In the years of comparative stability before the World War, simple cost accounting was a sufficiently effective tool to meet all requirements. Knowing his costs, a manager could plan with certainty, for business was on a cost plus, or, in some cases, a cost minus basis. But then followed a succession of rapid changes divided into three periods, the pre-war period, the war period and the post-war period. It quickly became evident to thinking managers that no accounting system confining itself to already established facts would satisfy the needs of these three periods and of the years ahead. That is how it has come about that budgeting and planning have pushed to the fore in the last few years as subjects of consequence to managers. Budgeting and planning have become a particularly conspicuous need since the beginning of the deflationary movement early in 1920. As long as the market was advancing and the demand for commodities was insatiable, the manager could be sure of success if his planning were only conservative enough. He did not have to be accurate. All he had to be sure of was that his errors would be in his own favor. Granting that they were in his own favor, he could make a multitude of mistakes and come out with a profit. In fact, there was a time when the more mistakes he made in his own favor the greater his profit. This was the era of easy money when price and quality were lost sight of in the shadow of the overwhelming demand for deliver
