Every business institution has to consider the rate of charge which it will be able to make for its service or product, and the establishment of such rates is often one of the most serious problems in business management. The retailer is constantly faced with the necessity of keeping his charges at such a level as will net him a profit above cost, while at the same time he avoids loss through excess of expense over income. The apportionment of different items of operating cost to the different charges for service or goods is a special phase of the general problem herein referred to and is itself highly technical. It always offers serious difficulties as an element in practical business policy.

In banking the same problems have to be met, and while they present some peculiar phases or elements of difficulty, they are in the main identical with the questions of the same description which are encountered in ordinary business. Still it is true that business enterprises are not all interested in this problem in precisely the same way. Contrast, for example, the case of a municipal street railway which has entered into a contract to carry passengers at a five-cent fare. The problem of profit for it is largely a problem of keeping down expenses, since the rate of its charge is practically stable. True, it may be possible, by proper, adaptation of service, to adjust its charges in an indirect way, as when special cars are run for long-distance traffic on an express basis, thus avoiding the cost of intermediate stops, while other cars are run for local traffic, but in the main the problem is very simple. At the other extreme of the problem of price adjustment is the case of a manufacturer who has to fix his charges on, say, one hundred different items or kinds of product, adapting his accounting so as to apportion overhead costs as well as individual costs to the several items. Intermediate is perhaps the problem of the railway which carries both passengers and freight and which perhaps divides its passenger traffic into two or three classes, while its freight is classified on a very complex schedule designed to adapt the rates to the different freight movements.