matters our mental action is so swift as to be practically automatic-they are attended to by the lower nerve centers, as explained in Chapter X-yet if we check up our actions we find that we are really applying these tests of thinking one by one, until we are satisfied.

The same tests expressed in more formal, complete, lengthy terms constitute a very important part of the subject matter of psychology and logic, the sciences which deal especially with the way the human mind works. These tests accurately and systematically applied-whether the statement of them be elaborate or brief-will guide us safely in estimating business methods and projects. In fact, there are no other tests for careful human thinking.

Problems in Analysis

EXERCISES

As an exercise for developing the judgment let us consider certain problems in analysis. In the process of analysis, similarities and differences are detected and upon these as a basis classifications are made. Study the following rules, noting, of course, the errors used for purpose of illustration and preparing answers to the questions:

1. Every division is based upon differences in some attribute common to all the members of the whole to be divided. In classifying businesses as individual proprietorships, partnerships, or corporations, what has been taken as the common attribute? A statistical company recently issued a circular in which industrial stocks were referred to as coppers, leathers, oils, steels, motors, and marines. What was the basis of classification here chosen?

2. Each division in order to be consistent must rest upon one common attribute. Should businesses be classified as individual proprietorships, partnerships, and monopolies, what is the basis of classification taken for the first two? for the third?

3. The various groups must be mutually exclusive. A young employment manager in his report was found to have classified the factory's employees into administrative, machine shop, foundry, assembly, and Austrians. In another instance the purchasing agent

referred to belting, oil, copper, and metals. What fallacies were involved? How would you have avoided them?

4. The division must be complete, so that the various groups when combined will equal the whole. A merchant estimated his rent, salaries, spoiled merchandise, and bad accounts as totaling 16 per cent and, since a profit of 20 per cent was desired, marked his goods at an advance of 36 per cent. In what respect was this figure fallacious? Let us now apply our tests concerning evidence to certain examples which have been drawn from the current newspapers and magazines. These examples have been stripped of all non-essential matter in order that the fallacies-that is, the errors in reasoning-may be more readily exposed. Since as a usual thing fallacies are imbedded in the midst of long statements and much perfectly good reasoning, you will find it helpful likewise to reduce questionable arguments to their barest outlines. What, boiled down to its essence, does this

speaker or this article claim?

Lack of ideas is fatal to business success.

This efficiency expert has many ideas.

Therefore you should not oppose the policies he advocates.

Whatever harms people should be avoided.

A tariff on steel girders harms building contractors.

Therefore the protective tariff should be avoided.

Bankruptcy is proof that wrong procedure was followed.

Jones is a bankrupt.

Therefore to succeed do just the opposite to what Jones advises.

Lawsuits should be avoided.

Collecting this bill from Smith involves a lawsuit.

Therefore this bill should not be collected.

A federal Bureau of Business Practice we declare would be unconstitutional.

Things which are unconstitutional cannot become law.

Therefore you should oppose a bill authorizing such bureau.

War is a dreadful thing.

Johnson discharged his employees who joined the militia.

Therefore Johnson is a true humanitarian.

The best accountant I ever employed had red hair.

This accountant has red hair.

Therefore I shall engage him.

Our advertising manager expected sales to exceed $150,000 per week. They have not passed beyond $125,000.

Therefore he should be discharged.

Mill's Five Canons

The famous writer on political economy, John Stuart Mill, in his "System of Logic," has formulated five "canons" or rules for the discovery of "causal relations." The business man who masters these five canons, utilizing the illustrations given herewith, will find that he has definitely gained in his power of getting at the essentials. First Canon, the Method of Agreement. "If two or more instances of the phenomenon under investigation have only one circumstance in common, the circumstance in which alone the instances agree, is the cause (or effect), of the given phenomenon."

An example of this method often cited by logicians is the experiment carried on by Sir David Brewster in his attempt to find the cause for the colors seen upon mother-of-pearl. These were quite naturally supposed to be due to the chemical or physical nature of the substance itself, but Sir David, happening to take an impression of the mother-of-pearl in wax, found that although the substances were entirely different the colors were exactly the same. He next took impressions in balsam, gum-arabic, resin, etc., and afterwards marked a metal surface with very fine, close grooves, in every case producing the same iridescent colors found with mother-of-pearl. The form of the surface, therefore, which had been the only factor remaining the same throughout, and not the chemical or physical composition, which had varied in each case, was by the method of agreement very properly concluded to be the cause sought.

Second Canon, the Method of Difference. “If an instance in which the phenomenon under investigation occurs and an instance in which it does not occur, have every circumstance in common save one, that one occurring only in the former; the circumstance in which alone the two instances differ is the effect, or the cause, or an indispensable part of the cause of the phenomenon."

This is the method of experiment and its utility, as Jevons points. out, depends mainly upon the precaution of varying one circumstance only at a time, all other circumstances being maintained just as they were.

The instance of the star salesman who protested against being charged with any advertising expense whatever, claiming that the sales were not due to advertising influence but to his own ability, illustrates very nicely the use of this canon.

"Very well," returned the sales manager, "you are to have Ohio as your territory then, on your old commission. We have not as yet advertised there and shall not, now that it is to be your territory."

The salesman, well pleased with himself, sallied forth to conquer the Ohio territory. But business proved hard to get, with commissions as a consequence small, and, although for six weeks he marched and countermarched across various sections of that territory, in the end he returned thoroughly beaten to headquarters. Advertising, he was convinced, did help him on the firing line.

The full validity of this proof concerning the influence of advertising obviously depends upon its being the only circumstance which varied. This searching question is to be borne in mind, therefore, in securing accurate results through the method of difference: Do other conditions remain unchanged?

Third Canon, the Joint Method of Agreement and Difference. "If two or more instances in which the phenomenon occurs have only one circumstance in common, while two or more instances in which it does not occur have nothing in common save the absence of that circumstance; the circumstance in which alone the two sets of instances differ, is the effect, or the cause, or an indispensable part of the cause of the phenomenon."

What we have here is a double application of the method of agreement, first to a number of instances where an effect is produced and secondly to a number of quite different instances in which the effect is not produced.

A manufacturer, let us say, has experienced considerable trouble from complaints concerning defective rear wheels in wagons which he placed on the market. The foreman declares the difficulty is due to overloading in the wheat regions; the works manager thinks possibly the relatively inexperienced mechanics engaged in one department (Department B) following a strike may have turned out some poor work which escaped detection; while the sales manager gives it as his opinion that the dry climate in certain sections is responsible. Complaints are tabulated from several sections as follows:

Complaint A: Broken wheel made by Dept. B-farm use-dry region.

Complaint B: Loose hub-made by Dept. B-lumber camp-damp region.

Complaint C: Defective bands-made by Dept. B-coal delivery— average climate.

Complaint D: Cracked spokes-made by Dept. B-dairy use-damp climate; etc., etc.

The returns concerning these various wagons reveal the fact that only one circumstance is invariably present, "made in Dept. B." That this is the cause sought is probable, but in order to render the conclusion still more definite, it is decided to investigate negative instances, or in other words, cases in which the wagons had proved entirely satisfactory. This reveals that the wagons made by departments other than B are being used under widely varying conditions of climate and load, and that uniformly they are giving satisfaction. This information shows that where no complaints had been received one and only one condition was invariably absent; viz., the work of Department B. This confirms the previous investigation.

Fourth Canon, the Method of Concomitant Variations. "Whatever phenomenon varies in any manner whenever another phenomenon varies in some particular manner, is either a cause or an effect of that phenomenon or is connected with it through some fact of causation."

The directors of a certain large baking concern in their deliberations at a particular meeting not long since illustrated how this canon is applied. The instance, it will be recognized, has been stated in much simpler terms than actually existed for obviously no bakery's success is dependent upon three factors alone. But otherwise the conditions remain unchanged. This was the evidence placed before them:

Kansas City plant-run-down business. Coming of Supt. Smith= improving business.

Pittsburgh plant-high costs. Coming of Supt. Smith improving business.

Boston plant-factional quarrels. Coming of Supt. Smith-improving business.

According to detailed records submitted by the firm's accountants it was clear that the increasing week by week tenure of this particular executive and a plant's gradual reaching of its standard in capacity and costs were in close causal connection. The board proceeded to elect Superintendent Smith general manager, and the same ability which enabled him to put plant after plant into condition is now operating successfully in a wider field.

Inasmuch as business problems very frequently are characterized by change, it is found convenient to utilize this method of detecting causes from the study of concomitant variations.

Fifth Canon, the Method of Residues. "Subduct from any phenomenon such part as is known by previous inductions to be the