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represents the increase by compounding, due to the overhead additions to the flat cost or introduction, capital charges carrying units A and B to this stage.
The same principle runs throughout the table. Unit A compounds ten times, unit B nine times, etc. The lower line of the tabulated values, marked "Final values," shows the final value of each unit (A, B, etc.) under its letter; the final value of the completed article in column headed "Costs" (the addition of this column (75.442) states the actual units of capital used by the unorganized group to produce and sell the finished article); the total overhead charge, as swollen by compounding under column headed "Overhead" and the column to the extreme right shows the profits a sequence organization might make at each stage by selling its partly finished product at what it actually cost the unorganized group.
The horizontal lines below the tabulations state comparatively the results of unorganized and sequenced operation. They show the total capital, unorganized, to be 75.442 units compared with 10 units when sequenced and a wasteful use of capital of 65.442 units, or 654 per cent; and that if the sequence sells its finished product for what it actually cost the unorganized group, which is 15.937 units, then, because its own cost is only 10.000 units, its profits will be 5.937 units or 59.37 per cent.
TABLE 2.-Unorganized industry, compounding of capital, overhead charges, and profits.
[Ten stages. Ten per cent overhead charges (on flat cost). Ten per cent profit rate (on whole cost).]
1 Unnecessary capital, unorganized, increase due solely to compounding, 54.528 units, or 545 per cent. Unnecessary capital, unorganized, 99.528 units, or 995 per cent.
COMMITTEE ON INTERSTATE COMMERCE.
Final selling price, original unit:
Saving (82 per cent of original, 456 per cent of sequenced price).
Final selling price, complete (10 units):
Saving (63) per cent of original, 173 per cent of sequenced price).
Final selling price, complete (10 units), unorganized.
Cost, complete (10 units), sequenced.
Possible profit, unrestrained sequence combination.
Possible profit, unrestrained sequence combination, at 25 per cent profit rate.
Reduction of tariff-trust "velvet" by 15 per cent reduction in customs tariff duties.
This table and Table 3 differ in form from Table 1; were made prior to it and are less clear, although more condensed.
Successive in-process or stage values in lines are located by numerals 1, 2, etc., to 10, in columns under the heading "Stage" at the sides. Columns 1, 2, 3, and 4 show, respectively, the flat cost, overhead charges, capital charge, or whole cost and profits chargeable to unit A (the first unit of value introduced) in each of the 10 stages. Unit capital or whole cost (column 3) for any stage is the sum of flat cost plus overhead (columns 1 and 2) for the same stage. Flat cost (column 1) for the second and any succeeding stage is the sum of whole cost plus profits (columns 3 and 4) for the preceding stage.
Because these columns state the successive values of a unit through 10 compoundings, they also state the final values of units B, C, Ď, etc. Opposite the stage No. 10 are found final values for unit A; opposite 9, like values for unit B (which is compounded 9 times); opposite 8, like values for unit C, etc.
Columns 5, 6, 7, and 8 give similar in-process values, for stages, of the in-process or partly finished and the completed commodity. In the first stage these values are identical with like values in columns 1, 2, 3, and 4, because only unit A has been introduced. In stage 2 unit B is introduced, its introduction values being identical with the like values of unit A in its first stage, as shown in columns 1, 2, 3, and 4, while the values of unit A have been advanced by once compounding to those stated in the same columns for stage 2, and therefore secondstage values; in columns 5 to 8, inclusive, are respectively the sums of the like values for stages 1 and 2, in columns 1 to 4, inclusive. Likewise, in stage 3, because unit A has now been compounded three times, its present value is shown (columns 1 to 4) for stage 3; because unit B has been twice compounded its present value is shown in those columns opposite the numeral 2; while unit C, now introduced at standard values, has its values shown in those columns opposite the numeral 1; and the third-stage values for the in-process commodity, as shown in columns 5, 6, 7, and 8, are the sums of the like values for stages 1, 2, and 3, shown in columns 1, 2, 3, and 4.
The same rule applies to the succeeding values in columns 5, 6, 7, and 8, which may be easily checked. Columns 9 and 10 show by stages in units and percentages, respectively, the waste in the use of capital necessary to carry the compounding, as distinct from the increase of capital due to the fact that each handler has to have capital necessary to buy the original unit values, in addition to that necessary to carry the compounded increases-55 units of capital are necessary to carry the uncompounded values and 54.528 additional units to carry the compoundings; a total of 109.528 units; say, 11 times the necessary sequenced capital.
Column 11 is not shown in the large charts, but is added for the convenience and information of the committee.
It shows, in units and percentages, the profit which the sequence organization will make if it sells its partly finished commodity in any stage, for the price, in the same stage, which will net the unorganized group 10 per cent profit.
Under the tabulated stage values are statements in horizontal lines of comparative values in unorganized and sequenced industry. The . upper and second lines are the additions of columns 1 to 9, inclusive, and show total values necessarily carried by capital. The third line
shows like necessary values sequenced, and the fourth and fifth lines. show in units and percentages the excess or wasteful burdens carried by the industry and its capital, unorganized, from which it is freed by sequencing it.
Thus, under column 3, we find the total book capital necessary to carry the successive, compounded, whole costs of unit A to be 27.273 units unorganized, as compared with 1 unit sequenced, a waste of 26.273 units, or 2,627 per cent; and under columns 1, 2, and 4, respectively, we find the same percentage of waste in carrying unit A's flat costs, overhead charges, and profits, as swollen by compounding.
Under column 7 we find the total in-process book capital of the unorganized industry to be 109.528 units, as compared with 10 units, sequenced, a waste of 99.528 units, or 995 per cent; and under columns 5, 6, and 8 we find the same percentage of waste in carrying flat costs, overheads, and profits, as swollen by compounding.
Succeeding horizontal lines state final selling price of unit A's value (original unit), unorganized, as 6.115 units, sequenced, 1.100 units, saving of 5.015 units, which is 82 per cent of the unorganized and 456 per cent of the sequenced selling price; the final selling price of the complete commodity with 10 per cent profit rate to be when unorganized 30 units, sequenced, 11 units, a saving of 19 units, which is 633 per cent of the unorganized and 173 per cent of the sequenced selling price.
Similarly, the lower three lines show that if the sequence sells at 30 units, which would net the unorganized group only 10 per cent, the sequence, to which the cost would be 10 units, would net 200 per cent on its capital.
The final lines show the difference in the profit rates to a sequence combination selling at prices which would yield the unorganized group a 10 per cent and a 25 per cent profit rate-a difference of 47.187 units, or 472 per cent.