Paul D. Bunker

Figure 13, Cover (Reduced in size)

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:—

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.

Issuing Coupons.

Figure 15. (Reduced in size)