COUPON SALES.Coupons, as it may be superfluous to explain, are credit slips sold to enlisted men by the Exchange. They are sold on credit, being secured by notes signed by the purchasers; these notes constituting a lawful lien on the drawer’s pay are supposed to be redeemed at the next pay day. The credit slips can be used at any time for purchasing articles at the Exchange. Exchanges formerly used metal coins or “checks” for this purpose, but it was considered inadvisable to permit credit to be so easily counterfeited, transferred, etc., hence the use of paper coupons has become universal, being covered by mandatory orders in certain circumstances.
Kinds of Coupons.
There are two classes of coupons, the first being the well known “Coupon Book” shown in Fig. 13. These books are made in various denominations ranging from one to five dollars. They are composed of a cover and several interior pages, the latter being divided by perforations into five coupons each, representing values of five, ten or twenty-five cents, depending upon the value of the book. For instance, a $1.00 book contains three sheets, two composed of five 5c coupons each and one composed of five 10c coupons. On the cover of each book is printed the serial number of the book, its value and blank lines for the insertion of the signature of the person to whom issued, the signature of the Exchange Officer and the date of issue. It is also customary to have printed on the cover the words “Not Transferable”. In some cases, on the back cover of each book is printed a promissory note which, after being signed by the soldier, is torn off and kept by the Exchange authorities until the value of the book is collected in cash from the soldier. A variation of this scheme is to have a separate sheet in each book so printed that it will perform a like function. In either case, it is expected that when the book is depleted, the clerk making the last sale shall take up the cover of the book in order that it may be filed in the Exchange for such period as the Exchange Officer shall determine. This, for the reason that sometimes a man will claim that, although he signed up for certain coupons at a certain time, he failed actually to receive the coupons. The possession and production by the Exchange of these used-up covers are conclusive evidence to the contrary.
These coupon books have certain inherent defects that are more or less serious. In the first place, it is found that they can be used as stakes in gambling games and can also be sold or otherwise transferred by the original drawer. This is objectionable, not merely because it is against regulations, but also because the person who so receives the coupons is not apt to draw coupons of his own, thus tending to curtail the amount of coupon sales transacted by the Exchange. This transferring of coupons can be accomplished in several ways. In large garrisons it will take a little time before the clerks will know each man by sight, especially when there is an influx of recruits. If a customer is not known to the clerks, he might be able to use another soldier’s coupon book unless the clerk should require him to write his name and compare it with the signature on the book presented. This would be impracticable at certain times of the month when the coupon sales were heavy, as it would consume too much time, thus preventing the clerks from waiting upon other customers as promptly as they should. It is evident that this kind of a transfer could be effected with any kind of coupons, and there is no preventive except to have the clerks become acquainted with every man in the garrison at the earliest practicable moment. When there is time, the clerks should, in doubtful cases, require the customer to write his name and then compare it with the name signed on the book. All clerks should understand that when any person presents a coupon book not his own the book is forfeited to the Exchange and the occurrence is to be reported to the Exchange Officer.
Another way in which coupons can be transferred (unless each coupon is numbered to correspond to the cover) is as follows:—Private A borrows from Private B fifty cents in cash and gives him a dollar coupon book in exchange. Private B removes the staple which binds this book together, takes the book apart and throws away the cover. He then loosens the staple in a book which he himself has drawn at the Exchange and carefully inserts enough of the loose coupon sheets from A’s book to fill it up again, and bends the staple back into its original position. This scheme is of wider prevalence than most Exchange Officers would imagine, and it is very hard to detect.
Another fault to be found with the coupon book lies in the possibility of there being a wrong number of sheets of coupons in it. Printers are but human and it sometimes happens that there are too few or too many coupons in a book. Unless this is detected before issue, it causes an error in our statement of coupons outstanding. To prevent this, it is necessary to examine each book before issuing it, (even before handing them over to the coupon clerk), a tedious operation, one which consumes unnecessary time and labor.
In most Exchanges, the conviction sooner or later arises that there are coupons outstanding of which the Exchange has no record. This may occur through the suspicion that some person has acquired coupons in some unauthorized manner. When such cases arise, it is customary to place the Exchange Officer’s signature on the backs of the coupons or to employ some secret mark. This is a laborious and expensive operation and should not be resorted to unless necessary. In justice to our printers, be it said that they use every endeavor to prevent coupons from falling into unauthorized hands, but Exchange Officers, if inexperienced, do not always appreciate the importance of taking like precautions. All coupon books should be kept in a place that is absolutely secure, and nobody should have access to same, except the Exchange Officer himself. He should use every effort to prevent a single book from reaching his customers except in the regular way. He should take from the coupon vault only enough books to supply the demand, and they should be carefully accounted for by the clerk who issues them to the men.
Some Exchange Officers use a fac-simile stamp instead of countersigning each book in person. If this is done, the stamp should be most carefully guarded, and kept in the personal possession of the Exchange Officer. When the stamp is made, there should be incorporated in it, some secret mark, otherwise, any person could secure another similar stamp, to the possible loss of the Exchange. This secret mark should be in the nature of a double instead of a single period or some other inconspicuous mark that would probably not “take” well should any person attempt to produce a second fac-simile from an impression of the genuine stamp.
The second type of coupon, shown in Fig. 14, corrects some of the faults of the coupon book. In the first place, it is much cheaper, the first order being about one-half and subsequent orders costing about one-third of the price of the coupon books. This is an important saving because the cost of coupons is a dead loss to the Exchange, and if a satisfactory coupon can be obtained at a low cost, it should be used as a matter of course, and the overhead charges correspondingly reduced.
As will be noted, these coupons consist of a single sheet of stamps or coupons, separated by slot perforations, the whole sheet containing twenty 5c coupons. Considerable experience in this line prompts the statement that no real advantage is gained by having coupon books of denominations higher than one dollar. The style of coupon here illustrated makes a virtue of this fact and all slips are ordinarily made in the one dollar denomination only. In counting up the coupons after the day’s work, we know that, regardless of colors, each coupon represents 5c. Another beauty of the scheme is that it is practically impossible to have strips containing a wrong number of coupons, the method of manufacture almost precluding such a possibility, thus obviating the laborious checking process. Still another advantage is that the whole dollar’s worth of coupons is printed on a single piece of paper, thus preventing any addition to its value, as is possible with the book when partially depleted. One might think that the smaller size of these coupons would make them hard to handle and count, but an officer of considerable experience in this line of work states that by using the rubber end of a pencil they can be counted with more facility than can the other style of coupons. Some Exchanges would probably require each strip to have attached to it a detachable stub on which the soldier would be required to receipt for the coupons and also promise to pay for them at next pay day. In this case, as in the case of the coupon books, such practice merely adds unnecessary work and serves no useful purpose. On pay-day, we should have to handle one such stub for every dollar’s worth of coupons that each soldier had drawn; each of these stubs or cards would then have to be stamped “Paid” and returned to the soldier. This is not an efficient method.
Whichever style of coupon is decided upon for use should be printed on stock of various colors and coupons of one color only should be issued until it is desirable to have a check on our outstanding coupons. (Of course, if the books are used, it will be necessary to have the 5c and the 10c coupons of different colors.) The color should then be shifted and when coupons of the old color cease appearing, we can arrive at an approximate check on our outstanding coupon account. We say “approximate” because it sometimes happens that a man puts away a whole or a partially used book in a garment and thus inadvertently retires it from circulation for a space of time that may stretch into months. Of course, this could be prevented by issuing a notice that all coupons must be presented before a certain time, and that after that time, no coupons of the old colors would be accepted. This would give us a fresh starting point as regards our outstanding coupons, but such a proceeding should be resorted to only under the most serious circumstances, because it savours somewhat of a person refusing payment on a draft. When, however, there is good reason to believe that our Coupons Outstanding account is incorrect, such a step should be taken immediately, as it is about the only practical way in which we can correct the account—a very important one.
Regulations Concerning Coupons.
Before explaining at length the system of handling coupon sales advocated herein, it may be well to examine the regulations with which we must comply. First, comes par. 15, G. O. 176, W. D., 1909, which reads as follows:—
“15. Sales on Credit. When the commanding officer and council are agreed that it is to the true interest of the command, the former may authorize a credit at the exchange to any soldier in good standing to an amount not exceeding in any one month one-third of his monthly pay. This will be given upon the request of the soldier, in writing, approved by his company commander, and these credit checks will be carried on the accounts of the exchange as “bills receivable” until paid. Soldiers granted credit will be distinctly informed that they must make prompt and unsolicited payment to the exchange officer on next pay day. Defaulters will be debarred the privileges of the exchange and are liable to trial and punishment. It is the duty of the soldier who has been given credit to pay the amount as soon as he receives his pay, and the exchange officer will be present at the place of payment to receive the money or make such arrangements as will facilitate the payment. Credit will not ordinarily be extended to a soldier between the date of last payment on rolls before discharge and the date of discharge. When the debt has remained unpaid one pay day on which the soldier was paid a balance sufficient to discharge such debt and no other means of collection is practicable, the exchange officer will notify the company or detachment commander, who will note the amount on the next pay rolls as “Due Post Exchange —— ——” and on succeeding rolls until the debt has been collected, or until it is apparent that it can not be collected, when the credit check will be turned over to the company or detachment in lieu of so much cash at the next distribution of profits as provided in paragraph 17.”
In the opinion of many, it is unfortunate that an arbitrary limitation of credit has been fixed as shown in the first sentence of the above quoted paragraph, as it tends to work a hardship upon some of our most valuable soldiers. Most of our older non-commissioned officers and N. C. staff officers are married and spend most of their pay for articles that are carried in stock by well equipped Exchanges, such as meats, groceries, etc. It is not always convenient or even possible for them to pay cash for purchases, and there is no doubt that they would do a much larger business with the Exchange if greater credit were allowed them. It is a well established custom to extend reasonable credit to all commissioned officers; it would seem but just to extend a proportionate amount of credit to such N.C.O.’s as might be vouched for by their respective organization commanders. It is hoped that this limitation may be modified, but until that occurs, the Exchange Officer has no discretion in the matter and should be careful to avoid any infraction of the general rule.
The second sentence of par. 15 also merits more than a passing glance. It requires a previous request “in writing” by the soldier before credit coupons can be issued him, and the request must be approved by his company commander. It is not specifically stated that this request must be renewed every month, nor is the writer aware that this point has ever been decided. We may, therefore, assume, when any man has once made this written request, that credit to the amount of one-third of his monthly pay be extended to him, that he need not formally renew this request monthly. Should this interpretation prove fallacious, we must have the consolidated request (Form 25, to be described hereafter) signed by the men monthly. If this is done, the list should be signed at the same time as the pay rolls, to save trouble for the men. It is found that when there is an unnecessary amount of “red tape” connected with the operation of securing credit coupons, the men will (perhaps unconsciously) tend to shun the process, with consequent loss of business to the Exchange. There is every reason why we should make it as easy as possible for everybody to transact business with the Exchange and any unnecessary stumbling blocks should be carefully searched out and removed. The Exchange should be run on the same general principles which govern a civilian store, and if the latter subjected its customers to petty annoyances of any kind, it would soon be driven out of business by lack of trade.
Returning to paragraph 15, it might be remarked that perhaps the best way in which the men can be “distinctly informed that they must make prompt and unsolicited payment”, is by incorporating this statement on the receipt which they sign when the coupons are issued to them. Beside the other matter contained in par. 15, we should note par. 13 and par. 14 (c) and (e) of the same order. They read as follows:—
“13. Checks or Coupons. The use of checks or coupons representing values, and exchangeable for merchandise or other charges at the exchange, is encouraged merely; but care should be taken that these checks are not disposed of to unauthorized persons, and to provide against this, they should never be redeemed in cash. When permitted by the commanding officer, they should be sold by the exchange officer and regarded as a liability until redeemed.
“The coupon-book system of extending credit to enlisted men will be used by all exchanges conducted at posts where more than two organizations are stationed, except at temporary stations and at places where conditions of service have made it impracticable to procure the coupon books.
“These coupon books will bear the name of the enlisted man to whom issued and will be honored at the exchange only when presented by the enlisted man whose name appears on the book.”
“14 (c). Bills Receivable (Enlisted Men).—To show the value of checks issued to enlisted men, and the amount of cash received from them in payment of their due bills. When checks are issued, the entry will be ‘Cash, Dr. to Bills Receivable.’ The difference between the two sides of the account will show the amount of due bills on hand unpaid.” (Par. II, G. O. 201/09.)
“14 (e). Check Account.—To show the amount of checks outstanding. When the checks are issued, this account will be credited as above, thus, ‘Bills Receivable, Dr. to Checks.’ The amount of checks received each day for merchandise will be charged to the account, thus, ‘Checks, Dr. to Merchandise.’ The difference between the two sides will show the amount of checks outstanding.”
Note that the outstanding coupons are a liability, as they may be presented as a claim against the Exchange at any time. Of course, the receipts which the men have given us for these coupons, in other words, their notes promising to pay us for the coupons, are an asset and should be carried under Bills Receivable. Some Exchanges call such assets “Bills Receivable, Credit Coupons”, thus differentiating them from such as Bills Receivable, Charge Accounts or Bills Receivable, Laundry Coupons.
Paragraph 14 (c) and (e) translated into non-technical language simply means that when we issue coupon books of a certain value to the men, we must enter this amount on the left hand or debit side of our “Bills Receivable” account in the Ledger, thus charging up “Mr. Bills Receivable”, as it is sometimes explained, with a certain amount for which he must account. Now, as the Ledger is to be kept according to the double entry system, we must obey the fundamental principle of this system, which is, “for every account that is charged (debited) a certain amount we must credit some other account with the same amount”, hence the name, double entry. In view of these facts, therefore, we turn to our Check Account—or Outstanding Coupons, if you prefer to call it so, and credit this account with the same amount that we charged against Bills Receivable. When we receive the cash for the men’s notes at pay day, we credit “Mr. Bills Receivable” with the amount taken in, thus clearing him of this amount and making him no longer responsible for it. We have previously, of course, entered this amount on the debit side of the Cash Book, for the same reason noted above. When the coupons are presented by the men in payment for articles purchased by them, we credit “Merchandise” (or the proper department of the Exchange, if departments are used) with the amount taken in. This, for the reason that said department is no longer accountable for that amount of merchandise; we must, therefore credit that department with the proper amount and charge or debit it against the outstanding coupon or Check account. It must be remembered that outstanding coupons are a liability against us and are in the nature of bills payable—except that they are payable only in merchandise. Hence, if we consider this account as a living person—one of our creditors—it will appear more logical when we place to his credit everything we owe him, i. e., the coupons we have given him, and to charge him the value of the merchandise he has obtained from us in return.
The above prolix explanation will sound puerile to an experienced accountant; it is not written for him, but for the inexperienced man with little or no knowledge of scientific book-keeping, who is trying to work this system or one like it. The writer knows from bitter experience how hard it is to avoid some of the unexpected pit-falls of double entry.
Now we are in a position to describe the manner of handling our coupon sales, starting from the very beginning.
The first thing to be done is to have the various organizations submit their lists of men who are entitled to credit at the Exchange. This is usually done a few days after pay day, it being the excellent custom in most Exchanges to issue no coupons until about five days after, in order to attract some of the cash that is apt to be plentiful for only a few days. One of the best forms for such a list known to the writer is Form 25, shown in Fig. 15. It measures 9 × 20 inches and may be punched to fit a loose leaf file. It is faint ruled horizontally six lines to the inch in order to fit typewriter spacing. The length of this form enables a whole company of 110 men to be entered on its face, without resorting to the necessity of turning a page. In garrisons where the organizations are uniformly smaller, the length of the form can be correspondingly reduced. Each organization fills out one of these sheets on a typewriter, entering the names of the men in pay roll order in column 3. In column 2 is entered the rank of each man, and in column 4 is entered the amount of credit he desires, which must not exceed one-third of his pay. The men sign their names in column 1 and in space A is printed the statement to which they subscribe—that they request credit to the amount of one-third of their pay and that they promise to pay for their coupons on the pay day after drawing same, etc. This list is then sent to the Exchange at the regular time, preferably a day or two before coupons are to be issued.
There is a point in this connection that sometimes causes trouble, due to the fact that pay day never comes on the first of the month. There are two ways of handling the situation. The first is to have the companies submit their lists to the Exchange on the first of the month and the Exchange issue coupons on this authority until the last of the same month with the exception of the five days after pay day, during which time, no coupons are issued. The men pay for the coupons on the pay day which occurs in the succeeding month. The principal objection to this method is that if a man draws his full allowance of coupons on or near the first of every month, he would, if he deserted a few days before pay day, cause the Exchange a loss of twice his monthly allowance. The second way of proceeding obviates this defect: it consists in having the companies submit their lists a few days after each pay day. The Exchange issues coupons on this authority and all of these coupons are supposed to be paid on the pay day which winds up this period. Therefore, it is seen that the Exchange runs a smaller chance of loss, or rather, the chances are that the loss will be smaller.
Upon receiving these lists, the coupon clerk at the Exchange takes a supply of Form 19, shown in Fig. 16, and enters the names of the men at the top of these cards, one card for each man who is entitled to credit. This work can be done at odd moments during the month. It is also a good plan to enter the amount of credit to which the man is entitled. This data should be entered at the very top of the card where it will catch the eye. These cards are 3 × 5 inches, specially printed; they fit into the filing cabinet, to be described later. One standard drawer 15½ inches long will hold enough cards to take care of a six company post. The cards should be of fairly good writing stock, but no thicker than is necessary to insure ease of handling. They can be obtained from any job printer, but care should be exercised that they measure precisely 3 × 5 inches, otherwise, they will prove very troublesome to run over rapidly in the drawer, because some will be larger than others. Plain cards of this size can be bought at $1.50 per thousand from regular dealers. All cards pertaining to any one company are behind an index card bearing on its tab the designation of that company. It is also a convenience to have a set of alphabetical guides for each company, as they facilitate finding and filing the cards. After any of these cards receives a record, it is highly important that it not be lost or stolen, so the drawer containing them should be locked except when actually in use. When any man applies for coupon books at the Exchange, he signs his name in the space provided on the card, the clerk adds his own initials as witness, stamps in the date and enters in ink or indelible pencil (or preferably by means of a rubber stamp) the amount of the coupons issued. If the clerk does not recognize the man, he compares his signature with the same man’s signature on Form 25, which he should have near him for this purpose and to see that the man does not overdraw his allowance. He also requires the man to sign his name on the stub of the coupon slip or the cover of the coupon book issued. In addition, the clerk should have at hand a strip of paper on which he has entered in rotation along the left hand margin the serial numbers of the coupons he has on hand. Such a strip can be struck off on the adding machine. As coupons are issued, the clerk should enter opposite each number, the name of the man to whom it was issued. He can do this while the man is signing the coupons, so no time is wasted. In the evening, this strip is given to the Steward or cashier and the total value of coupons issued is entered in the proper place on the Steward’s daily report (Form 4, Fig. 5). The record of this strip is checked by comparison with the number of coupons left in the possession of the coupon clerk.
It is found in practice that Form 19 contains sufficient space for noting the transactions of any month, for very few men will draw coupons as many as six times during the month. It will be noted that this scheme does not contemplate restricting the men to but one drawing during the month, as is the practice in some places. The Exchange loses trade by such methods, and much better results are obtained by permitting the men to draw when they please.
When the end of the month arrives, the coupon clerk disregards it by continuing to use the same set of cards right along until 24 hours before pay day occurs. (It should be understood by the whole garrison that no coupons will be issued during this time, in order to allow the coupon clerk to work up his pay table collection sheets). By means of an assistant, the coupon clerk transfers the total of the coupons shown on each Form 19 to column 10 on Form 25 opposite the name of the man to whom that particular Form 19 refers. As fractional parts of a dollar are not issued, $5.00 can be abbreviated to “5”. At the same time, the coupon clerk reads off the totals of any unpaid cards that have been carried from the preceding month, these figures being entered in the same manner in columns 5, 6 or 7, as the case may be. It will be noted that these cards have no place for “brought forward” entries. This is unnecessary labor and is therefore omitted. It is no argument against such a practice to ask what would happen if one of the old unpaid cards became lost, because we might ask the same question concerning the current cards. The answer lies in the fact that the checking system will take care of such cases. In this instance, columns 5, 6 and 7 are checked back to the Forms 25 pertaining to the preceding month.
It will be noted that our Form 25 makes provision for entering Laundry charges and has in addition a spare blank column for such miscellaneous collections as may be found desirable. The particulars of the Laundry entries will be dilated upon later. When the amounts that the various men of any organization owe to the Exchange have been entered in their proper columns, each line is added across and the totals due from each man entered in the proper column. Each column is then totaled on the adding machine and the footings checked by comparing the total of the total column with the sum of the totals of the other columns. If they agree, that sheet is ready for payment, and a like process is instituted with the other sheets. These sheets and the Forms 19 are the only papers that need be taken to the pay table.