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from the year 1857 to ils transference to the | Office, and the only possible solution of the Government. It shows steady progress and present deadlock is for the Government to cut financial prosperity, following the logarithmic the Gordian knot and take over the business curve. The Government made a good bargain in 1911. in its purchase ; it is the fashion to depreciate this purchase. Indeed it is the inalienable
DEDUCTIONS. right of virtually half the British race to decry In all well conducted businesses profit is the action of the other half. Facts have no usually distributed to meet : effect on party bias. The £5,715,000 paid 1. Depreciation—which is a term applied to by the Government for the telegraphs are now | the diminution of the value of the plant as a worth £30,000,000, and no one believes it ! | whole, due to time and work acting upon it, and
Fig. 6 shows the growth of this General Post finally causing its complete decay. .. Office business. It also obeys the logarithmic 2. Renewals--which is a term applied to the law. There is no capital. Everything is periodical replacement with new materials of
charged to revenue. The working expenses the parts of the plant that wear out most are apparently very high, but if they were rapidly. taken as they should be, at a fair com 3. Reserve—which is a fund invested outside mercial figure, say 57} per cent., the profit the business formed as a species of insurance to would be considerable. ·
be prepared for emergencies, accidents, and (6) Telephones.- The telephone business of fires, and to meet what we call in England this country defies diagramatic analysis. It has antiquation of plant, or what they call in the had a curse upon it from its first introduction. | United States better ment of plant. It is now in a state of chaotic confusion. It 4. Redemption—which is the formation of a has been the shuttlecock of politicians and the sinking fund, in the course of time wiping out football of local authorities. The attempt to the capital raised by loan or subscription... force it on the municipalities is likely to prove 5. Dividends and bonuses which are the disa failure. Tunbridge Wells has lamentably | tribution to shareholders in cash of the surplus broken down. It is an imperial business, a of the profit earned. part and parcel of the business of the Post Sound finance means a proper appreciation of all these points, and a due and proper allo .: THE SCRAP HEAP. .. i cation of a portion of the annual revenue to The value of scrapping is not appreciated in meet each requirement. Practice is very | England. In America, when a new process is variable. Different businesses require different introduced, which effects considerable. ecotreatment.
nomy in production, it can be shown by simple In electrical industries depreciation and calculation that it is wise and commercial to renewals must be continuous, and must be
sweep away the old plant and install the new; the first charge against revenue. Electric
and this is done. English manufacturers are plant must be maintained in absolute perfect most tenacious of old machinery. I have seen order up to the hilt, otherwise it fails to be old Boulton and Watt machinery at work that productive, and rapidly becomes very in absorbed annually an excess of coal and oil efficient. Hence depreciation and renewals costing sufficient money to have justified its are provided for in the ordinary annual main
removal a generation ago. But it is in the intenance expenditure. Reserve fund is, however,
creased rate of production that justificaessential in all growing businesses, and the tion for scrapping comes in. The American soundness of the financial control is shown does not wait until a machine is worn out more by the condition of the reserve fund before condemning it. As soon as he than by any other monetary sign.
realises the fact that up-to-date machinery Redemption of capital is a compulsory i will save him in time and labour enough to feature of municipal undertakings, erected justify new plant, away goes the old plant, and with capital borrowed under the authority the value of the new is soon repaid by greater of the Local Government Board. The rate at
production. In the majority of cases the which the loan is redeemed is determined by “ betterment" of machinery is charged against the nature of the work undertaken.
revenue, but it is easy to justify its charge The present rule is for- Land, 60 years ;
against capital if the value of the increased Buildings, 30 years; Machinery, 15 years; production exceeds the interest on the sum of Electric Mains, 30 years.
the capital invested in the old and in the new No dividends or bonuses are allowed in | plant. However, the judicious manufacturer such municipal industries. The profits are should be fortified with a reserve fund to devoted to the amelioration of the rates, but in provide against antiquation and provide for all businesses established by private enterprise
betterment. under the Limited Liability Act the surplus profits are distributed as dividends and CO-OPERATION AND COMBINATION. bonuses. The formation of a good reserve There seems something radically wrong, fund is imperative in all undertakings de from a scientific point of view, in some of these pendent on moving machinery, for invention is gigantic “combines " that have originated so prolific and improvements so rapid that in the U.S.A. It is startling to find that antiquation is soon reached and betterment each holder of £1,000 in the White Star Line needed. It is also necessary in the case of will receive f. 14,265 for his share from the private undertakings established under the new Atlantic Shipping Combine. l'pon what Tramways or under the Electric Lighting Acts, capital is profit to be distributed which will for in those cases at stated periods the muni enable the new holder of £14,265 to be as cipality has the power to take possession of the happy as the late holder of £1,000? Whence business at its then value of the plant, and no | are the new profits to come ? allowance is made for goodwill or compulsory It is not even clear where the money is purchase. Sound finance seems to show by to come from (or the traffic to pay that experience that 2} per cent. on the capital is money) to gain any profit whatever on about the average amount that should be the millions projected to permeate the allowed annually to form a substantial reserve. soil of London with “ tubes."
There are risky adventures, like submarine On the other hand combinations and cocables, where larger amounts should be put | operative societies, associated with a judicious aside. The Eastern Telegraph Company is system of management, must offer consideran admirable instance of sound finance. It able economic advantages in encouraging has been in existence for thirty years. Its production, maintaining fair prices, securing invested general reserve fund amounts to 'good markets, and adjusting a margin £1,164,673 28. 2d. Its capital is £,10,249,170. | between expenditure and revenue which will Its gross revenue is £1,200,000.
satisfy buyer and seller. The co-operative
system which is such a feature of credited with the establishment of an AmericarScandinavian agriculture has been intro- | Korean bank, the first attempt to initiate some reform duced into Ireland with marvellous financial into Korean finance, in which they are assisted by success. This is due greatly to its non the establishment of a small steam coinage factory, political and non-sectarian character. The
which, it is hoped by the astute promoters, will some nature of trade organisations and modern
day develop strength enough to be a reliable sounhome industries is everywhere changing.
dation for a Korean Imperial mint and national The individual is merging into the orga
banking system. It may be argued by those who
know Korea that such institutions are at present nisation. Self-help is the key of the
purely visionary, but there is no knowing when they situation. It is very remarkable that we
may become positively practical, and in view of have been taught this new doctrine of
present relations between Great Britain, Japan and economics in Ireland. There are 630 co-opera
Korea, there can be no possible doubt of the imtive societies in that country, with 65,000
| portant value of the wedge which will open up the members (shareholders), all farmers and heads
country, the thin end of which is now being carefully of families. The annual trade turnover is inserted by our American cousins." 6,1,250,000. The rate of growth of all branches is most satisfactory and encouraging. We, in
I read in Frazer's “The Real Siberia”: my native country of Wales, are watching this
” The building of the mighty Trans-Siberian improvement with great interest, and I hope
Railway has attracted the attention of traders. soon to find that my countrymen have made Americans and Germans are already in the up their somewhat conservative minds to follow country opening up commerce. The British, Ireland's good example. Ireland acquired from however, lag behind.” Wales the light of learning and of religion. Let
The crying demand of our countrymen us hope that she will return the gift by giving abroad is for representatives who will make the Wales the light of co-operative commercial interests of the British merchant their own. economic prosperity which has been accom What the merchant wants, to secure him plished there by “the familiar magic of an equal chance for business with the common sense.”
rest of the world, is broad-minded and The key of commercial success is the dis energetic Consuls, and from the facts covery or construction of a new market aided I have detailed above, it would seem as if by a cheap and reliable mode of distribution.
there existed sound cause for recommending The parcel post is the most efficient means at a great deal of the American method in the our disposal to distribute the products of home constitution and working of a new commercial industries throughout the United Kingdom. Consular service, whose motto should be, Every town and every house thus becomes a ' “ English Trade and Commerce, First, Last, new market. We have to educate heads of
ve to educate heads of , and all the Time.” families in these facts. This can be done by The Germans have an admirable Intelligence societies and local industrial exhibitions. Ad Department all over the world. If any electric vertising is now a science.
development is foreshadowed or suggested in
any one of our colonies, especially those in COMMERCIAL SUPREMACY.
which my firm acts as consulting engineer, we The way in which other nations are assailing at once receive intimation of the fact from our commercial supremacy is well illustrated Germany and often from America. We never by the following extract from a technical once have received similar information from paper :
any British source ! “Messrs. Colbran and Bostwick are Western Amcricans. They were sub-contractors on the
COMMERCIAL EDUCATION. pioneer railway now running successfully under
I have endeavoured, to the best of my Japanese management between Seoul and Chemulpo,
ability, on every occasion to point out that the bridges, permanent way, rolling stock and loco
the retardation in commercial progress in the motives of which are all American. . . . . . .
United Kingdom is not due so much to want They not only control the electric light and power in Seoul, the capital of Korea, but they hold the
of scientific education in the men as in the concession for long-distance and local telephony for
i masters. It is the masters who have allowed the whole empire, and they have secured the contract
the Americans and the Germans to oust them for future extensions of the electrical tramway system,
out of their own markets, not by any superiority the first section of a fairly large system of water in the quality of their goods, but by lower works for the capital. They are also, with some truth, | prices, by superior knowledge of the de
mands of the markets, by the establishment also Elementary Science, Geography, History, of new markets, by better direct communica- and Literature. The only two foreign tion with foreign countries, by superior methods languages were French and German. of business ways, by establishing regular In the next year a provincial examination intelligence departments, and, above all, by was held at Huddersfield, but it was not possessing and exercising superior commercial | until 1858 that the system was inaugurated technical knowledge..
which has since developed to such an imThere is a science in business as in manu- | portant extent, and simultaneous examinations facture. We want our business men to be at a number of different centres under the technically educated. Their brains must be supervision of local committees were estabtrained as the Germans have been trained, lished. As regards the invention of this to guide their business habits by language, system, the Society must share the credit observation, generalization, and common sense. with the College of Preceptors. That InThey must lay aside the habits of their fathers. stitution in 1853 tried the experiment of It is very satisfactory to find our new universities collecting pupils at local centres, and of establishing commercial faculties.
examining them by means of papers sent The University of Birmingham has created a down from London. It was at one time Faculty of Commerce, the first in the United thought that the two systems would clash, Kingdom, and it began its work on October ist, but it was soon found that the College and 1902. Its object is to educate in the scientific the Society occupied entirely different ground, bases of commerce, not the rank and file, bnt and the two systems have never interfered the officers of our industrial army. Industries, in any way with one another. trade, and manufactures are the dominant In 1858, 58 institutions sent up 288 candiinterests of the present day. They are man- dates. The numbers increased steadily till aged by all classes of society. The peer rubs 1865, when there were 2,160 ; and they have noses with some village Hampden over the grown with an almost continuous increase office desk. It is surprising that the principles | until last year we examined 15,578. and development of commerce have been so During the long period over which the long neglected in our schools. A knowledge examinations have now extended there have of the science of business must assist the | been considerable and great alterations. It early experience of the man of business was at first intended that the examinations in learning practically the best modes of should include all the elements of a general transacting his business. It is technical education. The establishment of the Unieducation of the highest type. The establish versity Local Examinations in 1858, and of ment of a Faculty of Commerce will revo- the Science examinations of the Science and lutionise college life. Every seat of learning Art Department (now the Board of Education), must copy Birmingham. It will make college led to the abandonment of many of the original life essential for the man of business-the subjects. On two occasions, in 1871 and in reverse of the popular notions of the past, 1879, it was considered that the ground was which regard a college career as unfitting for adequately occupied by other institutions ; a future business calling. College training but the decision of the Council to abandon the must give an intellectual and lively interest in Society's examinations was on both occasions a student's future calling, whether it be a rescinded in consequence of the urgent learned profession, a political life, a military | representations from the local institutions occupation, or a business vocation.
through whose agency the examinations were The Society of Arts has long held the position carried out. In 1876 the Programme was of pioneer in the matter of Commercial Educa. revised, and a more purely commercial chation. It is now nearly fifty years since (in racter was given to the examinations. It was 1853) the Council of the Society first took up also proposed to award, in addition to the the question of examinations, and considered certificates always granted for single subjects, a proposal submitted to them by Mr. Chester a commercial certificate to be given to all for the establishment of a general examination candidates who had passed in a certain number system. It was not, however, until 1856 that of subjects. This proposal was not successful the proposal bore fruit, for in that year 52 at the time, nor does it appear to be very much candidates were examined in London. The more popular at the present date, for though it subjects of examination included not only was renewed two years ago there have not as Book-keeping, Arithmetic, and Drawing, but yet been any applications for such a certificate. On the other hand, in Cardiff University they. There are, however, two other causes that have abandoned the granting of certificates require our most serious consideration. The for simple subjects and give them only for one is want of commercial patriotism ; the groups.
other is the Free Trade fallacy. . Up to 1880 the examinations had been free. No one can have travelled in the United In 1881 the examinations were actually dropped, States or met Americans in Europe without but they were renewed in 1882, and a fee of being struck by their intense patriotism. They 2s. 6d. was charged to each candidate. This often carry the stars and stripes with them, fee has since been continued, and for the last and decorate even their rooms in French and few years the examinations have been self- English hotels with their flag. “America for supporting, and the Society has thus been the Americans,” is their motto, and they exrelieved of the very heavy drain on its re- clude every other industry but their own by sources which the examinations previously great protective tariffs. They have thus a caused.
great home market-virtually a monopolyUp to the year 1901 only one grade of exam behind them, which is a grand guarantee for nations was held, certificates of three classes the capital required to maintain their active being awarded, although for many years there competition in other countries. existed a system of elementary examination There is no such motto as “Great Britain for for which the Society supplied identical exami the Britons." Here we are loyal to everybody nations, the results being examined and the but a Briton. Our industries not only receive certificates awarded by examiners appointed no protection, but they are retarded by internal by the local boards. This system, which was restrictions of the worst character, and our never very successful, was abandoned in 1895. manufacturers are handicapped in every direcIn 1901 the experiment was tried of establishing tion. Railway companies favour foreign proa second or lower grade, and it has proved ductions by giving preferential rates, and extremely successful, for in the first year 4,458 freights are excessive. A case came within papers were worked, and in the present year my own experience where a contract went to there was a slight increase, the number being America because the freight from one of our 4,803.
Lancashire towns was 255. per ton, while from I may add that this year the Society has Philadelphia it was only 16s. 6d. ! successfully introduced a system of vivá voce The average man who is not wedded to examinations in foreign languages. It is party politics feels strongly that there is someobvious that these cannot be carried out on the thing wrong in the doctrine of Free Trade. same system as examination by written papers, Nations which have not adopted it have and therefore arrangements have been made flourished, more than the solitary nation that for the Society's examiners to visit the local has. Our working man does not earn as much centres at convenient dates, and 'examine such money as the American working man, nor candidates as may be entered for the purpose. | does he live so well, nor bear so high a The first of these examinations was held in character. The burden of taxation falls on May last. Since that date examinations have our industries, and reacts on our working been held in French, German, and Spanish, at l classes. We admit, free of duty, those articles five centres in London and the provinces, to which compete with our own industries, and which 280 candidates were sent up, of which tax those which do not. We remit the tax 202 passed and 78 failed. It is worthy of note which would be paid by the foreign producer, that in the Birmingham University no student while we exact that which falls upon our own will receive the degree of Bachelor of Com subjects. Tariffs in all countries are excluding merce who does not pass in two modern our commerce. We are being beaten not only foreign languages, German, French, Spanish, in neutral markets, but even in our own. or Italian.
We have spent £300,000,000 in making
South Africa an integral part of the British OUR FISCAL SYSTEM.
Empire, and at once it is made an open The supremacy of the commercial and in- , market to our competitors who have paid dustrial position of the United Kingdom has nothing towards the formation of the market, practically ceased. Can it be recovered ? but have reviled us in ways that will not
I have endeavoured to show that this is easily be forgotten. greatly due to our want of commercial edu- The great prosperity which followed the cation and to our obsolete business habits. introduction of Free Trade was due to the