THE UNIVERSITY OF TEXAS AT AUSTIN THE GENERAL LIBRARIES LIMITED CIRCULATION This Item is Due on the Latest Date Stamped ffHIS IS AN ORIGINAL MANUSCRIPT. (IT MAY NOT DE COPIED WITHOUT THE AUTHOR’S PERMISSION APPLICATION OF THE PUNCHED-CARD METHOD TO THE STATISTICAL AND ACCOUNTING PROBLEMS OF TEXAS BUSINESS AS EXEMPLIFIED BY REPRESENTATIVE CASE STUDIES APPROVED: APPROVED: APPLICATION OF THE PUNCHED-CARD METHOD TO THE STATISTICAL AND ACCOUNTING PROBLEMS OF TEXAS BUSINESS AS EXEMPLIFIED BY REPRESENTATIVE CASE STUDIES DISSERTATION Presented to the Faculty of the Graduate School of The University of Texas in Partial Fulfillment of the Requirements For the Degree of DOCTOR OF PHILOSOPHY By Stella Traweek, 8.8.A*, M.B.A* Austin, Texas May, 1949 PREFACE the library THE UNIVERSITY or TEXAS The modern punched-card method is a natural outcome of the increasing size of business operations* It is one of the children mothered by necessity, and necessity in Texas is great enough to warrant more use of punched cards than is made at present. It is evident, also, that progress is being accelerated in her industrialization and that her need for fast and efficient methods is increasing rapidly. Routine tasks and paper work of all kinds show signs of becoming an impeding burden. I have attempted here to set out-some of the observations I have made in a study of representative Texas businesses and to present some suggestions for improvement. I have found superlative enthusiasm on the part of the users of the punched-card method. Not only have they been univer« sally cooperative in explaining the advantages of the method in their individual businesses, but it has seemed throughout my studies that they have a gospel oc £they are anxious to preach for the good of their fellow workers with quantity X [■records. Once the machines have been used with punched cards to orepare re-9 cords, it is hard for the user to understand why everybody with any quantity or Cvariety of record keeping does not adopt the method. When a new machine is Ll, offered to further shorten or simplify a troublesome process, some Texas users are quick to install and use it. The Texas Department of Public Welfare had the '--first check-writing collator in this part of the nation. Humble Oil and Refining Company installed one of the first IBM electronic multiplying punches. Yet there are many places in Texas business for profitable use of the punched cards where they are not being used. The most important fact that has been evidenced is the need for education in the use of the punched-card method — formal CH CD 585005 education in the colleges and universities for future leaders in Texas business, on-the-job education for people in business who resist the use of the method because they do not understand its advantages. It is my hope that I have set out a picture of the punched-card potentialities in Texas that may assist in the progress of the State toward utilization of the best available devices for increasing speed, efficiency, and precision in keeping business records. It is a pleasure to express my gratitude to Dr, John R. Stockton, Supervising Professor, for kindly and continued guidance, enthusiasm, and assistance in my work, I am indebted also to Professor E. E, Hale, Dr, E. K. McGinnis, Dr, E. To Miller, Dr. G. H, Newlove, Dr. C. A. Smith, and Dr. H. K. Snell, members of my supervising committee; to Messrs. Glenn Solomon, Charles Griffin, James Sweeny, and E, G, Collins, and Misses Sara Troy and Ethel Smith of the International Business Machines Corporation, and Miss Joy Johnson and the late Mr. E. W. Peck of Remington Rand, Inc., all of whom arranged interviews with the users of punched-card equipment; and to the following employees of businesses of which I made case studies: Dr. Fladger F. Tannery (Assistant Comptroller, who arranged the interviews) and Messrs. Henry M. Hopkins (who supervised the study), Milton Trammel, Fitzgerald, M. E, Reddick, C. M. McKinsie, Jack P. Jones, Booth, and Tommie Thomas (who cooperated in the study) of the Humble Oil and Refining Company; Dr. Watrous H, Irons and Messrs. Hal Simmons, Leo Howell, and George Carroll of the Federal Reserve Bank of Dallas; Mr. Byron Shipp of the Registrar’s Office of the University of Texas; Mr. Glenn D. Gurley of the Southland Life Insurance Company of Dallas; Mr* J. R. Benson; Mr. E. A. Andrews of the Texas Employer’s Insurance Association and the Employer’s Casualty Company; Mr. L, L. Harris of Henke and Pillot; Mr. E. H. Wade of Pioneer Air Lines; Mr. Byron Thomas of the Texas Employment Commission; Major John H. Cates and Messrs. Starr and M. H. McNeely of Fort Sam Houston; Mr. Robert L. Maierhofer of Kelly Field; Mrs. Augusta Jones of Sanger’s; Mr. Dennis Macken of the Austin National Bank; Mr. T. J. O’Connor of the Texas State Board for Vocational Education; Messrs. Bill Davis and Bee Grissom of the Texas Department of Public Welfare; Messrs. G. B. Herbert, Davis, Bush, and Lockwood of the Texas and New Orleans Railroad; Mr. W. Wo Arnold of Nardis Sportswear; and Messrs. Hall Logan and W. C. Cason of the State Board of Control. I am grateful to Mrs. Esther Steffan for excellent and helpful service in typing the dissertation. And acknowledgements would not be complete without an expression of appreciation for the devoted assistance, inspiration, and encouragement of my late mother, Mrs. 0. E. Traweek, whose courage made the writing of this dissertation possible. Stella Traweek April 1, 1949 TABLE OF CONTENTS CHAPTER PAGE I. PUNCHED-CARD METHODS IN STATISTICS AND ACCOUNTING 1 International Business Machine Punched-Card Equipment Remington Rand Punched-Card Equipment Punched-Card Equipment Compared 11. THE REGISTRAR’S OFFICE AT THE UNIVERSITY OF TEXAS 16 Reports Required Source Documents Procedure A. Grade Records B. Statistical Reports 111. FORT SAM HOUSTON 34 Reports Required Source Documents Procedure IV. KELLY FIELD. SAN ANTONIO 43 Reports Required Source Documents Procedure V. TEXAS EMPLOYMENT COMMISSION 52 Report Requirements Source Documents Procedure VI. HOUSTON POLICE DEPARTMENT . ... 9 70 Reports Required Source Documents Procedure VII. FEDERAL RESERVE BANK OF DALLAS 75 A. Proofing Department Report Requirements Source Documents Procedure CHAPTER PAGE B. Savings Bond Redemption Department Report Requirements Source Documents Procedure C. Department of Research and Statistics Report Requirements Source Documents Procedure VIII. THE AUSTIN NATIONAL BANK, AUSTIN, TEXAS 100 Reports Required Source Documents Procedure IX. TEXAS STATE BOARD OF CONTROL 104 Report Requirements Source Documents Procedure X. TEXAS EMPLOYER’S INSURANCE ASSOCIATION AND THE EMPLOYER’S CASUALTY COMPANY o o 11l Reports Required Source Documents Procedure XI. PIONEER AIR LINES, INC * 119 Reports Required Source Documents Procedure XII. TEXAS AND NEW ORLEANS RAILROAD . . 155 Reports Required Source Documents Procedure XIII. RED ARROW FREIGHT LINE 147 Reports Required Source Documents Procedure CHAPTER PAGE XIV. THE HUMBLE OIL AND REFINING COMPANY, HOUSTON 149 Reports Required A. The Production Department ......0...... 151 Reports Required I. Production Accounting Office — Vouchers Payable Section Reports Required Source Documents Procedure 11. Production Accounting Office — Material and Supplies Reports Required Source Documents Procedure 111. Production Accounting Office — Natural Gas Production Reports Required Source Documents Procedure IV. Production Accounting Office — Machine Section Reports Required Source Documents Procedure B* Treasury Department 180 Reports Required Source Documents Procedure C. The Crude Oil Accounting Office ...0....... 188 Reports Required Source Documents Procedure CHAPTER PAGE D. Baytown Refinery ••••••0»...0..0... 193 Reports Required Source Documents Procedure I. Material Accounting 11. Payroll Accounting 111. Miscellaneous Accounting Uses of the Machines XV. A WHOLESALE AND RETAIL MOTOR COMPANY IN DALLAS ..... 225 Reports Required Source Documents Procedure XVI. NARDIS SPORTSWEAR 231 Reports Required Source Documents Procedure A. Orders B. Payroll C. Accounts Payable XVII. SANGER’S, DALLAS 242 Reports Required Source Documents Procedure XVIII. PUBLIC UTILITIES ACCOUNTING IN SAN ANTONIO, TEXAS . . . 249 Report Requirements Source Documents Procedure XIX. HENKE AND PILLOT, INC., HOUSTON 254 Reports Required Source Documents Procedure CHAPTER PAGE XX. THE PUNCHED-CARD METHOD IN STATISTICS AND ACCOUNTING .... 262 Situations Where Punched-Card Methods are Needed Characteristics of Work Which Warrants the Use of Punched-Card Methods The Punched-Card Method and Change in Habits Rented versus Purchased Punched-Card Equipment Service and Personnel Supply XXI. USE OF THE PUNCHED-CARD METHOD IN TEXAS 273 Fields for Punched Card Use in Texas A Survey of Texas Punched Card Users Kinds of Operations Done by Punched-Card Methods in Texas Reasons for Limited Punched Card Use in Texas BIBLIOGRAPHY . . 290 CHAPTER I PUNCHED-CARD METHODS IN STATISTICS AND ACCOUNTING The punched card in statistics and accounting is a modern improvement which has made a phenomenal rise to favor in the business world* Within this decade there was retired from the position of Chief of the Machine Tabulation Unit of the United States Bureau of the Census in Washington a man who, in his business lifetime, saw the invention of both lines of punched-card machines and their rise to the present world use. He was in the Bureau of the Census when the work became so great in quantity and complexity that the task of compiling the 1880 Census was hardly completed in time to take the next. He was still there, as Chief of the Unit, when more detailed statistics were gathered each census period than could have been considered without the punched-card method of handling — statistics on the individual, on special groups, on state characteristics and performances, on industry, on agriculture, on mining, and on special problems such as housing and business. Industrialization in Texas is new, and the growth of large-scale enterprise in the State is relatively recent* This means that the use of the punched-card method in statistical and accounting systems in Texas is so new that little is known about the types of uses except by the manufacturers of the equipment and the users themselves* INTERNATIONAL BUSINESS MACHINE PUNCHED-CARD EQUIPMENT Invention — It was during the compilation of the 1880 Census that Dr* Herman Hollerith, a statistician in the Bureau of the Census, started work on a machine that would lessen the labor and time required and increase the accuracy of the counts in the census. Mr. Hollerith completed his first statistical machine in 1887, in time for the 1890 Census, as he had attempted to do. His system was fundamentally simple. It consisted essentially of a method of recording the facts of any given situation -- for example, the census description of one person — by punching holes, according to a definite pattern, in a piece of paper. The original plan used strips of paper; but Dr. Hollerith soon found it was better to use a separate card, of standard size and shape, for each ’unit situation.’ A pre-arranged code assigned definite meaning to each separate position on the card. A hole punched in that position would then actuate electricallyoperated mechanisms which dealt with the particular data which that position represented, functioning as counting or adding devices, either singly or in various combinations, as the result sought might The first use of the machine made by Dr. Hollerith was not in the Bureau of the Census but in the tabulation of mortality statistics for the city of Baltimore. Next it was used by the Bureau of Vital Statistics of New Jersey and by the Board of Health of New York City. The compilation of vital statistics is today, the world over, a recognized function of electric punchedcard machines. In 1889 a commission of three experienced statisticians was appointed by the Superintendent of the Census in Washington for making a series of exhaustive practical tests of all then-known mechanical methods and systems for counting, adding, or tabulating data which might be practicable for use in the Eleventh Census to be taken the following year* In November of 1889 this commission reported that the census records could be transcribed by the Hollerith method of card punching in not more than three-fourths of the time required by any other system, and that the data could be tabulated by Hollerith machines in not over one-eighth of the time required by any other available method* As a result of this report, the Hollerith system was officially adopted by the United States Government for compiling census returns. The success of the Hollerith tabulating method in this census attracted widespread attention in the United States and in foreign countries. Austria- Hungary used the method for compiling census returns during the same decade. In 1896 Dr. Hollerith incorporated his tabulating business under the name of the Tabulating Machine Company in the state of New York. Soon afterward the Company purchased land in Washington, D.C., where the present Washington plant of the International Business Machines Corporation is located. More lend and buildings have since been added to the first property, but the site has been maintained. Consolidations — In 1911 the Tabulating Company merged with two other companies, the International Time Recording Company and the Computing Scale Company of America. The International Time Recording Company had established a factory at Endicott, New York, the present location of the International Business Machines Corporation, after previous consolidation of four time recording companies. The new merger took the name of the Computing-Tabulating-Recording Company, which in 1914 employed and placed in control the present president. Progress — A period of development brought many changes in the Company. In 1917 Internation Business Machines, Ltd., of Canada, was created, and the Company in the United States took over the American Automatic Scale Company of Chicago. In 1924 the organization became the International Business Machines Corporation. An extension of engineering and research activities brought many improvements in the old and inventions of new machines. Operations were extended until the Corporation has customers in almost every country in the world, with factories in the principal countries supplying the market. The research and engineering division was made a major division of the Corporation, and completely-equipped laboratories were set up at Endicott, New York. A school building was constructed there, and a complete instruction program trains employees of the Corporation and operators who are employed by the users of IBM equipment. The term “IBM” has become so universally used that it has been adopted for use throughout the remainder of this discussion and case study. A most important development is the printing function of the Electric Accounting Machine, the extension of which has played an important part in increasing the use of the machines. The machine containing this improvement was first placed on the market in 1920. Prior to this time, the part played by the machanism in tabulation ended with the appearance of the totals in the counters. They had to be transcribed to the record sheets by hand, which introduced human fallibility and limited the speed of the operation to the speed attainable in writing down the correct figures in the correct columns. Electric typewriters were added to the IBM line in 1933, and today three modern models are marketed. The executive model has compensation mechanism to even margins and four sizes of type. Each letter is allowed the necessary space for that letter rather than the customary equal space for each letter. For example, an ”i” is a fractional width of an ”m.“ In 1934 the retail scale business was sold, and the Corporation retains only the industrial part of the scale business. Two new styles of time recorders for use in recording payroll time were introduced. Other business machines invented and improved include time indicat ing devices; time signaling devices; laboratory panels; interior telephone systems; central control radio, music, and speech equipment; property protection devices; piece-work coupon printing machines; machines for producing graphic analyses; the Filene-Finlay Translator; and a proof machine for banks. Tabulating equipment for use with punched cards includes a mechanical keypunch to replace the pantograph punch, an electric keypunch, an electric duplicating keypunch, an alphabetic printing punch and an alphabetic duplicating printing punch; several attachments for use on punches; several gang punches* a mechanical verifier and a motor drive verifier; a vertical sorter replacing the old sorting box which was attached to the tabulator, a horizontal card-operated sorter, and a card-counting horizontal sorter; several devices for attachment to sorters, including a collating device and a multiple-column sorting attachment; the 285 and 297 numerical accounting machines; special devices for the accounting machines; the 92 and 93 automatic control tabulators, the printing tabulator, and the modern alphamerical direct-subtraction accounting machines both net balance and non-net balance, with digit selector and unlimited class and field selection; an automatic interpreter 550, for translating the holes punched in a tabulating card into printed figures along the top edge of the cards; the automatic check-writing interpreter; special devices for interpreters, including a class selector and an automatic ’’not over" indicator; the reproducing punch, a comparing reproducer, with independent selector control and gangpunching emitter; an automatic summary punch 516 connected to the accounting machine, a gang summary punch 518 receiving impulses both from the punched cards and from the counters of the accounting machine; an automatic multiplying punch 601 and an automatic cross-footing multiplying punch 601, with special devices including a decimal accumulating device; and a test-scoring machine for scoring and analyzing examinations by means of mark sensing. The Past Decade — Within the past ten years IBM has added to the line the following machines to aid in punched-card operations: A new Calculating Punch multiplies, divides, cross-adds, and cross-subtracts in any combination during the same operation, automatically at increased speed, with ten-digit capacity for each operation. It identifies and punches negative totals as true figures and verifies results individually• An Electronic Calculating Punch multiplies, divides, cross-adds, and cross-subtracts automatically, in any order or combination, during the same operation. It punches the results in an IBM card at one hundred words a minute, checks calculations simultaneously while multiplying or dividing, gang punches common information in IBM cards while calculating, and has programming facilities, storage capacity, and complete flexibility. It has a capacity of ten digits times ten digits or division of thirteen digits by eight digits, with the size of the quotient determined by utilization of the programming facilities. It does multiplication and division of either individual numbers or groups o An Electric End-Printing Reproducing Punch does six complete operations with speed, accuracy, and flexibility o It end-prints on the same or duplicate cards, and transcribes and records electronically from a pencil-marked entry. It duplicates all or any portion of recorded data from one group of cards to another and checks the reproducing. It gang punches automatically and summary punches in conjunction with an Electric Punched-card Accounting Machine. An Electric Punched-Hole Verifier verifies the accuracy of both alphabetical and numerical keypunching. When a card is verified satisfactorily, a notch is cut automatically into the top edge. All cards not verified successfully after a second attempt are released automatically and are neither notched nor stacked with the satisfactory cards. The notch does not appear on a card where columns are skipped. It permits direct verification of multiple punching in a single column. It verifies at increased speed. Movable keyboards may be lobated in any position most comfortable for the operator. A new high-speed Electric Punched-Card Accounting Machine prints three lines from one card. It lists a hundred cards a minute or accumulates one hundred fifty cards a minute. A new carriage handles longer forms, provides added flexibility. It performs all the operations of the previous accounting machines. The tape-controlled Automatic Carriage eliminates carriage set-up time and moves the forms to the correct printing line with one motion rather than advancing them through a series of short movements. It provides for as many as ten divisions of each form. A compact little punching device prepares the tape for automatic spacing o A High-Speed Electronic Sorter sorts 650 cards a minute. An automatic run-out allows all cards to be sorted into the correct pockets without the necessity for pressing the start key. A safety device stops the sorter when any pocket has reached its capacity. A new card-feeding machanism allows refilling of the card hopper while the sorter is in operation without automatic stopping of the machine. Selection switches retain sequence in undesired cards. It does alphabetic sorting also. A Numberical Collator merges or interfiles cards in sequence, matches cards with identical punching, and selects cards automatically at a speed of 240 cards a minute. It reconciles bank statements or verifies information punched in master and detail cards or in two fields in one card, and does several combinations of these functions. An Electric Punched-Card Collator with Alphabetic Feature enables cards punched with alphabetical information to be merged, filed, or selected automatically# A Check-Writing or Stencil Collator writes checks or prints information on card forms from a stencil card prepared and inked once and used indefinitely. Three hundred pounds pressure between rollers forces the ink onto the check or other form. Used in a window envelope, the check is ready for mailing. A Continuous Form Feed Device guides continuous forms through the automatic carriage of the IBM Electric Punched-Card Accounting Machine, feeding from both sides of the form to maintain proper register. Forms of any standard size are accommodated. Proper alignment is assured. A Proof Machine sorts checks, proves deposits, lists for clearing house and other bank reports, and endorses the check. A check is handled only once to accomplish these four functions. An operator scans the checks, records the amounts by means of a ten-key adding machine keyboard, depresses the proper one of twenty-four classification sorting keys, drops the checks into the sorting chute, and touches a release bar. Each check amount is listed on an adding machine tape corresponding to its classification as well as on the main control tape. Either full endorsement or the block number and date as desired is automatically imprinted on each check just before it reaches the proper sorting receptacle. The adding machine classification and the amount of the check are visible on special indicators before the release bar is depressed. An automatic light signals when any sorting receptacle is filled to capacity, the machine automatically locking until the checks are removed. This machine is also used on sales slips or other forms of a size that will fit into the check compartment s • A Facsimile Posting Machine instantly transfers a complete line or part of it in facsimile from a master sheet to an individual record. The master sheets may be hand-written, typewritten, or machine-written. Cards, sheets, or any paper form may be used. Controlled line-to-line spacing of the master sheet eliminates failure to posto An Automatic Sequence-controlled Calculator installed at Harvard University in 1944 contains 2,204 counter positions including 72 storage counters of 24- column capacity. It was the first of a series of rapid-calculation devices completed or now under construction intended for use in the field of scientific computation. International Business Machine Corporation also placed at the disposal of business the International Business Machines Service Bureau. This division offers, on a fee basis by time or volume, at IBM branch offices, the use of any units of equipment in the IBM line of Electric Accounting Machines. The IBM "Era of Progress" was emphasized by the opening in 1938 of the IBM World Headquarters Building in New York City, dedicated to "World Peace Through World Trade." Business Machines Corporation pamphlet AM-1-1, 1936, p. 2. REMINGTON RAND PUNCHED-CARD EQUIPMENT Invention — In 1907, when further improvement in methods of recording the census seemed imperative, Mr. James Powers, an engineer, was called to Washington by the Director of the Bureau of the Census. Mr. Powers’ principal contribution to the 1910 census was the census punching machine, of which three hundred were manufactured and used. Having been granted patent rights by the Government, upon completion of his government work Mr. Powers organized and operated the Powers Accounting Machine Company. This Company was incorporated in Maine in 1911 and additional expansion made in a New Jersey branch in 1912. Here the slide punch, the two-deck horizontal sorter, and the printing tabulator were developed. Adding mechanism of the Comptograph was first used in the tabulator but was later replaced by that of the Dalton Adding Machine. This was the first time that a tabulator had been made to print information automatically from punched cards onto a sheet or roll of paper. Development — In the fall of that same year, 1913, a demonstration of the Powers punch, sorter, and tabulator in Europe prompted organization of several foreign sales agencies. In that same year the Powers Accounting Machine Company surrendered its Maine charter and was re-incorporated in Delaware. In 1914 a larger plant was opened in Brooklyn, New York, for the manufacture of Powers machines for commercial purposes. The' first commercial punching machine marketed was arranged with forty-five slides on each keyboard one slide for each column of the 45-column card used. This punch was speedy and reliable, and the fundamental principles were used for more than thirty years. Known as the ’’slide punch”, it was the only punch marketed until 1916, when the so called ’’automatic punch” with twelve depressible keys was brought out to meet the advantages of a touch system of punching. This automatic punch was built in several types, one being known as the ’’visible punch” in which the card could be read by the operator so that the information written on it could be set up in the machine before the card advanced to the punching position. An automatic numbering attachment was supplied as optional equipment whereby each punched card was consecutively numbered. This addition gave it the name of the ’’numbering punch” by which this type of punch was subsequently known. In 1924, the automatic punch was furnished with alphabetical keys in addition to the numerical keys, in order that names as well as amounts could be reported in the perforated card. This machine was called the ’’alphabetical punch”. At the same time provision was made in the tabulator so that names or descriptions could be simultaneously printed with a listing of amounts® no In 1925 electric characteristics were introduced into the alphabetical punch. A standard Remington typewriter was electrically synchronized to an automatic punch so that it was possible to punch information into a card at the same time it was written on an original document, such as an order or invoice. This machine was called the "Synchro-Matic". The first Powers horizontal sorting machine had two decks of receiving magazines. In 1919 the "Timed Sorter" was developed, containing one deck for receiving magazines and permitting cards to be fed in rapid succession whether or not a preceding card had reached its pocket. This sorting principle with many engineering improvements provided the basis for today 1 s high-speed sorting machines. In 1921, card counters were developed for each receiving magazine for statistical purposes. Up to the time of the development of the Poxvers sorter other machines were vertical, but the advantages of the horizontal sorter caused eventual abandonment of the use of vertical sorters. Machines developed later broadened the scope of the punch, sorter, and tabulator and relieved the operator of much routine. Tabulators were provided with an "automatic” totaling device known as the "Universal Automatic Control" which caused the tabulator to sense automatically the change of designation and also to record automatically the total at the end of each card group. The Merger — In 1927, together with seven other large office equipment companies, the Powers Accounting Machine Company was merged into one company, Remington Rand, Inc. The purpose of the merger was to enable business institutions to obtain all their office equipment needs from one source. Further Improvements — A new development program was immediately instituted, and during the next ten years the following new lines of equipment were developed* Model 2 Tabulator — It is equipped with direct subtraction and grand total mechanisms* The 90-Column Card — This remains the largest capacity card available* The 90-Column Automatic Punch — It retains the automatic repeat punch and correction features of the 45-column punch, and is further equipped with electrically actuated keys for ease of operation* Correction and repeat punch features are exclusive* Model 2 Interpreter — This will interpret a complete card in one run* A Full Line of 90-Column Tabulators -- This contains from 30 to 85 printing sectors* It is also possible to equip these machines with direct subtraction and grand total mechanism* Automatic compensating feeding mechanism was also developed for this line of printing tabulators* In addition, instantaneous summary punch was developed for use with the Model 2 Tabulator* During this period, the Synchro-Matic 90-Column numerical punch was also engineered* It was possible to synchronize electrically this machine with the Remington Bookkeeping machine or the Remington Billing machine* In 1938 a new tabulator, the Type 3100 Alphabetical Tabulator, was put on the market* With its 100 alphabetical or numerical printing sectors, with its 80-110 sub-and grand total counter capacities, with its Universal Automatic Carriage for instantaneous form feeding and spacing, and the Multi-Stage Selector mechanism, there is hardly a printed report or record that cannot be prepared quickly and accurately by it* The Printing Multiplying Punch, a direct multiplication machine and printing multiplier, was introduced* The Multi-Control Reproducing Punch was developed to ease certain payroll calculating work and to eliminate many manual punching operations* Also added to the line of equipment were the following auxiliary machines: The Posting Interpreter, by translating punched holes into alphabetical and numerical characters, and printing these characters boldly and legibly across the face of the card at a constant speed of ninety cards per minute, makes each tabulating card a valuable bookkeeping document in its own right. The Check-Writing Interpreter, which embodies all the features of the Interpreter, permits the interpretation from a preceding punched tabulating card on a tabulating card check. The information sensed from and printed on the first punched card is retained and prints again on the tabulating card check or checks that follow. The Automatic Visible Punch, embodying all the features of the visible punch, provides in addition a means of mechanically feeding the tabulating cards from the bottom of the stack in the feeding magazine onto a reading platform. The reading platform is so designed t,hat the entire face of the card is clearly visible to the operator. The Interfiling Reproducing Punch, designed to augment the efficiency of a Model 3 installation, accomplishes its purpose by feeding two files of cards from separate feeding magazines and interfiling them in a common card receiver. The various operations of card feeding, punching, and segregation are coordinated by positive mechanical comparison. A Spot Punch approximately six inches long is designed for punching information on the spot where it is found -- numbers of stock items on high shelves or readings at meter boxes* Remington Rand, too, has added to the “Era of Progress*" following section is adapted by permission from a mimeographed article by Remington Rand, Inc# PUNCHED-CARD EQUIPMENT COMPARED The punched-card machines invented and manufactured by these two producers are meant to serve the same purpose* The cards are similar, but Remington Rand machines use round punched holes while IBM machines use ei n £ r q VWV V V w rectangular holes. Two or more holes are punched in one column for indication of numbers or alphabet in Remington Rand cards. Except in a few cases for special purposes, double punches in a column of an IBM card indicate letters and are so transcribed by the machines. Use of the upper half and the lower half of the card separately gives Remington Rand ninety-column card capacity as compared with IBM*s eighty. Remington Rand equipment is designed for mechanical operation and adjustment, while electrical principles control operation of the IBM machines. Changes are made in the operating units at the factory only for the Remington Rand machines. IBM machine operation is regulated and determined by electrical plug-in wiring similar to telephone switchboard operation except that the wires are left in the control boards during any entire machine operation. Minor adjustments can be made in report form on the Remington Rand machines by lever manipulation and designing of card fields* IBM flexibility includes rewiring of boards; digit selection, unlimited class and field selection, and other wiring flexibility; more varied attachments and auxiliary equipment; and a wider variety of punched-card machines. IBM machines are leased only, while Remington Rand equipment is either leased or sold. Rental charges include maintenance service in either case* Purchased machines are maintained and repaired by Remington Rand for a charge of four per cent of the purchase price per year* The International Business Machines Corporation concentrates on the production and development of punched-card equipment, while Remington Rand, Inc*, maintains a relatively complete line of business machines and furnishings* IBM maintains service bureaus for production of business records on a time or volume basis* Both maintain offices and offer service for maintenance of machines in the principal cities and larger towns in all parts of the country* Both do international sales business. Both offer some exclusive performances by punched-card machines. Both have customers in all parts of the nation and abroad. Approximately a decade ago a national magazine survey attributed eighty-five per cent of the punched-card use to IBM machines, the remaining fifteen per cent to Remington Rand. Both organizations are contributing to the advance in the search for speed, efficiency, and precision in obtaining and dealing with business facts. The following case studies are an attempt to survey the use of the punched-card method in business in Texas, with a view to a critical analysis of Texas needs and the extent to which the punched-card method is being used in the filling of those needs. In order to present the cases naturally as they appear in business, terminology used is as near as possible that applied by businessmen in speaking of operations and devices. Terms of the trade which appear in literature and studies of Remington Rand, Inc., and the International Business Machines Corporation are employed as standard, though some of them are not words with dictionary definitions. The word ’’alphamerical,” for example, is applied to the IBM tabulator which prints both alphabetical and numerical data. The term ’’recap” is used universally when speaking of a recapitulation sheet and is, consequently, used in the studies presented here. Several other comparable terms are used when they seem applicable. The oases presented cover uses of punched cards in the fields of government, transportation and public utilities, retail sales, finance, manufacturing, and education in Texas, and on the basis of these oases conclusions are drawn as to the nature of the punched-card systems in Texas* CHAPTER II THE REGISTRAR’S OFFICE AT THE UNIVERSITY OF TEXAS REPORTS REQUIRED The Registrar*s Office at the University of Texas has been using IBM machines since 1930. Originally it was planned to use the equipment for statistical purposes only. However, the work was constantly expanded to include all phases of grade reporting. Before the close of the late war many special reports were made for various officials of the University, but the enlarged enrollment since the war has made it impossible to make such reports except one special report on the number of absences from classes needed for a special study of revision of the absence rules. It is expected that special reports will again be attempted when registration has stabilized at 17,000 or 18,000 so that more equipment can be utilized or when enrollment falls back to be stabilized at some lower number. The Finance Office reproduces data from the Registrar’s grade cards as basis for preparing bills for veterans* accounts to be sent to the Veterans Administration. These reports are prepared on IBM equipment in the Finance Office. This machines records division prepares many reports on veteran students for the Veterans Administration. These reports furnish the basis for determining sustenance allowances, for requistions for books and supplies, and for the payment for these books and supplies. In connection with the regular work of the University, the machines were formerly used in preparing class cards, but typewritten cards were found more satisfactory* The peak in registration is reached in a very few days, and there was difficulty in. training a sufficient number of machine operators for such a short period. Furthermore, it is not economical nor possible to rent as many machines as are needed for the few days involved. These difficulties could probably have been overcome, but students are permitted practically unlimited latitude in changing programs during the first week of classes. No penalty, financial or otherwise, is involved. With fifteen to seventeen thousand students, literally thousands of program changes occur at the beginning of each semester. In the spring semester of 1945-46 adds, drops, and section changes averaged approximately two and one half per student. Therefore, it is not considered practical to use IBM equipment in preparing class cards. SOURCE DOCUMENTS Source documents used are the registration forms filled out by students and reports from the various deans and teachers (usually on forms prepared on the machines and sent out for filling in)# PROCEDURE The Installation — With an enrollment in the University of more than 17,000, all reports were prepared by the Registrar’s machine records division on two alphabetic duplicating punches, one alphabetic interpreter, two high-speed sorters (450 cards per minute, one with a counter), one reproducing punch, one tabulator with eighty counters and digit selector, and a transfer posting machine• The division has access to a collator in the Finance Office and to the installation of IBM equipment in the Veterans Administration office# All the equipment in the Registrar’s division has recently been replaced with new machines; this is considered the chief advantage of the machines* being rented rather than bought# All educational institutions receive a twenty per cent discount on equipment rental* The division uses one man on the tabulator while four other operators are punching and coding. In addition three persons work by hand on the information from and for veterans which is used later on the machines. Codes — Coding is made of mode of admission, college or school from which the student entered, sex, high school rank, nativity, marital status, religion, and other classifications and facts shown on the two cards shown. Cards and Forms — The two basic card forms used are Exhibit 1. Practically all reports are made on plain roll paper, usually then typed and reduced in size. A. GRADE RECORDS The Flow of Work through the Machines — The following details the uses of IBM machines in relation to various phases of grade handling. The two basic tabulating machine cards are shown as Exhibit 1: Card Form One is used especially in connection with grades and Card Form Two is the statistical card. These card forms are used in connection with many needs and adapted as other uses require. The column heads do not always indicate the data actually punched. Operation I: During the first week following registration a master card is punched for every student from the alphabeted file of course cards. Card Form One is used and columns 1-34 are punched. The items punched at this time are: (1) Finance Office consecutive serial number (used only for balancing student counts); (2) veteran status; (3) college or school in which registered; (4) mode of admission; (5) sex; (6) name. These cards are checked orally for accuracy. Operation 2: After these master cards are punched, a six digit sequence or alphabet number is reproduced in each card from a pre-punched deck of one thousand serially punched cards. This number provides a rapid means of alphabeting, and becomes a control number for matching, merging, and selecting various groups of cards on the collator. At the beginning of the session, only every fiftieth number is assigned, thus leaving space for inclusion in alphabetical order of subsequent registrations for the second semester and for the summer. This alphabet number is reproduced or ganged into all master and detail cards. This file of master cards is then balanced with the Finance Office count number. Counts under various breakdowns, i.e. sex, college and school, mode of admission, veteran status, etc., are made about the eighth day of the semester* At his first registration for the session, each student fills out a Statistical Data Card. This card furnishes a basis for the personnel data needed* Coding of this data is begun promptly and is completed in eight to ten weeks* Operation 3: Approximately two months after the opening of the session a Master Statistical Card (Card Form Two) is prepared for each student. Reproduced in it are all of the data previously punched in the Master Card referred to in Operation 1. The personnel data from the Statistical Data Card are then key punched in the Master Statistical Cards. Columns 35-55 are punched. The data are then available for manipulation* The key punching in these two cards, together with the preparation of address cards, represents substantially all of the original key punching done* Practically all other cards are reproduced or gang punched. This eliminates much checking and helps to avoid errors. Operation 4: About the middle of the semester the Chairman of each teaching department sends to the Registrar’s office a report filled out by each teacher for his course sections, showing the number of students in each course and section. Much work is involved in the checking of section numbers etc., many times requiring special notice to the student to come in and report; then this report must be transmitted to the teacher of the section, who in turn must check and report on whether or not the student is attending and whether the instructor has a card. On the basis of these data and information from the Final Announcement of Courses, a master course card (on Card Form One, columns 36-48) is prepared for each course and section scheduled for the semester. In each card are punched: (1) a department code number; (2) department abbreviation; (3) course number; (4) section number; (5) semester hour value of courses; (6) course rank. Operation 5s From, these master course cards the machine operators prepare individual grade cards, gang punching the appropriate quantity for each section as indicated on the departmental chairman’s report* Operation 6: These cards are placed in tub files, with guides for the various courses and sections. Some eight weeks before the end of the semester a staff of clerks pulls for each student a set of cards corresponding to the courses and sections for which such student is registered. This information is obtained from the admission permits or course cards, which are passed down a series of tables, each clerk pulling the appropriate grade cards from the files in front of her. The individual grade cards are then checked for accuracy in pulling, and notations of dropped courses and withdrawals are punched into the grade cards concerned. Operation 7: Next the permit or course card which has accompanied each student’s pack of grade cards is removed, and the corresponding master card (from Operation 1) is inserted as the first card in each set. The file of cards is then sent to the reproducing machine and the student’s name, alphabet number, veteran status, college or school, sex, mode of admission, etc., is interspersed gang punched. The master card is then sorted out and the grade cards are interpreted. Since the file of course cards was in alphabetical order, the grade cards are in that order, and are left so for further procedures. Adds, drops, section changes, withdrawals, etc., occurring later must be punched in the appropriate grade cards. Operation 8: Shortly before the close of the semester the grade cards are sorted by course and section. Course header cards are prepared by reproducing from the master course card (from Operation 4) and a grade sheet is prepared on the alphabet printer for each section. The grade sheet shows the course and section, semester and session, and the names of all the students registered in the course. Drops and withdrawals are shown with dates. A consecutive sequence number is reproduced in the header cards and is printed on the grade sheet. This number is used to facilitate checking and filing grade sheets. Operation 9: The grade sheets are sent to the faculty just before final examinations. The grade cards are kept in the Registrar’s Office. After the grade sheets are prepared, the arrangement of the grade cards is not disturbed, but they are kept in exactly the same order in which they appear on the instructor’s grade sheet. The instructor enters grades and absences for the semester on the sheet, signs it, and returns it to the Registrar’s Office. He is encouraged to report each set of grades as rapidly as he completes the grading# Operation 10: When the grade sheets are returned, clerks sort the grade cards according to the grades on the sheet. Names are not involved in this sorting and are not checked. The clerks know that the cards are in exactly the same order in which the names appear on the grade sheets, and they simply toss the cards into sorting boxes by grades. Since no matching of names is involved, this can be done very rapidly. Operation 11: After the grade cards are sorted by grades, the cards are gang punched with appropriate grades--columns 49-50. There are always some late grades returned by instructors, so when all grades are in except about a thousand or twelve hundred out of the ninety thousand, the process of punching begins, within thirty minutes after the last grade sheet is received* Operation 12: As the grade sheets are being received and after the grades are gang punched, they are sorted on the first digit of the alphabet number, and by the time the last grade sheet is in, the operators are ready to complete the alphabet sorting* In order to speed up the work, they first alphabet j completely the grade cards for the first several hundred students* Cards are separated and processed in ten groups* Operation 13: Then the address cards for this small group are collected with the grade cards for the same group* This same procedure is used for the remaining cards* Address cards are prepared in advance* In general, three cards are used for the address* (Card Form I—columns 1-34.) The parents’ name is punched in the first, street address in the second, and city or town in the third card* All carry the alphabet identifying number* Operation 14: The merged group of cards then is sent to the alphabet printer, and the preparation of semester reports for parents and students is begun* This plan allows operating the sorter, collator, and printer simultaneously* The semester report fora is prepared in triplicate, the original being sent to parents in window envelopes* One copy is used to report students transferring to Medical School, transferring to other institutions, etc* 5 the other is used for special reports such as the report to the Mexican Embassy on Mexican students in the University* After these notices or reports are sent out the last copy is available for students at the counter in the Registrar’s Office for immediate information on his courses* The mailing of grade reports to parents is completed approximately a week after examinations are concluded* Operation 15 s By the time the alphabeting of the grade cards has been completed on the sorter, enough of the cards have gone through the printer to enable starting to sort out the parent’s address cards© Operation 16: Then as soon as the last of the reports to parents have cleared the printer, the listing of grade reports for the various deans is begun. First, is prepared in triplicate on continuous forms and in alphabetical order, a list of all students, showing courses, grades, and total hours for each student. One copy goes to the Dean of Student Life, one copy to the Dean of the College of Arts and Sciences, whose students comprise the largest group, and the third copy is retained for use in the Registrar’s Office© As the cards come from the printer, they are sorted by college and school, and a similar list is prepared for the deans of the other seven colleges and schools for checking on probations, drops, etc. This list is also used to notify the Veterans Administration at Waco so that the drops can be discontinued from subsistence pay© Following is the procedure for posting grades on permanent records cards through the use of a transfer posting machine: During the first few weeks following the close of the semester, instructors report their corrections of grades, supply missing grades, etc© These corrections are made on the office copy of the listing of grades mentioned in Operation 16© Operation 17: During the semester a master course title card has been punched for each course given that semester. (Card Form One—Columns 10-34 and 36-53). Each card contains (1) the course title or a condensation of it (not more than twenty-five letters); (2) department code number; (3) department abbreviation; (4) course number; (5) credit value; (6) number of didactic hours per week; and (7) number of laboratory hours per week© Operation 18: The following items from the file of detail grade cards (Operation 7) are reproduced in another set of cards (Card Form One): (1) college or school in which the student is registered; (2) mode of admission; (3) sex; (4) veteran status; (5) department code and abbreviation; (6) course number; (7) grade; and (8) alphabet number. Operation 19: This file is then sorted by course number, and merged with the master course title cards. Operation 20s The course title and other data on each master title card (Operation 17) not already in the file of detail (Operation 18) cards is then interspersed gang punched in the detail cards for that course. The result is a card for each course each student is taking, showing course title, grade, alphabet identifying number, etc. Operation 21: Two additional cards for each student are added to this large file of individual course cards (Operation 20) and this entire file of cards is then sorted in alphabetical order. The additional cards are (1) a card carrying the student’s name and alphabet number; (2) a card indicating the semester and session involved, and the college or school in which the student is registered# This card also carries the student’s alphabet number. In the sorting of these cards, they are so arranged that the name card is first, the semester and session card is second, and the detail course cards follow in course sequence. Operation 22: A list, carbonized on the back for transfer posting, is prepared on the alphabet printer, from this file of cards. This list of names, courses, grades, etc., is then ready to be posted to the permanent record cards through the use of the transfer posting machine. In posting on the transfer posting machine, the permanent record cards are fed in manually, and each line on the course list (Operation 22) is posted automatically by tripping a lever. Each lever action makes a new line on the permanent record card, and posts all of the detail from the course listcourse and number, title, number of lecture and laboratory hours per week grade, and credit value. It is advantageous to use the transfer posting machine rather than to post with the alphabet printer because the printer is then available for other work. The rental on the transfer posting machine is relatively nominal. An 8 1/2” x 11” size permanent record card is used, and before posting, the file of these cards is arranged in the same order as the names appear on the course list (Operation 22). In posting with the transfer posting machine the student’s name on the course list is used as an identifying check against the name on the permanent record card. The name is not posted. By careful count when grades were recorded for the first semester of 1946-47, an average of 7200 entries per day and an average of 1200 permanent record cards per day were posted. The posting was done by an inexperienced operator who had no previous experience with IBM equipment. This would not be possible using typewriters. This is the same procedure used by the army on stock record cards. from Max Fichtenbaum and W. B. Shipp, “Grade Records and Tabulation Machines,” Journal of the American Association of Collegiate Registrars, April, 1947. EXHIBIT 1 B. STATISTICAL REPORTS The Flow of Work through the Machines — The statistical work is meshed closely with grade records, and in many cases the statistical data are in a sense a by-product. Many reports are made by this machine records division of the Registrar’s Office for the Veterans Administration. Every veteran is certified as entered into training as of a certain date and carrying the specified number of semester hours or full time. This determines the amount of sustenance allowed the veteran. A card is made for each, and with the digit selector on the tabulator the date of completion etc. is printed. All veterans in the fall semester are entered as registered for the entire long session. Then, any veteran not registering for the spring semester will have a notice of discontinuance printed on the tabulator and forwarded to the Waco office of the Veterans Administration. The card is already made, and the report only has to be printed on the proper continuous forms with three carbons. This office also prepares reports on veterans* requisitions and fees. A requisition is given each veteran for books at the beginning of the semester to be presented to the book store, which in turn supplies him the books and submits a bill for them to the University and receives the University’s check in payment. At the end of the semester the Veterans Administration, by contract, is sent an individual bill for each student, including registration fees, supplemental laboratory fees, books and supplies. The card for each veteran’s fees is then collated against the Veterans Administration grade file for veterans taking laboratory courses with fees, and those cards matching are reproduced so that the Veterans Administration can pick up all that portion of the bill from there. The Registrar’s Office machine records division does this billing and the Veterans Administration pays for the work by the hundred students, less drops and corrections. A report is also made of the probable number of veterans who will drop in order to transfer to the Texas ex-serviceman’s program, where all fees are paid. Statistical reports made on the machines are required by the University administration for making recommendations (a) to the Legislature and (b) to the student’s dean* The Vice President requests any special information needed by the administration and furnishes personnel as it is required. A report is made also to the State Department of Education showing students registered the first six class days and at the end of the semester, with courses reduced to a full-time basis. All such regular statistical, reports are made according to Bulletin #6 of the American Council on Education and the U.S. Department of Education on standardized reporting. They are run on the IBM machines and then typed in the final form desired on long sheets, lithoprinted to reduce them to about one third their size, and distributed in that form. These reports include: 1. Enrollment by mode of entry 2. Enrollment by schools, by sex, by rank 3® Enrollment by schools, by religious affiliation 4* Enrollment by grade, by rank, by mode of admission (transfer, from high school, etc*) 5* Enrollment by grade-point score and of individuals listed by grade-point score 6* Enrollment by size of classes 7. Enrollment by section of the country (county, congressional district, etc.) 8* Enrollment by occupation of parents 9. Enrollment by age 10* Enrollment by transfer from junior and senior colleges 11. Performance of first-year students by their rank in their highschool graduating class 12. Legal citizenship of students 13. Percentage enrollment of veterans 14* Distribution of NEW students according to location of the school from which they were admitted, by rank 15. Working status of students 16. Five-year scores on students taking special examinations 17. Simple head count of students on a full-time basis 18. Active registration (in attendance at a particular time) The last report listed is made at the beginning of the semester, at the end of the first six class days of the semester, and monthly throughout the semester so as to show cumulated withdrawals and additional registrations® Statistical Report Use — These reports are needed for various uses® Enrollment by schools, by rank is used in estimating the teaching load in the various schools by rank and making appropriations. The higher the rank, the harder the teaching load and the higher the appropriation per student* IBM FORM 32-9170 1 3000-4-47 END PRINTED IN U. S. A. The reports show that veterans 1 enrollment has plainly shifted the bulk of the load as the veterans have advanced through their University training* In the spring of 1946, before the bulk of veterans entered, the heaviest load was in the freshman rank. The enrollment of freshmen in 1947-48 had fallen off and the heaviest load was at the junior level* In the fall semester of 1948 a slightly heavier load was at the senior level: 22*1% seniors, 21*1% juniors. In the 1949 spring semester only 23 new freshmen veteran students registered* The loading in the higher ranks takes a heavier appropriation* In 1936-37 freshmen constituted 19*5% of the student body, in 1944-45 only 15*9%, in 1945-46 about 23%, in 1946-47 only 12*0%, in 1947-48 only 8*5%, and in 1948-49 approximately B*s or 9%* Freshman enrollment is probably cut into now by the increased popularity of junior colleges* Church affiliation tabulations are used to combat rumors of the lack of any religious tendency among University students, as well as to supply informa tion to the campus Bible Chairs for use in recruiting for their courses and organizations* The report on grade-point scores is used in determining fraternity and sorority eligibility; pledges must meet the all-University average* The report on size of classes is used in making recommendations to the Legislature and to faculty committees, showing where many classes have few students (are over-staffed) and where the opposite is true* In the second semester of the 1946-47 long term, for example, there were 252 classes of over a hundred students that should have been relieved by elimination of some very small classes* From the machine reports a map is prepared showing the number of students registered from the various counties, for use by the Legislators from the various districts* In addition to the information supplied by the table showing occupations of parents, it is hoped to attempt a correlation between those occupations and the occupations students hope to follow. The gathering of the latter group of data is made difficult because of rapid change in preference by students. The report of students according to age shows that freshmen had been getting younger for many years before the late war; since the war the age of freshmen increased approximately three years, the average length of service. By 1947-48 the age had dropped back about two years, to about one year older than before the war. There is a decided tendency toward older students in summer school. Apparently this is because so many teachers were recruited during war years who do not have degrees and are now working toward them or toward higher degrees, and because regular students and veterans who are not advanced in age drop out for a break in the summer. The College of Education had been very low in enrollment but has been getting the biggest recruitment in summer school and is still definitely on the up-swing. This is due to the reason given above and probably due to the higher salaries now offered teachers; many can make more in nine months teaching than in twelve months elsewhere. The performance of first-year students by rank in their graduating class shows that the lower 50% needed additional training; they are now admitted on probation. There is a close tie with the results of aptitude tests. The legal-citizenship table shows increases from the East and Middle East. Analyses run on various schools and colleges show that veterans have appreciably changed the characteristics of the various ranks and schools* Before the last war S. M. U. had stabilized at about 3,800, while now they have an enrollment of approximately 6,200. This is an example of the fact that church schools are getting more of the veteran enrollment; they are expensive schools, as a rule, and when the government no longer pays the bill, students often cannot afford to pay their own expenses there. The church schools now operate for the first time on a cash basis (break-even or profit)* Many cooks* and mechanics* schools are already having to close or operate on a month-to-month basis because veteran enrollment is dwindling* Data also show that many students who would like to transfer to another college or university are C or D students at their schools and are deterred from transferring by the B-average requirement of the University and of many other comparable schools. Practically no students are normally admitted to the University by individual approval, but since the war veterans are admitted in this manner and have supplied an appreciable addition to enrollments. The same is true at other institutions. This group shows a particular shortage of mathematics, according to the tabulated reports. The table on self-supporting students is worth very little at the present. Students claim less or more self-support as it is profitable under veterans 1 benefits. The information on special examinations shows the need for shifting the giving of these examinations to departments or schools for better control. In 1947, as an example, 2,547 asked for examinations, their examination questions were requested from teachers, prepared, and sent in (often after many requests, delays, and special trips to get them), and only 2,047 took the examinations; exactly 500 did not show up. Only 1,463 passed. A five-year table showing passes and failures by colleges and schools and by rank shows that the Uniform English Test reduced the passes about ten per cent. The use of tabulating machines in these operations has been most satisfactory* In fact, with the large increase in enrollment, this office would have been badly handicapped without such equipment. REGISTRAR’S OFFICE INTERNATIONAL BUSINESS MACHINES CORPORATION ALPHABETIC ACCOUNTING MACHINE CONTROL PANEL TYPE 405 WITH NET BALANCE COUNTERS AND AUTOMATIC CARRIAGE PLUGGABLE CONTROLS BY GRADE BY RANK BY MODE OF ADMISSION (REPORT 4) (Card Form II) "I'M CHAPTER III FORT SAM HOUSTON REPORTS REQUIRED The United States is divided into six army areas. Fort Sam Houston in San Antonio is Headquarters for the Fourth Area, including Texas, New Mexico, Louisiana, Arkansas, and Oklahoma. The Machine Records Unit at Fort Sam Houston accounts for all Class 1 and Class 2 personnel within this Fourth Area. Class 1 includes all types of personnel under the jurisdiction of the Commander General; Class 2 includes those under the Chief of Technical Service out of Washington. Class 3, the Air Force, is accounted for at Brooks Field in San Antonio. The Machine Records Unit does the same work as was done by those units overseas set up in moving vans and moved with Army Headquarters throughout World War 11. Since the Machine Records Unit is designated in all army communications and reports as MRU, that designation will be used throughout this study. Approximately a hundred fifty regular and special reports are made by the MRU each month. These are made by request of and sent to Army Headquarters in Washington and/or Fourth Area Headquarters at Fort Sam Houston. Most of the statistics now required by the army, as by civilian business, are both organizational (merely totals) and individual, with more emphasis on individual statistics than formerly. This requires more reports and more detailed reports. The MRU prepares all reports directed by the Army Manual TM 12-305, Machine Records Operation, Personnel Accounting, and Record Keeping. This Unit also accounts by name for 70,000 civilian personnel within all the Area who work for the Fourth Army. Navy personnel within the Area and working for the Army are not included. Accounting for Service Reserve personnel, 90,000 officers and enlisted men, is also done by the Unit, but the records are not as extensive as those kept on the personnel in active service. SOURCE DOCUMENTS The original army document which accounts for all personnel is called the Morning Report, Exhibit 1. This report is required from each unit in the Area, to be sent in by ten o*clock each morning and complete as of twelve the preceding midnight. It gives complete information on the changes and happenings of the personnel of the unit, such as absences, sick in the hospital, a.w.0.1., promotions, any change in rank, etc. This report is often quite volumnous. One, for example, sent in for January 11, 1948, from one unit, gave three and a half pages of information on the 268 persons assigned to the unit, with classifications. PROCEDURE The Installation — The Unit at Fort Sam Houston is set up with all machines in one room, in which also are eight desks at which checking is done by hand before and after the machine work. In an adjoining room workers check file, return Morning Reports for correction, etc. The number of machines was reduced as of January 1, 1948. After that date the Unit used six alphabetic punches, three alphabetic verifiers, four alphabetic tabulators 405, nine sorters, three interpreters, three collators, and three reproducing summary punches. Both a day and a night shift are on duty in order to better utilize the machines. The night shift is made of army personnel and is smaller in number than the day shift of civilians. The day shift does all the punching and verifying of the cards. The Army Major in charge is assisted by a civilian supervisor of the Unit and a Supervisor of Civilian Personnel. There is continual rewiring of the boards for the 405 tabulators, flexibility necessitated by the variation of reports* Wiring diagrams or instructions are usually sent out of Washington. Codes — Codes are uniform throughout the Army, set up in Washington and sent to each unit with instructions for reports. Classification of personnel, personnel status, and a great many other designations are coded. Both alphabetic and numerical codes are used* Cards and Forms — Exhibit 2 shows two cards used for records. The yellow status card is used for enlisted men, an orange one of the same form for officers, and the card with the pink stripe for personnel summary* A green card is used for various special purposes, to distinguish in the file special information or changes of particular types; fields on the green card may be used to conform to any use. There are many forms for reports, most of them very simple, with a minimum of printed information. Detailed headings etc. are not necessary, since the use is fixed by regulation and all reports conform to detailed instructions from Washington* A monthly personnel roster is Exhibit 3. Flow of Work through the Machines — When the Morning Reports are received each morning, they are checked for correctness and returned to the units for correction if errors are found* From the Morning Reports the MRU maintains a complete, alphabetized record file of all personnel in the Fourth Area* Each morning changes in the cards bring the file up to date. Orange cards for officers are followed by a trailer card for the break, which in turn is followed by the yellow cards for the enlisted men, Exhibit 2a. From these cards the summary cards, Exhibit 2b, are prepared for the summary file. From these two card files all reports are prepared for the Unit. Sorting, collating, duplicating, etc. are done as the various reports require. All reports are run on the tabulators and then checked visually for errors or shortages. They are then forwarded to Washington and/or to the Headquarters Office at Fort Sam Houston. The reports this unit makes include a monthly personnel roster to go to each unit in the Area, Exhibit 3. The same form is used for enlisted men and for officers, though the rosters are made separately and that of the enlisted men does not show “duty." Enlisted men are listed alphabetically, officers by rank and alphabetized. With each roster are sent mimeographed instructions and code explanation, four pages for the enlisted men’s roster and eight for the officers’. The roster is printed on the 405 tabulator from the status cards, Exhibit 2. These cards are punched according to a thirteen-page instruction code and notes sent out to the MRU from Washington. The instruction sheets include the type bars to be used on the interpreter for printing some of the items across the top of the status card, universally used abbreviations for some of the designations, and codes fors serial number prefix, for various types of personnel, grade, racial group, component (Regular Army, US Air Forces; Reservists, US Air Forces; etc.), category for officers or time of enlistment for enlisted personnel, state of residence, rating, and file section. The rosters sent out by the MRU are required by the War Department in Washington and are verification of the items shown on the Morning Report* The last page of each roster is a certificate of correctness of the report, giving the number of pages in the roster and the number of each status and race included, and signed by the authenticating officer. These numbers must match the number of cards on file in the MRU office and the number reported on the Morning Report of each unit. The rosters are sent to the Commanding Officer of the unit, checked for correctness and authenticated by him, and forwarded according to instructions given in the direction copy. The roster has four copies if it is for officers, five if for enlisted men. The first two copies are invariably returned to the Machine Record Unit after authentication, one or two retained by the unit listed on the roster, and the other copies "forwarded to the next higher echelon of command if desired by that command." Rosters are also made for the regular Army personnel being trained in ROTC (Reserve Officers Training Corps) units such as that at the San Antonio High School. Reports directed by the Manual TM 12-305, Machine Records Operation, Personnel Accounting, and Record Keeping, include a list by class and race from the strength summary card, Exhibit 2b, and accumulated totals of those listed (card count by class and race). The summary cards are duplicated and sent in to Army Headquarters at Washington about the thirtieth of each month. This reports what is in the MRU file, which balances against the Morning Reports from all units in the Area. A breakdown is made by technical service, the projected strength of the Army from the date of enlistment, a report as of the end of each month for the entire year — considering only those in the service at the time the report is made, the strength being projected according to expiration of the term of each member enlisted : Class * 31 Dec* 47 ’ 31 Jan 48 • 29 Feb 48 * 31 Mar 48 f etc* for each t ti»i month Total Strength J 150 ! 145 I 135 ’ 135 I 105 76 AGD • lift MC t t t t • RA t t t i » Res t । i t » NG « tiit CML i titt OM t । i ’ i INF , • t • f FA ...it ROC • ’ ’ 1 ’ This report shows that of the 150 enlisted at the end of 1947, five enlistments were to expire in January, ten in February, none in March, thirty in April, and twenty-nine in May. These numbers would be broken down into the various classes indicated. A duplicated copy of the six classes of status cards is also sent to Army Headquarters in Washington, to be used in checking the various reports. A regular report is made on operation personnel of the Fourth Army Headquarters total army ground forces (agf), for each organization, broken down into various classifications: officers, WAC officers, enlisted men, etc. etc. followed by a total for the organization. These organizations include the T 0 Units (table of organization set up by the War Department) and the Area Service Units (fire, street detail, military police, etc. — the “housekeeping” force) broken down into complements: medical, escort detachment (for returning overseas dead), etc. A report is made of authorization of military and civilian personnel. Each of these categories is increased or decreased as there is need for work. For example, at the time this case study was made the 97th MRU at Fort Sam Houston consisted of two officers, twenty enlisted men, and ninety-eight civilian workers. The unit was established in 1940 and has varied in size as the needs changed. The great quantity of detail required for the best utilization of Army personnel makes imperative the use of mechanized methods of record-keeping and reporting. All the United States armed forces have found that efficient operation requires individual statistics which could not be procured by hand methods quickly enough for use in planning. Machine methods keep information up to the day. EXHIBIT I EXHIBIT 2 MISCELLANEOUS REPORT CHAPTER IV KELLY FIELD, SAN ANTONIO REPORT REQUIREMENTS Kelly Field, like Fort Sam Houston, is a military installation and must fit military regulations and needs. However, Kelly Field must make a statistical accounting not only for military and civilian personnel, as at Fort Sam Houston, but for aircraft, parts and repairs, supplies, and performance or use. One hundred forty-nine regular reports must be made, many of them of very great length and detail, some short in the final form but requiring a count of thousands of parts. In addition, many special reports are made. These are more difficult because of the extra effort required to gather the material for the reports without provision for routine or organized procedure and because of the consequent circumlocution due to special orders required etc. All of the American armed forces have long found this too great a task to be done by hand and have used machines both in peacetime and in war, in the United States and abroad. At Kelly Field one hundred six of the regular reports and most of the special reports are made on the IBM equipment. All are made in strict accordance with instructions, forms, and diagrams sent out from the Headquarters, Air Force, in Washington. Regular reports are made daily, weekly, semi-monthly, monthly, quarterly, semi-annually, or annually. They includes thirty-five civilian personnel reports (daily civilian strength report, monthly roster, corrections to the monthly roster, etc.), about seventy reports on military personnel, aircraft report, vehicles report, area stock balance report, national stock balance (“world wide”), stock level report# consumption by the Division ( for figuring the reorder point on the basis of past experience, so that the Field will never run out of supplies), fuel report (on hand, used, by what agency), monthly aircraft engines and completed aircraft report (for example, status of jet aircraft engines by flight hours), weekly aircraft storage (number of planes), quarterly report on engine boxes (held for future shipments), #llO daily report on gain or loss of aircraft from the area (consequently, an inventory of all aircraft in the area of that date), monthly take-off and landing of aircraft (to determine the wear and tear on the airstrip), monthly summary of hours flown the previous month by each type, quarter-annually inventory of use of training aid devices, monthly report of petrol used, quartermonthly report on aircraft fuel, ten-day spare engine report, and many others. SOURCE DOCUMENTS Information for the reports is submitted by the officer in charge of the particular activity or stock concerned or by an assistant delegated to prepare the material® All regular reports and most of the special reports are prepared on forms printed for the purpose and regulated by Washington orders. Perhaps the most evidently regular form is the Morning Report, a copy of which is included with the case study of the Fort Sam Houston MRU. This report is required from each unit in an area, to be sent in by ten o’clock each morning and complete as of twelve the preceding midnight. It gives complete information on the changes and happenings of the unit, including personnel roster, absences, sick in the hospital, a.w.0.1., promotions, change in rank, etc. These reports often include many pages of information about the entire roster of personnel assigned to the unit, with classifications. These reports and other reports prepared by the officers in charge are the source documents for the cards punched and used by the machine unit at Kelly Field. PROCEDURE The Machine Installation — All employees of this installation of machines are civilians, including the supervisor. Fifty-four operators are used on the machines. All punch and verifier operators are women; other operators include both sexes. The machine unit occupies a wooden building on the Field, one room being used by clerical workers connected with the machine unit, one room by the machines, and one room for filing cabinets for the cards and reports. Vertical storage bins for cards are used above the sorters. Card file trays are kept on tables through the center of the room (between the machines) as long as the cards in the particular trays are used, according to military requirements. Sixteen hundred filing cabinets for cards are kept in the adjoining room. Machines used in this installation include fourteen punches, ten verifiers, eleven 405 tabulators, six reproducers, five alphabetic collators (until the last few months used only in the Air Corps but now offered in the general market), one numerical collator, nine sorters, three interpreters, two multipliers (for simple multiplication and simple cross-footing), two type cutters for teletype used for reports to Headquarters. These type cutters, of course, are not IBM machines but make the strips of type from the IBM cards. Codes — Code numbers identify all reports, both in classes and individually. The code for all regular military jobs on the machines is 300. For example, 301 is the unit operator effectiveness index, made from the Morning Report locator cards, for change of location of any person. Report 309 is a proof tabulation of the sc 900-901 card file (enlisted men* s and officers* cards). Report 311 is the officers* monthly personnel roster. Training reports are all 700*s, military miscellaneous and non-recurring reports are all 700’s, military miscellaneous and non-recurring reports are 501-522, and the maintenance table of authorization is 524. All 900*s are reports on machine operation time and efficiency; for example, 984 is operator error time, 985 machine reparations time, 986 machine specification time, 988 machine inspection time, and 989 machine awaiting repair time. Cards and Forms -- Kelly Field installation uses two standard form cards and two incidental forms. The card form attached, Exhibit 1, is the standard form used for preparation of the World Wide Consolidated Stock Balance and Consumption Report and the Area Consolidated Stock Balance and Consumption Report for reporting stock of whatever kind at the Field. The other standard form is that used for civilian personnel statistics. It contains fields for the usual personal data found on any employee record, including the employee’s name, age, etc., together with his IBM clock number, his rating, and entrance and separation dates with reason for separation. This card is easily distinguishable by the pink stripe through the center. One of the incidental forms is a perfectly blank IBM card, the other a card ruled into uniform fields throughout the length of the card, eight numbered units, each containing three three-column fields followed by a one-column field. Both of these are used in manila, but sometimes both the standard forms and the incidental forms are used in orange or green to distinguish the summary cards. The form for the World Wide Consolidated Stock Balance and Consumption Report is attached. Exhibit 2, together with the wiring diagram for the tabulator 405 on which the report is run. Exhibit 3, and the card from which the record is taken, Exhibit 1. The Area Consolidated Stock Balance and Consumption Report form is exactly like this one except that the last two columns are captioned "Due In" and Due Out,” and title of the report is changed appropriately. The same card and wiring diagram are used to prepare it. The world wide report is made with seven carbon copies, while the area report is made with three carbons. Both reports include all stock of whatever kind at the Field for use in the designated territory. Flow of Work through the Machines — All documents are sent, by request from Washington when not regularly required by military regulations from Washington, to the machine unit after they have been verified and authenticated by the officer in charge of the particular source. They are received by the Supervisor, checked to see that the correct report has been made and authenticated, and given to the punch operators along with the proper card form. The cards are punched, verified, and sorted as required. For some reports, such as the aircraft reports, fixed information is reproduced from the master card into the detail card and the present item added in its designated column. Information that must be extended is usually extended on the multiplier. Information needed for visual reference later is interpreted across the card. Necessary matching of information is done on the collator. Many items such as aircraft reported must be collated with the information sent from Washington or from the Headquarters unit to determine that the aircraft assigned to the Field are the ones that are there and reported on. New or additional cards are merged with the original deck by collating. When the information required for a report is ready, the report forms are checked to see that the correct form is used for the given report and the proper cards. Then the report is run, copies separated if in duplicate or greater number of copies, and the reports sent to the mailing department, the machine room copy to the filing clerk for filing© The other copies are mailed to the designated destinations, always including Headquarters, Air Materiel Command. One copy sent there eventually is sent to Headquarters Air Force. Cards for reports that are needed by Headquarters immediately upon preparation are sent to the type cutters and the report is sent by teletype to Headquarters at once. When the cards have been used to prepare all the necessary reports, they are filed in the sixteen hundred filing cabinets in the adjoining files room* In some cases, always designated by Washington, the entire deck of cards used to make a report is duplicated and the cards themselves are sent to Washington along with the report* In Washington these cards are collated with the master deck on file there, to see that the aircraft or personnel assigned and reported as assigned to the Field are actually there and no errors in reporting have been made* This vast quantity of detail would be impossible without the use of machines. A more complete check on personnel, equipment, and performance is possible by means of the machines than could be made otherwise, and consequently better over-all planning can be done. One hundred six regularly prepared reports and a great many special ones make a complete accounting for all military and civilian personnel, aircraft, parts and repairs, supplies, and performance or use at Kelly Field© EXHIBIT 3 W EXHIBIT 2 W WORLD WIDE CONSOLIDATED STOCK BALANCE AND CONSUMPTION REPORT EXHIBIT 3 IBM ALPHABETIC ACCOUNTING MACHINE PLUGBOARD TYPE 405 WITH NET BALANCE COUNTERS AND AUTOMATIC CARRIAGE PLUGGABLE CONTROLS CHAPTER V TEXAS EMPLOYMENT COMMISSION REPORT REQUIREMENTS The Texas Employment Service and Employment Commission, Austin, makes two general classes of reports: statistical reports and reports on interoffice functional operations. The first class of reports concern employment and wage records, benefit claims for the veteran employees and for other employees, and a report on the personnel of the Commission. They include monthly, quarterly, and annual reports. Reports of the second class regard benefits and include all papers for an individual claimant: the form he will use to report unemployment and request benefits, the ledger sheet for posting his payments, the list of his earnings during the year on his determination sheet, a report from the Commission on how much money he can draw and at what rate, and a picture of his work history on the disbursement record. For the veterans the work on the machines includes writing the checks for payment and continuing claims. SOURCE DOCUMENTS Source documents used in the Commission include the Employer’s Quarterly Contribution and Wage Report, Exhibit 1; the claimant’s Initial Claim for Payment, Exhibit 2; his Continued Claim for Benefits, very similar; and the Daily Record of Time, Exhibit 3. The second sheet of the Wage Report is the Payroll Detail, and a third detached sheet is included for continuation of the Payroll Detail. Of the four copies of the Initial Claim for Benefits, the original and first carbon copy (yellow) stay in the State Office, the second AMOUNT AND DURATION OF BENEFITS (A) MAXIMUM TOTAL BENEFITS $ (1/5 of wage credits in base period, or 9 x benefit amount, whichever is lesser) / Less amount previously paid during benefit year $ Balance of benefits available $ (B) MAXIMUM NUMBER OF BENEFIT PERIODS (“A” divided by benefit amount) BENEFIT AMOUNT $ MAXIMUM BENEFITS $ (1/13 of highest quarterly earnings) (9 x benefit amount) Form Y-5 (947) carbon (green) goes to the last employing unit, and the fourth copy (pink) is the claimant’s copy. The Continued Claim for Benefits is green to make distinguishing easy and has a carbon copy of only the top part of the sheet including the name, address, county code, and claim date. Both copies stay in the State Office. EXHIBIT 1 TEXAS UNEMPLOYMENT COMPENSATION COMMISSION AUSTIN 19, TEXAS EMPLOYERS QUARTERLY CONTRIBUTION AND WAGE REPORT EXHIBIT 2 TEXAS UNEMPLOYMENT COMPENSATION COMMISSION INITIAL CLAIM FOR BENEFITS EXHIBIT 3 TEXAS EMPLOYMENT COMMISSION GAILY RECORD OF TIME PROCEDURE The Installation — Machines used in the Commission in 1948 included nineteen IBM keypunches, five verifiers, seventeen collators, seven sorters, six reproducers, six 405 tabulators, one 416 tabulator, five alphabetic inter preters, two numerical interpreters, and three multipliers. This was onlythree fourths of the machines used in 1947, but the installation had been cut somewhat more by 1949, to eliminate $BOO of the $6,370 equipment used the previous year. In 1940 a 602 calculating punch replaced one of the older multipliers. For filing the punched cards 245 cabinets are used, 20” x 32”, containing twenty-two drawers each and holding 76,000 cards each. Sixty-eight persons were employed on the machines in 1948 and a supervisor for each group of operations. The installation occupies the entire fourth floor of the Brown Building. Twelve girls punched regularly in 1948, but in 1949 all the girls working on the floor were taught to use the punches so that they could fill in idle time punching cards. Often in the forty-day period covered by a record sheet as many as twenty-five girls punched cards. Codes — Each employee has a social security number; marital status, reason for refusal or discontinuance of claim, out-of-state claims, sex, and transaction classes are coded. Other data are recorded in numbers as occurring, such as date and amount© Cards and Forms — About one hundred card forms are used. The five cards forms used for the employment record and claims are Exhibit 4. Exhibit 4a is the benefit claim card; 4b the employee wage record card for individual wage items, which is used for punching 4c, the warrant or payment card used for the initial claim. This card has been changed to eliminate coding, since the report is automatically coded. This saves about two hours a day formerly used in working out the card. Card 4d is the continued claim card, a picture of employee’s ledger sheet for showing his employment history, from which his register is run and a copy sent back with his check for the .claim; 4e the wage record ’’out” card. The payroll detail part of this last card is filled with information from the employee’s wage record card. One copy goes into the base period file; the other is sent back to the Machine Records files. Cards and other forms used in the Veterans’ Service differ slightly to make them adaptable to Government requirements. Most of the many reports made by the Commission are placed on report forms requested by the Social Security Board in Washington. Fifteen of these reports are regular monthly, quarterly, or annual reports: four in regard to taxable wages and experience rates (rates of contribution by the employer), used to determine the trend of employment and wages throughout the state; ten regarding the benefit claimant , his employment duration, wages, weeks lapsed between claim and check, how many disqualified, etc.; and one showing quarterly time and cost of the personnel of the Commission. Most of these reports are run on the tabulators on blank paper and typed from the tabulator reports onto the prepared forms with seven to ten copies. Some prepared forms with two to six copies are run directly on the machines. Several typical forms are attached, Exhibits 5 through 10. IMPORTANT APPEALS AND DISAGREEMENTS You may appeal from or disagree with the determination shown on the opposite side. Such appeal or disagreement must be filed with a representative of the Commission or in writing with the Texas Employment Commission, Brown Building, Austin 19, Texas, within twelve (12) days after the determination is mailed. The "Date Mailed” is shown on the opposite side. If you appeal or disagree you should continue filing claims as instructed. EXPLANATION OF TERMS USED Benefit Year” is the fifty-two (52) consecutive week period beginning with the day on which the first valid claim for benefits is filed. For example, if a valid claim is filed on January 1, the benefit year begins on January 1 and ends on the following December 31. Valid- Claim’ means a claim filed for benefits by an unemployed individual who has received wages within his base period from employment by employers equal to not less than nine (9) times his benefit amount. For example, if Ninety ($90.00) Dollars or more have been reported for you in the base period by subject employers, your claim should be valid. "Base Period" means the first four (4) out of the last five (5) completed calendar quarters immediately preceding the first day of an individual’s benefit year. If You Filed Your Claim During the Months of: Your Base Period Would Be: January —March 1947 October 1, 1945 to September 30, 1946 April—June 1947 January 1, 1946 to December 31, 1946 July—September 1947 April 1, 1946 to March 31, 1947 October —December 1947 July 1, 1946 to June 30, 1947 "Benefit Amount For Total Unemployment.” The benefit amount is determined by taking one-thirteenth of the highest quarterly wages in your base period adjusted to the next higher multiple of One ($1.00) Dollar. The benefit amount cannot be more than Thirty-Six ($36.00) Dollars, nor less than Ten ($10.00) Dollars per benefit period. "Maximum Total Benefits” is the lesser of: (1) nine times your benefit amount; (2) one-fifth of your wage credits in the base period. The maximum amount of wages, including remuneration other than cash, such as tips, room and board, laundry, etc., which may be used in the computation of benefits, is $1,620.00 in your base period. If an individual’s benefit amount is Thirty-Two ($32.00) Dollars, nine times his benefit amount would be $288.00. If the wage credits in the base period equalled $1,620.00, one-fifth would be $324.00. The claimant would, therefore, be entitled to the lesser, which is $288.00. If the wage credits were $1,000.00, one-fifth would be $200.00 and the claimant would be entitled to this amount, which is less than $288.00. "Benefit Period” means fourteen (14) consecutive days immediately preceding the effective date of a continued claim. GENERAL INFORMATION Your first check will be mailed only after you have served any disqualification period shown and after you have filed at least one payable continued claim or if filing on an interstate basis serving a waiting period and filing two payable continued claims covering a benefit period. If you obtain part-time employment or are partially unemployed, you may be entitled to partial or part-total benefits. For example, you are considered partially unemployed if you are working less than your usual customary full-time hours for your regular employer. You are considered part-totally unemployed when you have been laid off by your regular employer and are working at odd jobs for others. For example, if you earned Ten ($10.00) Dollars from partial or part-total employment during a benefit period and your benefit amount was Twenty ($20.00) Dollars, Four ($4.00) Dollars would be added to the Twenty ($20.00) Dollars, and the amount of your earnings would be deducted and a check for Fourteen ($14.00) Dollars would be sent you in payment for the period. PENALTIES Section 16 (A) provides: "Whoever makes a false statement or representation, knowing it to be false, or knowingly fails to disclose a material fact, to obtain or increase any benefit or other payment under this Act, either for himself or for any other person, shall be punished by a fine of not less than Twenty ($20.00) Dollars, nor more than Fifty ($50.00) Dollars, or by imprisonment for not longer than Thirty (30) days, or by both such fine and imprisonment: and each such false statement or representation or failure to disclose a material fact shall constitute a separate offense.” PERSONS VIOLATING PROVISIONS OF SECTION 16 (A) WILL BE PROSECUTED TO THE FULLEST EXTENT OF THE LAW. Each time you return to the Commission Office to file a continued claim be sure you correctly answer all questions asked on the continued claim. To do this, it is necessary for you to have with you the following information: 1. The amount of wages, if any, paid you in lieu of notice of separation. 2. The correct amount of Workmen’s Compensation, Old Age Benefits, or any benefits from employers pension plans received by you during period covered by claim. 3. The correct amount of time you have worked and the exact amount of wages you have earned during period covered by the claim, including as well as cash, tips, room and board, laundry and other remuneration. ALWAYS FURNISH YOUR SOCIAL SECURITY ACCOUNT NUMBER WHEN WRITING THIS COMMISSION Flow of Documents through the Machines — The greatest flow of documents through the Machines Division is that of wage records. More than six million records of the individual wages each employee earns in Texas are functioned in the Commission in order to use approximately seventy thousand for benefit claims. Everything concerning the wage record and the claims is done by this Machines Division except writing the checks for claims of others than veterans. All the work concerning benefits, including the checks and continuing claims, is done by the machines for the Veterans Administration Unemployment Service. Only a few of the regular reports can be included in this study. The attached Exhibits 5 and 6 are prepared from information received on the Employers Quarterly Contribution and Wage Report, Exhibit 1. When the Employers Report is received, cards are punched with the information contained in the report. From the cards containing the Payroll Detail information from the second part of this report, the Batch Proof Listing of Payroll Detail, Exhibit 5, is run on continuous forms, single copy. This form has recently been greatly reduced in size, to make a neater report which is more easily handled and filed. The Supervisor of the Commission’s Machine Division suggested the change and it was accepted by the Washington office and is now the uniform requirement in all states. The Payroll Detail is usually run in batches of approximately fifty-five, and this page is large enough to accommodate that many, too few to require the older large size sheet. Exhibit 5 is the Annual Report of Coverage and Contributions by Industry Group, prepared from the same cards# This report, on continuous forms with two carbon copies, is run directly on the tabulator and only the headings typed in. All copies are identical. Though still titled an annual report, this report has been combined with the quarterly report on firms reporting in consecutive quarters. This combination eliminates a great amount of summary punching required to combine the quarterly reports into an annual one. One copy of this quarterly report goes to Washington; another is sent to the Bureau of Business Research of the University of Texas. From this report the Bureau prepares the report on employment in Texas which it sends to the Bureau of Labor Statistics in Washington. From the Employers Wage Report, Exhibit 1, has been prepared a card for each individual employee, showing his social security number, name, and wages, Exhibit 4b 0 If the employee becomes unemployed and wishes to request compensation, he files a claim on the form Exhibit 2. Upon receipt of this claim the Machines Division pulls his card and heads up a Notice of Determination, Exhibit 7, listing his earnings* The three copies of the Notice are identical except for color. The claimant receives a copy; complete instructions are printed on the back of each sheet. From this record the Commission prepares a report of how much money the claimant can draw, at what rate, etc., and makes the initial entry on his Record of Disbursements, Exhibit 8, using cards 4a and 4c. This sheet carries a complete picture of his history from the first claim until he is retired from the compensation roll: claims, partial benefits, adjustments, disqualification, disbursements. When his accumulated credits have been used up and he is retired, this complete history is run on a report given to him and to the Commission Claims Department. Card 4e is used here. This record is also used to prepare the work load report of the Division showing how many claims are received, how many eligible for payment, how many are disqualified and why, the reason the claimant is out of work, and all details regarding his claim© When the claimant files his second claim, Continued Claim for Benefits, the Machines Division combines all his wages and makes an experience rate against each of the employers for whom he has worked for the past three years* This rate is modified by the State experience factor to determine the final effective rate. Card 4d is used to run his employment register, a copy of which is sent him with his benefit check* When payments are made, the Unemployment Compensation Register, Exhibit 9 is run on the machines showing the payee, his social security number, date, amount of benefit, adjustment, amount of the check, warrant number, and the date paid* This is made in four copies, one sent to Washington and one to each of the three Texas branches affected* The individual wage item card, Exhibit 4b, is used to run the names of employees on gummed paper to make tags for the individual folders containing documents forming the history of each case in the Benefit Claims Department* The tags, Exhibit 10, are cut from rolls of paper the width of one tag, a different color for each year* The tag (half of Exhibit 10) is folded over the edge of the folder and stuck; this affords a quick and easy way of identi fying the folder and the year in which it was made. The Commission uses the Daily Record of Time, Form Y-5, Exhibit 3, for checking the efficiency of the workers in the Commission* This is especially useful in checking the time and efficiency of the machine operators* This time report is used to determine, for example, the number of cards per hour punched by the keypunch operators* Both the punching rate and the accuracy score of operators has increased appreciably in the two years this system has been in use* The report for the first two months in 1949 showed a 425-card-per-hour average for all girls punching, which included one totally untrained operator and various girls from other positions on the floor who were being trained on the keypunches. The cards average about twenty-five punched columns. These girls averaged .18 accuracy, with seven of the twenty-five rating "exceptional, below .1 accuracy. The accuracy score is a combination of the time record with the recording of cards returned for correction. The rate and accuracy scale of grading follows: Rating Exceptional Satisfactory 1 Satisfactory 2 Acceptable Not Acceptable Cards per Minute Over 400 326-400 301-325 250-300 100-249 Accuracy ♦o— <O9 •1-.19 .2-.39 04-.49 • 5-or over Another interesting experiment was made recently by this Machines Division in an effort to reduce instruction time and requirements for new keypunch operators. A notebook was prepared in which all source documents and card forms used on one class of report were pasted in associated groups. The documents were filled with fictitious names and data; the skip bar used with the particular card form and report associated in the book was drawn actual size across the bottom of the card; and instructions for the procedure were written at the bottom of the page in a brief sentence or two. This book and a jumbled batch of various source documents were given to a new employee who was keypunching. She was able, without undue loss of time, to punch the entire batch with only two errors. This Machines Division is the largest in Austin and does an enormous quantity of work with striking efficiency. The wage records alone use a million and a half cards per quarter, and the Veterans Administration Unemployment Service has been using more than a million per quarter. Many reports are made from each card in most instances. The cost of assembling and reporting such a quantity of detail by hand would be prohibitive* Besides the reports required by the Social Security Board in Washington, reports such as that sent to the Bureau of Business Research of the University of Texas on unemployment in Texas are made possible by machine records. During the last World War the War Manpower Commission got most of the figures on Texas manpower from this Commission. Both the Texas Commission and the National Board consider the machines indispensable. EXHIBIT 4 EXHIBIT 5 TEXAS EMPLOYMENT COMMISSION Batch Proof Listing of Payroll Detail EXHIBIT 6 ANNUAL REPORT OF COVERAGE AND CONTRIBUTIONS BY INDUSTRY GROUP signature TEXAS EMPLOYMENT COMMISSION-AUSTIN NOTICE OF DETERMINATION EXHIBIT 7 EXHIBIT 8 Texas Unemployment compensation Commission BENEFIT RECORD / EXHIBIT 9 TEXAS UNEMPLOYMENT COMPENSATION COMMISSION BENEFIT PAYMENT REGISTER EXHIBIT 10 1S V K ON£ A L II IS 045 4 0 2 06656 a >RQTHY £ BISHOP O 3a 043-4 0 2 Osasy a -Ku, UNEMPLOYMENT CLAIM CHAPTER VI HOUSTON POLICE DEPARTMENT REPORTS REQUIRED The Police Department of Houston requires a good number of reports for adequate operation. It is using an increasing number to add to its efficiency. Remington Rand equipment has made possible the preparation of a great number of helpful reports on crime, arrests, fines, juvenile offenses, etc. The punchedcard method is used for statistical reports only. The Supervisor of the Machines Division made his own code and card plan and machine specifications and asked for the exact installation wanted for his purpose, whereas the systems service representative of the Remington Rand Company is usually called upon to do that task. SOURCE DOCUMENTS Reports by police officers are the principal source document. PROCEDURE The Installation -- Remington Rand equipment is used in this installation. Machines include an automatic keypunch, a sorter, and a tabulator. Two operators and the supervisor prepare the machine reports. Codes — Many specialized codes are used. They include burglary ’’trademarks" which help to identify the person, such as entry through ceiling skylight or through door, disorder and litter left, means of attack (punch, chisel, etc.). Cards and Forms — One principal card form is altered slightly for various uses and contains the fields necessary for making the reports discussed in the next section. The Flow of Work through the Machines — Following is a copy of an article on use and procedure in the Police Department written by the Remington Rand representative for publication. One copy of each of the records for Arrests, Juvenile Citations, Accidents, and Crimes comes to the tabulating department. The information on these records is coded so that any description or alphabetic information is represented in numerical codes. For instance all the streets in Houston were numbered so that it is possible through numerical codes to give the exact location and street for any report. All of this information is punched into a tabulating card. This is done through the use of Remington Rand Automatic Key Punch which has the exclusive feature of being able to retain information from one card for a number of cards when that information is common to all these cards 9 This does much to speed up the work of punching the cards for the Houston Police Department. After the cards are punched, they are taken to the Remington Rand Sorter which will arrange the cards in any desired sequence at speed of 420 cards per minute. It does this with the highest degree of accuracy because little metal fingers search the cards for holes and when there is a hole the metal finger passes through it, automatically telling the machine to put that one card with all other cards with a like hole in that same position. Therefore, it is possible to sort all of one type of case together, or to sort all the crimes committed in one district of the city into one group. Any such arrangement of the cards can then be made automatically so that the controlling heads of the Police Department may keep a constant check on all activities in the city and immediately shift their forces to meet every situation. However, it is important to add here that the Houston Police Department also has a Remington Rand Tabulator which takes the cards after they have been arranged by the sort and prints out the various reports required so that the process is complete from entering each individual case through arranging a number of cases into a desired order and in printing reports once the order or arrangement is made. The machines work at such speed that any desired report may be obtained in a very short time. This makes it possible for the Department to keep a minute-by-minute check on all activities in the city, and not only that but to get much more information so that more complete control can be obtained. For instance, under the manual set up of record keeping the department was only able to get about ten breakdowns of the information on crimes committed in the city and it was difficult to get all of this because of a shortage of clerical help. However, they can now very easily get forty or fifty breakdowns of the information on crimes committed. Therefore, there is that much more analyzed information available for control purposes. The following are forms of some of the reports made: Cases (by Serial Number) Offense Code * How Cleared * Property Code (cash, bicycle, car, jewelry, * * etc.) t t Number of Cases Cleared ’ Amt, Lost or Stolen * Piece Count * .Amount Recovered i t t t t t Traffic Arrests 1 Traffic Number of * Date * Code * Arrests » Sex and Color t * by Code * White - * White* Negro * Negro * Wx, * Mex. * * * * Male * Female* Male * Female* Male * Female t t t i t t t t A report of offense by sex and color is an exact duplicate of the one above except that "Offense" replaces "Number of Arrests." Traffic Fines Traffic Code * Number of Fine * * Other Courts ’ Amount of Fine t t » t t t t t Juvenile Offenses * Disposition * Sex and Color ’ Age * Piece Count Code * * * ’ (Number of cases) t t t t These reports are made from cards punched from information cards on which most of the spaces are filled in by the officer making the arrest* Other information (code etc.) is filled in by the office workers. Reports are made by the Police Department for the Federal Bureau of Investigation monthly on Class One cases (rape, robbery, theft, etc*) by run of property card by type (cash, clothing, etc.), showing loss and loss recovered* A run is also made by type of crime, etc* Class Two offenses are reported for the State. These include swindling and theft by baillee. Reports less complete formerly required several workers seventeen days to prepare. At present two operators get out the reports for the Federal Bureau of Investigation and the State in four days. CHAPTER VII FEDERAL RESERVE BANK OF DALLAS A. PROOFING DEPARTMENT REPORT REQUIREMENTS In the Department only a proof of the incoming bank “letters” (lists of checks) is needed. Double proofing is done by means of the IBM machines for added accuracy. The first proof is the run through the IBM Proofing Machines, the second proof a list of all checks (by serial number and symbol) printed on the IBM tabulators* SOURCE DOCUMENTS The bank ‘’letter” is the only source document, since it contains both a list of the checks sent in for clearing and the checks themselves. PROCEDURE The Installation — In this Department forty-nine IBM Proofing Machines, a duplicating punch, three sorters, and three tabulators are used* In addition to the IBM machines, Recordiak machines are used for photographing front and back of the checks before they are sent out* Codes —- No additional coding is necessary here, since all checks have the serial number and the symbol for the bank on them© Cards — No cards are used except the small number of blank cards used to make dummy checks when the original checks are too mutilated to run through the machines. No prepared forms are used, since the report of the checks is the tape run through the proof machine. The proof run on the tabulator lists the checks in the same order as the run through the proof machines; therefore, it is run on plain paper. Flow of Work through the Machines -- When the bank "letters” are received, they are sent to the IBM Proofing Machine operators in runs of uniform size. Each operator receives an additional run as she has finished the previous one. The task is to prove the totals of the “letters" on the machines. The machine has both an adding machine keyboard and a set of twenty-four selection keys controlling the twenty-four pockets. The checks are broken down into runs a, b, c, d, etc. As each check in a particular run is stacked by the operator, she adds the amount of the check and touches the selection key to throw it into its proper pocket representing the particular local bank to which the check is written. The machine adds the amount of the check on a master tape and also on the tape for the particular compartment to which the check is sorted, and at the end of the run throws a total for each. A drum inside the machine has, at the same time as adding the amount, sorted the checks themselves into the compartments corresponding to the respective banks. At the end of the day, at the cut-off period, the machine is cleared and the checks and tapes removed. The grand total on the master tape must equal the twenty-four individual compartment totals. Amounts can be checked on the master tape by comparing with the individual compartment or pocket tapes for the banks, as indicated by symbol and by run on the master tape as well as on the smaller tapes. Both tapes must check with the “letters.” For each bank the outgoing “letter” is the recapitulation made on the same kind of machine, usually the same machine, with only a single tape. This is sent to the individual banks each day. From the Proofing Machines, the checks are sent to the IBM tabulator room. There mutilated checks have cards duplicated from them to use as dummies in the tabulator. However, out of the 25,000 to 30,000 checks per day coming through the Dallas Federal Reserve Bank, less than one per cent is mutilated. The checks are sorted by machine according to serial number and bank symbol and then listed on the IBM tabulators. The list shows the check serial number, bank symbol, date, and amount. This is an additional proof against the proofing machine tape. Next, the checks are sent to the Recordiak machines and there photographed front and back in the order in which they have been listed. These photographs serve as irrefutable proof that the particular check has been cleared through the Dallas Federal Reserve Bank. During January of 1948 a train wreck in South Texas destroyed 3,700 checks payable to the Dallas Federal Reserve Bank and 12,000 Government checks for the twelve Federal Reserve Banks. For the first time in history, the U.S. Treasury allowed the Dallas Federal Reserve Bank to use photostatic copies of the checks destroyed in lieu of duplicate checks usually required© Two days before this case study 'was made, 188,000 checks went through the thirty proofing machines in use that day between seven-thirty and three o’clock. That is a record which proves the worth of the machines and on the basis of which the nineteen additional machines were installed. The supervisor in charge of this Department is enthusiastic in his approval of the speed and accuracy with which proofs can now be made. Machine accuracy also lends assurance to the banks receiving the proof slips© B. SAVINGS BOND REDEMPTION DEPARTMENT REPORT REQUIREMENTS The Savings Bond Redemption Department of the Federal Reserve Bank of Dellas has the task of canceling all bonds received for payment, making proof of the transmittal letters sent in by the commercial banks cashing the bonds, checking payments with the Washington records, making a report of sales of bonds by county, issue etc., and, in addition, preparing a check on the time of all workers in the Department. SOURCE DOCUMENTS The transmittal letters and the accompanying bonds sent in by commercial banks furnish the information for the work done by this Department. Reports from Washington on bond serial numbers sold are used for checking. PROCEDURE The Installation — The Department uses twenty IBM punches, two verifiers three sorters, three collators, two reproducing summary punches, three gang punches, and three 415 tabulators. A supervisor directs the operations of the entire Department with an assistant in charge of the machine room. Codes — The only true code used is for the denomination of the bond: 1 for $25 bonds, 2 for $5O bonds, etc. Operators of the machines have numbers the bonds are serially numbered when issued, and each batch of bonds received is designated by a number and worked in a group. Also, the canceling machine numbers the bonds in sequence as it cancels them. Banks have the same code number used throughout the Federal Reserve system. Cards and Forms — Four card forms are used in the Department, each a different color but containing substantially the same information. The card form attached, Exhibit 1, is used for the detail card, and the fields are the same as those on the blue rate card designed by 'Washington and used for all bonds. An orange control card has a slightly different arrangement of the fields. A rose summary card contains totals of the same information. Few prepared forms are used, since the principal operation here is to prove balances and individual bond records etc. Cards and bonds are sent to the Treasury Department in Washington after proofing. Flow of Work through the Department — Transmittal letters are sent in to the Federal Reserve Bank at Dallas by commercial banks in the District claiming a certain number of bonds cashed and the amount paid. The bonds are enclosed with the letters. The banks are given immediate credit, and then a check is made of the bonds and amounts. The bonds from each transmittal letter are run through the canceling machine as a "batch." The machine numbers the bonds in sequence and puts in the batch number as it cancels with the stamped words "Paid by Federal Reserve Bank." The sequence numbers of all bonds included with each transmittal letter are totaled by machine* Then the first three digits of this number are gang punched into all cards needed for recording the batch. A control card is punched for each transmittal letter, showing: sequence number total, unclassified charge date, amount paid, sequence number gang punched, total number of pieces, batch number, agent’s code, month of payment, and date of transmittal letter, with two columns x-punched for controls. Next a detail card is made. Exhibit 1, for each bond. The machine operator duplicates her number in columns 2-5 from a pattern card previously prepared and kept in the duplicator rack of the punch. In columns 6-11 she punches the amount paid. A skip bar throws the card to column 15, the denomination code field. The operator fills in this field, the issue date, the bond serial number, and the completing digits of the sequence number gang punched before. She then duplicates in the appropriate fields the amount paid, the denomination code, the issue date, and the bond serial number. The theory is held that no operator will duplicate her own error, or repeat an error exactly. When the batch is completed, the cards are run through a collator to compare the duplicated fields. A red card is thrown in front of any card containing an error, and the errors are then corrected and an eight punched in column one of such cards. When the cards for the batch are all correct, the cards are separated from the bonds and each batch is separated from the others by the orange control card for the particular batch. From the control card are gang punched into the detail cards the remaining information to complete the card through column 64© The denomination code is repeated at the end for ready reference. Next, both control and detail cards for all batches are listed, controlled on agent and batch, with number of pieces and amount added from the detail cards and subtracted from the control card, so that the two columns will have a zero balance if no errors are present. If the balance of a batch is zero for these two columns, a zero is punched in column 70 of the control card for that batchj if a debit balance, a one in column 70; if a credit balance, a two in column 70. At or near the end of the day, when enough batches have been completed to allow only additional time for the required runs, the control cards are pulled (sorted) and a preliminary run is made to secure totals of items and amounts for each bank. This should balance with the amount for which the bank was given credit when the letter of transmittal was received© Blue master rate cards showing denomination, issue date, and redemption value, have been previously prepared in Washington for the particular issue and particular month. A sufficient number of these is collated with the detail cards, all sorted on month, denomination, and year. The redemption value from the roaster rate card is then punched into the proper field of the detail card. They are then collated to separate the blue rate cards and the detail cards and to compare the amount paid against the redemption value. Error cards are thrown out into the middle pocket by the collator* These error cards are sorted on sequence number and a list run on the tabulator. The bonds meanwhile have been sent to the Audit Section and have been thrown in batch order by month and denomination, just as the cards are sorted. The bonds on which the error cards are listed are pulled and the necessary adjusting entry punched in the control card. With an x in column 5 of this card, the correct redemption value field is made to print instead of the error* The corrected cards are collated for redemption value, sorted in the same order as the other cards, and merged with them by collating* The transcript charge date is gang punched into the corrected cards* An unarranged list of detail cards is next made and the total redemption value checked for correctness against the advice-of-shipment total* Summary cards are then punched showing totals by denominations, months, and year* These are sent to the Audit Section and must check against the physical count of bonds and their value. Both cards and bonds are then shipped to the Treasury Department regional office in Los Angeles, California* In the Los Angeles office these cards are merged with those from other Federal Reserve Banks in the Western District* All the cards are sorted in order of serial number and an arranged list run* The Dallas Federal Reserve Bank Savings Bond Redemption Department also makes reports on bond sales by county, by issue, etc. and keeps the internal records of the Department on the IBM machines. This includes a record of machine hours of time for machine operators, accuracy scores on punch operators. etc. The great accuracy required in accounting for bonds by this bank seems to make imperative a more exact method than a hand performance. The supervisors and those who use the results, in Dallas as well as in Washington, seem agreed that the machines satisfy the requirement. They are constantly studying to find more exact ways of checking results and preventing error, though error has been reduced to an almost impreceptible fraction by use of the machines. EXHIBIT 1 C. DEPARTMENT OF RESEARCH AND STATISTICS FEDERAL RESERVE BANK OF DALLAS REPORT REQUIREMENTS The Department of Research and Statistics, Statistics Section, of the Dallas Federal Reserve Bank transcribes on IBM machines selected account data for preparation of ledgers on the Member Banks of the Eleventh Federal Reserve District. Ledger A is composed of nine lists of all Member Banks. The first eight are PERMANENT lists made from the master cards. Each is a list of banks by code, with a count on number of banks. All Member Banks are listed 1. In order by bank number 2 • By county 3. By size of city 4. By type of charter and type of city 5o By basic bank size as of 1939 6. By crop reporting area 7• By state 8. By branch area 9. By bank size for current year. Ledger B contains an alphabetical county and city list, with designated branch districts, indicating changes by years. Ledger C contains a list indicating whether a bank is classified as a county or reserve city bank and whether it has a state or national charter indicating by years the changes in the classifications. Ledger D contains designations of the crop reporting area codes for the respective counties. In addition a permanent ledger contains CURRENT bank data according to the following classifications: A. List of individual accounts by bank B. Totals by account, by FRB branch and district C. Totals by account, by stat© D. Totals by account, by crop reporting area E. Totals by account, by county F> Totals by account, by city size G. Totals by account, by class of bank H. Totals by account, by current bank size. SOURCE DOCUMENTS The regular reports of Earnings and Dividends of Member Banks in the Eleventh Federal Reserve District are the source documents for all data used by this Section. PROCEDURE Installation -- The installation for this Section consists of an IBM punch with duplicator rack, a sorter, a gang punch, and a tabulator. Codes — The four codes used are listed below: for the master card, for the current accounts, for the accounts from Report of Condition, and for the accounts from the Report of Earnings and Dividends. I. The codes are contained on the master card: A. Columns 1 through 4 - Bank Code Number. Numbers were assigned Member Banks in order as of the December 10, 1943, list of Member Banks, arranged alphabetically by cities. Banks which left the system between December 31, 1939, and December 10, 1943, were added to the and of the list and assigned numbers 576 to 594. Banks which joined the system after December 31, 1943, are numbered consecutively, starting with number 595. When banks merge or consolidate, the resulting institution is treated as a new Member Bank and given a new number, and the numbers of the consolidated institutions are voided. Four columns are allocated to the bank code number in order to provide for bank numbers to 9,999. Ledger A contains a list of Member Banks and their assigned numbers and codes. B. Column 5 - State Code Number. States are designated as follows: Texas -1; Louisiana -2; Oklahoma -3; New Mexico -4; and Arizona - 5. C. Column 6 - Reserve Branch District Code Number* Branch districts are designated as follows: Dallas -1; Houston -2; San Antonio - 3; El Paso - 4. Ledger B contains an alphabetical county and city list, with designated branch districts, indicating changes, if any, by years. D. Columns 7 through 9 - County Code Number* The number for eaoh county is obtained from the "Numerical Code for States, Counties, and Cities of the United States" prepared by the International Business Machine Corporation, with the following changes: Last three digits only are used. Arizona is assigned a 300 series instead of the 200 series. Louisiana is assigned a 400 series instead of the 200 series. New Mexico is assigned a 600 series. Oklahoma is assigned a 200 series, as given. Texas is assigned a 900; 000; and 100 series, as given. E. Column 10 - Size of City Code Number. "City size" is determined by the 1940 population census data. The designations and size groups are as follows: Designation 1940 Population 1 1,000 and below 2 1,001 to 2,500 3 2,501 to 5,000 4 5,001 to 10,000 5 10,001 to 50,000 6 50,001 and above F. Column 11 - Type of Charter and Type of City Code Number. This column indicates whether a bank is classified as a country or reserve city bank and whether it has a state or national charter as follows: 1 National country bank 2 State country bank 3 National reserve city bank 4 State reserve city bank Ledger C contains a list indicating by years changes in the above classifications• G. Columns 12 and 13 - Basic Bank Size Code Number. The "basic bank size” is the size measured by total deposits as of December 31, 1939. The designations and classes are as follows: Total Deposits as of End of Year Designation (thousands of dollars) 0 Bank nonexistent on December 31, 1939 1* Under $lOO 2* Under $250 3 $250 - $499 4 $5OO - $999 5 $l,OOO - $1,999 6 $2,000 - $4,999 7 $5,000 - $9,999 8 $lO,OOO - $24,999 9 $25,000 - $49,999 10 $50,000 and above *Bank sizes 1 and 2 have been grouped together for present purposes* H. Columns 14 and 15 - Crop Reporting Area Code Number# The crop reporting area classification is based upon the Department of Agriculture’s crop reporting area designations for the State of Texas. The ten areas in Texas are coded in accordance with the Department of Agriculture designations. Areas in states other than Texas are designated by "zero". Ledger D contains a list designating the crop reporting area codes for the respective counties# Columns 16 through 20 — Reserved for Master Card Use. ll* Current Account Codes and Account Amounts; A. Columns 21 and 22 - Current Year Code# These columns carry the last two digits of the current year, such as ”46" for the year 1946, which are gang punched into all cards at the same time# B* Columns 23 and 24 - Current Bank Size Code* The banks are classified in codes from 1 to 10 according to the size of their total deposits on December 31 of the current reporting year* The bank size groups are identical with those for the basic bank size groups (1939) with the exception that the ’’zero” group is not used* C. Column 25 - Type of Account and Report Code. This column contains a code indicating the group on the Report of Condition from which the account is taken. Digit 1 identifies ’’asset accounts"; digit 2 identifies ’’liability and capital accounts”; digit 4 identifies ”detailed schedule of U. S. government obligat ion account s’*. Report of Earnings and Dividends accounts are not given group codings in this column; thus it is possible to differentiate between a Report of Condition account card and a Report of Earnings and Dividends account card by ascertaining whether a group number is carried on the card (Column 25)• Columns 26 and 27 - These columns carry the code numbers for individual accounts as carried on the Report of Condition and on the Report of Earnings and Dividends but modified as indicated above. Column 28 - This column carries the sub-code number. On the Report of Condition and the Report of Earnings and Dividends, such total accounts as ’’capital" and "current operating earnings" are broken down into subdivisions. A card is punched for each of such accounts and the sub-code column is used for coding. D. Amount of Accounts. Columns 30 through 41 carry the account amounts. This provides sufficient space to punch up to nine billion dollars, including cents. All the information on each account, including the codes as well as the amount, is contained in columns 1 through 41• The remaining columns are unused* Since only 41 columns are used, it would be possible to use each card for two years by using two of the reserved columns. Such utilization would, however, prevent subsequent substantial additions to, or modifications in, the information recorded on cards for prior years. In 1947, however, control holes were punched in columns 16 and 17 and would prevent future use of these columns. The control hole in column 16 is punched to take a count on the number of banks in each tabulation. The controls are used either to subtract or to block out the account amounts in order to obtain the desired summations of account groups. Coding of Individual Items 111. Account Codes - Report of Condition Account Account Group Code bub - P H Number Code Counter One Column 25^ X^26^2^27 2 28 A. Assets — — — *Cash, etc 10 1 ♦U.S. Govt obligations, dir & guar’d 102 Obligations of states & politic subdiv 103 Other bonds, notes, & debentures 104 Corporate stocks 105 Loans and discounts 106 Bank premises owned, etc 10 7 Real estate owned - other 108 Investments & other assets, etc 1 0 9 Customers liability to bank, etc 110 Other assets 111 **Total assets 112 "X” punch in Col 17 B• Liabilities and Capital Accounts Demand deposits of individuals, etc* 213 Time deposits of individuals, etc 214 Deposits of U.S. Govt 215 *A duplicate set of cards is reproduced for these accounts, "X" punching Col© 17 on the reproduced cards* These duplicate cards are used only in the special summations. In the special summations they are subtracted from other accounts as indicated* **A "one" is gang punched in Column 16 to take a count on the number of banks. (1) A major control is made in Col. 25 for a "zero" balance of all listings and tabulations. (2) An intermediate control is made in Col. 26 and Col* 27 to add the cards for each account and to avoid listing each card in tabulations© Account Account Group Code Sub- Code Number Code Counter One Column Deposits of states & political subdiv 216 ♦Deposits of banks 217 Other deposits 218 Total deposits 219 "X" punch in Col 17 (2 1 9) Bills payable, etc 2 2 0 Mortgages or other liens 221 Acceptances, etc 222 Other liabilities 223 Total liabilities other than capital 224 "X” punch in Col 17 (2 2 4) Capital 225 "X” punch in Col 17 (2 2 5) Ist Preferred stock 2 2 51 2nd Preferred stock 2 2 52 Common stock 2 2 5 3 Capital notes & debentures 2 2 54 Surplus 226 Undivided profits 227 Reserves 228 Total capital accounts 229 ”X” punch in Col 17 (2 2 9) Total liabilities & capital accounts 230 C. Schedule of Loans and Discounts Commercial & industrial loans 301 Loans to farmers, directly guar’d 302 Other loans to farmers 303 Loans to brokers & dealers, etc 304 Other loans for purpose of•••..etc 305 ♦Real estate loans - farmer 3 0 61 Real estate loans - residential 3 0 62 Real estate loans - other 3 0 63 Retail auto instalment paper 3 0 71 Other retail instalment paper 3 0 72 Repair & modernization instal. loans 3 0 73 Instalment cash loans 3 0 74 Single payment loans to individuals 3 0 75 Loans to banks 308 All other loans 309 Total loans and discounts 310 ”X” punch in Col 17 Account Account Group Code Sub- Code Number Code Column —— —•—— -=»= Counter One D. Schedule of U.S. Government Obligations Treasury bills 401 Treasury certificates 402 Treasury notes 403 U.S. savings bonds 404 Other bonds maturing within 5 4 0 5 Other bonds maturing 5-10 4 0 6 Other bonds maturing 10-20 407 Other bonds maturing after 20 408 Obligations guaranteed by U.S. 4 0 9 Total U.S. Govt obligations 410 "X” punch in Col 17 IV* Account Codes - Report of Earnings and Dividends Account Account Group Code Sub- Code Number Code Counter One Column 25 26 27 28 * A* Interest & dividends on U O S. Govt oblig 111 Interest & dividends on other securities 112 Interest & discount on loans 1 2 Service charges & other fees-bank’s loans 1 3 Service charges-deposit accounts 1 4 Other service charges 1 5 Trust department 1 6 Other current earnings 1 7 ♦Total earnings from current operations 1 8 "X” punch in Col 17 B. Salaries of officers 2 1 Salaries & wages - employees 2 2 Fees paid to directors, etc 2 3 Interest on time deposits 2 4 Interest & discount on borrowed money 2 5 Taxes other than on net income 2 6 Recurring depreciation on bank 2 7 Other current operating expenses 2 8 Total current operating expenses 2 9 "X” punch in Col 17 ♦A ’’one” is ’’gang punched” in Column 16 so that a count on the number of banks can be taken* Account Account Group Code Sub- Code Number Code Column 25 26 27 28 Counter One C* Net earnings from current operations 3 (3) "X" punch in Col 17 D* Recoveries on securities 4 1 Profits on securities sold or redeemed 4 2 Recoveries on loans 4 3 All other 4 4 Total recoveries & profits 4 5 "X” punch in Col 17 E. Losses and charge-offs on securities 5 1 Losses and charge-offs on loans 5 2 Losses and charge-offs on all other 5 3 Total losses and charge-offs 5 4 ”X” punch in Col 17 F. Profits before income taxes 6 W X M punch in Col 17 (6) G* Taxes on net income - federal 7 1 Taxes on net income - state 7 2 Taxes on net income - total 7 4 "X" punch in Col 17 H* Net profits 8 (8) "X" punch in Col 17 I* Dividends on preferred stock 9 1 Dividends on common stock 9 2 Total dividends in current year 9 3 M X M punch in Col 17 Cards and Forms — The card which is Exhibit 1 is used for both the current cards and the master card, the first twenty columns for the master card, the first forty-one for the current items* The master card contains all information relative to an individual bank which does not change from year to year* A new master card or a change in the master card is necessary only in the event of entry or departure of banks from membership in the Federal Reserve System, changes in the type of charter or classification of city, or changes in reserve branch district area# The information contained on the master cards is gang punched by machine into every account amount card after the other information is punched in the remaining columns. Two simple continuous forms are used. All reports are run with one duplicate (carbon copy) except the county lists, which have been run with two carbon copies in order to supply one to the University of Texas Bureau of Business Research. Flow of Work through the Machines — When the Reports of Condition and Reports of Earnings and Dividends are received from the Member Banks by the Federal Reserve Bank of Dallas, they are sent to the Statistical Section of the Research Department. Clerical workers pencil in lightly the bank code number, the current bank size code number, and minor account code modifications. Each report is audited to assure accuracy before punching and tabulation. A register of the reports received from and transmitted to the respective departments is maintained to enable the Statistical Section to determine where reports are at all times and whether they have been punched in cards. When a sufficient number of bank reports have been punched, thirty to forty banks, the individual bank tabulations are prepared on the tabulator and checked against the original reports for accuracy. Corrections are made if needed and then the other tabulations listed are made. Detailed descriptions of the lists follow. A. List of individual accounts, by bank. Prepared in duplicate, one carbon, on sheets as specified by bank; separate sheets for each Report of Condition and each Report of Earnings and Dividends. Carry: !• All master card codes, columns 1 through 15. 2. All account codes and amounts, columns 21 through 41* 3. Grand total for district of each account for purpose of establishing a balance. Uses These lists, by bank, are prepared as cards are punched and returned immediately to the Statistical Section. The lists are checked against the original (official) Reports of Condition and Reports of Earnings and Dividends by verifying codes and balances. To verify the accuracy of each tabulated report, it is necessary to verify both the amount and coding of each account. The coding is verified by checking the tabulated report against the original report. Since the procedure followed balances the subsidiary accounts against the total accounts, the amounts transcribed are verified by checking the amount of one subsidiary account against the original report and determining whether the total account punched establishes a balance against all the subsidiary accounts. If the tabulated reports are not in balance or if an account is not coded properly, the tabulated report is sent back with correction indicated; new cards are punched accordingly; and a corrected report, in duplicate, is run off and sent to the Statistical Section for verification. When all of the tabulated bank reports are correct and in balance, the originals are bound; the carbons are filed by branch district and subsequently sent to the branches. This provides the permanent record by bank. It is tabulated and balanced before other reports are tabulated. B. Totals, by account, by branch code, with grand total for district. Prepared in duplicate, one carbon. Carry: 1. Master card branch code, column 6. 2. All account codes and amounts, by branch, with current year and count on number of banks, columns 21-22 and 25 through 41. Use: This is necessary to provide the aggregate data by branch district, to provide control balances, and to ascertain that the total data are in balance. These data are transcribed to a permanent ledger for reference. C. Totals, by account, by state code. Prepared in duplicate, one carbon. Carry: 1. Master card state code, column 5. 2. All account codes and amounts, by state, with current year and count on number of banks, columns 21-22 and 25 through 41. Use: This list is necessary to provide aggregate data by state. Only one sorting is necessary to obtain, and that sorting is a preliminary time-saver to preparation of the next list. These data are also transcribed to a permanent ledger. D. Totals, by account, by crop reporting area. Prepared in duplicate, one carbon. Carry: 1. Master card crop reporting code, columns 14-15. 2. All account codes and amounts, by crop reporting area, with current year and count on number of banks, columns 21-22 and 25 through 41• Use: These data are transferred to a permanent ledger. E. County data. Prepared in triplicate, two carbons, with separate sheets for each Report of Condition and each Report of Earnings and Dividends. Carry: 1. Master card county, branch area, state, and crop reporting area codes, columns 5,6, 7-9, and 14-15. 2. All account codes and amounts, by county, with current year and count on number of banks, columns 21-22 and 25 through 41. 3. Combination summations, by county. These summations are made by separate sortings and the summations are listed on separate reports by county. a. Risk assets: total assets, less U. S. government obligations and cash. b. Total deposits, less interbank. c. Total loans on real estate, including real estate loans secured by farm land, loans secured by residential properties, and loans secured by other properties. d. Total loans to farmers, including loans to farmers directly guaranteed, other loans to farmers, and real estate loans secured by farm land. e. Total consumer loans to individuals, including retail automobile instalment paper, other retail instalment paper, repair and modernization instalment loans, instalment cash loans, and single payment loans to individuals. f. Total salaries, including salaries to officers and salaries and wages to employees* g* Total investments: the sum of U.S* government obligations; obligations of states and political subdivisions; other bonds notes, and debentures; corporate stocks; and loans and discounts* Use; These lists, by county, are the primary statistical record derived from the data* The original is filed, by years, in the Statistical Section Office; one duplicate sent to the interested branch; and one duplicate sent to the Bureau of Business Research, the University of Texas* Prior to filing, the data are transferred, by hand, to a county summation sheet which lists, by year, 1939 to date and annually thereafter, the information, by county, for each account* F. Totals, by account, by city size (as of 1940)• Prepared in duplicate, one carbon* Carry; 1* Master card city size code, column 10* 2» All account codes and amounts, by city size, with, current year and count on number of banks, columns 21-22 and 25 through 41• Use; These data are transferred to a permanent ledger* G* Totals, by account, by class of bank; whether country or city, state or national charter* Prepared in duplicate, one carbon* Carry; 1. Master card code for class of bank, column 11. 2* All account codes and amounts, by class of bank, with current year and count on number of banks, columns 21-22 and 25 through 41. Use; These data are transcribed to a permanent ledger* H* Totals, by account, by current bank size classification* Prepared in duplicate, one carbon© CarryB All account codes and amounts, by size of bank group, with current year and count on number of banks, columns 21-22, 23-24, and 25 through 41. Use: These data are transcribed to a permanent ledger. I. List of bank codes by size group classification as of current year. Carry: 1. All codes, columns 1 through 15. 2. Bank numbers, in order, by current bank size group code, current year, columns 21-22, 23-24. Use: These data are incorporated in Ledger A. In 1943 the Department of Research and Statistics of the Federal Reserve Bank of Dallas began transcribing selected account data from Reports of Condition and Reports of Earnings and Dividends of Member Banks in the Eleventh Reserve District. Data from the year-end Reports of Condition of 1939 through 1943 and annual Reports of Earnings and Dividends for those years were transferred to International Business Machine cards, and selected groupings were tabulated by the Dallas service bureau of the International Business Machine Corporation. The same procedure was followed in 1944 and 1945. In 1946 the procedure was simplified and adapted to use of Remington Rand equipment so that machines and personnel within the bank could be utilized. In 1947 the procedure was readapted to the use of International Business Machine equipment then used within the bank. That is the procedure described here, and it has proved so satisfactory and efficient that it is intended that essentially the same method be followed in subsequent years. Approximately 60,000 cards a year are used and the seventeen regular reports discussed here are made from them. It is considered that the necessary volume of data could not well be handled to give the detailed information needed but for the machine process. EXHIBIT 1 CHAPTER VIII THE AUSTIN NATIONAL BANK, AUSTIN, TEXAS REPORT REQUIREMENTS The Austin National Bank uses IBM proofing machines only. They are used to indorse checks and proof the totals of checks received. This proofing gives totals to use in giving permanent credit, for posting to ledgers, and for preparing the bank "letters” to be sent out to other banks (lists of checks received and credited)• SOURCE DOCUMENTS Checks received from other banks and from customers are the only documents used* PROCEDURE The Installation -- When the Bank moved into its new building in 1948, five IBM proofing machines were installed. They are operated by five girls* Of the five machines, two are used for transit checks. On the machines used for local banks’ checks, the keys have been colored to match the check color for the respective local banks, in order to facilitate the machine operator’s placing check amounts accurately and swiftly. The machines are arranged in a department all their own, adjoining desks for operating adding machines for supplementary work. Following is the arrangement of keys on one of the proof machines used for local checks. The keys designate customers of the Austin National Bank, alphabetically arranged, local banks, and the Austin National Bank ledgers. Mail Orders Amer. Natl. Coml. Ledger 2 Mu to Roc Gen. Revenue Warrants Cap. Natl. Transit Dept. L to Mu Old Age Pensions Fidelity State Mise. Cash Harris through K TEC Warrants Blank Gen. Ledger and Bank Ledger E to Harris Highway Warrants Teller’s Cage Th through Z Burn through D Confederate Pensions Coml. Ledger 1 Roc to Th Ato Burn Codes Obviously, no codes are needed. Cards and Forms — No cards or forms are used, since the tapes from the machines give the only record needed. Flow of Work through the Machines -- A photostatic picture of the flow of documents through this department is attached. The picture shows the checks received for deposit by the bank, the deposit slip, the receiving slip, and their route through the proofing machine. Full explanations of the processes are given with the documents pictured and the tapes on which are listed the various checks received. The shorter lists, each for a particular bank or department, must total the same amount as the longer master tape list, and the checks in the compartment for the particular small tape must all belong to that particular bank or department. The tapes can be checked item for item, since the items appear on both lists individually and in the same order. Subtotals for the various smaller pockets are also shown on the master tape for checking. Fuller explanation of the operation of such machines is given in the case study of the Federal Reserve Bank of Dellas* The tapes and checks are sent from the department to the accounting division for further processing* Each teller or department in the bank must balance daily against these control figures# These five machines and five operators handle all checks that flow through the Austin National Bank on ordinary business days. On peak days, as for example, following a holiday on Monday which also comes near the first of the month, the check load is so heavy that the machines needed for ordinary days cannot handle the load in the nine possible working hours. The expense of adding more machines permanently is impracticable; consequently, the machine task is supplemented by hand methods ordinarily used in banks. Sometimes also the load throughout the day is so uneven as to pile the work in the last hours of the day enough to overburden the machine operators. Still, for the ordinary tasks the machines prove adequate, and in spite of out-of-the-ordinary inadequacy, they add immeasurably to the efficiency of handling the check load with accuracy and dispatch. PROOF DFPARTMFNT’ THIS department acts as an internal clearing house for the entire bank, its work consists of • LSU.I ni\ I l¥lL_|s| | • I. VERIFYING. lE. PROVES the accuracy of all entries, 2. DISTRIBUTING. I E-. DISTRIBUTES ALL ITEMS TO PROPER DEPARTMENTS FOR HANDLING; 3. CONTROLLING. I E.. AS ITEMS ARE DISTRIBUTED TO THE PROPER DEPARTMENTS, THE TOTALS OF SUCH ITEMS ARE CHARGED TO THE SEPARATE DEPARTMENTS AND EACH TELLER OR DEPARTMENT IN THE BANK MUST BALANCE DAILY AGAINST SUCH CONTROL FIGURES CHAPTER IX TEXAS STATE BOARD OF CONTROL REPORT REQUIREMENTS The Texas State Board of Control at Austin keeps volumnous records and needs more in order to do the best job of its duties. Records suitable to the use of machine methods include appropriation accounting (appropriations, requisitions, expenditures, incumbrances), notices to vendors, bids by vendors, purchases and accounts payable, inventories of supplies and of property, and payrolls. SOURCE DOCUMENTS Legislative reports and notices, requisitions from all State institutions and agencies, invoices, reports of inventories, etc. furnish sources for the data used or to be used on the machines. PROCEDURE The Installation — The Board has only one keypunch} the reports are run on the machines of the Texas Employment Commission. One operator does the , keypunching in the offices of the Board. Codes — Codes are used for institutions, expenses, items of inventory, and many other uses. The institutions are coded alphabetically with one or two letters each as for example: Code Institution A Abilene State Hospital B Texas School for the Blind C State Orphan* s Home D Texas School for the Deaf AS Austin State School BR Brady State School BS Big Spring State Hospital etc. Expenses are coded numerically, as for example: 1 Bond Premiums 2 Drugs and Hospital Supplies 3 Equipment 9 Automotive 4 Equipment, Cooking 5 Equipment, Farm etc* 12 Recreation and Amusement 25 Travel 30 Groceries 60 Livestock etc* A sheet of complete instructions is sent to the institution with each blank to be filled. Cards and Forms — Exhibit 1 is two card forms used in appropriation accounting. The form for the encumbrance report made from these cards is Exhibit 2. Flow of Work through Machines — Since September 1, 1947, when the first records of the Board were placed on the punched cards, every item requisitionordered by the twenty-six state eleemosynary institutions is punched on a card and liquidated by completing the card as the warrant is issued* Since these institutions spend from #2,000 to #125,000 each per year, there is a great quantity of work for the machines* For the purely appropriation accounting about 4,000 cards are used per month* For inventories of the institutions about 1,000 to 8,000 per month per institutions would be required, and for payrolls about 4,000 cards per month. Since the first use of the machine process by the Board, the following reports have been made from the punched cards: 1. Summary of expenditures and encumbrances for each institution 2* Expenditure analysis for each institution, 3« Statement of expenditures and encumbrances of all institutions for the use of the Board of Control* Since December 1, 1947, a comparative statement is made from the cards for each institution. The form on which the encumbrance report is made is Exhibit 2, and Exhibit la is the card used for this purpose. Since the encumbrance is an estimate of what the expense will be, it is never for the amount actually spent. Therefore, the difference between encumbrance and warrant (the last column on the encumbrance report) makes an adjustment with the expense allowance necessary. If the estimate was more than the warrant, the difference is credited back to the expense allowance; if it was less, the Board has the task of attemption to find money with which to meet the difference. Of course the allotment each month is 1/12 of the total appropriation for the year, and the encumbered purchase orders to date plus the expended warrant amount to date should total the allotment to date. The encumbrance statement eliminates the necessity of each institution keeping a multiple-column journal, large and detailed, as formerly. Now one column only is posted to each account. Card Exhibit lb is used for preparation of the appropriation or expenditure analysis, and the form of the appropriation record is as follows; Institution Code Department Number Appropriation Numbers 0 & M Local (Operations and maintenance) The comparative statement showing expenditures of similar institutions is intended to assist each institution in estimating its efficiency and its shortcomings. It is considered a real help in the effort. For the last few months an inventory of property at the Confederate Home for Men has been kept on IBM cards. When all the difficulties have been ironed out, it is hoped that all the eleemosynary institutions can be put on the cards in the same way. This is the first time that the Board of Control has had a control on this property at all. A complete inventory of all articles of property has now been punched in the cards, and as new articles are bought in the future, they will be put immediately onto cards. Previously there was no inventory kept of small tools, stoves, filing cabinets and similar pieces of furniture, etc. When these articles were reported at the end of each year, only an incomplete and entirely unsatisfactory list could be made. At this Home there are approximately 500 inmates and 100 employees who live on the property. There are five kitchens, a laundry, two storerooms, and eight ward buildings. At the present only about 6,000 cards per month are punched, but in the future this number will be much greater. Proposed Work by Machine Method — Many other uses of the machines would be profitable for the business of the Board, and they are anxious to place accounting and statistical information on the machine as soon as possible. It is hoped that soon the payrolls for all institutions can be prepared on the machines. If a tabulator can be installed, the present cumbersome and inaccurate methods of accounting will be replaced by machine accounting. At present all comparisons of accounts are made visually by individuals; comparison by statement would save time and expense, and warrants could be issued without the present cumbersome delay. Another need is to eliminate the confusion and wasteful manner in which vendors are contacted. With the immense quantity of purchases to be made through the Board of Control, vendors are kept on file and notified that bids will be received. Since many of these vendors sell various classes of items which the State purchases from time to time, it is impossible with the present system to adequately separate the vendors and notify only those who are interested in a particular item needed by the States therefore, many of them are notified at the expense of the State’s time and money when the vendor has nothing to offer in the line submitted. On the cards, all lines offered by each vendor could be kept separate, and a simple sorting would group the vendors needed for the particular purchase. Combined with the use of the multigraph for addressing envelopes, the IBM method is one of the hopes of the Board. A plan has been laid out with report and card forms which the Supervisor is desirous of using for keeping the inventory of supplies at the eleemosynary institutions, an immense task which cannot be adequately done by hand. For example, at the State Hospital in Austin there are sixteen kitchens, 16 baths, a hugh ice house and warehouse. It has been extremely difficult to control the inventory containing four classes of articles: fresh meats and vegetables, other groceries, hardware, and drygoods. The State is interested not only in what is spent but in the welfare of the inmates affected by that expenditure — therefore, in the diet. All types of food would be coded by the Board’s plan. Now all requisitions sent to the storeroom from a kitchen are recapped by hand, a tremendous task with room for many errors. By the punched-card method a report would be made on the machines from the requisitions after they are filled showing: Requisition ’ Date ’ Dept. * Quantity 1 Cost 1 Type of Food 1 P-G ’ Hdw Dgds. * ‘ ’ (Pounds to » ’ /Coded) ’ 1 » ’ » three deoi- 1 1 ’ t Amounts * ’ ’ mals) ‘ ’ ’ (”P-G*‘s Perishables and groceries) From this sheet the Board of Control would be able to figure the per ounce, per day, per person use of each type of food and so check the adequacy of the diet© The Chairman and Supervisor are convinced of the efficiency, economy, and adaptability of the machines for accounting and statistical control for the State’s ponderous quantities of figures. EXHIBIT 1 EXHIBIT 2 CHAPTER X TEXAS EMPLOYER’S INSURANCE ASSOCIATION AND THE EMPLOYER’S CASUALTY COMPANY REPORTS REQUIRED The Texas Employer’s Insurance Association was created by act of the Legislature in 1914 to serve Texas employers. The Employer’s Casualty Company is a privately owned company, organized in 1920 by the officers of the Texas Employer’s Insurance Association and other citizens, for writing casualty insurance. All employees work for both companies, in the same offices, and with the same equipment. Both companies make the same use of the machines and machine processes. All records for both companies are kept on the IBM machines, including the general ledger for each company. The machine work includes all accounting, payrolls, claims, losses and loss reserves, and all statistical reports. The only checks written on the machines are the payroll checks. These organizations claim to have the only insurance office using a complete accounting system on the cards entirely. SOURCE DOCUMENTS All documents received by the two companies are source documents for the machine operations. These include applications for insurance, premium checks, claims requests, doctors’ certificates, and proofs of loss. PROCEDURE The Installation — Machines used in the installation include one alphabetic printing punch, five duplicating punches, four verifiers, two 285 numerical tabulators, one 405 alphabetic tabulator, one 416 numerical tabulator, one collator, and four sorters. Ten operators are employed on the keypunches, including a supervisor; seven operators work on the other machines. The general machine supervisor has charge of all machine operations. Codes — Among the items coded are state, district, class and kind of insurance, re-insurance company, and kind of injury© Cards and Forms — Approximately thirty card forms are used, some very similar. Different colors of the same card form are used for different purposes. Exhibit 1 consists of (a) a production and premium card, (b) a loss reserve card, and (c) a card used in manila with buff stripe for re-insurance paid and in orange for premiums written. Exhibit 2 includes (a) a unit statistical plan (designated USP) card used in manila for losses and in orange for premiums; (b) a card form used in manila with orange stripe for cash or deposit, in manila with purple stripe for journal entries, in yellow for medical disbursements, and in orange for general and compensation disbursements; and (c) a card form used for payrolls — manila with yellow stripe for deductions, with green stripe for name, and with blue stripe for net pay. The report form, Exhibit S, is a daily bank: report. A very great many forms are used for reports, but many of the reports made on machines are run on plain paper and headings put in by hand or typewriter. Flow of Work through the Machines — Cards are keypunched manually from the insurance forms on which the information comes into the office. Details are listed on the card, giving a complete record of the entry (the insured). These cards are verified and then, tabulated by machines and totaled according to debits and credits, checking out to leave the general ledger entries in balance. Entries ar© also made from these cards to the individual accounts of the assured. At the end of the month, these cards are balanced back to the ledger and then summarized and each type of information punched on a summary card. In this way the volume of records is greatly reduced for storage throughout the year. The report to the Internal Revenue Department on dropped insurance is made from these summary cards and cards showing insurance in force and paid. The summary cards are also used to make reports showing summary by account, showing district, group, year of issue, year of accident, etc. Disbursement cards, Exhibit 2b in yellow or orange, are punched from the check stubs and a daily report of disbursements run on the tabulator. A similar report is run from the cash receipts card, Exhibit 2b with an orange stripe, on the form Exhibit 3 for each bank used for deposit. The journal and other forms which make a complete set of accounting records are run on the machines from cards shown in Exhibit 2. The loss reserve record is kept on the card form Exhibit lb and reports made from that card. An insured man, when injured, reports to the employer, who fills out the provided form and sends it to the office nearest him. That office finishes the report details, such as the standing of the policy, which are in the files of that office. The local office then sends the report of injury to the home office in Dallas. The home office keypunches the card Exhibit lb to set up the reserve needed to take care of the injured. If the injured finds that the claim is too small or too large, he sends in another report and the reserve is adjusted accordingly. Vlhen the claim is discharged, the reserve is closed out from the same card. At the end of each month a loss reserve statement is made from the loss reserve cards still in the file. Many statistical reports are made from the cards shown, always by means of the IBM machines. Detailed reports show premium and loss items listed on card forms for USP losses and premiums. Exhibit 2a. A report of premiums written is made from card form Exhibit 1c in orange. The payroll is run and checks made from the card form Exhibit 2c. The name card, deduction card, and net pay card are combined to write the check and its stub, showing all three items on the stub and only the net amount and name on the check. The gross amount is also shown on the stub by adding the amounts from, the net and deduction cards* All cards and reports discussed so far are used by both the companies under discussion. The Employer’s Casualty Company requires other card forms and reports in addition. Casualty insurance is very detailed. Many varieties of insurance are written, many adjustments are made, and there are many variations to be accounted for in accounting and statistical records — sales, reinsurance paid, and fixed premiums. There is insurance for bodily injury, for property damage, for collision (material damage), and comprehensive coverage on automobiles, perhaps all on one policy. Another type of insurance is inland marine (designated i.m.) which insures anything moving; for example, a motor truck cargo or personal property floater (a policy which permits moving the property anywhere). There is also manufacturer’s or contractor’s insurance and title and guaranty insurance. This Company writes one hundred twelve differ ent types of policies* The Employer’s Casualty Company does a great deal of re-insurance, "faming out" insurance to others who carry the risk, to relieve the Company of too much liability* Cards showing this re-insurance charge and the details concerning it, Exhibit Ic, are used to run machine reports of the re-insurance* All reports are made on the machines, as well as all accounting entries* Statistical reports include the social security, unemployment tax, and income reports, all made from the payroll cards, Exhibit 2c* All reports tie back to the general ledger, made from the same cards directly or from summary cards made from the detail cards. The tabulator does the process of posting, picking up the balance, adjusting it by new entries, and printing the new balance. The form of the general ledger is: Proof 1 Date 1 Description * Dr. * Cr. * Pick-up Old Balance ’ Balance t » »i» । it t t t t The investment ledger is made in the same way, on the tabulator, and is tied directly to the general ledger. Approximately two and a fourth million entries per day are made by this installation. The same card, used for many entries, may be handled a hundred times in one day. In 1547 approximately 1,400,000 cards were used. Most of the card forms are permanent, but some temporary forms are printed and used for special purposes, approximately forty thousand cards per year. The Companies are very proud of their complete accounting system entirely on punched cards. EXHIBIT 2 EXHBIT 3 CHAPTER XI PIONEER AIR LINES, INC. REPORTS REQUIRED The home office of Pioneer Air Lines, Inc., in Houston uses the International Business Machines for payroll, revenue, general, cost, and engineering accounting. A list of reports is given in the operating schedule discussed in the section on the flow of work. Checks are written on the tabulator. All statistical reports are made by machine. SOURCE DOCUMENTS Source documents include manifests (reports on trips), duplicates of tickets sold, flight logs, cash vouchers, journal vouchers, clock cards, and allocation time report sheets. PROCEDURE The Installation — This installation is a very small one doing an astonishing amount of work# The work on the machines is done by the Supervisor and his one assistant. One keypunch, one sorter, and one 405 tabulator with automatic carriage (32 counters, 66 type bars, two classes of total, no net balance) constitute the machine equipment. Codes — Class of payroll, cost, location, type of deduction, type of voucher, air lines, points of origination and destination, and employees are shown by code. Flights, tickets, forms, and planes are numbered# Cards and Forms — A list of the twenty-five card forms follows* Selected cards are Exhibit 1. CARD FORMS PAYROLL Master Card 1 Name Card 2 Total Card 3 Payroll Detail 4 Payroll Deduction 5 Earnings Card 6 ACCOUNTING Payroll Analysis 7 Stock and Stores 8 Cash Receipts 9 Cash Vouchers 10 Journal Vouchers 11 REVENUE On Line Tickets 12 Excess Baggage 13 Off Line Lifts 14 Inter Line Sales 15 0 & D Inter Line Sales 16 Mail Loading Forms 17 Loading Manifests 18 Flight Logs 19 HEADING Flight Pay and Expense 20 CAPPS Mail Forms 21 Origination and Destination 22 Origination and Destination By Flights 23 A card form containing identical fields is often used for various purposes, different colors designating the different uses. For example, the same form is shown in Exhibit 1 in orange for general accounting and green for payrolls. Exhibits 3 through 6 are some of the forms used by Pioneer. Many reports are run on plain roll paper. Flow of Work through the Machines — Twenty-three pages of punching instructions kept available in the office set out the fields for the various cards to be punched. Page numbers correspond to the card numbers given in the list. The Operating Schedule for the Tabulating Department, Exhibits 2a and b gives the reports due for completion on consecutive days of the month. The consecutive order of completion of the reports is more important than the date on which each is completed. An attempt is made to complete almost all the reports between the third and the tenth of each month, except the last eight, which are quarterly and annual reports. The first report listed is the hourly payroll. Data for this report are taken from the IBM time clock cards, the amounts being computed semi-monthly by the Accounting Department. As the time cards are sent up to the Department, they are accompanied by a report sheet for each person, allocating the expenses for the time involved. These sheets are kept on a clip board in the entrance hall leading from the hangars, easily available for recording. The salaried payroll is cut on master cards and the same information used repeatedly except for additions or deductions from the semi-monthly amounts for variations in working time. These variations are computed manually and each is cut into a card for the individual concerned. The payroll is run by the third of the month, and again by the sixteenth of the month. Checks are run on continuous paper forms, with a statement of earnings above the check, with one carbon which is used as the check register. The next two reports on Exhibit 2a, flight pay and flight expense, are made from card form Exhibit la, cut from report Exhibit 3, Aircraft and Pilot*s Flight Log* From this card form four different reports are made on the Multiple Heading Form which is Exhibit 4. Each report is checked in the heading of this report form with its particular designation, as indicated on the form instruction line. One copy of the form is sent to the Accounting Department, and one is kept in the Tabulating Department. The flight pay report is a report of the pay due the pilot. The other crew members, copilot and stewardess, are paid on a straight monthly rate. The pilot receives base pay plus a certain rate for each hour night flying and each hour 73 BKS. 11-47 > PAL FORM 105 REVISED 8-14-46 No. 9465 day flying and a graduated bonus for all miles overtime. For the pilot’s pay this report, Exhibit 4, is checked as the captain’s and the entire report filled in, the last column being miles rather than expense in money as on the other crew members’ reports. Pioneer will use in the future a similar form with the check attached to the bottom of the form. The information from the top section of Exhibit 3 is cut into a green card according to the fields in the upper section of Exhibit la. A report is then run on the form, Exhibit 4, checked in the third designation block. This is a report of time and mileage by ship and class of flight (for example, regular schedule). Intermediate total is on ship and minor total on class of flight. The same form and card are also used to show time and mileage by class of flight only; the form is then checked in the fourth designation block. Payroll deductions are cut according to the middle section of the green card, Exhibit la. Then, after all payrolls are run and checks written, the cards are "broken out" by class of deductions and listed for the accounts receivable ledger. A list of employee earnings to date is run for social security report. A copy of his earnings to date is given each employee who leaves Pioneer. The overtime analysis, report 7, Exhibit 2a, is especially important to Pioneer Air Lines. The corporation is new and small and attempting to operate on as small capital as possible and to set up an efficient performance looking toward future development. The breakdown is intermediate on employee and minor on cost distribution (the job each employee has worked on). This enables cost analysis for efficiency. A report of schedule and elapsed time by pilots is made from cards cut from the flight logs. The difference between the air time and the elapsed time is the time spent on the ground, which shows how closely the pilot is flying his schedule. The Chief Pilot uses this check on the records of his pilots. The Passenger and Baggage Loading Form, Exhibit 5, shows the number of passengers, where they were loaded, and where they went. A detail card is out with this information, the date, trip, etc. A heading card is made for each group, with alphabetical and numerical code for each point. Revenue and Traffic Departments use the alphabetical code only, which is not cut in the detail card. The detail cards, Exhibit Ic, are sorted and controlled on the numerical code, and the heading card is used to precede each group, to make the following report, a count of passengers, with intermediate control on “From” points and minor on "To” points. Origination and Destination by Flight Fit. No. 1 From ’ To * Non -Trans. ’ Trans. ’ Total Pass. ’ Miles between ’ * * Pass. * Pass. 1 1 Points t The punching of these passenger flight cards is a difficult task for the keypunch operator because she must analyze each passenger’s trip carefully. For example, when the operator is punching information on a passenger loading at AMA (Amarillo) and going to San Angelo, on Flight 11, which does not go to San Angelo, a one is cut in column 18 if the passenger is a transfer or zero if he is a non-transfer. Another card is cut on the passenger for the transfer flight carrying him from Abilene to San Angelo. On this flight manifest, an ”x” by the passenger’s name indicates that he is a transfer from another flight, whereas on the previous manifest his name was followed by a red circle. On the machine tabulation such a passenger is counted before the transfer, then counted as a transfer, and finally is in the complete count of all passengers. The Revenue Department uses the miles flown from the heading cards to figure passenger revenue miles, the load factor. Extensions are made by a multiplying punch* These two reports furnish all statistics needed for Government reports. The Traffic Department uses these passenger cards to determine the flow of passengers and to determine whether or not a flight is profitable and how profitable each is. A register is run on off-line lifts, which are many. Billing of these lifts to the lines selling the tickets is made on the machines* The tickets are sold by another line and the passengers ride with Pioneer; consequently, the line selling the tickets must be billed by Pioneer* The register is run in order of ticket number, with breakdown on air lines and by classification of passenger. Then, each line is billed for the total amount due from that line. Tickets are cut and origination and destination reports are also made for off-line-lift tickets sold by Pioneer — where Pioneer sells the tickets and the passenger was carried part of the trip on another line# These reports include the line on which the ticket was sold, where the passenger got on and where he went, where he got off Pioneer lines, where the ticket was sold and by whom. A breakdown is made by air lines and a final count of all tickets made. All other reports listed on off-line lifts are made from these cards. Following is one report form: Off-Line Sales Airline 1 Connection Point * Origination * Final or Off-line (over which ticket * * * Destination was sold by Pioneer) * 1 1 । i t For interline sales (tickets sold by Pioneer but passengers picked up by another line), card 15 on the list is used. The interline sales register is run on the tabulator and the credit due other lines set up in the books. When tickets are sold by other lines for transport of passengers over Pioneer lines, those lines credit Pioneer. Usually the larger air lines bill the difference between these amounts two or three times each month and designate the final billing for the first of the month. Upon receipt of this billing Pioneer cuts cards for the lifts by other lines and for their lifts for other lines as billed. These cards are collated with the cards already prepared by Pioneer for the amounts due to and from the other lines as indicated by Pioneer duplicate ticket copies. When the billing is closed for the month, one set of these cards is sorted and an analysis is run as follows: Mo. Yr. Line Ticket Form Coupon Number Dr. Cr. Balance No. If the debits are greater than the credits, the Revenue Department analyzes and if incorrect, rejects the charges. The cards are again collated to pull all the balanced accounts, and a list is run with debits separated from credits. From this list the Revenue Department sends back the corrections to other lines, and those lines bill Pioneer the following month for the corrected balances. The same procedure is followed by other lines if errors are found by them. The unbalanced and rejects will be outstanding at the beginning of each month, and the Accounting Department sets up the unearned transportation amount on the books (the usual balance being an unearned one because of the larger lines* operations). A revenue register. Report 12, is run on stock and store issues, with control on issue number, using card form shown in Exhibit lb. Report 12 is a distribution report on such issues. For the mail loadings report on pound miles by flights, Exhibit 6, card form 17 is used. The manifests come in with each flight. The machine report is run with intermediate control on flight, minor on point. The last column contains the product of the pounds times the miles flight. The report is made in triplicate. One copy is sent to the Revenue Dept., one is retained, and the third is the Government copy. Following is the form of the report: Flight Point Lbs. On Lbs. Off Miles to Next Point (Pound-Miles) The excess baggage card form 13 is used for recording baggage loads between points on the pioneer lines. The report made from these cards is almost identical to the mail report. Cards made throughout the month from journal vouchers etc. are thrown together at the end of the month and run for general ledger entry. For the trial balance figures the machine simply groups by minor and intermediate control and tabulates totals. Addition of a summary punch is in prospect, which will enable the making of an actual trial balance on the machines. Various runs by station are made for checking on the Pioneer stations in the various locations. Station expenses are coded by station and run with intermediate control on station and minor on cost code. This distribution is used in the trial balance. A card is made for each ticket sold, from which a numberical list is made in order of number; this ticket register is used as a check on the honesty of ticket agents as well as a check against errors. These reports are representative of the work done on the machines by Pioneer. The installation uses approximately 25,000 cards per month and makes a remarkable number of reports. The performance is outstanding for an installation of its size* EXHIBIT 1 Exhibit 2a PIONEER AIR LINES INC OPERATING SCHEDULE - TABULATING DEPARTMENT Exhibit 2b OPERATING SCHEDULE - TABULATING DEPARTMENT EXHIBIT 3 PIONEER AIRLINES INC. AIRCRAFT AND PILOT’S FLIGHT LOG PIONEER AIR LINES INC. exhibit 4 MUNICIPAL AIRPORT - HOUSTON, TEXAS EXHIBIT 5 PASSENGER MANIFEST PIONEER AIR LINES, INC. Interline Sales Exhibit 7 INTERNATIONAL BUSINESS MACHINES CORPORATION ALPHABETIC ACCOUNTING MACHINE CONTROL PANEL TYPE 405 WITH NET BALANCE COUNTERS AND AUTOMATIC CARRIAGE PLUGGABLE CONTROLS EXHIBIT 6 REPORT OF ONE-WAY TRIP CHAPTER XII TEXAS AND NEW ORLEANS RAILROAD REPORTS REQUIRED The Texas and New Orleans Railroad home office in Houston uses IBM equipment for both the Freight and the Passenger Division records. All disbursements, payroll, and check records are recorded on cards and records kept on IBM machines. Machine records are used for bills collectible and department bills, for purchase and claim vouchers, and for material accounting. Passenger ticket sales and all interline accounting are kept on the machines. SOURCE DOCUMENTS Material storekeeper charge-out slips, locomotive repair and replacement reports, time delay and return reports of the engineers and trainmen, conductor’s reports, time sheets and various other documents used for reporting payrolls and deductions, disbursement vouchers, and ticket copies are source documents used for punching record cards. PROCEDURE The Installation — Machines include six IBM duplicating punches, two alphabetic duplicating machines, two .IBM 404 and one 405 tabulators, two 285 alphabetic tabulators with automatic carriages, three automatic verifiers, one collator, four sorters, two automatic reproducers, one gang summary punch, one interpreter, and two 602 calculating punches. Two additional punches are used by the Passenger Division. For machine work other than punching, both Divisions use the entire installation. Workers in the day force consist of a supervisor, nine keypunch operators, and four operators of other machines. The night force consists of six keypunch operators, a supervisor of keypunching, and three tabulator operators with a supervisor. Most of the boards used have fixed wiring. Few special reports are made on the machines, and consequently few specially wired boards are required. Filing cabinets are provided for keeping six months’ cards used for making regu lar reports; this is a requirement of the Interstate Commerce Commission. Codes — Accounting numbers designate stations; forms and tickets are numbered; and accounts, foreign roads, and a few other classifications are coded. For example, deductions are coded "2" for group insurance, "42" for other insurance, and "60" for Community Chest. Gards and Forms — Exhibit 1 shows five card forms used in machine account' * ing for this Railroad. Each will be discussed in the section on flow of work. In addition to these forms five payroll cards are used: the labor card, the pay roll detail card, the deduction card, the ’’ICC" Form A Statistical Data form, and the quarterly withholding tax and employee earnings card. Forms used for reports include Exhibit 2, the Time Record of Trainmen, Enginemen, and Yardmen; Exhibit 3, the Report of Interline Passenger Traffic Ticket Sales; and Exhibit 4, the Interline Ticket Report-Distribution. Flow of Work through the Machines — The machines section begins its with the originating document* The information is punched into cards from this document, and the machines produce the journal entry abstracts, the final form of entry record. All entries prepared by the machines must check exactly with predetermined totals. A detailed abstract showing the order number of every document of entry that comes in during the month is made on the machines. The general accounting card is Exhibit la. In disbursement accounting the machines abstract practically all the records. From the abstracts the Accounting Department enters whatever is necessary for its records. Accounting for bills collectible and for department bills is kept entirely separate, each bill being coded for identification. The purchase vouchers used for general accounting are kept on a green card easily distinguishable from the claims voucher card. Vouchers for the various purposes are made by a Vouchers Bureau in the same office with the machines section. The vouchers are then sent to the machines section, cards are punched and abstracted, and the abstract totals are checked back against predetermined totals of the Accounting Department’s voucher register. Material accounting uses two card forms. Exhibits lb and lc, Charges made directly to operating expenses are made on the order-to-storekeeper card. Exhibit lc. All other material charges are made on Exhibit lb. Separate charges for the individual items make unnecessarily bulky records; therefore, the total reported from orders on the storekeeper is made on one card. From the individual orders on the storekeeper, the storekeeper foreman makes one charge-out slip, A comptometer operator makes extensions and sends the slip to the Store Accounting Bureau. There the slip is stamped with origin and division. The slip is then sent to the machines section, where a card. Exhibit Ic, is punched, showing article and price. From a report made from these cards the charges are made to the various accounts. The report has the following form: Division ’ Acct, No, ’ Service 1 State * Fluctuation Code 1 ’ (frt., passenger, ’ 1 ’ ’ common) ’ ’ « t « t All shops use a locomotive repair report designated by one code number. These repairs are totaled and entered on a master card as one total. The card fields except the amount field are duplicated from a master card which remains the same. This follows the Division’s practice of grouping charges rather than making individual entries* From these master cards a report is made which serves as document of entry to the expense account. The payroll is made and paid by the Treasurer and totaled for checking against the machine reports. The payroll is accumulated, recap is made for distribution, and the coding is done before the records are sent to the machines section. Time rolls are made by groups: trainmen, enginemen, and yard men, etc. The machine section handles only the Houston payroll; payrolls made for other points on the Road are handled through the Railroad Division. Enginemen (engineers and firemen) and yardmen (switchmen and others who work in the yard) will servo as an example in the preparation of payroll documents* Each employee has his own I.C.C. sheet form which he fills in with his time record and sends to the Houston office through his Division Timekeeper* Before sending it in, the Timekeeper checks each time record against the train sheet made out by the train dispatcher* Then he codes each and puts in the allowances and class of service (freight conductor, yard trainman, etc.). In the Houston office the Time-keeping Bureau checks, records, and sends this report to the machines section. In the machines section a card with buff border. Exhibit Id, is punched with the information from the time report. As many as four employees are placed on one card, with rates for each* Extension in the common column is made by the multiplier. All classes that have the same rate are run together and checked. The portions of these cards remaining fixed have been prepunched and the amount, date, etc. are punched in at the end of the period. At the end of the period an abstract is made from these cards, and a total of the money column is accumulated for checking. The cards are sorted in man-number order and a time sheet is run for total earnings by rates, Exhibit 2. From this time sheet the payroll cards are punched. The form used by Maintenance-of-Equipment or Mechanical Department shows hours and rates, ’with explanation necessary for distribution. In the Division office the calculation of rate times hours is drawn off on a printed form by hand. From this form, machine record is made on the record card. General office payrolls are made by the person originating the time rolls for each group of workers. From that record, cards are punched and records accumulated. Maintenance-of-Way employees' time is recorded by the section foreman or B. & B. (bridge and building) foreman. The payroll card is manila with a yellow top border, and it gives full details about the worker and his pay and deductions. After the cards are punched from the payroll documents, a list is made on the tabulator and checked against the various totals. Accounting entry is made from this list. Deduction, calculations are made by means of a 602 calculating punch* Two hospital deductions and withholding tax require complicated calculations* If the employee’s earnings are less than $3,000, the machine figures 5 3/4 per cent and punches the hopsital deduction; if earnings are $3,000 or over, it automatically punches $17*25 as deduction; if the adjustment is already punched in the field, the machine ignores the entire field* It also punches the net earnings* For withholding tax, the machine multiplies the $56 deduction by the appropriate number, punches that amount, deducts it from gross earnings, computes the tax of fifteen per cent, and punches that deduction and net earnings in the card, all at one operation. Where there are more than one deduction to be made from any one pay check, a deduction card is made so that the details may be given. Only the total is punched in the payroll card. With the deduction card following the payroll card, a list is made with minor control on employee number. Cards are sorted in numerical sequence. When the pay checks are run on the machines, the deduction card follows the payroll card again and lists the various deductions (group insurance, other insurance, Community Chest, etc.) Payment is made to employees twice a month. In making payment for the second period (fifteenth to the end of the month) all deductions are listed, including those of the first period. The railroad retirement and unemployment tax is limited according to the amount of the monthly earnings; therefore, a small deduction is made from the earnings of the first half month, and computation is made and adjusted when second-half deductions are made. Division forces prepare a form showing distribution of labor time. This form records the kind of work done and whether switching service was for freight or passenger train. From that form, the office in Houston recaps on another form, which is sent to the machines section. A card with blue top border is punched with the information, and recap is run on the machines for each order number, from which is made the entry for distribution of payroll cost. A monthly report is made to the Interstate Commerce Commission on straight time and overtime and the various services by each individual in the Railroad’s employ. For this purpose an orange-striped card is made from the time rolls. Each quarter year a report is made on employee earnings. A punched card is used showing each quarter’s earnings, each quarter’s withholding tax and the quarterly total for each employee. Tabulating machine operations for the Passenger Division constitute approximately ten per cent of the total machine use. Besides the operations already described for payrolls etc., the Passenger Division punches a card for each ticket sold, Exhibit le. If the ticket is for route over another road, the proportions earned are punched in a trailer card, the same field lay-out but without the yellow stripe on the card. A tabulator run is made, with minor control on the station accounting number, Exhibit 3. One copy is sent to each line for collections of revenue due. In contrast to the former three or four months’ lag in collections, records show collections now up to date. Where station volume justifies it, station accounts are accumulated until the end of the month and the report sent then; otherwise a report is sent as soon as the record of the sale is made. Entries in the accounting records are made from the second copy of the machine run. An Interline Ticket Distribution Report, Exhibit 4, is made for office use. A header card is punched alphabetically, one for each road, and sorted in alphabetic order. Ticket sales over each road are then followed by a trailer card punched with the same alphabetic identification. A check sheet is run daily, and if the three columns at the right of the sheet (home proportion, miscellaneous account proportion, and foreign road proportion) for any one road do not add to the amount in the ’’Fare or Amount” column, that trailer card is thrown out by the machine. The Freight Division uses approximately 350,000 cards per month, the Passenger Division 30,000. This includes approximately 80,000 payroll cards, 125,000 buff-bordered multiple-employee time cards, 5,000 blue labor cards, 30,000 payroll deduction cards, 20,000 I.C.C. statistical cards, 55,000 order-on-storekeeper cards, 20,000 material accounting cards, 20,000 ticket cards, and 20,000 green voucher cards in addition to 25,000 Federal quarterly earnings cards♦ Many reports and entries are made from the same card in most instances. Consequently, it is evident that the volume calls for machine methods. So convinced is the Company of the economy of expert machine use that several employees from the machine section are being given training in night schools for machine operators at Company expense o EXHIBIT 1 Texas and New Orleans Railroad Company TIME RECORD OF TRAINMEN, ENGINEMEN AND YARDMEN EXHIBIT 3 759— TEXAS AND NEW ORLEANS RAILROAD COMPANY—7S9 Auditor of Passenger accounts, Houston, Texas REPORT OF INTERLINE PASSENGER TRAFFIC TICKET SALES EXHIBIT 4 INTERLINE TICKET REPORT - DISTRIBUTION * CHAPTER XIII RED ARROW FREIGHT LINE REPORTS REQUIRED Red Arrow Freight Line, serving points in all parts of Texas, maintains its home office in Houston# Punched cards are used for claim draft accounting with loss and damage, for the C.O.D. register, for waybill accounting, and all general accounting# Reports are made for management and for the Interstate Commerce Commission and government requirements# Payroll is a new use# SOURCE DOCUMENTS Time cards on employees, waybills, claim slips, driver’s trip tickets, and invoices are the source documents. PROCEDURE The Installation -- Remington Rand equipment includes a punch, a sorter, a tabulator, an interpreting duplicating punch, and an interfiling reproducing punch# Codes — Codes are used for freight classifications, revenue types, claim designations, etc. Cards and Forms — A waybill card shows C#O#D«, weight, advances, route, charges, etc# A claim card and a payroll card showing driver, rate per mile, number of miles, etc. are other card forms used. Bill heads and other necessary forms are the conventional forms bearing the Company’s name. The Flow of Work through the Machines -- When a waybill, invoice, or record of a trip by a particular driver is turned in, a card is punched showing all information on the report# At the end of each day a report is made on trips, shipments, number of C*O*D’So, etc* At the end of the accounting period reports are made on tonnage and revenue, inbound and outbound freight, damage by commodity, loss by commodity, damage by originating station, loss by originating station, driver earnings, parts and labor costs, ton-miles, claims paid, and uncollected bills* Complete station accounting is done on cards* Accounts receivable are kept by punched-cards methods* Driver trip tickets and waybills are made on the machines* Disbursement accounting, rate studies, C.O*D* draft reconciliation, truck analysis, service reports, and payrolls are kept and checks written on the machines® One report shows Station * Truck ’ Driver ’ Connecting 1 Run ’ Customer * Commodity * Ton Miles » » ’ Line ’ ’ » 1 tit » i t t Other reports include a C*O*D. list, customer list, waybill list, freight revenue charges reporb, run number list, and the following agents’ collection list® Agents 1 Collection List — Cash Receipts Date * Waybill 1 Station ’ Weight 1 Revenue * C.O.D. * Advances Mo. Day * ’From To 1 * ’ ’ t j t t t t The reports are used to fill government requirements for reporting and to enable management to control operations to a degree not possible without the punched cards* CHAPTER XIV THE HUMBLE OIL & REFINING COMPANY, HOUSTON REPORTS REQUIRED Humble Oil & Refining Company makes extensive use of the International Business Machines in accounting and statistical analysis in its operating departments and in the Humble Pipe Line Company which is an entirely separate corporation* Each operating department has an accounting office which is responsible for the accounting procedures incident to the particular departmental operations* Separate machine installations are used by the Sales Department in accounting and sales statistical work, by the Production Department for most of its accounting and gas royalty payments, by the Crude Oil Storage Department for the preparation of over 50,000 checks per month for oil royalties and reports necessary to account for oil runs, by the Refining Department for accounting and payroll purposes, by the Treasury Department for payrolls and annuity plan accounting, and by the Employee Relations Department for governmental reports and personnel statistics* The Pipe Line Company uses the machines for the preparation of payrolls and for other phases of accounting. Some of these uses by operating departments are set out in this study* The financial reports come from the various departments to the Comptroller’s office and, except those of the Pipe Line Company, are consolidated in that office* The Humble Company finds this plan of separating the departments allows greater freedom of the operating units, and by associating an accounting office directly to each operating department, better functional responsibility can be developed and maintained* The responsibility of the operating departments may be pointed out by the fact that the Production Department is responsible for finding and producing oil. Once it is produced and stored, it is sold to the Crude Oil Department for trans-shipment by the Humble Pipe Line Company to the refinery facilities or to other purchasers of bulk crude oil. If the oil is delivered to the Refining Department, it is considered as a sale. The Refining Department in turn refines the oil into constituent products and sells these products to the Sales Department for retail and wholesale trade accounts. Several administrative or service departments, such as the Law, Treasury, Industrial Relations, Comptroller’s, etc. perform functions for all operating departments. ORGANIZATIONAL CHART HUMBLE OIL & REFINING COMPANY A. THE PRODUCTION DEPARTMENT REPORTS REQUIRED In the Production Department the IBM machines are used only in the Accounting Office for performing accounting and statistical work based on operations of other divisions of the Department. In the Finding or Geological Department of the Company little statistical work is developed except on cost and financial accounting. It is difficult to develop the operating statistics of this Department on the machines because most of the work is secret and the data incident to geological information would not be adaptable to machine procedures. The same is true of the Drilling Division except that job costs for drilling operations and material costs are being developed by machine methods. The work of the Oil and Gas Operating Division is more adaptable to machine procedures. Machines are used for general accounting, cost accounting as well as production statistics, per barrel costs and lease status studies, and material accounting and perpetual inventory control. Further uses of the machines are being studied in order to better utilize the principles of mechanization in the accounting procedures. The Production Accounting Office is organized into five divisions with each division separated into several sections and with one central machine section. The Production Accounting office organization chart is shown on the following page. Each section is responsible for the original data from that section getting to the machine room so that tabulating cards can be punched from source documents. The cards are used to prepare journal vouchers that are returned to an appropriate section for review. As the journal vouchers are listed by the numerical printers 416 a summary card is punched by the summary punch 513 for each general ledger account divided into sub-accounts. The summary cards are further used to prepare the voucher register, to post subsidiary ledgers, to prepare cost statements and comparative statements, etc. The detail cards are used to post subsidiary ledgers if required by the degree of detail needed in the ledger. I. PRODUCTION ACCOUNTING OFFICE — VOUCHERS PAYABLE SECTION REPORTS REQUIRED A function of the Production Accounting Office is presented to illustrate the detail involved in paying for vendor invoices. This section is responsible for obtaining approval for invoices received from vendors furnishing materials, services, etc. to the Production Department, verifying material-received reports to the invoices, and finally preparing a remittance statement to be used by the Treasury Department to pay the invoices. (A similar section performs the same functions in the Sales, Refining, and Crude Oil Departments). The section processes payments for invoices covering accounts payable incurred by approximately 80 district offices throughout seven states. ORGANIZATION CHART H. 0. & R. CO - PRODUCTION ACCOUNTING OFFICE SOURCE DOCUMENTS Source documents are invoices and material-received reports. THE PROCEDURE Cards and Forms -- Cards in Exhibit 1 are used for the reports required by this section. Exhibit 2 is the Distribution Voucher used. The remittance statement is prepared on Burroughs accounting machines and is not shown here. Some lists are run on plain roll paper. The Flow of Work through the Section — The route of documents to the Vouchers Payable Section is as follows: 1. A purchase requisition is prepared in the field for necessary equipment. The Purchasing Department receives the request and orders the material. 2. When the material is received by the field a material-received report is made (generally a copy of the purchase order) and sent to the Accounts Payable Section. 3. The invoice requesting payment is received by the Purchasing Department and sent through necessary channels for approvals and distribution. 4. The approved invoice is matched to the Material Received Report. 5. The Distribution Section verifies the distribution and sends it to the Traffic Department, Warehouse Section, or other unit that may have special interest in the specific type of invoice. 6. The Vouchers Payable Section receives invoices, verifies approvals, etc.,consolidates all invoices for individual vendors and prepares a remittance statement by use of Burroughs accounting machines# 7. The remittance statement with invoices are sent to the Machine Section where tabulating cards, Exhibit 1, are keypunched and verified for each item of distribution on the invoice. Cards are balanced and filed. 8. The remittance statement with invoices are passed to the Treasury Department for check preparation and payment of the due bill. 9. Weekly all cards are used to prepare a consolidated journal voucher, Exhibit 2, covering all distribution items for the week, listed in detail and totaled by general ledger account by lease-by subaccount; e.g., Code 25-1 (Lease and Well Expense) shows each individual charge and credit by lease by sub-account by remittance statement. This allows an audit trail back to the individual invoice. EXHIBIT 1 EXHIBIT la EXHIBIT 2 HUMBLE DIL & REFINING COMPANY PRODUCTION DEPARTMENT DISTRIBUTION VOUCHER II. PRODUCTION ACCOUNTING OFFICE — MATERIAL AND SUPPLIES REPORTS REQUIRED By use of machine methods perpetual inventory is maintained of material and supplies carried in the warehouse stocks of the 80 headquarter districts of the Production Department. SOURCE DOCUMENTS Source documents for the material and supplies accounting include purchase requisitions, material-received reports, and invoices* These documents are used to prepare others, such as remittance statements, which become source documents to the other divisions of the accounting. THE PROCEDURE Codes — The basic requirement to machine applications in material accounting is a material code number which allows use of the same code to the same item of material throughout the Company. Furthermore, materials are classified so that coding becomes a rather simple job though classification may be difficult; for example, a “Christmas tree" consists of a group of values, pipes, parts, and accessories prepared to specifications to fit the need of a particular well in order to permit the flow of oil from the tubing into the line-pipe. In the various fields the needs may vary as to the type of Christmas tree; therefore, the "tree" may be changed to fit these needs. Consequently, any change will affect the price and value of the "tree" and will affect the classification of that particular type of unit. To code each part would be very difficult; therefore, it is the custom to include the tree in the perpetual inventory record as one item. Cards and Forms — Exhibits 1 through 5 are the cards and some of the forms used in accounting for materials and supplies by the machine process. The Flow of Work through the Section — Perpetual inventories of material and supplies are run on the machines for the stock carried in each of the warehouses in the eighty districts* Materials issued from the warehouses are priced, valued, and journal vouchers, Exhibit 2, prepared by the Machine Section from the same cards, Exhibit 3, used to prepare quantity records. Comparative material receipts and issues statements are prepared by machine and are used as per cent of turn-over statements, consolidated material statements, and material surplus statements, Exhibits 4 and 5* III. PRODUCTION ACCOUNTING OFFICE — NATURAL GAS PRODUCTION REPORTS REQUIRED In the Gas Accounting Section and the Gas Measurement Section of the Production Accounting Office income and expense must be maintained on each gas producing lease and the quantity of gas produced must be determined, valued, and the proportionate share distributed to each royalty interest in the lease. The majority of this work is done by punched card application. EXHIBIT 4 H O & R CO ■ PRODUCTION ACCOUNTING DIVISION MATERIAL ON HAND - ACTIVE ITEMS EXHIBIT 5 H O « B CO - PRODUCTION ACCOUNTING DIVISION MATERIAL CONTROL - USTING SOURCE DOCUMENTS Source documents for this section are the meter charts from the field. THE PROCEDURE Cards and Forms — Exhibits 6 and 7 are reports forms used in preparing gas statements• Flow of Work through the Section — Gas measurement is a very complicated procedure because of variations. A meter is used to indicate on a chart by automatic markings various variables such as temperature, pressure, etc. The chart is the basis for determining the volume of gas produced and finally the monetary value due the lease. Humble uses 16,000 gas meter charts per month. There are 1,987 meters and each must be read in the field daily or weekly, depending upon the volume going through the meter. At the end of the month all meters are read for the monthly close-out. The charts are then read in the Houston office by five operators using intergrator machines which automatically determine ratios. Each of these readings multiplied by the coefficient gives the cubic feet of gas produced by the lease. Because the variables change so rapidly, Burroughs calculating machines are used to accumulate the volume and compute the value of gas produced. This is prepared on a statement similar to the attached form. Exhibit 6. Computation of each royalty owner’s share is made by use of an IBM calculating punch 602, and the statements recording the Division of Interest are prepared by use of alphabetical printer 405, Voucher type checks in continuous form are prepared, and the use of the voucher stub which shows production statistics decreases the number of gas statements that must be sent to the individual owner. The same cards that are used to prepare royalty payments are used as a medium of preparing gas production and consumption journal vouchers, production statements, production statistics, and tax reports. Each lease is maintained as a separate account with only Humble’s share of production being booked, but total expenses and sales are kept in detailo Machine operations for the Gas Measurement Section are shown on the attached chart of three pages, as follows: !• By lease routing and computation of the volume and value of gas produced, purchased and sold. 2. Determination of the net amount due the various owners of an interest in the gas and the preparation of the gas purchase check and the gas purchase register. 3* Journal Voucher Preparation of Gas Accounting. EXHIBIT 6 GAS STATEMENT HUMBLE OIL & REFINING COMPANY HOUSTON. TEXAS DIVISION OF INTEREST GAS STATEMENT HUMBLE OIL & REFINING CO. Houston, Texas EXHIBIT 7 IV. PRODUCTION ACCOUNTING OFFICE — MACHINE SECTION REPORTS REQUIRED The machine section verifies distribution and prepares journal vouchers on all accounts payable (verification of distribution is made by matching on a collator a set of master distribution code cards against the detail distribution cards); verifies distribution and prepares vouchers covering operation of Company-owned trucks, tractors, etc#; verifies distribution, computes and prepares vouchers on electricity purchases; verifies distribution, computes, and prepares vouchers covering utility car rentals; assigns machine code account numbers to leases, districts, systems and facilities; prepares detail statements and general vouchers covering use tax liabilities in various states; verifies distribution, completes vouchers and prepares quantity records on warehouses and field transfers, verifies distribution, and prepares freight suspense vouchers; computes and prepares vouchers on payrolls; posts all investments, expenses, etc. to lease ledgers; prepares clearing and adjustment accounts (such as on a water well on one lease that is used by other leases in the vicinity); prepares reports on operations, lease purchase suspense reports, recovery to stock and minor sales, etc.; prepares the various subsidiary ledgers, invoice register, regular statistical reports and each month prepares many special reports and studies. PRODUCTION ACCOUNTING OFFICE GAS MEASUREMENT SECTION PREPARATION OF LEASE GAS STATEMENT Exhibit A I B M MACHINE METHODS FOR GAS PAYMENTS PRODUCTION ACCOUNTING OFFICE IBM MACHINE METHODS FOR GAS ACCOUNTING PRODUCTION ACCOUNTING OFFICE SOURCE DOCUMENTS Most of the source documents for this section are reports prepared by the other sections in the Department. Original documents include truck earnings reports, lists of incomplete construction jobs, and reports on expense of trucks, leases, and construction# THE PROCEDURE The Installation —• The Supervisor of the Production Accounting Office machine section started the unit in 1942 with one 297 tabulator, one sorter, and one keypunch. In 1949 the installation contained four 405 printers, four 416 printers, eight sorters, three collators, two multipliers, ten keypunches, six verifiers, two reproducing summary punches 513. Fourteen full-time operators are used on the machines, two junior clerks for voucher balancing on hand machines, and fourteen keypunch and verifier operators. One keypunch operator is responsible for making corrections to cards mutilated in machine operations. In order to facilitate the corrections a card rack formerly utilized as a time card rack is placed on the wall above the keypunch machine. The rack has an "in” and an "out" pocket for each machine operator. When mutilated cards are to be made over, the cards are placed in the "in" pocket labeled for use of the machine operator. When corrected, the cards are placed in the "out” pocket• The keypunch machines and verifiers are in one room separate from the regular machine room. Rubber-base carpets are placed on all aisles between machines to lessen fatigue and thereby increase efficiency. In machine operations efficiency decreases rapidly when fatigue sets in. Time reports on forms similar to Exhibit 8 are maintained on all machine operations. The tabulating card form Exhibit 1 is used for most purposes with a change of color to signify different operations. In current operations, in order to determine machine load requirements, the machine time is allocated to the various reports according to averages derived from more than six months data on past performance. Summary cards are prepared throughout the month as operators have idle time between other tasks. This machine section keypunches 225,000 cards per month, with other machine operators (reproducers, summary punches, etc.) adding another 200,000 to the total. For all plant accounts a summary card is made each month. The number and kind of other cards made depend upon the statistics required later. Cards and Forms -- Card forms shown in Exhibits 1 and 3 are used for most of the reports prepared by this section. Exhibit 8 is the Daily Report of Machine Operating Time used. Besides forms mentioned in discussions of other sections of the Department, Exhibits 9 through 16 are representative forms used by the Machine Section® Flow of Work through the Machines — The quarterly truck and tractor report is an example of the machine procedures in the accounting system. The attached form. Exhibit 1, 405 alphabetical printer diagram, Exhibit la, and the three forms are used in preparing the reports, Exhibits 9, 10, 11. Services rendered by trucks and tractors are charged by field reports, Exhibit 9, as operating expenses against leases or facilities using the units. The charge is based on an hourly rate computed from the expenses incurred the past quarter divided by the number of operating hours. The credit is to the income account of the truck or motor unit (906). The closer earnings equal expenses the better, as the variance for the auto and motor truck accounting is cleared to profit and loss accounts at the end of the year. The function of the quarterly report is to determine the average hourly rate to be charged for the next period in order to decrease variances. During the month journal vouchers for all operations are prepared by the machines, Exhibit 4. These journal vouchers contain some direct charges such as gasoline, tires, repairs, etc. to the auto and motor truck expense account (903). At the end of the month the cards covering these accounts are used to prepare a trial balance, with the balances in account 903 by units being cleared to an apportionment account (906), Exhibit 10. Overhead charges, such as bulk grease or charges pertaining to a truck terminal where several trucks are serviced, are charged to the apportionment account. The amounts undistributed to specific truck units are accumulated and distributed quarterly to individual vehicles. The income from trucks is credited to individual units (906) by reports compiled for the operating time of each truck as recorded by field reports, Exhibit 9. Each quarter a report is prepared for management on how much it is costing to operate each vehicle and its earnings. Exhibit 11. This report is prepared by consolidating the quarterly detail cards used in the current account ing work with the previous balance or summary card plus necessary master name and description cards. Each truck is listed by number, type, and description with accumulated totals of earnings to date, direct operating costs to date, overhead costs allocated to date, total operating costs, hours operated to date, average hourly cost, and the present rates used to fix income on a per-hour and per-mile basis. A new summary card is punched. The quarterly report is reviewed by the clerical accounting and operating personnel to determine efficiency of vehicles and to compute a new rate, if necessary, to decrease variance between income and expenses* Earnings end costs are usually balanced in three quarters, but occasionally there is a small credit or charge to profit and loss, perhaps $5OO annually. Several source cards are used to compile the report. The report is prepared in triplicate by district, according to the location of the truck or equipment, with copies sent to the General Manager of the Operating Department, the Division Operating Superintendent, the District Superintendent, and the accounting office. Another example of machine methods as indicated by attached forms is the accumulation of charges to Incomplete Job Construction (Account 308), Exhibit 12, and the final clearance of the job costs to an investment account, Exhibit 13* The Incomplete Construction Account is used for two reasons: a cost analysis by jobs is needed, and it is a Company principle that direct entries cannot be made to the investment account* During the month journal vouchers are prepared which contain charges and credits to the various jobs under construction* These journal vouchers are prepared on regular distribution voucher form, Exhibit 2* At the end of the month all cards punched to Account 308 are accumulated and balanced to the voucher register totals, Exhibit 14. A trial balance is prepared by consolidating the current month 1 s detail cards with the previous balance or summary card, Exhibit 12* The trial balance accumulates the job costs by intangible or non-accountable items, and tangible or accountable items. The cumulative total is summary punched to new balance cards, and summary and detail cards are filed for future use. The trial balance totals balance to the General Ledger accounts for Incomplete Construction. Each month the Incomplete Construction Section gives the machine section a list of jobs which are considered as finished and are to be cleared to the proper investment account. The machine section selects the detail cards covering the jobs and prepares a "Detail for Clearing Report," Exhibit 13. This report lists each charge and credit, indicating the voucher reference and amount, with totals by sub-accounts and jobs. The report is sent to the Incomplete Construction Section for verification and for final clearance distribution to be made to the Investment Account. Other forms attached are the regular journal voucher form which accumulates distribution charges and credits by account sequence. Exhibit 2* the monthly voucher register which recaps the distribution items by account by voucher, Exhibit 14; subsidiary ledgers (2 forms) for lease expense and sales Exhibit 15; and for all other accounts. Exhibit 16. DAILY REPORT OF MACHINE OPERATING TIME EXHIBIT 8 HUMBLE OIL & REFINING COMPANY PERFORMANCE OF COMPANY TRUCKS, TRAILERS, AND TRACTORS EXHIBIT 9 AUTO AND MOTOR TRUCK EXPENSE TRIAL BALANCE EXHIBIT 10 Humble Oil & Refining to. Motor Truck & Tractor Status Report EXHIBIT 11 INCOMPLETE CONSTRUCTION (A/C 308) TRIAL BALANCE EXHIBIT 12 EXHIBIT 13 INCOMPLETE CONSTRUCTION a/c 308 DETAIL FOR CLEARING Exhibit 14 VOUCHER REGISTER Humble Oil & Refining Company CRUDE OIL PRODUCTION DEPARTMENT B. TREASURY DEPARTMENT REPORTS REQUIRED The machines are used principally to prepare payrolls for the Humble Company, except Refinery Hourly Rolls, and to prepare complete accounting records for the Annuity and Thrift Plan of the Company. The latter accounting procedures are completely mechanized and provide for the detail posting of over 17,000 individual ledgers of participating employees by use of the transfer posting process. SOURCE DOCUMENTS Source documents for the Treasury Department come from all other Departments. They include time sheets, deduction reports, and other authorizations for payments, such as inter-office voucher statements for material or other purchases. Most of the documents are made by the Machine Sections of the vari' ous Departments. EXHIBIT 15 Humble Oil & Refining Co. — Production Accounting Division SUBSIDIARY LEDGER EXHIBIT 16 HUMBLE DIL & REFINING CQ. PRODUCTION ACCOUNTING DIVISION THE PROCEDURE The Installation — The Treasury Department uses in the machine section five 405 printers, two 602 multiplying punches, three summary punch reproducers, two collators, one interpreter, three sorters, five keypunches, and three verifiers. Eight keypunch and verifier operators (all women) are used in punching operations, with ten machine operators (eight men and two women) handling machine processes. Todd protectograph machines are used to protect check amounts and to authorize payment by use of facsimile signature. Cards and Forms — Exhibit 17 is the three payroll cards used, and Exhibits 18 and 19 are the payroll report forms. A pre-numbered cut check with an earnings statement stub is used for payrolls. The Flow of Work through the Department — In the payroll work the earnings cards are punched from time sheets and deduction cards are punched from original source documents. In certain cases of deductions which are constant a master card is used as a deduction order. Taxes are computed and deducted from earnings by machine methods. The withholding tax increased the payroll accounting labor thirty per cent, but there was no increase of personnel since the work is done on the machines. Other payroll deductions include the purchase of government bonds which also uses machine procedures to accumulate bond balances, post individual ledgers, and issue bonds. During the war 8,000 to 10,000 bonds per month were sold, issued, and accounted for. The Humble Company was the only place in Texas issuing bonds for the Federal Government, by purchasing bonds through the Humble Credit Union and using machine methods to transcribe the name and address of the bond purchaser. Another deduction from payroll earnings which is rather complicated is the Annuity and Thrift Plan sponsored by the Humble Company. After one year of service, an employee can participate in the Thrift Plan up to ten per cent of his salary while the annuity is determined on the basis of the annual earnings. The thrift deduction is made each pay period, and the amount deducted is allocated to cash, purchase of Company stock, bonds, insurance, etc. as the employee may desire. The A & T card, used first as a deduction card for payroll purposes, is later used as a medium of thrift accounting which is a completely mechanized process. In the payroll process employee earnings are computed by 602 multipliers as an extension of the earnings cards, Exhibit 17, punched from the time sheets. Exhibit 18. Earnings cards, deduction cards, and master name cards are sorted together, and payroll abstracts, Exhibit 18, are written on the 405 printer. As soon as the abstracts have been written, the same cards are used to write the pay checks. A pre-numbered cut check with an earnings statement stub is used. When an employer has no balance to be paid, a blank form is inserted in the proper place between the numbered checks in order not to break sequence of the check number. The stub on the checks becomesthe employee*s statement of his earnings and deductions. As soon as the machine section has finished the payroll abstracts and checks, the payroll office protectographs the checks, balances the accumulated totals, and forwards the checks to the Treasurer for signature. The machine section uses the payroll tabulating cards to prepare deduction lists, payroll statistics, and bond and thrift accounting. The thrift accounting procedures utilize the thrift deduction payroll card to allocate the amount to whatever unit is desired by the employee. After allocation has been made, the cards are accumulated for a monthly period and postings made to the individual ledger sheets by transfer posting methods. In case employees are purchasing stock in the Thrift Fund, an allocation of purchases is made by machine methods several times a year at average cost price. Employees with sufficient balance can borrow money from the plan and pay it back through payroll deduction. The loan accounting, calculation of interest, preparation of payroll deduction lists, and posting of account ledgers is done by IBM methods. Interest earnings and other earnings from the fund are allocated to employees accounts twice each year by machine use. Each of these additional items is posted to the account at the same time regular monthly postings are made. At the end of the year a trial balance is made and an individual statement is prepared for each participant of the plan. This statement is a historical account of the record covering the entire time from the beginning of participation to the current date. In the past auditors checked back against the trial balance run to verify the accuracy of the accounting. The controls into which the trial balance ties back are maintained by machine tabulations. In 1948 auditing of the Thrift Plan was done through machine methods by public accountants familiar with the machine processes. The preparation of trial balance cards was inspected by auditors, the machine processes followed very closely through the machine section, and all mutilated cards collected by the auditors. The close inspection of machine work assured the auditors of no manipulating of accounts and so very greatly facilitated the work of the audit. Auditing time was cut down approximately fifty per cent. EXHIBIT 17 EXHIBIT 18 REGULAR PAYROLL Humble Oil & Refining Company EXHIBIT 32 RECAPITULATION OF STOREHOUSE STOCK B 7 SYMBOL CLASSIFICATION September, 1847 C. THE CRUDE OIL ACCOUNTING OFFICE REPORTS REQUIRED Computations to determine the net oil run, a summary statement of runs, the Farm Ledger, the division of interest statement, a check register, oil purchase checks, tax reports, suspense listings, and other subsidiary reports are prepared in this Office. SOURCE DOCUMENTS Run tickets and lists of owners of interest in leases are the source documents for the Crude Oil accounting. THE PROCEDURE Cards and Forms — Exhibit 20 shows the original run ticket, the card into which the information from the run ticket is keypunched, and the name card for the division of interest accounting. Exhibits 21 and 22 are the reports used for the Farm Ledger and the Division of Interest Statement. The Flow of Work through the Office -- In accounting for the crude oil produced and run from each lease, a run ticket is prepared in the field for each shipment of oil made, Exhibit 20. In most oases the Crude Oil Department purchases the oil, transports it through the Humble Pipe Line Company, and computes the volume and value of oil. The gauges, temperature, and gravity of oil are shown on the run ticket so that the owner of the lease can determine the volume of oil run. The original copy of the run ticket goes to the lease owner; the copy is sent to the Houston office. Computations using tank tables, adjusting coefficient, etc. are made on the form to determine net oil: (a) Ist gauge—2nd gauge - gross barrels (b) Gross barrels adjusted for temperature, gravity, and BS&W “ net barrels. A card is punched for each run ticket. Exhibit 20. The quantity, value and tax are computed for that run by machine methods. At the end of the month all runs for a lease are consolidated and a summary statement prepared as the basis for paying royalties on the oil (just as in gas accounting). The form used as an oil statement; (Fann. Ledger) is Exhibit 21. The farm ledger is run on a 405 printer with ditto ribbon for reproducing copy. Summary cards are prepared for each lease summary, and these cards are used as a medium of computing the value due each individual interest owner of the lease. Each owner’s share is stated in percentage with eight decimal places to insure accuracy. Each lease equals 100 per cent, and in computing the value of individual owners, the 602 multiplier is used with the decimal accumulating device. This device insures that each lease will total to the penny. Master cards are maintained for the name and address of each interest owner, Exhibit 20. Plastic type cards are being used as the master cards for durability and are giving good service, even being collated with regular paper cards. As soon as the interest for each owner is computed, by use of a working card, the name and address cards are collated with the interest card. This combined file is used to prepare the division of interest statement, Exhibit 22 the check register, and the oil purchase checks. After royalty payments have been made, the same cards are used to prepare tax reports, suspense listings, and other subsidiary reports. The farm ledger and division of interest sheet preparation is step lb page 2, of the chart. Exhibits 22a and b. Checks, statements, etc. are verified in the clerical unit of the Oil Run Division before sending the checks to the Treasury Department for protectographing and signature. National Cash Register machines sign and protect checks accumulate balancing totals, and complete a check register in one operation. Another section receives the checks from the Treasury Department and mails the checks. EXHIBIT 20 EXHIBIT 21 FARM LEDGER Humble Pipe Line Company HOUSTON 1, TEXAS EXHIBIT 22 DIVISION OF INTEREST OIL STATEMENT HUMBLE OIL & REFINING COMPANY D. HUMBLE OIL AND REFINING COMPANY BAYTOW REFINERY REPORTS REQUIRED The Accounting Division of 63 employees at Baytown, Texas, does the shop and field accounting for the Refining Department. Unlike the production which is spread over seventy-two areas, the refining and all the related operations are carried on in Baytown. This includes two Government Synthetic Rubber Plants. Practically all the accounting is done on the IBM machines. Twothirds of the work is accounting for material control; the other one-third is payroll accounting. MACHINE & CONTROL VxIQRK Exhibit ’’*-12. MACHI OPERATION'S Exh fbi’*. t 2 SOURCE DOCUMENTS Source documents for the material accounting include warehouse tickets, invoices, material-received reports, and purchase requisitions. For payrolls the clock card and deduction reports are the source documents. THE PROCEDURE The Installation — Machines in this installation are four 405 tabulators (plus one for the summer run only), a 519 mark-sensing and reproducing and printing punch, one 603 multiplier, one 601 and two 602 multipliers, three collators, five sorters, three 513 reproducing punch, one 517 gang summary punch, one interpreter, four alphabetic keypunches, five numerical duplicating keypunches, four verifiers. Three senior and four junior tabulator operators include two girls. There are also three verifier operators, five keypunch operators, and the following clerical workers: one supervisor, two time-check girls, four comptometer operators doing distribution, and five billing girls. In the employees’ distribution section there is a supervisor and three girls, one using a tabulator. Two men supervise the entire unit. In the tabulating rooms a light floor is used for added lighting, and sound-deadening material on the ceiling helps keep down the noise of the machines* Besides current card files, intermediate storage files sufficient for one year’s records are a part of the Section’s installation* Codes — Initials are used as codes for many designations, such as "FED” to designate "federation dues." Codes include materials, worker classification, etc. Cards and Forms — Some of the card forms used in material accounting are Exhibits 25a and 25b. The green card is the master card for the balance at the end of the months issues credited to stock are punched on the manila card; the orange purchase or invoice card is used for stock control; from the rose transaction or transfers card debits are made to stock and credits to refinery code. A manila card with narrow orange stripe at the top is reproduced from the issues card and run by refinery code for summary. Payroll cards are shown in Exhibit 34. The manila card is the earnings card, the orange card is the master name card, and the yellow card is used for deductions, and a manila card is the detail which has the amount punched in by the multiplier. A green card contains information from the time sheets for distribution of the labor by industrial units. A card with a purple stripe is punched with total hours and amounts for each department and used to compute the average rate for each department. A plastic card is now being used for the master card instead of the orange paper one shown. Exhibits 25 through 32 are forms used for material accounting, each discussed in the procedural flow of documents. Exhibits 35 through 39 are forms used in the payroll accounting, also discussed in a later section. Exhibit 33 is the clock card used for recording time. I. MATERIAL ACCOUNTING The Flow of Work through the Machines — A chart of the procedural flow through the material accounting by the punched card method is Exhibit 24a and b. The tabulating procedure consists of the following twenty-six steps: 1. Key punch; A.lssues — date, ticket number, stock control numbers, account numbers, and quantity. B.Purchases — date, invoice numbers, stock control numbers, quantity and amount. 2. Verify step 1. 3. Sort invoice cards by invoice number. 4. List invoice transmittal showing: invoice numbers, stock control numbers, quantity, amount, and rate. Assign transmittal numbers, Exhibit 26. 5. Sort all detail cards by material control number. 6. Match master balance file with detail cards, merging matched masters in front of matched detail cards. (Review unmatched detail cards*) 7. Intersperse gang punch from master into detail: unit of measure, groups coding, price, and description. 8. Break merged deck into groups; return masters to active file; break issues on unit of measure. 9. Calculate and punch amounts in issue cards (quantity times price). 10. Sort issues on account number and break out construction and bills. 11. List billing check sheets. Exhibit 26, and daily construction cost of material. 12. Reproduce duplicate issue cards and file for disbursement voucher. File original issue cards until end of month. 13. Sort detail cards for entire month on stock control number. 14, Collate master cards (active file) with month’s transaction cards; return unmatched masters to file. 15. List monthly transaction sheet showing opening balance, movements, and closing balance. Exhibit 27, Summarize closing balance. 16. Compute new prices (divide closing balance in quantity into closing balance in amount). 17. Key punch price changes (stock control number and new price). 18. Verify step 17. 19. Break transaction deck into groups. 20. Match price change cards with new balance cards. 21. Reproduce new prices into matched new balance cards; discard price change cards. 22. Match new balance cards (with price changes) with superceded balance cards. 23. Reproduce description and groups coding from superceded balance cards into new balan.ce cards (matched into step 22). Discard superceded master cards. 24. Reproduce from superceded master cards (unmatched in step 22) price, description, and group coding into new master cards (cards in which price did not change. Unmatched in step 20). 25. Interpret new master balance cards. 26* File new master cards with master cards which had no movements. The list in step 15 is run by stock control number and includes inventory of reclamations, welding shop stock, and furniture and fixtures* It is run in triplicate; one copy is retained in the machines sections, one sent to the storehouse accounting section, and one sent to the inventory section. There are approximately 73,000 master cards for material but usually about 39,000 different items in stock. The year 1947 was a busy one, yet of the $8,000,000 issues from a $4,500,000 stock, physical inventories indicated an adjustment error of only $170,000 in credits and $169,000 in debits during the year, or a variance of $l,OOO. About a cycle of turnover per year is expected, but in 1947 it took only seven months for the cycle. All of these cards are used later for many reports. For example. Exhibit 28 is the classification of the storehouse movements for a particular month. These total are accumulated and printed on the IBM tabulator and then typed to make the sheet a convenient size. Exhibit 29, the balance of inventories, is run on the printer from new balance cards and then typed for convenient reference. This balance is added to the inventory figures from sheet 28 to check for balancing back. Exhibits 30 and 31 are sections cut from two types of itemized inventory run once quarterly and once yearly for check. Exhibit 32 is the inventory balance summarized by classes. The T-Sheets (transaction sheets) column must balance to zero. EXHIBIT 24a PROCEDURAL FLOW CHART MATERIAL ACCOUNTING BY PUNCHED CARD METHOD EXHIBIT 24b EXHIBIT 25 DEPT. NO. _DATE Purchase No, Order Sym . No. Invoice Date Quantity Amount TRANSMITTAL No. A36318 6 240 104 10 09 7 6000 306 820 B29719 6 481 6555 10 15 7 2500 747 820 A36318 6 556 220 10 09 7 40000 36 820 EXHIBIT 26 STOREHOUSE MATERIAL INVOICE TRANSMITTALS Material No. Description Ticket No. Code Quantity Unit Price Amount Date * Sts 0 12 0 CEMENT P 0 R T L A N 2 5 10 3 7 2 6 1 0 2 9 1 4 0 0 8 3 3 3 2 A 4 0 O * 3 3 2 * 2 3 0 6 C 0 5 D U L E T S TYPE LB 1 1 - 2 2 5 9 7 5 7 2 6 1 0 3 1 1 4 0 0 1 2 7 6 0 8 Q .0 13 1 F K 2 0 BREAKERS OIL CIR C U 1 25149 7 2 6 1 0 3 1 1 10 0 1 3 6 0 3 1 3 6 9 3 8 0 19 4 CON RIGID STL 1 1 - 2 1 N 1 7 8 2 9 7 2 6 1 0 3 1 3 2 4 2 0 13 18 16 8 3 19 WIRE LEAD COVERED NO 1 2 2 5 9 7 4 7 2 6 1 0 3 1 1 2 6 0 0 4 6 1 1 9 6 O 8 4 4 5 CARLE 3 CONDUCTOR N 0 6 2 5 9, 7 4 7 2 6 1 0 3 1 1 2 0 3 0 0 2 6 5 2 7 8 O 8 4 5 2- WIRE RUBBER LEAD 14-3 6 0 25974 7 2 6 1 0 3 1 1 6 10 0 1 o 115 9 0 2 6 7 1 1 1 - 2 1 N COVERS BLANK W D 25975 7 2 6 1 0 3 1 1 4 0 0 2 1 8 4 9 2 9 14 R E D-U CFRS 1 1-2X3-41 N 2 5. 9 7 4 7 2 6 1 0 3 1 1 10 0 3 5 3 5 9 2 9 16 2X1-1-2 IN CONDULETS-R E D 2 5 9 7 4 7 2 6 1 0 3 1 1 2 0 0 4 3 8 6 9 3 0 2 2 RED 1-1-2 XI -1-4 X M SE 2 5 9 7 5 7 2 6 1: 0 3 1 1 10 0 1 7 17 9 0 12 0 BUSHING CONDUIT 1 1-2 1 N 2 5 9 7 4 7 2 6 1 0 3 1 1 4 0 0 1 2 4 8 q 0 6 2 4 LOCKNUTS C 0 N D 1 1- 2 1 N 2 5 9 7 5 7 2 6 1 0 3 1 1 4 0 0 5 2 0 q 1 2 2 9 C 0 N D U L E T S G U A B - 5 9 1 1 - 2 26401 7 2 6 1 0 3 1 1 2 0 0 6 2 3 1 2 4 6 1 n 3 1 3 0 0 * 2 4 6 8 8 * EXHIBIT 27 STOREHOUSE MATERIAL CHARGED TO INCOMPLETE CONSTRUCTION Period September 1-16, 1947 No. 0 6 0 0 6 0 0 6 0 0 6 0 0 60 0 6 0 1 R E N Des L) 5 1 5 oription and Code 2 1 7 3 6 6 A 1150237 7940020 1 0 6 7 8 4200237 12 3 1 2 2 3 M 9 Ticket No. 3 3 5 2 9 2 4 6 4 2 7 6 9 2 17 9 A 23495 .18 0 0 * Lhienti -hv a*- UNIT PRICE 1 3 7 6 1 1 3 7 6 1 1 3 7 6 1 1 3 7 6 1 1 3 7 6 1 1 3 7 6 1 Amount 8 9CR ICR BCR 8 4 2 * Date O 5 5 8 5 5 “ 0 9 0 1 0 8 0 8 0 4 0 2 0 0 OCR OCR OCR 0 0 0 1 1 1 1 10 0 8 2 3 8 4 13 7 6 10 0 8 10 0 8 5 5 0 4 2 7 5 2 6 9 9 9 9 9 3 2 0 2 2 2 3 0 5 1 V L V STL thro globe 3 - 4 1 M 2 0 0 9 0 5 1 8 1 0 7 3 1 3 0 5 1 1 5 0 2 3 7 2 2 5 3 2 0 OCR 9 0 5 1 8 1 OCR 9 2 5 3 0 5 10 15 0 '6 69 7 2 0 OCR 9 0 5 18 1 OCR 9 2' 5 3 0 5 6 0 3 0 0 0 0 3 8 210 5 2 0 0 0 0 5 18 1 0 9 2 5 4 0 0 * CR * CR * 0 7 1 5 7430004 8 18 6 6 10 0 0 0 1 0 2 5 0 10 2 5 9 2 5 0 7 1 1 0 8 8 2 9 •2 7 69 2 0 0 0 1 0 2 5 0 2 0 5 9 2 8 12 0 0 0 * 12 3 0 * 1531660 0 0 0 3 0 2 7 5 2 ❖ * STOREHOUSE STOCK BALANCES AND MOVEMENTS — SEPTEMBER, L947 Dept. No. Date CARD COUNT PURCHASES (1) ROUTINE (3) INSURANCE (2) SPECIAL (4) OBSOLETE TOTALS 2709 Dr. 430,396.25 53,922.02 14,305.60 11.25 498,653.12 11 Cr. 63.92 87.60 151.52 Adjustments 36 Dr. 2,480.86 283.09 2,863.55 5,627.50 4 Cr. 25.55 25.55 T-Sheets 604 Dr. 16,799.70 27,649.55 2,402.85 46,861.01 608 Cr. 18,943.53 25,514.63 2,402.85 46,861.01 Transfers 568 Stock Corrections (4) 21,922.79 1,654.22 813.42 24,390.43 34 Mfg. For Stock (5) 2,846.58 1,889.37 4,735.95 77 Corrections (6) 25,018.89 44,328.28 1,402.98 70,750.15 608 Reclamation (7) 46,690.82 3,363.48 56.39 50,110.69 260 Returned Excess (8) 22,877.17 3,084.52 9,067.10 35,028.79 11 Dismantled (9) 536.77 472.30 1,009.07 119,893.02 54,319.87 11,812.19 186,025.08 ISSUES FROM STOCK Corrections 11,207.07 Cr. 23669 493,292.93 Cr. 71,110.03 Cr. 31,499.77 Cr. 595,902.73 Cr. Exhibit 29 INVENTORY AND CLASSIFICATION OF STOREHOUSE STOCK BAYTOWN REFINERY SEPT. 30, 1947 ROUTINE INSURANCE SPECIAL OBSOLETE TOTALS 3,024.614.75 1,292,419.86 359,701.26 2,546.86 4,679,282.73 Exhibit 30 STOREHOUSE MATERIAL INVENTORY SEPT. 30, 1947 13 Class „ Description COCKS EXHIBIT 3j 14 COCK REPAIR PARTS 16 COMPRESSORS AMR RARtt A i? ” 17 ■' • . • COMPRESSORS ANO PARTS ‘ ' ! j ‘ 18 containers ano container FILLING ANO SEALING ACCESSORIES 2 2 ELECTRICAL EQUIPMENT 26 exchangers CONDENSERS evap ORATORS COOLERS REBOILERS ANO PARTS 30 ? F ( f ( glass ano glazing materials 32 HARDWARE BUILDING 34 HOISTING CONVEYING ANO MATERIALS HANDLING EQUIPMENT INCLUDING INDUSTRIAL SCREEN ING DEVICES < 13 6 HOSE AND HOSE FITTINGS EXHIBIT 31a Class 01 d Balance Purchases T-Sheets Transfers Issues New Balance 6 5 9094350 1025288 475280 1 7 0 2 6 3 2 CR 8892286 6 7 1 7843428 568363 1 5 7 9 7 5 9 7 4 2 2 CR 17830166 6 8 1 4249141 608756 CR 316569 8 0 4 8 9 1 CR 14369575 7 2 6567468 306936 7 9 0 3 8 18 9 3 1 5 CR 6764127 7 4 861856 10 22 60 CR 759596 7 6 665998 112613 3 35 2 5 3 3 008 0 CR 482056 7 8 232583 116579 CR 18 9 2 3 1 CR 159931 8 0 754983 6 3 4 4 0 CR 691543 8 2 1900492 797904 401822 1 7 01 2 9 CR 2930089 8 4 2 1628348 1498898 CR 525148 1706632 CR 21945762 8 6 3306356 1488758 7 3 9 6 6 3 5 7 1928858 CR 2933352 8 7 1004684 192997 CR 6 8 9 9 3 3 7 9 3 1 CR 866649 8 8 3 8852691 4860558 2 8 8 CR 4688438 2992024 CR 45409375 8 9 1 5815636 1955273 8 1 7 4 8 CR 17689161 9 0 7695732 111019 1 4 5 1 6 9 CR 2 0 8 2 9 9 9 8 0 4 0 CR 6684371 9 2 3 0926531 538334 3847861 4 2 4 9 1 4 9 CR 31063577 9 3 6683348 1916296 252334 1796863 CR 7055115 9 4 1 0461539 207923 6 7 18 105002 2 7 2 3 2 4 CR 10508858 9 6 3 6 2 8 6 124236 16 10 8 3 9 7 8 CR 7 8 15 4 9 8 121374 6 5 0 9 8 6 0 3 7 6 8 6 4 CR 110205 458506674 50410355 9 9 1 CR 18602508 5 9590273 CR 467928273 EXHIBIT 32 RECAPITULATION OF STOREHOUSE STOCK B 7 STOOL CLASSIFICATION September, 1947 II. PAYROLL ACCOUNTING The Flow of Work through the Machines -- Payroll accounting consists of the following steps: 1. Clock cards, Exhibit 33, in batches of 25 are given to comptometer operators, who summarize hours by rates and occupation codes, with no computations. 2. Adding machines total the number of hours and adjustments if there have been previous errors etc. They give a predetermined total to go to the keypunches. 3. Employee number, hours, and rate are punched in IBM cards. 4. Cards are electrically verified. 5. All earnings cards have master cards and vice versa. The cards in blocks of 500 are matched in the collator with master cards; if there are no master cards for some, they are checked to see why, if a worker has no detail card, it is assumed he is (a) time checked (eligibility check — Anybody can punch the clock.), (b) terminated, or (c) sick. The cards are then summarized. 6. The rate is multiplied times hours on the detail cards. 7. Detail cards are matched with master cards and started through the printer to summarize. Personnel data are punched in, annuities, thrift rates, and class of exemption for withholding tax are put in the summary cards from the master cards. Summary cards are balanced back to check correctness. 8. Summary cards are run through the multiplier 603 three times. This multiplier runs 6,000 per hour, six times the rate of the old 601. Gross earnings are here multiplied times each rate to give the employee* s withholding tax. The base for computation must include the part of thrift income; therefore, for example, if the Company’s contribution is 3%, then 103% times the gross gives the base from which to figure the social security and withholding tax. One run is made through the multiplier for each rate for deductions. 9. The master card is punched with the exemption, the breaking point, the percent, and the corrections necessary for withholding tax. Cards are sorted on the breaking point and then on the number of exemptions, and the percent and correction are punched into the earnings card by the 513 reproducing summary punch. 10* Cards for employees who have other earnings amounts are held out and computed manually; these include such things as time checks in advance. A time check is vacation or termination check. When he starts his vacation, an employee is paid for the time worked up to and including vacation. As indicated in number sa, b, and c above, these are listed on an abstract and a personal check is made of each individual to see what has occurred. 11* Master cards are sorted on x or code for elimination from the file. Then extension is made to detail card for withholding tax, earnings, and percent, and the correction is subtracted — all on the multiplier at one operation. At the same time old age and survivor*s insurance and withholding tax are punched. The cards are rerun through the multiplier to verify* 12. The earnings cards or corresponding master cards are matched with miscellaneous deduction cards, which are in employee-number order© Those that match are pulled from those that have no earnings. Deduction cards of those with no earnings are checked to see that no one is missed. A new operation also punches the total of calculated deductions and base net (difference between earnings and calculated deductions)© The master cards, earnings cards, and deduction cards are then sorted on employee number. A dummy deck of the employees with no earnings is thrown in so that each can be written on the abstract for checking. A code separates this dummy deck so that they can be ’’kicked” out before writing the pay checks. In this way every employee is on the abstract, but only those who are due a check are paid. 13© The payroll abstract, Exhibit 36, is run on the printer. Of three copies, one is retained in the division, one sent to the Comptroller’s Office, and one sent to the Refining Accounting Department in Houston. The cards are then sorted on the code to pull the no-earnings employees. 14. Checks are written on the printer. A check form is Exhibit 7. A new improved form was put into use April 1, 1948. 15» The checks are then protectographed and balanced back to the total at the bottom of the payroll sheet under w net.” The total net plus the total deductions = gross. Two payrolls are written for the refinery (one for negroes and one for white employees) and one for each of the two rubber plants. Each group is in straight alphabetical order, sorted for this purpose by means of the employee number. Each employee keeps his same number wherever he goes as long as he works for Humble. Humble has about 18,000 employees, and with this sequence it would be possible to number 100,000. About 5,200 employees at the refinery are on the hourly payroll; approximately 1,400 refinery employees are on the salary payroll written in Houston. If deductions are greater than the pay due, the cards are rerun after adjusting to make the balance zero. Reports written after the payroll is finished include a recapitulation of the payroll, by plants (Exhibits 38a and b), with as many totals as the printer will carry, which establishes a control for the later reports: labor distribution, thrift, social security, etc. Exhibit 38a is a copy of the recap sheet, which is run on the tabulator and then typed. An explanation of abbreviations will assist in interpreting it: Abbreviation Used Meaning A & T annuities and thrift Emp. employee’s taxable proportion Co Company’s taxable proportion OASI old age and survivor’s insurance Gro gross DED deduction REG. P.R. regular payroll T.C. time check M.L. Dep. Reg. military leave, dependents, regular M.L. Dep. T.C. military leave, dependents, time clock M.L. 2 Mos. T.C. military leave, two months* pay A & B annuities and benefits (sickness) RUR SR 10 Rubber Reserve, Synthetic Rubber Plant 10 Temp. temporary (workers who are Refinery employees) MBA mutual benefit association (group hospitalization) FED federation dues The two amounts added to the Refinery Payroll amounts at the bottom, are the detail which supports the checks paid these rubber-plant employees. The amounts are determined from time clock cardsj two clock cards are kept for these workers, one to be sent to Humble and one for the rubber plant records. A recap of deductions, Exhibit 39, is also run on the machines for the Refinery and each of the rubber plants. One-time deductions on the payroll (Red Cross donations, retail sales to employees, safety equipment) are punched manually in cards, with minimum information that will allow matching these cards with the master cards. A thrift report is made to send to the Treasury Department -- Annuity and Thrift Accounting Office with a reproduced tabulating card for each individual. An annuity report run at Baytown shows the amount contributed by the Company and by the employee (miscellaneous complete total and percentages). Supplementary payrolls, an analysis of sickness benefits by departments, etc. are additional reports. Many individual accounts must be separated: Laboratory expenses are charged to research and development; government rubber plants are charged with all expenditures on their payrolls, and therefore, the Company’s contribution on those are set out (group hospitalization, for example). The labor costs must be distributed according to the time sheet. Exhibit 35, made out by the gang pushers and approved and turned in by the foreman* The information at the top of the time clock card, Exhibit 33, is put on by an addressograph. At the end of the period the old cards are pulled and racked up at the clock house* At the end of each shift the time sheet is turned in by the foreman. The time-keeping division writes the amount of time on the clock card, checking to see that the time reported is correct according to the right card. This is for straight time employees. Recapping is made of rates and hours at the top of the card by comptometer operators, and at the end of the week this is punched into the IBM cards. This becomes the source document for the payrolls. The time sheets, Exhibit 33, are extended daily by the comptometer operators, and totals should agree with the total payrolls© These are the source documents for distribution of hours by departments and codes. Hours are extended by the code, on the 603 electronic multiplier, for the amount charged on each group. The record is kept by departments and by days, as shown, and the ’’Total” column is summarized on an adding machine and this amount punched into summary cards. They are coded by departments and run through the printer to get the amount by departments. From this figure an average is derived for each department and for each job. There would be approximately 250,000 cards per month if this were recorded by individual. A master card deck containing all the good codes is matched with this deck to determine whether there are any incorrect codes in the summary cards. If an error is made in punching the cards, it can be found by checking the time sheet 5 if the error has been made by another, it must be located and corrected. Out of 60,000 cards, not more than a hundred cards have to have codes looked up for correction. If an error is found on the employee’s time report, as soon as the error is discovered, it is recorded on a sheet like the time sheet except that it is green. The correction is posted to the clock card and goes through each channel for distribution. To spot check for correctness, half a dozen jobs are picked out for one pay period and checked. As the average rate is computed and applied for prorating expense over all jobs, overtime is recorded by the job so that investigation can be made as to why one job runs excessive overtime. EXHIBIT 33 EXHIBIT 34 EXHIBIT 35 HOURLY EMPLOYES TIME REPORT BAYTOWN REFINERY EXHIBIT 36 PAYROLL EXHIBIT 39 1-15-48 SR 43 DECOCTIONS COLLECTED A & T GRO 495,837.44 6,979.39 5,752.37 474.24 10.867.55 DEP 120,581.01 1,906.47 279.18 81.63 2,750.77 NET 375,256.43 5,072.92 5,473.19 392.61 8,116.78 REG PR TC ML DEP REG ML 2 MO STC A & B INS 31.32 2.25 18.02 INC TAX 50,126.61 657.82 279.18 79.38 1.635.26 BMP 33,911.03 493.86 965.29 co 22,584.37 324.41 637.82 TAXABLE 11,303.80 162.32 319.58 HOURS 358,743.98 5,106.75 8.664.00 OASI 2,140.05 32.82 51.59 52,778.25 35,370.18 23,546.60 11,785.70 SR 10 & SR 43 TEMP 372,514.73 5.640.92 2,172.87 520,021.98 6,795.95 125,599.06 394,422.92 366,873.81 513,226.03 Exhibit 38a REFINERY PAYROLL DECEMBER 1945 A & T REG OPER INS mum 4,100.91 EMP 2,938.83 1,922.43 TAXABLE 961.68 HOURS 28,282.00 OASI 143.22 39,720.54 PED 10,084.40 NET 29,636.14 TC 8.29 17.08 11.35 5.68 264.33 2.15 292.23 42.85 249.38 MC DEF REG 19.93 272.80 19.93 252.87 A & B 168.92 68.94 46.30 23.21 648.00 912.40 237.86 . 674.54 4,298.05 3,024.85 1,980.08 990.57 TEMP 29,194.33 384.42+ 145.37 41,197.97 527.29+ 10,385.04 30,812.93 29,578.75 41,725.26 RUR SR 43 PAYROLL DECEMBER 1945 A & _T INS INC TAX EMP CO TAXABLE HOURS OASI GRO PED NET REG OPSR .75 8,720.09 5,664.81 3,723.17 1,862.62 58,003.98 341.17 79,939.92 20,721.94 59,217.98 TC 36.87 32.52 21.19 10.61 534.50 3.49 663.59 170.21 493.38 ML DEP REG .90 125.04 .90 124.14 A & B 5.25 349.92 151.54 2L«?0_ 49.83 1,688.00 2.060.84 528.42 1.532.42 6.00 9,107.78 5,848.87 3,843.86 1,923.06 temp 60,226.48 5,256.50* 344.66 82,789.39 6,268.66+ 21,421.47 61,367.92 65,482.98 89,058.05 Exhibit 38b RUR SR 10 PAYROLL DECEMBER 1945 III. MISCELLANEOUS ACCOUNTING USES OF THE MACHINES Flow of Work through the Machines — Miscellaneous uses of the machine installation at Baytown include the making of personnel reports. These show employee number, name, department, marital status, military experience, birth date, date employed, theoretical date or employment, and length of service (present date minus theoretical date of employment). Much reconciliation is done on the machines. Certain controls are carried, such as an MBA insurance master deck which corresponds to the insurer’s records. These are matched with the employee’s deductions or collections on the collator and reconciled with the payroll records and the insurer’s records. A master deck is made also on investments in furniture and fixtures by items: number, description, location, cost, and classified into office machines and furniture. Various reports are run from these cards. Industrial unit distribution is made of mechanical equipment such as trucks used in the refinery. Some accounting and reports are done only partially on the machines, such as charges to construction (expense and investment parts). The ledger is kept by hand, but the machines run the vouchers. Labor transfers and special material invoices such as to Brown and Root are kept partially by hand. This installation runs the deductions originating in Baytown and sends them to the Houston office. The distribution is verified by matching the master cards with the cards sent by the Houston office. Exceptions are listed for use by the cost accounting group o Each of the Government rubber plants has a warehouse and sends over issues* Humble punches them in much the same manner as is used for Humble issues and runs vouchers by code and transmittals of issues by stock control, two runs from the same deck* Humble then bills the Government plants for the time used® The Chief Accountant of the Refining Department, stationed in the Houston office, has used the machines since 1924, with installations in Houston and Baytown. The Division formerly had two printers and one 601 multiplier. With those two machines two employees did in thirty-three hours the work that is now done by the electronic multiplier in four and a half hours. With this newmachine 6600 cards were run the first hour, with an error or deviation of only 13. The Chief Accountant thinks the quality of the workers has improved; they now have time to THINK about their work. Employees replaced by machine efficiency are placed in some other part of Humble’s work; each man is placed in his best field of operation. As an example, a supervisor other than the regular supervisor of operations is placed in charge of the payroll run at the Baytown installation. He has complete control of the machines process during the run of the payroll. This is his specialty and he does an excellent job. This is possible where all other machine operations are discontinued during the peak period for one special operation. The procedure for material accounting at Baytown has been perfected to such a degree that the New York Office of the International Business Machines Corporation has prepared a case study of the installation. The only tin smelting plant in North America observed the operation and copied the procedure used by Humble. For machine workers, as throughout the Humble organization, an extensive training program is carried out* An increasing amount of time is given workers for thinking about their work and improvement of procedures* An intensive effort is being made to encourage accountants* familiarity with the machine process so that the most efficient use can be made of machine accounting methods. CHAPTER XV A WHOLESALE AND RETAIL MOTOR COMPANY IN DALLAS REPORTS REQUIRED A motor company in Dallas which prefers to remain unidentified sells motor cars (of more than one trade name) and accessories and uses IBM machines in practically all of its accounting and statistical control® The uses include orders incoming and outgoing, invoices, shipping tags, accounts receivable, labels for advertising literature, payrolls, and all statistical reports. SOURCE DOCUMENTS Source documents include customers 1 orders, factory invoices, and payroll reports# PROCEDURE The Installation -- The Company uses one alphabetic punch, one verifier, one 405 tabulator with 44 counters, one reproducing summary punch, one collator, one sorter, one multiplier without cross-footing, and one interpreter. Equipment also includes filing cabinets for cards and a tub file® The machines division employs, besides the supervisor, two girls and three boys as operators. Codes — Parts and cars are numbered; but some classifications, such as dealer and wholesale or retail, are designated by true codes. Cards and Forms — Four cards of the design attached. Exhibit 1, are used: a plain manila for the detail card, with a narrow blue stripe for the replenisher, a green stripe for the name and address card, and a pink stripe for the invoice card. The fields for the various uses are easily identifiable. The summary card contains the folloxving fields and is plain manila: name, part number, class, fourth-quarter issues, third-quarter issues, second-quarter issues, on hand, on back order, on order, x, and date* Exhibit 2 is the invoice form used and Exhibit 3 the shipping tag for parts. Flow of the Work through the Machines — When the installation was put in a year before this study was made, the machine operators punched a complete file of all parts in the warehouse for wholesale and retail sale, taking the information from a small yellow ticket sent with the parts from the factory. These cards were verified and reproduced into the replenisher card. Since there is a card for each part unit, they are placed in a tub file as a stock record. Either the detail cards or the replenisher cards are used to make a tab which is pasted over each folder which fits into the tub file* Detail cards for parts are now made from the replenisher card for as many parts as are received and shown on the packing slip sent with each shipment* For all orders received and for all orders made up from summary for ordering from the factory, cards are pulled from the tub file® All orders from customers, orders to the factory, and receipts are made from these cards. The factory also uses IBM machines to put the name on each sheet; this Dallas motor company saves el even-twelfths of the time by putting the name on only the first page of each document. Therefore, the Dallas company sends out the invoice within a half day while it takes the factory a week after the order is made up. The company keeps a name and address file for all customers* Each dealer has a code number given him by the factory* and these are used for dealer identification on all invoices and orders* For independent dealers, the company in Dallas assigns code numbers* For each customer there are two sets of three cards each—a name card, a street address card, and a town and state cardo Duplicate cards reproduced from the customer file and used for invoicing and shipping documents, are not destroyed but are kept to be used again, perhaps for back orders. The invoice card for each item shipped is punched by hand except for the prepunched invoice number. These cards are merged by the collator with the name and address cards, the detail cards being kept in whatever order the customer account may require. The invoice is run on a continuous form, Exhibit 2, with a carbon copy which is the shipping order. With the customer identification tag (Exhibit 3) made from the same cards, the shipping order is sent to the Shipping Department to be processed. The upper left-hand perforated section of the shipping order is torn off and pasted on the package for shipping. The shipping tag is torn from the continuous form of tags, folded over at the left end for strength, and wired to a part through the holes at BOTH ends. Tags for items not in stock are sent to the customer to indicate back-ordered items, so that he can file them as his back-order file. When the order is completed, the shipping order is returned to the machines room and the cards for all items that have been back ordered or canceled are pulled. Then the items and unit prices are multiplied on the multiplier and the invoices completed and mailed. To the invoice form shown here, Exhibit 2, the new forms have added two columns, "discount” and "tax and handling." For filling back orders, the Company finds it easier to use the original card file by part number or dealer code. Back orders are allocated according to receipt. At the end of a period the machines workers cumulate shipments, receipts, back orders, back order cancellations, and back order releases and make a stock balance card, from which they prepare a stock summary. This summary shows the same columns as the summary card, omitting the quarterly issues and, of course, the x column. The summary is analyzed and the factory order prepared from it. This order is often a hundred pages in length. Cards for these items are pulled, punched, and matched against the back order file, and from them is made a list by which back orders are to be allocated. Handling of accounts receivable has been taken over by the machines* The Company payroll is kept on the IBM machines. Some workers are paid weekly, some on an hourly basis, some on commission, some monthly, some on a fixed salary, and some on salary and commission. The checks and check register are run in three hours each week for one hundred employees. The payroll is started on Friday morning for the weekly workers, and the workers are paid on Saturday. The payroll register is run on blank, ruled continuous forms. Name and address labels in continuous form are run from the name and address cards and torn apart for addressing all advertising literature to wholesale customers. At the time of this study the company had ten filing trays full of (approximately 20,000) item master cards, four trays inactive, and 2,500 to 3,000 different items handled through the tub file. The master cards, which have location numbers, are run and multiplied by net price and listed to check against the inventory. All inventory parts files are handled by the parts house across the street from the machines room, the office, etc<» EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 IDENTIFICATION TAG CHAPTER XVI NARDIS SPORTSWEAR REPORT REQUIREMENTS Nardis Sportswear of Dallas is a manufacturing establishment operating four factories making sports clothes for women of three age groups: teen-age, misses, and junior. All their accounting is done on the machines with the exception of the actual postings to each accounts receivable account. The machine work includes orders, invoices, customer statements, freight and express bills, sales analysis, inventory, payrolls, accounts payable, payments, cost accounting, tax reports, reports to the workers’ union and to Texas Employment Commission, and other reports used for administrative analysis and control. SOURCE DOCUMENTS Customers* orders, creditors’ invoices, end customers’ return credit lists are the only source documents used. All other information is kept originally and directly on the IBM cards. PROCEDURE The Installation — The machines room is in one factory building, across a hall from the receiving room into which all documents and original record cards are sent first and in which the postings are made to individual accounts receivable. Five girls operate three keypunches and one verifier and check orders* One lady supervises this work and does clerical work* Two men operate the other machines, consisting of one 601 multiplier, three 080 sorters, one 077 collator, two 405 tabulators, two 513 reproducing summary punches, and three 552 alphabetic interpreters. A supervisor-accountant is in charge of the installation and its work. Codes — All information is coded except quantities, prices, and dates. The items coded include line of garment (teen-age, misses’, and junior styles), color, style of garment, special instructions, type of operation, worker number, and customer number. Cards and Forms — Three Nardis forms are attached: the order card. Exhibit 1; the piece work card. Exhibit 2; and the payroll time card, Exhibit 3. In addition, a detail card and a summary card (with yellow stripe) are used. Exhibits 4 and 5 are respectively a copy of the combination invoice continuous form which is run with five carbon copies, and a copy of the payroll register. Other reports are run on plain paper in sheets or on rolls. A. ORDERS Flow of Work through the Machines — When a customer’s order is received in the receiving room, it is checked for correct reference, price, and the salesman’s accuracy in recording style and other specifications. A card is then punched for each item, verified and sent to the machines room. In the machines room the cards are interpreted and checked for correct entry of the style etc. On the order card the field covering columns 49 through 65 is captioned (and shown in the interpreting field at the top of the card) by the three lines carried, assorted by rows, each size in the respective line being listed in order. The top row shows teen-age styles, the second row misses 1 styles, and the bottom row junior styles. The number of each size ordered is entered in the field below the caption showing that size in the row corresponding to the style number in a preceding field. In the style numbers, 100 series are misses 1 styles, 200 series junior styles, and 300 series teen-age styles. The Company makes no "stock" lines (not changing) but all "style” lines (about six lines per year, with approximately 150 original numbers on every line); a style may be made in eleven different colors and all sizes for that line. Salesmen send in orders by the day, and the sequence of the order is punched in the card. Cards are sorted and tabulated by order, showing under each order the style number and size for each piece. Wien orders have been received and tabulated for enough of any one kind for the cutter to begin cutting a garment, the tabulated orders are sent to the cutting room. s There patterns must be spread for economy, small pieces fitted among the large, and varied sizes and shapes fitted for the best use of the cloth, but each entire garment must be cut from, the same bolt of material in order to insure uniform color. The cutter takes the sort by color and size and sets up the cutting plan to supply the orders already in, plus a reasonable addition to be expected before shipping time. Garments made from the odds and ends of colors not used in filling specified color and size orders are used in filling the ’’assorted” items on orders, according to size ordered, and may include any variety of color left in stock. For example, if there are no yellows left, the assortment contains no yellow; if more green is left, assortments contain more green garments. When the cutting is completed, the garments are sent to the factory to be made up. From there they are sent as finished garments to the Shipping Department packing room. TOiiXe this is being done, all items are pre-billed in the machines room on the continuous-form invoice which is Exhibit 4. This invoice form is in six copies* The first two copies are sent to the packing room along with a copy of the machines list by style and size which was the order to the cutter. A clerk takes the invoice form to the racks on which the garments are sent in from the factory and pulls the proper sizes and colors to make the order© Then, he makes up the "assorted" items from the left-over garments# There should always be more garments than the number listed on orders, never fewer# If there are any short, they are considered held back as damaged, and a check is made for them. The list by style and size is used to check the rack of garments into the room and out on orders# From the clerk, the order goes to the packer, who also checks to see that the order is filled correctly. Extensions on the invoice have been checked by means of the IBM multiplier in the office# The invoice then needs no further auditing and is packed with the garments. This procedure is more satisfactory to the customer because he can check and price as he unpacks# It also saves Nardis approximately three thousand dollars a year postage. It also prevents any loss of invoices in the mails. The second copy of the invoice form is the packing slip; after the order is filled, the top section is torn off below the address and used as an address slip for the package to the customer. The third copy of the invoice form is the express receipt, with piece price and total prices blotted out by printed characters# Copy four (printed in red) is the posting copy for the accounts receivable posting by hand© Number five (marked F) is the file copy for the machines room# Number six (marked S) goes to the salesman# F and S copies are left without printing other than by the IBM machine; this is for economy, since both users of these copies know the form and need no printed indication of the meaning of the various specifications# From the S copy the salesman can figure his commission which is also figured in the machines room from the same cards which were used to print the invoices# The total amounts extended by the IBM multiplier are added by salesman and multiplied by the salesman’s rate to get his commission© In the machines room the order cards are filed by style number sequence and old ones removed, so that from the file it is possible to determine what is on hand and being sold. Cards for credit invoices on merchandise returned are the same as for sales except that they are pink. These cards are credited to the accounts receivable and deducted from the salesmen’s sales before commissions are figured. Cards are punched with each customer’s name and account number and sorted in numerical sequence so that they will be filed in alphabetical order. A yellow card is used for the name and two or more blue ones for the address. The file was started with cards for all customers then on the accounts receivable ledger, punched alphabetically, listed, and assigned numbers in alphabetical order, leaving spaces in the number sequence for additions which are continually being made. These cards are maintained in a master file, with name card followed by the address cards (also coded and filed numerically). Invoices and statements are headed from these cards. For invoices, the name and address cards are first merged with the other cards by means of the collator, so that items can be filled in on the invoice at the same run on the tabulator. Nardis has approximately ten thousand customers, half of them active. Lists of inactive customers are used for sales promotion and for checking for restrictions to assure only one dealer to a town or section of a city. EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 invoice 36629 PAYROLL REGISTER NARDIS SPORTSWEAR EXHIBIT 5 B. PAYROLL Flow of Work through the Machines — All work for the payroll is done on IBM machines. Into a blue master card is punched the name of each employee and an assigned clock number which is never changed or given to another employee subsequently employed. All employees punch the clock except the executives of the Company. The card form shown here as Exhibit 3 is pre-punched with the employee number. Each employee records his work time on the card by means of the IBM time clock, and the card is used to compute each week’s payroll. This card plus the detail card give a check on the garment machine use© The employee detail card is used in the factory operations. Some work in the factory is done by the piece, some by time at a rate which is the average for that worker* For workers on the time rate, the detail card contains fields for job, class, starting date, social security number, and name. The finishing date is put in when the card is turned in. Record of piece work was formerly kept by each employee tearing off a coupon from the work order as each operation was completed. This coupon was sent to the payroll office, where it was checked and extended. The present process is done by machines except for the worker* s writing his number in the proper field on a card when his work on a piece is completed. For each separate garment to be made, a pre-punched card like Exhibit 2, the card with the rose stripe through the center, is placed in a plastic case made especially for Nardis. The case, made card size, holds several cards and hangs on the wall. The card cannot be dropped out by accident and will stay in perfect condition for use on the machines with only slight care by the workers who mark it o The worker can remove the card with ease, and he places his number on the card as he finishes his operation and passes the card along with the garment. Each worker checks the number against the preceding worker’s type of work as he in turn records his own operation. The only blank left on the card when the workers have completed the garment is a possible space for price if it was not known when pre-punching was done. This is filled in later in the payroll office, where another check is made of each worker’s number against his type of work o This payroll ticket plan involves the use of approximately one hundred thousand cards per week, for 800 piece-work employees and 200 workers on a time basis. Savings on the payroll ticket plan total thousands of dollars per month, eliminating thirty-five workers formerly used for similar work. In addition, the cards furnish a compact permanent record. The three work cards are used to compute each week’s payroll. The lefthand section of the clock card is filled in by duplication from the master card. For the time workers, computations are made from the clock record and rate to arrive at the pay amount. For the piece workers, the wage is computed from the piece record and rate. On Friday, which is the end of the Nardis work week, these pay amounts are punched into a summary card used for writing the pay check. Paper checks in continuous form are used on a 405 tabulator with bill feed, and signatures are put in by hand stamping machine. The check has a stub at the left end containing a detailed statement of earnings and deductions. The checks are checked against the cards for error© There has never been an error found on a check since the machines have been in use by Nardis, The summary cards are used also for preparing the payroll register, Exhibit 5, run on continuous forms in duplicate, with names in the same order as the checks were written. This register is kept for permanent record. Bank deposit for the purpose of payment is made according to the register. From the same cards a summary of recapitulation is run on a plain sheet, showing total payment by class of worker, by floor, by factory, by department, etco in making administrative recommendations. One copy of the recap is sent to the workers’ union, one to the factory manager, and one is kept for the office files. The general ledger posting is made from the recap sheet. At the end of each quarter the payroll record summary c ards are used for the Texas Employment Commission, tax, and other reports required by the employer. Quarterly reports are made to the workers’ union also. One per cent of the earnings is paid for health fund, and payment is made by the employer by contract. Cards are pulled for union members by running them through the collator. Amounts on these cards are totaled and the health fund payment computed. Salesmen’s commission is computed on the machines by running a total of sales by salesmen from the order cards and multiplying by the commission rate. Their checks are written on the machines also. C. ACCOUNTS PAYABLE Flow of Work through the Machines -- Accounts payable are kept on the machines also. Cards are punched for all invoices received, totals are accumulated, and payments are made by machine check. A report is made with breakdown as to piece work, trim, etc., using codes for each classification. This record is especially valuable when invoices are lost. Also, many sortings and checks are made possible. The cards are sorted and run by vendor’s number and totaled, for example; then his balance due is checked against his bank balance maintained for payment. Use of the machine payroll ticket plan for the 800 piece-vzork employees and 200 workers on a time basis has eliminated thirty-five workers and saves thousands of dollars per month for Nardis. An error has never been found on a check since the machines have been in use by the Company, invoices are ready to go out packaged with the garments, and invoice errors are practically non-existent. Coordination of the work of the four factories and checking on efficiency and waste are made possible by use of the machines in a degree not practicable by hand methods. CHAPTER XVII SANGER'S, DALLAS REPORT REQUIREMENTS At Sanger’s in Dallas, Texas, IBM machines are used on sales only. The sales audit includes extension of the items on each sales slip and the computation of commissions, discounts, taxes, postage, gift-wrap charges, etc. The biggest problem is the accurate record and report to the Government on the various taxes included in sales. Some departments in the store are concessions, and their sales are run in the same way but separate from those of the other departments and the reports on these sales given to the Concessions Department each. day. Reports for administrative and accounting purposes are run on sales by sales person, by departments, by sales book number, and by cash and charge sales, as well as a summary of taxes and discounts. SOURCE DOCUMENTS The only source document used here is the sales slip (called a "check") which is made in triplicate by the sales person. Each has her individual book containing fifty checks, in which she records both cash and charge sales. Each check contains book number and check number. PROCEDURE The Installation — The machines room contains for use in sales accounting four IBM keypunches, one sorter, one proof machine, one 285 tabulator, and during the busy season two extra keypunches and sometimes an extra tabulator* Several comptometers are used by hand for computing control figures. The supervisor uses thirty other employees, including clerical workers. Codes — Each sales person has a number, each book of sales checks used by her has a number, and each check itself has a number. Cash sales are coded w l” and charge sales "3”. Various extra charges are coded, such as gift-wrap charges, discounts, etc. Cards and Forms — Exhibit 1 card form is used for most sales. Since the desired information fills but one-third of the card columns, the card is reversed and used a second and third time. The three divisions are shown numbered on the card in order of use, the sections being assigned to three successive months* sales* A card with an extra stub is used for sales showing an extra charge or deduction. No printed forms are used. All reports are run on plain paper and headed by hand or on typewriters. The forms used are, therefore, shown as the report is discussed in the following paragraphs. Flow of Work through the Machines — Although all sales slips (checks) are treated identically, charge sales, cash sales registered on a cash register, and cash sales not registered on a cash register are kept separate. At the end of a day’s business the cash from the cash registers is picked up by an inspector (cashier), added by her, and must balance with the cash checks. Employees get a discount and their purchases are not registered on a cash register. Some of the petty cashiers in the sales departments carry boxes into which they put the money collected on sales of small items; they turn in their sales along with the money at night. Some sales persons other than these turn in all the money at night, but some have a cashier who punches the register for all sales for cash in the department, and this cashier is responsible for all this record at night. Early in the morning the sales checks are sent to the file clerk, who separates the three copies and keeps the original for filing. She balances these copies, files those that balance, and investigates those that do not balance. The remaining two copies of the balancing checks are sent to the machines room* The workers in the machines room begin about eleven o’clock each morning to extend the previous day’s sales checks sent in by the filing clerk* Both copies of the check received in this room are extended* As this is done, they are separated into kinds of sales; cash, charge, sales with extra charge or deduction, sales from, a department where all transactions are shown on one cash register tape and are the responsibility of one person, cash sales not shown on cash register tape* All the sales from a department shown on one cash register tape and the responsibility of one person are punched on one card in total* All other categories listed above are kept separate* Sales not shown on cash register tape include deliveries and sales at a discount, whether to employees or to others* Sales showing discount, employee’s discount, postage or tax charges, gift-wrap charges, etc. are marked with a red pencil and then punched on the card with the extra stub, in ’’books" of about fifty. All sales checks to be punched on the regular three-section sales card are run through the IBM proof machine, each category in a different run* In this machine they are sorted alphabetically by ledger and the amounts listed* As each pocket in the machine (representing an alphabetized ledger) is filled, the operator totals and takes out the checks for that ledger and the tape containing the listed amounts and the total* The duplicate copies of the checks are added on a comptometer for comparison with the proof machine tapes* As the checks come from the proof machine, these first copies are used to punch cards like Exhibit 1. Both book and check number are punched in the cards, along with the sales person number, kind of sale, day, department. amount, and ledger number. After the cards are punched, cards and checks are separated, the cards placed in a file box in order, and ledgers of cards separated by a pink card. The tabulator operator feeds the cards in this order and tabulates the amounts by ledgers and in total© She then checks each ledger total against the total on the back of the last check in that ledger, computed and written there by the comptometer operator. If the tabulator total does, not balance with the penciled total, the cards are pulled for that particular ledger, listed on the tabulator, and checked for error. Cards in error are repunched, and totals are tabulated again and checked with the penciled totals as before. The grand total from this first run is the sales for the day. Besides this amount and the totals by registers, many other reports are run from the sales cards. Sales are run by departments, with refunds, credits, etc. Summary cards are made for all departments. The report shows the following columns: Dept® • Chg. * Cash * Cash Reg, ’ COD 1 No* of Returns * Amt. of Ret* 1 tit t t । t * No. of Sales 1 Net Amt. * t t t A report is made listing sales by sales person* Most of the sales people intersell between departments, selling in sometimes three or more departments© The run is made by sales person, by department© The girl who balances the checks after the first tabulation discussed above, sets up a control in pencil by sales person, by department. She balances these totals against the tabulator totals on the tape run in this last run, which is in the following form: Department * Sales Number * Reading * . ~ _ x 1 f t t (Returns are credited below the sales.) Since a sales person making a sale including merchandise from more than one department makes a separate check for each department, showing only the sale from that department, this list from the tabulator is checked for departmental errors (reporting an article in a department where that article would not be sold or where that sales person does not sell) and for other sales errors. Sales are also checked in total against the summary cards made for the department. Appropriate corrections are made on the departmental and sales person cards and reports. All sales persons sell on commission and commissions are based on the corrected report. Another report shows a sales breakdown of a full list by check number, with intermediate control on book number and minor control on cash and charge. A daily listing on the machines is made of postage, gift-wrap charges, employee’s discount, and other deductions or extra charges. Everything not merchandise must be subtracted from sales at the end of the month for stock statements. Taxes are the biggest problem among these extra deductions and charges. An accurate record must be kept of all taxes and a report made to the Government, and taxes vary greatly and are in great numbers on small items. Many kinds may be on one check. For example, one check showed: 1 Powder $1 .00 State tax *O2 Federal tax *2O f 1.22 1 Cream 2.00 State tax ©O4 Fed. tax .40 2.44 1 Deoderant 1.25 Fed. tax .25 1.50 Sale charge f 5.16 This sales could not be recorded as $5.16 but had to be broken down into merchandise, State tax, and Federal tax and each record kept for its own separate purpose. Taxes, gift-wrap charges, employee’s discount, etc. are not kept by department and consequently require only one operation after they are punched into cards. Cards for all tax charges are punched and listed by sales person. This record is necessary to pay the taxes and to take the amount out of each sales person’s total sales at the end of the period for figuring commission. A summary of taxes also is run on the machines. At the end of each two weeks the machines division throws together all sales cards for the period and makes a run with major total on sales person, intermediate total on department, and minor total on day. All cards showing taxes or other extra items are dropped below the line of the sales amount and are deducted from the major total. This net total by sales person is used in the Sales Department for checking efficiency of the sales personnel. The machines division keeps a bound record of these sales by sales person, by department, by day. A net total by department is needed on this report but cannot be taken except by hand because of lack of space and versatility of the machine used. The daily report on sales by concession departments is made possible by the use of machines and greatly simplifies the straightening of obligations at the end of each month. A volume of fourteen thousand sales checks is considered by Sanger’s a very small day’s business, and the vast quantity of detail is almost impossible without the machines; with the machines the vast detail is routine, controlled, and accurate© EXHIBIT 1 CHAPTER XVIII PUBLIC UTILITIES ACCOUNTING IN SAN ANTONIO, TEXAS REPORT REQUIREMENTS The San Antonio Public Service Company requires billing and accounts receivable only, and all accounting and statistical records are carried on the IBM machines. SOURCE DOCUMENTS Slips brought in after meter installations, the meter book showing consumption readings, and cash stubs furnish the information for the machine records. PROCEDURE The Installation — The Company uses an alphabetic duplicating key punch, a motor-drive duplicating key punch, an accounting machine 297, an automatic reproducing punch, an alphabetic interpreter, a sorter, an alphabetic tabulating machine 405, and a collator. Codes — No real coding can be used, since all the information on the card goes out to the customer or is recorded on his account. Symbols are used for such designations as tax-exempt customers. Cards and Forms — The five card designs and ten of the forms used are shown on the accompanying photostatic copy of the flow of work through the installation. The cards are an advance card, a billing card and a master rate card of the same design, a revenue and statistical summary card, a ledger record card, and a control card for accounts receivable. The report forms include the audit tape, the statistical report, the tax exempt register, the revenue summary, the customer's bill, the accounts receivable register, delinquent and cut-off notices, and accounts receivable control. NEW ADVANCE CARDS KEY-PUNCHED ON ALPHABETIC PUNCH FOR SETS, CONNECTS, C.O.T. AND CHANGES. BOOKKEEPERS SUBTRACT READINGS FOR CONSUMPTION AND PRE-AUDIT BOOKS FOR ANY IRREGULARITIES. A PERMANENT FILE OF MASTER CARDS IS SET UP FOR EACH RATE TO SERVE AS AN AUTOMATIC RATE CHART. THIS FILE WHICH CONTAINS ONE CARD FOR EACH NORMAL UNIT OF CONSUMPTION, IS PRE-PUNCHED WITH THE GROSS, DISCOUNT AND NET AMOUNTS. MASTER CARDS ARE REFILED FOR USE ON SUCCEEDING DAYS BILLING. CHART NO. 1 CARD PREPARATION ADVANCE CARD FILE CONTAINS ONE CARD FOR EACH METER IN SERVICE. THE FIRST CARD FOR AN ACCOUNT CONTAINS THE CUSTOMER NAME AND DATA REGARDING THE FIRST METER. THE SECOND CARD CONTAINS THE ADDRESS AND DATA REGARDING THE SECOND METER. ADDITIONAL CARDS, AS REQUIRED, ARE SET UP FOR ADDITIONAL LINES OF ADDRESS. EACH CARD FOR A METER IS PUNCHED WITH FIXED INFORMATION SUCH AS FOLIO, RATE, REVENUE CLASS, ETC. IN ADDITION TO THE NAME OR ADDRESS. IT ALSO IS PUNCHED WITH THE PREVIOUS DATE AND READING READY FOR CURRENT BILLING. PUNCH OPERATOR VISUALLY CHECKS ADVANCE CARD INTERPRETATION TO METER SHEET TO ASSURE COMPLETE ACCURACY. PUNCHES PRESENT READING AND CONSUMPTION. ALSO KEY-PUNCHES BILLED AMOUNT ON IRREGULARS. CARDS LISTED ON NUMERIC CHECKING AND LEDGER POSTING MACHINE TO PREPARE AUDIT TAPE, WHICH WILL PROVIDE THE FOLLOWING: 1. PRINTED PROOF AND RECORD OF ACCURACY IN RECORDING OF THE PRESENT READING AND CONSUMPTION TO THE CORRECT ACCOUNT. 2. PROOF THAT SUBTRACTION OF CONSUMPTION IS CORRECT. 5. ANY CARD IN ERROR FOR THE ABOVE IS AUTOMATICALLY OFFSET IN THE PACK FOR READY CHECK AND CORRECTION. 4. ASSURANCE THAT ALL METERS ARE ACCOUNTED FOP. 5. IRREGULAR BILLED AMOUNTS ARE LISTED FOR VERIFICATION OF THE EXTENSION AND PUNCHING. ADVANCE CARDS FOR NEXT MONTHS BILLING CYCLE ARE AUTOMATICALLY REPRODUCED FROM THIS MONTHS BILLING CARDS, INTERPRETED AND FILED. ALL CONSTANT DATA SUCH AS NAME, FOLIO, RATE, ETC. ARE REPRODUCED DIRECTLY INTO THE NEW CARD. THE PRESENT DATE AND READING FROM THE CURRENT CARD IS TRANSCRIBED INTO THE PREVIOUS FIELDS OF THE NEW CARD. BILLING CARDS ARE SORTED TO PATE AND CONSUMPTION SEQUENCE, AND COLLATED OP MERGED WITH MASTER EXTENSION CARDS. THIS OPERATION ASSOCIATES THE MASTER EXTENSION CARD FOP EACH UNIT OF CONSUMPTION AHEAD OF THE CURRENT BILLING CARDS FOR THAT CORRESPONDING UNIT OF CONSUMPTION ON THAT RATE. AMOUNTS TO BE BILLED ABE GANGPUNCHED OP "COPIED" FPOM EACH MASTER CARD INTO CORRESPONDING BILLING CARDS BY THE REPRODUCING PUNCH. THIS EXTENSION PROCESS IS ASSURED OF COMPLETE ACCURACY BY THE AUTOMATIC VERIFICATION OF THE ACTUAL PUNCHING OPERATION AS WELL AS THE APPLICATION OF THE CORRECT RATE AND UNIT OF CONSUMPTION. TO CHART NO. 2 CHART NO. 2 STATISTICS AND BILLING REVENUE AND STATISTICAL SUMMARY CARDS ARE SORTED AND TABULATED AT CLOSE OF MONTH FOR VARIOUS REVENUE AND STATISTICAL REPORTS. BILLING CARDS ARE TABULATED BY RATE AND UNITS OF CONSUMPTION. THEY ARE THEN SORTED BY REVENUE CLASS AND A REVENUE SUMMARY IS PREPARED. AS THESE DAILY REPORTS ARE TABULATED, THE GANG SUMMARY PUNCH AUTOMATICALLY CREATES A REVENUE OF STATISTICAL SUMMARY CARD FOR TOTAL METERS, CONSUMPTION AND REVENUE FOR EACH UNIT OF REVENUE CLASS AFFECTED. CARDS REPRESENTING BILLING TO TAX EXEMPT CUSTOMERS ARE SORTED OUT AND A REGISTER OF TAX EXEMPTIONS PREPARED ON THE ALPHABETIC ACCOUNTING MACHINE. BILLING CARDS AND ARREARS CARDS ARE SORTED AND COLLATED BY FOLIO. THE CARDS AND BILLS ARE PLACED IN THE ALPHABETIC BILLING MACHINE WHICH ADDRESSES AND IMPRINTS THE BILLING DATA IN ONE OPERATION. CARDS AND BILLS ARE FED, EJECTED AND STACKED AUTOMATICALLY. / ARREARS CARDS FROM CHART NO. 5 LEDGER RECORD CARDS AND BILLING CARDS ARE PASSED THROUGH THE COLLATOR TO PRE-CHECK THE POSTING SEQUENCE. THEY ARE THEN PLACED IN THE CHECKING AND LEDGER POSTING MACHINE AND THE LEDGER RECORD CARDS POSTED IN THE SAME MANNER AS THE BILLS WERE PREPARED. TO CHART NO. 5 CHART NO. 3 ACCOUNTS RECEIVABLE Flow of Work through the Machines — The accompanying flow chart gives a complete flow of work through the machines. Each step is explained in detail on the chart. The work of the machines begins with the punching of a card as each meter is set, connected, changed, or cut off. Machines carry the work through the monthly or special readings, computations of amounts according to the various rates, billing, preparation of cards for the next month, and preparation of all statistical and accounting reports for accounts receivable as well as the ledger. All cards are duplicated, checked, duplicated for future use, sorted, merged, separated, grouped, refiled, and have calculations checked by the machines. One distinctly new and unique step performed in this installation is included in the preparation of the audit tape. The numerical checking and ledger posting machine provides: 1. Printed proof and record of accuracy in recording of the present reading and consumption to the correct account, 2. Proof that subtraction of consumption is correct, 3. Any card in error for the above computation automatically offset in the pack for ready check and correction, (This is the new step. The machine has been made to check the subtraction of previous reading from present reading, check it against the amount found previously by the bookkeeper, and if an error is present, throw out the three cards ordinarily left in the machine at the end of an operation, and then stop the machine with the card in error ready for removal and correction.) 4. Assurance that all meters are accounted for, and 5 0 Irregular billed amounts listed for verification of the extension and punching. This is considered one of the most efficient and up-to-the-minute installations for the purpose in the country* The machine method is highly satisfactory and a great saving in time, errors, and expense* AFTER COMPLETION OF THE CURRENT BILLING ROUTINE, THE CARDS AFE PLACED IN THE ACCOUNTS RECEIVABLE FILE. THIS FILE IS WORKED BY THE ADDITION OR REMOVAL OF THE CARDS ACCORDING TO THE ENTRY TO BE MADE. WHEN CASH IS PAID, THE CARDS REPRESENTING THE ITEMS PAID APE REMOVED FROM FILE. THESE CARDS AFE LISTED ON THE ALPHABETIC ACCOUNTING MACHINE TO BALANCE TO THE TOTAL OF THE STUBS. ANY DISCOUNTS TO BE FORFEITED APE SEGREGATED AUTOMATICALLY. DURING THIS OPERATION, THE GANG SUMMARY PUNCH CREATES A CONTROL CARD FOR THE TOTAL CREDIT TO EACH LEDGER CONTROL. MISCELLANEOUS ENTRIES ARE WORKED IN A SIMILAR MANNER, REGISTERS PREPARED AND CONTROL CARDS SUMMARY PUNCHED. AT DELINQUENT' NOTICE DATE, THE REMAINING CARDS ARE REMOVED FROM FILE AND DELINQUENT NOTICES ARE MABE BY THE SIMPLE PROCESS OF "RE-BILLING" ON THE ALPHABETIC BILLING MACHINE. THIS OPERATION IS REPEATED FOR THE FINAL OF CUT-OFF NOTICES AT THAT TIME. THE CYCLE BALANCE IS OBTAINED BY LISTING THE ACCOUNTS RECEIVABLE FILE AT CYCLE DATE FOR THE TOTAL LEDGER OUTSTANDING. CONTROL CARDS FOR THE SAME LEDGER ARE ALSO LISTED TO OBTAIN THE TOTAL CONTROL OUTSTANDING TO BALANCE WITH THE DETAIL LEDGER TOTAL. CARDS BILLED AS ARREARS ON NEXT MONTHS BILL. SEE BILL PREPARATION ON CHART NO. 2. CHAPTER XIX HENKE AND PILLOT, INC., HOUSTON REPORTS REQUIRED In the central office of the Henke and Pillot chain in Houston, Remington Rand tabulating equipment had been in operation five months when this study was made. The machines are used for Grocery Department operations only, for inventory, purchases, incoming orders, billing, and administrative reports. SOURCE DOCUMENTS Purchase invoices for checking receipts for stock are practically the only source documents. Orders are taken by phone. A physical inventory of stock in the warehouse is made on forms prepared by the machines and checked against the card inventory; in a sense the list is a source document. PROCEDURE The Installation -- The machine installation consists of one numbering punch, one sorter, one 30-90 Model 3 tabulator with 90 sectors and a universal carriage, one multi-control reproducing punch, and a rack to separate the multiple copies and carbons on continuous forms as they come from the tabulator. All are Remington Rand machines. Four operators assist the supervisor, who worked out the efficient and impressive procedure used. Codes — The twenty retail stores and the few other customers buying directly are coded. Products are recorded by product number as well as by name and some classes of sales and of products have special codes; for example, articles sold on quota. Cards and Forms — Exhibit 1 is the card design used for all stock records. It is used in manila, green, orange, yellow, and with five different colors of stripe through the manila form. A few simple forms similar to Exhibit 2 are used on the machines. Many reports and records are run on plain roll paper or continuous forms. Flow of Work through the Machines — The most distinctive and volumnous work done is on the inventory. A tub file the length of the room and two bins in width consists of small bins which contain machine cards standing on end, on which an inventory is kept of all grocery stock in the warehouses of the Company. A natural colored card, Exhibit 1, is used for each case or a green one of the same design for 500 cases. A tab for each section shows product number, and stiff cards separate the various products. The product numbers are arranged in numerical sequence from left to right throughout the length of the tub file. Upon receipt of goods in the warehouse, a card is punched for each case, showing description, code number, product number, case number, loca' tion in the warehouse, etc. The product number and case number are printed across the end of the card by the summary punch. Since the case numbers are filed in sequence and the first is pulled first, the number of cases left in the warehouse can be determined at any time by subtracting the case number on the back card in the bin from, the case number on the front card in that bin. At the beginning of each week each store manager is sent what is known as a questionnaire, a small book made of sheets from the tabulator, on which are listed in multiple columns all articles in the warehouse stock, their numbers, codes, etc. Twice a week, at a predetermined time, exactly on schedule, each store manager is called for his grocery order. He has marked, in blue for the first call of the week and in red for the second call of the week, on the questionnaire the items he needs, and he calls to the operator the numbers in order, with the needed quantities. The operator in turn marks the quantities and the store number on an identical list she has before her on a sliding platform or desk above the card bins. The items are arranged on the list in the order of arrangement on the store shelves, so that the store manager can. start at one corner of the store and run down his list and by the time he has returned to that corner, he has completed the list and his shelf stock simultaneously. The cards are arranged in the same order in the bins, so that the operator receiving the order by phone can tell at a glance whether there is enough stock to supply the order, and inform the manager, who in turn can substitute for short items. When the numbers in the bins of the section assigned to that operator are passed, she transfers the questionnaire and the sliding desk to the next operator, who plugs in her portable phone and takes the orders for her section of bin cards. Four operators in succession take care of all the card bins. The cards are then pulled for the items ordered, leaving in the bins only the unemcumbered stock for checking and supplying the next order from the next store called* The cards are then sorted in order of block number and section in the warehouse, and listed with two carbon copies on the tabulator. One copy is sent to the store ordering. This is the bill for the grocery stock and contains all information except the cost, which is omitted by not having a carbon under that particular column. The next copy is sent to the warehouse for filling, and the original is retained for accounting use. These are run on continuous forms like Exhibit 2, with one store following another in code order. By means of the universal automatic carriage each form is filled and the skip is made to the next until one store*s order is completed, at which time his total is shown and a skip is made to the top of the next bill head to begin the bill for the next store. The forms as they run from the tabulator are separated by the rack behind the machine, the carbon sheets discarded, and each continuous copy refolded in its individual stack* When the copy of the order arrives at the warehouse, individual pages give each separate sheet to the porter for the section where the goods on that particular sheet are located. The porter has the goods so arranged that he goes to the far end of the warehouse and works back to the front and usually has a dolly just about full by the time he reaches the front end to unload. His next numbers will take him to the back of the warehouse to start again toward the front. The pages punch time in and out on a time clock, so that a record by time is kept of number of units and tonnage loaded, and individual records of performance are compared for efficiency of the porters. This has reduced warehouse expense a great deal. There is less damage in handling, more speed, and a great deal more accuracy. Accuracy is the most important because of convenience to the stores, reducing reorders required, and saving of time. There are now less than two cases per week error. Upon arrival of a truck, the stores scarcely check except the number of cases. After the cards are pulled from the tub file bins in the office, each is run through the reproducing punch and punched with the store and department number, identifying it with the shipment made from that set of cards. Later various types of analyses are made from the cards for administrative use. The supervisor considers the chief advantage of this system the opportunity for informing the various store managers whether or not the item, ordered is in stock. Formerly a printed order form was used, containing only the code and quantity. This form was sent to the stores and written-in orders were sent back in and the items pulled from that. The telephone system used now enables the operator to inform the store manager while he is ordering whether or not he will receive the item ordered, whereas he formerly did not know until the truck was unpacked; then he had to order a substitute and cause another truck trip. This was particularly troublesome on advertised items. Now that the substitution can be made at once, an average of ten per cent more shipping units per order are included than originally. Above the tub file on the wall of the machine room are twenty-one pigeonholes, each labeled with a number of a branch store of the Henke and Pillot chain, with one kept for "wholesale” trade — restaurants, lunch counters in drug stores, public institutions such as hospitals, etc. which are allowed to buy directly at reduced prices. Scarce items are apportioned to these pigeonholes by quota. In the tub file below these scarce-item cards are kept covered with a paper cover to indicate to the operators that they are not to receive orders for them indiscriminately. They are distributed by the distribution manager before the cards can be pulled. Keeping the cards in the tub file enables the operators to inform the store managers as they order that the items are still in stock but scarce and how they will be distributed. Twice a week an inventory is made of the tub file by sections, and the warehouse porters make a physical count of items at the same time. Less than one credit because of error is necessary per week and that on scattered items at scattered places. When the inventory is made from the tub by subtracting the low case number at the back of the bin of cards for any one item from the high case number at the front of that bin, if it is suspected that the cards are in wrong sequence, that bin of cards is run through the punch with a counter to see if the count there agrees with the count in the warehouse. Just before this case study was made, when the count from the tub was compared with the warehouse count, the discrepancy was twenty-four cards out of about 250,000, amounting to $97 out of a million dollars worth of merchandise, less than one hundredth of one per cent error. Among the reports prepared on the machines for administrative analysis is a truck tonnage report for checking truck efficiency. This is made by departments, by stores in order to see what each department costs, etc. For example, special deliveries show inefficiency of the manager. Then the sales supervisor confers with the manager for correction. Purchases are analyzed by per cent earnings and by commodity classes to determine whether or not the store manager is ordering advertised specialties to get high volume, as new managers often do under the impression that high volume will make a good showing* Often that sort of buying brings little or no profit while a smaller volume may bring several times as much profit. Comparisons are made on commodity classes as to how inventory is tied up; for example, canned fruits with market considerations* If prices are going up, an extra effort is made to stock them; if the market is going down, an extra effort is made to sell* It is not the policy of the store to stock heavily for future profits. The warehouse inventory is turned over at least ten times a year. If an item does not move three times a year, it is considered that too much has been bought and the buyers are so informed. At first the buyers objectly very hotly to the card system, but they became its most ardent supporters when they found the advantage of acquiring efficiency and a check on buying for that purpose. An inventory is kept also of items not sold from the warehouse; for example, milk and small crackers, items bought directly from the vendor and delivered to the individual stores by him* Upon delivery of these items the vendor leaves the store department manager a copy of the invoice* The manager stamps receipt and approval and sends the invoice to the machines division daily* Cards are punched for each item and a list of these purchases run* EXHIBIT 1 EXHIBIT 2 CHAPTER XX THE PUNCHED-CARD METHOD IN STATISTICS AND ACCOUNTING The cases covered in this study reveal some general principles with respect to the use of the punched-card method in statistics, accounting, and general office routine. The most significant of these principles are summarized in this chapter. In the following chapter the peculiar features of the economy of Texas as they affect the use of the punched-card method are discussed. The principles covered in the remainder of this chapter are not especially characteristic of Texas but apply generally to the method wherever it is foundo Situations Where Punched-Card Methods Are Needed — The complexity and size of modern business have greatly enlarged the problem of business record keeping* The problem of management has become greater and more complicated. When business was operated on the scale of home crafts and later as individual ownerships or partnerships of moderate size, one man or two could keep themselves informed by personal observation and could control by personal suggestion the operation of all phases of the business. As size increased, business required more complex organizations, and the quantity of detail alone precluded the possibility of personal familiarity with all parts of the organization. More work was necessary to regulate each phase of an organization’s activities and to coordinate the activities of all parts into a whole that moved smoothly and profitably. More information became essential as the necessity developed for properly formulating over-all policies and for devising means of effecting these policies. It also became necessary to keep more records in order to provide for purchases, payments, collections, expansion, and other financial and operational needs. Apparently, in stages of development and growth past that size where written records are necessary at all, the rate of increase in the need for records and for greater numbers and kinds of records is more rapid than the increase in the size of the business organization itself or its volume of business. Certainly at some stage only a small additional size necessitates increasing or even doubling the quantity of records kept for proper administration of the business. For example, somewhere in its development, though it is sometimes difficult for management to decide just where, the business becomes large enough to add a personnel manager or department, a credit specialist, or some mechanical system of keeping records and making reports. The change is of necessity all at one time, and the record work increases then. Past the stage where strict departmentalization and entirely separate spheres of operations become profitable, the necessity for record keeping develops volume very rapidlyo Records as they develop always include accounting procedures among the first of the processes. That fact was true in the long development of business in general, and it is true in the growth of any individual business enterpriseo Because of the universal need for such records and the long period over which they have been universally used, accounting techniques have been developed more thoroughly than statistical methods. Systems for simplifying accounting records end reducing the number necessary and the ease of handling them are applicable, while in statistical analysis the very nature of the process requires great quantities of detail that are impossible of collection and organization by hand methods. Double-entry methods and highly standardized report forms for accounting purposes were in use long before systematic utilization of statistical facts for formal control was recognized in any appreciable degree. While this development was occurring, all kinds of paper work were increasing in volume. With first consideration of the use of statistical measures for control and policy-making, the need for great quantities of data is evident. Businessmen, recognizing that fact, necessarily look for efficient means of acquiring, organizing, and analyzing the data. Both in the production of accounting records and relevant reports, and in the production of purely statistical series for analysis the punched-card method has proved the best solution where the quantity of work is great. Punched cards eliminate the need for clerical performance of great quantities of irksome routine work incident to the performance of modern business operations. Characteristics of Work Which Warrants the Use of Punched-Card Methods Punched-card methods are adaptable to business record keeping only in businesses with a sufficient quantity of work to warrant paying the charges for a complete installation of the machines or paying for the services of a service bureau if one is maintained in the area accessible to the business. With each machine running a hundred to seven hundred cards a minute, the volume should keep the machines busy most of the day if it is to be profitable to maintain an installation. That eliminates most small businesses except those near a service bureau. These bureaus are profitable to the manufacturers and therefore maintained only in business areas sufficiently concentrated to keep the bureau busy. Work is done there for a charge by the hour or by the hundred cards. It frequently occurs that an industry producing only one product, produces great quantities of that one product and therefore is of great size. But if record keeping is not required for anything except that one product and it is standardized, sufficient volume of records is not provided to require volume of record keeping. However, while variety is essential, too many changes made at too frequent intervals can render the punched-method inadvisable except for summary purposes. The oil companies compute oil run tickets by hand but use punched cards to produce summary records. One of the outstanding features of the punched-card method is the variety of useful reports that may often be produced from one basic record. Quite extensive analysis of sales is useful to management in forming business judgments and regulating activities, yet the entire analysis can be made from one record, the sales ticket. A type of business needing such analysis profits perhaps more than any other from the use of punched-card methods. The same information from the basic record, wnen punched into a card, can be used an indefinite number of times by a simple run through the machines. Reports are thus made on sales by salesman, by area, by class of merchandise, by product, by size of sale, by day, etc. The tedious sorting by hand of an appreciable volume for this purpose would be unprofitable. Computation of sales taxes of various kinds requires such quantity and accuracy of work that hand methods are expensive and irksome, yet the punched card produces the desired figures from the same run that makes a sales report. Many routine office tasks such as writing checks, filling out driver*s licenses, and writing notices of insurance premiums or notes due, can be and are done by means of punched cards. The records necessary for doing these tasks are put on punched cards for the purpose of making other records, and the routine tasks can be done often at the same time that other records are run. The most that could be required for their preparation is a single run through the machine. At the same time that checks are run an attached statement of earnings, with deductions, is usually run. Driver*s licenses are filled out by a single run of a permanent stencil card through an IBM collator which produces the licenses at the rate of six thousand an hour. When record of an insurance policy is made on the cards the first time, forms for at least a year’s premiums are cut by summary punch, the date for each payment punched in a fraction of a minute, all information interpreted on the forms, and the forms filed in the tickler file for mailing at the proper time. Notices of notes due are handled in much the same manner as the notices of insurance premiums due. In public utility accounting the past-due notice and cut-off notice are run at the same time that the monthly bill is run, from the same card. These procedures save thousands of man-hours formerly expended in doing tasks by a fixed pattern repeated each time in the same way, typically mechanical. An example of volume, speed, and accuracy is furnished by one of the world’s great industries, automotive mass production, ’’based on the use of special machinery at every point where machines can do a job better than hand „1 tools—in office work as well as in factory departments.” The parts business calls for a tremendous amount of “paper work.” Cost accounting is necessary, particularly with post-war costs several times as high for operation or expansion as those of pre-war times. Since punohed-card machines work with speed and accuracy that human minds and hands cannot begin to match, automotive firms are investing millions of dollars in their operation. One automotive firm alone pays two million dollars a year for machine rentals. It is possible with such machine methods to make analyses, on a routine basis, that once were so costly they were rarely made. Before the war one firm made a special engineering cost study which had to be redone 76 times before the right answer was obtained. A typical operation of this type now keeps seventeen persons busy full time, but they do work that would have required 240 persons working without punchedcard methods, and thus would have been so expensive it would not have been done. Another example is the parts division of a car firm which maintains 45 parts warehouses in the United States and Canada; handles 75,000 kinds of parts, as old as 1925 models and ranging from lock washers and bearings to complete motors and bodies; and averages 500,000 pages of entries on its order books each month. This work is done by 400 people and done so well that within a few days after a car dealer places a parts order, the order is filled by shipments from perhaps five warehouses in different cities. Another automotive firm uses 600,000,000 tabulating cards yearly (a pile 86 miles high) for payrolls, cost accounting, engineering specifications, inventory controls, production schedules, and medical and personnel records. Payroll, once looked upon as a routine part of accounting, has become a major task. Enactment of the first Social Security legislation and labor regulations required specialized record keeping which has increased in volume and complexity. Pay deductions, both voluntary and statuatory, have grown, adding to a mass of detail work that no business can escape. Nearly every company has its own problems and preferences, but payroll is perhaps the most universal prob lem solved by the use of punched cards. Where speed is required, nothing is comparable to the punched-card methods of making records. Daily reports on shipments, daily sales analyses, immediate location of a required number of any classification of product or personnel from a mass (fifty cooks for a detail), or reports immediately at the end of a manufacturing process would be an impossibility by hand; with punched-card machines it is a matter of minutes if the cards are already punched or hours if they have to be punched. A trained operator should punch five hundred cards an hour, or more if the information punched is limited to a few columns. It is, therefore, possible to have card records completed in a very short time after information is available. Accuracy is assured if cards are punched, verified, and listed or tabulated by machines. No error in orders, no doubt about whether an order can be filled from stock, no wrong classification of person or item should be present when punched cards are used. Sorting is automatic and rapid, the record verified for correctness. Audits can be made without the long and tedious hand processes, if records have been kept on cards. And there is no chance of human error, a very small percentage chance of machine error if proper checking is done. Government agencies make extensive use of the punched-card method. The quantity of data required to record the many facts procured by these agencies makes use of such a method imperative. The census, agricultural estimates from over the nation, and internal revenue computations in the quantities now handled would be impossible without mechanical aid given by punched-card equipment. A specialized but highly useful performance by use of punched-card machines is the preparation of a master premium rate table* This involves use of progressive totaling on the tabulator to secure the premium rates for each age for varying amounts of insurance. The progressive totaling device is applied to many such problems requiring progressive amounts. Many times this eliminates the necessity of including an expensive multiplier with the punched-card equipment and does in a few minutes a quantity of work which would take hours by hand and be subject to much computation error. Any kind of business requiring large quantities of paper work profits from the use of the punched-card method, but inventories, sales analysis, routine office tasks, government records, payrolls, and industrial production records are particular classes using the method most profitably* J* Cummings (Editor), "Office Machines Vital in Running Industry’s Plants," Automobile Facts, February, 1949* The Punched-Card Method and Change in Habits — Th© punched-card method of keeping any records will break some fundamental habits acquired with the hand methods* Businessmen who have grown accustomed to strict secrecy in making payrolls feel that that secrecy is being violated by use of punched cards. However, it is simply a shift of the responsibility of secrecy from one department to another. It is less difficult to keep card records under lock than to keep the more cumbersome bulk of hand records, and it is entirely possible to have the cards made and run by employees as responsible as the employees who performed the hand processes of making payrolls. There is often a feeling, too, that since no check is necessary in some parts of the punched-card process, no check should be made. This destroys confidence in the records. The misconception is apparent when it is realized that not only are as many checks on accuracy advisable with the punched cards, but more checks are possible and profitable. Checking is simply done in a different manner and at a different time. Availability of the number and accuracy of checks by the punched-card method is one of the chief advantages of the method. Checking can be done with very little time and effort in the machine process® That fact is the quality which makes possible an audit by the punched-card method at a saving of half the usual time and the consequent expense. The principal reason why punched-cards are not in more universal use is the resistance to change of habits offered by both executives and employees whose jobs would be affected by the change to the punched-card method* It is the usual thing for employees to offer violent objection to installation of the punched-card machines. Great numbers of them feel themselves being replaced, rather than realizing that introduction of the faster and more accurate method eliminates much of the rush and the exhausting routine that constantly burden the employee. They should have time to think and plan their work, which is profitable and allows them to use the results with confidence. They can only be made to realize this through experience and training and with assurance from the employer that the worker will not be replaced by machines. The greatest resistance which has to be overcome in introducing the punched-card method is perhaps that of executives who are inclined to hold tenaciously to old habits developed by long experience with hand methods. It is impossible for them to accept the machine process as being as reliable as their trusted employees, and not knowing enough about what the machines and cards can accomplish to appreciate the advantages, they are irritated by the thought of changing processes that they know. The human fear of anything which is unfamiliar, plus distrust of anything mechanical, plus the inherent resistance to any change of habit add up to dogged persistence against suggestion. The additional feeling among many that any new expense is wrong until it is proved, right has to be overcome, also. Education of executives on the job is a difficult and often impossible job. That fact is additional argument for training the future executives in modern methods while they are being given their formal educational background in schools. They receive information with little prejudice, and they begin their business career with the knowledge of equipment which can lessen their tasks and those of the workers they may direct and at the same time offer other improvements not possible using all hand methods. The ounce of prevention is easier and less expensive in time and money than the many pounds of cure. Rented versus Purchased Punched-Card Equipment -- The International Busi- ness Machines Corporation rents or leases all punched-card equipment. Their policy is to keep the machines in repair and to replace equipment as it becomes obsolete or inadequate for the customer’s use. The charge is made according to the number and kind of pieces used. Except the punches, their punched-card machines are operated by means of plug boards which can be wired by the customer to suit his needs. If he has no need for the flexibility thus provided, he can procure permanently wired boards from the factory and use them indefinitely. Minor changes can be made in the permanent board in a moment, often without even removing it from the machine. Thus the user can run the report immediately upon his decision that it is needed. The International Business Machines Corporation is exclusively interested in punchedcard and related equipment, machines for making and analyzing business records. The Corporation produces a great variety of machines and auxiliaries which will accomplish almost anything business requires in the way of records. The manufacturers claim this flexibility end the assurance of the newest models without purchase expenditure the chief advantages of their rental plan. Remington Rand, Inc., furnishes machines on either a rental or an ownership basis. If the machines are purchased outright, four per cent of the purchase price is charged per year for maintenance. A permanently prepared unit is purchased on order from the factory for each new style of report. However, mechanical levers allow minor omissions and inclusions for certain fields or operations provided by the unit. Also, different reports can be produced by changing the punching sequence in the cards, allowing some flexibility. Some users of the punched-card method have no need for special reports differing from the periodic reports sufficiently to require specis.l changes in the permanent set-up mechanism. Use of the permanent unit eliminates the need for training employees in the tedious task of wiring a board. Simplicity of operation enables a new employee to use the machines with few instructions. Owned machines can be set for greater speed in feeding cards, thus saving time, if the owner considers the saving worth the extra wear on the machine. increases rapidly with increased speed. If great speed is not essential, a sorter, for example, can be rented at a reduced rate if used to feed only 250 cards per minute o If an owner demands high speed, the sorter can be made to feed seven hundred cards per minute. The manufacturers claim, this freedom of use of the machines and a possible saving in expense the chief advantages of the ownership plan. Service and Personnel Supply — To use the machines for punched-card statistics or accounting, a user must be near repair service. This repair or maintenance service is furnished from local offices scattered wherever there is sufficient demand for the machines to warrant establishment of an office. Conse quently, industrial districts and areas where a considerable number of other establishments do business of considerable size offer the opportunity for service if enough users can be found to justify service maintenance in the area. Use of the machines outside areas where service is available, is practically impossibleo Personnel for operation of an installation is not always easily obtainable* Workers object to the noise of the machines, and the amount of the work which must be done standing, together with the fact that for operation of some of the Remington Rand machines the operator must stoop to remove all cards, makes the work objectionable to some* The principal deterrent, however, is the low salaries offered for workers on the machines. Salaries are lower than those offered for many unskilled workers and much lower than for perhaps any other task requiring the skill, knowledge, and general business judgment needed to produce the best results from punched-card operations* This fact seems particularly applicable to the Texas situation and is developed further in the following chapter* CHAPTER XXI USE OF THE PUNCHED-CARD METHOD IN TEXAS Fields for Punched Card Use in Texas — The Texas situation is peculiarly contradictory. There are a great many installations of punched-card machines in use, yet there are many business organizations in which machine methods could be adopted where they have not been. There are other industries and businesses where it is not considered practicable to use machines because of the inadequate volume of work needed that could be handled by the expensive machines. Punched-card methods are not suitable for a very small volume of work unless there is available a service bureau which will do the work for an hourly or hundred-card charge. A public accounting firm in Austin installed and began the use of a punched-card installation, in spite of misgivings on the part of representatives of the machine manufacturers. After an adequate trial the expense proved greater than the benefit, because of the immense quantity of work the machines were capable of doing and the consequent charge for the equipment. On the other hand, a volume which at first consideration seems too small to justify punched cards may use them profitably if the use is limited to a simple count of groups. One installation in Austin uses only a punch and a sorter with counter attachment, which costs only approximately sixty dollars per month. The charge is more than compensated by the return. The situation of the small business is handled in some instances by use of an IBM service bureau maintained at a local IBM office. Houston, Dallas, Fort Worth, San Antonio, and El Paso have IBM service bureaus. In some cases an installation of another user is employed at periodic intervals for making records. Either is inconvenient for many because of the distances to be covered between the business and the service bureau or neighbor. Dow Chemical Company at Freeport uses the IBM service bureau in Houston. Remington Rand Houston representatives have arranged for Prairie View College (for colored) to use the machine installation at Toxas Agricultural College at College Station serviced by the Houston office. A punch has been installed at Prairie View, but it is an inconvenient task to send the cards and an operator the fifty miles to the machines. The distance also causes some delay in producing records, thereby eliminating the practicability of even making some records that could otherwise be used profitably in the administration of the school. There is no thoroughly satisfactory mode of transportation between the two schools. The Board of Control in Austin uses machines at the Texas Employment Commission, as shown in Chapter IX. The inconvenience and the consumption of time, as well as the interference with the operations of the Employment Commission, prohibit making many records badly needed by the Board of Control. For example, complete inventories of property at the State eleemosynary institution have never been kept. It would be a simple matter on punched cards. Just as in using any particular make of automobile, use of punched-card machines necessitates proximity to an office of the makers of the machines that can furnish repair service* The volume of business in parts of Texas does not justify the establishment of an office in some localities where a few installations could be used profitably. IBM service is available in twelve cities and towns in Texas. IBM offices are located in Dallas, Fort Worth, Houston, San Antonio, El Paso, Austin, Beaumont, and Lubbock. Service bureaus are maintained at the first five of those offices. Maintenance engineers are stationed at Port Arthur, Waco, Galveston, and Corpus Christi. Remington Rand maintains offices in Houston and Dallas, and a maintenance engineer in Austin. There is much to be done in Texas in increasing the use and efficiency of punched-card methods, but much advancement has already been made in that direction in the State. A Survey of Texas Punched Card Users — In a survey of punched-card use in Texas, the percentage of installations which are used,by Government agencies is impressive. A view of the work done by these installations and the other businesses which could use punched-card methods profitably and do not, leads to the conclusion that perhaps some of the work that should be done on punched cards is still attempted by hand because of lack of realization on the part of those in charge of methods just what the benefits of the punched-card method are. Govern ment agencies have the advantage of knowledge and experiences gained by other such agencies all over the nation. The National Government uses many installations of punched-card machines for many purposes, and consequently the advantages are considered in local offices of National Government agencies. The State Government has the example of other states and the national agencies doing the same processes. On the other hand, some government agencies, particularly the Texas State Board of Control, Chapter IX, have difficulty securing adequate appropriations for the use of the much more efficient machine methods. The saving could be proved only by experience, and since those who must make the decisions do not know what improvements could be made by punched-card methods, the large initial expenditure for equipment or the large monthly fixed charge is so erident that it obscures the future benefits. National users of the punched-card processes in private business have assisted in extending the use of punched cards in Texas• A notable example is the Houston office of General Foods, where a Remington Rand Synchro-Matic Punch is used to punch cards on all operations as these operations are posted by posting machines. The cards are then sent to the home office in New York for analysis. As pointed out in the Fort Sam Houston case, Chapter 111, the emphasis today is on detail or individual statistics rather than on totals. Modern methods and modern need for control have made the use of detail statistics desirable; punched cards have made their use possible. Statistical reports in the quantity used by the Houston Police Department, Chapter VI, for increasing efficiency in law enforcement could not be produced by hand methods. The keeping of records for long periods of time is greatly simplified if the records can be put on summary cards. Only a small space will accommodate enough data on cards to eliminate a storage problem. For example, in the Texas State Highway Department five drawers of a standard-size card filing cabinet, approximately 14” x 18” x 28” in size, hold summary cards containing a complete record of all highways constructed in Texas by the State Highway Department since its organization. The records begin at 1917 and show the kind of road constructed, the number of miles, the location, the amount and cost of material and of labor, etc. The time required for making such records by hand alone would have been prohibitive. Summary cards are run by machine at the same time as totals are accumulated. Many State offices in Austin use punched-card methods besides those included in the preceding case studies. For example, the Texas State Department of Public Welfare uses an IBM installation staffed by thirty-three persons, including the supervisor, and composed of thirty-four machines. Complete records for the State’s assistance payments to the 212,981 old age assistance recipients, the dependent children of the State, and the needy blind are handled by IBM machine methods. This includes handling the application for assistance, all the intermediate records, writing the checks, and tabulating statistical reports and ledgers on the programs. This installation also keeps the inventory of ten thousand pieces of equipment belonging to the State, report on which is sent to the State Comptroller, the State Auditor, and the Board of Control. It handles payrolls on eleven hundred employees of the Department of Public Welfare; makes a monthly analysis of correspondence as to kind, source items mentioned, etc.; and makes great numbers of special reports requested by State officials or agencies, such as a report on administrative expenses of the Department. The machines are of the most efficient types. They include a highspeed sorter, an electric punched-hole verifier, and a check-stencil-printing collator used for writing the assistance checks. IBM equipment is used by the Department of Public Safety for safety statistics; by the Texas Liquor Control Board for licenses and a tickler file; by the Highway Department for accounting and statistics, including cost accounting, a chart of accounts, and comparative figures for construction by type; by the Highway Planning Survey; by the Secretary of State’s Office; and by the Health Department, Bureau of Vital Statistics, for record and analyses of births and deaths, venereal diseases, etc. Remington Rand tabulating equipment is used by the State Board for Vocational Education for reports of payments due, reports to the vocational schools on action by the administration, and reports on the pupils in the five programs of the vocational plan. Forms requesting information are sent out by the Board to the vocational schools, filled with the requested information on the 26,000 persons enrolled, and returned to the Board. Within eight days after receipt of the information a complete invoice is sent to the schools, in spite of the tedious coding and recording required by the variety of detail —• an impossible task if attempted by hand methods. The Bureau of Business Research of the University of Texas uses punchedcard machines for compiling statistics on current business. The Bureau’s installation is used, also, by the Air Corps for statistical studies at the University and by the Guidance Bureau for tabulating results of tests. Another Texas user not included in the case studies is Southland Life Insurance Company of Dallas. The Machines Department is a service department working for all other departments. Most of its work is for the Actuarial and Accounting Departments. All billing is done on the machines. This includes approximately 300,000 premium notices per year, each in quadruplicate. One copy is sent to the insured before a premium is due, one is mailed to the agent when collection is in process, and two are filed with the accounting stub in the ’’Outstanding Premium” file. The premium history card is used for this purpose and for all other records regarding a particular case. The official receipt is a part of the original copy of the notice and is dated, detached, and mailed to the insured upon receipt of his payment in the Dallas office. A copy from the files is sent to the agent notifying him that payment has been made. Payment is indicated by an "x" punch in a designated column of the card. This card is then used for collating against the cash cards for balance checking. Policy loan notices and payment receipts are made in duplicate, one copy for the borrower and one for the office files. The same card is used for all records regarding that loan. Salary savings receipts are made in the same way. The daily cash book and daily journal are made on the machines from punched cards. The journal is made from the premium history cards, policy loan cards, etc. At the end of the day*s posting, a summary of the entries made to the journal is made in classifications needed for the general ledger, the totals summarypunched as the journal is made. At the end of the month the daily summary cards are again summarized on the summary punch and these cards used to list the totals by tabulator, from which the Accounting Department posts the general ledger. Copies of the billing, premium cash transactions, and journal are sent to the Accounting Department. The salary savings journal is made on the punched-card machines once a week and sent to the Accounting Department. Commission records are kept as payments are received on policies etc. and the commission statements are sent to the Commission Department. Each agent’s commission cards are kept for that purpose on punched cards, each with a place for thirty-two premium payments. The payroll is kept on punched cards and checks written on the machines. Complete accounting for dividends to stockholders is done on punched cards, as well as their premium checks, with statement stub. For the actuarial Department the Tabulating Machines Department keeps complete valuation records, reserve requirement computations on 125,000 policies, and periodic statements of insurance in force etc. Tabulated statements by machine go with bank deposits and drafts on organizations by contract. The business is of great volume and variety, since the Company does a great variety of business in insurance. All routine work, all statistical records and reports, and a great deal of accounting is done by punched-card methods. DuPont at Orange uses Remington Rand punched-card equipment for payroll, for labor distribution, and for material distribution reports. This is one Texas industry which considers the volume of rapid and accurate records needed in its Texas operations justifies the use of punched-card equipment. Dow Chemical Company needs some records requiring rapid and accurate punched-card methods, but their production is so specialized that complicated records are not required in sufficient quantity to justify a machine installation. A great part of their raw material being sea water, there is no inventory, storage, or purchase problem to require records. Payroll is their chief need for punched cards. That is handled by the Houston IBM service bureau, fifty miles away. The arrangement is considered fairly satisfactory, but records that might be needed quickly could not be depended upon from that distance. Grocery chains keep inventories on punched cards with gratifying accuracy and speed. The Ped and White supply house, Sweeney and Company, Inc., in San Antonio uses IBM equipment. Henke and Pillot in Houston, Chapter XIX, uses Remington Rand machines. Orders from the various retail outlets and the businesses allowed wholesale privileges are taken by phone regularly each week ac« cording to a pre-arranged schedule. Clerks receive the order with a tub file of inventory cards directly before them, so that they can inform the store managers ordering that articles are or are not in stock or are in stock but scarce and supplied on quota. The supervisor considers this the chief advantage of the system. Shipping units per order have been increased ten per cent and truck trips for reorder cut appreciably «> Since both the inventory cards and the items on the order sheets are arranged in order in which the articles are arranged in the warehouse, orders are filled quickly and accurately. Periodically a physical count of items in the warehouse is checked against the card inventory in the tub file. A recent comparison showed a discrepancy of 24 cards out of approximately 250,000, amounting to $97 out of a million dollars worth of merchandise -- less than one hundredth of one per cent error. The system has increased warehouse efficiency to less than two cases per week error in deliveries, reduced warehouse expense and truck expense, increased buyer efficiency, and allowed closer managerial control© Kinds of Operations Done by Punched-Card Methods in Texas — It is apparent from consideration of Texas case studies and of the potential users of the punched-card method that perhaps the most extensive need for the method in the State is in Federal and State government agencies. Extensive use is made of the method by the Texas State Department of Public Welfare, the Texas Employment Commission (Chapter V), and the State Board for Vocational Education. The State Insurance Commission uses two IBM installations, one for life and one for casualty insurance records. The State Comptroller’s Office has a punch and uses other installations for additional work. The method is also in use in the Secretary of State's Office, the Texas Liquor Control Board, the Highway Planning Survey, the Teacher Retirement System, the General Land Office, the State Employee's Retirement System, the Board of Control (Chapter IX), and the State Departments of Health, Safety, the Treasury, Labor, Education (Census Division), and the Highway Department. The Veterans Administration Office at the University, a National Government agency, uses punched-card records. Other government installations include Fort Sam Houston (Chapter III), Kelly Field (Chapter IV), and Brooks Field. The Federal Reserve Bank of Dallas (Chapter VII) is a Government agency using punched-card methods which is also in the financial group of installations. State educational institutions are left out of consideration here and considered as belonging in the educational group. Other government agencies, both state and national, could use punched cards profitably, and some are already introducing the method with hopes of expanding and broadening the uses. More city departments could profit by the experience of the Houston Police Department (Chapter VI) in the use of punched cards® Perhaps the next biggest class of users and potential users of the punchedcard method is the transportation and public utilities group,, Punched-card installations considered here include those used by the Texas and New Orleans branch of the Southern Pacific Railroad (Chapter XII), Pioneer Air Lines (Chapter XI), the Red Arrow Freight Line (Chapter XIII), and the Humble Pipe Line Company. User not given in the case studies is the Braniff Airways installation at Dallas. Several truck lines use the punched-card method# Fewer railroads in Texas use the method than could profit by its use. Perhaps some of the larger bus lines need it. The San Antonio public utilities installation (Chapter XVIII) shows what could be done with profit by many of the larger public utilities. Several cities in Texas are large enough to use the same kind of a system to advantage. Retail business, while not fostering very large establishments has opportunities for the use of punched cards to advantage. Sanger’s in Dallas (Chapter XVII) uses the method with profit. Joske’s in San Antonio and Foley’s in Houston should find it as profitable. A few other retail stores of comparable business make limited use of the method. Grocery stores have shown what can be done with inventories and orders. These include Henke and Pillot of Houston (Chapter XIX) e Sweeney and Company of San Antonio and the Texas office of General Foods are wholesale grocery distributors who find the method indispensable. The motor company of Dallas, Chapter XV, is both wholesale and retail distributor who finds the method invaluable© While the financial users are not usually very large in Texas, the use of punched-card equipment and proof machines is essential. Many others could profit by the example of the Federal Reserve with its three uses (Chapter VII), the Austin National Bank (Chapter VIII) with its proofing machines, and the insurance companies with their volumnous records kept on punched cards. The Southland Life Insurance Company handles a variety of insurance, savings, and loan business almost entirely on punched cards. The Texas Employer’s Insurance Association and the Employer’s Casualty Company of Dallas (Chapter X) maintain a complete accounting and statistical record system on the cards and handle two and a quarter million items a day as a matter of routine. Manufacturing in Texas is relatively undeveloped, but with the rapid advancement that is being made the future should promise more use for the punched cards as profitable as that made by Nardis of Dallas (Chapter XVI), a manufacturer of women’s sportswear, and the oil companies in Texas# The Magnolia Petroleum Company uses the machines in one installation for a complete accounting and statistical system on punched cards. Humble (Chapter XIV) separates its punched-card installations into seven distinct units. One is used by each of the following: the Sales Department, the Production Department, the Crude Oil Storage Department, the Refining Department, the Treasury Department, the Employee Relations Department, and the Pipe Line Company. While the oil companies are the chief industrial users of the method now, the time may be near when industry will be of such diversity and volume as to require even more assistance from the punched cards than Dow’s small use through the Houston service bureau. Educational users of the punched-card method of keeping grade records include the Registrar’s Office of the University of Texas, Texas. Agricultural and Mechanical College, Prairie View College. The Auditor’s Office of the University of Texas uses punched cards for financial accounting, the University Guidan.ce Bureau uses test-scoring machines, and the Bureau of Business Research has an installation for compiling statistics on current business. The cases studied cover a rather large variety of uses. Chapters II through VI reveal strictly statistical uses, Chapters VII through XV and Chapter XIX a combination of statistics and accounting, and Chapters XVI through XVIII accounting principally. Even the accounting installations make statistical reports from the punched cards because the operation is so simple when the records are on the cards already for accounting uses. That multiple-use feature of the method of keeping records on punched cards is one of its principal justifications. Payroll accounting, one of the most universal uses of punched cards, is done in Texas on the cards by Humble, Magnolia, the Texas Employer 1 s Insurance Association, The Employer’s Casualty Company, The Southland Life Insurance Company, Sanger’s, the Texas and New Orleans Railroad, Nardis, Pioneer Air Lines, the State Department of Public Welfare, the University Auditor’s Office, Red Arrow Freight Lines, DuPont, General Foods, and Dow Chemical Company. Appropriation accounting is done on cards by the Boards of Control and Vocational Education. General accounting, including accounts receivable and accounts payable, is done by many of the Texas users of the method — Henke and Pillot, the Dallas motor company, Humble, and the three Insurance Companies. Bond accounting is done by the Federal Reserve Bank, personnel records by Fort Sam Houston and Kelly Field. Kelly Field includes inventories also. Inventories are kept by Henke and Pillot, Sweeney and Company, Humble, the Board of Control, the Department of Public Welfare, and Nardis. The educational institutions keep grade records, the University Testing Bureau grades tests, and the University Auditor's Office does financial accounting. The Austin National Bank operations, of course, are financial. Sales analyses are made by Humble, by Sanger's, by Henke and Pillot, by the Dallas motor company, and by the transportation companies. Humble Production Department accounts for gas royalties besides general production accounting. The Crude Oil Storage Department of the Company prepares oil royalty checks end accounts for oil runs® The Humble Treasury Department includes annuity plan accounting in its punchedcard operations. Nardis includes all kinds of production accounting. Work done on punched cards in Texas, therefore, includes practically all kinds of possible records and performances with business data* As volume increases in Texas business, the punched-card method will be well known among the users in the State and should be used to advantage® Reasons for Limited Punched Card Use in Texas -- Apparently there are only two reasons why punched-card methods are not used more extensively in Texas business* First, there are not enough industrial plants or other businesses of sufficient size to warrant the use of the method* Retail stores such as Sangers, Chapter XVII, use small installations for specialized work, but many others use no punched cards or service from a bureau of the machine company because the volume of work needed does not seem to justify an installation of machines. Some concerns that do need some punched-card service are so far separated that cooperative use of machines is difficult. However, it does appear that the variety of industry in Brazoria County, for example, would warrant cooperative installations. Besides Dow Chemical Company, the sulphur interests, and rice business would seem to justify such a machine installation for joint use. Secondly, where the use of the punched cards would be profitable, the inertia or lack of information and the resultant skepticism of potential users have to be overcome. This is, of course, true not only of Texas businessmen but of many businessmen everywhere. The feeling of many executives that secrecy will be sacrificed when payrolls are put on the cards has often deterred businessmen from their use. The Southland Life Insurance Company in Dallas now uses the machines for payrolls, along with all theix* other complicated and tedious recording of the various phases of widely varied insurance business, but the use was adopted only after much effort on the part of the present supervisor of the machines department. It is difficult for businessmen accustomed to the strict secrecy of records kept by hand by trusted employees to realize that the machine staff can also be selected with the same care and the records kept with the same secrecy as before. It simply means transferring the responsibility of secrecy from one department to another, and usually cards can more easily be kept under lock than the more bulky hand records. Lack of knowledge of what the machines will do and how reliable the results are, and an aversion to using highly trained workers on anything which seems as mechanical as the machines, keep many potential users from attempting the use of punched cards or from full realization of their potentialities. Such low salaries are paid for operators of tabulating equipment that few train to become operators if they are a.ble to secure thoroughly adequate educational training for other jobs. Thosewho do train to become operators are likely to be without adequate education to enable them to take advantages that would be evident if the operator were familiar with the accounting and statistical needs of the business. As an example, a supervisor of a department using one of the largest ♦ punched-card installations in Austin knew nothing whatever of the machines and had to depend wholly upon the supervisor of the machines installation and his assistants for advice as to the use of the machines. More than a year after his first connection with the work of the machines he remarked that he was going to see if the machine supervisor and the IBM consultant could "work out" wiring of the tabulator board so that an additional column of needed information could be included on the monthly report. The "working out" meant one more group of wires in the board for a simple listing, a fact most obvious to one familiar with the machines. In another instance a Government installation in Texas spends the time of keypunch operators and the space on the punched card that might be needed for other use, in punching a one into each of the hundreds of thousands of cards used each year, in order to count the number of cards by machine. The only operation necessary is plugging into one stationary outlet in the board to get the count; an unpunched card would do as well as a punched one. A supervisor of the machines in the same agency insists upon the use of a totally inadequate method of checking errors, holding to an outmoded method to which he has been long accustomed in the use of hand methods, a method subject to all the human errors which handicap businesses using hand methods. Adequate methods of checking the punched cards are easily attainable. A supervisor in that agency was called upon to prepare a manual which would explain the punched-card method to management of the agency so that the most efficient use might be made of the machines, and so that the results could be used with understanding of their limitations and their potentialities® Two mimeographed efforts at the explanation left the officials confused by much use of technical terms and as unsure as before. The supervisor did not have sufficient educational training to explain the process and make clear the potential uses of the machines in the particular field of operations of the agency. More salary incentive will have to be offered machine workers before adequate assistance can be had. Even adequate salaries sometimes do not solve the problem. In some of the largest and most efficient machine units in Texas, like those of Humble, Chapter XIV, supervisors and chief accountants find it difficult if not impossible to secure the desirable quality in operators for the punched-card machines. This seems to be due principally to the aversion of accountants and statistical analysts to using anything that seems mechanical. They want to use their minds. Yet they miss the realization that that end could best be accomplished by the use of the most modern methods of getting results, that the mind can best devise with quick and accurate means at its disposal. This aversion, built up over years of associating the idea of machine operation and ignorance, must be overcome with knowledge. Elimination of much of the noise of the punched-card machine in operation would be a long step toward this goal, also. Chiefs of several of the Humble Company divisions and many others throughout the state emphasize the urgent need for courses in the operation and use of the punched-card machines in the colleges and universities of the state. They plead for making students, particularly accounting and statistics students, aware of and inclined toward use of the machines. The need is for people who understand both what is needed and what the punched card can produce. One chief of a division made the statement that the punched-card machines are like a pencil; they produce only what is within the ability of the man who uses them. Another advantage to the use of punched-card operation by the accountant and statistical worker is that, as a new employee, he can learn the business in all its phases and divisions on the machines more quickly and thoroughly than in any other place in the organization. The supervisor of the machines department of Southland Life Insurance Company urged the same necessity of overcoming resistance to the use of machines by trained and dependable employees. The Texas Employer’s Insurance Association and Employer’s Casualty Company workers, Chapter X, are convinced that the advantages of their complete accounting and statistical records on punched cards, if realized by businessmen, would bring the conversion of hand methods to punched-card methods to the point that most accountants and statisticians would use punched cards. It follows from the foregoing analysis of the use of the punched-card method in Texas that, while just about every kind of operation covered by punched-card statistical and accounting methods is in use in Texas, still more extensive use could be made of the methods with profit to Texas business. The limited field of industry in the State is being rapdily broadened and enlarged and will offer further use for punched cards in accounting and control. Government uses of the method possibly lead in the State, but at least five other classes of users are included: transportation and public utilities, retail business, financial institutions, oil and some other industries, and educational institutions. The limited need for the punched-card method in Texas because of limited size and variety and the resistance by both workers and executives appear the two causes why use of the method is not more extensive. The latter cause can be and should be overcome by education of the future executives while they are being given formal training for their business careers and by offering better salaries for punched-card workers so that the educated, thinking employee can be used on the machines or in connection with planning for their operation. More effort should be made to educate the present executives in the advantages of the machines in order to overcome prejudices built by long experience with hand methods. While the scattered industry in Texas and the limited size of businesses cannot be remedied quickly, the difficulty is rapidly disappearing with the increased industrialization of Texas and the increasing population and concentration of trade. In contrast with the industrial Northeastern part of the nation, Texas seems to have little need for speed in compiling records and efficiency in handling quantity, but pooling of operations in areas where the variety and quantity of paper work justify use of a common installation by several establishments, the use of service bureau, and ingenuity in devising or seeking out present needs for the punched-card method will develop additional use of the method even under present conditions. BIBLIOGRAPHY Alt, Franz L. 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