SOURCES OF ADMINISTRATIVE INFORMATION STATISTICS AND INSPECTION 1. Use of statistics.—Only when statistics can be employed progressively are they effective. It is not so important that past conclusions be confirmed by statistics as it is that deductions for the future be correctly drawn. Only when they take on the latter character may they be said to be vitalized.
Among the monthly reports of the Harriman lines is one of particular interest because it looks forward instead of backward. It asks not for an explanation of the unsatisfactory conditions shown by the figures, . but for a statement of what action has been taken to correct them.
R R. Division.
19....
General Superintendent : Dear Sir.—I transmit herewith explanations of fluctu ations in operating expenses for 19...., com pared with the same period of previous years, having per sonally reviewed the month's exhibit.
The fluctuations are regarded by me as unsatisfactory, and I have taken action to improve results in future periods.
2. Graphs and statistics.—The graphic method of presenting statistics, tho inferior to the numerical in accuracy, has the advantage of enabling the eye to take in at once a series of facts. This advantage is not of first importance when we are considering only one set of facts. Accuracy is then more essential than ease and rapidity of representation. But ease and rapidity are essential when we want to compare many sets of facts, because if the mind is hampered in getting the general effect of one set, it loses count of the others. The function of the graphic method is the comparison of different sets of statistics. A for mer president of the New York Central told the New England Railway Club how a simple use of graphic charts saved the road $2,000,000.
Thirty years ago we built four grain elevators in Buffalo. In 1909, it became necessary to rebuild thein, and two mil lion dollars were appropriated. However, I had an analysis made of the grain business, and plotted a chart of the curves of production and consumption. Those lines cross at 1913, meaning the probable end of exporting grain, and we decided to spend only $80,000 and merely repair the existing ele vators.
3. Indicating relation of one set of facts to an other.—Another function of graphic charts is the in dication of the true relation of one set of facts to another. For instance, it is known that cost varies with output. In starting a new business or shaping new plans it might be desirable to know just what this variation was likely to be in order to estimate how much business would be necessary to overcome the initial expenses, and what profit should be realized from a given volume of business. A chart will show far more clearly than statistical tables the variations of two factors in relation to each other.
4. Comparisons of ti7ne periods.—Still a third class of information which can be advantageously studied with the aid of curves is that which involves compari son from month to month of such items as costs, sales, output, etc. Almost any kind of information can be plotted with time as the horizontal coordinate, and the desired information as the vertical. Curves repre senting succession units of time are most convenient when they read from left to right. The advantage is that the curve can be kept up to date, and that com parisons with previous and standard conditions are grasped more easily and present the results over a long period of time. For instance, the average mar ket price of a product for every business day in the year can be shown in much less space than is possible in any other way. In the matter of output, sales, costs, etc., it is customary to carry in addition to the quantity for the period, the cumulative total for the year. The height of this curve always shows the total business to date, and its slope shows whether the tendency is for the volume, to increase, remain station ary or fall off. Conditions making for or against im provement may thus be understood sooner than they would be if tabulations of figures were used. Note, for instance, how quickly you catch in Figure 13 (page 288) the relation between orders and shipment.