THE SHOP-ORDER SYSTEM OF ACCOUNTS. 313 



all authority for expenditure of labor or material; these being, 

 however they may be disguised, the elemental forms of all 

 internal expenditure. 



2. The converging toward the office, from all circumferential 

 points, of independent records of work done and expenses made 

 by virtue of that authority. 



Upon the free play of the forces thus defined there is but one 

 essential restriction, that every right to the means for executing 

 an order shall be qualified by a responsibility, which shall be 

 recorded in as great particularity of detail as the scheme of 

 management adopted may require. This leads to a comparison 

 of managements depending upon the automatic record of their 

 results. The following discussion will show how easily and 

 cheaply this end may be attained. 



In a broad sense a manufactory may be considered as an 

 engine for transforming material, and its efficiency, like the duty 

 of a pump, may be measured by the ratio of the effort exerted 

 to the effect produced. 



It will not be disputed that this ratio is best expressed by the 

 true costs of its products, and that managements may be com- 

 pared by their costs. 



The object of the proposed system of accounts is to provide 

 automatic, and, therefore, impartial means for determining the 

 most probable cost of manufactures in gross, or in such detail 

 as the expense of its determination may permit. This is no 

 new necessity. It enters into the imminent questions of what 

 we can afford to make at market prices ; of what is the lowest 

 selling price ; and also into estimates relating to the differences 

 caused by the addition or removal of parts and the substitution 

 of processes. 



The difficulty of analyzing the usual gross account of expendi- 

 tures, the uncertainty of this analysis when made by clerks un- 

 familiar with the processes analyzed, and the evident objections 

 to so employing the time of foremen, have generally led to more 

 or less exact accurate estimates of cost by those whose manage- 

 ment was more or less in question. I do not exclude the self- 

 deception of absolute proprietors. These objections are increased 

 as the product of an establishment is diversified, so that the more 



