effect of certain antecedents and the residue of the phenomenon is the effect of the remaining antecedents." This method was employed by Sir Isaac Newton in an ingenious experiment in which he sought to determine the elasticity of substances by allowing balls made of these various substances to swing against each other, and then observing how far they rebounded in comparison with their original fall. This loss of motion, however, Sir Isaac was well aware, is due only in part to imperfect elasticity, since the resistance of the air also enters in to effect the result. He determined the strength of this resistance by allowing the balls to swing without striking each other and observing how much each variation was less than the last. By being enabled in this way to compute the quantity which must be deducted for the resistance of the air, he had at the same time determined the elasticity of the substances under investigation, since these were expressed by the residue. It may very likely be that after the effects of all the known causes have been subtracted from a given phenomenon a residue still continues to exist. One is tempted to pass over such residue without further investigation, since to the average mind at least residual phenomenon are usually obscure and seemingly unimportant. Nevertheless, this final canon emphasizes the importance of a complete and precise solution of the problem at hand. PART V AIDS TO EFFICIENT CONTROL OF BUSINESS To judge your business fairly, you must review the past, know the present, and judge the future from what you have done and what you are doing, coupled with a careful survey of the field in which you operate.-HENRY CLEWS. Properly classified records act as a measure of efficiency; CHAPTER XIV CONTROL THROUGH STATISTICS To the keen, analytical mind in business there is scarcely such a thing as chance, for this reading of the future by analysis removes the elements of uncertainty in any enterprise.-JOHN H. HANAN, President of Hanan and Son. The Problem of Control The trained mind, reasoning along the lines suggested in the preceding two chapters, depends constantly for accurate results upon statistical information. Facts, verifiable evidence of every operation from the purchase of raw materials to the collection of bills due, have in every progressive business establishment fairly effectively ousted Dame Chance; the manager applying the best practice of today has become convinced he cannot continually guess nor wait for year-end inventories, but must exercise day-to-day control. The necessity for this close control becomes apparent upon an examination of cost data, compiled under the competitive conditions which prevail today in industry. A commodity which the manufacturer, let us say, puts upon the market for $160 has entailed the various items of expense shown in Figure 23. Here expenditures of $150 yield a profit of $10-67/10 per cent on the cost price or 6 3/10 per cent on the selling price. The narrow margin speaks in no uncertain terms of competition, and it emphasizes at the same time the important influence upon the results of what managers of the old time school refer to contemptuously as little things; a five dollar reduction in any of these cost items increases net profits 50 per cent; a ten dollar accumulation of small wastes wipes out profits en |