The Nonpartisan Leader Newspaper, March 31, 1919, Page 9

- amusing yet- pitiful fight which. Business Principles and the Farmer Application BY A. B. GILBERT USINESS thinking has been practically revolutionized by certain principles in the last 20 years and everywhere we find more or less application of these principles or methods. But the beginning has scarcely been made in the business world as a whole, although the average small business mar is likely to feel that he has grasped the last word of these principles when he .buys a cash register or gets a patent system of accounts. Cost accounting, eificiency, depreciation, system have become household business words and because of this fact the city man is likely to think he has a ready remedy for the problems of the farmer °* in the advice: “You need business methods.” There is just enough truth in this to give plausibility to the advice and faith to the adviser that he has solved the farmer’s problems. -But these business principles can be applied by the small farmer only in the most general way. The farm application of them must be much different from the city application. Again, for the same reason that the special interests get their big profits by political and business force and not from individual effi- ciency, the big problems of the farmer lie out- side his individual control and can not be reach- ed except by united farmer activity. Let us take, for instance, the matter of book- keeping. and cost accounting. The city man has had to use bookkeeping to prevent others from getting the better of him. He deals with a large aumber of people and has to have accounts of these dealings. The farmer, on the other hand, deals with only a few persons and can keep track gen- erally by carefully preserving bills, receipts and simple memoranda of his sales. The other object of bookkeeping and cost account- ing, which has been so developed in the large busi- ness concerns, is TO AID IN MANAGEMENT. The business is too big for the manager to keep his thumb on all those details essential to wise man- agement; so he devises careful written records” which bring the whole business before his eyes. This second object is perhaps the only logical rea- son why the small farmer should keep accounts. He is in much closer contact with his business, the farm, than the merchant or manufacturer is with his. It is smaller and the details are more in hand. But it is valuable to him to know ac- curately the results the different cows are giving, about what it costs him to raise steers for the market, the cost per acre of wheat, corn, rye and other crops, the value of the service he gets or might get out of a tractor; or whether the use of certain kinds of fertilizer pays. Contrary to- first impressions it is very easy to make mistakes on these things when the farmer' relies only on im- pression and memory. KNOWING PRINCIPLES MORE IMPORTANT Any system of account keeping that is practical must take these fundamental facts into consider- ation. We must also remember that the farmer has to be his own bookkeeper and has other work of much greater importance to do. The “manager” can not keep elaborate, complicated books or rec- ords on the farm no more than he does in the city. The city manager always hires specialists for this work. \ The farmer probably can gain more from a study of the new business principles, so that -he has them in mind when he buys, sells and plans his work, than from adopting any com- plicated system of records, even if he can work it. There is the recognition of depreciation, for in- stance, as a production cost. Land depreciates, houses and barns depreciate, the machinery depre- ciates, the 1uman being depreciates, that is, passes from full value to no value or scrap value in the course of time. The time taken to reach the no- value stage varies with every different kind of . thing and with tke use to which it is put. Unless the returns each year cover the year’s share of this cost and unless the farmer saves out enough to, cover dépreciation of the things on his farm, he will some day reach the point where he can not renew necessary instruments of production. Some study of rates of depreciation is val- uable because naturally the farmer will then . around the idea of ‘“overhead expense.” of Fundamentals for Farm Use Must Be Different From That for the City Man—W:ill Not Solve Big Problems give more attention to reducing this rate of depreciation by repairs and renewals at the proper time and by better care. Also in buy- ing he will not buy the lowest-priced thing, but that thing which promises lowest cost in terms of service over a series of years. Thus a ma- chine which costs $200° and will probably last only five years is dear beside one which costs $300 and will last 20. “Cheap and bad,” as so much of the stuff on our market is, is profit- able only to the seller. Again, there are the important points grouped By this the business man means all those expenses which remain about the same whether his business is good or poor, whether his clerks are working half the. time or busy all day, whether his factory is used to capacity or only partly used. The big items in the farmer’s overhead expense would be land, building expense, equipment expense, his own time.’ These items remain about the same whether he uses them to full capacity or to only part capacity. It is good businss, of course, to use them to full capacity, making each contribute to income all that it reasonably can. Thus if most of the farm- er’s work comes in some seasons, and in other sea- sons he has little to do, the finding of something additional for the farm plant and himself to do in the slack seasons costs but little extra. The ad- ditional business has to meet only what business men call the ‘“variable expenses” to be profitable. If the wheat farm has a good deal of pasture land and a good deal of roughage which otherwise- would not be used, dairying to utilize these things and the farmer’s seasonal spare time, would have to meet only the variable costs to be profitable. Among these variable costs would be the’ extra barn room, the needed dairy equipment, the cost of additional feeds needed, the extra labor cost in the busy seasons, the cost of the herd. Against these costs the farm would have to credit the dairy with fertilizer and probably contribution to hog production. If the difference is very small, how- ever, between dairy income and variable charges, the farmer might well prefer to be idle in slack seasons to doing the work and taking the risks of dairying. The study of efficiency from the works of (Continued on page 13) Soldier in France Writes to Leader J. E. Simonson, Formerly of Reeder, N. D., Glad Fight for Democracy — com— HE Leader has received an interesting letter from ~J. E. Simon- son, formerly - of Reeder; N. .’ D., and now g on active duty with the American Expeditionary Force, expressing his pleasure over the progress of the Nonpar- tisan league and inclosing two sketches which he made. He is glad that the people at home have kept up the fight for democracy in America while he and others have been engaged on the foreign field. The following is Mr. Simon- son’s letter in full: Noviant, France. Editor Nonpartisan Leader: The Nonpartisan Leader has: been sent to me over here and I have enjoyed reading it. I have a membership in the League and have also done organization work in Adams county, N. D., for the League. Consequently you can imagine how glad I've been to see the Leader make;its appearance. T've noticed with interest the “The sketch of the church,” says Mr. Simonson, “shows what court.. Two bells which hung in the steeple fell to the ground but were " only slightly-d_amagéd.” The path of war is the path of ruin. PAGE NINB A.LE Frances : the enemy did at Berne- at Home Is Kept Up—Sends Interesting Sketches From Battle Front the special interests have put up to defeat the farmers and organ- ized workers of the Northwest. While the boys over here have been busy administering the knockout blow to Kaiser Bill and his gang of ruffians, the League has . also given Big Biz or the political kaisers at home the same remedy. - We members of the League -who are over here are certainly glad to hear of the victories won at the polls by the organized farmers and those who sympa-: thize with them. We know now that when we come home, we’ll be able to enjoy clean political life and good laws for the working classes. The League is to be con- - gratulated on its great successes. I have been over here eight months and have seen quite a lit- tle of France. We were located in central France for several months, at a large engineer sup- ply depot which is one of the largest of its kind in France. Its immense growth in such a short period of time has-been a good sindication of American ingenuity and hustle. After leaving there (Continued on page 14) * W SR R