Profit and Loss

Last week the New York Times published book editor Gerald Howard’s essay reminiscing about editorial tasks in the early 1980s:

I had the idea that we should reissue two early novels by the fine writer Alice Adams. In order to clear the sum of money necessary to do so, I had to generate, by myself, calculator and production cost sheets in hand, a profit-and-loss statement, or P. & L., which would then be signed off on by various departments. My last hurdle in executing this modest financial transaction of maybe $7,500 was to secure the initials of our chief financial officer. A numbers guy. Not much of a reader.

Like all publishing P. & L.’s, ours factored in typesetting, cover art and printing costs, marketing, overhead, the cost of money and the revenue from projected sales and subsidiary rights to spit out a percentage figure on the bottom line that indicated the likely return on investment. (When I first was confronted with one of these forms, I thought, so that’s what a “bottom line” is. Interesting.) We were theoretically required at that time to have our P. & L.’s yield a return of at least 8 percent, and I had become adept in ways to make or exceed that number. You could shave on the cover art. You could shave on marketing and advertising. You could basically lie about projected sales and hope no one called you on it. The techniques I had developed in college to make my ham-handed chem lab experiments yield the proper results found a practical new use.

So there I was in our C.F.O.’s office with a P. & L. that just eked out a 7 percent return. He looked at that piece of paper dubiously. He looked at me dubiously. I made some weak noises about literary excellence, backlist sales, commitment to authors. He continued to look at me dubiously. Then, with that wry and sad expression with which financial people have regarded liberal arts people since at least the invention of movable type and perhaps even written language, he signed off on my shortfallen P. & L. and said to me, “You know, we could make more money by just putting this advance into a certificate of deposit.”

I produced the properly crestfallen face because I knew he was right. Inflation was rampant and C.D.’s were paying 10 percent per annum or more. What a drag I was on the corporation. But I grabbed the P. & L. before he could have second thoughts, thanked him and backed out of his office.

Note, however, that the CFO did sign off on the investment.

I interviewed for a job with Gerry Howard a couple of years after this must have taken place. One of my first tasks on the editorial job I did get was running a P&L on one of the two desktop computers the Editorial Department then owned. I guess I should be pleased I wasn’t doing the calculations by hand.