which might be gained in interest if 
 they were employed in the firm's transactions, and thereby 
 to a large extent locked up. 
 
 Conclusion. — It is only necessary to add that the words 
 of this writing can serve no useful purpose unless they are 
 aided by the intelligence of the reader. It is impossible 
 to define any system, either of accountancy or manage- 
 ment, which will equally benefit all establishments ; there 
 are local conditions of situation, capital, turnover, class of 
 trade, and character and temper of officers and men, which 
 render variations of method desirable, and even necessary. 
 No text-book can, in such a complex question as manage-, 
 ment, do more than offer suggestions, and the value of the 
 suggestions will depend chiefly on the manner in which 
 they are applied by the reader. Engineers have greater 
 difficulties to encounter in their purely technical work than 
 those involved in commercial management, and there can, 
 therefore, be little doubt of their ability to satisfactorily 
 dispose of these business questions when once they set 
 themselves down to master them. 
 
INDEX 
 
 PAGE 
 
 Accountant, The 26-55 
 
 Accounts, Payment of 55 
 
 ,, Collection of by Travellers 83 
 
 Advertising 79 
 
 Agents, Particular, Directors are 3 
 
 Alteration of Drawings 153 
 
 „ Special Contract Drawings 153 
 
 ,, Standard Drawings 154 
 
 „ Patterns 155 
 
 Annual List of Members 12 
 
 Articles of Association 4 
 
 Attainment of Character 171 
 
 Auditor, Qualifications of 16 
 
 Preparation of Balance Sheet 17 
 
 Examination of Books and Accounts 17 
 
 Not QuaUfled for Management 17 
 
 Limits of Knowledge of Business 18 
 
 Summary of Duties ., 19 
 
 Monthly Audits 19 
 
 Audits, Monthly 19 
 
 Averaging Cost of Materials for Estimates 105 
 
 Balance Sheet, Preparation of 17 
 
 Blocks, &c., Allowance in Estimates 119 
 
 Boiler Specification , Ill 
 
 Branch Establishments 75, 288 
 
 Card System 35 
 
 Cartage 73 
 
 Cashier, The '. 26, 57 
 
 ,, Selection of 58 
 
 Catalogues, Record of 34 
 
 ,, Preparation and Circulation of 81 
 
 Cost of 264 
 
 Charges in Advance of Orders 266 
 
 ,, „ on Foreiga or Public Contracts 268 
 
300 INDEX. 
 
 PAGE 
 
 Check Boxes, Time Checks 1S3 
 
 Cheques, Drawing of 61 
 
 Formof 61 
 
 Claims against Carriers 248 
 
 „ Formof Claims Book 249, 250 
 
 Commercial Management 1 
 
 Commissions, Illicit ; 35 
 
 Conclusion 297 
 
 Conferences 167 
 
 Contracts, Signing of 5 
 
 Correction of Invoices 46 
 
 Correspondent, The, Qualifications of 87 
 
 ,, Authority of 88 
 
 Registration of Letters 88 
 
 „ Distribution of Letters 90 
 
 ,, Departmental Letters 91 
 
 „ Telegrams Forwarded 92 
 
 „ The Typewriter .• 92 
 
 ,, Lady Clerks 93 
 
 ,, Register of Addresses 94 
 
 ,, Printed Memorandums 94 
 
 ,, Postal and Telegram Register 94 
 
 ,, Piling Letters 95 
 
 Cost Accounts , 67, 208 
 
 ,, Nature of 70,208 
 
 ,, Division of 70 
 
 ,, Invoice Debits to 71 
 
 „ Freight and Cartage 73 
 
 ,, Use of in Estimates 116 
 
 ,, Cost Sheet A 208 
 
 ,, Management Expenses : Form A 209 
 
 ,, Debits to ditto 210 
 
 ,, Credits to ditto 212 
 
 ,, Direct Charges for Special Purposes 213 
 
 ,, Cartage, Coal, and other Establishment Charges.. 214 
 
 ,, Depreciation 215 
 
 ,, Interest 220 
 
 ,, Later Departmental Sheets 224 
 
 ,, Transfers from Departments 226 
 
 ,, Estimated Charges 227 
 
 ,, Credit Transfers- to Sheets 228 
 
 ,, Materials and Expenses 228 
 
 ,, Salaries and Wages 229 
 
 Sheet B 230 
 
 ,, Scrap Material 232 
 
 ,, C, or Contract Summary Sheet 232 
 
 ,, Arrangement of Debits, C Sheet 233 
 
INDEX. 301 
 
 PAGE 
 
 Cost Accounts : Credits, C Sheet 233 
 
 Form of C Sheet 234,235 
 
 ,, Closing of C Account 236 
 
 „ Quantities in 237 
 
 „ Trade Debits and Credits .„ 237, 238, 239 
 
 „ Transfers to Plant Sheets 240 
 
 „ Monthly Profit and Loss Account 245 
 
 Credit and Debit Notes 47 
 
 Creditors, Monthly List of 58 
 
 ,, Sanction of Payment by Directors 60 
 
 Customs Regulations 290 
 
 Daily Keports by Travellers .- 84 
 
 Day Book 276 
 
 Debit and Credit Notes 47 
 
 Delivery Book 272 
 
 Delivery, Date of 35 
 
 ,, Penalty Clause 36 
 
 Delivery Notes 42 
 
 Depreciation : Cost Accounts 215 
 
 ,, by Individual Machines 218 
 
 Departmental Cost Sheets 224 
 
 Departmental Letters 91 
 
 Diagram Accounts 279 
 
 ,, Cost Accounts 280 
 
 ,, Technical , 285 
 
 „ Custody of 285 
 
 Discipline, Necessity of 21 
 
 Discounts and Packages 48 
 
 Disputes as to Wages 194 
 
 Distribution of Letters : 90 
 
 Directors 1 
 
 „ Duties and KesponsibiUties 2 
 
 ,, Particular Agents 3 
 
 ,, Payment of Dividends out of Revenue or Capital 4 
 
 ,, Act as a Board 5 
 
 ,, Signing of Documents or Contracts 5 
 
 „ Seal of the Company, Care and Use of 6 
 
 ,, Rules for Meetings 7 
 
 ,, Committees 9 
 
 ,, Officers' Attendance at Boards and Committees 9 
 
 „ Attendance Book 10 
 
 ,, Appointment of Officers 10 
 
 ,, Resolutions, Reports on 14 
 
 ,, Monthly Reports to 278 
 
 Dividends, Payment of , out of Revenue or Capital 4 
 
 Division of Sales 86 
 
302 
 
 INDEX. 
 
 Documents, Signing of , 5 
 
 Drawings, for Estimates 119 
 
 Shop 140 
 
 ,, Registration of Drawings, and Register 143 
 
 ,, Numbers of 144 
 
 ,, Alternative Plan of Register 148 
 
 ,, Shop Drawing Numbers 150 
 
 „ Index to Drawings' Register 151 
 
 ,, Special Contract Drawings 152 
 
 ,, Alteration of Drawings 153 
 
 ,, Alteration of Standard Drawings 154 
 
 ,, Drawings for Works 156 
 
 ,, Preparation of Shop Drawings 156 
 
 ,, Separate 157 
 
 ,, Examination of Shop Drawings 157 
 
 ,, Shop Drawings' Diary 159 
 
 Filing of 160 
 
 Drawing Office, Importance of 26 
 
 Scientific Investigations in 27 
 
 Requisitions 29 
 
 Orders for Worls: 132 
 
 Order Book 133 
 
 Stock Orders 133 
 
 Shop Orders and Lists, and Form of 138 
 
 Parts to be Supplied from Stores, &c 141 
 
 Patterns Required and General Remarks 141 
 
 Supplementary Shop Orders 142 
 
 Shop Order Copy Book 143 
 
 Preparation of Shop Drawings 156 
 
 Examination of Drawings 157 
 
 Return of Tracings and Prints 157 
 
 Tracings Sent Away 159 
 
 Filing Drawings 160 
 
 Sketch Books, &c 162 
 
 Relations with Works Manager 163 
 
 Duties of Directors 2 
 
 ,, Secretary 11 
 
 „ Auditor 19 
 
 ,, General Manager 20 
 
 Engineer, Qualifications of Manager as 24 
 
 Establishment Charges, for Estimates 105, 120 
 
 ,, Cost Accounts 214 
 
 Estimate Clerk 103 
 
 Estimated Charges, Cost Accounts 227 
 
 Estimates, Preparation of , 98 
 
 ,, Catalogue 103 
 
INDEX. . 303 
 
 PAGE 
 
 Estimates : Averaging Cost of Materials 105 
 
 „ "Weight of Materials 105 
 
 „ Establishment Charges 105, 120 
 
 „ Profits on Standard Machines 106 
 
 ,, Estimates in General 106 
 
 „ Data for 108 
 
 „ Order of 109 
 
 „ Labour and Materials 110 
 
 „ Quantities of Materials 110 
 
 „ Approximation from Former Constructions 110 
 
 ,, Boiler Specification Ill 
 
 ,, Price of Materials 113 
 
 „ Unstable Equilibrium of Markets 113 
 
 ,, Estimation of Labour 114 
 
 ,, Estimation by Technical Experts 115 
 
 ,, Cost Accounts, TJse of, in Estimates 116 
 
 ,, Steamship Estimate 117 
 
 ,, Wages and Salaries, Division of 118 
 
 „ Drawings, &c 119 
 
 Blocks, &c 119 
 
 „ Profit 122 
 
 , , Estimates Sent to Customers (Tenders) 123 
 
 ,, Tender Copy Book 124 
 
 ,, Pursuing Tenders 124 
 
 ,, Tender Index Book 124 
 
 ,, Estimates and Commercial Records 126 
 
 Examination of Books and Accounts 17 
 
 „ Invoices for Materials Purchased 45 
 
 Factory Rules 164 
 
 Filing Letters 95 
 
 Foreign Contracts : Advance Charges 268 
 
 Foreign Houses 289 
 
 ,, Cost Accounts 289 
 
 Foremen's Records 116 
 
 Foremen, Timekeeping of 180 
 
 Freight „ 73 
 
 General Manager (see Manager, The General). 
 
 Goods en bloc 254 
 
 Manufactured for Stores 257 
 
 Form of Order 257 
 
 Alternative Form of Order 258 
 
 Manufactured for Warehouse 259 
 
 Requisitions from Warehouse 259 
 
 Incentives to Productive Energy 171 
 
304 INDEX. 
 
 PAGE 
 
 Ineentives to Productive Energy: Profit Sharing 172 
 
 J, ,, American Methods 173 
 
 „ „ Fixed Piecework Rates 174 
 
 » ,, Analytical Piecework Rates ... 175 
 
 ). ,, ■ Differential Piecework Rates.. 177 
 
 Inspection of Materials in Progress 37 
 
 Instruction Book, Works 248 
 
 Interest : Cost Accounts 220 
 
 ,, Summary of 222 
 
 Interviews 24 
 
 Invoice Book 49 
 
 Invoices for Materials Purchased 43 
 
 Examination in OflBce 45 
 
 Passing for Payment .•. 45 
 
 Correction of 46 
 
 Posting of 51 
 
 Not Rendered 54 
 
 Debited to Cost Accounts 71 
 
 to Customers 275 
 
 Copies of ;;. ; 275 
 
 Day Book 276 
 
 Issue of Stores and Materials 195 
 
 Justice, Capacityfor 21 
 
 Lady Clerks 93 
 
 Letters, Registration of 88 
 
 ,, Distribution of 90 
 
 ,, Departmental 91 
 
 „ Filing of ; 95 
 
 Loose Tools ; 249 
 
 ,, Electrically-driven 251 
 
 ,, Schedule of 252 
 
 Machine Details, Nomenclature of 98 
 
 Manager, The General 20 
 
 Duties and Qualities of 20 
 
 Capacity for Justice 21 
 
 Necessity of Discipline 21 
 
 Routine Duties 21 
 
 Selection of Staff 22 
 
 Selection of Office Staff 23 
 
 Qualifications as Engineer 24 
 
 Working to Time 24 
 
 Interviews 24 
 
 Manager, The Works 163 
 
 ,, Relations with Drawing Office 163 
 
INDEX. 305 
 
 PAGE 
 
 Manager, The Works: Qualifications 164 
 
 ,, Workmen and Factory Rules 164 
 
 ,, Order Book 165 
 
 Clerk 167 
 
 ,, Conferences 167 
 
 „ Shop Appointments 168 
 
 ,, Workmen's Characters 169 
 
 ,, Attainment of Character 171 
 
 ,, Incentives to Productive Energy 171 
 
 „ Profit Sharing 172 
 
 ,, American Methods 173 
 
 ,, Fixed Piecework Rates 174 
 
 , , Analytical Piecework Rates 175 
 
 Differential Piecework Rates 177 
 
 ,, Automatic Grading of Men 178 
 
 „ Contract System 179 
 
 Management, Auditor not Qualified for 17 
 
 Management Expenses, Cost Sheet A 209 
 
 ,, Debits to Account 210 
 
 „ Credits to Account 212 
 
 ,, Direct Charges for Special Purposes 213 
 
 Market, The Cheapest 33 
 
 Materials Purchased, Inspection of in Progress 37 
 
 ,, Receipt of at Works 39 
 
 Tests of 42 
 
 ,, Invoices for 43 
 
 ,, Returns and Rejections 47 
 
 ,, Debit and Credit Notes 47 
 
 ,, Packages and Discounts 48 
 
 ,, Issue of 195 
 
 „ Removal of from Stores 196 
 
 ,, Collection of 197 
 
 Members, Annual List of 12 
 
 Memorandum of Association 4 
 
 Meetings, Directors, Rules for 7 
 
 ,, Officers' Attendance at 9 
 
 „ Minutes of 13 
 
 Monthly Audits 19 
 
 Monthly List of Creditors 58 
 
 ,, Sanction by Directors of Payment 60 
 
 ,, Profit and Loss Account 245 
 
 ,, Statements for Customers 277 
 
 Name Plates 140 
 
 Nomenclature of Machine Details 98 
 
 Officers: Appointment by Directors 10 
 
 W3 
 
306 INDEX. 
 
 PAGE 
 
 Office Staff, Selection o£ 23 
 
 „ Timekeeping of 180 
 
 Orders for Purchases 32 
 
 Placing of 33 
 
 with a Favoured Firm 33 
 
 Received 126 
 
 Received Register 127 
 
 for Work, Drawing Office 132 
 
 Shop Orders and Lists 138 
 
 Packages, Marking of 273 
 
 Passing of Stores Requisitions 30 
 
 „ Invoices for Payment 45 
 
 Patterns Required lil 
 
 ,, Numbers of 145,150 
 
 ,, Register of 145 
 
 ,, Alteration of 155 
 
 Payment of Absent Workmen 194 
 
 „ Accounts 55 
 
 Wages 193 
 
 Piecework Rates, Fixed 174 
 
 ,, Analytical 175 
 
 „ Differential 177 
 
 ,, are not Cost Accounts 178 
 
 ,, Wages Record 190 
 
 Petty Cash 66 
 
 Penalty Clauses 36 
 
 Personal Solicitation 85 
 
 Placingof Orders 33 
 
 ,, with a Favoured Firm 33 
 
 Plant Sheets: Transfers from Cost Accounts 240 
 
 Postal and Telegram Register 94 
 
 Price of Materials 113 
 
 Printing Ink, Copyable 32 
 
 Productive Energy, Incentives to 171 
 
 ,, Profit Sharing 172 
 
 „ American Methods 173 
 
 ,, Fixed Piecework Rates 174 
 
 , , Analytical Piecework Rates 175 
 
 ,, Differential Piecework Rates 177 
 
 Profit and Loss Account, Monthly 245 
 
 Profits in Estimates. General 122 
 
 Profit Sharing 172 
 
 Profits on Standard Machines 106 
 
 Public Contracts, Advance Charges 268 
 
 Purchases and Sales 28 
 
 Purchases of Materials f 32 
 
INDEX. 307 
 
 PAGE 
 
 Quantities in Cost Accounts 237 
 
 Quotations, by Standard Prices 96 
 
 Railway Companies, Claims against 248 
 
 Recapitulation 76, 129, 240, 294 
 
 Receipt of Materials at Works 39 
 
 ,, by Storekeeper 40 
 
 Register of Addresses 94 
 
 Members 11 
 
 Letters 89 
 
 Orders Received 127 
 
 Drawings 143 
 
 Patterns 145 
 
 Register, Postal and Telegram 94 
 
 Register, Alternative Plan 148 
 
 Relative Transport Costs 196 
 
 Removal of Materials from Stores 196 
 
 Reserve Funds 291 
 
 ,, for Equalising Dividends 292 
 
 ,, for Depreciation of Buildings 293 
 
 ,, for Replacement of Machinery , 293 
 
 „ Investment of 293 
 
 Resolutions, Directors' Reports on 14 
 
 Responsibilities of Directors 2 
 
 Reputation of the Firm 86 
 
 Requisitions, Drawing Office 29 
 
 ,, Storekeeper's 30 
 
 ,, Passing of Stores Requisitions 30 
 
 Returns and Rejections of Materials Purchased 47 
 
 Rough Time Book 184 
 
 Sales Department 79 
 
 Sales and Purchases 28 
 
 Sales, Division of 86 
 
 in Commercial Books 272 
 
 Instructions to Warehouseman 272 
 
 Delivery Book 272 
 
 Marking Packages 273 
 
 Advice of Deliveries by Warehouseman 274 
 
 Scientific Investigations in Drawing Office 27 
 
 Scrap Material : Cost Accounts 232 
 
 Seal of the Company 6 
 
 Secretary and his Duties 11 
 
 Secretary: Register of Members 11 
 
 ., Annual List of Members 12 
 
 ,, Minutes of Meetings 13 
 
 Shipping Regulations 290 
 
 w3* 
 
308 INDEX. 
 
 PAGE 
 
 Shop Drawings Diary 159 
 
 ,, Drawing Numbers 150 
 
 Shop Drawings, Preparation of 156 
 
 „ Separate Drawings 157 
 
 ,, Examination of Drawings 157 
 
 „ Return of Tracings and Prints 157 
 
 ,, Temporary Sketches 157 
 
 Shop Orders and Lists, and Form of 138 
 
 Shop Orders : Parts to be Supplied from Stores, &c 141 
 
 „ Patterns Required and General Remarks 141 
 
 Shop to Shop Orders 248 
 
 Solicitation of Customers by Principals 85 
 
 Special Contract Drawings 152 
 
 Staff, Selection of 22 
 
 ,, Appointments in Shops 168 
 
 Standard Prices, Quotations by 96 
 
 Steamship Estimate 117 
 
 Stock Orders 133 
 
 Stocktaking 286 
 
 Storekeeper's Requisitions 30 
 
 Storekeeper, Receipt of Materials 40 
 
 ,, Qualiflcations and Selection of 41 
 
 „ Delivery Notes 42 
 
 Stores Ledger 52 
 
 Postings 202 
 
 Stores, Issue of 195 
 
 Issue Book 199 
 
 Prices of, for Issue 201 
 
 Return of Issues of 202 
 
 Postings to Stores Ledger 202 
 
 Postings to Financial Ledger 205 
 
 Expended Account _ 206 
 
 Goods Manufactured for 257 
 
 Form of Order for ditto 257 
 
 Alternative Form 268 
 
 Stocks in Stores and Warehouse 261 
 
 System, Value of 2 
 
 Subordinate Officials 26 
 
 Supplementary Shop Orders , 142 
 
 Telegrams Forwarded 92 
 
 Temporary Establishments 75 
 
 ,, Sketches 157 
 
 Tenders, Record of 34 
 
 ,, Sent to Customers 123 
 
 „ Copy Book for 124 
 
 „ Pursuing Tenders 124 
 
INDEX. 309 
 
 PAGE 
 
 Tenders: Tender Index Books 125 
 
 Timekeeping , 180 
 
 „ of Staff and Foremen 180 
 
 „ Admission of Workpeople 181 
 
 Time Checks 182 
 
 „ ^ Check Boxes ' 183 
 
 „ Rough Time Book 184 
 
 „ Time Tickets 185 
 
 ,, Wages Book 186 
 
 „ Abstract of Wages _ 188 
 
 ,, Checking Wages Book 189 
 
 „ ,, Piecework 190 
 
 „ Rates 192 
 
 „ „ Time 192 
 
 Tools, Loose 249 
 
 „ Electrically-driven 251 
 
 ,, Schedule of Loose 252 
 
 Tracings Sent Away 159 
 
 Trade Debits and Credits, Cost Accounts 237 
 
 Travellers, Employment and Character of 82 
 
 ,, Collection of Accounts by Travellers 83 
 
 ,, Daily Reports 84 
 
 ,, Expenses of 264 
 
 Typewriting Machines 92 
 
 Unpaid Wages.. 195 
 
 Unstable Equilibrium of Markets 113 
 
 Value of System 2 
 
 Vouchers 65 
 
 Wages Book 186 
 
 „ Form of 187 
 
 ,, Abstract of 188 
 
 „ Checking of 189 
 
 Wages and Salaries, Division for Estimates 118 
 
 Wages : Checking Kates 192 
 
 „ Checking Time 192 
 
 ,, Payment of 193 
 
 ,, Disputes as to 194 
 
 „ Payment of Absentees 194 
 
 ,, Unpaid Wages 195 
 
 Warehouseman, Instructions to 272 
 
 „ Advice of Deliveries by 274 
 
 Warehouse, Goods Manufactured for 259 
 
 ,, Requisitions from 259 
 
 ,, Orders for Warehouse Goods 261 
 
310 INDEX. 
 
 PAGE 
 
 Warehouse: Stocks in Stores and Warehouse 261 
 
 Book 262 
 
 „ Charges to Warehouse 262 
 
 ,, Accounts 263 
 
 „ Limitation of Transactions 266 
 
 Weights in Drawing Office Register 151 
 
 Weight of Materials for Estimates 105 
 
 Works Instruction Book 248 
 
 Workmen and Factory Bules 164 
 
 Workmen's Characters 169 
 
 ,, Attainment of Character 171 
 
 Works Manager (see Manager, Works). 
 
 Workpeople, Admission of 181 
 
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 etc., with descriptive letterpress. The Models are printed on thin card- 
 board, the important parts are tinted, and the Valves are movable so as 
 to show their positions when the Piston is at any part of the stroke. The 
 relative positions of Crank Pin and Eccentric are clearly shown. By 
 Thomas Jones, M.I.Mech.E,, and T. Gilbert Jones, M.Sc. Price 2/6 ■ 
 post free, 2/9. 
 
 DESCRIPTIVE GEOMETRY MODELS. 
 
 Consisting of 12 Models made of stiff paper, which, when folded, show 
 the two planes of projection at right angles to each other. By Thomas 
 Jones, M.I.Mech.E. Price, with descriptive letterpress and 40 problems 
 
 for solution, 2- ; post free, 2/3. 
 
 ^be Scientiftc publisbino Co. IE. 
 
 HODSON'S COURT, CORPORATION STREET ; and 
 g, VICTORIA STATION APPROACH, MANCHESTER.