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C.E.Krto epp el & C o. irxc.
litaustrial Ertgirieers
52 Vanderbilt Ave.,
Sept. 26, 1921.


Mr. Benj. Strong, Member,
President's Unemployment Conference,
Washington, D. C.
Dear Sir:

Such men as General Wood, the Ex-Acting secretary
of Labor, Howard Coffin, and several bankers and manufacturers, endorsed a research report on "stabilizing Insdustry, Finance and Labor" which we recently completed.
This report will no doubt be of service to you in
your work on the Unemployment Conference, and is being
sent to you under separate cover.
The reasons for the ups and downs in unemployment
can be expressed as follows:
When prices are high employers do not want to
reduce them until wages areireduced, and workers do not want wages reduced with prices come

When prices are low workers do not want to see
them increased until wages are increased, and
employers do not want to increase wages until.
prices are increased.
Two things are therefore necessary: first, stabilize industry to shave off the high and low peaks of production; second, make waste in industry, and not wages,
the point of attack.

The report we are forwarding has to do with the first.
The second is covered by the report of the Committee on
the Elimination of Waste in Industry, of which Committee'
the writer is a member.
May we hope for your favorable consideration of the
matter submitted?
Yours very truly,

C. E. KIWEPPEL & CO., Inc.




Joptenher 28, 1921.

I aokuoAledje az, U741114 you for you.' fava: of 010

26th 1a3t4nt aaolosis 2,2port bearias uQon the subjoot of
uno4p1ojconA, uhich I 3hv,11 bo taaa to read at the first

Verj truly gmra,


0. Po. groeppel,
52 :Auderblit Avon-4,

liew York City.








1 - Reasons for Lack of

Industrial Stabilization.

2 - Steps Necessary to Effect

Industrial Stabilization.

3 , Endorsements of Plan Submitted.



& CO. INC.,








Report arranged by
and adapted from
1 - "Organizing Industries for Economic Production,'" a
paper presented by C. E. Knoeppel, March 1919; before
the New York Conference, The Society of Industrial Engineers.

- "Principles for Stabilizing Prosperity," an article
published in "Industrial Management," July 1919, by
G. Sumner Small, then Vice President and a Director of
C. E. Knoeppel and Co., Inc.

3 - "Constructive Outline of Steps Necessary to Secure
Industrial Harmony and Efficiency," a report submitted
to the President's First Industrial Conference, October
1919 and prepared by I. A. Berndt, J. P. Jordan, G. S.
Small and C. E. Knoeppel, all at the time members of
the firm of C. E. Knoeppel & Co., Inc.
- "How to Get Back to Normal Quickly," a paper presented by C. E. Knoeppel, in February 1921 in Chicago
and New York, before the Society of Industrial Engineers, Western Efficiency Society, and the National Association of Cost Accountants.

51- * *







Report arranged by

adapted from

1 - "Organizing Industries for Economic Production," a
paper presented by C. E. Knoeppel, March 1919, before
the New York Conference, The Society of Industrial Engineers.

2 - "Principles

for Stabilizing Prosperity," an article
"Industrial Management," July 1919, by
G. Sumner Small, then Vice President and a Director of
C. E. Knoeppel and Co., Inc.


3 - "Constructive Outline of Steps Necessary to Secure
Industrial Harmony and Efficiency," a report submitted
to the Presidentts First Industrial Conference, October
1919 and prepared by I. A. Berndt, J. P. Jordan, G. S.
Small and C. E. Knoeppel, all at the time members of
the firm of C. E. Knoeppel & Co., Inc.
4 - "How to Get Back to Normal Quickly," a paper presented by C. E. Knoeppel, in February 1921 in Chicago
and New York, before the Society of Industrial Engineers, Western Efficiency Society, and the National Association of Cost Accountants.





American Industry should be operating at ncrmal capacity,
when in reality it is not operating at greater than one-half
of its capacity.

Something is decidedly wrong, and an analysis shows that
the trouble is economic* in character.

Present Situation.
The present

situation can be expressed as --

No Selling - No Buying,
No Buying

- No Making,

No Making

- Then what?

Palling sales and decreased productions are leading to
unemployment, idle plants, high costs, and heavy losses. The
United States Steel Corporation is operating at about 65% of
its capacity, the sharp decrease in its unfilled tonnage being
attributed to the present stagnation.

The Need for

Industrial Products.

It is generally agreed that Zhere should be plenty of busin fact, the available statistics clearly indiiness ahead;
our families need
Our children need schools;
cate this
our cities require new public buildings;
homes to live in;
our automobiles, trucks and farmersneed roads; our railroads
need repairs and new tracks, roadbeds and equipment; our pubbetterments and replacements; our furnaces
and stoves require fuel; our people need shoes and clothing.
In addition to all of this, the world needs food.

lic utilities need

In support of this statement, consider the following estimates of the National FederatJ.on of Construction Industries,
as regards the present needs of the United States, as follows--

1,500,000 Homes

60,000 Apartment buildings




Railroad Stations
Schools and public buildings
Freight terminals.

is estimated to be one billion dollars be-

hind, Europe is sadly in need of materials and machinery with
which to do business,

The banker, the employer, the salesman, the purchasing
agent, the lawyer, the wholesaler, the retailer and the consumer all have their ideas aa re7ards the cause of our present

troubles and who is response:Me.

As a matter of fact we are all to blame for the conditions
we find ourselves in, end the basic cause of our diffirtat196
is that we have nct learned how to baater. The reason felis that WEile we have mastered natuaal laws and use them in productive ways, we are mere "babes in the woods" when it comes to
economic laws.
Every trade, whether in horses or in goods manufactured,
involves two things -- a purchase and a sale, a buyer and a disposer.

The basis of our economic existence is purchasing and selling, the trading of energies and abilities, money being merely
the medium of exchange, and because of fundamental flaws we are
having industrial difficulties and will continue to have them
until we eliminate them.
Fundamental Flaws and their Effects.

These flaws are -A - Uneconomic and speculative purchasing.
B - Unscientific price making.

The results of these flaws as they effect industry and

Commerce are -.

1 - Unemployment.

2 - Reduced wages.

3 - Idle plants or plants operating at
reduced capacity,
4 - Seasonal demand.

5 - Losses when market falls
having purchased at high

off after

6 - Depression and business stagnation
at one time, and feverish activity
and over-expansion at another,

prices at

one time
and abnormally high prices at another.

7 - Abnormally lo v

8 - High costs whetter operating below

or above normal.

9 - Periodic idleness of plants, capital
and materials.

Faulty Purchasing.

Let us attack the first flaw -- Uneconomic and speculative

We all know of cases where large profits were made by "buying right," as the saying goes, and of other cases where heavy
losses were sustained, when on the wrong side of the material
The point is, what caused these profits and losses?


off sufficiently, prices get to a point
When business
low enough to tempt a buyer, whether he is a consumer or a purchasing agent. Buyers begin to stock up, to replenish reduced
margins, not with reference to the immediate requirements but
because money can be made by purchasing in large lots for future
uses when prices will again be high.
The consequence is that industry and commerce become stimunemployment diminishes;
production is increased;
prices start to climb. They keep on climbing to a point where
the consumer or purchasing agent begins to feel that they will
not go much higher; that suP'iciem materials are on hand for
present and future uses; tl-Tat there will be a let-up in activities and that it would be well to wait for price reductions.
The swing starts the othr way resulting in a drop in prices,
reduced capacity, less sales in plants and commercial houses,
unemployment and finally a denession sets in.
An analysis shows that there is no difference when it comes
to buying and selling as between manufactured goods and commodities, and stock securities. When prices of stocks and bonds
are high, we stop buying and start selling, which reduces prices
and again induces buying. This in turn advances price and at a
certain point buying stops and the cycle repeats itself.
At any rate, we are convinced, and many manufacturers agree,
that waiting for prices to drop when prices are high, stifles
demand to too great an extent; while buying too much when prices
In cthor
are low stimulates demand to too great an extent.
words, unscientific buying in dull times, makes for false demand,
and we have an unwarranted increase in production, which like
the "wash sale" on the Stock Exchange, puts prices on too high
a basis. This in turn causes a stoppage in buying because of
the high prices, resulting in an unwarranted decrease in prodtrtion forcing prices on too low a level. If we produced pig
iron in dull times, we would not have an abnormally low price,
and we would have pig iron in good times without the abnormally
high prices.
Here is what happens in periods of depression or inactivity, or low price levels. Concerns stop producing materials.
Not only are men thrown out of work, which is bad enough, but
there are also losses to consider due to idleness in the use of
a severe ec5nomi
machinery, plant, materials and in money
loss all along the line, all of which makes for high production
In periods of stimulation, over-activity and excessive


demand, plants are run at full blast, to the detriment of the
plants, while costs increase because of inefficiency due to using
labor not suited to the work, increased rejections, greater labor
turnover, confusion, Jack cf co-ordination and other factors.
In other words, whether prcdacirg in unusually slack times or unusually busy times, the condition, lliet with make for high costs.
If productions were kept on'a mre nurmal basis the year round,
we would get away from the sharp price swings, both upward and


There is an angle to this great subject of uneconomic and
speculative purchasing which too few fully and properly consider.
A concern purchases a product at $100. Later on when it
is used it is found that the price is $150. To get the profit
due to purchasing on a low market out of the purchase, many include the $50 increase in the cost, at a profit in making the
price, on top of it.

On the

other hand, let us say that this product is bought
at the high price of $150 and that later when used, the price
goes to $100.
Can the sales price include the $50 loss? Obviously not and get the order. The cost goes in at $100. and tie
If the cost goes in at $150, a loss on
loss sustained is 050.
the entire order is taken.
Who pays for these differences between market and cost
prices of materials?,

The consumers of the various products. They pay the profits on a rising market in a direct way by the inclusion in price
of the amount the purchaser did not have to pay, and in an indirect manner for the losses on a falling market, due to the fact
that in a period of expansion concerns must get prices high
enough to contain profits which will offset losses sustained in
periods of depression, and part of t%hese losses are those caused
by purchasers who get caught in a ialiivg market.

Who are the consumers? All of us consume all that is made;
therefore we suffer for our own faults in paying for purchasing
profits at one time and being taxed for purchasing losses at
You may say that a profit on materials at one time, offsets
a loss taken on materials purchased at another.

If this is the case would it not be better to include in
the cost, the market price of materials at the time of use, and
clear the differences between market and cost values, through
an adjustment account, taking any balances at the end of the
year to profit and loss?
In this way you would divorce entirely the profits and
losses due to purchasing, from those due to operating, and the
effect would be to stabilize price making.


At any rate, sufficient has been indicated to show that
purchasing has an enormous bearing on stimulating industry and
commerce at one time by too much buying for too far in advance,
and depressing them at another, caused by stoppage in buying,
due to either having a surplus of goods on hand, or waiting forbetter prices.

So much for the first flaw in our economic foundation in
industry. Let us turn
second -- that of relation between
cost and prices.

to the

It is a well-known axiom of business that in periods of
depression or reduced demand, costs of production are so high,
that prices based on them will not secure the required amount of
business to operate plants at possible capacity.

As a result, costs are ignored, and prices go tumbling in
order to force or stimulate the purchase of commodities, the
basis of which is judgment based on fears of losing business,
or going out of business,
instead of a predetermined and scien-

tific basis for determining and knowing what rock bottom prices
should be.

On the other hand, in periods of expansion, costs are low
due to volume of production, purchasing in large quantities, and
other reasons, and figures based on costs result in prices less
than the plants are able to get for their products. Again costs
are ignored and judgment resorted to.
Both of these conditions seem to support the contention, so
often advanced, that there is no relation between cost and price,
due to the fact that whether in the one case, or the other, costs
are not used as a basis for price-making at all.
The actual procedure in making prices is unfortunately based
on such knowledge as may be available as to competition, demand,
available supply, the financial situation, what the traffic will
bear, or the low points necessary to book orders.
The significant fact in connection with all of this is that
there-YE only one time in a busiress; when there is a positive
relation EFTiVeen costs an prices,
that is when a plant is
operating at normal capacity.


Even then, the margin of profit added to costs to make
prices is many times a gamble as tO how much can be added, and
still not lose the business.
Here, then, are three important conclusions for the benefit
of American Industry, as a whole --

A - If operating at normal capacity means
prices which yield business, 2771?7 not deter-

mine and use prices which reflect normal


- If, in times like this, judgment used
in determining prices is based on fear instead of predetermined estimates, isn't it
better to have stientific knowledge of what
will secure business than to operate blindly?
If losses must be sustained in order to
secure sufficient orders to remain in business, isn't 'it better to know how far these
losses TEEEo and for how TE5F, without posiC


detrim"iiit-175 We" TUilts?

These points raise this economic and vital question -How far can industrial plants go below
normal capacity and remaiiiin business, and
what is the point at orders wills begin
to come in?
Doesn't this reasoning spell the determination of what the
normal capacity of a plant is? Dollars of sales are not an
index of a plant's capacity. The real index is the normal capacity in production hours of machines and working places. Considered from the standpoint of hours of effort, prices may
fluctuate, but normal capacity is more or less constant.

Let us look at it in



If you had 10 dairy cows and 5 of them went dry, would you
assess the cost of maintaining the ten cows against the produc'..
tion of the five cows, in determining the price of milk during
the time these five cows were dry? Naturally, you would not,
on account of the fact that you would figure your herd results
and costs for a season, which would give you a normal output

If, then, you assess all of the cost of operating a plant
at one-half capacity, against the products produced by this reduced capacity, could you get prices based on these figures?
In other words, the proportion of overhead in a department
or plant, to assess against production, should vary in the ratio
of the capacity actually employed on production to the capacity
that could be employed.
Would you assess all of the overhead of two plants on one
plant, if ozr of the plants should stop work?
If you buy a suit
of clothes and find a hole burned in it, would you pay for two
suits when you get the replacement?

This spens a standardization of the overhead expenses by
departments, and determining what they would be at normal, taking care of the difference between normal and actual overheads
by providing for charging or crediting same to an adjustment
account, and clearing the balance at the end of the year to profit and loss.

This would mean, then, that operating profits and losses
could be analyzed as distinct from profits and losses due to
purchasing, and profits and losses due to volume of business.

Knowing what normal capacity is, standardizing overhead
expenses, calculating same on normal capacity, and assessing
overhead to production in proportion of the ratio of actual production to normal production, the business could then be visualized as reflecting normal conditions.
Inasmuch as the greatest volume of business goes to that
concern whose prices reflect normal operating conditions, the
matter of price-making is next in order.
In most cases at present, costs are too high to mean prices
which include fair and reasonable profits. Plants are concerned
with getting enough business to remain in business. Salesmen
are doing all in their power to make prices low enough to justify purchasing, the result being that present price-making has
as its basis, pessimism on the one hand, and fear on the other.
Concerns know that in these times losses must be sustained.
The serious question to them is how much the losses will be, and
how long they will last before an upward trend sets in. In other
words, business at present is like driving an automobile without
knowing just how much gas is frilie tank.
Some concerns may be selling at: a profit; but the majority
can only be selling at, or below, cost to produce.

The curse of American Industry is its unintelligent competi-.
Consumers, as a rule, are the only ones to benefit by
the uneconomic and incorrect methods of costing and pricing in
use by so many concerns.

It is onething to lose money knowingly and blindly; but
distinctly another to do so knowingly, but with eyes wide open.
If, therefore, there must be losses before we can get back
to normal, and this is generally admitted as necessary, then
there is no logical argument against substituting for judgment
and guesswork, some plan which will make losses a matter of intelligent,
systematic and scientific determination. This must
be done if business is going to get away from playing the business game, like the card player who bets before looking at his

At any rate, by observing the above principles, we would
know what standard costs should be at normal capacity, through
the use of standardized overheads, using time estimates for the
various operations at current rates, and current prices for material. Tie know what actual costs are for the actual volume
of work produced. We also know, or can ascertain, what costs
have been at full capacity.
From such figures, charts can then be developed, showing
60%, 70%, 80%, 90% and 100% of capacity, which will
the basis for determining prices reflecting normal

 costs at
serve as
Federal Reserve Bank of St. Louis

If you must go under these figures to get busineSs, you
have at least the basis for knowing what a normal price is, and
any deductions from normal prices are then made openly and with
knowledge of the effect of so doing.
You say that selling goods on anticipated normal means
"playing the market short." My answer is that inasmuch as you
cannot sell goods at the prices you want to get for them at
this time; inasmuch as you must pocket some losses until normal
inasmuch as prices based solely on pessimism
is again reached;
and fear, may be ruinous in the end, why not play the market
short willingly and knowingly, but safely? Why not, therefore,
put these losses, due to the present business conditions, where
you can see and analyze them, and use them as your guide for
later decisions?
In this connection, let me point out the importance of
considering relative complexity of work in determining prices.
It is generally accepted that consumers should pay most for
that which costs most to produce. For instance, three pieces
of work may cost. $1,000 to produce.
If 20% is added to the
In one there
cost for profit, the price in all cases is $1,200.
may be $500 worth of labor and overhead;
in the second, $400;
and in the third, $300. No provision has been made for considering the degree of complication in this method of calalating
price, and as time of workmen and equipment is the productive
investment in business, it stands to reason that a concern
should get more in profit for the work taking $500 in labor and
overhead, than the one taking $300; and this the price-making
should reflect.
This spells a sMaller percentage of profit on
materials and a much greater percentage on labor and overhead;
this to vary in proportion to the increase of the labor and
It is one thing to make a reduction in price after there
is a reduction in cost; but distiaely another to base a price
on the anticipated cost of an expected increase in production.
Yet, in so doing lies one of the means for stabilizing industry.
It is well to remember, in connection, that if we wait too
long before products are made in volume, prices trill be very
much higher later on, due to the fact that buyers cannot hold
out much longer.
If when orders are placed it is found that
stocks are depleted and that plants are idle or working at reduced capacity, a shortage of goods will be the result, and a
stimulated demand will follow, which will throw prices on a
higher level than would otherwise be proper. In the meantime
there will be a high unemployment, with a definite loss per
worker, of a definite amount of production.

It is a well-known fact that in industry, effectiveness
varies directly in proportion to productivity, or to put it more
simply, as the work actually produced per hour approaches what
should be product. per hour, the greater the relative accomplishment.


A worker getting 60/ per hour, working 8 hours per day and
producing 10 pieces per hour, is of much more value to industry
and to the public, from an economic standpoint, than one working
10 hours per day, at 45/ per hour, and producing 5 pieces per
hour. The cost in the first case is 6/ per piece, while in the
second it is 9/, or 50% higher.
What people buy when they purchase goods is not the physical things they see, but hours and minutes from President down
to office boy, which they do not see.
TIME is the real investment in industry, and governs directly what cost will be.
Normal conditions require normal hourly outputs. It is,
therefore, obvious that what should be produced must be known
in order to currently determine the relative attainment and take
all possible steps necessary to produce normal hourly outputs.
What are the real facts, however? The Associated Employers
of Indiana compiled figures on brick-laying, showing the following:


Rate per hour



Bricks per Day




On a basis of eight hours per day, this means that cost
increased from $4.00 per thousand brick to $18.50 per thousand
brick -- an increase of 462-1/2%.
In the "Philadelphia Public Ledger," Richard Spillane says
in an article:

"The distance between New York and Chicago via
the Pennsylvania Railroad is 908.7 miles. A through
train, such as the Pennsylvania Limited, makes the
trip in 22 hours and 55 minutes. One Pullman conductor and one porter for each Pullman car make the complete journey, but it requires seven engineers, seven
firemen, seven flagmen, seven railroad conductors and
Seven crews of brakemen. The Pullman employes put
in 22 hours and 55 minutes, part of which time they
sleep. The railroad men put in an average of 3 hours
and 17 minutes and get a total of eight day's pay.
"Here is how it is done:
Niles Time
New York to Philadelphia
9i75 2h.11m.
1 dayTg-Pay
Philadelphia to Harrisburg 103,9 2" 29"
Harrisburg to Altoona
131.1 3" 05"
1138 3" 15"
Pittsburgh "Crestline
5" 10"
2 day's pp
"Fort Wayne
131.6 2" 55"
Fort Wayne
148.1 "Chicago
3" 50"
Total ..
908.7 Av. 3 h.17m.



"In various instances these train crews 'double
back' the same day and receive two day's pay for less
than seven hoursl work on the road."
In many other lines of work experience has been much the
same -- reduced production and increased wages.

Until recently, workers have consistently striven for increased wages to offset the increase in prices, and employers
have striven to increase prices to offset increase in wages,
At the present time employers do not want to decrease prices
until there is a decrease in wages; and workers are fighting
the reduction in wages until there is a decrease in prices.
In other words, we have a case analogous to a dog chasing
his tail.
Employment of labor is predicated on normal demand for
products of industry.
There can be no normal demand for
the products of industry until there is employment of labor,
and by labor I mean workers of both head and hand. Therefore,
employment must be stabilized.
Labor is never going to be willing to do its share in
turning out quantity production, and using labor-saving equipment until, through stabilization, we work normally in industry
for longer periods, thereby reducing unemployment and the seasonal high and low peaks of demand for labor, as well as for equipment and materials -- all of which constitute another reason
why these principles should be adopted.
Why does labor take this view of things? Simply because
it has believed in the fallacy that production should be retarded
and the introduction of labor-saving machinery frowned upon and
fought against in order to make more work for more people, guard
against over-production, and force industry to work more normally.

Is this fallacy the real cause of small outputs, strikes
and the like?
In the last analysis, depressions cause unemployment due
to the fact that a fear of being out of work in periods of de4',.
creased demand, causes most of those who work with hand and
head to restrict or stop their buying. Workers cannot be blamed
for making jobs last, striking and restricting production, if
by working at maximum they assist in more rapidly bringing on a
condition of lessened demand, due to making a temporary surplus
of commodities that, while no doubt 'needednow, will not be purchased until prices are lower.
The real cause is more fundamental than this. Labor knows
that every so often there are periods of depression. Labor also knows that each and every one of the 110 million people in
the United States has a more or less constant demand for things,
and that these things should be constantly supplied to meet these

There is no greater problem before this country today than
to get industry on a producing basis, and having gotten it there,
to keep it there, and for this reason a study of basic causes
is timely, which causes were indicated as uneconomic and unskientific purchasing, and faulty price-making.

Another factor must be considered in this connection. To
have available the equipment and facilities necessary to produce
in periods of expansion means that when normal is reached there
is an idleness of these industrial facilities which increases as
low production points are reached.
In other wo
ing at low points, there is naturally a high relative over-equipment, and an enormous factor of idleness.
A glance at the chart submitted, covering the manufacture
of pig iron and paper for 17 years, will indicate ishat we mean
by this statement.
To maintain the Leviathan in idleness in New York Harbor,
is costing this Government $780,000 per year. What then must
be the cost of idle machines, idle floor space, idle cars and
locomotives, and idle men in industry at a time like this?
The point is -- who pays for this idleness?

Who finances

It is safe to say that there is enough money lost in industry in operating below normal to pay handsome profits and high
wages, if we could find ways and means to operate industry normally, and purchase goods on an economic basis.
If a man keeps a dollar in his pocket for a year, has he a
right to ask anyone to pay him 6% on it? If a worker walks
the streets for a year, can he demand his yearly income? Should
industry be paid for idle capital, idle plants and idle materials?
The question of storage and financing enters into this phase
of the discussion, for it will require srsace and money, as well
as knowledge of fundamentll bieeness conditions, to keep on manufacturing in periods of low en&nd. It can be done, however.
ewelry, candy, shoes, undeiwear,
If the manufacturers of pie.nos,
socks, stockings, clothing, and the like, were to wait until the
demand struck them befere etartng to produce, you can well imagine what we would have to pay for these products. What they
do, however, is to produce as near to normal as possible throughout the year.
Knowledge of sales conditions, financing and storage space, are provided.
What would happen if all the grain elevators and cold storage plants should suddenly burn?
Or to put it
is to prevent us from handling basic commodities the same as the
products we grow or raise and place in elevators and cold storage plants?
If workmen can see a scientific basis for loss-taking;
it can be demonstrated to them that anticipating normal will reiA
duce unemployment, making drastic wage cuts unnecessary, and



stimulate buying, they will be quick to agree to do what they
can to attain fair standards attainable for the various operations and even accept a reasonable cut in wages if necessary.
You would say to them -"These charts show that to get back to normal
we expect to lose so much. Now to get back to
normal it will be as necessary for you to produce
normal outputs as for us to quote normal prices.
If you don't, our losses will be that much more,
and may seriously affect our ability to keep going.
You may feel that this is none of your concern, because you may say that if you don't work for us you
can work for someone else. But the fact remains
that any business condition which adversely affects
us is likely to affect other concerns in greater or
less degree. Isn't it better, therefore, for us
to get together, we 'playing the market short,' and
you giving us the safely attainable productions
necessary to keep us within definite cost limits at
wages consistent with the cost of living which these
In this way we can
conditions would1212112E about?
work things-Fa-aha-k6ep going."
The trouble today is not over-production; "it is under
consumption." The world needs the products of industry now,
today, not next year.
The more things we
There is no limit to human desires.
have, the more things we want, and the more things we want, the
more things we will obtain. Compare the comforts we enjoy today with those of 20, 50 or 100 years ago, and this will be
apparent at once. If automobiles became cheap enough, every
family would have one; and this same reasoning applies to
pianos, books, clothing, food and the like. There was a time
when only a few housewives could afford a sewing-machine. Today
sewing-machines are very reasonable and in practically every
If all were possessed with what those with money have,
all would still want more. Human desires, no matter how they
may be expressed, spell demand, and demand calls for supply.
Prom this it can be seen that man cannot make more than he desires, or more than he is willing to buy, if conditions are maintained on a right basis. The trouble is not with demands, but
the way we arrange to supply these demands.

said --

People have
which to buy products?"

"Where is the money to come from with
The answer is this --

Products are wealth; production creates
buying power. The only limit on ability to
acquire wealth is the ability to produce it.
We-Can only have more riches by producing more
goods or buying power.

Obviously, a farmer cannot buy more horses, or cows, or
sheep, by producing less pigs, less milk, or less wheat, or other
products. In other words, if we are going to exchange for more,
we have all got to produce mcre, not by spurts, but on a normal

basis throughout the year.


Inasmuch as the stabilzation of finance enters into the
discussion of this important subject, it would be well to giV,e
some thought to it.

Long practice, as well as the very exigencies of his work,
compel the banker to become an analyst who accustoms himself to
observe and weigh A comparative merits and demerits of a business
If, as often happens, he inclines toward old ways
rather than new ways, he is Merely depending upon his profession's
age-old dread of the unknown, as compared to daily repetition of
established customs and methods. The banker was the world's
first specialist -- and like any other specialist he sometimes
concentrates so closely upon the details of familiar things that
he lacks the breadth of vision that a wider education or practice
would have brought to him.
Granted that banking iS primarily interested in security,
the wise banker makes painstaking inquiry into the policies of
any business which applies for financial credit or accommodation.
borrower's business is founded upon
The banker knows that
settled, definite and prudent polities, which in themselves are
fair, the organization is almost certain to be stable from the
financial viewpoint.

if the

It is a well-known fact that money goes to that concern
which can demonstrate that it is safely and wisely managed. ?[any
financial houses today are uncertain whether to call loans or
to extend them; whether to help, in the expectation of assisting
"in pulling things through" and thereby safeguarding their investments, or to quite and pocket their losses.

Go to your banker

and say --

uHere is What I am doing now; here is what
1 did at full capacity, and here is what I can
If I continue as at present, I
do at normal.
may win and I may go under; if I can get back
to normal quickly, I will lose very much less
and can pull through successfully. Here are
the facts and the figures."

Are not the bankers looking for just such kind of talk?
conservative banker in the country knows that his task
is to differentiate between what is guesswork and unsystematic
procedure, and what is definite, provable and likely to happen.
He would be the last one to turn down a request for money or
extension of loans when he knew that it was based on the same
fundamental he relies upon to make decisions -- co-ordinated

The most

A banker wants to know the likely effect on the investment
of running at greatly reduced capacity. He wants to know whether
speculation, or safe and shrewd buying, is the basis of purchasoperating
ing. He wants to know just what the net profit in

really is.
Knowing these things, he can decide whether he will
assist, on the merits in the case: not knowing them, he will
probably 'play safe' and decide against helping. Knowing true
conditions, he does not have to fall back on over-strict conservatism to help him out, but can get right in to a consideration of the pros and cons of tangible things.

Another question comes up -- how are we going to reconcile
The answer here is that we
finance, labor and management?
must all fall back on a fundamental principle -Let each interested party take LESS than he
now "demands," in order to get MORE than he now "has."
Should not this principle be sold to workers, bankers and
executives, by showing them how the realization of 100% demands
on the part of each affects the receiving of things from others,
as well as their ability to give them? No one is opposed to
selfishness of conflicting interests, so long as this selfishness is intelligent.
Of interest to every man, woman and child in this country
today, in fact all over the world, is the matter of how to get
industry baCk to a normal basis and arrange for stabilization.
We are afraid to buy because we do not know what is coming,
or because we expect to go lower. We are afraid to produce
because we do not know how much buying there may be. We are
afraid to invest or loan, not knowing what may happen to our
money. Workers are afraid to cut loose and produce, for fear
this might bring greater unemployment all the sooner.
The business world is going round in circles, and is affected with an excellent case of "cold feet.° We hear on
all sides that by next month, or in the spring, or summer, or
fall, things will be better. This attitude, however, will not
in itself bring an upward trend a single day sooner.
yet there is no doubt as regards the urgent need for the
products of industry.
The present situation can easily get worse unless vision,
supported by facts and courage to take the initiative, are
substituted for the fears and pessimism which are at the bottom
of our industrial ills.

The Liberty National Bank of New York recently published a
It shows that it took nineteen
chart of price tendencies.
years, following the outbreak of the Civil War, before prices
reached the 1860 level. The 1867 and 1920 price points are
It is extremely doubtful, of course,
together on the chart.
if it will take us twelve more yeans before prices are down to
pre-war basis, as conditions now and at the time following the
Civil War are very much different. The bank statement says,
however, "Whether the future price trend will follow the Civil
War precedent, or depart from it, this much is to be observed,
that the contention that we must expect a permanently higher
price level has been rudely shaken during the last few months."

The National City Bank Review says - "Adjusting relations
between groups of producers so that a full exchange and consumption of products can go on, is the objective of the wage
The only advice possible at a time like this is to remind
managers, and purchasing agents,
find ways and means to stabilize industry,
which if done will automatically stabilize finance and labor.
This can only be done through plants in industry working out
a constructive program, and the various industries to co-operate with our Government in bringing about betterments in the
conduct of business.

industrial executives, sales

that their task is to



To reduce unemployment to a minimum, to avoid drastic wage
cuts, to get away from depressions and industrial slumps, to
keep plants operating more uniformly throughout the year, to
direct the use of credit capital more safely and more surely,
and to increase foreign trade, are all possible if constructive
measures are adopted which have as their objective, stabilization
Of industry, finance and labor.
While it is admitted that something can be done in each plant
in working toward stabilization, it is also obvious that a great
deal more can be accomplished if each industry, co-operating with
the Government, can assist materially in working out other betterments.
What can be done will, therefore, be considered under two
headings -A - By a given industry co-operating
with the Government.

By plants in a given industry.

A - By a given industry co-operating with the Government.
Constructive steps which can only come through given industies and the Government working together are as follows:
1st - Publication ot Costs.

The argument in favor of having public utilities file their
reports with the Public Service Commissions, and the results of
the railroads with the Interstate Commerce Commission, is to insure the best service to the public at the lowest cost.
So that
we may get facts out in the open for discussion, comparison, legislation, and for proper guidance of industry, cost and production
figures should be filed with State and National Commissions or
industrial bureaus, by concerns making basic commodi-ties.
Unfair methods of competition, excessive costs, faulty industrial practices, abnormal profits, severe losses, incorrect
accounting methods, and the like; can only be brought to light
by filing reports.
There should be no objection to this, when it is considered
that in the last analysis, all business and industrial activities
are for the public service.
2nd - Publication of trade information.

Crop and weather reports are of real help in agriculture and
but we are still without the kind of trade information
and statistics which would more intelligently guide industry.


Facts as to the ebb and flow of business, demand for products,
the available supply of products, labor supply and movement of
labor, and many other elements which have a bearing on guiding
the industrial ship, should be covered by regular and accurate
Government reports in both statistical and graphical form.
3rd - Uniformity in accounting methods.

Steps should be taken to get the various industries to
adopt the same basic methods in cost and general accounting so
that results would be comparable, and to guard against inaccuracies and faulty practices, as well as to eliminate unintelligent and cutthroat competition.
4th - AsSisting plants showing no profit.

If a business gets in a bad way, or becomes insolvent,
the courts take hold for the benefit of the creditors. Why
wait until the courts take hold of a business?
It will be conceded by all that something is wrong with a concern which consistently shows a slight profit or a loss.
It may be mismanagement, lack of capital, faulty methods, inefficiency or other
reasons, and if sick enough, such a concern has only one thing
ahead of it -- failure.
Failures hurt business in general, and
failure statistics show that many of the causes are preventable.
If preventable, why not prevent them?
If, therefore, through
publication of cost and production data, along with unformity
in accounting methods, it could be demonstrated by some agency,
industrial or governmental, that certain well-defined reasons
were responsible for the lack of success, and that the elimination of the faults would make for greater success', would it be
called interference or paternalism, if this agency stepped in
and in an advisory and constructive way helped the concern to
straighten itself out?

5th - Sustaining buying power.

Arrange for financing and strage of the surplus materials
of a basic nature during periods of decreased demand, so as to
have them available at normal prices when there
ts a resumption
in demand. This would help enormously in keeping industries
producing normally for longer periods.
A given industry could arrange for this financing and storage, or the Government could finance the manufacturers, so as
to enable them to continue producing, and later when there was
an increased demand, the financial obligations could be discharged.
In this connection, arrangements could be made for concerns
to make known their normal requirements of materials in order
that supply could be made at a uniform rate. During the war
many concerns submitted statements of monthly requirement of material and of their needs for ensuing periods, with the result
that proper distribution was made to them.
This would do away
with peaks of supply in one case, and depleted supply in another.


6th - Providing Employment for idle labor.

Road building, irrigation projects, power developments and
other public works are lines of activities which could make val-

uable use of workers temporarily unemployed. Many of the state
and national projects require both skilled and unskilled labor,
and the development of such projects in times of decreased demand
would attract those who were out of work.
From the standpoint of a given industry working with and
co-operating with the Government, it should be obvious that these

factors would materially assist industry in operating on a normal
basis for longer periods, thereby stabilizing industry, which

would mean the stabilization of finance and labor, as well.

A great deal can, of course, be accomplished by each in'
are many matters which require
cases involve a co-operation of
Oovernment agencies.

dustrial plant, although there
collective action, and in some

The steps outlined would result in the most intelligent direction and guidance of industry, leading to a more healthy
condition, pronounced assistance to those needing it, and real
co-operation and ea-ordination between industry and the Government.
B -

By plants

in a given industry.

As a constructive program which will assist the various
plants in industry in getting back to normal quickly, as well
as working toward stabilization, the following steps are recemmended:

1st - Determine the normal capacity of
machines and working -TECEiT-Ei dB rtmenrg,
in hours.. Th1F-TrZad be % to 85 ot the
2ossible 017-115a,gy caprEiTT."

2nd - Standardize overheads according to
departments, with due consideration to reducing' them 'where possible, determining what the
YaTel-FOuld be at normal capacity.

3rd - Detexmine from estimates, records

East performances, conferences, or by Observations, what would be fair and attainable proof


standak71-6-Tei--hEaFY317-the various oper-

ations, using normal capacity as a basis.

Knowing what is normal capacity for machines and working
places according to departments, having standardized overheads
and definite standards of the times which should be taken for
the various operations to produce the units of product, and
knowing the current labor and material rates, and we have the
basis for the next recommendations:



4th - Determine quantities of the various
plant can make
the cost of the

combinationa of products that a
at normal capacity, calculating
products that can be maue.

normal condtions, using a nolmai profit as the
5th - Develop the prices which will

TETtor iT-674 to co'ET,7 :Ins67C6Ing.

Inasmuch as it was recommended that the volume of production

be assessed for a proportionate overhead only, the ratio to depend
upon the relation of the actual production to the possible production, the following recommendation is in order:
6th - Charge the difference between actual
and standard overhead into an adjustment account,
the balance of whfch can be carried at the end

Tfthe year, to profit and loss.

This charge will decrease as you approach normal and cease
as you attain it. As you go above normal and reach possible

capacity, the total charges will be offset in whole or in part by
credits to this adjustment account.
The net loss will be much less for the coming year than it

would be as most pIa717e-Tre noTiTircerating.

In carrying out the above provision, the burden account would
the actual expenditures, the work-in-process
would be charged with the standard overhead, while the difference
between standard and actual overheads would be carried to a "burdIvu profit and loss account."
The time may come when the differences between actual cost
of direct labor and what these costs should be, will be handled
as outlined for overhead costs. But this is for the future to
determine. At the present time, what has been outlined as above
is advocated for the present, as many concerns are successfully
using the plan mentioned.
be charged with

In respect to materials of staple nature, such as pig iron,
scrap iron, coal, coke, rubber and lumber, it will also be of
value to use a "Material Adjustment Account," which will exhibit
the profit and loss, as between the purchase-price of material,
and the price which is charged into the cost, For instance, if
the average cost of pig iron as purchased is 035 per ton, and the
market drops to $30 per ton, the cost records would be charged
at the rate of $30 per ton on the tonnage used, the "Material

Adjustment Account" being credited with the same figure. At the
same time a second entry would credit the inventory account at
the actual cost on the tonnage used, with a corresponding charge
to the "Material Adjustment Account." This would clear the actual cost from the inventory and would concentrate in the "Material
Adjustment Account" the loss on the material used, enabling the
cost to be figured on the basis of the normal condition which

existed at the time the material was used.




This leads then to the following recommendation:

7th - Carry the profits and losses due to

purchasing to a "Maerial Adjustment Account,"
which can be clea.F.TTHI-115,10:1-7s7fit and Loss
at TTie eAd of the year.

As it will be necessary to secure the co-operation of work-

ers as well as bankers, the next two recommendations are in order:
8th - Call in some of your best workers,
as representatives of their fellOTTorkmen;
outline to the7-177-aaTT-cfoilF7-3r-e-sconditions
are and whaT-T5u775.71t-I-6-do; explaining to
Ta-m-TEe above prIncipiJs as they relate 1-5
unemprITET7-r-e-EaTions in hours and wag-6T,
and what losses to the compaFfir1I-Rean to
Fah-W3Fkers and-rhe company.

9th - Place plans as to normal possibil-

ities, with7NIT -5-501Enations before bankers
as-a-bagrd-ficY-ZrZaTT-s-TITITTI4ancial assistance.
With a campaign based on normal capacity worked out;


negotiations going on with workers to get their help in producing
up to safe working maximums, and with bankers to render financial
support, you are then in a position to give proper attention to
sales and advertising campaigns; to consider what you can do in
the way of time payments, discounts, deliveries, quality betterments, and other things, as a basis for booking orders, which

will mean reaching normal quickly.
This gives us the basis for the next and final recommendation:

10th - Plan the sales and advertising camnormal opel,ating coriliticns.
The steps above outlined will go a long way toward enabling
plants to return to normal quickly, as well as to assist to a
great extent in bringing about stabilization. We should be
at the present moment in a very prosperous condition, due to the
needs of the world-over for the various products of industry,
when in reality we do not know which way to turn. The initiative
must come from industrial executives, who should co-operate with
workers, with bankers, and with Government agencies. It is hoped
that the measures advocated, not only for particular plants, but
for a given industry, will assist materially in maintaining the
ideals we are all so anxious to see attained.

paigns nece- a-iy TO secure prices which reflect


The original material covered by
the attached endorsements did not contain the recommendations under Section
"A", Part II, nor the seventh recommen-


dation, Section "B"

Part II.

111 Broadway, Trinity Building


February 3rd, 1921.

Dear Mr. Knoeppel:

It was very kind of you to think of me in connection with the inquiry referred to in your letter of
January 31st, and I appreciate the trouble you have taken.

My own views of the present situation were given
at length in an address before the Pennsylvania Society,
and I have pleasure in' sending you herewith a copy of
those remarks.
Sincerely yours,

Mr. C. E. Knoeppel,
C. E. Knoeppel & Co.,Inc.,
52 Vanderbilt Ave.,
New York City.



C. M. Schwab


At Annual Dinner of


(N-Y.Dec.11, 1920).


Examine the volume of production in most any of the
great staple lines of industry and you will find that
during the past two years there has been a smaller annual
production than at any time since 1913.

When, therefore, our business men thoroughly study
and cope with these problems of economy and make up their
minds to go ahead and to produce to the utmost on a smaller
margin of profit than they have been accustomed to realize
in the years of inflation, then our course will have been
set toward a haven of safety and progress.

The laboring man is entitled to his full share for the
contribution he makes to the value of an article.
laboring man should be taken into the fullest confidence
of his employers. He should be so sure of getting his
fair share of the wealth he produces that he will work with
zeal and enthusiasm.

The result of this experience through which we have
passed is that our costs have been inflated and we have
had in America both our business institutions and American individuals generally indulging in wasteful and
extravagant methods.

Now the laboring man is primarily interested not in
the amount of money paid to him, but what his money will
If the cost of living comes down there is no quesbuy.
tion that our American laboring man can maintain his
present standard of living even though his wages as stated
in dollars amount to a lesser sum than before.


Fort Sheridan, Illinois,
February Fourth,
Nineteen Twenty-One.

Dear Er. KnoeppeL
I have looked over with keen interest and
appreciation your general plan to improve conditions
of industrial and economic efficiency, to get our
people back to work and to build up business confidence;
in other words, to start the wheels going.
The present condition can be described as
one characterized by considerable lack of confidence,
indicated, as you express it, by "no selling or buying and little manufacture, with increasing lines of
the unemployed.° There is much work which ought to
be done, and done promptly. Every city and state
has public works which should be done and now is the
time to do them, if it is humanly possible to do so.
If these are undertaken they will help tremendously
in giving employment to the temporarily unemployed
and thus aid in reestablishing confidence and checking unrest and discontent.
It seems to me that the constructive outline which you have submitted, "How to Get Back to
Normal° is one which aught to be presented to our
big commercial and financial interests, and I be-.
lieve that the general procedure indicated is one
through which better conditions can be attained; or,
as you put it, "anticipating normal conditions will
mean normal conditions more quickly."

With kind regards,
Sincerely yours,

Mr. C. E. Knoeppels
Old Colony Club,
La Salle Hotel,
Chicago, Ill.

Leonard Wood

Jan. 31st, 1921.

Dear rr. Knoeppel, I think your article on getting back to normalcy in industrial and commercial activities is
The plan you outline is
altogether admirable.
the same, commonsense procedure in this crisis of
our economic affairs as a nation.
Sincerely yours,

(Signed) Rowland R. Mahony
Acting Secretary of Labor.


512 Fifth Ave.
February 3,


Mr. C. E. Knoeppel, Pres.,
C. E. Knoeppel 8.: Co., Inc.,

52 Vanderbilt Avenue; N.V.

My dear Mr. Knoeppel:

have your favor under date of the
first, together with your plan in the cause of
better business.
I have made a notation at the bottom
of your plan, calling particular attention as
see it, to the need of getting all the workers
interested in this program.
I believe, Mr. Knoeppel, that it is
just as necessary to hook up the vital current
and power directly with the individual, and the
individuals throughout the plant, as it is to
hook up electric current to the machines and discard the old belt and shafting system in hooking
up power with the machinery.
Pick out the man with the most vital,
energetic, personality who will pour that powerful current of thought directly into the human
I am
Sincerely yours,

John Leitch




We have your letter of February 1,
enclosing an outline of the essential steps
necessary to bring business back to normal,
The policy outlined by you is a sound one
and if followed strictly should give the desired results.
In a few words, the best
way to get results from any manufacturing
plant is to (1) reduce costs to the minimum,
(2) bring prices-down to rock bottom, or to
a level that will move goods.
The manufacturing concern which first reduces prices to
cost or approximate cost will receive the
greatest amount of business.
In a falling
market a large turnover and small profits
is preferable to small turnover and prices
held at inflated levels.

If we have any criticism of your
program it will be on the basis that it is
somewhat too Utopian for the average- business man. Theoretically, there is no need
for business depressions or falling markets
and the suffering entailed in a period of
Actually, however, such conditions exist and will continue to do So as
long as human nature is what it s. ,Could
we reduce business to a policy of strict
honesty, efficient production, low costs and
reasonable profits, we would get results
and moderate prosperity would be permanent.




Service Dept.

of the

February 21, 1921.
Mr. C. E. Knoeppel,
Co., Inc.,
C. E. Knoeppel
52 Vanderbilt Avenue,
New York City.
Dear Mr. Knoeppel:

It is always a pleasure to reaffirm my faith in the vision
of American business executives, always a pleasure to encounter
fresh evidence of it, such as came to me in your paper on "How
to Get Back to Normal Quickly."
Many of the principles which you set forth might well be
applied continuously, as well as in the present emergency.
find the whole plan interesting and stimulating, and I am
pleased to know that it is to have wide attention through the
instrumentality of the Associated Business Papers, Inc.
have talked the matter over at some length with Mr. McCullough,
who is telling you on his own account, I believe, how great is
his interest.
With best wishes,
Yours sincerely,
(Signed). Merle Thorpe

20 Vesey Street
New York City
.Feb. 16, 1921.

Mr. C. E. Knoeppel,
52 Vanderbilt Avenue;
New York City.
My dear Mr. Knoeppel:

I believe that your attempt to get back to the normal
through the study of conditions on the side of production is a
Society has accomplished so much in the
logical step to take.
world without co-operation and without forethought, what could
we expect of a society that applied to its economic relations
the ordinary thoughfulness and co-operation now used in private
While the dynamic side of industry lies on the side of the
market and the place where the prices are made, it is logical
to begin an attack for accomplishment of economic co-operation
on the side of production, the passive element in the fixing of
prices. LG/IC
Federal Reserve Bank of St. Louis

Very sincerely yours,

Lee Galloway


3, 1921.

Messrs. C. E. Knoeppel & Co. Inc.,
52 Vanderbilt Ave.,
New York, V. Y.

Permit me to answer your letter of February 1st
I have read with inin the absence of our Mr. Wetmore.
terest the enclosed data on "How to Get Back to Normal,"
and agree with you that it is quite the proper course to
pursue, and I know of several of our customers who are working with these things in mind.
Yours very truly,
A. N. Cordell,
Assistant Vice President


February 8, 1921.
Dear Mr. Knoeppel:

Referring to your address "How to get back to
normal quickly," made before the joint meeting of the
Society of Industrial Engineers and the Western Efficiency
Society, last evening, permit me to state that T believe
you have formulated a very practical plan to Meet the needs
of the present situation.
I followed your presentation of the details very
closely and attentively and consider the sequence a logical
one and the basic principal involved, sound.
Sincerely hope that the efforts being made will
result in your plan being brought to the attention and consideration of manufacturing interests throughout the country,
as I believe its general application would be Of great value
to those interests.
With kindest personal regards, believe me
Yours sincerely,

Mr. C. E. Knoeppel,

Care C. E. Knoeppel&
#52 Vanderbilt Avenue,
New York, N. Y.


John W. Thomas

Company, Inc.,


February 19, 1921.
C. E. Knbeppel & Co., Inc.,
52 Vanderbilt Ave.,
New York City.
Attention - C. E. Knoeppel, pres.
Dear Mr. Knoeppel:

_I have your letter and article on "How to Get Back
to Normal", and believe you have hit the nail on the head.
The pendulum has swung a bit too far in the business world and it will need strenuous methods to bring it
back to normal. Anything that can be done to get each and
every one talking, thinking and acting optimistically, will
be beneficial.

Your last line expresses the whole story - 'Anticipating normal conditions will mean normal conditions quickly.
Yours very truly,




F. H. Payne,

February 4, 1921.

C. E. Knoeppel & Company, Inc.,
52 Vanderbilt Avenue,
New York, N. Y.

Answering your letter of January 27th we have to advise having
reviewed the manuscript "How to Get Back to Normal", which
accompanied your letter, and form the conclusion that we are
in heartysympathy with the processes you prescribe for accomplishing the purpose indicated in the caption. Certain it
is that there is nothing illogical or impossible in the program outlined.
On the other hand, it appeals to us as being
basically sound and economically right.
Yours very truly,



L. M. Lamb


Jan. 28, 1921.

Mr. C. E. Knoeppel,
c/o Messrs. C. E. Knoeppel & Co.., Inc.,
52 Vanderbilt Ave.,
New York City.
My dear Mr. Knoeppel:

Replying to your letter of January 27th, we
have applied your suggestions in our foundry about
six weeks ago, and it has enabled us to keep our
foundry going at about 40% of our possible capacity.
Although no orders were in sight prior to that
time, several of our large customers were able to
take advantage of the reduction which we were able
to make them due to operating conditions now existing, similar to those outlined in your program.

It can readily be seen that this plan is beneficial to our customers as well as ourselves, whereas if this program had not been
down would have been necessary. .

applied a total

Yours very truly,


C.J.G.Fisher, Pres.



February 10, 1921.

Mr. C. E. Knoeppel,
52 Vanderbilt Ave.,
New York.
Dear Mr. Knoeppel:

I have your letter of the 31st, together
with its attachments.
Think perhaps the best endorsement of
your suggestion that I can give is to
say that here in our own plant we have
already done practically just what you
suggest. We took very careful stock
of the situation early in the fall and
instead of guaranteeing a maintenance
of prices based upon then existing conditions we decided that the quickest
and healthiest way to get back to normal
and more efficient basis would be to reduce prices and then "cut the cloth to

We believe results have and will fully
justify us in our decision.
With best personal regards,
Very truly yours,

H. E. Coffin



Nineteen Twenty-One.
C. E. Knoeppel & Co.,
52 Vanderbilt Ave.;
New York City.

Mr. C. E. Knoeppel

My dear Mr. Knoeppel:

With interest I have read your article on "How
to get back to normal," and have had the opportunity
of giving the matter some considerable thought, since
my talk with you in New York last week.
On the program, which you have outlined, I absolutely concur, and may add, we have taken the preliminary steps toward adopting it.

Mr. Reed's advice is still good - The only
way to resume, is to resume," and the only way to
Gut, is to cut. The whole question is, whether or
not the country has foresight and stamina enough to
go out and make a very short job, of what at the present rate of progress will take a year or so to aci.e., the establishment of such a condicomplish;
tion as the average mind will acknowledge is good
and healthy, and deserving their support with dollars.
Every possible success 1 certainly wish you,
and shall be happy to lend you any possible assistance.

Very truly yours,



E. F. Hauserman, Pres.




Oct. 27th, 1916.

Messrs. C. E. Knoeppel & Co.,
New York City.

Inasmuch as your client, who is also a client

of ours, does not wish his name divulged, we take pleasure


verifying the correctness of the attached chart giving

his experience during the years shown.

We have examined your

chart and client states

that it is in accord with his records and is a correct showing of his experience.

In general, we have

known, through

our business relations with this concern that it has made
remarkable progress and improvements during the past few

Very truly yours,

par,)a./ LA.,




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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102