MASTER NEGATIVE NO. 94-82053 COPYRIGHT STATEMENT The copyright law of the United States (Title 17, United States Code) governs the making of photocopies or other reproductions of copyrighted materials Including foreign works under certain conditions. In addition, the United States extends protection to foreign works by means of various international conventions, bilateral agreements, and proclamations. Under certain conditions specified In the law, libraries and archives are authorized to furnish a photocopy or other reproduction. One of these specified conditions Is that the photocopy or reproduction Is not to be "used for any purpose other than private study, scholarship, or research." If a user makes a request for, or ater uses, a photocopy or reproduction for purposes in excess of "fair use," that user may be liable for copyright infringement. The Columbia University Libraries reserve the right to refuse to accept a copying order if, In its judgement, fulfillment of the order would Involve violation of the copyright law. Author: Terry, Samuel Hough Title: How to keep a store Place: New York Date: 1891 fi-S20S'>-3 MASTER NEGATIVE # COLUMBIA UNIVERSITY LIBRARIES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD ■ UBINCSS 254.5 T27 Terry, Samuel llougji How to ke'^p a siorei embodying the oonciLusiono of thirty years* experience in merchandizing # by Samual II. Terry. 17th ed. Hew Yorki Fowler, 1893 406 p- . 19 cm. mm RESTRICTIONS ON USE: FILM SIZE: . 35 /VM^ TECHNICAL MICROFORM DATA REDUCTION RATIO: ' -^ DATE FILMED TRACKING # : M2H 00£73 IMAGE PLACEMENT: lA (^) IB IIB INITIALS: ' c FILMED BY PRESERVATION RESOURCES, BETHLEHEM, PA. ^ ^ '^. CJl 3 3 IQ) a m if? N CO N> 00 4^ CJl cnx COM o ^^ CJl 3 3 > o m hoc:: ^ o o in N ^^: ^^«. -, CO ^ e' v>^ in O 3 3 o pr.i^or^Eifi; bo ro b NO ro In 1.0 mm 1.5 mm 2.0 mm ABCDEFGH JKLMNOPQRSTUVWXYZ abcdefghiiklmi lopqrstuvwxyz 1 234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyzl234^67890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 ^o 2.5 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 €^. .^' fe ^o ^o :

C c*> I TJ ^ 0(/) ; m i! 3) O m ^o 5^^ 1— » ro rv CJl o cr 3 3 E z . at &5 dm FGH jklm HIJKLM -nnopqn IJKLM nopqr ^z XJ-Z x co^ OOISI 8 o^x >J-< oorsj s ^i%. cr CX)' Terry, Sajnuel H. Hox>r to keep a store. # MIMMJM^MMIM^JH f^ i li THE LIBRARIES COLUMBIA UNIVERSITY il lU m u i I i Graduate School OF [| Business Library H JUL # % Columbia Winti^tviity in tfje Citp of ^cto gorfe LIBRARY School of Business Given by ^^/ // //l/sh-OTTf #' m I *> HOW TO KEEP A STORE, nCBODYINO THE CONCLUSIONS OF THIRTY YEARS' EXPERIENCE IN MERCHANDIZING. SAMUEL H. TERRY SEVENTEENTH EDITION. NEW YORK : FOWLER & WELLS CO., PUBLISHERS, 775 BROADWAY, 1891 ,• Jt2- sLLLO UCUjSiJtih T, iS /OWLER 4k W«LL«, COPYRIGHT, I8SS, W i^. (^ 7 of PUBLISHERS' NOTICE. W« have received many inquiries from purchasers and readers of " How to Keep a Store " in regard to the author, his qualifications, experience, etc. Mr. Terry modestly objects to having a biography pub- lished while he is living, but has consented to fur- nish us some facts as to his business experience. In the year 1832 he commenced as a boy, in his fourteenth year, in a village store in Bucks County, Pa., near the place of his birth. In 1840 he removed to Philadel- phia, obtaining a situation in one of tb**, then Jargest dry-goods retail houses there. In 1842 he came to New York under an engagement as book-keeper, cashier, and general office manager in an active dry -goods jobbing house. In 1847 ^^ embarked in a small fancy dry- goods jobbing business on his own account, when the wholesale business was yet all far down-town, and this, his first venture, was in Beaver Street. In 1849, his business increasing, he removed to William Street, and in 1855, with the up-town march of business, to Warren Street, where he had built himself a storehouse. At the close of 1864, just prior to the end of the Rebel- lion, he retired with a modest competence to a country place in New Jersey, some twelve miles out of New York, and was out of business for .some five years During this period the book " How to Keep a Store ' SHibiiiU&ri> J^oiice. t ! was written in the main as since published. In 1869 the needs of a family growing up induced him to pur- chase a considerable interest in a brick manufacturing company, which, on account of the cessation of the demand for brick for new buildings in the year 187 1, proved to be an unprofitable investment of capital. In 1872 he therefore entered into the service of the late firm of A. T. Stewart & Co., taking charge of the im- portant department of Cheney Brothers' American silks — a company widely known as one of the pioneers in that industry, and then and now the largest of the kind in this country. In 1873 the Company removed their account from Stewart's and opened a store in their own name for the sale of their productions, which was put in charge of Mr. Terry. He still continues with them. From the foregoing it will be seen that Mr. Terry has had so varied an experience that he was peculiarly well fitted to write a book on business. Though but eighteen years old when the panic of 1836 prostrated the business of the country, he was fully alive to the effects of that prostration before it was fairly over in 1842. The later business troubles of 1857 and 1861 were experienced by him in person. So that his observation extends over a period embracing all the more important business disasters and successes in our country's history. Fowler & Wells, January^ 1884. Fublishers. CONTENTS. CHAPTER I. Introductobt. PXGES 13 TO 18. CHAPTER II. ON THE SELECTION OP A BUSINESS. The four points requiring attention. Knowledge of Details; Losses come through Ignorance ; Anecdote ; Ignorance of De- tails—how remedied in part. Amount of Capital necessary ; When sales are for cash ; When on credit ; When partly cash and partly credit ; Starting business without Capital ; Friendly creditors; Ten and thirty day credits. Liking for the busi- ness; Conscientious scruples; Respectability of the business; Mere love for it not sufficient. Business selected ought to be profitable ; This may be estimated from otheiV success ; Periods of expansion and contraction ; Calculations for es- timating profits; Turning stock often; Reason why Cash Traders often sell much cheaper than Credit Traders; Making money from the start. Pages 19 to 39. CHAPTER III. ON THE CHOICE OF A LOCALITT. What the Business Location must depend on ; Extent of the population ; The present supply ; Prospects and risks in large towns ; Advantages of smaller places ; Desirable Locations; The best Location in the town. Convenience to Customers; A rumseller's good Location; Buying out an old dealer; Good will— and how to buy it; Swindling verdant beginners; Removal from one locality to another ; Disrupting social ties. Pages 40 to 50. / 6 CONTENTS. CHAPTER IV: ON BUYING A STOCK OP GOODS. Taking note of the kind of Goods used ; Prevailing Styles • Quantity of Goods required ; Purchasing choice goods ; mak- ing out a list; Special Details that are necessary; Plan when Details are impossible ; The "guessing" method; Feeling the way along; Danger of buying at random. The amount of credit required— how calculated; The length of credit neces- sary; Long credit unprofitable; Local pay days; Gain in Buying on short time ; One cause for failure. ITow to buy goods ; Reason why goods differ in piice ; A good rule to buy nearest the fountain head; Beating down the price- Anecdote— Countryman with his satchel; Measure of the Seller's complaisance ; Depreciating goods not wanted. Pages 51 to 79. CHAPTER Y. OBTAINING CREDIT ON PURCHASES. Credit founded on confidence ; What gives confidence ; Capital ; Busmess ability; The risks of the Creditor; Fortunes made Without capital ; How credit is to be obtained ; Making statements; References; Recommendations; Personal intro- duction to credit— Its advantages and dangers ; Discredited Classes and Localities— Jews, Irishmen, Frenchmen; Credi- tors' prejudices; Anecdote— The Michigan man; A Retailer's experience; Befriending a Friend ; Written Statements, their effect; Cautions about them; Confidential Capital; The tech- nical meaning of words used ; Anecdote—" At the risk of the business ;" Difference between Oral and Written State- ments. Confidence in one's success necessary in obtaining credit. Pages 80 to 97. CHAPTER VI. EXAMINATION, MARKING AND ARRANGING OF GOODS. Noting deficiencies, damages and errors ; Comparing the goods with the invoice; Giving early notice of damage. Marking cost and selling price ; Convenient cost marks ; Adding charges to first cost; The rate of profit; Must not always be gov- erned by others ; How averaged on the goods ; Leading ar- ticles ; Necessary precaution in rating profits. Keeping the goods in order ; Affixing the price mark ; Keeping goods pro- tected ; Convenience to be regarded; Best light to show goods in ; Modifying inferior lights ; Dark stores ; Learning ^ the details. Pages 98 to 117. CONTENTS. f CHAPTER YII. ON ADVERTISING A BUSINESS. Kinds of business advantageously advertised ; Special and ex- clusive articles ; Impolicy of deception in advertisements ; Extent of publicity ; Making the truth attractive ; Taking advantage of the advertising ; Advertising only an auxiliary. Pages 118 to 124. CHAPTER YIII. EMPLOYMENT OF CLERKS. ^ow clerks are taught; The way they should be taught; En- gagements too transient; Changes; Taking boys to learn; Untenable objections to this method ; Judicious liberality to clerks; Maintaining subordination; The clerk's necessities considered ; Getting rid of incompetents. Pages 125 to 133. CHAPTER IX. ON THE ART OF SELLING GOODS. .business compared to a steam engine; Selling the goods the steam— the great requisite ; Qualifications of a good sales- man; Influences which attract or repel buyers; Anxiety to make sales ; Difference in character of buyers ; The suspicious customer ; Deference to customers ; Anecdote— Disarming the customer's suspicions ; The rude customer ; Exhibiting goods ; Ta lkin g too muchi Proprietor the best salesman. ^ Pages 134 TO US. CHAPTER X.' SELLING GOODS FOR CASH. Reasons why a cash business is best ; Two sides to a cash busi- ness- Reasons why goods are cheaper for cash; Cash and credit transactions compared ; Avoiding the credit guaranties ; One reason why European goods are cheaper. Pages 140 to i67. 8 coNTEirrs. CHAPTER XI. SELLING GOODS ON CREDIT. Hast personally know those trusted ; References and statements insufficient; People that are dangerous to trust; Those that are safe ; Grades of risk ; More reliance on possession than ex- pectations — anecdote; The extra profit required to coyer losses; The speculative periods -Causes for them; Risk of any fixed estimate of loss; Changes in the responsibility of customers; Influence of rival stores on credit ; Classifying the risks ; Influences impoverishing customers ; Temptations to ex- tend credits ; Limiting the amount trusted out ; Advantage of prompt collections ; Specific term of credit ; Anecdote — The "lucky " and " unlucky " retailer ; The way the " luck " came. Pages 158 to 178. CHAPTER XII. SELLING FOB CASH AND CREDIT COMBINED. Difficulty of doing an exclusive cash business; Relative pro- portion of cash and credit considered ; Difficulty of main- taining the proportions; Influences turning cash trade into credit trade — How to meet them ; Results when not over- come — hard times ; The rock on which young beginners often split; Practical illustration of such a two-fold business; Cir- cumstances which overturn calculations; Making reductions in price for cash ; Rate of difference ; Short credit sales — Their risks— Exceptions ; Good way to keep account of them ; Refusing credit courteously; Offiering credit thoughtlessly; The creditor's best guaranty. Pages 179 to 196. CHAPTER XIIL ON REPLENISHING STOCK. Periods in which to replenish ; Time of greatest supply and of greatest demand ; Influence of fashion ; New inventions • Buying out of season ; Timid buyers caught ; Loss in reduc- ing stock too low ; Keeping memorandum ; Looking ahead; Profits of buying new styles; Their risks ; Experimental pur. chasing; Good judgment better than prejudice; Risk in buy- ing everything asked for— Anecdote ; Orflering goods by let- ter ; Importance of giving full details ; Three styles of order exemplified; Ordering from samples; Returning goods that do not suit. Pages 197 to 206. CONTENTS. y CHAPTER XIV. SETTLING FOR PURCHASES. Mercantile standing depends much on the way it is done ; giv- ing notes in settlement ; Propriety of it; Reasons why some do not give them ; Advantage in giving them ; Contonning to the customs of the trade; Changes in the known ternia of the sale— How obtained— And when ; Meeting the obliga- tions; Payment of interest, and exchange or discount on un- current money; Anticiparing payment—When advisable; What payments to anticipate. Pages 207 to 216. CHAPTER XY. ON THE DEPRECIATION OF GOODS. Intrinsic and ornamental qualities in goods considered; The three causes of depreciation ; Introduction of improved ar- ticles ; Changes of fashion ; Decay, waste, &c.— How to avoid these losses; Protections against the risks; Loss often dis- guised. Pages 217 to 227. CHAPTER XYI. LOSSES BY FIllE, THEFT, NEGLECT, ETC. The mysterious leaks ; Result if not cared for ; Risks of fire from heating— From lights; Sale of inflammable articles; Keeping well insured ; The " conditions " of the insurance policy. The best safeguards against burglars, shop-lifters and street thieves. Peculations and dishonesty of employees ; The clerk's temptations— First steps in crime; The employer's guardian duty; Stealing for vicious indulgence. Losses by over weight and measure ; Omissions to charge goods- How avoided ; Importance of caring for all these leaks in the busi- ness. Pages 228 to 248. CHAPTER XYII. KEEPING ACCOUNTS. The object in keeping accounts ; Importance of understanding them; Fictitious accounts; Anecdote— The book-keeping most to b« preferred; Fundamental rul« in book-keeping; 10 CONTENTS. I The time to charge goods ; Entering counter ; Detecting arith- metical errors ; Omissions to give credit for purchases ; Origin of many false pretense cases ; The invoice— Its examination- Making claims; Good plan of noting errors, eic, in invoice' Account of goods received without invoice ; Anecdote— The deceived retailer; Keeping account of cash sales; The ticket plan— Its advantages and management; Making up cash ac- count; Writing up books daily; Danger if not done; mem- orandum book of accounts receivable ; The maturity of an indefinite credit ; Summary of daily cash and credit sales • In- ventory ; yearly account of sales ; Useful items to record for reference ; The end and aim of book-keeping. Pages 249 to 270. CONTENTS. 11 CHAPTEE XX. INFLUENCES OF SOCIAL LIFE ON BUSINESS. Family influence ; Influence of friends and acquaintances ; Mem- bership in associations; Enlarging the circle of acquaintance; The leading store; Leading people; Injurious social influ- ences; Cliques; Neglecting business; A dealer's ambition in- fluenced ; Dealer's influence socially, shall it be for good or for evil ? Keeping up the standard of commercial probity. Pagita 299 TO 306. CHAPTER XVIII. EXPENSES. How expenses are kept down ; True liberality ; True economy • Wasteful saving; The rate expenses should bear to profits' Private expenses; Living within the income; Extravagant living main cause of failures ; Arrange to save something yeariy; Easier to increase than decrease; Stem necessity's reductions; The dealer's temptation to extravagance; Anec- dote of a retailer's wife ; Advantage of a private purse ; Self- deceptions; A good method in small concerns to limit ex- penses ; Importance of economy to the beginner. Pages 271 to 280. CHAPTER XIX. COPARTNERSHIPS. Object of a partnership ; Of many, one ; What is required in a partnei ; Division of labor ; Deception in partners ; Diver- sity of gifts ; Harmony of views ; Each partner responsible for his division ; Too much independence ; Necessity for a leading mind ; Avoiding causes of disagreement ; Social uni- formity desirable ; Desirable partnerships ; Partnership some- times absolutely necessary ; Importance of a written agree- ment; Dissolution; Buying out; Providing for the liabilities • Division of the assets- How made equitably; Seller's rule for valuing; The buyer's rule; Valuing articles in use. Pages 281 to 298. CHAPTER XXI. ON BUYING GOODS AT AUCTION. Its advantages ; Limits to these ; Art in buying ; Lines of goods ; Anecdote of inexperienced buyer ; Requisites of a good auc- tion buyer; Estimating the value of the goods; Great differ- ence in value of goods of same cost ; Fluctuations in price and causes thereof; Marking catalogue ; Buying on another's judgment; Choice of lots, how to secure it; Intimacy with the auctioneer; management of the bidding; The "choice and privilege," how managed ; Knowledge ot the competi- tors; Duplicate lots; The auctioneer's silence; Running up the price ; The starting bid ; Frequent bidding ; Mock auc- tions — Their peculiar features. Pages 307 to 324. CHAPTER XXII. INVESTMENT OP THE PROFITS OF BUSINESS. Necessity of first having the profits ; When they may be safely withdrawn; Temporary investments; A few experiences; Building a store, a notel, a manufactory — Lumbering; the lesson to be learned ; Bonds and mortgages ; Accumulation of interest; Real estate investments; Advantage of inconvertible investments ; Danger of keeping everything at risk. Pages 325 to 339. 12 CONTBNTS, CHAPTER XXIII. INSOLVENCY. Necessity for this chapter; Bankrupt laws considered; Society's law for the insolvent ; Duty of charity ; Exemptions ; The Mosaic law; The retailer in failing circumstances; Twelve objections which creditors often make to compromising; What the insolvent may retain; Objections considered; 1. Ought to have stopped sooner ; 2. Too much confidential ; 3. Owes me too much ; 4. Never made anything by him ; 5. My debt should be made confidential ; C. Knew he could not pay when he bought the goods ; 7. Deceived me by false state- ments ; 8. Owes me more than he ought ; 9. Does not fully account for his failure; 10. Can not pay what he proposes; 11 Payment of compromise too remote; 12. Is too unprinci- pled to be trusted to settle his estate— Lawsuits imminent; Counselling with creditors ; prepared for emergencies; Com- promise made — what follows; The dilemma; Getting new capital; Realizing the change in circumstances; Reducing the business; Easy state of finances deceptive; Struggling along ; Need of some better rule or custom for the insolvent. Pages 340 to 379. CHAPTER XXIV. BUSINESS QUALIFICATIONS. The peculiar qualities required ; Knowledge of the goods ; Energy — Perseverance — Decision — Promptness — Economy — Knowledge of human nature — Good memory of details — Affability— Foresight— Enterprise. Pages 380 to 393. -O- APPENDIX Mercantile Problems, " Forms, Pages 393 to 403. " 404 TO 406. HOW TO KEEP A STORE. CHAPTER I. INTRODUCTORY. THIS book is designed mainly as a text-book on the art of buying and selling goods at retail, and naturally, in writing it, the writer has kept in view the de^ ficiencies of the young and inexperienced. Those who are experienced in the trade may think the book unnecessary ; that it only tells them that two and two are four, or such simple truths, which they learned early in life. It really professes to do no more than gather together the experi- ences of the author and of some of his circle of acquaint- ances, and condense them in a form convenient to guide and instruct those who are starting out in life. And if the experienced men, who find nothing new in it, find that it truthfully sets forth the way in which they would go, if with the light of their experience they had the path to travel over again, they find in it all that the author ex- pects them to. Experience is a good teacher; but his school is a very expensive one, and many of his lessons may be economi- cally and advantageously studied in a book of this kind, and gotten by heart before we go into his school. The most simple truths, too, sometimes fail of their 2 -^- . J w^nj ^— a^iw ^HVi 14 lNTROl)tTCTOBlf. proper influence at first, becauee we do not see how they applj to any contemplated action until we are taught by experience ; and it is a further aim of this book to make the influence of these simple truths on the ordinary opera- tions of business more apparent, through the various illustrations and exemplifications used, so that the youthful student may have some knowledge of, or at least some preparation for, the lessons he may have to learn before he enters the school of experience. In looking over the catalogues of our libraries, we find text books, and manuals, and guides, on nearly every sci- ence and occupation in which man engages, except this one ; and when we reflect upon it, it must really be re- garded as a strange omission that such a book has not long since been written. Considerable libraries on each of the subjects might be collected of divinity, law, medicine, surgery, chemistry, banking, navigation, architecture, engineering, military art, metallurgy, raining, agriculture, cookery, manufac- tuies, and mechanic arts, by the aid of which the inex- perienced clergymen, advocate, physician, surgeon, chem- ist, banker, sailor, builder, engineer, soldier, foundryman, miner, farmer, cook, manufacturer, or mechanic may qualify himself, and through the help thus derived from the experiences of others, can more surely and readily obtain success in his occupation. Indeed to such special- ities do these investigations extend in some of the sciences and arts, that works are written on even one little branch of the subject, and we have treatises on the eyes, the skin, the use of one single remedy in curing disease; books on the art of gauging, of book-binding, of quarrying stone, of weaving, of painting and gilding, of dyeing, of soap making, of brewing, and even on the use of one particular style of arch in building, with a hundred other matters tNTEODtrctoRY. 16 of such limited use that probably not one in a hundred thousand of the people have any interest in them. But in all our libraries, whether public or private, we look in vain for any hand book or text book wherein one may learn something about the occupation of a retail dealer, though probably one-tenth of the community are more or less engaged in that business. True, there are several good works on the general sub- ject of business, whose existence should not be ignored, but they treat of business in general terms, and do not go sufficiently into the details of the subject, to be valuable to the novice. They present the theory or principles of busi- ness rather than the practical details ; and are necessarily more useful to the experienced man, who desires to test and arrange his experiences, so as to learn the most he can from them, than they are to those who are entirely with- out experience. Some of this reticence among those who are capable may be the effect of a sort of free-masonry, which regards such information as the secrets of trade, not to be divulged to the world generally, lest too many be allured into the occupation. Others perhaps have remained silent because, having had no aid of the kind themselves, they believed that those that came after them, might be best left to win success, through the same hard knocks and rough experi- ences that they had encountered. Whatever may have been the motive, the silence seems to have been hitherto universal, inasmuch as the author has not, even after some investigation, been able to learn of any book hitherto published in this country, which even proposed to fill the blank that this is designed to occupy. The work has been long contemplated, and is not offered to the public as the hasty observations and conclu- sions of the fiuthor, or as the occupation of an otherwise tt INTRODUCTORY. idle period, but as the result of frequent reflection upon the various subjects it embraces, during several years of a business experience. The frequent applications made to him by persons in business for advice and counsel, and his own experience early in life, with an inexperienced business man, led him many years ago to notice the ignorance of many persons in the retail trade, about the very rudiments of their business, and to see the necessity there was for some such text book, where the unlearned might get the information they needed, on the practical routine and details of their business. That such ignorance should exist in this occupation need not seem strange. Probably fully one-half of those now engaged in its various branches had no practical know- ledge of business in the outset. And one-half of the bal- ance learned all that they knew on commencing as a clerk in the store of some merchant, who had not him- self any business training. The " universal Yankee," (in the English sense of the appellation) while he may confess his ignorance of some things, always has a strong and abiding confidence in his natural ability to trade and barter, *' to buy and sell and get gain," in the retail, or wholesale, or any other trade. He thinks he needs no education for that work ; it is just as natural to him as it is to eat or drink; and he is ready at once to undertake the management of the largest retail house in town, only needing to be shown a day or two, " till he learns the ropes." The prosperous mechanic, so soon as he has made a few hundred dollars, leaves his bench ; the dissatisfied farmer's son, with his inheritance in hand, drops the plough ; the venturous sailor, tired of the storm and calm, sells his bark and quits the wheel ; sometimes, too, with them the learned professor, the sage physician, the over-tasked iNTRODtrcroRY. 17 clergyman throw down the insignia of their profession, and without a month's preparation, venture their means in some business enterprise, requiring an intimate acquaint- ance with details, which long experience or study alone can give, before success can be considered even probable. It is said that not more than four out of every hundred engaged in business are eventually successful. This -is doubtless much under the mark, unless the idea of success is very great wealth — say $100,000 or over. The author's own experience leads him to believe that about fifteen per cent of those who retail goods succeed in making suf- ficient to enable them to quit business by the time they are fifty years of age; tha^ twenty -five per cent more continue on successfully, making a living and always paying their debts to the ends of their lives ; and that the remaining sixty per cent either entirely fail, and go out of business, or make some compromise with their creditors and continue on with varying success afterwards. But even this proportion of failures is enormous when comr pared with the results in other pursuits. And yet, have we any reason to wonder at it, when men engage in the -business so ill-prepared for its risks and disasters? Hard- ly any sane man would undertake the practice of law or medicine without months, at least, of previous study, or engage in the manufacture of any article without a long experience in its details. The art of buying and selling goods at retail, requires quite as much study as either of them. The most of such inexperienced people enjoy a very encouraging hope, which leads them to believe that they will soon learn all that is necessary. They do indeed learn, but it is years often, before they possess the knowledge that they ought to have had when they commenced. This want of knowledge piakes even limited success barely Id iNTKODUCTOUy. iNTRODtJCTORY. 19 possible for the first two or three years of business, and these first years very often give the character to the whole business career. While, as before remarked, this work is written mainly for the inexperienced, it is believed that it can be read with profit by many of those who have spent their lives in business. The author puts forth no claim to superior knowledge over others of like experience, but it need not be considered an assumption to say, that in business aflTairs, as indeed in most other matters, each man's experience dif- fers in some points from others, and therefore, the wisest can still learn something from the career and history ot other men's experiences. And even if this information only brightens and revivifies old and inactive ideas and energies, it is useful. So long as we see the many instances which occur of men long experienced in business, failing we may properly conclude, that all is not yet known that can be known by even the experienced, and that it is quite probable that many, who by reason of the length of time they have been in business, the world regards as wise and skillful in managing their afiairs, have yet much to learn. It is indeed believed that this book will repay perusal by those who never expect to engage directly in the retail business. To some extent, men of all pursuits are inter- ested in many of the questions herein considered. The farmer and mechanic have both to buy and sell, and much of their prosperity depends on their doing these properly. The professional man has at least to give credit and make collections, and very many of them may learn something about these subjects herein. In short, therefore, the book, though primarily for the inexperienced, is regarded by the author as worthy of a perusal, and often a careful study, by all persons engaged in any vocation wherein they have to deal with their fel- low men. The critical reader may complain because so many techni- cal words and phrases are used, not always in the sense current in other countries, but often as Americanisms. In this country the word " store " is so generally used to designate a place where goods are kept for sale, and the word *' shop," used in England in its place, so generally here confined in its use to a place where some mechanical work is carried on, that the use of the latter word in its English sense, would tend to confusion and obscurity in writing. It may be wished that all the other technicali- ties used herein were as correct in principle as the word store in the American use of it, but the writer did not set out to correct modes of speech, and preferred to use the current and accepted expressions in the trade, rather than go into any argument to show their impropriety, even when he may have thought them improper. Mon^ Jfeatth is jiccumulated. 21 CHAPTER II. ON THE SKLKCTION OF A BUSINESS. CHOOSE a Business— Ist, That you are acquainted with the details of; 2nd, For which you have sufficient capital ; 3rd, For which you have a taste or liking ; 4th, Which gives promise of making something more than simply a living. It is a prevalent idea among men that are not very prosperous in their occupation, that any other business is better than the one in which they are engaged. Those who are ever ready to act on this idea and make frequent changes, generally remain poor through life. This of itself should show us that such an opinion is not the result of close observation of the profits of differ- ent kinds of business, but rather a conclusion or supposi- tion, made without reflection. " I make only a very stinted living at my business, and there is Jones, and Smith and Brown, and nearly every one I see around me thriving, and it is because my busi- ness is a poor one," is, if not the language, the thought of many a discouraged tradesman. Could the poor man know the trials and vexations of those around him, he would cease to envy them, and be satisfied to plod on in- dustriously in his own occupation. Were the thoughts of these neighbors revealed to him, he would find that they often envy him his apparent prosperity. "All is not gold that glitters," is an old proverb that such people might remember to their great comfort, whenever tliey see some neighbor giving outward evidence of a prosperous busi- ness, grown up almost like Jonah's gourd in a single night. Wealth is rarely accumulated in any other way than by persistent and continuous efforts in one direction ; and then it may seem long to the anxious expectant before the reward comes. Spasmodic and speculative efforts to expedite it often do more to retard than to hasten it, by diverting the attention from the sober and practical routine of details essential to success, and causing them to seem dull and plodding. Fortunately, in this country, while there are great differ- ences in respect to the profitableness of the various kinds of business, there are very few of them by which an in- dustrious and prudent man can not make money, not only sufficient to support a family, but something beyond as an accumulation for his old age. But no prudent man would embark in a business, ex- * pecting success, if unfamiliar with the details, or with in- sufficient capital. And though he may have sufficient knowledge and capital, if the business is one that is dis- tasteful to him in many of its details, or if with all his skill and capital he can only succeed in making a living, he will soon become lukewarm and irresolute in conduct- ing it, and thus make it less profitable. Jt is therefore also indispensable to success, that a man should like his business, and think it the one best suited to his peculiar gifts and qualifications. The acquaintance required for a business, should not be merely a superficial knowledge of the articles dealt in, but should descend to minute details of the various quali- ties and the advantages and disadvantages resulting practically in the use of different qualities, the causes of increase and decrease of supply, the periods of greater ^d less demand j and also the fashion or prevailing taste 22 M^nowtedge of !DelaiU Hequired* Story of Stephen Girard^s Venture. 23 which in many things governs or influences the public in the purchase of many articles. Thus, if a man proposes to deal in lumber, he should not only know, and be able to distinguish, the various kinds, as pine, spruce, hemlock, etc., but he should also know what qualities are recognized in the trade as " clear stuff," "first," "second," or "third qualities," "box boards," '' cullings", and so forth, so as to be able himself, if neces- sary, to assort a mixed pile of lumber ; and should know these qualities, not only as they are recognized in the locality in which he proposes to trade, but also as they may be differently graded in rival markets. He ought to know what deduction is proper to be made for any defect in a piece of lumber or board, by knowing for what pur- pose it could most advantageously be used, and with least loss. He should know where the different kinds of lum- ber are obtained, the superiority of that from some loca- lities over that which is brought. from other places, the various methods by which it is brought to market ; some- thing of the geography of the country, so that as new avenues are open to transport it, he may be among the first to avail himself of the advantages, and not, as is sometimes the case, learn this from some rival dealer, who has enjoyed a. monopoly of the advantage of the new route for a year or two, before it generally became known. In addition, he needs to know the sizes and qualities of lumber that are more especially used by those who will be customers— what will be wanted by builders, what by box makers, what by cabinet makers, what by ship- builders, etc. All this information he could scarcely expect to acquire short of three months service in the practical details of a lumber yard, specially devoted to learning, with a view of going into the business. It will be that much time well expended, by any young man ignorant of a business he proposes to embark in, to go to some long established dealer, residing far enough away from the locality of the contemplated busi- ness to avoid uneasy jealousy, if necessary, and make arrangements with him to be instructed in the details of the business, even by a payment of money to him if re- quired. The better a man is acquainted with the details of the business in which he is engaged, the greater is his chance of success. In truth, the man that is ignorant of these, has no right to expect success. Ignorance may take the risk and occasionally win, but it is not once in ten times. The oft-quoted, yet questionable story of Stephen Girard's* shipment of a large lot of warming pans to the West Indies, in ignorance that it was a warm climate, on which he was not only saved a loss, by the fortunate con- version of the articles into sugar-dippers, but by which he made a great profit ; and other similar stories of great re- turns resulting from ignorant and ill-conceived ventures, are too often used as arguments to induce credulous men to invest their money in some thing which they know nothing about, in the vain expectation that they will draw a prize. The lesson to be drawn from them is, not that ignorance and rashness has at any time a chance of success, or is preferable to prudence, but rathei an encouragement not to despond, even when matters look discouraging, and to try to find a way out of the difiiculty by unusual efforts and ingenuity. In another man's hands, less enterprising and managing than Stephen Girard, the warming pans would have remained simply warming pans, to the end of time. * S«Iated also of otben^ 24 j±n Zlhpro/i table ^Business Operation. Absolute losses in business are generally the result of ignorance. Every reader of this, who has been in busi- ness will concur with the assertion that fully nine-tenths of the losses he met with therein, arose from his igno- rance of something which he could previously have known. As an illustration of this, an acquaintance of the author, an importer of European goods, had one season several inquiries for a peculiar kind of satin vesting, such as he had never imported, but the value of which, and the place of manufacture on the continent, he was well acquainted with. Ascertaining from the applicants that the article was scarce in the market, and much increased in price, he thought it a favorable opportunity to make a profitable venture by ordering some. There seemed not much risk in it, as the article was of a staple character, and he ordered a few cases to be sent out as soon as tliey could be manu- factured. The goods speedily arrived, but too late for that season's sale, and as they were not suited to the sales of the succeeding spring season they were held over till the summer. When shown to clothiers, and offered for sale, he was surprised to learn that they had not made up any such goods for vests in years, and would not purchase them at any price. So hunting up the same parties who had the year before wanted them, he tried to sell them to these ; but now found for the first time that the goods had been wanted the year before for making gentlemen's cra- vats of a fanciful style, and further learned that the fash- ion having changed, they were now using quite a different material, and would not buy the old style of goods at any price. Not having the sagacity to discern or invent any new use for the goods, as Mr. Girard did, he was forced to sacrifice them in the auction room at a heavy loss. Ordinary prudence, and especially the experience of a Jffno7^ance of Details— I/oh^ Tiemedied, 25 few such losses, naturally leads a dealer to thoroughly inquire into all the minutiie of every such proposed trans- action. But if the want of information about the special goods proposed to be dealt in be general, the cases of loss will be too numerous, and the aggregate of loss too great to endure while the dealer is being educated. In such cases a deficiency of information may be partially supplied, when the dealer has all the other requisites, by employing a clerk who is known to be experienced in the details of the business he would undertake. But this should never be considered sufficient to compensate for entire lack of knowledge on the part of the employer. It would answer reasonably well in such cases, as where a man accustomed to buying and selling dry goods, desires to embark in the grocery or hardware trade. Even then the dealer should avail himself of his opportunity to learn the business as soon as possible. If there should be a total deficiency of experience in buying and selling, in a person having sufficient capital, he might select to advantage a partner having the re- quired knowledge without capital, and each of the two would thus supplement the other's deficiency to their mutual advantage. When neither of these substitutes can be obtained, the only prudent plan is for the person to spend sufficient time as a clerk, with some one in a similar business, to learn the details before embarking in it himself. While actual and s()ecific losses in business are mainly the result of ignorance, it sometimes happens that the most carefully managed business will fail of profitable re- sult from want of sufficient capital. Hence the amount of means which any person has to put in must be kept in view in the selection of the business. And this 26 cimoujit of Capital necessaiy. I I has reference not only to the kind, but to the extent of it; as an amount of capital sufficient to conduct any particular business in one locality, might be inadequate to profitably carry it on in another. Precisely what amount of capital is needed for every particular business, it would be preposterous for the author to attempt to say, bat a few general rules may be given, which will enable any one to estimate with reasonable accuracy the amount needed in any particular instance. Every business requires a certain amount of stock to be kept on hand. This must either be paid for in cash — requiring that amount of capital — or must be bought on credit, and for which the dealer will be indebted. Com- monly it is partly paid for in cash, and partly owed for. Hut as the fact of owing for it implies the necessity of obtaining credit for the amount — and as a man's credit will depend very much upon his capital — it follows that tlie amount of his cash must be considered, even when he buys partly or wholly on credit. Those who trust him will at least consider it, if the dealer does not, and will require that it shall be, in their opinion, adequate to the business. It the business is to be one where the sales will all b"•'•«"'• ienced friends deem suitable, on ^"y *"J^ ^^^i^. • • • ^rr..^onhle with his notions of gentility oi uia It IS incompatible wiui u oa T make only one exception to tnis . n i"« j & „ess. I ^^;^ ;°J . ^^3 i„:^Hous to the community, or \ nV^arapters and consider contemptible, is taken in Tatd t a" n o character, who infuses energy, abihty, ti honeTty and good sense into his management, Tdn;S years the' whole reputation of the calling is iged, all is recognized as worthy of the aspiratio.. of the refined and iatelligent. yf^a^ makes a Cashless Z/hpleasant. 33 Kor should a man rashly embark in a business simplv because he fancies it an agreeable one. We are more ap't to see the pleasant side of a business when we look at it simply from the outside. The disagreeable work has to be done in the back room. It was the poet Burns, I think, who tells us that in early life he had a confirmed ntention of becoming a tailor. The sheltered in-door oc- cupation of the men of that craft, as he saw it, by com- parison with his own out-door exposure, seemed the very acme of a happy life. No doubt many young men select their life's occupation from as narrow a view of it as Burns took. As before remarked, mHch of the pleasure derived from any business is found in the profitableness of it, and there- fore when the best loved business ceases to be profitable, with most men it ceases to be pleasant. Should any of my readers find themselves in this position, becoming weaned from their former attachment to their business, and on the look out for something more agreeable, it may well be worth their inquiry as to whether the waning love IS not the consequence of the loss of its former profitable character, and if found to bo so, to make extraordinary efforts to restore the business to its former prosperity and thereby regain the love they once had for it, rather than rashly quit it for new undertakings of which they may lack the knowledge to conduct profitably. A few words of advice may be given to a class of men, some of whom I occasionally meet, who remain in a busi- ness simply because it is pleasant, and they like it ; though from causes entirely beyond their control, it has ceased to be profitable, and they can have no prospect of ever again making it so. They are generally men somewhat ad- vanced m life who thus cling to their first love, but the younger are also sometimes too slow to make a change in \ 1 34 (Profitableness of a business i -< May be Estimated from others' Success, 85 such cases. When a man is well in years, he is not ex. pected to feel very ambitious, and if one thus situated is satisfied that his diminishing business will sustain him to the end of his days, it may be wise to let well enough alone. But a younger man— any one under forty-five years of age— with good health, ought not to delay placing himself in a position where he may be able to do so much better as to be relieved from pecuniary solicitude for his future years. And lastly, a business ought to be selected, in whicTi there is a prospect of making more than a mere living. Let the dealer's aim be to accumulate something for that period of life when age may unfit him for procuring a livelihood. It is pleasant to feel as we advance in life, that we are year by year laying up something for the time of old age, not only for our owu subsistence, but that we need not stint our contributions to the various religious and philanthropic movements which have had our aid and influence in the more active period of our lives. To positively foi-etell the profitable results of any con- templated business is of course impossible. So many cir- cumstances beyond the control of the dealer, circumstances of early or late seasons, of storm or tempest, of heat and cold, of disease and death, influence favorably or unfavor- ably the result that any precision is impossible. But though we may not be able to calculate with certainty, we may approximate to the true result. We can calculate suf- ficiently near to say, that if everything occurs as usual, such or so will be the profit. Even if an occasional year may fail to yield the result anticipated, still, if we have prudently and carefully made up our estimate, always keeping on the safe side, allowing a sufiicient margin for probable contingencies, an average can be struck near 1 'I enough for the purpose in view, and which would be suf- ficiently safe data to warrant embarking in a business, if other things were fitting, of which satisfactory results •could be thus predicted. Somewhat can always be premised of the profitable- ness of a business, by the success or experience of others in a similar business, and probably the most of those who now commence a new undertaking, found their expectations upon the successful career of some acquaint, ance. This is a very simple method. If A commenced a certain business ten years ago worth 5,000 dollars and is now worth 50,000 dollars more, made in his business, it follows that in the period of ten years the average net profits of his business have been yearly 5,000 dollars. The danger of this method arises mainly from the ten- dency in such cases to look only at the instances of sue- cess. When the results of the business of a sufllicient num- ber of dealers, taking the unfortunate with the fortunate, can be averaged, the conclusions reached are more reliable. It will then often be found, that while A has done so well, B, his neighbor in the next street or village, is not so well off* as he was ten years ago. Though even in B's case, the cause for his want of success may be traced to some personal deficiency or inattention to business by which the novice may know his own success will not be endangered. Nor does it always follow that because A made 50,000 dollars in ten years that the business is profitable at the end of the ten years. The detailed history of almost every man's business will show that there have been especially favorable periods, sometimes of six or eight years together when everything prospered, and then again a series of years when there was no prosperity ; and it might possibly be that A made all his money in the first five years of his business, and in the last five, barely held 36 0»pan»iont and ConlraeHons. luB own. In the contraction and expansion of cun'ency permitted in this country, there would seem to be a periodicity in the whole business of the nation ; having its rise and expansion through five to ten years, and its decline and contraction more forcibly in two to five years. Such a period of expansion began gradually to rise about 1830, continuing to 1837, when the excitement reached its height and culminated, turning with tremendous force downward. From this time till about 1844 business was stagnant. Then it began to gain, and continued rising with but slight occasional depression until 1857, when the expansion having reached a height generally felt unsafe, the supporting confidence was withdrawn, and the forcible contraction suddenly began. In 1860 we were just get- ting well out of the slough, when the rebellion began its career, and all other influences on business were over- borne by this terrible calamity. During that period old experiences were at a discount, as they continued to be till the close of the war in 1865. With the issuance of the legal tender currency trade revived, and we were, nomin- ally, at least, prosperous till 1873, when another panic occurred, bankrupting thousands. From that time trade was stagnant till 1879, when all values seeming to have reached the lowest point confidence was again restored, and business revived. This improved condition will doubtless continue for a time, to be surely followed by another crisis in the uncertain future. A calculation of the chances of success in any new un- dertaking will therefore be imperfect and liable to de- ceive, if we do not, to a large extent, take in view the general prosperity of the country. If everything is seen to be inflated in price, and speculation is rife throughout the land, and danger of a financial panic seems imminent, the undertaking requires extreme caution. The writei wil^ t>*>t izo so far as to that it must be postponed till ^siimating Profits. 87 a more auspicious pe,iod, as it might then never be un- dertjiken. In the best of times one can always find croak- ers who think the country is going to destruction, and no investment safe, except bonds and mortgages, secured on real estate, at not over one half of what it will sell for at sherifTs sale. Perhaps for some readers it may be well to go definite- ly into the particulars, and show how such a calculation of probable profits should be made. Where there is a good deal of competition, and the gross profits on sales are at the lowest, it will generally require that at least four times as much be sold yearly as the stock of goods kept amounts to, to make the business profitable. Sup- pose the gross profits to be fifteen per cent, four times this will be sixty per cent of the stock, which if $10 000 will give a total profit of $6,000. If the stock can be turned over this often, at this profit, and the aggregate of profit is enough to cover the expenses and leave a net result sufficient to satisfy the dealer, the problem is solv- ed. If, however, there are doubts of the ability to sell four times the amount of stock, and it is thought that not over three times the amount can be sold in a year, or $30,000, the total profit will be, at the same ratio, only $4,500, and may be sufficient. Still if the profit can be increased to twenty per cent on the goods sold, the result will be the same as in the first instance. The oftener the stock is, in mercantile parlance, " turned tover," the cheaper the dealer can afford to sell his goods, and if he can sell five or six times the amount of his stock m a year, and make relatively as much profit on his sales as when he only sold three times his stock, his net profits will be largely increased. One of the ways by which a busmess frequently becomes less profitable, is through the accumulation of undesirable goods, which I \^ 38 Turning Stock Often, Make Money from the Start, 39 are rarely sold, on account of which the yearly sales, though possibly not reduced in amount, are largely re- duced in 2)roportion to the stock of goods kept. The fol- lowing table will show at a glance the relative advan- tage of large sales in proportion to the stock. It is made up on the basis of a 110,000 stock, such as we have been calculating upon, and to make the yearly profit of $6,000 it is shown what per centage of profits is required : If turned once a year, sales $10,000, GO per cent i4 4( twice " t( u 20,000, 30 *' U ii three times t. (( 30,000, 20 " a ti four " (( (( 40,000, 15 " • U 4( five " t( i( 50,000, 13 " a a six " u ti 60,000, 10 " Instances arc frequent where retailers turn over theii- stocks as often as twelve times in a year, and there are others Avho do not turn their stock over more than once. The former prosper — the latter grow poorer. In some of the old plodding localities, where the dealers never expect to do more than turn their stock twice in the year, making large per centage of profits, a new and enter- prising man occasionally stai*ts up, who sells his goods at half the profits of the old dealers, and grows rich, while they stand wondering how he can afford it, and pre- dicting his speedy failure. A glance at the table above would show such the secret of making money by sell- ing at small profits. It is just as simple as that the shoe- maker who requires a week to make a pair of boots, does not thrive if paid twelve dollars a pair, while he who by his industry and labor-saving appliances makes two pair in a week prospers, though only getting ten dollars :i pair. Having, by all the light and information he can obtain, thus arrived at a satisfactory conclusion, as to the amount ii he can sell, and the gross profits he can make for the year, thiB projector of the new business should carefully set down all the outlay for rent, clerk hire, tires, lights, freight on goods, incidental expenses, and the losses of various kinds, which he will be subject to, all of which will be from time to time referred to in future chapters as we consider them in a more appropriate connection. When these are deducted, if there is left enough of the^ profits for him to live on, and make twenty per cent on his capital, the business promises well. Beginners in business are sometimes deceived by a very ^common idea that they must not expect to make any thing the first year. Such low aspirations are not commendable. A man should start expecting to make something from the beginning, and although there will generably be more or less expense attending the starting of a new business, which is not required in subsequent years, still there are also some advantages to the profits. The goods are all new, the proprietor's energy is fresh, customers will give the new store a trial, at least, and thus some things are favorable, which may not be so in subsequent years. The author would, therefore, caution any one who having gone carefully and repeatedly through all his calculations, and finding them result unsatisfactorily as to profits, is still encouraged to undertake the business from the idea that " nobody expects to make anything the first year ;" and hoping without any sufiicient grounds, that future years may turn out better. Having gone a little behind the first year, he will find himself in no heart to struggle the second one ; and will be very apt to succumb entirely io the third year, and consider bis business hopeless. Zocatlnff in Towns, 41 CHAPTER III. OK" THE CHOICE OP A LOCALITY. THE location of a business must depend mainly upon the location of those who are expected to be customers. We ought not to expect that enough of them could be found in a small village for a business in guns and ammu- nition, or in fine laces, or embroideries, or in books and stationery, or other such specialities. Such enter- prises as these |-equire that there should be congre- gated, within a reasonable distance, a number of persons using or needing enough of the articles dealt in, to sup- port the business. The first inquiry must therefore be, whether there are enough people in the vicinity who re- quire the articles that it is prooosed to deal in, to sustain the undertaking. The second consideration might be the present source of supply, and how far the new source may be able to supplant the old. In large towns there will be but little needed on the first inquiry. It may be safely assumed that in a town of over twenty thousand inhabitants there are sufficent cus- tomers for any of the ordinary business occupations. The second inquiry, as to the present sources of supply, and the ability of a new concern to furnish a source superior to any previously existing, will be the principal question to be considered. But these satisfactorily settled, there are some drawbacks to business in large towns that make the risk greater in doing business in them, than in country places. The expenses of business and of private living arc greater, and it often happens that a large portion of » moderate capital is expended in rents and living, before the business is sufficiently established to pay any profit. In large towns also, the fluctuations in business are greater than in villages and country places. The inhabitants of large cities are accustomed to use more of the luxuries and superfluities of life than country people, and in times of pecuniary trouble these superfluities are retrenched, causing many people who obtain their living from the man- ufacture of, or trade in such articles, to curtail even in the use of articles of greater necessity ; and it thus follows that, to some extent, business in all branches is depressed. In country places the expenditure for living is reduced nearer to the minimum in the best times, and there is consequently less necessity for retrenching, and even if the necessity for retrenching exists, there is less to re- trench. Small towns, villages and country places are therefore the safest locations to commence a new business in with limited means and limited experience. As a general thing, it is prudent for those only who have large means and experience, to begin business in large towns and cities — such as have had a few years profitable ex- perience in a small place, and feel the need of a larger sphere for their operations. The most prudent course for a young beginner, is to commence where the expenses of his living will be in some degree commensurate with his capital — not exceed- ing for the year one fourth of it, or one third at the utmost. So that if the business should turn out unprofit- able, the loss will not be felt so heavily. There is always a large risk where the stoie rent, clerk hire, and business and living expenses of the proprietor for the year, as cal- culated upon at the outset exceeds the whole capital in- vested. As remarked in the previous chapter, the begin- ner should be ambitious to make something the first year, 'si!h 42 ^esiradle Zocations, 1 as a stimulus to his ambition, and a reward to Iiis enter- prise, and to make this probable, the expenses of the undertaking should be based not so mucli on the expected profit as on the present capital. What ought to be look- ed for but failure and misfortune, by one who takes on such a load of expense that in the first three months he uses up all his capital, before, perhaps, his business has fairly commenced. And yet such undertakings are by no ' means unusual. As the business and capital increases, removal to a more extended sphere is frequently judicious. The risks of smaller places being less, the general results of a success- ful business, conducted in such a place, when compared with a successful one in a large city, will ordinarily be correspondingly less. Some of the most desirable locations wherein to com- mence a business, are to be found among the enterprising people of our young and growing western towns. Hun- dreds of successful merchants throughout the west owe their fortune almost entirely to the happy circumstance of the selection of such a locality in which to commence their mercantile career. Their business grew up with the growth of the town in which they were, and needed only reasonable attention, and the avoidance of " specula- tions" to produce a fortune for the proprietor. Having selected the town, the question of the best loca- tion in the town is one deserving attention. The larger the town, the more important it is that the business should be on the best street, and also at the best place on the street. An omission to regard this will be quite as serious as to disregard the other. A location on a street out of the line of business travel— or too far up, or too far down, even on the best business street— will often prove very On ^Principal Thoroughfare, 48 disadvantageous. Persons coming to trade in a store bo located, will be found to have been in other stores more conveniently or centrally situated on their way ; and only come to this because they have not been suited in thos^ they first entered. The great proportion of such cus- tomers will be found fastidious, diflScult to please and troublesome to sell to when they are suited ; and the business which depends mainly on such for support, is not worth having. It may safely be assnmed, that for every one coming in this way, there were half a dozen who ob- tained what they sought in the first one or two stores they entered, and returned home without going near the store so inconveniently located, and who would just as willingly have made their purchases in it as where they did, had it been as convenient to them. There is, therefore, a great advantage in having a loca- tion so convenient to the buyers, that when going out to make purchases, they come first there. When fish go up stream the fisherman who casts out his net lowest down the river, stands the best chance of being rewarded for his labors, as those above him only have their chance at the fish that escape his net. Still, we must not lose sight of the fact that the best location may be only obtainable at a rate too dear to be profitable. Rash and imprudent beginners sometimes err in selecting such localities, re- gardless of the heavy rent or cost of such choice posi- tions, while excessively prudent men often commit the opposite mistake, and take an out of the way location, be- cause the rent is low. ' The whole matter needs to be carefully thought over, and all the points duly weighed. Sometimes the differ- ence of a single block in distance along the street, is of consequence, and the merchants in one block will be all the time busy, while those on the next block to them in the ^ 44 ji !Rum-setter*s good Zocation, ^uyinff Out an Old heater. 45 ii same street, are doing very little trade. The plan of the streets in a town, the quarter in which the customers re- side, and the route they ordinarily or naturally take in get- ting into the business location, should be considered. The location of the principal stores on a business street need not always govern a person in his selection, as it frequent- ly occurs in our fast growing towns, that the business lo- cation, adopted as such when the town was smaller, has become inconvenient, on account of the growth of the \ town in a direction different from what was originally ex- pected. When such a circumstance exists, there is a question open for consideration, as to the relative advan- tage of a location in the vicinity of the older stores, or of one more convenient to the residences of the custo- mers. The magnitude and character of the contemplated business might also be allowed to influence the decision. If it is one complete in itself, giving a full assortment of the kinds of goods kept, convenience to the customer should govern ; while if it is one of limited character, not comprising all that a customer w^ould likely desire at the time of going out to purchase, necessitating a visit to . some other store, it will be found preferable to make one of the crowd, and take the chances of the old locality. Some months ago, when traveling, the author stopped over night at a country tavern, and while sitting in the bar room, was amused, and perhaps somewhat instructed, in listening to a talk between the tavern keeper and a friend, who seemed to have visited him to get his advice about the propriety of renting a tavern (or hotel as he called it) at the county town, some few miles distant. They had duly discussed the rent, number of rooms and other accommodations for travellers, when the tavern keeper remarked that "there must be a good deal of money taken in at thej)ar." » Yaas," responded the visi- tor, "thare was consid'ble drinkin' goin' on all the time I was thar, an' I sez to myself, when I looked round and see the court house and the crowd on one side, and the stores and customers on tother, 'twas about the hand- iest place in town for a feller to git a drink." He evi- dently appreciated the advantage of the location. Much of the benefit to be derived from a new location in a different street, or further up or down the street than where the trade has hitherto been carried on, arises from the cheaper rents ordinarily current in such localities. To obtain this benefit, however, it is essential that a lonjr lease be secured at a low rent, so soon as it is ascertain- ed that the location is well chosen. This may frequently be done by taking a store for one year, with the privilege of a longer term at the same rent ; or with privilege ot purchase at a set price, if it be intended to make the pur- chase. If this advantage is not secured, the dealer may find competitors for the lease of the store, and the price will be advanced to him ; notwithstanding that to a great extent, it was his business occupancy that made the loca- tion desirable. A good location with many s^dvantageous connections is sometimes secured by buying out an older dealer, and thus coming into the enjoyment of the profits and advan- tages of an established business at once, which it has taken years to build up. Like many other things, though, these advantages are often bought too dear. At a fair price it may be considered the best method by which a young man cafti get into business, but it needs much cau- tion, both as to the price and the character of the busi- ness. If the business has been conducted in an irregular, thriftless manner, it may be more trouble to get the cus- tomers out of their bad ways than it would be to make 46 Oood yfin - new ones. When a man starts business anew, he may make almost any rules he pleases regarding credits, tak- ing back or exchanging goods, etc. K they are m ac- cordance with reasonable and common sense views, the customers will submit to them, and will not be offended; but when he succeeds to an older merchant, every change he makes in his method of dealing with the customers is criticized, and compared with the old way, and offence is frequently taken. There is an intangible article called " good will gen- erally included in the purchase of the stock of a retiring dealer, which is supposed to be his favor— his commend- ation of the purchaser to his customers— though it gener- ally includes the customers themselves, so far as they are a transferable article. This " good will " if really felt, ie of much advantage to the purchaser, for it is in the power of the retiring merchant, by his influence, to aid mate- rially the new business, or by his enmity to injure it. It sometimes occurs, though, that a retiring dealer, looking upon this " good will " as simply the transfer of cus- tomers, or established trade, sells it, and while openly professing to commend his successor, does so with so many "buts" and "ifs" that he really injures the man's trade more than he could 'if he were an open enemy. It is pretty hard to bind a man in such things who has ne conscience or sense of what is just. The author has seen several instances of want of good faith in keeping an agreement of this kind, and has gen- erally found the ground of refusal to keep faith to be, that nothing was really paid for the " good will." On further investigation it would turn out that the retiring dealer had obtained a good price for the stock, and talk- ed about the " good will " which he threw in to make the bargain good ; and thus sold an old stock of unde- 1 ^oH' to ^uy 47 sirable goods— perhaps not worth over fifty or sixty cents on the dollar — at about cost. On account of these ex- periences, the author recommends any one proposing to buy out an old dealer, to treat for the stock of goods, and for the " good will" separately. So much on the dollar of cost — fifty, sixty, s3ventyor eighty cents — or whatever their real worth may be, for the goods, and a certain speci- fied sum for the "good will." "Good will" so purchas- ed is more apt to be real, as the seller feels he has a real consideration for it. The " good will " that goes with the goods to make them cheap to the purchaser, may last till the payments are made for the stock of goods, but be- yond that is not always to be depended on. Many of the questions considered in this and the pre- vious chapter, are decided by this method of commencing a business. From the success of the old dealer the be- ginner can calculate somewhat of his own chances. In considering the success of the old dealer, however, the last one or two years profit is of more consequence than the profits of a series of years. The inquiry should be, whether the business is profitable now, not what it was two or three years back. To obtain this knowledge, the amount of purchases and the amount of sales, with the gross profits and store expenses of each year, should be obtained from the retir- ing merchant. When the " good will," before spoken of, is bought, the buyer has the right to demand these, and that they be given truly, as they are the data from which, in great measure, the value of the " good will " is calculat- ed. An action at law will lie against the old dealer for damages for any \o^% incurred by the purchaser, if he has been misled by false or deceptive statements about the profits of the business. A few words of special caution may with propriety b« 48 Swindling Verdant T^eghiners, Cha,iging ZocaUty* 49 added, on the danger of being misled and deceived fey the person who proposes to sell out. Unscrupulous men sometimes add to their stock a variety of trashy and worthless articles for the sole purpose of defrauding some verdant buyer. Bottles of common colored whiskey nicely labelled " Best French Brandy," and valued as such. Tea of very inferior grade, or i)erhaps damaged, purporting to be the best quality, etc. Or the fraud may take the form of drugs and medicines, the adulteration of which it is difficult to detect. Ev'en the apparently well-thumbed account book, or prescription book, show- ing the daily business is all a sham. Birt it is glowingly advertised as a certain fortune to any one who will pur- chase, and would not be sold for any consideration, only " the owner has other business," " or is in ill health," or " going west," etc. Once in possession, the deluded pur- chaser waits in vain for the rush of customers, and finds when too late that he has been villainously cheated. Known instances of such deceptions should induce cau- tion in purchasing from a stranger. Ordinarily a profit- able business does not go begging for a customer ; nor is one frequently sold out to a stranger, without some good reason, such as the death of the proprietor, his failure, or the necessity of removal to some other locality ; and some- times, though still more rarely, the disposition of the pro- prietor to retire with a competence. In the last case, however, the proprietor generally chooses his own time to go, and his successor ; and the transaction is often re- garded somewhat as a favor, bestowed either on some employee who has merited it by faithful attention to the business, or upon some intimate friend or relative. A man may have a reason for selling out, sufficient to induce him even to make a sacrifice to do so, which an- other would regard as insufficient. Some men are natur- ally timid, and having made a moderate amotlnt, are very fearful of losing it at every threatening aspect of business afifairs, or at what they think a critical period. Particu- larly has this been the case since the downfall of the re* bellion. And a person of nerve and self-confidence may on this account sometimes obtain a fine business position and trade at a very satisfactory price. Unless, however, a satisfactory motive is apparent, it will be better to leave the purchase alone. The probabilities are that there will be no advantage to be the successor in such a business, and it would be better to start anew. The subject of a removal of business from one locality in a town to another in the same town, may also be ap- propriately considered in this connection. This ought to be always of serious consideration, as future success or failure often depends upon it. In actual business in cities, it is probably more or less dwelt upon every week in the year, and especially at about the period of annual house moving. If trade is dull in the morning of any special day, the proprietor takes a walk up the street to see what his neighbor on the next block is doing, and if he sees two or three customers in his store, he im- mediately agitates the subject of the relative value of the two locations for business. And this is kept up by his clerks, who are always ready to excuse their own de- ficiencies and inattention, or perhaps incivility to their customers, who go away without purchasing, by alleging that " the store is so badly lighted that it is impossible to sell goods to any one who is particular," or " this is such an out of the way place that the customer has been in all the stores in town before coming here." While there may be no great loss in agitating the subject to a reasonable extent, it is productive of harm when it becomes a com- 1 5d ^tHsrupHng Social *ttes. I II mon excuse for every deficiency in sales. A good rule to observe, when contemplating removal, is to look at the " balance sheet " for the year. If that shows a fair pro- fit, do not be in a hurry — stay in the old place another year at least. No matter if the windows are small, and the inside finishing old fashioned, or not fashioned at all ; or the rent is too high, or it is inconvenient to do business in ; still, if the one great result is forthcoming — that the business is on the whole profitable, do not risk removal. "Let well alone" is a good rule in this matter, as in many others. * When a merchant is not thriving in his present location, the case is different. There is no advantage in a man clinging on to one place, like an oyster to a rock which the waters have permanently receded from and left bare. Let such a one, however, seriously consider whether it is the location which is the cause of his want of success, or whether it may not be something else. If he concludes that it is the former, he should go as soon as possible. These changes, when they transfer the dealer to a con- siderable distance, are sometimes very unpleasant, owing to the social ties and connections which require to be sun- dered ; but these should not have too much influence on the judgment, when the means of living are at stake. Postponement in such cases only increases the difficulty, makes it harder to part, and tends to gradually reconcile the man to remain and look with equanimity on what will probably sooner or later occur — his failure and insolvency. A house well established in business, with a large number of regular customers, may risk removal to a less eligible location for the purpose of reducing rent, or other pru- dential considerations, but the movement then should be to a location which would be gradually improving, never to one that is gradually deteriorating. Chapter iv. ON BUYING A STOCK OP GOODS. AFTER choosing the location, the next thing in order is the purchase of a stock of goods. To do this properly, it will be requisite first to ascertain what the wants are of those who are expected to be customers, in the partic- ular line of the business contemplated. Every community has more or less of peculiarities of style in dress and living, which must be kept in view by the merchant who would purchase goods to supply the wants of that community. In one community gay colors prevail ; in another a staid plainness predominates. Certain makes or qualities of goods are in demand in one locality, that in another are seldom asked for. Wholesale dealers in large cities, who meet with buyers from various sec- tions of the country, are required to purchase their goods with reference to this varied demand ; and hence where they keep large stocks, there will be found a " southern style, a " western " style, a « country " style, a " city style ;— w^ith even finer drawn distinctions, as a « Broad way " style, an " Eighth Avenue " style, or a « Bowery" style, as the prevailing tastes of the different communities require. Much of a retailer's success will depend on his ability to catch and retain in his mind the prevailing ideas of taste in the community in which he does business ; and on his purchase of such goods only as naturally attract and please his customers. It will not do for him to get too far ahead of his customers, in the matter of taste and se- »> »» >» liii 5d H^evalting Styles of Ooods. in 1 I lection of goods, and think that he can bring them up to his standard. He may, by doing so, make his store select, but never popular. If his customers are better pleased with red and yellow than they are with drab and laven- der, he must endeavor to like red and yellow too. In noticing and following out the characteristics of dress or style, as popularly in vogue in the community, care must be taken not to servilely copy styles or pat- terns of goods actually worn, which would often be only the duplication of some rival merchant's goods, that have already lost their novelty. The quality of goods worn must also be considered, as well as the style. It would be a great mistake to pur- chase an assortment of goods of inferior quality, when the customers are mainly people of wealth, and accus- tomed to the use of goods of finer quality ; and equally as great an error in supplying a neighborhood with goods finer than they are accustomed to use, or can afford to purchase. The quantity of goods to be purchased at the com- mencement of a business should depend mainly on three things : the amount of capital, the probable amount of sales, and the convenience for replenishing readily during the season, such portions of the stock as may be sold out. As to the first — the amount of capital — it is supposed that before even the location was selected, this was ex- actly fixed and known ; and is, therefore, at this period, not in any uncertainty. The second — the probable sales — ^it may also be presumed, has received attention, and been fully considered in deciding upon the location. Yet, as it is now absolutely necessary that it should be closely estimated, if not befoie done, a few words on that sub- ject will be in place.^ Quantity of Goods required, 53 An estimate of probable sales may be founded on the experience of other dealers in similar positions, or as near similar as may be found. If the kind of business pro- posed, or the location and neighborhood are so peculiar that no such experiences can be found, then the estimate may be made by an independent calculation of the wants of the community in the aggregate, by first estimating the wants of separate individuals or families. Takinnr a sufficient number of them to form somewhat of a foir average, and multiplying this average by the whole num- ber of individuals or families in the vicinity of the busi- ness. By such means an estimate may be formed of the quantity of goods yearly required in the particular line, to supply such a community. Following this will be the consideration of the present source of supply. If it is distant and inconvenient, either in whole or in part, it would be reasonable to expect that if a new concern started in the locality could furnish the supply, in all re- spects as satisfactorily in price and variety, that the ad- vantage of convenience would so far govern as to induce the community to obtain the supply at home, instead of gomg abroad for it. When part of the supply is fur- nished by dealers already in the locality, it will be neces- sary to consider the chance which the new enterprise has of drawing a certain portion of trade from those who have been longer established. By a comparison of his advantages as compared with others", in buying for cash, in economical expenses, or in other ways, the beginner can make probable his ability to take so much of his sales from one dealer in the vicinity, and so much from dealers at a distance ; together making up a round amount, which he may confidently hope to sell yeariy. Though such calculations may seem at first glance im- praoticable, they are not so diflicult nor unreliable as i 54 ^ocess of JE^stimating this. Convenience for Replenishing, 55 i 1 . J I i many might suppose. The originators of ©very projected railroad, canal or other like enterprise, base their claims upon capitalists for money to construct them, upon calcu- lations framed upon such foundations. As an illustration, suppose that in a community of 10,000 persons, centered around a small town, it should be found by an inquiry among various classes and grades of the people, that the average yearly consumption of such goods as a person proposed to deal in, was ten dollars for every man, woman end child. Thi? would require a supply of $100,000 worth for the community per annum. Now, suppose there are five stores in the place, dealing in this kind of goods, whose aggregate sales are $80,000 a year, leaving 120,000 to be purchased from some distant city. An Additional dealer with a new stock of goods, all other things being only equal, might expect to do a share of the home trade, in proportion to the assortment he keeps, equal with the established houses. And bv his addi- tion to the combined assortment of the town, tend to re- tain at home a part also of the $20,000 which had been laid out in the distant city. Thus, if he should keep a stock of goods of the value of $5,000— and that is as large a stock as any one has who sells $20,000 yearly- he might reasonably expect to sell as much, less the pro- portion of the decrease in sales, which all would have to submit to, by the introduction of a new concern taking a share in the whole business of the place. Prudence would, of course, dictate some reduction from this exact sum for contingencies, and for the increased attention the old dealers would be likely to give when they seriously feel the influence of the new enterprise, in curtailing the amount of their sales. In all calculations of the foregoipg kinds, much will depend on the popularity of the house already in the, trade. Unless there are some good indications that a fair opening for a new enterprise exists, owing to increase of population, or to the unpopularity of some one or more of the principal houses in the trade, the locality could not have been well selected ; and hence, as before remarked, this subject of the amount of goods which can be sold per annum, in a certain line of business, should be set- tled before positively deciding on the location. The third and last consideration in laying in stock — the convenience for replenishing in articles which may be from time to time sold out, must mainly be governed by the distance from the entrepot where the purchases are made. If it is very near, it may bo advantageous to visit it every week to replenish, or even to see the range of prices, or the probability of a fall or rise on certain articles, so that the price of those on hand may be modified to meet the market. When the distance is greater, it may not be profitable to go oftener than once a month for that purpose, and when still more distant, twice or thrice in a season. But the distance may be so great that it is ad- vantageous to purchase all that is likely to be needed for the coming six months ; though in these times of rail- roads, telegraphs and frequent mails, such locations are rare. A good general rule to adopt in such cases, would be to arrange the primary purchases at the commencement of business, and afterward at the beginning of each sea- son, so that there will be no necessity for going to pur- chase again, until so many goods are required that the ex- penses attending the purchase will not, at the outside, exceed two per cent on the amount bought. If the rate could be reduced to one per cent it may be still better. If goods are purchased in March, that will not be needed li 56 ^Purchasing Choice Goods, till May, the loss of interest may be greater than the ex- pense of a second trip ; besides the risk of deteriora- tion in price and damage, and additional expenses in- curred by having the goods in possession long before they are wanted. Some reliance may be placed on ordering limited amounts, particularly of staple and regular kinds of goods, concerning which something will be found fur- ther on in this work, in a chapter about replenishing stock, to which the reader is referred for details that may be important to consider in this connection. The purchase of very choice styles of goods, or goods in limited supply, should be governed by other considera- tions. It is sometimes necessary to secure these early in the season, as later they may not be found, and the re- tailer who has secured a full supply of them will have an advantage over one who can not get them, or can only obtain them at advanced prices. However, as it requires a master at the business, to tell what goods should rank as choice, and what are likely to be in limited supply, and as it is the interest of the whole- sale dealer to have his customers believe that everything he has for sale has one or both of these advantageous qualities, it is the safest course for beginners to keep closely to the above rule; deviating only when the judg- ment is well satisfied that it will be profitable to do so. The large purchases partake somewhat more of a specu- lative character, and therefore the lighter purchases, with frequent replenishing, are to be commended as more pru- dent. To enable the retailer to avail himself practically of his conclusions in relation to his purchases, as proposed in the foregoing, it will be necessary for him to make up a list or inventory of the articles he intends purchasing, M^aking Out Jjist, 57 before commencing to buy; putting down as definitely as he can the quantity and value or price of each article. As the making of this up is a work of some labor, when done properly, (and it is of not much use unless so done,) a little space will be devoted to the specific details of such a list, taking for the illustration a stock of dry goocls^ tc» amount to $10,000. The ftrst subject to consider will be the various depart- ments, or sub-divisipns of goods, which come under the general name of " dry goods." The beginner should take a sheet of paper and write down each subdivision, one under the other, as follows : Men's wear, Ladies' dress goof*s, Brown muslins, Bleached mu«l»n«, - Hosiery, Gloves, Flannels, Tickings, - Linen goods, Silks, Ribbons, Etc. $0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0,000 0.000 ^00,000 In this way, running out a list of every class, he can think of which is appropriate to the business, or which it would be profitable to keep for sale. , When this ia completed, or all on it that can, for the time, be thought of, then he may take up one of these sub-divisions as 3 heading for another sheet of paper, and under it put down every thing which is thought necessary to have, to make the assortment complete, with quantity and price ; carefully considering so as to get only such articles as are desired ; and then count out the amounts into the outer ' i I 58 Special Details JVecessary, column, or edge of the sheet of paper, and sum up the whole, so that he can see what the estimate is for that department. Suppose, as an example, the first sub-divi- sion is taken, viz ; " GOODS FOE MEN*S WEAR." piece black cloth, 16 yds, at $3.00 3 2 u (i u u (( u u u u (( li (( (( u i( i( brown blue " bl'k beaver do. 16 16 16 20 (( (i u black cassimere. cot. warp 20 u (( i( blue steel mixed do., u (( « (( (( satinet, black satinet, fancy caasirnere. (( 25 20 20 25 25 30 30 75 50 u u (( u u u u u (( (( u (( u u i( a (( i( (( (( u u u u u (( u 4.50 4.00 2 50 4.00 O Olt 1.25 2.00 1.50 1.25, 1.50 75 1.00 1.00 1.50 $48.00 72.00 •04.00 40.00 80.00 45.00 31.25 40.00 30.00 31.25 37.50 22.50 30.00 75.00 75.00 Etc.— thus going on through all the variety which may be thought necessary to make up an assortment which we may suppose will foot up to the amount of 11,600. Then taking another sheet, with another of the headings and continuing on, the same way through all the sub-divisions, summing each one up separately. When this IS all done, the footings or amounts are to be set opposite to each heading on the first sheet started with, and all added up, which will show what the whole estimate amounts to. It is, perhaps, necessary to remark here that the novice is to give a careful consideration to every article he puts on the list. If he knows that blue cloth IS only bought by a certain class who do not desire a fine article, he will mark it at such price as he thinks will suit best, and not merely mark at random as the iUue, Cuttinff Down the £^stimate. 59 tration is marked. If he has noticed that nobody wears blue cloth in the locality, of course he does not want to put it down. And so of every separate item under each head. Each is to be separately considered, and the rela- tive merits of different values duly estimated, and whether one quality alone will sufliice, or whether two, or three, or more, different qualities are necessary for the assortment. When this is all made up, he has before him a list of about such goods as he would buy if he should go to make his purchases without a definite idea of what he wants. But if he now counts up the totals of each class, he will probably find that instead of $10,000, (the pro- posed limit,) they amount to $12,000, or perhaps $15,000 — as his purchases would if made without the list. Should the list not be capable of reduction, to the limit of $10,000, by striking out individual articles from under each sepa- rate head, without seriously impairing assortments, it will be necessary to consider the propriety of dispensing en- tirely with one or more of the sub-divisions or classes of goods. It is generally preferable that there should be a fair assortment in each such sub-division of goods which may be kept, rather than a greater variety of classes with a poor assortment in many of them. In the case illustrated, therefore, it might be desirable to strike out the department of "silk goods," or "ribbons," — or per^ haps " men's wear," which now oflen forms an entirely different branch of business. When the whole list is per- fected by thus going over it, and brought within the pro- posed limit as to amount, for convenience it should be copied into a pocket memorandum book, using only the left side pages, reserving the right side blank for the inser- tion, at the time of purchasing, of the exact quantities and prices of the goods purchased ; and when the goods bought are not just such as are on the list, which will often be the 60 Tlan Tfhen Details are Impossible. case, to note what is purchased in lieu of them. The ini- tials of the wholesale dealer should also be added on the line, if there is any probability of forgetting from whom the purchase is made. Such memorandums are valuable for correcting errors in quantities or prices, which may 1*6 made in entering the goods by the salesman, and atten- tion to them will prevent the retailer from duplicating his purchase in another house, which he may sometimes do if he has no note of the previous purchase. It will often happen that it is impossible to put down with accuracy the details of the articles to be purchased before seeing them. In such cases, it may be sufficient to put down simply the amount intended to be invested in the class of goods. But in the most difficult cases raucih may be done to aid the purchaser in the excitement of buying. Take, for instance, in a dry goods business, such a class of goods as " dress trimmings," than which nothing in the whole range of merchandise is more vaii- able. The continually recurring, yet unexpected and ir- regular changes in the styles and colors, make it almost impossible for even the most astute retailer to decide upon what he will buy, until he sees the styles. One sea. son " gimps " are all the " rage," the next " fringes," then " buttons," then " braids," then *' velvets," then *' riV bons," and so on, each kind in dozens of diversified styles, the only and great aim of those who get them mp being to get something new, so that the variety might well confound the calculations of the experienced. Still, even Jn this chaos of finery, much can be accomplished in pr&- paring the way towards a proper selection. Suppose in such a case it should be decided to invest $300 in a small assortment of fashionable dress trimmings, the particular kinds to be decided on after inspection. It will be a ma- terial help to the judgment to divide the amomit, and say Advantages of a Memorandunt, 61 how much shall be invested in qualities suited for lawns and printed dress goods of like character; how much for a better grade suited to worsted or woolen dress goods ; and how much to a finer grade for silk goods. ^ And if experience has shown that it is difficult to sell dress trim- mings, when the whole quantity required for a dress ex- ceeds in value one-fourth the cost of the dress, a still closer classification can be made, and the completed list will give perhaps $50 worth, ranging at from twenty- five to fifty cents to the dress, $100 worth from fifty cents to a dollar for the dress, and $150 worth from $1.00 to $3.00 for the dress. Such memorandums while they confine the range to narrow limits, still give scope for the selection of any style or kind of goods which may be thought most suitable after inspection. In fact, the list of more regular goods will sometimes not be more definite, and will often read thus : 3 pieces cotton pant, stuffs, to sell from 371 to 75 cents, leaving the exact styles and .prices to be decided on after an inspection of the goods. A week might be well spent by a person beginning, in properly making up such a " memorandum book." Care in such particulars indicates prudence and forethought, and if a retailer finds himself deficient in either of these, a habit of relying on such memorandums in purchasing will make it necessary that he does reflect and think, be- fore going to make his purchases. The experienced merchant finds the advantage of such a guide in buying a diversified stock of goods, and the begmner never need fear that he will know too much about the goods he intends buying, before he commences to purchase. As the more exactly he knows what he wants, the less is he likely to be improperly influenced by the wholesale salesman. Besides, this preparation ii la 62 T'he ^'Ouessmff^* Method. x\ XI iomething of a relief to his mind, which is likely to have enough to fully occupy it, in obtaining credit, comparing prices of rival houses, selecting, shipping, and settling for his purphases. But such memorandums should not be guesses or jump- iing at conclusions in the lump, as they are theil worse than useless, giving a man the idea that he must buy some- thing, he knows not what ; whereas if he trusts entirely to his memory he might recollect something of what he wants. As an illustration of this guessing process, quite preva- lent with some who are too lazy to look particularly into details, the writer once saw on the memorandum book of a retailer who was buying to replenish stock, the fol- lowing : — " A small assortment of narrow ribbons." The retailer said he had a good many at home, but he would select out a few more, which he did, simply guessing at the widths and colors he needed, when he could have had in ten minutes time before he started, a full list of the ex act colors and widths he was out of, thus surely avoiding the duplication of goods which would likely take place by the guessing method. For want of care in making up such a list, many a re- tail dealer has his shelves cumbered up with unsaleable duplicates of goods, which employ a large part of his cash capital, and for any practical advantage to his busi- ness in increasing sales might as well be packed away in cases. All that sells of them from season to season scarcely pays for the depreciation alone, without consid- ering the trouble of keeping them in order, and their of- ten being a hindrance to the purchase of other goods which would sell. A dealer that the author knew had some experiences of this kind in one department of his business — that of " kid gloves." Without special regard i>anffer of buying at Random. 63 M to his customers' wants he had made several purchases of "job lots," from time to time, among which were many sizes and colors not often called for. These increased the bulk and appearance of the stock, much beyond what it had ordinarily been. Notwithstanding the mcreased stock, .complaints were soon made by the salesmen that they could not suit the customers out of the stock on hand, and more gloves were wanted. This being a very common excuse for failure to effect sales, but little attention was given to it. There seemed to be enough gloves, and they were offered cheap enough. But the glove business grad- ually declined, and the stock did not sell off. Finally, when the busy season had nearly passed by, it became, patent to the proprietor that something was wrong wnth the " kid gloves." He had the whole stock carefully as- sorted out, when it was found to be mainly made up ol the odds and ends of the "job lots." Sizes too large or too small for the general trade, and colors and qualities not desired even when the sizes were suitable, with scarcely a pair of gloves in the lot of such as were daily called for. The remedy adopted was to send a large part of them to the auction room to sell for what they would bring, and get in a fresh supply of the right sizes and colors, after which gloves were sold to the customers as before, without complaint. There are not many retailers who have been four or five years in business, but will find such unsaleable lots of goods on their shelves, which they would be benefitted by selling off at auction for whatever they will bring, and supplying their place with something desirable. A man may find it to his interest to keep a piece of land year after year, though it brings him in no income. He is of- ten not disappointed in his expectations, and after keep- ing it five or ten years, it sells for so large an advance u Peetinff the way alonff. over cost as to make it a good investment. But such ad- vances in price cannot even be hoped for in merchandise, hence the sooner unsaleable goods are disposed of the better. Young merchants sometimes meet with considerable losses, which have their origin in an attempt to keep a greater variety of sub-divisions of goods than their capital wiU warrant. They get a little in every department, but hardly enough for an assortment in any one ; intending to learn by the experience of the business what particular classes of goods are most profitable, or rather, perhaps, what kinds they have most demand for. Starting with- out any well devised plan, they « feel their way along." When a man cannot see his way, of course feeling his way i8 necessary and prudent. The danger of this plan how- ever, is, that a great many " odds and ends " of broken assortments are left on hand, which it is very difficult to sell, except at a loss. Take for illustration the case of a be- ginner whose memorandum book is made up a few pages back. If, when the rough calculation. mdicated there is completed, and it is found that it will require $15,000 of stock to give a full assortment in each department, he should be in doubt which department or sub-division to strike out of the list, and so conclude to first try all of them with a limited assortment, or rather some of them with no assortment, cutting down the department of" men's wear" to $600 worth, and several others in the same pro- portion. The result would be that these departments, having no assortment to show, are soon lost sight of in the activity of the other branches in which the as- sortment is good. And thus, perhaps, one-quarter of the capital will be practically lost to the business : the goods remaining month after month on the shelves, until ' hey become faded^r out of fashi^on ; and even when Zoss in Stltififf off broken Assortments. 65 sold will not bring more than three-fourths of what they cost. ^ Every experienced retailer knows how difficult it is to close out all the stock in any one department which he desires to cease dealing in. It is always done with considerable loss after the assortment is once broken. Hence, if a memorandum list, carefully made out as sug- gested, only prevents losses of this character, it will am- ply repay for a month's labor, if necessary, to make it out* But its advantages are not limited to this. In fact, no prudent merchant would think of purchasing a stock of goods without such a guide. A junior partner in a west- ern house, who had been considered so prudent as to have had charge for some time of a branch concern, came east some years ago to make purchases for the first time, with- out any definite idea of the quantity of goods he was to purchase in each department of business, but was limited in the aggregate to the amount of $8,000. When he got home and summed up his invoices, he had actually bought over $20,000 worth. So great a mistake could only occur from an entire dependence on the estimates of the hour, and the want of a well digested and pre-arranged list of quantities. The influences and excitements of a first visit to the great metropolis overcame his cool judgment. Nothing is so distasteful to a salesman in a wholesale house as to see his customer with memorandum book in hand, asking by the card for this, that, and the other. The young merchant is frequently ridiculed for " old fogy- ism " in tying himself down to it, and urged to " go in" and buy anything that is " cheap." But these very ob- jections are evidences of its value. The salesman Imows that while his customer adheres to it, there is but little chance of influencing him to buy beyond his wants. V Before the beginner leaves home to make his purchases. 66 Amount of Credit Required. >rhat must he ^idfor in Cash^ 67 it will be prudent to make some calculations as to the amount of goods which it will be necessary to buy on credit, if any. This subject can be had in view when making up the memorandum book. Certain goods are mostly sold for cash ; others are purchased more advan- tageously for cash, even when they are also sold on credit. Other kinds may be wanted in such small quantities that it would be injudicious to ask credit on them by a person just commencing business, as the necessity for credit on such trifling amounts would indicate an insufficient capi- tal for the business, and might give rise to suspicions tha.t he does not tell the truth about the amount of cash capi- tal he possesses. The credit needed should therefore be obtained on other than the foregoing articles, and gener- ally, it may be remarked, only on goods in which the dif- ference between the cash and credit price is not greater than one per cent a month for the time of credit. The relative proportions of his cash and credit pur- chases having been settled on, in accordance with the re- commendations in the first chapter of this book, it will now be necessary only to carry out the detail by propor- tioning the amounts of cash and credit to each separate sub-division of the stock. These proportions may be noted in the memorandum book at each heading. As the cash is a specific item, while the amount of the credit is an undetermined one, it is necessary to take the cash first into calculation. To make this subject more plain, the illustration as be- fore used, of a ten thousand dollar stock will be continued. The capital in cash we will take to be $5,000, out of which must be reserved sufficient to pay freight and ex- penses of purchasing, etc., say in this instance $300, or better, perhaps, 1500, so as to pay any bill of triflmg amount which may have been omitted from the calculations in the memorandum book. This will leave $4,500 toward paying for purchases. In going over the memorandum book, it is found that $700 will be required to pay for small purchases and " cash " goods, leaving $3,800 to apply on the purchase of the balance of the stock of goods— $9,300. This would enable the purchaser to pay forty per cent of his purchases in cash. The balance— sixty per cent— he will require on credit. To be on the safe side he should endeavor to make the arrangement with the wholesale dealer to pay one-third cash, as he may occasionally be under the necessity of paying as much as one-half cash on some purchases. Besides, it is always pleasanter, and adds to a retailer's credit, to be able when settling up for his purchases, to pay a larger proportion in cash than was agreed upon, while the opposite condition, where he comes short of his promises, and having agreed to pay one-half cash, has to ask that he be let off with one-third or three eighths cash, even though granted, as it often is because the goods are entered and packed, causes a loss of confi- dence in the retailer's ability to manage his business prop erly. One advantage which this pre-arrangement gives the buyer, is the ability to tell, when he asks for credit, ex- actly what proportion of the purchase he can pay in cash. Which proportion for his benefit should always be set- tled on before he has made any selections of goods. If he goes on to select his goods, leaving the seller in un- certainty as to whether he intends to ask for credit on the whole, or to pay cash for part, the most unfavorable view is taken, and it is supposed that he will want credit for all of them. Now, as the payment of part cash on a purchase ie always advantageous to the seller, or regarded so, the buyer should obtain the advantage of his cash payment, by having the terms of the credit and the proportion tp 68 Length of Credit necessary, be paid m cash settled on primarily. The wholesale deal- er will then be disposed to accord to him such favor as he deserves, on account of tlie cash payment, m raakmg prices to meet his views whenever possible. The length of credit which the retailer will require on his credit purchases, is also of importance, and should be duly considered in this connection, and the conclusions whicli may be arrived at entered in the memorandum book, with the amount. This length of credit, or time ag it is usually called, must be sufficient to enable the buyer to get his goods home, sell them, and if credited out, to make the collection before his own payments be- come due. It will doubtless save present reflection and labor for the retailer to jump at a conclusion, and assume that he will sell enough to pay his bills as they mature; especially if he buys his goods on the longest time he can get But it will be more prudent for him carefully to m- vestigate his chanced of selling for cash, and collecting the cash from previous credit sales for each month of the year Such calculations will be but the details of the yearly sales, referved to in the beginning of this chapter, and may be used to confirm or disprove the conclusions there arrived at. These are the data from which he is to decide as to the length of credit he will need on his pur- It may seem to some readers as no great matter if the dealer gets the longest credit he can, and yet falls short at the time of payment ; how can it help him to know that he will be short when he buys the goods ? But setting aside the impropriety of a man purchasing goods on a specific time, when he has made no calculation as to whether he will be able to pay, in which case if he fails bis innocence is only ignorance, at best, and ought not to Long Credits Unprofitable. 69 exculpate him for a broken promise, it is "not profitable' for a man to buy goods on a longer credit than he needs. Almost all houses that sell on credit, sell proportionally cheaper the shorter the credit. That is, if six months be the ordinary credit, and a buyer is content with three months, often one per cent a month will be deducted for the three months taken off"; while if the credit is given at six months, and at the end of three months the purchaser desires to pay, if in good credit he could probably only get two to two and one-fourth per cent ofi*, or at the rate of seven to nine per cent per annum. Besides this differ- ence, there will frequently be modifications in price to the short time buyer. Hence it is not profitable on the whole, for a man to purchase his goods on any longer time than he actually needs. The process of making up the monthly estimate of re- ceipts of cash, is somewhat different from that of the yearly estimates before mentioned. Each particular busi- ness has its months of activity and months of dullness, in the former of which the most of the trade is done. It is expected that a person embarking in a new business will know enough about its character to be able to tell, with some degree of certainty when these months are, and what proportion of the annual business is done in each one of them. When any part of the retailer's sales are on credit, a different rule of estimation must be employed, as the re- ceipt of the money is consequent on other causes than ac- tivity in trade. Goods bought at retail on credit, will generally only be paid for when the buyer comes legiti- mately into possession of the money, from the prosecution of his business or calling. The consumer is not likely to borrow money to make such payments, as the dealer sometimes does in an emergency. If the retailer'g custo- 70 Local Tay'l>ay8, mer is a farmer, he will probably be in funds to pay when his "wheat," "wool," "cotton," "tobacco," "fatted cattle," or other product is sold. If he is a mechanic, lawyer, doctor or other person living in and depending upon a community of farmers for his business, he can only pay when he is paid. Hence it comes thai; in every community there are one, two, three or more specific pe- riods in the year, varying as the communities vary in their products, which are known and respected as " pay- days." In manufacturing districts they may be monthly or semi-monthly. The retailer must note these periods, and make his arrangements for collections at such periods. By the observation of all these circumstances, an esti- mate can be made of the cash receipts for each month in the year, upon which is to be based the retailer's credit purchases. Such estimates always need a large margin for contingencies, especially those which are founded on the collections from credit sales. If it can be avoided, it will be better not to undertake obligations exceeding three-fourths of the estimated receipts, as it is better to have a little money over than to be short. There are al- most always opportunities in a business, in which an en- terprising man can use to advantage any surplus of cash he may have on hand, when he does not think it desirable for particular reasons, to discount his future payments. The advantages of thus arranging the credits, so that the resources of the business will meet the liabilities at maturity are many. Promptness in paying mainly de- pends on it. Without it, it is not always possible to use all the capital in the business to advantage. For even when the capital is so large that the dealer is in no dan- ger of being unable to meet his notes at maturity, if no calculations are made of the character mentioned, there will occur frequent periods when the capital lies as cash Gam in :Suying on Short Thne, 71 in bank, and can not be used to a profit, but must wait perhaps for two or three raontlis, the maturity of bills which might better have been purchased on shorter time A friend of the author, when just commencing business was advised by an old and successful dealer, to always keep himself short of money. The advice is good for all men m business, if followed in ths way : in buyinc. on just such a length of time, that it requires the dealer to attend closely to his sales and collections, so as to get to- gether the money necessary to meet his obligations, rather than to buy on such long time, that he is certain to have money enough to meet his payments, and so can be care- less about selling oflT his goods and collecting in his out- standing accounts. It is the practice of some very successful business men to buy their goods on the longest time they can get, in' all cases, and rely on discounting whenever they have money on hand beyond their immediate necessity. But the practice can not be commended to a beginner who has his credit to establish. Those who succeed on that plan are generally the old dealers, who are in good cred- it. It may answer later in business, when a man, feeling that he is fully responsible and able to meet all his en- gagements at maturity, and his credit is undoubted, does not wish any more to take the trouble of cyphering out exactly how much he can pay from his business this month, and how much the next, but takes it easy, paying when he has the money, and letting the bills run on to maturity when his trade is dull. The disadvantage to the dealer of not having any es- timate of the receipts of cash in his business, and of inat- tention to this in getting credit for his purchases, will be the maturing of his obligations at periods when he has not sufllcient business resources, but must depend upon K 72 One Cause for I^ailure to Tay. borrowing to meet them. The $5,500 of goods, which the dealer would require to buy on credit, in tlio case be- fore mentioned, must have some specific pay-day. Per- haps it is four months off; and the dealer seems to have a very easy time when he gets his goods home, and they sell off freely. He has so much money, and pay-day is so far away that he can go again in a month and buy some more goods ; increasing bis stock perhaps a thousand dollars, and paying cash for the most of it. Soon he is within one month of the maturity of his first purchases, and the money that seemed so plentiful before, is all at once scarce. The busiest months of the season have gone by, and now, when there is but little selling, and less col- lecting from outstanding accounts, his heavy payments are due. By borrowing and scraping he may possibly make up the amount, but the chances are he is short, and has to go to the wholesale dealer with a long story of " dull trade " — " great many of the goods bought of you still on hand" — and requires one-half the account extend- ed over a couple of months. Such retailers often find that the next time they want to buy, the goods seem dear- er in that house than in other places, and so they shift their patronage to another place, to go through the same experience there, at every little crisis in money matters, or stagnation in trade. A dealer who will arrange all the jsubjects treated of in this chapter methodically in his memorandum book, so that he can readily refer to them whenever his mem- ory is at fault, transacts this part of his business in a way which gives every one with whom he deals the impres- sion that he is a man of order and regularity in his busi- ness — two essential requisites for a merchant — and thus lays the foundation for a good credit. While the one who disregards these details, and buys his goods at ran- Goods yVelt Sought are JHdlf Sold, 73 dora, taking credit as he can get it, more by chance than calculation, will find that no matter how great his capital may be at starting, he will be long in obtaining a first-class reputation or credit as a merchant. It is an old adage among merchants that " goods well bought are half sold." It is as true as it is old. One merchant in a town often buys his goods a full profit cheaper than his rivals do, so that he could sell to the majority of them at the same prices they pay, and make a fair living by it. One of the first things for a beginner to learn, therefore, is how to buy his goods. Generally too much reliance is placed on the salesman he buys from, or the regularity of prices in the house in which he buys. If a man would consider the many processes most goods go through in the manufacture, and the risks they run in many ways of being in some degree more or less imperfectly made, he would not think it strange that goods seemingly the same arc of different prices in dif- ferent stores. Frequently some little difference of pat- tern or color, hardly noticeable, will increase the cost of manufacture five per cent, yet a manufacturer will take an order for a certain quantity of these, in connection with other styles, without any advance. While an order given by another wholesale dealer for the goods of increased cost alone will be charged the extra five per cent. If both dealers ask the same advance on their goods, one will be five per cent higher in price than the other. One wholesale dealer may give an order for certain goods at a fixed price of— say $1,00. Another, seeing the pattern, thinks that if he could get it a little inferior, so as to be able to sell it at a dollar, it would suit his trade better. The manufacturer is just as willing to make it a little lighter, or poorer in quality, and sell it at ninety 74 ^Reasons Hrhy Goods differ in THce, cents. It would take a " smart " man possibly to tell the difference between the goods, without having them side by side. Indeed, it is probable that sometimes there is no difference. The manufacturer took the order thinking he could make the difference by slighting the work a lit- tle, but found it so much trouble to reduce it just ten per cent, without reducing it still more, that he concluded subsequently to make it just the same as the previous goods ; though he speaks of it as being inferior. Or, he may have purchased a lower priced raw material to make it of, which, on working, he finds to his own astonish- ment is just as good for this especial purpose as the high- er priced was. These are cited only to show some of the many different ways by which variations will arise in the prices of goods, which are in the main similar. A retailer should not always think it indicative of a desire to get higher profits therefore, if he finds these differences in different stores. It is his business to keep his eyes open, and buy where he finds the article cheapest. To do this, he must acquaint himself well with the qual- ities of goods. When he sees a piece of goods, or any article he would purchase, and hears the price asked for it, if he has seen it in another place, he must be able to remember where it was, whr-t the price was, and whether it was really the same, or better or worse in quality. When he is called upon to decide upon the reasonable ness in price of some new style or manufacture of goods, he must be able to compare it with other goods nearest like it, and know enough of the difference of cost in dif- ferent goods, to be able to tell what price the new arti- cle should bear, by such comparison. If he desires to purchase, and thinks the price too high, but cannot find the goods lower, prudence would dictate buying lightly, nntil by additional supplies the price is brought down. j± Good Hute in ^Suyiuff, 76 Sometimes, though, it occurs that the new article is re- iatively cheaper than the old with which he compares it, and he determines that it is so. A manufacturer wilf be induced, in some dull period, to take an order to manu- facture some new style of goods, at a price which leaves him without adequate profit. This, coming into the hands of the wholesale dealer, is sold at the ordinary ad- vance, in the supposition that though the manufacturer now grumbles, yet when more of the goods are really wanted, he will be willing to make them at the old price, and the wholesale dealer only finds out his mistake when he has nearly sold out the goods and desires to obtain more. In such cases as this last, the retailer, if satisfied that the article will prove saleable as well as cheap, would be justified in purchasing more freely. It is this ready decision in such cases, combined with a good memory of prices and qualities, and good taste, or rather a concord of taste with the community for which he purchases, that makes the good buyer. A good rule in buying goods, is to get them the near- est possible to their source of growth or manufacture. On general principles, the fewer hands an article has pass-, ed through the less will be its price. When, therefore, a retailer, accustomed to purchasing an article in one house, finds it in another, from which the first obtained it, it is good policy to buy it in the latter, even though the price is no cheaper. The retailer may not at first get the advantages in that house that the old- er customer, and probably larger buyer gets, but by and by, as he comes to be known as a regidar customer, he has reason to expect that he will obtain them. A shrewd buyer is ever keeping in mind the considera- tion as to how he may dispense with all the middle-men between himself and the manufactitter.or producer. Even 76 '^Seating Down*' the Trice. when he has at last got into direct contact with these, in his buying, he is then still considering how he may fur- ther cheapen the article, by furnishing the raw material or other necessary to the producer. Perhaps this subject is more important to the whole- sale dealer, but it is a principle which can always be pro- fitably borne in mind by the retailer too. Especially in the purchase of what are called the leading articles of the trade ; of which large quantities, comparatively, are sold, and on which the profit is generally small Shall a retailer, in buying his goods, be so ungentle- manly as to beat down in price ? Unhesitatingly, " Yes," if the seller requires that process before he will make the lowest prices on his goods. The fault is in the seller who puts on an extra price, to be abated by the beating down process of the buyer. If A has an article which he asks seventy-five cents for, when it is only worth seventy, and B wants it, and cannot find it anywhere else, and he has such knowledge of A's business practice as to believe that he will sell the article for seventy cents, if he cannot get the seventy-five cents, there is no good reason why B should not offer the seventy cents, and use all truthful arguments to induce A to sell it to him. And yet the habit of " beating down " is always a bad one for a buyer to get into ; for so soon as a man is known to be one who always requires an abatement from the asked price, be- fore he will buy, he finds enough wholesale dealers who are ready to meet him more than half way, and who pride themselves on getting a little better prices out of such men than from those who either pay the price asked, or decline to buy. It often happens that a retailer wants an article to sell at a certain price, as one dollar, and to buy it so as to make, say fifteen cents profit. The wholesale dealer has f^tUeness Essential to a Good ^uyer 77 only one quality of the goods near that price, and for this he asks ninety cents, at which price it may be reasonable enough, but it does not afford the retailer a satisfactory profit. In such cases it is very proper for the purchaser to tell his desire, and ask if he can not be accommodated by a reduction in price to eighty-five cents. Such a re- duction may be regarded as a favor, and not a strict busi- ness transaction. There is no rule which can be adopted or given, which should govern a buyer in all cases. Some men are so avaricious that when they offer an article to a purchaser at a set price, say fifty cents, and the buyer takes it without remark, they think within themselves, '* that was sold too cheap. He would have given fifty-five cents just as readily." In consequence, the next article they offer, they add on a little to the price. It will hardly do for a retailer to say " I will not trade with such men," for they may have the exclusive sale of goods which he can not profitably be without. The true course is to deal with them just so far only as one's interest is advanced. To give preference first, to those who sell their goods fairly, if they have the articles required. A reasonable amount of suavity and politeness is as es- sential to a good buyer, as it is to a good salesman. If a man's manner is hard, imperious and domineering, char- acteristics which buyers sometimes like to assume, even when they are not natural to them, as if they were doing the seller a great favor in buying of him, they will find that concessions in price are rarely made to them, nor are the most desirable goods put forward when they inquire. Such are reserved for those who are fi-iends as well as customers. Besides, wholesale dealers of the best class, who feel confident that their goods are reasonable in price, and many of them perhaps more reasonable than 78 Measure of fhe Seller^ s Complaisance, S>epreciathig the Goods, 79 can be generally obtained, are sometimes independent enough to resent such imperious airs, and are particularly non-complaisant to such customers, who are thus thrown off as it were, and forced to buy their goods in houses where for the sake of the extra profit they get, they can afford to meekly put up with an unpleasant customer. It is in this as in many other things. The degree of com- plaisance is measured by the profit made. Two and a half per cent profit — seller very independent ; five per cent — a kindly nod of recognition ; ten per cent — a low bow ; twenty-five per cent — an obsequious deference. A young country merchant coming to a large city to buy goods, met as he came off the steamboat, a wholesale dealer in tapes, buttons, etc., with whom he was slightly acquainted. As they walked up the street together, the citizen was especially earnest to carry a small satchel for the countryman, which the latter had in his hand. " 1 could not understand," said the countryman in telling me of it, " why he should press his services on me so repeat- edly, seeing that the satchel was a light one, and I the younger and apparently stronger man, and therefore bet^ ter able to carry it ; but as we went by his store, he in- vited me in, and when I found that he asked about ten per cent more for his buttdns than others did, I under- stood the reason for his extreme politeness." Some buyers have a disagreeable practice of undervalue ing goods they do not want to buy, which can not be commended. A salesman, with a desire to please them, or to bring to their notice some article which he considers especially noted for its beauty, quality or reasonableness in price, exhibits it, and the buyer not needing the goods, accompanies his refusal with some disparaging remark counter to the salesman's commendation. Such remarks are doubtless frequently made, to convey to the seller an idea that the buyer will purchase anything if he will only offer it cheap enough, or if it is only handsome enough, and thus to induce him to offer some other goods cheaper, to try to effect a sale. But it is better for the buyer to decline to buy without assigning a reason, or to say can- didly ** it is cheap enough," or " very handsome, but I do not want to buy it." Instances are frequent where goods were purchased by the wholesale dealer, with the expec- tation that they would exactly suit some special custo- mer. When the customer saw the goods, being uncer- tain whether he had any need of them, he made such disparaging remarks about them, that the wholesale deal- er was fain to sell them the first opportunity at cost, and when in a day or two afterward the party for whom the goods were especially bought, having meanwhile looked over his stock, and concluded that he really required such goods, came back desirous of buying , he found to his mortification, that the goods were all sold, and could not be replaced. Such courses tend to destroy that friendly confidence which should exist between the buyer and seller, the loss of which is to the disadvantage of the buyer sometimes, as well as to the seller. The Tiisks of the Creditor, 81 !1 CHAPTER V. \ OBTAINING CREDIT ON PURCHASES. VSK surest and most pleasant way for a retailer to obtain credit for such goods as he needs, is not to want the credit. If his business is so arranged and managed that he can make his living, and something over, without the necessity of asking for credit, and this is generally known— if he has any reputation for probity— he will soon have more goods offered to him on credit than he can use to advantage. . Some men seem to regard credit as a thing they can create spontaneously — out of nothing; and hence use all sorts of schemes and devious plans to obtain it in the houses they wish to buy goods from. Whereas credit is as naturally a growth from mercantile confidence, as is the summer vegetation from the sun's warmth and the spring showers. And to endeavor to obtain credit without first establishing confidence would be as foolish as trying to make a shrub bloom in the ab- sence of warmth and moisture. It could only be done at more exj^ense than profit. Mercantile confidence is largely founded on the belief that he in whom confidence is reposed is in no need of credit to insure his prosperity ; that he has within hira- •self all that is requisite for success, and is not dependent on the aid of others whose inability or unwillingness to further help him may cause his failure in business. One of the most efficient requisites in making a man thus self- sustaining is suflicient means or capital in his business or out of it, to enable him to bear such losses as may pos* sibly occur in his business. Every man's experience teaches him that losses will occur ; very oflen to the ignorant and improvident, and sometimes to the most prudent and careful ; and if the loser has no means of his own, the loss must be sustained by others. Precisely in proportion to the limited amount of the loser's means is, therefore, the risk of loss in such cases to those who credit him. As prudence and care will frequently obviate a loss, or at least reduce its amount, the possession of these — or in other words, business tal- ent which includes both with some other good qualities — is necessary in addition to capital, to create full confi- dence. Beside the risk of real losses in the business, which one has to encounter who trusts a retailer, is the risk of dis- honesty. The risk that the man will, for the purpose of cheating those who have trusted him, secrete his assets in some way, and claim to have lost them and be unable to pay. From my own experience I have the charity to be- lieve that such cases are rarer than is generally thought. That the known cases of dishonesty are usually where a man who is in failing circumstances hides it from the world, and purchases goods, or having failed, unduly magnifies his losses and secretes his property, for the pur- pose of making a more favorable settlement for himself. It may be thought that the distinction is too finely drawn, and that both are alike swindlers ; but at least the temp- tation is greater in the latter case than in the former, and the guilt is of all shades and degrees, from that of him who would mildly depreciate the value of his assets, to him who would secrete them all, while in the case of one who defrauds his creditors when he is not in danger of insolvency, the guilt is unqualified and absolute. It does sometimes occur that a wholesale dealer, know- ^ ing intimately a young_man, and having full confidence 6i The Conjfdence of Intimate Priends, in his business ability and honesty, is willing to entrust him with goods in entire absence of capital, relying sole ly on these qualities for security. - But generally the goods so sold take the place of, and stand in lieu of cap- ital, for though the buyer may and often does pay for them regularly at the expiration of the term of credit, yet he is in the meanwhile, from time to time, buying other goods to replace those sold, and has therefore a quantity of woods always on hand from that creditor of about the oriirinal amount. The wholesale dealer furnishes the capital, simply furnishing it in goods instead of money. The absence of capital would ordinarily be taken as evincing a want of caution or prudence in one who pro- poses to commence business without any, or with a very inadequate amount, and no inference of the possibility of getting into business with insufficient means can be drawn from the few cases, which are much exaggerated, of per- sons who have been very successful, though originally commencing without means. Successful men who have started with limited amounts of capital, sometimes like to boast of their success, though having had but fifty or a hundred dollars to start the world with. But when such cases are fully investigated, it is found that they had some kind friend behind them, who would furnish all the goods they needed on credit, and wait for payment till the goods were sold — a favor- able connection which no one not especially befriended can expect to obtain. Sufficient capital is therefore ordinarily the first requi- site in creating confidence ; when to this is added busi- ness ability, honesty, integrity, industry, prudence, econ- omy and good health, the list is nearly complete. What would be regarded as sufficient capital depends on the character of the business, the place where it is to be I Mnf Credit is to be Obtained. 88 carried on, and its extent or magnitude. This subject was discussed at lengtli in the first chapter of this book, and if the reader has not made himself familiar with the conclusions there, in regard to the amount of capital, he is referred to that chapter again. A retailer may have all the requisites above mentioned, however, and yet not be able to avail himself of them, to the extent he should in obtaining credit. It will there- fore be my object to reveal what little of mystey there remains on the subject. The first effort of the person wanting credit should be to bring to the knowledge of those from whom he seeks the credit, such circumstances as above mentioned, which tend to induce confidence. Sometimes even this is felt to be indelicate and unmanly. The man says, I have these qualities, which should induce confidence ; my friends and acquaintances who have known me for years feel that con- fidence—in all my intercourse with them credit has been tendered me unsought, and it is degrading to my sense of self respect to have my worthiness in this matter again brought up for consideration. It is no doubt true that the man who does not need credit can have a more inde- pendent spirit, but there is nothing necessarily mean, crmgmg or contemptible in any retailer making known to the wholesale dealer, the amount of his capital, his former career, and the circumstances which tend to show his mdustrious habits, his prudence and economy, and his opportunities for obtaining a thorough knowledge of the busmess he proposes to engage in. It will naturally oc- cur to any one who has sufficient sense to conduct a busi- ness that the other qualifications of honesty and integ. nty are more appropriately testified to by some one else than himself, though there is no harm in speaking mod- estly on these pointsjn^ answer to_direct questions. For >^' 11 til / ^e/erences an4 HecammendaHon*. the ascertainment of these nn»i:fl„ .• finnation of all others r!^ '''^''^<^*'°°«. and fnUer con- alwa^s be tendered ^ClfToT "^i^ "'^'' ^^ ^'•-"l «on8-friends or aclaTnL 'f '*' ^'"■' *^ «°<'I> Per- -ntfor a conlCluT^ T ^'^^ ''-- '"« app.i- 'othem. IfsuchperrrSeTt"'""^*"'"^'''"^ tance that the party to bably take some such^orf^^'i;:*^"— * "°"''^ . ■^-— eg Co., Mu, York: ed with c!!fr::-tfr^h -;P-ona.ly acquaint. ioh^ing county ofJack;:t)y:Me::r:t (^-"'"/^^ »«'- who recommend him T V„„ • . **'^^- *- and F ., -en who are likefvT; be .7 •"'^'"''''^- ^hey are no bnainess characterf and on .uTa " "'""""^ ^ "■-'" of the bearer's int;grity and bn,i '"'^' "' ^''^ ?'-« have no hesitation, were I in 7''' ""'""'''^' ^ ^<">W e-t to a reasonable amoi^irre^ltSa!:" ^— ^^ , Banker, Van Buren, Ark. Tersonal Introductions to Credit, 85 It may be well to remark that no person should be mentioned as a reference in such cases unless first spoken to, and his consent obtained. If, in an emergency, some person is named as reference, whose consent to act as such has not been previously obtained, which may some- times happen, it should always be mentioned to the party from whom the credit is solicited. This is very often done, after a man has been in business and established a credit at a few houses. In purchasing in another house, and giving such statements of capital as may be neces- sary, and a name or two for reference, the buyer may say, " I also buy goods of J & Co., and E. R anger of Unfriendly Introductions, Discredited Classes and Jjocallties* 87 I I w I'M I that always pleases us." Such men, after they have in. troduced another to credit in a house, have privately so much to say about the necessity of caution, so many " ifs" and " buts," that they more than neutralize all the good they have done, and the giver of credit, though he may choose to send the goods purchased at the time, is indis- posed to renew the credit, unless he can obtain some more satisfactory assurances. And in so deciding does just what the false friend desires. The person he introduced gets the goods then purchased, and feels under great ob- ligation to him for the introduction, while his credit is really injured by such an introduction. Even when the introducing merchant means well, and has a friendly intent at the time, the influence which he has over the new dealer's credit in the houses he intro. duced him in, is greater than is desirable. In case of a change of feeling towards his friend, from rivalry in busi. ness, or other cause, he has it in his power to do a greal injury, and this even afler two or three years have passed by. The wholesale dealer is very likely to consult with the original introducer of a customer, from time to time, afterward, and ask how the person introduced is succeed- ing, naturally believing that the friendship which was shown in the introduction still continues. It only needs innuendoes and hints of evil omen to seriously weaken any credit when newly established. A man who obtains credit by his own address, and statements and references, gets more within the affections of the party who gives it, and has less to fear from the ill- natured remarks of rival dealers. If such be asked their opinion of the man's prospects, and they speak disparaging- ly, allowance is made for envious or jealous feeling which may possibly influence the unfavorable testimony; while in the former case the wholesale dealer is inclined to be- N I lieve that the new dealer's position and prospects are even worse than his supposed friend hints. Another disadvantage of an introduction by a friendly dealer is that the party introduced is likely to have his credit and standing depressed by any circumstances which may weaken the credit of the party introducing him. Doubtless the disposition to this influence has originated from the close relations that often exist between the two persons in such cases. As when an old merchant introduces one who has been many years in his employment ; if the old merchant should subsequently fail, an inference might be drawn that the younger one had not obtained his busi- ness knowledge in a good school. When a man finds himself thus aflected in credit, by the discredit of another with whom he has friendly asso- ciations, it is wise to broach the subject at once to his creditors, and show them as he best can that the influ- ences which brought down his friend are in no danger of undermining his prosperity. He may with great pro- priety refer also to the inducing causes of his friend's failure — such as too extensive credit, too heavy expenses, buying too freely, etc., and to any caution that may have been given by him, which, if heeded, would have prevent- ed the unfavorable result ; and thus show that he was fully awake to the danger that befell his friend. To so great an extent does the habit prevail among wholesale houses, of connecting together acquaintances and dealers from one locality, that sometimes nationalities, special names, or all the residents of a State, are separate- ly placed under the ban of distrust, and refused credit be- cause the wholesale dealer having met with so many losses from the class, distrusts all of them. One will not sell any more to Jews, another distrusts all Irishmen, and a third is suspicious of all Frenchmen. 88 Creditors' Prejudices. An anecdote, current about 1842, after the commercial troubles of 1836 and 1840, illustrates this disposition in the extreme. A wholesale house in New York city had met with so many losses from Michigan customers, as they tried different ones season after season, that their patience was exhausted, when one day a countryman call- ed m their place of business and desired to look at some goods. " For what part of the country do you buy ?" was the natural query in a cheerful tone. "For Michi- gan," the response. " Michigan r echoes the jobber, and with changed features and voice, "I do not sell goods to Michigan." "Oh," says Michigan man, "I don't want credit. I've got the money to pay for what I buy." "I don't care if you have, you can't buy goods in my store, I have been cheated so by everybody I sold goods to from Michigan, that even if you bought for cash I should get swindled some way in the operation !" Men who disburse credits are not always governed by reason in giving them. A merchant doing a large busi- ness in New York city, whose credits amounted to mil- lions m a year, told me that he always looked with sus- picion on any applicant for credit of the name of D ^^ ^ ' C^^'*)' common family names.) He admitted that it was an unreasonable prejudice, arising only from having been grossly cheated two or three times by persons of these names, "but," said he, "I cannot help it. The mtroduction of any person of either of the names brings to recollection the swindlers that cheated me before, and for the time I seem to lose faith in human nature, and . am disposed to make very severe terms with the aDpli- cant." ^^ A retailer seeking credit cannot expect to know all the whims and prejudices of those from whom he seeks it. But such of them as may be general, as connected with Tniroducer must be in Good Credit. 80 his nationality or the region from which he comes, or where he contemplates doing business, or his opinions as his politics or religion, if of a kind likely to prejudice people against him, are better brought up for consider- ation at once ; and if the party from whom the credit is solicited shows any tenderness on that score, have the matter fully discussed, rather than leave it to rankle in the creditor's mind. Whims and prejudices of this kind only need to be dispassionately discussed and brought to the light, to be shorn of all influence. In truth, we are so constituted as to take rather firmer hold of any ac- quaintance or project which we were at first prejudiced against, after we see clearly that our objections were un- founded prejudices. A sense of justice induces us to be more liberal toward such, to compensate for the injustice first done them. The applicant for credit must be guarded against an over confidence in the mercantile standing of the retailer who is introducing him to credit. It sometimes happens that retailers have a good local reputation for standing and credit, which is not maintained in the quarters where they purchase their goods. Personal or family pride may induce a man to be upright and prompt in all his trivial business transactions at home, whereby he obtains a good standing there, while on account of repeated fail- ures to meet his bills at maturity, and other unbusiness- like doings in the place where he buys, his credit is poor. It is therefore of more consequence to the applicant for credit, that the person who introduces him is in good credit in the houses in which he is introducing him, than that he is simply in good standing at home. It will always be prudent for a beginner — when so in- troduced — to take the first opportunity of finding out exactly how his introducer's credit stands in that house. \ 90 ^ Retailer* s j^xperience. Sometimes the members of the house approach the new customer with enquiries, made indirectly, about the busi^ ness of the one who introduced him. This may be re^ garded as an additional hint or admonition to be on his guard in relation to his introducer's credit, at least to en- quire about it. The recollection of several cases in my own experience where persons were introdued by men in doubtful stand- ing, and on that account were long in obtaining the credit they really deserved, induces me to dwell somewhat at length on this subject. One instance, in particular, is recollected, where the beginuei* had been a clerk for the person introducing him, and was distantly related to him. His employer and relative was doing a large and apparently prosperous business in a western city, and was regarded at home by his clerks and acquaintances, as in a flourishing con- dition and in the best of credit. He was, however, known in New York by those who sold him goods on credit, to be a careless purchaser, ignorant to a great ex- tent of the values and peculiar details of many of the goods he dealt in, and so uncertain in making his payments, that half the time his notes had to be renewed, in conse^ quence of all which his credit was weak. The friend he introduced, who claimed to have less' than half as much capital as he had, was very lukewarm- ly received. Credit was given to him in some houses on account of his paying a part cash, and the season follow- mg, in some instances this was refused, although he had paid promptly. For a period of over a year the new dealer continued m a sort of despairing way, generally making his period- ical visits to New York in company with his friend, and going around from store to store with him, availing 'him- Sefriending a F'riend. 91 self of his friend's sheltering aegis, as he thought to his advantage. I had sold him goods on credit, and found him always prompt in paying, well acquainted with the peculiar values and qualities of the articles he dealt in, and be- came satisfied that he could be successful as a retailer if he had a fair chance. Having grown somewhat inti- mate, he did not hesitate to disclose to me the difliculty he experienced in getting the limited but necessary credit for his business. Telling me that, on the present visit, parties who had before sold him goods and who had been promptly paid, had declined crediting him again. I told him what I believed to be the cause ; that ^ the friend introducing him, in whose company he so fre- quently was, was regarded as in a doubtful position, and this had its influence on his credit. And suggested to him that his chances for obtaining credit would be much increased by keeping aloof from this friend ; and as he wanted credit in other houses, to refer rather to those who were crediting him, instead of relying on his friend's indorsement of character. The suggestion was acted up- on, and thereafter he had no difliculty in getting the rea- sonable credit he needed, and in a few months^ by his promptness in paying, he attained a standing in the mar- ket far better than that of his former employer. Wholesale dealers sometimes require that the applicant for credit shall sign a written statement, setting forth specifically the amount of his assets and liabilities, and , the character of the latter, whether "confidential" or " general," together with such other particulars as may be thought necessary to enable the giver of the credit to pass upon the responsibility of the applicant. Such a written statement is deemed particularly necessary 92 Makinff yrv-inen Siaiemenis. when the applicant is suspiciously in doubt about the amount of his assets and liabilities. Guessing and sup. posing at amounts that he should be able to give ac- curately, and the written statement is therefore required to bring the confused verbal statements to exactness. The applicant "guesses" his stock of goods is worth about $10,000; -thinks" he owes about 1^3,500, and " supposes » about a quarter of that is borrowed money and " confidential." But when these amounts are writ- ten down as a specific statement of his aflTairs for him to sign, and make a basis for the credit to be given him he needs to modify them considerably. Or, as is frequently the case with such men, he begins to bluster about " never having been called on to sign any statement before, and won't do it now." Sometimes, with more shrewdness, he may sign, but takes care to buy no goods in that house lest if he did and did not pay, he might have to stand a trial for obtaining goods on " false pretenses." Ordinarily a request to sign a written statement, upon the character of which the credit is proposed to begran^ ed, evmces a want of faith in the verbal statement. No man would care for a written statement in such cases if he was sure that the oral statement is true, as it does not add a particle to the applicant's ability to pay. It is only when he thinks that the oral statement is possibly false that he requires it in writing. His reasoning is this; if the statement is true the applicant can pay the debt; if it is false he must pay or encounter the risk of a criminal I prosecution for "false pretenses." The creditor's reliance is in part the same that money lenders are said to sometimes depend on when a bor- rower forges an endorsement on his note which they dis- count. They have well grounded reasons for believing that the endorsement is a forgery, but so long as the Caution about Makfnff Statements, 93 drawer has a family or social position to be sacrificed by the disclosure of his crime, he has the greatest of all in- ducements to conceal the forgery by the prompt payment of the note. Every person soliciting credit should therefore be very cautious about the verbal statements he makes, that they are the unexaggerated truths, and which, if circumstances require it, he can put his name to, and buy goods, con- scientiously satisfied that he is not deceiving those who are crediting him. And yet even with such cire, the fre- quent adoption of this method by a seeker after credit is not advisable, as the habitual use of it will not confirm his honorable standing among dealers. I shall not say he ought never to put his name to a statement of this character, because circumstances might occur that would render it advisable to re-establish a credit, if not to ob- tain one at the outset. Some independent readers may not coincide with this remark, and think that an honest man should never so demean himself for the sake of get- ting goods ; that he had better go out of business than to so humiliate himself. But it is easy to believe that Wto would act very independently on particular occasions, though when the trial comes we are governed by the same influences as others, and act pretty much as others do. Suppose a case of a business man in good standin"" and character at home, in business for years, and with an honorable pride in his commercial and social standino- finding on coming to market to make his season's pur- chases, that exaggerated rumors of heavy losses having befallen him, through endorsing for some friend, had pre- ceded him, and were current among those who had cred- ited him. And this induced a general refusal to renew credit, and he could not obtain the goods he required for his trade, even after the most thorough explanations, and 94 The Technical Meatu^^ cf T^ords used. assertions of his continued responsibility, while a written statement, which if untrue, would hold him criminally, might be all sufficient to restore confidence. The man is placed in the dilemma that he must either give this state- nient or go home without goods, and not only betray to his friends and neighbors at home his mortification, but perhaps really be made insolvent by the breaking up of his business. Will it be derogatory to his reputation to give such a written statement, if thereby he obtains the goods he needs for his business, continues to pay his debts, lives down the unfavorable rumor, and retains the es- teem and confidence of those around him ? Such humiliations all are subject to, more or less, that depend largely upon credit in obtaining goods or money to prosecute their business. The good book saith no- thing more truly than that the '* borrower shall be servant to the lender." The possibility of such mortifications should be an additional reason for arranging a business on such a basis that extensive credit will not be needed. When a written statement has to he given, it is not only essential that it be true according to the idea of the signer, but that it is true according to the technical or business meaning of the words used. The full import of these should be clearly understood by the signer. A young man about comraencmg business told the writer in answer to questions asked with reference to a credit, that he had $5,000 capital, |!3,000 his own, and 12,000 borrowed from his father. I asked him if the 12,000 borrowed was at the risk of the business. He said it was. But in a further conversation with him in relation to his father's means of living and his ability to bear the loss of the two thousand dollars in case the busi- ness was not successful, with a view to test his disposition, about this sum in the event of failure ; he remarked that "Al the '32isk of the business » » 95 "his father did not risk much, as of course he would be paid if no one else was." As this did not accord with his statement that the 12,000 was at the risk of the busi- ness, I asked an explanation, and then found that the young man's idea of " at the risk of the business," was that his father had no security for the money, and if he lost all and could not pay him, his father would have to bear the loss, and would not hold it as a debt against him. When I explained to him that " at the risk of the business " meant in commercial parlance, to be at hazard till all the other debts were paid, and that on such a state- ment as he had made me, he would be bound to pay everybody else before he paid his father, he seemed quite Burprised " as if anybody could suppose that a man would pay others and leave his own father to suffer !" I have quite often known persons to include and call " capital " in business, certain sums which were borrowed, and which were considered as the most " confidential " of any debt the dealer could make. When the so-called capital is made up in this way, it would be not only mor- ally wrong to call it capital, if not at the risk of the busi- ness, but without explanation of the circumstances, it would render the person liable in case of failure, to prose- cution and punishment. As the technical mercantile meaning of " capital " is the fund that is ultimately liable for the payment of all the contracts and agreements of the business. Therefore, if a man states that he has $10,000 " cap- ital," he virtually says that he has $10,000, which stands as security for the general obligations he may incur Part or all of this $10,000 may be borrowed if it stands *' at the lisk of the business," as his own means does. But if it is understood between him and the lender, or if it is his intention^ that in case of difficulties occurring 96 Oral and 7HrUfeH .Itafemoits. n the business, the loan .ha}< be made confidential and The debts wh>c„ t..« aealer creates in purchasing goods "il-t"l "r" " Tl^'l '"■■ *'' P'*^'"^"' °^ thisto-callod c^p.tal, .nsiead of the capital being security for the The prevailing disposition which most dealers have to magnify the.r capital, and the frequent miscomprehen" dwellfo r™' r''*"' ' •'^^'^ "<"''=«'^' «d-es'meTo tlr o T "' ''"^'^ °° *'^ «"''>«'• The inculca- tions oa this pomt may servo to illustrate for all others technrr' f '""^ --^-standing all the phrases 12 technical words m use in business. A distinction may seem to have been drawn between a eS Both ' ^'r """^'^ ^*^'^™^"'' ^'>'<=" ''^ -t exist. Both are alike censurable and punishable. The difference mainly is, that the oral statement of facts is generally qualified by words or phrases, which to make not'reJl "^ '" f °"' '" ""'""="• ^ "- -"o does not really know what the amount of his liabilities are may say I do not think they will exceed $5,000." This IS very different from the definiteness of a written state- ment which says, " my liabilities do not exceed $5 000 " One asserts an opinion merely, the other a fact. Confidence in one's own ability to conduct a business undertakmg prosperously, is of great advantage in ob- taimng credit. If the applicant speaks doubtfully or hes- fh 'J"^^ 1 ," r'P'"''' ^^ "^^ ""' «^P«<=' that the wholesde dealer of whom he is asking credit will be en- couraged to have confidence in the enterprise. A strong faith m ultimate success generally infuses additional life and energy into the work, and hence it is more likely to prosper than when it is prosecuted with doubt and hes- Importance o/ Con/idence iv one*s on^n Success* 07 itation. One man will look at an undertaking and say " 1 don't believe that it will succeed, but 1 will try it and do my best ; if I fail the fault shall not be mine." An- other, looking at a similar enterprise says, "1 know this scheme will work, and 1 can accomplish its success." It is not difficult to understand, that of the two men start' ing in business w ith these difterent ideas, the last will get credit for the necessities of the undertaking where the first could not. The sanguine man infuses some of his spirit into the mind of him whom he asks to trust him, and to some extent influences his decision in his fa- vor. While the influence of the presager of misfortune is just the reverse, and really tends to take away any disposition to confidence which is in the mind of the per son granting credit. This confidence in one's success shv^nld be a well ground- ed one, and not the swaggering and empty boast of ig' nOrance, which on being questioned soon betrays itself. It can be felt only when a person has so fully canvassed all the risks and contingencies to which his enterprise will be subjected, that he is prepared to confute everv doubt which may be thrown upon it. It is always well to have the subject of credit settled at once, so soon as the dealer decides that the wholesale house has the goods he wants to buy, and not to post- pone the subject day after day. as if he feared to undergo the ordeal, or was waiting to have the subject broached by the wholesale dealer and the credit tendered to him. Such hesitation gives the wholesale dealer an unfavor- able impression, inducmg him to regard the party as one who has not confidence in his own merits. Noting deficiencies and Damaget, 99 CHAPTER VI. XIAMTNATION, MAJIKING AND ARRANGING OP GOODS. AFTER the goods are received in store, the first thing to be done will be to thoroughly examine them, to see that each article corresponds in quantity with the amount charged in the invoices, and that there are none of them damaged. Also to notice that they are the same goods, corresponding in prices and qualities with the samples shown at the time of purchasing, and also that the quan- tities are the same as were purchased, neither more nor less. Such examinations are very necessary, not solely be- cau3e of the danger of fraud or deception on the part of the wholesale dealer or his clerks, but to guard against unintentional differences or mistakes, though sometimes necessary to protect against the former. Goods are liable to abstraction from the packages while in the carriers' hands, and are at all times more or less exposed to be stolen, so that a habit of examination and frequent inspection, even after they are in store, is necessary to guard against such losses, or rather to de- tect the loss at an early period, so as to adopt means to recover the goods and punish the thief. But more es- pecially is this examination required when the goods first come into the retailer's hands, before they are exposed for sale, so that if anything be missing it may clearly ap- pear that it was either never sent or abstracted before it came into his possession. When goods are missing it is of the utmost consequence to know whether they were omitted in packing by the wholesale dealer, or were abstracted while in possession of the carrier. As re- course must be had to the one or the other to make good the loss according to the place where it occur- red. In this respect, it is very necessary to observe carefully the outside condition of the packages or cases, before they are opened, to see if they present the appearance of having been tampered with ; and also, immediately when opened, to notice if the goods seem in disorder, as they will probably be if a part of the contents of the package or case has been stolen. It a package presents evi- dence of this character, it is well to call some disinter- ested person to notice its appearance, and to aid in the examination of such case or parcel, who can testify to the quantity of goods remaining in the case or parcel, if necessary. And if the carrier or his agents are not too distant, and the goods are valuable, it may be well to call their attention to it beforehand. Any deficiencies in quantity, variations in price or qual- ity, or damages found on the goods, as rents, stains or the like, should be immediately reported to the wholesale dealer, giving a full description of the character and amount of the damage or claim made, and tlie deduction required therefor. Whenever possible, a sample show- mg the character of the damage should accompany the notice, and when it is an error in price, such a sample is especially necessary, to show that the retailer has not mistaken one lot of goods on the invoice for another ot different price. A retailer should always make it a point to give early notice of any claim for reduction he may have, and not leave such, as is too often the case, until the bill is due, three or four months aflerward. By an early notice he 100 Cost and Seltmg Marks. Adding Charges to Thirst Cost', 101 }^ i ffives the wholesale dealer an opportunity to make a re- clamation on the i)ersoii from whom he obtained the goods. Courtesy requires that a notice of a claim should mention sufficient of the circumstances to enable the wholesale dealer to j)ass judgment himself on the propriety and rea- sonableness of the amount claimed. Even when the missing goods appear to have been ab- stracted wliile in the carrier's hands, it is well to give no- tice of the fact to the wholesale dealer. His evidence, or that of his employees, may be necessary to satisfy the carrier that the missmg goods were really shipped with the others which were received. The goods having been thoroughly examined, as men- tioned, should then be carefully marked with the full cost and selling price before being placed on sale. The cost and selling price may be in characters of any form or style, each one representing a numeral, or they may be letters of the alphabet. The first ten, last ten, or mtermediate letters, being taken to rej)iesent the numer- als. Sometimes a word having ten letters is used tor such purpose, each letter representing a numeral, as " Cumber- land,'* " Perth Amboy," " republican," and many others. A very convenient cost mark is a combination of figures which takes the form of a number on the goods, serving both to indicate the cost and selling price, and to identify the goods by. For instance, if a unit is added to each fig- ure of the cost, the prices 10, 22, 45 and 115, wouid be respectively represented by numbers 21, 33, 56 and 226. Or to the first figure of the cost one may be added, to the next two, and so on. If more complexity be de- sired, a *' dummy " figure can be inserted, which is not counted, which may be placed first, second or last, as may be decided on. Placed second^the above^uimbers might be read 241, 363, 516, 2426, still representing the prices as above. A little custom in reading a mark of this character, will make it as familiar and intelligible as the ordinary numerals of the invoice. Incpiiries are often necessary to be made by a salesman of the proprietor, in reference to some article while being exhibited to a cus- tomer, which inquiry can only be answered by a know- lodge of the cost of the goods. It is a much less objec- tionable way of referring to the cost, by saying that it is number 56, than to say it cost BC. For identification of the goods, this cost number may be used in every en- try of them, when sold on credit. The marked cost on the goods should be not only the " prime " cost of the invoice, but should include the ex- penses of purchase, freight and incidental charges up to the time the goods are brought into the dealer's ware- house, and the rate of exchange. All these additions, tech- nically called " charges," are sometimes so trivial when the retailer resides near the place of purchase, that he does not consider them in marking the cost of the goods, but suffers these items to go into the general account of the expenses of the business. I can but regard this as objectionable, whenever these charges are great enough to form a calculable sum. This sum, of course, will vary according to distance and means of travelling for the ex- pense of purchase, the distance and bulk of the goods as compared with their value for the freight, and the char- acter of the currency in use at the two places of buying and selling, for the rate of exchange. Whatever they may amount to, whether one, two, five or twenty per cent on the invoice cost, they should take their proper place in the economy of the business, by being added to the price of the goods, and not be allowed to swell up the yearly expenses. 102 The Haie of Tro/ti. I The usual custom is to average these expenses, aod ap- ply the average advance on all things indiscriminately, which may answer well as a general rule. But there are some kinds of business wherein it would not answer, and special calculations have to be made for certain articles. If a retailer of hardware lives at such a distance from the entrepot where he purchases his goods, that it costs him one dollar per hundred weight for freight, he could not safely average this freight alike on woodscrews cutlery, and other comparatively light articles, and on cut nails. The freight alone would be probably five per cent on cost in one case, and twenty-five on cost in the other. So in a business of drugs and medicines. Dye stuffs which are often a part of such a business, are many of them very bulky in proportion to their value, and would require a different rating. A retailer might make an average of this kind, and in the absence of competi- tion receive no injury thereby. As, if he sells some things too low, he would sell others equally too high, and would come out even in the end. But if he has any competi- tion his customers will only buy those articles he sells low and will go to his rivals for those he sells too high so that his trade woidd soon all be in articles on which he makes no profit. The true cost of the goods being thus ascertained, the next consideration will be the profit, or advance to be made as the selling price.. The general rule for this is to add enough to cover the expenses of the business, such as store rent, clerk hire, compensation to the principal— for living or household expenses— probable losses by de- terioration, bad debts, etc., and besides all this, sufficient to leave an adequate net profit to the proprietor for the capital invested. Ordinarily the selling price is controlled by the prices fVices must not be entirely *joyerncd by others, 103 of rival dealers, but it would not do to let these govern entirely. For a livcil might in sheer ignorance sell many articles less than actual cost. When that is found to be the case, there is no good policy in following his lead. It would be better to dispense with the goods, until the rival has found out his mistake, or gone out of business. Generally the business career of such men is brief. Even, therefore, though a beginner may regard the j^rices at which he will sell his goods, so well established by rival dealers, that he expects lo be governed by them, he ought still to keep before him the principles on which profits are founded, so that he may from season to season review his course, and see whether by leaving off some articles which are unprofitable, and adding others which may be more profitable he cannot increase the net gains of his business. If the beginner has duly considered the question of ei- penses, as suggested in the second chapter of this book, that much will be settled. The probable losses by bad debts and depreciation on stock must be estimated. Both these subjects are too extensive to discuss in this connec- tion, and will be treated of in future chapters, specially devoted to each, to which the reader js referred. When all these expenditures and losses are estimated, there only remains to make a calculation of the gross profit, or ad- vance on the goods, which must be obtained in selling them. For example, suppose the fair expectation be of selling $20,000 per annum. The estimate for private and «tore expenses of all kinds $2,500, losses by bad debts and do preciation on goods $500, the reasonable net profits over everything — expenses and losses — as the annual gain to the proprietor $1,000. Thus making a sum of $4,000 to be made on sales of $30,000. The cost of the goods sold 104 Averaging Tro/its on a varied Stock of Goods. would therefore be $16,000, and it would require a gross profit of tweuty-five per cent to be marked on the goods. • How this profit of twenty-five i)er cent is to be aver- aged on the goods will depend very mucli on the comjie- tition. General prificiples of instruction can only be given. Suc'h articles as are in daily demand in consider- able quantities, with small risk of depreciation, are pj-o- perly sold at less profit than those in rare demand, or on which the risk of depreciation is great. Some very con- scientious men hold to the opinion that a retailer should never discriminate in this way, but should sell all kinds or classes of goods at the same advance ; there beino- in their mind a species of deception in selling what are called leading articles at less advance, and making up the profit to the average by increasing prices on other goods. There appears to me, however, good reasons why there should be even large differences in the rate of profit on the differ- ent kinds of goods a retailer keeps, independent of the competition which may often induce these different rates. Goods of a perishable nature, on which there is a risk of spoiling or deteriorating— those in which fashion or style makes a large part of the value, and which a change of fashion would make less valuable— those which are sel- dom wanted, or wanted for only a short sea^n in the year, as the interest on the amount of stock kept in pro- portion to the amount annually sold, is greater than on those of daily sale— those that are wanted only in small quantities at a time— those in Av4iich there is much risk of breaking or wastmg m handling— and those which re- quire much time and trouble m their purchase, manage- ment in store and selling, out of proportion to their in- trinsic value — should all evidently command a profit be yond what articles of an opposite character do. And the increase should be fully adequate to compensate for Necessary ^Precaution in Hating Promts. 106 the increased risk, interest, time employed and labor in buying, storing and vending them. In averajrin'T- the amount of profit to be made on the different kinds of goods, as above, notice must be taken of the different proportions that will probably be sold of each kind. It will not be enough that a stock of goods, newly laid in to start a business with, are so accurately averaged in the selling price, that when all are sold they will have just yielded the twenty -five per cent profit. If, for instance, of a stock of $6,000 laid in for a busi- ness, $1,000 is marked at an advance often per cent, $1,000 at twenty per cent, $2,000 at twenty-five per cent, $1,000 at thirty per cent and $1,000 at forty per cent, the whole when sold will average twenty-five per cent. But it is almost a certainty that the first $2,000 worth of goods sold would not be at a profit of over twenty per cent. By this time, probably, the stock would require replen- ishing, mainly in the goods paying ten per cent profit. So that the next $2,000 sold out again would only yield twenty per cent profit. And this would be continued the year through, and the retailer would find when the year came round and he took account of his stock, that for some unaccountable reason his profits were not forth- coming. This is a very essential matter to keep in mind, and be well understood. Losses in this way oftenest occur with those who undertake to sell leadnig articles at very littlo profit. These are the goods they sell most of, and which need most frequent replenishing It is a difficulty which is very apt to overtake young beginners. With a desire to make some excitement when ihey first open, they put down the ])rices of their leading articles, below the prices current among their neighbors. They think to make up for this by greater economy in expenses, but 106 Tettinff jlyerage of IVqflt on Sates. I 800I. find that to sustain themselves they must make a lair average profit, and so they put an extra price on such goods as are not of so frequent sale. This may work for a while, perhaps for a year, and the success of the year's business seems to warrant a continu Ztl t r'*'°'- ^""'y-erior business capa- city, some especial business connection whereby he ob- tains advantages in purchasing, or greater economy in living and store expenses, and either or all of these ad- vantages are proper matters to publish. But when a dealer has none of these advantages, and unjustly claims them in advertising, tlie result is often injurious to his business, particularly in local or limited communities, wherein mainly the retailer trades. For so soon as a few members of the community ascertain the falsity of the statements he advertises, which they generally soon do, instead of furthering the ends of the retailer by spread- ing the lie, or even by silence, they rather endeavor to thwart his trickery by telling the truth, and warning their associates, frequently regarding it as an act of jus- tice to go out of their way to do it. So that in the end the dealer sometimes does not get credit for the advan- tages he really may possess. Independent of the foregoing considerations, it will be found advantageous to make some publication when a business is newly commenced, or upon the occurrence of any notable event, as an arrival of a renewed supi)ly of articles suited to the coming season or period, the receipt of some special article which has been scarce and in de- mand, or a general reduction in the price of many articles, as sometimes occurs towards the close of a season. The method adopted_to give publicity must also be va- JExtent of publicity. 121 ried to correspond with the different circumstances or conditions of the business, and also the extent of the pub- licity. As the two subjects are intimately connected and involved, they may be treated of together. It should be sufficientlv extensive to bring the informa- tion to the notice of all Uiose likely to be customers, and as a general rule, it is better too much than too little. Meaning thereby that it will be better that three-fourths of the comnmnity of purchasers obtain the information a dozen times, if necessary, while bringing it once to the notice of the other fourth. One person reads the news- papers daily, and regularly notices among the events of the day the new advertisements. Another looks only oc- casionally—perhaps once a week— over the advertise- ments. The latter class must be provided for by a con- tinuance of the advertisement as well as the former. While there is still another, and a large class, who sel- dom read the advertisements in a newspaper, and this class must be reached in some other way. If they are males to, whose notice the information is to be brought, the handbill is a ready method ; if females the circular. Oflen both can be appropriately used. In some localities these latter methods are more economical and more di- rect than newspaper advertisements to spread informa- tion among the limited community which a retailer has for his customers : in particular, small villages without a local paper, in the vicinity of a large city, where the villagers rely on the newspapers of the city for their daily news. Advertisements in such papers would be ex- pensive in proportion to th# extent of their^ circulation in the village, and probably not the one-thousandth part of the circulation would be of any advantage to the ad- vertiser in his situation. The handbill pennanently and conspicuously posted to meet the eye at every turn, and 122 Make the Truth Att?^acttye, the circular letter addressed directly to the individual, can here be used more appropriately. Indeed, as an auxiliary to newspaper advertisements they are always valuable. A dealer can display mucli taste in getting up such articles, by the variety of tvpe and style whicli they admit of without increased expense. The use of litho- graphy to give the circular the fac simile of a specially written letter is often very advantageous. Whatever concerning a retailer's business is published, either by newspaper advertisements, handbills or circu- lars, should be the truth. If that will not serve, or it is thought that it will not, it is better to keep silent. What- ever may be the current belief by people outside of a retail business, money is not made in the end by deceiv- ing those with whom we deal, and on the continuance of whose custom we are to rely. Much though depends on the manner in which truths even are related. A tame, spiritless, common place advertisement which may be true in every respect will fail to attract the notice and be retained in the memory, like one of an original, spirited and novel character. A business man may be known, to some extent, by the style of his advertisement. If he merely revamps old and stereotyped ideas, and adopts other men's phrases and forms of expression, the probabilities are that he does the same in his business. And the best that can be said of the goods and prices of such a dealer is that they are as good and as cheap as some other dealer's. Every business man should endeavor, in the form and method of his advertising, a# well as in the transactions of his business, to improve upon what he sees around him; to originate new ideas and new methods, and not be con- tent to servilely copy even the most intelligent and pros- perous of his competitors. .? Strike Out JVen^ Taths, 123 In this way only can he be a whole and complete mer- chant, whose business fundamentally is to strike out new paths and new ventures. In this way only can he hope to reach the end at which he aims. The well-trodden ways of business are always full of a satisfied multitude, or if not a satisfied an incompetent multitude, plodding along like those around them, with just enough of profit to keep soul and body together ; often slipping down in insolvency and run over, then up and at it again, till death steps in, and with one blow ends both the life and the business together. There is nothing in the reading line so " flat, stale and unprofitable " as the advertising pages of our newspapers. It would seem that there is only one set of ideas that will pass current in that department, and that each advertiser had taken the greatest care to eliminate every orio-inal illustration of his idea from his advertisement. Black's advertisement would answer for Brown's, merely chang- ing the number of the street. Green's for his neighbor White, and vice versa. I have sometimes thought it would save the printers work if they would have some of them stereotyped, with blanks for the name and residence, to be changed as occasion required. To a great extent the subjects treated of in advertise- ments are the great concerns of every day life, about which, in their variety of detail, long columns of interesting reading matter are indited editorially or in correspon- dence, and printed side by side with the advertisements, meeting with eager readers. It is possible that some of the want of originality in advertisements arises from a very laudable desire in the advertiser to avoid the appearance of being singular or eccentric. He wishes to make known his business, yet avoid personal notoriety. I have observed this trait I' 124 TaKmff adyantage of the Advertising. cropping out in the characters of many people. They can not endure to have themselves talked about So- cially this is a very good trait, but such persons gener- ally lack energy in business. They are afraid to go for- ward m any unbeaten path— not because they^think It may prove unprofitable, but simply from fear of what the "Mrs. Grundys" of their acquaintance will say. Somebody might laugh at the originality of their adver- tisement or disparagingly criticise it, and that would hurt their feelings. If our feelings were moved oflener by the mner consciousness of right and duty, and were less sensitive to the whims and opinions of those around us, we should get through the world more comfortably and the world would grow wise faster: as each man's' originality would have a better opportunity to develop After all which may be said on the propriety, or the best method of advertising, it should not be forgotten that advertising is only an auxiliary to a business-mainly useful m increasing the sales-and thereby increasing the profits of a business which has an inherent life in Itself. It is the whip which applied to the active and vigorous horse, causes him to spring forward, and earlier reach his journey's end. It is of little use to the jaded and lazy beast. There must be such a co-operation, by due activity in the other and more essential parts of the business, as will turn to good advantage the notoriety given by advertising, or the notoriety is useless. When people have been induced to visit a place of business ^through advertising, they must be so received and so dealt with that they do not leave with the impression that they have been deceived by the advertisement. Unless this 18 done, the business can not be increased, nor even sustain- ed, as the advertiser has then only advertised and made more conspicuous his own incapacity to conduct his business. ■ .. CHAPTER YIII. EMPLOYMENT OP CLEEKS. ONE good clerk is worth a dozen poor ones. The one IS an aid in the business, the others only obstacles. The former relieves the proprietor by his care and attention to such of the details of the business as are entrusted to him ; the latter, by their carelessness and mistakes, cause increased labor in the necessity of not only looking after them, but also after every detail of the work entrusted to them, to see that it is properly done. One of the greatest difficulties of finding good clerks arises from the unwillingness of men in the trade to teach them, and perhaps somewhat from the unwillingness of boys to obligate themselves to remain long enough with one employer to be taught. Merchandising is a trade re- quiring for a surety of future success, quite as long an apprenticeship to learn as the majority of mechanical trades — though unfortunately boys do not think so. And when, therefore, such are taken by proprietors of re- tail stores into their service, the engagement on both sides is of too transient a character. No arrangement is made looking really to learning the business. The im- mediate necessity for a boy to fold and tie up goods, carry out bundles, and keep the store in order, is all that is sought to be supplied on the side of the employer ; and the weekly salary to be received, with perhaps the op- portunity to steal a knowledge of the business is all that is expected by the clerk. No permanent or sufficient ar- rangement is made, in view of what both parties will 126 T'he Way Cterks are Tattght. need in two or lliree years— the one an intelligent and educated aid in the business ; the other a full knowledge of the business details. Under such an engagement the boy remains a year or two, nominally a learner, and his employer with the best disposition towards him, feels but little interest in en- deavoring to teach him the details of the business, be- yond what answers the immediate necessity of the day, as he is in doubt whether he w ill remain with him from one month to the next. The boy picks up what informa- tion he can from observation, and at the end of a year or so knows by name the different articles kept for sale, and can sell goods to some of the more intimate customers of the house. Seeing no great prospect of advancement, as his employer, knowing his ignorance, does not overrate him or increase his salary, he seeks an engagement in some other house ; not now as a novice, but claiming to be able to sell goods, and if he has sufficient assurance and self-conceit may obtain a largely increased salary. The hardly half-taught young man is by the change now placed in a position where he in turn becomes the teacher, by example at least, of any novice his new em- ployer may liave in his service. The new employer, in his efforts to make the best of a bad bargain, may teach him something more, or with some objurgation on the impossibility now-a-days of get- ting a clerk worth having, submits in despair till the end of his engagement, when the clerk with one more year's experience finds another place, and his employer another clerk which is generally a duplicate of the previous one, only with a different class of faihngs. Whatever may be the youth's changes, the day comes at last when he has spent time enough, and ought to be thoroughly educated in his occupation. Should he possess The V^ajy they ought to be Taught, 127 ' what perhaps only one in ten have — great natural gifts of discrimination and facility of acquiring information from observation, he may, by remembering something of what he has seen, and forgetting a good deal of the so-called business knowledge which he has ignorantly picked up, in the end become a good salesman, and a valuable ac- quisition to a retailer in his business. How much more satisfactorily is that man served, how- ever, who first carefully selects such a youth as he thinks has a natural adaptation and ability for the business, and then makes an engagement for a certain period of five or six years, on a specified compensation for each year, part of the compensation being a thorough tuition in the busi« ness. The certainty of being repaid in the later years of the lad's services for any time or attention taken in teach« ing him, is a fair inducement for the employer to bestow both, and impart to him in the daily routine all which the employer himself knows concerning the management of the business. The learner, seeing that his employer takes an interest in him, feels a reciprocal interest in his employer's business, and they both soon come to view the relation between them as of higher consideration than a mere mercenary engagement. When, under such cir- cumstances, a boy does not live with his parents or other personal friends who will look after his moral training at the same time as his business training is advancing, it is very desirable that a part of the compensation agreed on should be board and living in his employer's family ; or where that is not possible or convenient, in the family of some friend of the employer, where his actions and habits outside of the business may have the restraining influ- ence of his employer's observation. A false notion prevails with many worthy people, that in thus training up a youth, they are entitling themselves 128 Vhienabte Ohjecflons to tralninff Clerks. to a continuance of Ins services after the first engagement expn-es at the period when the young man having thor- oughly learned his business, naturally is desirous of for- wardmg himself in the world. Nearly the only objection advanced agamst this method of training up clerks has been what was falsely called their ingratitude for what had been done for them. Instances of this kind are known where all the kindly affection which had grown up be- tween the parties by years of mutual confidence, was em- bittered at the end of the term, by some ill-natured dis- play of this disposition on the part of the employer ; who. had he reflected, would have overlooked the indiscreet o^ tnflmg remarks which he too readily construed into sign, of mgratitude. ^ _ A young man naturally rejoices at the arrival of that pe- riod m his life when he is regarded as a man; andU should not be hastily concluded that because he is so par- ticularly joyful at the expiration of such a period of ap- prenticeship, (if it may be so called) that he has felt the service or engagement a hard one. The employer who may be placed in such a position should be very sure that there IS ingratitude on the part of his clerk, before he manifests the opinion by any speech or outward action. And If, at some time, he is induced to b«lieve so hardly of his clerk, let him specially consider again whether on the whole there is anything that the young man ought to feel peculiarly grateful for. Whether for all that has been done for hira he has not returned a full compensation by his faithful services, and whether there is not quite L much cause for gratitude on the employer's as on the clerk's side. An employer who is so selfish that he cannot receive some of the compensation, in such an engagement, in the the merit of the Action itself, even when the recipient fails .1 / A Judicious Ziberatity to Clerks. 129 to fully recognize its value, is not to be envied, and is in truth unworthy and unfitted to have the training of any one. A fair degree of liberality toward a young man at the end of such a term of service, is actually advantageous to the employer. Knowing his clerk's qualifications and ability to fill situations more profitable than he can per- haps offer, it should be his eftbrt to aid him in his ^ deavors to obtain such a position. He will find a bene- ficial influence resulting therefrom on the younger clerks still in his employment, coming on in difi*erent degrees behind the one that has now attained his education. They will see that there is something to strive for beyond merely getting through this probationary period with the best grace and least work they can. It acts as an in- centive to them to be diligent and attentive to the com- mands and wishes of the employer, so that at the end of their engagement they too may be found worthy of a recommendation to a higher and more lucrative position. But the retailer commencing business must of neces- sity employ clerks already taught, and must take them as he can best find them. If he does not expect very much from them he will be less likely to be disappointed. He who anticipates hiring clerks that will attend better to the business than he does himself; who will come earlier in the morning, stay later in the evening, sell more goods, be more courteous and attentive to the customers, or at- tend to any one department of the business better than he does himself, will very often find his anticipations not realized. With the retailer who would prosper, it is quite as necessary as it is to the farmer to say, " come boys," instead of " go, boys." If, therefore, a business has been or is being established, which it is designed to leave mainly to the management .of hired clerk's, because 130 £:yil Inftueiice of ^adty Trahied Clerks, of want of time, or want of capacity on the part of the principal, it will be preferable to give an interest in the business to a principal clerk, so that he may have the motive to urge him to attention in the business which the owner himself would have. If though, the proprietor of a new business wants clerks to assist him, he should endeavor to secure such as have had a thorough business training in houses of repute and character, by paying them sufficient salary, until such times as he can train up others. Much ought to depend upon the character of a house in which a clerk has been trained. Ill manners, rude speech, tricks of the trade, and other evil results of bad teaching, are easily carried from one house to another. Indeed, the mere presence conspicuously of a clerk long known as with some house of selfish and illiberal character, will give a suspicious taint to the new house. Some dealers have a principle of never keeping clerks long in their employ, on the ground mainly, that while they are new in the place they are more zealous, and make greater efforts ; while after they have been some time in the one employment they become careless, feeling that they are settled permanently. Such employers are gen- erally not well served, as the short term of service of each clerk is soon noticeable, and really good clerks object to making an engagement which is pretty sure to fail of be- ing renewed at the end of the year. All things consider- ed, it is better to make as few changes as possible in em- ployees, retaining them from year to year, if suitable even in a modified degree. We know the failings of those we have, and how far we may depend on them. A stranger has to be watched at all points, until we learn where he may be trusted. Though this disposition should not be carried so far as to retain those who by their mis- *^ * Subordination -hoM^ Maintained, \^\ conduct or carelessness show that it requires, in their opin- ion, no effort or anxiety on their part to be continued in the service. When a clerk shows that he has no anxiety longer to conciliate his employer or obey his reasonable requirements, it is time he was away from his service. Clerks are sometimes employed only from week to week, or month to month. A very unwise custom, except with supernumerary clerks who are taken on only for a short time in the height of a season's business, and can readily be dispensed with at any moment. A clerk who is liable to be discharged at the end of every week or month, is constantly looking around for more permanent employ- ment, and necessarily cannot so thoroughly give his at- tention to his employer's interest. Besides, the principal himself must always fear that in the busiest period, when he can least readily replace him, the clerk may leave to his disadvantage. Clerks are human— they have their failings ; they re- quire sometimes to be plainly spoken to, for omissions of or inattention to the duties incumbent on them. And the employer who fails to speak at the proper time neglects an important duty, and will have no subordination among the clerks in his business. But it must not be forgotten that when they do well they like to be praised for it, or at least have the service acknowledged by a kindly re- cognition. The employer who has plenty of censure for his employees and no praise, is in a fair way to be very poorly served. Nor are clerks mere machines, that being used for the day can be thrown aside when the night comes, without a care or thought about them, till they are again wanted. Though an employer may think that there is no moral obligation resting on him, to care for his clerk's behavior when away from his place of business, his pecuniary interest, which will often be imperilled by a 132 The Clerk's JVecessities* i clerk's misconduct, should induce him to see to it, that the hours of leisure of those in his employment, are not gpent in evil courses, which will bring discredit on them, and subsequently on him for employing them. In employing clerks some regard should be had to the clerk's necessities for living expenses. If the salary pro- posed to be given, is clearly inadequate to keep his fam- ily, or himself if single, in the manner he has been accus- tomed to live, or near it, it will be better to. forego his services. It often happens that a retailer wanting only a third rate clerk to fill a position which a smart boy of seventeen could fill, to whom he expects to pay a very moderate salary, yet one fully equivalent to such a youth's services, has applications from experienced clerks out of situations, who are willing to take such a subordinate po- sition, until they can find something better to do. The retailer may feel that it is almost a charity to employ such a man — who perhaps has a family to provide for — in preference to h boy who may be living at home with his father, and in no want, and thinks he is fortunate in getting so able a clerk at so low a salary. But the re- sult in such cases is generally unfavorable. It is poor policy to employ any one in positions so responsible as a retailer's clerks are generally placed in, Avhen the salary paid them is inadequate to their support. If no worse result ensues than over-drawing of the salary, as pecula- tion, or the taking of goods surreptitiously, it will prove in practice that the dealer is not as well served in the de- partment he sought to fill— though the employee may be valuable in other positions in his business, where he is not really needed — as he would have been by the employment of a younger and less experienced person, who would have been ambitious to excel in that special position, so that he might have a chance to be promoted to a higher one. Getting rid of Incompetent Clerks, 133 «VI I When a man needs a cart horse at a price of one hun- dred dollars, his want is not supplied when for the same amount he purchases a race horse worth a thousand dollars. Sometimes on account of natural dullness or distaste for the business, boys do not readily acquire the knowledge of it, while the dealer, induced by family or friendly con- siderations towards them, still retains them in his em- ployment. Even with older clerks, often evil habits of various kinds cause them to be a continual source of an- noyance, and though at times efficient, they are so unreli- able as to be of but little real value to their employer. While on the one side, a retailer should not expect per- fection in his clerks, he ought not on the other to put up with confirmed deficiencies, which can not with reason- able efforts on his part be amended. The training of clerks is but an incident in his business, and should not require too much of his time. And it is good policy to get rid of such incompetents at once, and not waste val- uable time in trying to reform them. 1 CHAPTER IX. ON THE ART OF SELLING GOODS. IF we liken the whole economy of a mercantile busi- ness to the structure and operation of a steam engine, the department of selling the goods may with great propriety be regarded as the steam which sets in motion the various parts of the complex machine, and produces the action and result intended. The other matters are but the setting of the engine — the proper fitting and ad- justment of the several parts, or the lubrication which prevents friction ; without special attention to some of which it is possible that the engine will move if enough steam is applied, though with much noise and friction, and waste of power, and probably without accomplish- ing much. But no matter how nicely the several parts of the engine may be adjusted and oiled, if there is no steam, or an insufficient amount, there can be no result. And all the care given in choosing a location, selecting a stock of goods, and properly arranging the numberless details of the business is but incidental to the main object — which is SELLING THE GOODS; and which if left undone makes useless and valueless all the preparatory work. This must therefore, after all, and before all, be the great object which the retailer should perpetually strive to accomplish, for a failure in this is a failure in all. It should be a frequent, yes, daily consideration, how he can increase his sales. Men there are engaged in business, in inconvenient lo- cations, with stocks of goods in disorder, weak credit, ^ t A Sellhiff the Goods, the Great Requisite, 135 limited capital, and if possible other disadvantages, who, in spite of these difficulties, through great natural and acquired ability to sell goods, and close attention to that part of their business, are making fortunes. Not, per- haps so quickly or so pleasantly, as if they enjoyed some of the minor advantages. But it will not be too much to affirm (for the result is self-evident) that however much care might be expended on the preliminaries of a busi- ness by any one, if he did not bestow some considerable attention to the selling of his goods, his success would be exceedingly limited. Instances are doubtless within the knowledge of almost every reader, where persons of good character and general ability, lacking this one great re- quisite, have commenced business under very favorable auspices, and to the surprise of their friends have not succeeded. Such men are found frequently ; their goods carefully purchased, and well suited to the wants of the community ; store in good order, the machinery, in fact, all complete and well adjusted, but with an unsufficient head of steam to do any execution. Generally these men are the easy, good natured ones of the community, with the best of reputations for all the moral virtues, careful and prudent, and endowed with sufficient good qualities to ensure success in many of the pursuits of life. But they are sadly out of place when they attempt to sell goods. Whether from inability to discriminate individ- ual character quickly, slowness of speech, want of full appreciation of the necessities of the case, or whatever cause, they lack the ability to sell goods, and are there- fore almost uniformly unsuccessful in trade ; in the cur- rent phrase, " rusting out." Probably one half of the adult male population in these United States consider themselves well qualified and fully competent to sell goods. And if other circumstances 136' QuaVfications of a Good Salesman, were favorable would have no hesitation on this point about embarking in a mercantile business requiiing the salesman's ability to the greatest extent. Yet it may be doubted whether there is one })erson in a hundred who possesses such qualities of mind and person that he can, even under very favorable circumstances, become a good salesman. Almost everybody can speak in public, and so almost everybody can sell goods ; yet we have few orators and not many more salesmen. There is such a variety of in- formation and versatility of mind requisite, without which only mediocrity can be expected, that but few possess them or can acquire them in a high degree. A good salesman should have a comprehensive know- ledge of the goods he sells, their origin, peculiarities and advantages over other goods of similar character, for special or general uses, so as to be able to properly com- mend them. He should know their defects so as to best apologize for them. ' In addition, a general know- ledge of the uses and purposes to which they are put by the buyer, and also a knowledge of other kindred goods which may be used for the same purpose, so that he may suggest to his customer the peculiar advantage of this, or the disadvantage of the other, when the customer, as is often the case, does not yet know exactly what article he does want, being only aware of the necessity of supply- ing his want with something appropriate to the purpose. And in all this he should have a knowledge superior to that possessed by the person he sells to ; for any exhibi- tion of ignorance by the salesman, must be followed in- evitably by a loss of some of the confidence which the buyer would otherwise repose in his opinion. A good salesman must have also a good address, mean- ing thereby the ability to express his ideas clearly, fluently I Jhfiuences n^hich ^ti?^act or ^epet Suyers, 137 politely and deferentially, together with an acuteness of mind and knowledge of human nature which enables him to know just when to speak, how to speak, and when to keep silent. It is mainly this extensive knowledge of hu- man nature — the result of close observation, and some- times seeming almost an intuition — on which the success of the salesman depends. A good salesman always shows too, not only a wish to sell his goods, but a desire that his customer should be satisfied; a willingness on that account to exhibit hij» wares in even greater variety than they are asked for, with minute attention to the buyer's wishes, and all aa though it was a pleasure to do it, and not an unpleasant task. Although the old adage among merchants that "goods well bought are half sold " will always be a truism, for if care has been taken to get just such goods as are in de- mand, and they are offered for sale at reasonable prices, there is not much necessity for great efforts to dispose of them to a buyer, who may need them quite as urgently as the seller needs to sell them ; yet there will always be a great many articles which every retailer keeps, which he can not expect to offer more advantageously in price, than his competitors offer thetn, and for the sale of which he must depend on oth(;r influences than the intrinsic merit of the goods themselves. Such articles as these the buyer will purchase wherever he is most honestly, honorably and agreeably dealt with ; and it is in the sale of these that the salesman's art and the abilities as above mentioned are more particularly required. If the goods are exhibited with reluctance and with apparent discontent and inconvenience — or if the salesman's speech is rude, insolent or clownish — or, as more often, supercilious and arrogant, as if he j^that he occupied a position of ira- 138 A.nxi€fy to Make Sales, / portance as compared with the buyer — or if he is disposed to be snarlish and ill-natured whenever the buyer does aot readily accept his asseverations about the quality and \ralue of the article he praises, or seems inclined to leave without purchasing, it can hardly be expected that the buyer will be induced to buy there, or be attracted to re- visit the store or commend it to others, for anything that^ can be bought elsewhere. Salesmen who exercise so little control over their own passions, clearly show that they have mistaken their busi- ness, and are better fitted to drive oxen or swine, a voca- tion in which some bluster and irritability may be par- doned. When there is an apparent absence of animation and anxiety on the salesman's part, a similar state is often in- duced in the customer. The interview and examination of the goods end with " it's not of much consequence now ; ril call again when I need it ;" and probably with- in an hour after, in some^ other store, and with a more earnest and energetic salesman, the man purchases a sim- ilar article, in no way better suited to supply his wants than that which he had previously looked at, led thereto solely through the seeming anxiety of the salesman to make a sale. • It is not meant that an anxiety must be counterfeited where none is really felt. It is taken for granted that every man in business has an anxiety to sell his goods ; but one man may make but little exhibition of it to the customer, while another attains a habit of showing, in such cases, all the anxiety he feels. In all these things, however, regard must be had to the nature and disposition of the customer. The salesman's object is to satisfy the customer, first, that the article shown is just what he wants, or if not exactly that, that Differences in Character of buyers. 139 it comes the nearest to it of anything which can be had ; and, second, that the price is lower, or as low, as it can be purchased for elsewhere. And when we remember that two persons rarely arrive at the same conclusion, through the same chain of reasoning, or from a view of the same surrounding circumstances, it will be readily seen that sometimes much tact is required by a salesman, in bringing a customer to the point of buying. One man is brought to that only by a fair argument on the merits of the goods, as compared with other similar articles — all the advantages of this, and the disadvan- tages of the others, that he seems to hanker after, must be brought before him ; another comes to his conclusion to buy entirely through extraneous influences— because the salesman is a *' good fellow," " member of our lodge," or " association." Another is like a child, needs to be told what he wants, having no opinion formed about the character of the article he needs. This peculiarity is often found among men very intelligent in their own sphere, but not knowing, or caring particularly to inform themselves, about the small matters of every day life, such as usually concerns the retailer, and disposed, therefore, to accept what is recommended as best by the seller, so long as they have confidence in his honesty. Another class are the suspicious ones who see a moun- tain in every molehill — who can neither be led, coaxed or reasoned along. At every attempt on the salesman's part to do either, they fly back farther than ever from the point. These generally go by the rule of contraries. There are a great many of them in the world, and they need to be treated as the Irishman treated the pig he was driving to Cork — kept of the opinion that they are wanted to go the opposite way. Every retailer long in trade wiU have noticed this clasa II 140 2^ Suspicious Customer, of customers, who seem to know so much, or think they do, that they rarely buy the article he recommends. They are not unwilling to ask the dealer's opinion of themeritg of the rival styles of goods which may be offered them to select from, but generally end, if they buy at all, bv taking the article not recommended by the dealer. * When trading with such a customer, a sagacious sale* men would be cautious about too much commendation of the article the customer seems most to prefer ; for by the injudicious commendation of that the customer is pre. judiced against it, and there may be nx) other that pleases him. It is a better course rather to speak of the merits of the article which does not seem so acceptable to him, so thai his choice may be free to fall on that which he likes. This is not required to be carried so far, nor should it be, as to depreciate the article he likes by the comparison, lest it confirm the customer in the habit of distrusting others. Any tendency which it may have to confirm him in that disposition, may be thwarted, if after the selection is made, the salesman will make some such remark, as that his disinclination to praise the article selected, was not because it had not merits as great as the others which he did commend, but arose solely from his knowledge of the disposition of the customer to refrain from purchasing anything highly commended. And at the same time, if possible, pointing out some hitherto unnoticed and special merit in the article selected, which particularly makes it suited to the buyer's use. I have said that a good salesman should have a know- ledge of the character and qualities of the goods he deals in, superior to that of the buyer, at the same time it is sometimes very injudicious for the salesman to appear to know too much. It ia. to his advantage to have the buyer J \ >'li Reference to Customers, 141 in the first place satisfied with himself, as a preliminary to his becoming satisfied with the goods which he is about to sell to him. With most people a greater satisfaction is felt in buying from a salesman who does not know, or whom they think does not, quite so much as themselves. Tlie customer is generally conciliated by a certain amount of deference paid to his opinion, either about the articles he is buying, or concerning any other subject which may happen to come up on the occasion ; nor should he be offended by any arrogant rebuttal of his opinions when respectfully expressed. It is a great folly for the salesman to get into an argu- ment with him, even though satisfied that the customer is wrong. Acute observation will quickly discern whether the customer really knows as much about the goods as he professes to, or whether it is mainly an assumption for the purpose of increasing his importance in the eyes of the salesman. If the latter, it can be humored to advantage; and if the former, the salesman will act wisely in con- fining his remarks to such points as he clearly knows that he is right on, so that his ignorance may not be betrayed. A word of caution may be proper in relation to the anxiety which the salesman should show to effect a sale. In no case should this be carried so far as to give the cus- tomer the impression that the seller is to be very much benefitted by making the sale in question, lest a suspicion arise in the mind of the customer that the seller's gain is to be made to his disadvantage, and he be thereby in- duced to decline purchasing an article which he other- wise would buy. It was this influence which a certain proprietor of a large business endeavored to counteract, when noticing that one of his salesmen had been for some time earnest- ly striving to effect a sale to an apparently disinclined . f 142 ^isarmmff Customers* Suspicions, customer, by approaching him with some such remarks as the following — addressed to the salesman : " Well, Thomas, you seem to have been trying very hard to make a sale ; what is the matter ? Doesn't the article suit the gentleman ? " " Y^es," answers Thomas, " the goods suit him, but not the price. 1 have offered it at five dollars, at which price it is cheaper than anything of the kind in the store, but I cannot induce him to buy it." The proprietor taking up the article and scrutinizing the cost mark, replied, " At that price it is of little con- sequence whether you sell it or not. There is too much to be done this morning to spend so much time in trying to effect a sale, and if the gentleman does not wish it at that price, you must let him go." And passing on to other duties, left Thomas with the customer — expecting not that Thomas would let the customer go, but that the customer will conclude that Thomas' anxiety to make the sale can not proceed from any great profit that will be made on the goods, since the proprietor seems so un- concerned about selling. The extent of anxiety which a salesman should exhibit, must be regulated like the other matters mentioned — by the disposition of the customer. One will not buy unless the salesman is almost vehement in his desire to sell ; an- other wants very little of such earnestness, just enough to show that there is a willingness. The community of purchasers range in all grades between these two ex- tremes. When a stranger comes to buy, whose disposi- tion in this respect is unknown, it is safer to be moderate- ly anxious, while in doubt, as we are more ready to par- don what we think an excess of earnestness and warmth in such cases, than we are to pardon what seems coldness and inattention. \ The 'Rude Customer, 148 It is always more pleasant to a stranger entermg^ a store to make a purchase, to be promptly met by the m> telligent, anxious, expectant face of the salesman, a^kmg how he can serve the incomer ; than to be met with cold- ness and apathetic waiting for the buyer to make known his wants. The store is the home of the salesman, and the incomer, whether stranger or acquaintance, should be met as he would meet him at his private residence-at the doorway or near it, with a welcoming look or word. Buyers can be rude as well as salesmen, and some think themselves privileged at such times to use very un- complimentary language about the goods that are offered to them, provoking replies on the part of the salesman which if indulged in would generally end m the loss ot the sale of the article at the time, perhaps even the loss of the customer forever afterward. When the customer professes to know so much, and to be so positive in his assertions, and when there is nothmg really in the character or price of the goods warrantmg the invidious remarks he may make, the best way to parry them, if it be desirable not to give offence, is by a little gentle raillery, which he can not take amiss ; by which he is given to understand that he is saying what he does not truly think about the goods, so that he may have them offered cheaper. The extent to which this resource can be availed of must depend upon the acquamtance and relative position as to age, &c., of the salesman and the customer. It is at best a dangerous remedy, ^d un- less there is a fair certainty that it will answer the pur- pose in any particular case, it is best to avoid risk by a silent submission to the remarks, with perhaps a simple expression of regret that the article does not suit. Still there will occur instances when the salesman's self-respect requires that the customer should be informed in the po- 144 Exhibiting Goods. - \ litest way possible, that his unjust assertions and remarks are without influence or effect. When a customer does not seem to know exactly what grade or style of goods he wants, as is often the case, the salesman should endeavor, without too much ques- tioning or too many words, to get some idea of the use which is to be made of the article, or the price which the customer expects to pay, so that he may be able to ex- hibit his jxoods with some- discrimination. At this junc- ture price is of more importance than style, as people have generally a more definite idea of the amount of money they want to pay out, than they have of the exact style or quality of goods they will purchase, and it is more difficult to get them to go beyond their limit in price than it is to fix on some other style. If at first goods are exhibited of much higher price than the cus- tomer expects to pay, the inferior qualities afterward shown him, commensurate with the lower price which he is willing to pay, seem worse by the comparison, and he is less easily satisfied with them. As a general rule, therefore, goods should not be shown which can not be sold at or less than the price named, un- til after a full and complete effort has been made to suit the customer with the others without success. After that there can be no loss in showing a better grade of goods, prefacing the act with some appropriate remark such as " if you will go a little higher I think I can suit you." It will be when such better goods are shown that the general knowledge of the manufacture and intrinsic value of the goods dealt in, before referred to, will be found useful. Ordinarily the customer will then be satisfied with the quality, but desires to buy this better quality, at or near the price asked for tbc inferior goods. The great i Giving 'Reasoni for Increased f^ice of Goods, 145 majority of consumers are not ready to see, or if they see will not always acknowledge the necessity for so great an increase in price as a superior article always com- mands. In a cursory view, while the superior article seems better, it does not seem so much better as to war- rant so great an advance as is usually obtained. It is the current belief that it costs very little more to produce or grow a truly good article, than it does to make a miser- ably poor one, and therefore that the former can be afi^orded at nearly as low a price as the latter— that if twenty-five cents will buy a pound of poorly made butter, thirty cents ought to be sufficient to pay for a pound of the best ; forgetting the great rule in the interchange of commodities, that the perfectly made article is always very limited in quantity, and commands a high price, and pays a good profit to the one that produces it, while the in- ferior or imperfect grade is always over-abundant and often sells at a loss. It is the work of the salesman in these cases to explam clearly the cause for the higher price, as found in the in- creased cost of manufacture, by the use of a better raw material, a greater weight of it, finer finish or newer fashion, or whatever it may be. It is not enough to sim- ply say « the goods cost more." The reason is required as to why they cost more, and it must be a vaUd reason to have any influence on the buyer. If after all the customer is unwilling to pay the higher price, and the salesman is at liberty to make an abate- ment in the price by throwing ofl' some of the fair profit, and he has reason to believe that that will induce the cus- tomer to purchase, he should make the abatement in good season of his own volition, and not wait for the customer to offer him a lower price. ^ It, is generally bad^jDolicy to have the buyer make a 146 Talking too Much, price, even when the price is in itself satisfactory. The buyer founds his offer mostly on the asked price, and not on his intimate knowledge of the goods, and when the offer, made in this way, is accepted, especially after two or three transactions, he is ready to believe that the deal- er's asking price is no criterion of the value of the goods, but is named in the expectation of abating from it, and hence loses confidence. When an abatement, as above suggested, is meditated by the salesman, it is a good plan to turn the attention o^ the customer to the purchase of such other articles as he has come to buy, and after selling all of these that are needed or can be sold, then to recur again to the goods first looked at, proposing the abatement as a favor on ac- count of the other purchases. By this plan the evil in- fluence of an abatement in price is fully counterbalanced by what seems the friendly effort to accommodate the customer. In the belief that the art of selling lies in talking, salesman sometimes acquire a habit of talking too much. Two injurious effects result from this volubility. One is, that in the enumeration of good qualities, some will be mentioned which the article has only in very moderate degree. The attention of the purchaser is thus called to this quality, or rather lack of quality, thus unwisely brought to his notice, and the purchase is postponed in the hope of finding something elsewhere which will suit better in this respect, when if nothing had been said, this particular trait in the character of the article would never have been thought worthy of consideration. The other evil consequence of too much talking, is that the salesman, to keep his tongue running, must introduce extraneous matters as to whom he sold or exhibited the goods yesterday, and what was said about them, gradual- Setlinff "bargains,' 147 ly running off to the topics of the day, and drawing the customer's mind from the consideration of the article and from arriving at any conclusion about the goods. No al- lusion should be made by the salesman to outside matters, nor should he respond to any such remarks made by the customer, except in short answers, as "yes" or "no," during the time when the goods are being inspected with a view to a purchase. At this i^eriod of the negotiation the customer requires to have an opportunity for a mo- ment or two to decide, except, perhaps, with some of the weak-minded who can never come to any conclusion with- out aid. The salesman must do, at such times, as the doctors do in some cases, "leave nature to do the work," lending a helping hand only in an emergency, and then always in harmony with nature. Sometimes salesmen injure the general reputation of the goods they have for sale, by too highly praising one or two articles specially brought to the customer's notice, as "great bargains," and which are really below the or- dinary-price. If the salesman has such goods to show, it is always better to say nothing about their cheapness, but to introduce them to the customer's notice for some other qualification, leM ing the customer to notice for himself the reasonableness of the price. If nothing be said by the salesman concerning the price, the natural inference is that so many of the goods sold are " bargains," it is not thought worth while to speak of the cheapness of any one article ; whereas if the salesman injudiciously exalts the merit of cheapness, the inference is that bargains are rare, since so much is said of the one instance, and that really this is only a " bait " to get off dear goods. In general no one can sell goods so well or so advan- tageously as the proprietor of the store himself; and any one who puts off such business, as much as he can to the r 148 The f^qprietor the ^est Salesman, clerks, while he occupies himself at the desk, commita a great mistake, though a very common one. When a business is large enough to employ half-a-dozen or more clerks, it will not of course be possible for the proprietor to confine himself very closely to selling goods, as there are other departments of the business to be attended to, requiring so much time that they cannot, as in a smaller business, be done at odd hours of the day or evening. But this book is not written for such so much as for per- sons whose trade does not require more than three or four clerks at the outside. In all these limited establishments, the mistake is too prevalent of the proprietor aping the manner and practice of larger business houses, and en- throning himself at the desk as a sort of drirei \ ver the two or three salesmen. In such a position the dealer does not come closely enough in contact with his customers, while in the act of buying, to know their tastes and desires regarding the goods offered, as he ought to enable him to make his purchases properly. The best place for the proprie- tor in such moderate establishments, especially in the business hours of the day, is behind the counter selling his own goods, or from counter to counter aiding judi- ciously his clerks in their efforts to sell, and hearing di- rectly from the customers the objections they have to his goods, so that when he goes to purchase again, he may know what to select t^ «ait them, and what to reject as objectiouabifi -? CHAPTER X. SELLING GOODS FOR CASH. WHETHER the retailer will undertake to sell his goods exclusively for cash, or on credit, or partly in both ways, is a question which has been already referred to, as necessary to be considered at the outset, in the selec- tion of the location and in the economy of the business generally. But it may be well to give the whole subject of cash and credit sales some further consideration, as to their respective and relative advantages. Selling goods for cash is the simplest form in which business can be transacted, and wherever it is possible to do sufficient, it will prove in the end most profitable. The sales and gross profits are no doubt much Ifess in any given circle or community when the business is done ex- clusively for cash, than it would be if done on credit; but the' expenses and losses are also less, so that at the end of the year-^r rather at the end of a series of years -—the net results are greatest in the cash business. The disadvantages of a credit business can only be seen, and the relative difference between that and a cash business estimated, after the lapse of years ; as it often occurs in a credit business, that it continues reasonably prosperous for eight or ten or more years in succession, and then in one or two years of depression and panic the accumulated profits of the past are swept away. A cash business may therefore be commended : First for its economy, requiring fewer clerks and less of the time of the proprietor; no time being lost in keeping ac- 150 Reasons why a Cash business is Sest, 1 counts, making out bills, dunning, sucing, or investiga- ting the credit and ability of customers. Secondly, in less onerous duty on the proprietor's part, he having only his own business to look after, wliilc in a credit business he must continually be looking after the business of many of those he credits, to see that they are not becoming ir- responsible. Thirdly, for its fairness ; as all pay cash one p/ice only is required, while in crediting, justice requires that he who will surely pay should have some correspond- ing reduction in price below what is charged to him from whom the pay is doubtful. Fourthly, for its harmonious influences, there being fewer circumstances to create difficulties l>etween the dealer and his customers, such as refusals of credit, dunning, sueing, and the like. As none are credited, so there are none to take offence at a refusal ; and on that account, as often some will do, speak dispar- agingly of the dealer and his goods, among their friends and acquaintances. This may seem to some a small mat- ter, but every man who sells on credit at retail, trusts more or less, certain people in the community, when he knows they are of doubtful responsibility, for the purpose of retaining their friendship, because they have a large circle of family relations, who would be influenced un- favorably if these particular persons were not trusted. And lastly, the cash business is to be commended on ac- count of its comparative safety. The dealer has his means in his possession, and thoroughly under his con- trol. When he parts with his money in the first instance, he receives in hand goods, supposed to be, if properly bought, of more value to him than the money. As he parts with these goods again, he receives the money at ODce. Unlike the person who sells on credit, there is, in his case, very little risk of his losing his means by the dishonesty, incapacity or misfortunes of others. Two Sides to a Cash business. 151 «^ 1 J The release of the cash dealer's mind from the agitat- ing and exciting questions of the responsibility of cus- tomers, of the best periods for and the ways and means of making collections, and of arrangements for meeting his own payments, leaves him free to bestow a closer at- tention to the purchase and sale of goods, by which only ftre profits made in business. Almost every reader who is engaged in conducting a credit business, will bear me out in the assertion that more than one-half of his time and thought is occupied with matters and things connected with the crediting out of the goods and the collections, and less than half with the actual business of buying and selling. A cash business has two sides, and many fail of success because they only attend to one of them. It is quite as essential that the dealer buys for cash as that he sells for cash. If he does not, his chances of successfully com- peting with those who give credit are very limited. The great point of advantage which the cash dealer has over the credit one, lies in the lower price at which he can sell his jroods. But this lower price can be but trifling if the cash trader buys his goods on credit the same as the credit trader. Five per cent would probably be as much difference as could be made, and as the credit trader would generally be willing to take oflT five per cent from every bill sold on credit, as a discount for prompt cash, there would really be no advantage to the cash trader, but rather the reverse, as the customer of the credit dealer would have the goods at the cash dealer's price, if he paid cash, with the privilege of the credit by paying five per cent more. But if the cash dealer makes his purchases for cash only, buying of those wholesale houses as far as possible, who also buy and sell exclusivelyXqLcash, the reduction in llM 152 Whj^ Goods are Cheaper for Cash, price made by the avoidance of each dealer's additional profit, put on the goods to cover the risk of loss on credit sales, would be quite considerable. For it must be re- membered that it is not a single increase of price, render- ed necessary to cover the risk of crediting, that makes goods bought on credit higher, but it is the culmination or aggregation of such extra prices when the goods have passed through several hands. Because the consumer does not pay cash to the retailer, the retailer cannot to the wholesale dealer; he in turn, for want of the cash from his customers, must obtain his goods on credit from the importer or commission house. And all these extra prices are necessarily saddled on the goods. Perhaps this idea, which is an important one, deserving more attention than it receives, can be more clearly shown by an example. In presenting it I will assume that each person through whose hands the article passes can afford to sell it at ten per cent advance on cost for cash, but re- quires an extra five per cent to cover risk of loss when sold on credit. This ten per cent may for present pur- poses be supposed suflicient also to cover charges for freight, storage, insurance, etc. The rate of advance for credit is certainly under the average of that which is cur- rent in every day transactions. Of course if a larger ad- vance is taken as a basis, the difference in the retail price will be still greater. For the illustration take the article of wool, as it and its products are familiar to the reader ; simply taking suflicient to make a pair of blankets, say eight pounds. This at a low price in the hands of the grower in Michigan, we will, to start with, call worth twenty- five cents per pound, if paid for in cash, $2.00 But is sold to the agent of the wool dealer at five per cent more on credit, or. ... , , 2.10 f I Cash and CredU transactions Compared. 1^ And by the wool dealer to the Eastern man- ufacturer on credit, at fifteen })er cent advance, . . 2.41 The manufacturer adds to its value, let us sup- pose, in manufacturing it into a pair of blankets, a sum equal to its origmal cost, so that it costs ^in^ 4.83 And through his commission house he sells the blankets to the wholesale dealer on six months credit, at the fifteen per cent advance, 5.55 Who in turn jobs them to the retailer, on uncertain credit, at the same advance of fifteen per cent, making 6.39 And the retailer sells them to his customer, perhaps the original grower of the wool, at the same advance, with the understanding that he is to wait for payment till the next crop of wool is in, making the retail price $7.3o Now, for comparison, look at the price the consumer would have to pay if all the transactions from beginning to end were for cash, at ten per cent advance : - Cost of wool to the wool dealer, 12.00 '* " to the manufacturer, 2.20 Doubling the cost for manufacturing the same into a pair of blankets, 4.40 Cost of the pair of blankets to the wholesale dealer, 4.84 Cost of the pair of blankets to the retail dealer, 5.32 Cost of the pair of blankets to the consumer, 5.86 Making a difference in price in favor of the cash sys- tem of $1.49; or twenty-five per cent more, which the the consumer must pay for his goods under a credit sys- tem, than he would have to pay under a cash one. It will be readily seen that no one dealer in the series 154 A.voidmg the Credit Guaranties, of credit dealers, could by paying cash, save more than the five per cent due as a discount for his own special payment; and would therefore accomplish but little in reducing the price of his goods with cash in hand, unless he made his purchases from those wlio are in the cash series of dealers. The number of persons through which the various ar- ticles of daily use and sale — or some of the component parts thereof — pass, from the period of the raw product until they are completed, and in the liands of the whole- sale dealer, makes it impossible for the retailer to buy all his goods without getting some whose cost has been swelled more or less at dilFerent points along the line by the guaranty connected with credit sales. But a steady adherence to buying for cash, and so far as possible from those who also buy and sell only for cash, will at least avoid the necessity for three credit guaranties, that to the wholesale dealer, that to the retailer himself and that to the consumer ; and cannot fail to be perceptible in the price of the goods offered for sale. Were this custom, which I am happy to see is a grow- iniif one, of buying exclusively for cash and of cash houses, more general, the influences exerted thereby would soon be so great as to compel casii transactions, by all the parties through w hom the goods might come. So little, comparatively, is now done for cash, that it does not pay the large dealers in the line or series, such as the heavy manufacturers and commission men, to make an exclusive cash business. On account of these comparatively lim- ited purchases for cash, they are under the necessity of arranging their business on the credit system, giving the cash customer such advantages as they can afford, in the form of a discount for ready money, w^hich is, possibly, under the circumstances, fully equal to the interest and S'.^ ^ i 7f7io gets the ^xtra l^ofit in the Credit System, 155 lessened risk on each individual transaction ; but is not equal to the advantage which would be gained by the re- ceiver of the cash, if his cash business was great enough to enable him to make all his own purchases for cash. Tlie query will naturally arise as to what becomes of the extra twenty-five per cent which it is shown the con- sumer pays under a credit system ? It seems reasonable to suppose that some of the dealers in the series must get an undue share of profit, and that ordinary competi- tion would soon find this out, and the profit be reduced to a lower point/ But this is a profit only in imagination, and is not real- ized by anybody. A small part of it goes to pay interest on loans of money required by each dealer when his cus- tomers fail to pay him promptly, according to agreement, something more goes to pay the expense of keeping ac- (tounts and making collections, but the larger part is re- quired to balance the losses incurred from failures to pay. It makes good to the farmer his losses by specu- lative wool dealers ; to the wool dealer for his losses by rash or incompetent manufacturers ; to the manufac- turer for his losses by extravagant or reckless wholesale dealers ; to the wholesale dealer for his losses by ignorant or unprincipled retailers, and to the retailer for his losses by the numerous company of customers who live by their wits or are unable to pay through their poverty. All these various and multiform losses are aggregated on the goods, and those who do pay are, under this system, tax- ed a great part of the twenty-five per cent, or whatever the reality may be — simply to make good the losses from those who do not pay. The cause why the manufacturers and dealers in Euro- pean countries can so generally undersell us in our own markets, lies quite as much in the prevalence of this -ill 156 One ^Reason why I^oreign Goods are Cheaper, credit system of doing business here, as in the lower rate of wages there, which in many branches of business are not so reduced as we are accustomed to believe. The business men there have passed through that adolescent period when credit sales made indifferently, are thought to be worth within five per cent of cash. They have ar- rived at that maturity of experience wherein cash is main- ly required in transactions, because cash operations in busi- ness produce their results with so much less expense and risk; and the cost of production is thereby materially reduced. The occasional credit a manufacturer may give is an exception, and does not break into the general plan of his business, which is founded on cash principles. Wlien the dealer there desires goods, and has not the money, his recourse is not to the person from whom he buys for a credit, but to a banker whose business it is to lend money, for a loan. And if he has such securities as will satisfy the banker, he borrows the money and buys for cash. The dealer there does not give way to the temptation to sell on credit, because he gets a little better price. His experience, and perhaps the experience of his father and grandfather before him, whose business has continued down for a hundred years or more, has taught him that these alluring profits on goods sold on credit are too often deceptive. He prefers to make a small profit and a sure one, to the chance of a larger one with risk of loss and hence he sells for cash. , It is useless for us to expect to cope with them in the manufacture x>f any article where the risks of credit largely attach to the raw material or processes of manu- facture. Our manufactured goods reach the point theirs arc when they land here, loaded with credit guaranties- which entirely overbalance any advantage we may have in Soh^ Increased Duties Reduce ^ices. 157 \ bemg saved the expense of freight, so much in some cases as to exceed even a considerable tariff" on the for- eign goods. In this way we can readily explain the seemingly cu- rious problem in political economy, which we often see, where an increase of duty on a certain article actually re- duces the price. Before the duty was advanced, the man- ufacture was precarious, and prudent men kept aloof. *rhe business at home was in the hands of a speculative class, who having nothing or but little to lose, made their purchases and sales ou credit, and their goods were high in price, while they made nothing. Under the protection of the increased duty, sufficient capital is invested in the business to enable, and to some extent to compel, every one dealing in any of the materials to make cash transactions. The manufactured article being thus relieved from the load of a few credit guaranties can be put in the mar- ket at prices below the rates established previous to the advance in duty. The expectation of increased profit, by the advance in the duty, was the inducement to invest the capital in the necessary machinery, aud subsequently the home competition reduced the profits to the minimum. X CHAPTER XI. . SELLING GOODS ON CREDIT. THE selling of goods at retail on credit, to be profi^ able, must be confined to localities where the settled character of the population make it possible for the deal- er to know with some degree of certainty the pecuniary responsibility and character for honesty of those whom he credits. The dispenser of credit, in the comparatively small amounts of retail transactions, should know some- what personally of the customer he credits, beyond what he can learn from ordinary enquiries from third parties. He has not time to go around to make the enquiries re- quisite and usual among wholesale dealers, nor would he find it profitable if he had. Scarcely any one is so poor that he can not find some two or three friends to whom he can refer, who will think him responsible for the few dollars of a retail account. Nor is it sufficient for the re- tailer to take his customer's word regarding his ability to pay ; nor should he be satisfied with simply a belief in the customer's good faith or desire to pay. He must in- vestigate and know that the head is right as well as the heart. Honest people who ask for credit from a retailer, do so because they have not the ready means to pay. They are relying on their growing crop, or on their un- finished work, which gathered, or completed, will pro- duce the means to pay off any debt that they may 'create. Experience teaches us that when a man relies on these things, or generally on anything in the future to put him in funds to pay a debt, he gives a couleur de rose Personal Ji^nowtedge Acquired in Creditingr, 150 to his expectations, magnifying their productiveness or profit beyond what the reality proves to be. And the field that was to produce twenty-five bushels of wheat to the acre, or the contract that was to yield a thousand dollars profit, falls one-half short of the expectation. It requires, therefore, the cool investigation of him who grants the credit, who will lose if it is improperly be- stowed ten times as much as he will gain if properly given, to review the calculations, dispersing all the rose* ate hues, and looking at the applicant's prospects in their true light. This he can onlv do well when he has had, or can have some opportunity to learn the character and position of the applicant by personal acquaintance, aside from his own representations. A dealer who has for a year had daily opportunities for hearing of and seeing the transactions of any particular individual in the community, ought to be able to decide at once whether he is sufficiently responsible to be credit- ed with goods, and to what amount. The following classes, as a general rule, should be trusted only under peculiar or particular circumstances, and then never to large amounts : 1. People of extravagant habits, when the means to support the extravagance is not plainly visible, especially when accompanied with idleness, or general incompe- tence for any business pursuit, so that it seems a wonder to the community how the person can afford such luxuries. 2. Those who are intemperate, or are the victims of other personal vices, which disqualify them for properly attending to business, when otherwise capable. 3. People in ill health, especially when life is much en- dangered thereby, and the debt would be lost in case of death — or its collection even loner deferred. i V 160 People tJiai are ^a?igerous to Trust, I 4. Minors and married women who are not legally re sponsible for their obligations. 5. Men without families, whose attachments to any one locality are not firm, and who find no trouble in making a change of location, when even small obligations become pressing. 6. Strangers either with or without families, who drop down into a community without any one being able to learn who they are, what they are, what they have done or are doing, or what their resources for a livelihood. It such men have means upon which they live aside from present business pursuits, they rarely need credit, and if they depend upon their daily pursuit, the man that trusts them ought to know all about it, that he may judge of his security. 7. Persons who live by speculative enterprises, where they have nothing to lose as moneyless contractors, pro- duce speculators, stock gamblers, and the like. 8. In general, all those who having lived to middle life —say fifty years of age— show no desire to accumulate anything towards sustaining themselves on the down hill of life ; a turning period which is for them soon to occur, when their ability will be scarcely adequate to their sup- port as formerly, and which may include all those who are said to " live from hand to mouth." When people live on in this shiftless way until they are fifly years of age, it may with much certainty be predicted that in a few years more it will become necessary, or at least seem- ingly so, for them to consume the daily supply before they have earned it. As age advances the the ability to earn in most pursuits lessens, while the desire to spend, with spendthrifts, rather increases. The classes that may be safely trusted are those who have means which 4U:« not immediately available, as one Those w/io are Safe to Trust. 161 wk) has products of the soil or of his manufacture, await "ig the appropriate season for transportation or sale Likewise those who are producing articles of sale that require a length of time for their completion, during which the producer needs a subsistence. Instances of the first would be farmers or lumbermen whose products are locked up by frozen rivers; or an ice dealer, whose ice houses are stored with an abun- dant supply, but who has to wait for the summer's heat before he can find a market for his commodity. Of the second, would be planters, farmers, manufac- turers and mechanics generally, each to a length of credit m proportion to the length of time occupied by him in the process of his production or manufacture. The hon- est and industrious shoemaker, who has expended all his •eady money in the morning in the purchase of leather IQ make a pair of shoes for a customer, which would be finished by night and paid for when done, could be as legitimately trusted for his dinner till night, all other considerations being equal, as the larger manufacturer could bo credited for his subsistence, and that of his em- ployees for the more lengthened period which the exi- gencies of his business might require. In general, all who are dependent on either of the fore- going or similar classes for their pay, will come under the same rule as applies to the class on which they are dependent; but at each remove of dependence, more care must be exercised in examining into the circumstances of the individual case, as the risk of unfavorable circum- Btances occurring increases with each remove, if there be no capital to fall back on. Thus-the farmer can be cred- ited with some safety, to an amo^mt equal to the value of a quantity of wheat he may have on hand awaiting the opening of navigation. The risks will be his dishonesty 162 Oruikj cj i/ic :Hisk, —not paying after he shall have sold his wheat— and his over estimation of its vaiue, and on that account getting deeper iuto debt than the wheat will pay. There would he a greater risk in crediting a mechanic on the faith of a claim for work done for such a farmer, for though the farmer may prove honest, the mechanic might not. There would be another increase to the risk in crediting a third jierson on the basis of claims held by him on the mechanic, as it would now require that all three should be honest, and not self-deceived regarding their claims. Debts piled on debts in this way, are un- stable and uncertain enough even when the foundation is composed of property of sufficient and stable value. When, as sometimes is the case in times of speculation, the foundation is in corner lots, oil wells, gold mines^ fancy railroad stocks, or other glittering schemes, valued nominally at three or four times what they can be sold for, the whole structure is but a house of cards which the first breeze of distrust blows away, with the flatter- ing hopes of all those who have given credit on the faith of its security. The foregoing rule of increase of risk, with increase of distance or removal from the producer or foundational security, does not govern when the removed parties liave means independent of the producer. In these cases, how- ever, credit is rarely given on the expectancy, but rather on the reality of what the customer has. And in estimat- ing a man's ability to pay an obligation, the first consid- eration should be (after that of honesty,) as to wlietlier the man is able to pay from what he has in hand, or whether he depends on something that some one 'else has to first pay him. In trusting people, we should rely more on what they have than on their expectations, and take a view some- t Means hi Ilaud versus Expectations, 163 ' what as the Frenchman, a retailer, did, of whom a story is told, that when his son became enamored with the daughter of a reputed wealthy wholesale dealer, the two fatliers met together to settle on the details of the dowry that should be given to the daughter, which as my read- ers doubtless know, is in Euro[)ean countries an essential part of the engagement, and always corresponds some- what to the groom's wealth or expectations. It is need- less, perhaps, also to add that the parental negotiations are often of a very mercenary character, each trying to get as much for and give as little with his child as pos- sible, and of course each trying to make the future ex- pectations of his child take the place so far as possible of present wealth. The retailer's son would be sole heir to his father's es- tate, which was a large stock of goods of several thou- sand francs value, on which, however, he was heavily in- debted. The wholesale dealer's daughter was also sole heir to her father's wealth, which was rated by him at many times the vidue of the retailer's stock of goods. As he only sold by sample on commission he had no stock of goods of varying and uncertain value, like the retailer had ; his means were all in the accounts and obligations of his customers ; their value was fixed, and in his mind certain. As he did not owe anything, he could, he thought, claim that his daughter's expectations at his death were much beyond what the retailer's son would receive, and hence a very limited dowry in ready money ought to be sufficient. " But," said the retailer, " your w^ealth is alfvery shad- owy and intangible. Suppose these people don't choose to pay you— then what have you ? While I have, *. you see, this large and valuable stock of goods." \ 164 The ^xtra Profit to Cover Losses, "Ah! but then — see what you owe," exclaimed the wholesaler. ** Oh, that doesn't concern rae ; that concerns only my creditors." In estimating the responsibility of a customer it will be seen, therefore, that there are three things to be kept in view : 1. His honesty or disposition to pay. 2. His means or property in hand or in expectation out of which he is to pay. 3. The incumbrances on these means, in the form of debts already created, or which may have to be created, before the j>roceeds of the property can be realized to pay the debt.' It is the full investigation of these, and the ability to judge correctly upon them, which enables a dealer to grant credit with a good surety of being paid. It is when he fails -to thoroughly investigate them, and takes for granted that all is right, that he gives credit at random, and is likely to lose. In a business arranged on the credit plan, an extra pro- fit must always be obtained, to compensate for the losses which will be incurred by ftiilures to pay ; also to cover the loss of interest for the period of the credit, and for the additional expense entailed on the business, in keep- ing accounts, making out bills and collecting debts. The precise amount of extra profit required to cover these items is the difficult problem which all dealers on credit are troubled to solve. Taking the whole country for a long period — say half a century— statisticians could doubtless arrive at something like an average of the losses by bad debts, proportionate to the amount of goods sold on credit. Yet it is scarcely The Speculative ^eriods^ 165 possible that a single dealer can, in the short period of his business life, settle upon any near approximation of the l)ercentage of his credit sales which will be lost. The tide of confidence and of credit in the United States, seems to reqnire a period of about twenty years, if unobstructed by foreign causss, for its flood and ebb, or about the aver- age business life of a trader. He who commences busi- ness on the rising tide, may find that the calculations he makes of losses by bad debts, founded on the experi- ences of others, and on his own first year or two of business will be amply sufficient for ten or fifteen years. And should he then close his business career, his experience would indicate a very moderate percentage of loss. Though possibly should he continue business for the next five years following, when confidence may be ebbing and all values passing through a condensing process, and the whole busi- ness community in a panic, as in 1837, '57 and '73, each man suspiciously doubting the solvency of every other one, he would have to more than double the average of his former calculation to make good his losses by bad debts. And be fortunate indeed, if the losses did not entirely sweep away the profits of the former years, although these pro- fits, at the end of the fifteen years, might have been ac- counted a fortune. There is good reason to think that these periods of speculation, and their resultant panic, are coeval with a new generation of traders. Those who speculated so l.irgely from 1830 to 1836, were not the men who had gone through the trying times of the war of 1812, and the few succeeding years to 1820— a period that history records as of great mercantile peril. At the later period these older dealers had mainly passed ofl" the stage of ac- tion, and the younger ones had to have their experience of the disastrous results of speculation. From 1845 to IGG The Risk 0/ any ^xed JTshmaie of Zoss. 1856, when tlic tide was runoiDg up again, these men Ox' '36 had passed away, or the few that still remained were regarded as "old fogies." So those who suffered the anxie- ties and losses of 1857 to 1861 were cautioas all through the inflation from 1863 to 1870 ; but a new generation ol traders was then coming forward, lacking this experience of their elders, and their ambitious desires to " push things ** brought on the speculations that culminated in the panic of 1873. We need not expect another such climax and panic while these are the prominent men in business ; but in the next few years, with a new generation of traders coming on, speculation will doubtless rage again, to cuhni- nate by 1890 in another panic. Like the gu-1 whose mother had " been to balls and seen the folly of them," she must also go " to see the foUy of them." So the sons wiU not heed the advice of their fathers, but must see the folly of speculation for themselves. It is the uncertainty of the amount which may be lost by crediting out, which makes the credit business danger- ous. And we may set it down as an impossibility for any dealer to name the proximate percentage on his credit sales, which will surely cover his risk. So much depends on his care and discrimination in giving the credit, so much on his promptness and skill in collecting in desper- ate cases, or those likely to be such, that it requires al- ways the fear of loss to sharpen his wits and judgment. If in one or more years, through exceeding carefulness, a dealer's losses are so limited that he thinks he may safely conclude that a certain percentage, say three or five on his sales, will cover them all, such a conclusion almost surely relaxes his vigilance the succeeding year, and his losses jump up to double the estimate. In deciding upon the propriety of giving credit in actual business, there is al- ways a struggle of two opposite influences ; one the de- sire to make money by the sale,, the other the fear of loss Changes in the ^esponsibnity of Customers, 167 if llie debtor fails to pay. The judgment should faith- fully hear both sides, and then determine. If the fear of loss is weakened by a belief that the three or five per cent hitherto found suflicient, will cover any loss on this special transaction, and that therefore the business can af- ford this particular risk, the dealer will find that he is dispensing credits to a class who have not the responsi- bihty those had to whom he previously gave the credit. Ordinarily tliis error is soon corrected, as at the end of the year, when the losses are found to exceed previous calculations, an increased influence is given to ller cent or more of it, in bad debts, beside another five per cent in interest and extra expenses. He may be esteem- ed a fortunate man, who having got into such a position, from inattention to one of the positive dangers of all dealers doing a mixed trade of cash and credit, notices the cause of the difficulty, and extiicates himself, with no greater loss than two or three years profits. Hundreds continue on in just such positions, until overtaken by bankruptcy, oftentimes again and again, be- fore they fully learn the lesson that deficiencies of cash sales can not be made up by increasing credit sales, un- less an extra profit is obtained. This is the rock on which many have struck and foun- dered, who started off with most brilliant prospects, find did a profitable cash business for the first two or three years of their career. As they became acquainted more intimately with their customers, they yielded too easily to the temptation to give credit to them, either to in- crease their sales, or to accommodate the customer. For- getting that often people buy in a cash house, because they have no credit, and are not worthy of one. If we were to critically examine the details of such a business, where goods are sold at the same price indis- criminately for cash and on credit, we would generally find that all the profits are from the cash sales, and that 5Bi 186 Illustration of a Mixed business. the credit part of the business does not yield profit enough to support itself; and that those who pay cash have to con- tribute by the extra price they pay, towards supporting the credit branch of the business. There is morally a serious objection to the system in the injustice which takes advantage of the necessities of the cash buyer, and makes him pay the same price for an article that his neighbor pays who has six months credit on it, (and sometimes entirely fails to pay for,) and w hen, too, the cash buyer, as is often the case, is only one because he is poor, and has not the responsibility requisite to obtain a credit. Added to which there is the objection to it, that it is against correct business principles, and will not stand the test of competition, or even the ordinary vicissitudes of business affairs in the community among which it finds its advocates and customers. ^uch a business may be perhaps more clearly illustrat- ed to the reader by supposing a dealer to keep two stocks of goods in tw6 separate storehouses in the same local- ity, say side by side, with exactly the same goods in each, the prices alike in both, in one of which the goods are all sold for cash, and in the other all sold on credit, of an average of six months. Now the profits may be so adjusted by the experience of the results of former en- terprises, that the two stores together w^ill yield a satis- factory return or net profit, while the accounts of each if kept separate, would show that there is very little if any net profit in the credit branch after due allowance is made for the losses by bad debts which will occur in the average of a series of years. A business of this kind would not disclose its defects, while it has only the competition of rival dealers selling their goods in the same way, at one price for cash or on credit, for the rival dealers will have no advantage. mi ■H. ^a r Si'/ctrfustances which Oyer turn Calculations. 187 Anu so long as the cash buyers can not buy more advan- tageously, and are taxed everywhere to support credit systems, they will as readily purchase of one as another, all other conditions being equal. But in the event of a rival springing up, selling exclu- sively for cash, or nearly so, as he will not liave the bur- den of the credit branch of the business on his shoulders, on which half the capital and more than half the time and attention of the supposed dealer are bestowed with- out remuneration, he can aflford to sell his goods at less prices, and make in the end as great net profits. His lower prices would naturally draw customers from the cash store of the supposed dealer, and reduce that branch of the business, and of course very materially reduce the profits on the whole business. And he must either en- hance his prices to make his credit store profitable, and thus lose more of liis cash trade, or he must reduce the prices and cut off his credit trade. The true business course would be to reduce the prices in the cash branch, and increase the prices in the credit one, until the proper equilibrium is obtained. Somewhat similar would be the results on the profits ot such a supposed double business, if any changes were to occur in the business of the neighborhood, through which the cash customers, for w^ant of money, cease to buy in the cash store, and trade subsequently in the credit branch. Although the same amount of goods might be sold, and outwardly and on a superficial view, the joint business would seem profitable, yet it would really be languishing from time to time, in proportion as the cash trade turns into the credit branch. This is really the course which a mixed business of credit and cash takes when carried on in one store. Ac- tive competition requires that the business must merge ^1 Igg Making 'Reduction in Tt ice, for Cash, either into a cash one with goods at reduced prices, or into a credit one when increased prices are necessary to make it as profitable as heretofore. It is very rarely indeed that the proprietor of a retail store can make a difference in prices for cash or on credit. If these differences were made, the credit buyer would always want to buy at the cash price, and though he had not the money to pay down, he would " hand it in to- morrow," or " next week," and soon the dealer would find that he had charged his goods on his books at cash prices, and yet did not get the pay for them either *' to- morrow " or " next week," and frequently not for six months. The next result would be, that as the dealer pur- chases new goods, he is tempted to mark them a little higher in price, to cover this risk, and so as to be ready to meet the customer who wants to buy for cash, yet takes three or six months to pay, on equal terms. And he is thus soon again where he started from, with his goods all at one price. The only way that a mixed business can be done at re- tail, giving to the cash customer the advantage which he justly should have, is in the way that it is done in the wholesale business : by giving the payer of cash a dis- count, when payment is made, equal to the fair difference between cash and credit. This of course requires that the goods shall all be marked and sold at the compara- tively higher credit prices, which in turn again has some disadvantage in the actual sale of the goods. Many peo- .ple would not stop to enquire how much the discount off for cash is, and it is found in experience that to the mul- titude ninety-five cents in cash, looks cheaper than one hundred cents on credit subject, if paid at once, to five per cent discount. Every quotation of prices will be to the disadvantage of the credit house, except where iu Ulate of Difference, jgg rare mstances it may be mentioned that there is a dis- count for cash. The reduction of a discount off for cash would, it is true, be sometimes difficult. The very minute transac- tions, usual to such dealings, would make calculations of discount descend to fractions of values below the or- dmary currency used in making payments. But there are many varieties of retail business in which such a dis- count could be appropriately made. In others it might be hmited to purchases of a dollar and upward made at one time. Five per cent is the ordinary difference in wholesale houses between six months credit and cash. Whether this IS sufficient for a similar discount in retail business will depend a good deal on the extent of the credit, and the general character of it as given in the business. If the credits are very short, and only to a class of custo- mers among whom failures are rare, three per cent may be 4 sufficient reduction for cash. With longer credit and less responsible customers it might be profitable to give even eighft per cent discount for cash. The rate should be governed somewhat with reference to what has been added to the profit originally, on the ground of giving credit. For details of what this should be the reader can consult Chapter V. of this work. There is another class of sales common in retailing goods, which in some localities occupy so important a part as to require notice here. They are such as are sold nominally for cash, but really on a credit of a week or a fortnight, sometimes perhaps of a month. In manufac- turing localities where the operatives are paid off fort- nightly or monthly, such sales are very general. The operative runs an account from one pay-day to the next 190 >f*eeJtiy and Monthly Accounts, when it is paid off, and the next day's purchase is charg ed on a new account. It iswith most dealere the cus- torn to regard these as cash sales, but they are very dar- gerous ones generally. All the labor of keeping accounts •incidental tolonger credits is required, and the risks of loss ure generally greater. There is always a tendency to run an account too large to be paid at the next pay-day, and a balance has to be left over unpaid. This balance increases frommonth to month, and is very often even^ ually lost. The danger too, of loss of work by the cus- tomer, or removal from the place, adds to the risk. Sometimes also men of means, who do not wish to be troubled at every trifling purchase, to send the money, and yet wish to pay cash, want an account kept which they will settle weekly or monthly, as the dealer may de- sire. Setting aside the trouble of keeping the account, if reasonable prudence be used in granting the favor only to those who always pay'promptly every obligation, such accounts are quite as good as if the cash were paid down. In a locality where there are rival stores, the credit may have its advantage in inducing the cus- tomer to confine his dealings more especially with the one with whom he has a running account, instead of bestowing a portion on the rival stores. In general all goods sold for cash, and not paid for on-delivery, come under the head we are now considering, and all such sales require a degree of care. Whatever may be the motive for deferring the payment on what are thus called cash purchases, they can not exactly be considered cash, how- ever near they may come to it in their advantages. And where any considerable amount of goods in a mixed cash and credit business is sold in this way, in the summing up of the day's sales, it should have a separate item in the account. A Safe Ifay to JBnter ihem. idi The great tendency that short credits of this kind have to run into longer ones, makes it very desirable that the retailer should have such a discriminating memorandum of the daily transactions, so as to compare notes from time to time. If he puts these sales into the cash sales of the day, he only deceives himself; if in the credit sales he may still deceive himself, as in the average they sometimes make the credit sales result better than they really would without them. Dealers who do a cash business exclusively, necessarily nave more or less of such sales. It is a custom with some, when sales of this kind are made, not to count them in the daily sales until they are paid, and on the day of payment they appear as a cash sale of the day. This is a very safe plan, and when the amount so sold is not great in proportion to the rest of the business, has nothing objectionable. When, however, the amounts so sold grow to be large, almost unawares there arises a habit of depending on the receipts from such sales at cer- tain periods, to pay bills which may be falling due. The dealer in making up his calculations of how much money he will have on a certain future day, turns over his ac- count book, and reckons on this, that and the other bill being paid by that time. Whenever this occurs these accounts have taken the character of short credits, and should be rated and considered as such in the economy of the business. The reader is in this connection again reminded of the great advantage in controlling the extent of credits, in a mixed business of cash and credit, by the plan mentioned in the previous chapter, of fixing a limit in the beginning of a season, beyond which the dealer will not go in trust- ing out. He should also always keep a running memo- randum of the amount credited from day to day, and the 192 Reconsidering former Conclusion^. amount paid off, so that he may know what amount in gross he has trusted out. This gross amount may with propriety be sometimes varied at the commencement of a business season, after a full consideration of all the prospects of the coming sea- son's business. Curtailed or shortened when matters look inauspicious for prompt settlements, and extended when appearances are more favorable. It would indeed be advantageous for a retailer to take more fully into consideration, at the early commencement of every season, than is usually done, the position and expectations of his customers, and generally of the town or neighborhood in which he lives, in regard to their ability to purchase goods as heretofore, noticmg any cir- cumstances which indicate that their ability to purchase will be lessened or increased, and act accordingly in pur- chasing goods for the season's supply, and possibly in m^ ducing an increase or decrease of the gross profit. The circumstances which would govern the conclusions are such as bountiful harvests, great activity among man- ufacturing establishments, probable inerease in the prices of ' ally have gense enough not to place goods in such a posi- tion that they will come in contact with a fixed light, but the most intelligent may in a moment of haste un- thinkingly change the position of a moveable gas-burner, and place it dangerously near to the goods. And sec- ondly, articles should never be hung on or near the gas pendants^ or branches ; and any arrangement of wires or frames for hanging goods on, if necessary at all, should be so placed as that the goods hung on them are fully three feet away from the gas burners. The insurance inspector would always do his duty to the companies that employ him, if he were to report as dangerous all retail stores where goods of light inflam- mable character are thickly clustered on cords, or other- wise, in close neighborhood to the gas lights. Fires sometimes occur through the keeping for sale of specially dangerous articles, as lucifer matches, benzine, alcohol, turpentine, etc. Such goods are dangerous mainly when a light or fire is brought to their vicinity. It is therefore a good custom to adopt in keeping such articles, to place them all in one locality, and in such a position in regard to the permanent lights in the store- room, that all the operations of dealing them out can be readily performed at night without the necessity of a hand light. It is well too to so place them that there is no necessity to pass near them frequently with a light — in some corner, for instance, and then to encourage a feeling that that is a dangerous corner to take a light to. But this should not induce a dealer to put them down cellar, or entirely out of view, as is sometimes done, where at night they can only be dealt out by carrying a light, as this is really more dangerous than the open store. It is not often, however, that a fire gets headway in a store during the time it is. occupied. The spark or flame w JUsephiff IVcll Insured, 233 in its embryo stage is then noticed, and that which in fifteen minutes would have been an un2:overnable confla- gration is easily extinoruished with a wet finger. Hence it is always prudent as the last thing before leaving the store-house at night, to take a look through it after the lights are all out, ior any stray spark which may be in waiting like a mischievous clerk ior the departure of the principal, to have a " orrand flare up." After all the care which can be is used, to qjuard against the occurrence of fire, the crowniiiix woik must be to keep well insured. Tlie risks which a dealer incurs from fires caused by the carelessness of contiguous neighbors or the ill-will of an enemy, can only be covered by in- surance. To keep well insured means not only to have sufficient insurance to cover at least the larger portion, if not all the stock of goods, but also means that it should be in companies which are able to pay, and in the custom of paying their losses without the necessity of a suit at law to compel them. Avoid all insurance companies whose names are frequently seen in the newspapers as defend- ants in law suits. Unusual care should be bestowed on the language of the insurance policy, thiit it fully covers the risk, and that there is no " proviso " or " ex. ception " or " condition," which would debar you from re- covering in case of a loss. It is not safe to accept the as- surance of the agent or broker that " it in all right." So many new clauses are from time to time interpolated in the " policies " or " annexed conditions," that every one should examine for Iiimself — carefully scrutinizing and weighing the meaning and scope of every sentence and word, both written and printed in the " policy," and the " conditions annexed," to see that all is there that he re- quires, and that nothing objectionable is interpolated. iil! lit 234 The ** Condi f ions " of the Insurance Policy, Should he omit to do this, or to have any errors or languai^e ol doubtful meaning corrected, or to perform subsequently what may be required of hmi, as giving no- tice of other msurance, or of increased risk, he may open his policy some unpleasant morning when his store-house is in ashes, to find that he has insured, his " hazardous and not hazardous " goods only, while by the " conditions annexed " to his policy, three-fourths of his burnt stock was " extra hazardous," and of course not covered by the " policy ;" or that if he have "policies of insurance," in two different companies, and he has omitted to give each one notice of the other insurance, and have it endorsed on the " policies," neither corapany'is liable by the " con- ditions," for the insurance money ; even though possibly (as the author has known an instance of) one man was agent for both companies when the policies were ob" tained. The insured should always give himself the benefit of the doubt adversely, and if any clause or language in the policy seems obscure or of doubtful meaning, he should construe or read it most disadvantageously to himself- If it will not bear criticism in this aspect, then he should have the language made more exact and definite. The true legal interpretation of any doubtful phrase or clause in the policy, may appropriately be referred to the legal adviser of the insured, whose special business it is to de- cide upon such matters, but the general scope and inten- tion of the policy can not with safety be left to an at- torney, as only the dealer can know exactly what he wants to cover by the insurance, where it is situated and whether he is actual and sole owner of the property in- sured. A policy may be ])crfectly regular and legally binding, and pass the inspection of a good lawyer, and yet through a wrong number to the store house. ni 7>esi protection Against 'Burglars. 235 or some other apparently trivial error, which was not within the lawyer's special province to enquire about or know, the " policy " is utterly useless as a protection to the insured. As a single instance of such small irregulari- ties, the author once had a policy made out and sent to him, by an insurance company of high standing, with the insurance written out as on " Dry goods not hazardous,^"* with the premium at a non-hazardous rate, by a special agreement with the company. Yet on turning to the conditions annexed to the policy, *'' Dry goods ^^ were classed as " hazardous.''^ Here was a trifling matter, which in case of fire, would have been sufficient for at least a technical, and perhaps a full legal defence for the com- pany in any suit against them. At least sufficient for a costly and vexatious litigation, if the company chose to avail itself of the opportunity. Against burglars, the best protection is a continued oc- cupancy of some part of the ware-room as a sleeping apartment tor some of the clerks, especially when the store is a detached building away from the dwelling of the proprietor. Burglars rarely try their skill on such places when so occupied, and then only where by obser- vation they find that the inmates are off at unseasonable hours or for periods of undue length. Such rascals on the lookout for opportunities, quickly learn that certain even- ings in the week — until perhaps a late hour — the store is unguarded, and they operate on such a night. When those who thus occupy the store at night are occasionally permitted to be away till a late hour, some arrangement to supply their place is desirable ; and if that can not be, such absence should not occur on regular nights, but should be so irregular and uncertain that a burglar could not rely upon the absence on any s]^ecial night. 236 ZTseful Auxiliaries to flepel Thieves. It is a very common impression that when a burglar makes up his mind to break into a building, locks and bolts can not keep him out, still a good supply of such precautions, where other safeguards can not be readily or conveniently secured, will often deter a burglar from making the attempt. He may regard all the plunder he can carry away as not compensating for the trouble and risk. An ordinary window shutter with the common slide bolt is easily forced, but covering the inside of the shutter with sheet iron, and using a long bar across the window to fasten in the frame, either outside or inside the shutter, is a pretty good protection. A shutter of strong sheet iron fastened in the same way, is of course still better. An appearance of watchfulness will often deter a burglar who will on the other hand be invited by slight protections or a neglect of precautions. For this reason a padlock on the outer door is a bad precaution, as it gives notice that there is no one inside. A light left burning so that the whole interior of the store-room can be seen from some convenient aperture in the front door, is an excellent precaution to repel burg- lars, especially in a town where people are occasionally passing along the street at all hours of the night. If a clock be prominently placed so that the time can be seen by looking through the aperture of the door, and this be- comes generally known to the residents, it will often be consulted during the night by those passing, who desire to know the hour, and thus, perhaps, an hourly glance at the interior of the store will be made ; making the place entirely too conspicuous for a burglar. Watch dogs, if well trained, are a protection, though ordinarily not very reliable. Still, as they do not cost much to keep, they may be useful as an auxiliary to other means. ., The " Shoplifters, » 237 The losses which occur from shop-lifting and petty steal- ing, by those who visit the store in the guise of custo- mers, is in some localities considerable. This class of thieves mostly depredate in stores where there is not much attention bestowed on the customers. When the business of selling is conducted as it should be, and the incomer is promptly met at the first moment of entrance, and attended to with perseverance and vigor, and not lefl to wander about the place in an aimless manner, from one article to another, losses of this character are not so likely to occur, as where business is done in an irregular man- ner. A little attention will soon enable a salesman to re- cognize such persons as he should be suspicious of, for this cause. As their purpose in visiting the store is to steal, not to buy, they do not interest themselves in the goods they ask for. There is generally an aimlessness apparent in all their questions concerning the goods ; they no soon- er look at one article than they want another, declining the first without any apparent or adequate cause, except that of turning the salesman's supervision away in looking for the other articles asked for, so that they may have an opportunity to steal. This class of people frequently operate in couples, and one docs the stealing while the other diverts the attention of the salesman. The com- panion is never satisfied to remain inspecting the goods or hearing the negotiations, but wanders off apparently to inspect other goods which may be casually exposed, particularly if they are of a kind readily transferred to the pocket, bag, basket or other receptacle provided for carrying away the plunder. " An ounce of prevention is worth a pound of cure " in such cases, and a watchful eye kept over all such cus- tomers, will generally succeed in preventing depredations. This class of people do not liketo be publicly known 238 The " Street thieves." as thieves, and hence are chary of exercising their pro- pensities in places where they see they are suspected. For this reason it is not safe to disregard suspicious cir- cumstances because it is thought the person is "aboye such things," " an old customer," or any like reason to quiet suspicion. There is always a beginning to such practices, and it may be for the advantage of the person against whom suspicion is directed, to nip them m the bud, if possible, by what might seem harsh suspicions, rather than by a blind conSdence to allow such a ten- dency to grow into practice unheeded, and therefore un- In villages and country towns it is a common custom to place outside the door some of the articles kept for sale, L a sort of sign of the character of the business within, and these goods are subject to the depredations of a still lower class of thieves, if there can properly be any va- riety of class among those where all are base and vile These street thieves are generally half their time in jail for petty larceny. Unlike the shop-lifters, who seem otten ashamed of their conduct, these rather glory in their shame. Some localities are much infested with them Where they abound, the best way to guard against their pilfer- ing is to place but few or no goods out in the way men- tioned, and to fix or fosten in some manner those that are placed out, so that they can not be readily snatched up. It does not need that they should be very permanently secured. It is also well to so place the articles tl.al they may be plainly seen from the interior. This alone ,s often sufficient to deter the thieves from attempting to take them. Losses occurring from the peculations of clerks and employees, are perhaps the most aggravatmg of any !the l^ecutation of J^tnptoyeei. ^3D which a dealer incurs. It is hard enough to lose by a stranger, but when those in whom we especially repose confidence prove unworthy, and rob lis, it is doubly ag- gravating. Fortunately, like all other risks of loss to which the dealer is liable, this risk may be much limited by careful attention to the matter. With many persons, the moment a salesman or clerk's integrity is doubted, the first impulse is to discharge him; the very idea of having to watch those who are employed confidentially, and partly to watch others, and who ought, therefore, to be above suspicion, seems equivalent to a want of confi- dence in the integrity of the employee. If, however, the employer of clerks, and especially of very youthful ones, r.s retailers often are, would regard this watchfulness in its true aspect, as a means to protect and guard those under him from the strong temptations which frequently sur- round them to take the first step in wrong-doing, rather than simply as a means of detecting those who have not only taken the first step but possibly many more, they would see that there is no incongruity in closely watch- ing the actions of one in their employment, in whom they are at the same time reposing great confidence. " I can't bear to have anybody about me that I must watch," is the language or at least the thought of a great many dealers. The consequence very often is that the clerks seeing their employer indisposed to scrutinize very closely their doings, are led on from one step to another gradually, from what may seem only trivial matters to aggravated guilt. And at last when the employer's eyes are open, and he sees that something is wrong, and the honesty of the employee is questioned, without trou- bling himself to certainly detect and punish the cul- prit, he simply turns him off* in maudlin charity to prey upon others, taking a new and untried person to fill the I \ uo The Cte7'k*s TemptatttMS, place who has to go through the same temptations, and perhaps share the same fate eventually. While it must be admitted that there are a great many abandoned and incorrigible thieves in the world, it may , be questioned whether more than one in every ten became 80 except through temptation after temptation. Now restraining the propensity and withstanding the desire, and now yielding and overborne. And through this pro- cess of gradually sinking and struggling are at last buried so deep in the slough of iniquity that they give over their efforts to struggle out, and all hope of extrication and re- formation is at an end. Nearly every business man of mature years has per- sonally known of individual instances, even if they have not occurred in his own experiences, and they are doubt- less numbered by hundreds, where some thoughtless youth in a moment of temptation has purloined from his em- ployer an article for his own special gratification or use, and which being found out, exposed him to public pun- ishment. But his employer confiding in some virtuous traits of the youth's character, was pleased to act the part of a kind parent, rather than that of a })rosecutor, and placing before the culprit the horrors of the abyss into which he was falling, offered forgiveness and oblivion of the past offence, if there was reformation for the future. By this merciful course the erring one was brought to a sense of his guilt, induced to restrain his desires, and re- sist the temptations surrounding him ; remaining there- after a faithful, honest and reliable employee. The first step with pilfering employees is the taking of some comparatively trivial article for their own personal use or enjoyment. It may be only a few sheets of paper or envelopes, or such matters that he knows he would get for the asking. Sometimes clerks are permitted to pur- l^'irst Steps in Crime. 241 chase any article kept for sale for their own use, and are expected to keep their own account of it, or make the payment therefor without referring the matter to the em- ployer or any one else. This often leads to pilfering. The clerk wants the article to use now, he has no money to pay for it, but he will recollect it, and pay for it when he gets his month's salary. Or, if he is in the custom of charging the articles to himself, he takes it on going away at mght, and as the books are put away for the day he w.U charge it in the morning ; or perhaps he has already had so much charged against him for the current month, that at the end of it there w.U only be enough money comrng to him to pay his board, or other necessary billa^ and so he will remember this article, and charge it after the pay-day, as against his next month's salary He is satished m thinking that he means right, but he easily lorgets ; or if conscience reminds him, he satisfies that stem momtor that he intends yet to pay-or that it is only a triflmg matter any way, and even if he should entirely forget it, it does not more than pay him for some extra work he is required to do in his daily routine, and which he would not otherwise receive compensation tor. «ut time passes, and the article is neither paid for nor charged. The next time he needs something, and has not the money, it is easier to his conscience. He can now argue the matter. He gets an inadequate salary. He has to come earlier in the morning, or stay later in the evening than another one who is getting as much or more salary, and this which he now takes would not make "P for the difference ; though he means to pay for it, any way-that IS, he means to pay if it is brought to his notice by his employer or others that he has not paid for it And so he goes on from bad to worse, till his stealin<.s may amount to hundreds or thousands. It is very rare 242 j'hc Mnptqyer^s Guardian ^uty. that an employee, when thus abstracting his employer's goods or money, is not found in the end to have a careful account of the whole amount taken ; showing by this that he was soothing his conscience with the idea that by some fortunate event which he hoped would occur, he intended to pay for or replace all he had taTcen. An employer, by watchfulness, and a systematic regu- larity in his business, can do much to guard against any of his employees taking this first step, in this manner at least. He ought to make a positive and absolute rule that no one of his employees should purchase or take out of the store any article, except directly from himself An account of all such purchases should be kept, whether made for cash or charged against salary, so that he could always refer to it and know with certainty when he sees anything in his clerk's possession, which has been a part of his stock, that it has been paid for or charged, when he could not otherwise distinctly remember the circum- stance of purchase. In such cases there is a great advan- tage in having the employee a member of the dealer's household. The manner and extent of his expenditures can be more readily ascertained. As money must be had before it can be expended, the employer can generally tell whether the amount his employee receives in wages will cover the expenditure which he must necessarily make ; and if he concludes that it does not, or can not, he should make efforts to ascertain how the balance is obtained. Something may be surmised, possibly, by the habits and character of the clerk's associates. It is generally not difficult to note his places of resort, say for a continuous week or two, in which time in all probability some clue will be found to any seeming mystery. The opportunities such a one would have for taking goods or money should also be especially scrutinized, also the opportunity of dis- Stealingfor Vicious Indutffence, ^4^ posing of goods surreptitiously to persons who may visit the place of business as customers. Especially being on the guard when people of suspicious character always want to trade with this one person. In the case of those who have the handling of money. It may be necessary when such are suspected, to review the system on which the business is done, to see if there are proper checks and safeguards used against dishonesty ; and if there seems to be loop-holes in the system, where money could be abstracted without being readily noticed, or be covered up with false charges, then some new ar' rangements should be devisecj. A change to even a worse system might for a time be beneficial, in shutting up the opening ; as it would likely take some time to find out other openings for peculation, and in the meantime, through the change, circumstances would probably occur which would satisfy the dealer that the suspected one either was or was not guilty. When goods are taken to dispose of for money, or the money itself taken, and spent in haunts of dissipation and m vicious indulgence, the transgressor has arrived at that hardened stage that unless very youthful indeed, there can be but little hope of his reformation. He can only be made useful as a warning to those not so deeply involved in crime, by a prompt conviction and just punishment. The truest mercy to such is that which gives them an opportunity to repent behind the bars of a prison door, although it may subsequently expose them to the taunts of their associates. In other lands and with new acquain- tances, they would afterward have a better chance for reformation, than they would have by any unkind be- nevolence which lets them off without punishment, in- ducmg them to regai'd their offence as but a trifling one, to be repeated the first favorable opportunity. 244 tosies by Over height and Measure* The losses which occur to a dealer by giving over weight or over measure may be considerable in the course of a year. It is a subject worthy occasional attention, not that I would advise dealers to be too scrupulous about just having the scales always evenly balanced, ex- cept when they are weighing medicines. Good weight and good measure are scriptural injunctions, but they ne^ not run to excess. It is very easy to lose one or two per cent by carelessness in this respect, and when it is re- membered that this loss is out of the net profits of the business, which in many cases will not exceed eight or ten per cent, it can be readily believed that the net profits may fall short one-quarter of the contemplated result from this cause. The proportional loss is still greater where ihe gross profits are small, and the business depends for its success on selling a great quantity of goods. Very often this over weight and measure results from the em- ployment of salesmen who have never been taught how to weigh or measure the goods they sell, and a few les- sons are needed to perfect them. An excellent lesson for such, and worth trying occasionally by those more ex- perienced, is to take a hundred weight of some easily hand- led article and weigh it out into five pound quantities, or even less, so carefully as to make the requisite num- ber of pounds. Measured goods can be similarly tested. One who has never tried it will be astonished at the di- versity of result obtained by diflferent persons. Losses sometimes occur this way through purchasing goods by the piece, box or barrel, as of a certain specific measure or weight — as Chinese silks, raisins, fish, flour, etc. These are purchased as containing a specific number of yards, gallons or pounds, but many times fall short of that ; though as the article is not bought by the measure but by the piece or iMck;>ij«i no allowance can be claimed. Omissions to Charge Goods, 245 Where such goods are retailed it is well to occasionally test the net contents of a piece or package, so that the actual cost per yard, gallon or pound may be seen. In some cases, perhaps, this result may be more conveniently ascertained by keeping a memorandum on the package of each amount weighed out as sold, until the whole is re- tailed. The next subject in this connection to be mentioned is losses by omissions to charge on account goods that are sold on credit. In some stores a pass book is given to such customers as desire it, on which the goods are en- tered as purchased, as well as in the books of the dealer. If the experience with such books may be taken as r cri- terion of other accounts, almost every retailer selling on credit will lose considerably by omissions to charge the goods when delivered. I venture to assert that, in fully one-half the cases where a settlement is made of a three- months account, containing the record of twenty to thiit" or more different purchases, some will be found on the pass book which are pot entered in the dealer's books. -And in instances without pass books, how often does it occur that in the morning something is recollected which was delivered the night before, without being charged, and subsequently forgotten till some incident brought it to mind. In view of such instances, how many must there be where the matter is entirely forgotten ? These omissions are most likely to occur when intimate customers purchase. The dealer and his clerks r-rc all busy, when some intimate but impatient customer comos in. He wants a hoe, or a scythe, or a shovel, or some such article, which he selects and carries off, telling the dealer to charge it to his account. The only way to avoid omissions to charge such, or any t I 246 ZiOtses by ^Remnants — goods, is to trust Dothiug to memory, but to make at least a note of the matter, by a ticket in the money drawer, or in some convenient receptacle, when the charge cannot be made at once. •But preferably make the charge at once, even at the risk of losing the sale to the other customer who is being served. Losses which occur in the retail dry goods trade from unsaleable remnants of goods, though not precisely a total loss, as the foregoing, may be appropriately referred to here. With the best attention to the subject, on the part of the dealer, there will always be losses from this source ; they may be very considerable by inattention, and much diminished by care and prudence. Attention should be given in the first place to purchas- ing such lengths of pieces, especially of costly goods, a« will cut to the quantities which are ordinarily required, without remnant. And in the second place, in retailing the goods, the quantity which may be advantageously cut off from any piece should be considered before it is cut off". And even calculated so long beforehand that any piece which cannot be cut to suit the customer who is then pur- chasing without bad loss by remnant, should not be shown at all, at least not until every other effort has been made to suit without effect. As the consequence would often be that the customer's choice would faU exclusively on the piece which the dealer could not afford to cut in the length that would be required. In retailing valuable dress goods or other articles, rem- nants of which cannot be readily sold, except at a great sacrifice, it^ is a very good plan to mark on the ticket the length which may be cut from the piece, and as each prescribed length is cut off, the salesman runs a pencil mark through so much of the memorandum ; and nevei And the Sest Means to Avoid Them, 247 allowing other lengths to be cut — except with permission of the principal, who only is to decide whether it will be advantageous to cut the goods of a different length or not. As, for instance, a piece of dress goods of 52J yards might be marked 12, 13, 13^, 14, these being the ordinary range of length required for a dress. The first purchaser may wish \%\ yards, and can be accommo- dated, slightly altering the figures for what is left. So probably the second purchaser. Any change for the third purchaser requires more consideration. Observance of these two precautions will tend to lessen very much the number of remnants made in retailing, but still many will be made, and some special efforts are re- quired to sell them off quickly, as they are not only un- profitable stock of themselves, but often hinder the sale of other goods, through the customer fancying a remnant which is insufficient in quantity for her wants, and will not be satisfied with any other style. Of these efforts, the first is a prompt reduction in the price. Sometimes such a reduction will induce the pur- chaser of the last previously sold quantity to take the portion that would be a remnant ; though it can not al- ways be sold in this way without a too great and unpro- fitable reduction. But when a remnant is about being made it is at least always worth an earnest trial. The next effort will be to keep them in such a prominent po- sition as that they will be often brought to the notice of the customers as special " bargains." Every community has its "bargain" hunters, who will buy articles and find use for them afterwards. Sometimes such remnants can be manufactured into something more saleable. Thb, though, requires some tact and experience, and does not always succeed. It is a good plan to ticket the length on each piece, aad X 248 Importance of this Zeak, the aggregate price in round numbers of the whole rem- nant — not the price by the yard, as in the latter case there will often be a little chaffering about throwing off something from the measure — calling three and a half yards three yards, etc., taking up more of the salesman's time than is profitable. The remnant will often have all the net profit of the piece, from which it came, lying in it, and the dealer's ag- gregate profits of the year may depend largely upon his skill in selling them off advantageously. They should never be allowed to accumulate, and if the first reduction m price does not bring about a sale after a reasonable trial, the price ought to be further reduced. CHAPTER XYII. KEEPING ACCOUNTS. THE principal end sought to be obtained in keeping accounts in business, is to know thereby how much each debtor owes, and how much each creditor is to be paid. If the dealer has no knowledge of book-keeping beyond this, his books ought to stop at that point till he learns further. There is no greater waste of time and money in a small way, than that where a dealer employs a book- keeper or clerk to keep a complication of accounts in his books which he can not himself understand. The keep- ing of such accounts as " Cayh," " Merchandise," " In- terest," " Profit and Loss," etc., are exceedingly advanta- geous to a dealer, if he learns anything from them, but of themselves they add nothing to the profits of the year's business. And yet they serve a good and useful purpose, when understood, in, to some extent, proving the correct- ness of the other accounts, and in informing the dealer from time to time, as he consults them, of the progress of his business. And it is time well expended for a man ' who buys and sells goods to any extent, to thoroughly master the science, so that he can understand them. At a period in days long gone by, the author kept a set of books for an old dry goods merchant who never understood over one-half that was in them. All that he ever looked at was to see occasionally exactly what some man owed him, or what definite amount he had to pay. The " fictitious" accounts were all Greek to him, and yet with a stub of a pencil and a few smutty papers which he I'' 250 the Sook- keeping most to be preferred. carried in his vest pocket, he kept such an account that he could at any time tell in a few minutes how much mer- chandise or' cash he ought to have on hand, what had been made by discounting his paper, the amount of cur- rent expenses, etc., not, of course, to the exact cent, but with sufficient accuracy for his immediate purposes. To him, therefore, his method, so far as these accounts were concerned, was far preferable to the regular and more complicated " double entry " books which were kept for him ; as by his system he controlled his purchases from time to time, to the amount which his sales required and his expected receipts of cash would justify, and could readily tell when he had money in excess of his immedi- diate prospective payments, and the indebtedness of fu- ture months' which it would be most advantageous to an- ticipate, and generally was enabled to so conduct and manage his business that he made money. It is hardly necessary to say that he ought to have studied the science, and made himself familiar with the practice in the regular manner, as his business would afterward have been more easily and readily conducted. But until he had so learned it his svstem was preferable, and to any who are like him ignorantof the principles of "double entry" book-keep- ing I commend, as preferable, any plan which they do thoroughly understand, whether it be notched sticks, chalk scores, pencil memorandums or "single entry" books. They are commended as preferable, because the very essence and soul of the work is its comprehension. Ignorance of the principles and practice of " double entry " book-keeping, simple though they are, is astonish- ingly universal. A lawyer of standing in New York ci^, extensively engaged in the trial of cases as " reteree," where books of account were often introduced, while ad- mitting his own ignorance of book-keeping to the author, General Ignorance concerning the Science, 251 remarked that in all his experience in the many suits be- fore him, he had never met with a lawyer who so thoroughly understood " double entry " book-keeping, that he could elucidate the matters at issue from the account books often introduced. That they invariably had to employ a book- keeper as an expert to develop the testimony which the account books contained. A retailer that prided himself on his smartness and general intelligence, once in the wri- ter's presence showed his ledger to a creditor, as an ex- hibition of his systematic manner of doing business, re- marking that " in this new ledger he was keeping his ac- counts by " double entry," while the only difference be- tween this and his former plan of " single entry," was, that the ledger was ruled with " debtor" and " creditor" columns on one page, and not as his old ledger had been, with " debtor " on the left page and " creditor " on the right. It is, too, a very easy thing to go through a regular course of study of book-keeping, and learn the theory and be able to keep a set of books — that is to enter in the proper auxiliary books the original entries, and to transfer these under proper headings into the journal and ledger, and make out a balance sheet showing the results of a year's business, without having that intimate knowledge of the principles necessary to enable one to make that use of his books which they are susceptible of, in the daily transactions of his business. It is all very well for a dealer t j be able to know, at the end of each year, or half year, by balancing up his books, exactly how his business affairs are; but there are events occurring to a man in active business every month — often every week, the proper management of which re- quires that he should be able readily to make up from his books the result in whole, or in part, of so much of the year's business as has already elapsed since the last " balance sheet " was made. 252 y^iat is to be learned from the Account Sooks, The difficulty with a majority of those knowing a little of the science, who would learn more but find it hard of comprehension, is that they expect too much from it. They look for it to give definite results in each account, at all junctures. In actual business this is not possible in jome of the principal accounts, except when specially made up preparatory to balancing the books. The ledger, besides telling accurately what each man owes, or is to get, may tell definitely how much '' Cash " there is on hand, and what amount of " Bills Eeceivable " and " Bills Payable " there are ; but it cannot tell by the "Expense" account definitely, except at certain times, what the expenses of the business have been from any given period up to the moment, as there are often arrears of ex- penses unpaid, and accounts running against employees or others, which will be balanced by their salary at a later period, and all be passed into the " Expense " ac- count. Neither will it give from the " Profit and Loss " account any indications of the loss or gain, for the profits are rarely ascertained or entered till stock-taking, and the losses by bad debts may remain uncertain for months, and stand charged against the delinquent debtor. Nor can the " Merchandise " account tell what is on hand, as the profits on the sales and the depreciation on unsale- able portions of the goods, can only be known definitely at the stock-taking. Before that, and in the intermediate periods, these matters have to be estimated from a gen- eral knowledge of the whole business. Hence the best ' book-keeping in any ordinary business gives in many ac- counts — and these the most essential often in controlling or directing the management of the business — only in- complete results. And what is required of the dealer, is such intimacy with the books and their principles, in con- nection with'the business, that he can readily make up at The ^fundamental ^ute in jBook- keeping, 253 any time, in a few moments, the results on any special Item or account, which, in view of some meditated trans- action it is desirable he should know. Too often the business of those who even understand reasonably well the rules and practice of book-keeping, is like a prolonged battle, where they only get out of the smoke and confusion once in six months or a year, to look over and marshall their forces, count their dead and wounded, inspect their trophies and note their vantage ground, if they have gained either; whereas they should be so situated as to see from day today, if necessary, how the battle is going— when it is desirable to recede, when to advance. Otherwise much of the result is luck and chance, and is unfavorable, which under wiser generalship, would have been turned to success, as the issue of forethought and calculation. In keeping accounts, the fundamental rule is to make every entry so clear in all its parts, and so full— givmg the names of the persons, the several items, and all the various details in the original entry, and the proper head- ings alphabetically indexed, with full reference to the page of the original entry, when transferred to the led- ger, so that any competent book-keeper can readily un- derstand the transactions recorded, and trace them through the various books that they are entered in, without the necessity of explanation from the person making the en- tries. And the neophyte in the science may, with advan- tage to his thorough training, keep this question constantly in mind, as he pens his various entries: " Are they so full and plain that a competent book-keeper can clearly under- stand their intention and scope without my explanation ?" Correctness in keeping accounts is a matter of the first importance, and is only attained by special care and atten- tion, directed to that end. To attain this correctness it Afk I 254 Jmporiance of Correctness, is essential that every transaction which it is necessary to keep an account of, should be entered by the dealer at once, and not be trusted even momentarily to the mem- ory. The entry ought to be regarded as a part of the transaction, and by no means the last part of it either, as is too often the case, when the dealer's attention being drawn to other matters, there is always danger that the proper entry will be forgotten. As an illustration: in the taking of money in the settlement of an account, the first thing done after the money is received and counted, should be the making of an entry in the book, after that the re- ceipt and the change, if any, can be given ; or in a sale of goods on credit, the entry should be made before the goods are tied up — and by all means before delivery of them to the buyer. Sometimes it will occur that the goods are in the hands of the buyer before it is known that they are to be charged to account, and the omissions to charge goods sold on credit, or errors in the charge are most likely tc occur under such circumstances. It is therefore a good plan to use a little form in the charging of goods, such as having them always present in one lo- cality while the '* entry " is being made, so that they may be compared with it afterward. When this custom prevails, an enquiry is appropriate, prior to the actual delivery of tlie goods to the customers, who are likely to want credit, as to whether they wish the goods charged. When the goods have been actually delivered, and such a custom is known, there is no im- propriety m the dealer again taking the articles in his hand or possession, to carry to the desk or locality where the entering is done, so that the charge may be made in a regular manner. The only good that is to be found in many of the forms, and much of the routine in more important affairs, is that f>et eating Arithmetical Errors, 255 a habit is acquired which unconsciously leads to the per- formance of a duty that might otherwise be forgotten. It is a good plan to have contiguous to the desk where the books are kept, a small platform or counter, separate and marked off from the ordinary sale counter, where goods sold on credit are always to be placed, if not too bulky, while the " entry " is being made ; and still another location, where they are placed afterward, waiting for the customer to take them, or their being sent away. Such separate locations need not take up much room when the store-house and business is of limited extent, but they are valuable adjuncts in the plan of "a place for every- thing, and everything in its place." It should be the pride of every dealer to have his books uniformly correct, and he ought to consider himself dis- graced by every error brought to light in them ; and if errors and omissions are frequent, he might seriously question his ability to conduct his business. Arithmetical errors, and errors made in transferring from one book to another, are best detected by a careful repetition of the calculations, and checking off of the items transferred. Without this review errors will be frequent. The omissions to charge goods, however, can not be discovered by any such means, and the reader is referred to the latter part of the preceding chapter, where this subject was treated of under the losses of the business, for other plans in connection with those above mentioned, to guard against this neglect. Among all the errors and omissions of retailers in keeping accounts, none are more prevalent than those connected with the account of their own indebtedness. It would be difficult for many — perhaps one-half of all who retail goods — to tell at any definite time when called on, how much they owe their creditors. The loose habit 1? / 256 Omission to C?'edil Goods. ihey permit with the invoices of goods they receive, and generally the inattention to a proper system of receiving goods, the former frequently found days after their receipt filed away in the coat pocket of the principal, or his clerk, or carelessly stuck away in the most convenient comer or drawer; and the latter taken in and placed on sale without ajiy, or but a cursory examination and com- parison with the invoices, can only produce uncertainty and error in the accounts that are based mainly on such memorandums . It may well be doubted whether one-half of the " false pretence" cases, where retailers, in seeking credit, have made statements of their indebtedness, subsequently found to be erroneous, have not their origin in ignorance. True, a man has no business to say that he owes only a certain sum, unless he knows surely he does not owe more, and it may be legally right to hold him to the statement made in ignorance, just the same as if made in wilfulness. The omissions to credit persons for goods purchased can generally be avoided by the adoption of proper arrange- ments and plans in the receipt of goods and invoices. When the character of the goods dealt in will admit ol it, there should always be a special place of deposit for ar tides coming into the store, where they may remain until regularly examined and compared with the invoice. The invoices received with them ought to be first exam- ined by the buyer of the goods, to see if the prices are cor- rect, and the quantities charged the same as were bought, and if found correct, his initial should indicate it. Errors, if any, should be noted on the invoice, which ought then to be entered in an invoice book ; an essential book in the simplest form of book-keeping and in every business. II the items are many, it will sometimes cause too much de- lay to copy them all in the book at the time, and tempo The Inroice—iis IDispositiona. 257 rarily it is sufficient to simply write the creditor's name in the invoice book, under its proper date and place, and then coimt oflF the number of lines or space the items will oc- cupy, and enter the gross amount of the invoice at the bottom of these reserved lines ; marking at the same time the invoice uniformly in one place with the page of the in- voice book on which this entry is made. The invoice is then ready to be used for the examination of the goods. In houses where a very large business is carried on, the invoice is never suffered to go out from the control of the person whose duty it is to enter it, all examinations of goods being made by the use of the copy in the invoice book. This plan is an excellent one, where enough clerks are kept to have the invoices at once copied into the in- voice book, or where, as in importing goods, the invoice ia received generally several days before the goods are in store. But in ordinary business the examination of goods with the original invoice directly in hand, will be found more expeditions and convenient and, by this plan, fully as free from the danger of omissions to credit the purchase as the other. Even if there is a delay in getting back the invoice, from those whose duty it may be to examine the goods, the skeleton entry in the invoice book is a re- minder which can not be passed over. A.t the earliest period possible the details of items should be filled in, exactly copying the invoice. Whatever errors or deficien- cries were found in the goods ought to have been noted with a pencil on the invoice, at the time of examination, and should now in Hke manner be noted with pencil at the bottom of the copy in the invoice book, and the in- voice returned for correction. Space should always be reserved between the different entries of invoices for the subsequent insertion of such deductions or corrections as have been allowed or settled niv>ii after communica.ii 258 Account of Ooods 'fteceived Withoui Invoice. with the party from whom the goods were purchased* The invoice*book should have the page wide enough to admit of an extra money column on the extreme right, into which nothing else is inserted but the full amount of the footings after all deductions and corrections are made, and c&re should be taken that this full amount is not entered in the outer column until the in- voice and goods are examined, and corrected if found in- correct. The presence then of the total footing in this outer column will indicate that the entry is ready to be posted. Without this or some other check, there is dan- ger that the entry will be posted to the credit of the sel- ler before due corrections are made. Where there is some delay in the correction of the invoice, as is often the case, it is best to post the entry into the ledger to the proper credit, leaving the amount blank, to be subsequently in- serted when the invoice is received. Unless this is done, there is a further danger that this invoice will be passed over, and other invoices of a later date from the same house posted in the ledger, throwing this entry out of proper place, if no more serious omission happens. (See Appen- dix for specimen of invoice entered and marked for cor- rection in this manner.) When invoices are kept by pasting them in a book, as is sometimes done, the place for them in the book should be marked out — the name, date and amount inserted, as directed for the skeleton entry in the invoice book, and after correction, they are to be pasted in the place so reserved. It will sometimes occur that goods are received with- out an invoice. The regular course would be to leave them in the ordinary receptacle or place for depositing goods coming in, until the invoice arrives. It often hap- pens, though, that the goods are in immediate demand, and the delay in receiving the invoice will cause a loss of Crediting Customers for J^amily Supplies, 259 sales. If it is thought so, and the buyer definitely recol- lects the details of price and quantity, a memorandum can be made of them, which may take the form of the regular invoice, and be entered in skeleton form in the same manner as the original would have been, to be filled out from the genuine invoice when received. Greater care should be taken in the examination of such goods, and after one person has made out a memorandum from his own examination, another should take the memoran- dum and re-examine the goods as from the genuine in. voice. Then, when that invoice is received, if it diflfers from the memorandum, satisfactory evidence is at hand of the true quantity, even though a part or all of the goods have been sold. When two or more persons are engaged in the exami- nation of the goods of one invoice, it is a good plan for each to place his initials on the line of the items examined by him. If subsequently any errors are found, he alone should bear the blame who is in fault. Another frequent omission in keeping accounts, is that of the comparatively minor credits, which are to be ap- plied in reduction of some of the customer's debts, for ar- ticles furnished by them to the dealer for his private ex- penses, as the bills of the butcher, baker, shoemaker, phy- sician, etc. It may not be always possible to get the de- tails of these matters, but whenever the amounts are known they should be credited and duly charged to the private account of the debtor, and when they cannot be definitely known without great trouble, settlements should be insisted on monthly or quarterly at furthest, even though the balance found due on either side is not paid. Long-running, unsettled accounts of this kind are almost certain in the end to prove the destruction of friendship between the parties. One or the other is likely to be m I 260 TTie Deceived Retailer. surprised at the magnitude of the account against him, and the expression of his doubts of its correctness, often leads to hard feeling before the accounts are settled. A retailer who was in arrears of his payments, and whom I was advising about the course he should adopt in view of such arrears, had accounts of this character on his books, which had been running two and three years without settlement, or the entering of any credit for the articles furnished him, some of the accounts amounting to two and three hundred dollars. He seemed to have, and thought he had a good deal trusted on his books* which, he said, if he could only collect he would be able to pay up all his arrears of indebtedness. I was his creditor for several hundred dollars, and was anxious to get some of these outstanding accounts transferred to:me, which I could place in a collector's hands to secure my claims against him, and which he was willing to give. But as I turned over leaf after leaf of his ledger refer- ring to one large account after another, and was informed that this was due from a blacksmith who had an account against him of about an equal amount, the next from a farmer who had furnished hay and feed for his horse, an- other from a physician who practiced in his family, and 80 on through a long catalogue, really embracing all the large accounts, and sufficient to have covered his family expenses for two or three years, I found that there was really not one-half of the amount due him which appeared on his books, and was fain to put up with a larger number of small accounts. When a dealer keeps such accounts running on his books, without the credits being entered that should be, he soon gets an unreliable record. He is misled on one side by the appearance of money due him, and on the other by his private expenses seeming to be less than they £:eepinff account of Cash Sales, 261 really are, and is therefore deceived on both sides, and is likeiy to soon come to insolvency in his business. A deaier deceives himself somewhat in the same man- ner, when he continues to keep on his ledger claims against persons which he is unable to collect. All such accounts should be promptly turned over to the " profit and loss " account. This need not hinder the keeping of a memo- randum of them in another book as a list of bad accounts, which he may occasionally look over, to see if something can be realized from them. But so long as they stand in his ledger, apparently as good accounts, their tendency is to deceive him. In any summing up of the outstanding debt, they swell the aggregate, and sufficient deduction is rarely made for them. A man may be only a knave when he deceives others, but when he deceives himself he is likely to be both a knave and a fool. The practice of keeping an account of the details of • cash sales, is one at present mostly confined to such houses as do so large a business that they require a person solely to take the cash— the cashier, as he is called— and it is mainly as a check on the cashier that these details are kept. But the custom or plan is being introduced among dealers of even a limited business, with great advantage. There are many good reasons why such an account should, be kept by a retailer, who needs no clerk to assist him in selling his goods, though it is more necessary and advan- tageous with each addition to the clerical force. The most convenient form for keeping such details in small concerns, is that of making a pencil memorandum on a ticket at the time of the sale, and placing it on a file when the money is put in the drawer. As a check on the money taker, it is sufficient simply to name the aggregate amount of each sale, but it is susceptible of a larger use than this. It takes but little 262 The ''Ticker' 'Plan^ more time to give enough of the details of the sale in an abbreviated form, to be very useful in many ways to the dealer. It enables the cashier or money-taker to go over the calculations, and correct errors ; it often prevents dis- putes with the customer, who may come back in a day or two, forgetting perhaps some article purchased, and claiming that there was a mistake ; it is often useful to the dealer in enabling him to trace out some article of his stock which he fears has been stolen ; it enables him to count up the gross profits every day if he will, or as often as he desires, and thus to know whether he is doing a profitable or losing business ; and it may be useful as a check to prevent fraud by the salesman in giving goods to a confederate at much less than their value. The only current objection to these details is, that they take up too much time. It will be found, though, after a week's practice, to add very little to the work of the salesman, who is always under the necessity of counting up the total amount of the articles sold, which should never be done even in the most limited extent, except by arithmetical operation with a pencil or pen — as the cus- tom of reckoning mentally, the sum of two items even, is open to grave objections. When permitted with a few articles, it will be used with many, and the correct- ness of such calculations can not readily be verified. If, therefore, the rule is adopted, that the salesman shall use a pencil in counting up the sum of the sale, and he has blank paper conveniently prepared, the extra time taken in writing down the number, quantity, name and price of each item will be hardly perceptible in the most hur- ried business. The blank paper for such tickets costs but little in money or time for preparation ; it should be cut to'two or three sizes, as experience may show to be most desirable, and placed at various localities around the coun- Its Advantage and Management, 263 ters, so as to be conveniently within reach from any point where the salesman may be engaged. The initials or some particular number to designate the salesman, the day of the month and the customer's name, if known, should also be written on the ticket, and to prevent confusion on a small ticket, may all be placed on the back. (See Appendix for a form.) A ticket system, by which it is known exactly how much each salesman sells each day, soon begets a spirit of emulation among the clerks, each one being desirous of surpassing his fellows in the amount of his sales ; and its adoption will be often found to create new life and activity in a business where all was before listlessness and inac- tivity. These tickets should, after careful revision, be strung on a twine, as nearly in the order they were taken in as possible. Each day's number may be separated from the preceding by a piece of stout card, and if the card be dated, a ready reference can be made to each day's tickets when wanted. The cash account should always be made up in the even- ing of the day, after the sales are over, when the money taken in is put away for safe keeping, and by all means ought to be done before the business of the next day commences. The calculations on the tickets should be gone over, if not done as taken in, and the gross amount entered in a cash sales book, in such a manner as to show each salesman's sales, and the aggregate of tne whole day's transactions for cash down ; which carried on from day to day will give the aggregate for each month or for th? year if desired, and will also form convenient records tor comparison of the business in succeeding years at the same period. (See Appendix for form of this Cash Sales Book.) y 264 Tosting^the Accounts l>aily. Attention to writing up the account books every dav, besides the advantage of always having everthing in order for immediate reference thereto, makes the duty a comparatively light one. Twenty to thirty minutes will then in ordinary cases of moderate business, suffice to ar- range all the work of this kind; whereas if left over for a week or two, or even longer, as is too often done, it be- comes a tedious and disagreeable work, occupying per- haps half a day to the detriment of the business of sell- ing during the half day, and the further disadvantage of having the accounts meanwhile in such shape that it is quite a labor to find out if occasion requires what a cue^ tomer owes. I have seen in my experience, a retailer's books a wholo year in arrears of posting. The man thought himself wortb some five or six thousand dollars, but failed six months afterward, and could not pay twenty-five cents on the dollar of his indebtedness. It was very " hard times" all the time in his neighborhood. In the chapter on giving credit, mention is made of the advantage to be derived from having a definite period agreed on at the time of sale, for the length of credit, so that there will be no misunderstanding as to when the debt is due, and it ought to be a part of the book-keep- ing to take note of this maturity of the credit. It should not only be noted in the sales book at the time of and with the original entry, but should be transferred in post- ing to the ledger, so that the maturity of the account can be seen as readily as the amount of it. And so that collection can promptly be made, or at least attempted, when the account becomes due. When the accounts are very numerous, it will be found very convenient to have a memorandum book of '* ac- counts receivable," and even when they are not many, if Memorandum of Accounts Receivable/* 265 it is customary to sell bills of goods on differing times of credit, it is desirable to have a book of the kind, so that the dealer may readily see how much will be due him from outstanding accounts in any particular month in a series of months ; upon which, in part, he must often base his calculations for paying his own indebtedness, or such as he may need to create. Such a memorandum can readily be made, if a regular book is not kept for the purpose, by taking a ledger index, such as comes bound separately from the ledger, lettered on the margin one letter to each leaf, and ruling it with money and date columns, one set for each month, leaving a wide space on the extreme left for the customers' names. (See Appen- dix for a form of one.) The entries in such an account should be made at the end of each month, by going regularly over the ledger and transferring the accounts, as posted, into the column of the month they fall due, with the day of the month in which they mature, or the average date if there is more than one charge. At the same time such previous ac- counts as have been paid during the month may be marked off; by simply dr-awing a line through the figures. If the width of the paper admits of it, a marginal space on the right can be reserved for noting down any matter of in- terest connected with the account, such as payments in part, or promises to pay at some special day. As such a book would be really only a memorandum book, the monthly footings and the marginal notes should be made in pencil, so that they can be altered from time to time as circumstances require. It often occurs that customers ask for credit on goods as a temporary matter, being willing to pay in a month or so, and do not care to ask for the formal credit of a specified time. The dealer has a difficulty in deciding ! \ 1 266 T/ie Maturitj> of an Zndefinile Credit, when the account may be considered as due without of- fence to the debtor. The debtor waits for the account to be sent in, while the dealer is fearful of sending it lest it m.ght displease him, and thus the credit runt on much lTcreate""T"''T''l^"*'^^""^ "'"'" ^'^ "^^^^ was c.eateu„_ao meet such cases, it is a good plan for the dealer o post up in some conspicuous place oyer h.s desk, where all his customers may see it, a neatly writ- Zdl ''""': T^' *" ""^ '^"'' "•^* " '^''i'O''''^ ^old on crecht,on which no specified time is given, must he paid for wuhm three months," or such shorter or lon9 267 always needs to know, it will be found that the informa- tion is obtained in this way with half the labor. It is true that it is more labor to keep reckonings of this kind, to guide the way along, than it is to dash ignorantly through in the dark, which the dealer generally does if such accounts are not regularly kept. It soon becomes too much trouble to sift out and sum up the results he wishes to ascertain on any special occasion, and he there- fore omits it, risking the action contemplated on the hope that the facts are such as he would have them ; when a regularly kept memorandum or account would show him definitely how matters stand, and whether there is really any ground for his conclusions. A couple of hours at the close of each month, will or- dinarily suffice for making up these memorandums, and even if it should take twice as long, the time will be better spent than it often is in holding political or other disputa- tions with customers and loungers. At the close of the current year, it is very essential that the books should be balanced up and an inventory taken of the goods on hand, so that it may be known ex- actly what progress has been made during the year. Even this inventory is very frequently omitted in the retail trade. " It is too much trouble " — " I can't spare the time " — '' It will not make the goods any more if I do take an inven- tory." These are the common excuses for not doing the work, and possibly to the most of those who thus excuse the omission, it would be a superfluous work, as they would learn nothing by it. It woul(^possibly, in their case^ only serve to gratify a childish curiosity to know just how many dollars worth of goods they have, and for that pur- pose is as well omitted. But when it is made a part of the work for ascertain- ing the profitableness of the business for the year, and is J 268 Marking 1>oh'71 Unsaleable Goods, also treasured up for use in future years in the calculation of the comparative profits of different years, and thus serve as a guide to direct the onward course, it is of pri- mary importance. It is impossible for a retailer to know with any cer- tainty, at the close of the year, whether he has made money or not, unless such an account is taken. It is not only in this view, however, that the taking of an inventory is commended. Being a regular , and meth- odical inspection of the stock of goods, it should always be availed of to especially note all goods which are re- maining too long on hand, and to ascertain the cause for such detention, and the best method to dispose of them. And it should therefore never be left entirely to the sub- ordinates or clerks, whose chief aim would naturally be simply to take a correct account of the quantities and cost of the goods, while it is really the value of the goods that is wanted. This value can be given j^roperly only by the proprietor after a critical examination of each ar- ticle, and a comparison, if necessary, with other goods of similar use and purpose which are saleable. There is no time so appropriate for a general overhauling of old goods, and marking down such as seem to require it, as at the inventorying. It is also well at this time to reconsider the arrange- ment or location of the goods on sale ; to bring more prominent such as have been less freely sold by reason of their secluded position, and generally to review the whole plan and arrangement for the exhibition and sale of the goods. The omission to take the inventory, or even undue haste in running through it, will often prove to be the omission of all this useful work. With the inventory correctly made out, and showing Items Vsefut to ^eaord for Reference, 269 the real value of the goods, there is no difficulty under any system of book-keeping which is correct and com- plete, of making up a " balance sheet " or schedule of the assets and liabilities of the dealer, which on being com- pared with that of previous years will show him the in- crease or decrease of his capital. This ought to be care- fully and accurately made up and preserved from year to year, that it may be uslmI aa occasion requires as data to guide or Itlijfct future busiiioss. For tbesc pur[)oses the " balance sheet," as usually made out to show the capital by a comparison of the "assets" with the "liabilities," and through this the net profit or loss of the year's operations, is quite inadequate ; as it does not give all the details which are necessary to enable the dealer to avoid the errors of the past, or guide the future course. There are several other matters, which may well be incorporated into the " balance sheet," that are to be considered and properly adjusted to and with each other before this calculation for the future, or comparison with the past, can safely be made. These items are " the amount of sales for cash " and " the amount of sales on credit;" " the gross profits on the sales," "the store expenses," "the private expenses," ** the losses by bad debts actually incurred during the year," " the amount estimated for losses on outstanding accounts," and " the gain or loss by interest and discount." The profits of a year's business may be due to a favorable interest account ; which is favorable, because a larger pro- portion of cash sales enabled the dealer to discount his bills more freely : or a disastrous year may have been caused by heavy losses from bad debts ; resulting either from too great a proportion of credit sales, or from out- standing debts of a previous year on which too low an estim ite for loss was made at the close of the year. \ 270 TAe ^nd and Aim of ^ook-keepinff* The dealer, who would obtain the full benefit of his experience, must look into the causes for the profits or loss of a past year's business ; unless he does, he has no safe guide in his experience. And when the schedule of the year's business shows all these items, in connection with what is ordinarily in the balance sheet, the cause for any deficiency or any unusual prosperity can be readily seen. In conclusion of this subject, my readers are cautioned against the too current opinion that the abilijy to keep accurately the accounts and books of a business, is evidence of business ability, or is to be regarded in any respect as supplying the want of skill and experience in the actual and practical operations of buying and selling. Good book- keeping tends only to save and turn to the best use that which is already made, or by its records of the past throw some light on the future for the dealer's guidance. The best kept books can never put one dollar in the cash drawer, but they may save hundreds from unnecessarily going out, if there has been sufficient talent in conduct- ing the business, to put them in. Careful scoring of the shots in the target, will enable the marksman to so vary his aim that he can each time come nearer the mark, but all the scoring will no^ itself put a ball in the target. CHAPTER XYIII. EXPENSES. AS there is not much disposition generally to retain clerks when there is nothing for them to do, business ex- penses will to a great extent regulate themselves. Still there is some difference in the proportional expense which different men incur in doing business. One feels the ne- cessity of working arduously himself — of being early and late at his business — and at the head of everything. An- other from indolent habits, or because he has false ideas of dignity, or from other causes, leaves many of these de- tails to be looked after by a sort of head clerk. The for- mer, besides having his business better attended to, and being more familiar with its details, thus saves — if not the full salary of such a head clerk — at least the difference between that salary and the lesser one of a lower grade clerk. Such an attentive proprietor also sees and arrests more promptly any unnecessary waste which may be going on in any department of his business, as leakage or damage to his merchandise, unnecessary use of gas or lights, etc. The tools or utensils of business last longer with him, be- cause taken care of. Even a gross of steel pens will la^ twice as long in such a man's business, as in one who pays no attention to little matters. Some people may think these are too trifling details for a merchant to attend to, but if the indifference be once reached which looks with equanimity on the unnecessary waste of even a cent's worth, depend upon it, it is a propensity that will by and •I 272 True Liberality and 7rue £^conomy. by increase, and lead to an unprofitable augmentation of every expenditure in the business. There is a wide difference between this careful atten- tion to prevent waste, and that parsimonious and exact- ing method of dealing which every liberal man condemns ; although by some people who desire to be thought " whole- souled fellows," they are often confounded, and alike con- demned. A man should care for the stoppage of a leak in a cask of oil, though by the leak he may not lose more than a quart of oil, while at the same time he may with propriety give away that much in retailing out the cask to insure good measure to his customers. The waste enures to no man's profit, while the good measure does, and this may perhaps be taken as the criterion to judge of such matters. If the thing gratuitously parted with benefits a customer, it may be called a liberality ; if no one is the gainer thereby it is a waste. A dealer should be careful, too, that he does not run into an error in the opposite extreme, and think that sav- ing is making, as is sometimes done. I recollect to have once seen a dealer in a small room in the rear of his store-house, straightening some crooked nails that had been drawn from the covers of the cases in which his goods came, so that they could be used again, while in plain view of him were customers standing at his counters waiting their turn to be served. If a dealer could find no time more favorable for such work, it would be econ- omy for him to throw his crooked nails into the street. The man was really taking a little recreation— deceiving himself with the idea that it was a work of economy he was laboring at. We may often deceive ourselves in this way, and be amused in untangling knotted pieces of twine, straightening nails, and picking up odds and ends, when we could be more profitably employed in making money by attention to our legitimate business. The l^ate J^xpenses sho uld Scar to Trq^ts, 273 The expense of rent, though considered somewhat in a previous chapter on " choice of location," requires look- ing at from another point of view. It should always bear a relation to the amount of sales and profits. We sometimes hear one remark who proposes to take a choice location at a high rent, " it is worth as much to me as to any one." But this principle is an unsafe guide. If other people's calculations as to what a store may be worth to them were always correct, it might be safer to go by their judgment. But it is oftentimes found that the rash and inexperienced are the ones most prone to take such expensive localities. And it is often therefore equivalent to saying that we with our best information and experience will be governed in our business course by those who have neither. When a dealer is doing well, it is prudent to rather sacrifice a considerable prospect of doing better, which will involve him in a much heavier expenditure for rent. Precisely what rate proportional to profit should be considered reasonable and prudent, will, depend some- what on the kind of goods sold, and the character of the business ; as some kinds of business can not be success- fully carried on except in prominent locations, where rents are generally high, and if unprofitable there would probably be still more so in a location less conspicuous. Ten per cent on the gross profits of a retail business ought not ordinarily to be deemed too great a rent, while twenty per cent may be regarded as excessive. And yet if the other business expenses are not very heavy, and the business is materially more profitable in a location requiring higher rent, such a proportion might be under- taken with fair prospects of success. In the aggregate, a retailer's total expenses, including those of his private livini^, ought not to exceed one-half ( ■ isssa I 274 Private £!xpenses of the dealer. Zivinff JTit/tin the Income, 275 ftie gross profits of his business. There will ordinarily be losses from sources heretefore referred to, which will take from fifteen to twenty-five per cent more of the gross profits to cover them, even in a very carefully conducted business, leaving only from twenty-five to thirty-five per cent net of the gross profits. If care is not taken to keep down the expenses, even this is readily absorbed, leaving no profit to the dealer. It is, however, more especially, the matter of private expenses that I intended to discuss in this chapter. Too often these are rated not according to the income from the business, but the income is hardly considered at all. The dealer and his family live as he thinks is pro- per to their station, or as their neighbors and friends do, and then he strives to make the amount of his expenditure from his business. If he succeeds, well — if he does more, and makes money beyond his expenses, better — but if unsuccessful — " well, he must live," " the world owes him a living, any way," " he works hard enough for it " — and if his expenses exceed his income, so much the worse for his creditors. It is not too much to say that one-half the failures in business among retailers have their cause in extravagant expenditure. Not extravagant living ; for it would be hard for a man with an ordinary family to live extrava- gantly on from one to two thousand dollars a year, which is perhaps the average expenditure of the class I speak of. But the expenditure is extravagant when it exceeds the income, just as much so as it would be in an ordinary day laborer earning but one dollar a day, to spend by running in debt twice that sum in living. It can honestly only be called swindling, for any dealer ♦o continue from year to year to expend more than his net profits warrant, when the result at last is to be that those Who credit him will not be paid. Ignorance of his income can be no valid excuse, when the expenditure is kept up year after year. And when the ignorance is willful, as in the case of a dealer who suspects that he is not making his expenses, and who yet refrains from taking any inventory, or^from examining closely into his own standing and ability, lest the insolvency which he fears may be posi' tively proven to him, such ignorance is criminal. it has been so often exemplified in our experience, tha'u " a man who lives on a salary never grows rich," as to have passed into a proverb. The reason undoubtedly is the tendency of most men to live up to their income. And the cause why prudent men in business do sometimes grow rich, is because their income being uncertain, they confine their expenditure to the lowest probable sum that it will be, so that they may be sure of not living beyond their income ; and the dif- ference between tliis low estimate and the actual profit, leaves at the end of each year a surplus— greater or less, according to the prosperity of the year's business. This surplus, small though it may be, is the nucleus, around which if properly kept turning, a fortune soon gathers. There is no good reason why a man doing a retail busi- ness of any kind, should, if the profits of his business are no greater than the wages of a day laborer, live any more expensively than the laborer. His occupation is not so especially a necessary one to the community, that the laws of morality should be changed to suit his ideas of what 18 appropriate to his station, so that what is fraud in an- other is excusable in him. It is besides always judicious for a retailer to adopt a moderate and unobtrusive style of living, even if he can afford to live more ostentatiously. When a man in busi- ness adopts a style of living and expenditure far beyond 276 deducing J^xpetises by Stern McessUy^ the reach of his customers, it often creates a feeling among them that he is making too much profit out of them, and this reacts injuriously upon his trade. The sympathy and good wishes of his customers are withdrawn in a mea- sure from him, and bestowed on those of his rivals who seem by the economy of their living to be in greater need of their patronage. Besides it is much easier, as all the world knows, to increase one's private expenditure, than it is to reduce it ; and there is danger in increasing these expenses too fast, even though the profits of the business may seem to well warrant it. There is always an uncertainty regarding the continuance of prosperity in business, that should not be lost sight of, lest by the time the increased private ex- penses catch up with the increased prosperity of the busi- ness, the latter may receive a check, and be materially re- duced, perhaps even below its former extent, while the private expenditure can not be so readily brought down. This is only reduced by stern necessity, and that " stern necessity " is too often never found short of insolvency. It is of the character of that referred to once by a smith- ern trader, who told me " his customers rarely paid their notes except under a stern necessity, and that was when the sheriff was at the door with the execution in his hand." One reason wny the private expenses of a retailer are apt to exceed that of other people as prosperously en- gaged in other occupations is, the possession, in the trafiio of the business, of so many of the articles of luxury and convenience in daily use by his customers, and through this possession a continuous temptation to enjoy the use of them. If, for instance, one customer A indulges in one article of this character, B in another, C in a third and D in a fourth, each foregoing the use of what the other The dealer's Temptations to Extravagance, 277 three purchase, the dealer, regarding himself as well able to indulge in such things as either of them separately, man- ages to combine in his expenditure all the luxuries and comforts enjoyed by the combined four. Possibly the requirement that a dealer should have a strong belief in the necessity for, or advantage to be de- rived from, the use of any article in which he deals, that he may more pointedly and heartily commend it to liis customers, reacts too easily on himself, inducing him to feel too greatly the want of the article in his own case. If this be so, it shows the importance of keeping these desires in check, and the duty of limiting himself in the use of such articles, the expense of which he may not be well able to afford ; and when strongly tempted to incur any Buch expense, to specially reflect whether his business is profitable enough to permit the indulgence in so many luxuries. Perhaps in nothing is this temptation so great as in dress ; but there are many other things of convenient use in families, that are also seemingly indispensable, par- ticularly new inventions which promise greater economy or convenience in use, than the articles they are designed to supplant. One of the influences tending to induce economy in personal expenditure in small matters, is the want of ready money to purchase them. We often forego the purchase of an article that seems very desirable to have on this ac- count, not wanting to incur a debt, or perhaps having no credit established in the store where we see it. Amonjr retailers who may be supposed to always have on hand either the article itself or sufficient money to buy it, this re- straining influence is of course generally wanting. The practice, which is too prevalent among small dealers, of using the money drawer as their private purse, and taking therefrom whatever may be required to meet the mo' c\^ 278 Advantages of a 'Private ^htrse. II I raentary want — either fancied or real — greatly encourages extravagant expenditure. No matter whether an account of such money be kept or not, the practice is a bad one. As also is the habit of taking for private use articles kept for sale, simply charging them to an account against the dealer ; or still worse, as is often the case, making no charge of them at all. An example of this class is the retailer's wife, of whom the story is told, that on being asked by an acquaintance what a certain article of dress she wore cost, answered, " Oh, it didn't cost anything, you know my husband keeps store now, and I got it there ! " When a retailer has a large family, and this idea prevails among them, even in a limited degree, it will not be difficult for him to expend more than the profits of his business. As an aid in restrain- ing undue expenditure, it is an excellent plan for a retailer to draw from his business weekly or monthly, such regu- lar sums as by careful calculation at the commencement of the year he may conclude he can afford for his pri- vate expenses, and with this make from time to time such purchases from his own stock or elsewhere, as he re- quires or this sum affords ; and avoid running any ac- count with himself or others for such private expenses. The state of the private purse will then frequently determine the question as to the propriety of any con- templated purchase. If such a course were adopted aniyision of duties. 2S6 little common sense induces this kind of division of re- sponsibility in most cases, but it is oftener the result of chance and circumstance, than it is of a calculation or estimation of the peculiar ability of the partner to pro- perly manage the department he takes charge of. Mod- eration is to be shown by the other paitner who has not charge of the department, in urging his advice upon the one who ha,s the charge, lest the latter be induced some- times to act contrary to his own judgment, with a desire to carry out the wishes of his copartner. Such a course, though it may in some instances prove beneficial to the concern, will in the end be injurious by taking away from the managing partner the burden of responsibility lor the success of that part of the business under his own super- vision. Probably this influence is most frequently exer- cised in unduly magnifying or dwelling on the. difliiculties that lie in the way of any contemplated action, inasmuch as it is not so hard to induce a man to forbear in any given case in which he may be disposed to act, as to in- duce an action in a similar case when he is disinclined. The precise extent to which advice may go in such cases, depends a good deal on the disposition and character of the partner advised. Some men are naturally so timid and cautious about entering into any undertaking, that a word or two of doubt from even an indifferent person completely dampens their enthusiasm, while others more rash and headstrong need a clear and repeated demonstra- tion of the impracticability and hopelessness of any pro- posed undertaking before they will give it up. But as before remarked, this advisory influence should never be carried to the extent that the acting partner on the occa- sion can feel rid of personal responsibility for the success of the undertaking. In dividing up the details of the business in this way 286 2oo Much Indejpeiidenee, The Necessity /or a Zeader, m «( so that each partner has a certain portion of the business, for the proper management of which he is held respon- sible, it is necessary to guard against a danger of the op- posite character which often finds countenance in partner- ships, especially where there are several partners, of too great an independence, or a forgetfulness of the depend- ence of the business as a whole, on the combined skill of the partners. Each partner gets into the habit of attending to the duties of his special branch, without sufii- cient co-operation with the other partners. Indeed, they often become jealous of any interference^ as they would designate a partner's solicitous enquiries about their ac- tions. The fear of this interference induces an unwilling- ness to give counsel to the other partners in their depart- ments, and thus the chief advantage of the copartnership, — mutual advice and assistance — is lost to the business. The whole business is a unity or one, and should act from one centre of thought, though that centre be the com- bined skill and intelligence of a dozen men. Each de- partment should be in thorough subjection toJ,he exi- gencies and requirements of every other department. In a copartnership where one attends to the buying, another to the selling and another to the finances, each inde- pendently and without full consultation with the others^ it can not be expected that the purchases will be made with as strict a regard to the demand, or the means of payment, nor the sales made always in view of the state of the market and the supply, nor the finances managed so as to have no lack of money, and yet always keeping the capital employed, as when there is a full and free in- terchange of mutual advice from each one to the others, or in the absence of this, a superior head over all. Perhaps the difficulty referred to is more likely to oc- cur in partnerships where there has been originally such a superior head man or principal partner with younger copartners, and the principal partner subsequently with- draw^ing from the business, leaving the other partners, each accustomed to attend to his department, and all about on an equality of capacity and experience. In such a case, the counselling partner having left, there is no one sufficiently gifted to precisely fill his place, and to combine, arrange, and manage the relations between the several departments, which can only be well done by some general knowledge of them all. Time anvi trials usually bring out the best man of the firm, and if ambitious he assumes, or if modest, is called upon to assume the position of leader. This best man would, however, sooner be brought out, and often with less loss to the firm, if the necessity for him were appa- rent from the first. Commonly the burden of business does not rest so heavily on a man who is only a partner in a concern, as when he is alone. In the partnership the debts do not seem to be his, nor does the loss of reputation, when the business happens to be a failure, seem to bear so heavily on him. Too frequently partnerships are therefore exem- plifications of the old saying, that " what is everybody's business is nobody's business." The great majority of instances where equal partnerships have been success- ful, are those where there was only one leading directing ,mind in the partnership, and the other copartners w^ere but intelligent and confidential instruments in carrying out his plans. Such a leading mind is not by any means always found occupying the position of principal partner. Those who have an age and experience sufficient to give them thirty or forty years observation of the careers of business houses, can readily call to mind numerous instances of m Avoiding Causes of S>isagreemenL firms, that after remaining years in obscurity, at once shot up to a prominence in the community for their enterprise, and quickly accumulated wealth, and can readily trace the cause to the introduction into the firm of some active, energetic man— perhaps a former clerk— whose great business talent was everywhere conspicuous in the under- takings of the firm. Or in like manner will recollect other enterprising and successful business houses, that on account of the ability of some one member, stood in the first rank, and subsequently on his withdrawal, though he was perhaps only a junior partner, they soon sunk into partial obscurity. We may therefore conclude that for such men of super- eminent abilities, when they have sufficient capital, equal partnerships would not be preferable. They have the ability to conduct all parts of the business profitably, and need not involve themselves in the risks incidental to a partnership. It is always desirable that there should be socially a unison of views and opinions on the ordinary topics of life, between persons who are copartners in business. Men of differing religious or political belief, particularly if of strong feelings, should be cautious about entering into partnership together. Citizens of diff*erent countries are not apt to agree well together. We all have our sym- pathies for and prejudices against certain classes and things, and though we shouLl endeavor to put them aside in business matters, they can never be entirely subdued. There will always be matters of difference enough con- nected with the business, even when the most charitable construction is put upon the copartner's actions, and they will only be augmented by social variance. These little differences, too, can never be accommodated and conciliated, except by an abiding laith in the supreme T^e Credit of partnerships. 289 goo(*i intent, and good will of the copartner, a faith very difficult to hold if we are prejudiced against his nation, race, religion, politics, habits, or customs. The most satisfactory copartnerships have been where one individual has conducted a business in a moderate way at first, and as his clerks grew up under his care and teaching, the gradual increase of the business has made openings for them as junior partners. Their shares, small at first, were sufficient to induce increased exertion on their part, and finally on the retirement of the senior partner, they become equally sharers in the succession. There are dangers incident to such arrangements, needing to be guarded against. There is a tendency often to too much reliance on, and too much waiting for, the action of the older partner on the side of the younger ones, and perhaps a disposition on the part of the older part- ner to cease giving the attention to the business which is really necessary, on the ground that he now has part- ners to attend to it, and between them the business loses ground. The credit of a firm is generally better than that of a single individual with the same amount of capital, owing to the lessened risk of delay in payment of debts in case of death. When a single trader dies, those who have the settlement of his affairs are allowed from twelve tc eighteen months to pay in ; while in case of the death of one partner of a partnership, the surviving partner is en- titled to control the assets of the business, and is himself still bound to meet the obligations at maturity. This cir- cumstance alone may make it sometimes desirable that a partnership should be formed with some one, who is hon- est and reliable, even if of inferior business talents, 80 that in case of the death of the principal man, the busin^ can be promptly liquidated. 290 JS^inds of ^ushiess Requiring Tartneri, In localities where rents are high and expenses heavy, and where even a fair business can be readily doubled by doubling the capital and the attention to the business, it may be advantageous for two persons, who separately would be rival dealers, to throw their interests into one con- cern by forming a partnersliip. Together they may do as much business as botli will do separately, with but little more cost in rent and expenses than one would incur alone. There are, too, some kinds of business which in their nature seem to require a double service, and cannot be so well conducted by a single person. Such as those where it is necessary to spend a considerable portion of the time away from the place of business in purchasing, or where the article sold is manufactured by the dealer, and the manufacture requires constant attention and supervision. In such cases if the principal is alone in business, and at- tends to these details, he is much of the time away from the place where the sales are made. Either one part or the other must be left largely to the care of his employees, and either part is too important to be left so entirely to the care of a person having so remote a general interest as is ordinarily felt by an employee. A partnership in such cases is likely to be advantageous, if the proper per* son can be found. A partnership should not be too lightly entered into, nor when once formed dissolved on too frivolous grounds. If it does not give promise of durability when enter- tained, it is best not to form one. There is always con- siderable waste of time and expense in settling one up, as well as some in entering, aiid frequent changes will add materially to the cares and anxieties of the life's business, as well as give rise to unf ivorable rumors, to the detri- ment of the parties and the injury of their credit in busi- ness circles. Importance of a Written Agrceme7?t. 291 In all cases of copartnership, whether of longer or shorter duration, a carefully drawn agreement ought to be <2xecuted, which should include all the details of the Miethod and plan of the proposed business, and the capi- tal and service each partner is to contribute, and especially the manner in which the business is to be closed up and settled at the end of the partnership. And it is well also to include a proliibition against such practices or course 'of life of the partners as would injure the business oi the reputation of the firm. The necessity for such an agreement is particularly im- pressed on the r<^ader — first because the inception of the idea of a written agreement leads to refleciion upon what it ought to contain, and naturally to a fuller conference be- tween the parties as to the matters connected with the partnership and business, by which each one hears some- thing more of the expectations and wishes of the other, than he probably would otherwise ; and secondly, so that what is agreed on shall be legally binding, and not liable to be forgotten afterward. Such an agreement cannot ordinarily be properly drawn except by a competent lawyer ; yet the parties should al- ways first sit down together and make a rough draft, em- bodying all the details that occur to them as desirable to be embraced, so that the lawyer may know more clearly what they wish him to incorporate in the agreement. In this way, too, they are more likely, with the addition of the lawyer's advice, if he is a man of experience in these matters, to get all the details which ought to be embraced in such an instrument. In cases where the partnership has been formed with- out any agreement as to the method of division at its dis- solution, difficulty is sometimes found in making an equi- table division of the assets. U I 292 ^issotnilon of a Copartnership. ^^oviding for the ZiabiUties, 293 *i Ordinarily the partner wishing to withdraw from the business and take out his interest in cash, has to make such sacrifices on his share as will induce the continuing partner to buy him out, and it is a mere matter of bar- gaining as to what he gets. But this partner may not wish to dissolve the copartnership, and hence declines to give anything near a fair value for his partner's share. Indeed, it will often occur that the continuing partner has not means sufficient to pay cash, and the one that could advance his pecuniary interests faster in some other connection, is often on this account compelled to remain in a copartnership which is unsatisfactory. When a person wishes to withdraw from a partnership, and does not need the money, he may sometimes nego- tiate a better sale of his interest by taking the obligations of the continuing partner, payable at such times as may be mutually agreed on, longer or shorter, according as he is getting a higher or lower price for his interest, or ac- cording to his own future necessities for money. In this way the continuing partner has the use of the whole cap- ital foi a time, in which he may re-arrange the business on a basis commensurate with his own means, and he can on this account often afford to give much more for the retiring partner's interest. When such an arrangement cannot be effected, it is sometimes possible to get a third party to buy out, and take the place of the retiring partner. Of course the third party must be satisfactory as a partner to the one who remains, as he is not bound to accept any one. Or- dinarily, however, when one member of a firm has made 'up his mind to leave it at the first opportunity, he does not give his heart to the business afterward, and is therefore not so valuable in the partnership as a man of really less ability would be, who is anxious to embark in the business. ii* When no arrangement can be made to sell out, the only resource is to divide the assets as equitably as possible. In doing this, there ought first to be set aside sufficient of them to pay off the indebtedness of the firm, if any, taking care also to provide for existing or running con- tracts, as rent of store, clerk hire, and agreements for the purchase of goods which are yet to be delivered. The best assets for this purpose, after the cash itself, are the accounts owing to the firm. When tjiere are enough of these which can be set apart, the dissolution is much sim- plified, as they are easily managed, and any surplus of them left after paying the debts of the firm, can be di- vided without trouble. When these are insufficient, and the money has to be realized from the subsequent sales of goods, there will be more difficulty to provide for the debts. It will then be more equitable generally for each partner to take his proportion of the goods, and furnish afterward his share of cash towards paying the firm's debts as they become due. It may sometimes be desirable that each partner in taking in this way his share of the assets under his individual control, gives somo security to the other that his share of the money to pay the indebtedness will be forthcoming when it is required. On account of the necessity for this provision for the payment of the debts of the partnership, it is always ad- visable to prepare for the contemplated dissolution by selling the stock and paying the debts off, as far as pos- sible. When the liabilities are thus provided for, the division of the balance of the assets can be made in various ways. A very common way is to appraise carefully their value, and make them up in lots, say fifty or a hun- dred, and let each partner select alternately from them, choosing such as he likes best or thinks cheapest, until 294 !Dlyision of the Assets, The Seller's Ttule for Yaluing, 295 one has his full quantity, when the other takes the bal- ance. Or, if it be thought too much trouble to so care- fully appraise the value of every article, as it would be proper to do in dividing in this way, the goods can be in- ventoried at cost, or at such reduced price as may be readily fixed on by a cursory examination, as in taking ac- count of stock ordinarily, and then made up into lots of a convenient size, that the business may be more quickly dispatched; which can be conveniently done by taking a page or a part of the inventory as one lot. Then the partners bid on each lot, taking them in regular order just as though they were buying from third par- ties, bidding less than the inventory price, or more, as their judgment may dictate ; the highest bidder being the buyer of the lot, which is then charged to his account at the price he bid. When one partner, by his purchases in this way, has bought his share of the stock, the other takes the balance — whatever may be left — at the inven- tory price. This is a very fair way, as each one can bid up on the lots he likes best, but it requires some care and consideration as to the position on the inventory of the most desirable goods. If, as is often the case, the inven- tory is commenced with the leading and most saleable articles, and the end of it has a lot of trashy or shop- worn goods, which though taken at seemingly low prices are unsaleable, the one who bids up so as to first get his share, will generally have the be«t of the division. The one who is not buying his full share of the lots, needs always to keep in mind that he may have to take the poorer goods at the end of the inventory, at the price marked, to make up his proportion. When the business is one of a mixed character, and the dissolution of partnership is brought about that the busi- ness may be divided, and each partner continue on in separate branches, as sometimes will be the case, such a method of dividing will not be appropriate. As each one would only want the lots of goods which the other did not want, there could be no healthy competition in the bid- ding. Under such circumstances, when the parties can not agree as to the f lir value of the goods that each wishes to take, it is best to have them appraised by a third party. Necessarily the difficulty of making a division of the assets, and the loss which may be sustained by a partner who wishes to withdraw from a copartnership, will often overbalance the expected advantage of another business pursuit in which the withdrawing partner designs embark- ing, and he will thus be induced to prefer remaining in the old connexion. Therefore it is never wise or prudent for a man in a partnership to make actual engagements in connection with a new business until he knows exactly how he is to withdraw from his 2>i'esent one: and such an appraisement of tlie goods might well be only a con- ditional step to withdrawal, which is not to be made final and conclusive until after he sees the rate he will be charged for the goods he is to take, and finds all the con- ditions of the dissolution satisfactory. The natural tendency in most people to over-estimate the value of any property they hold, or in which they have an mterest, should induce caution in buying out a partner. Of the mstances of such j^urchases which have come under the writer's notice, in the large majority the error has been on the side of giving too much. The cost, of the goods, though most frequently the basis of their estimated value, is no certain criterion. This may be called the seller'* s rule for the value; it can rarely ex- ceed this sura, and may be much less. In estimating the value of any article, therefore, the cost price should be 296 T?ie Suyer*s Tlule for Valuing, Valuing Partly Iforn Articles* 297 borne in mind, subject to sucli reduction or modification as circumstances render necessary, and which are likely to vary with 6very separate article. It is often said that the worth of an article is what it will bring. But neither is this always a correct rule. This may be called the buyer's rule for valuing, and an article is rarely worth less than it can be sold for. Still it must be remembered that it costs something even to sell the article, and the one who buys to sell again must live by the sale, and hence not only the cost of selling, but a profit must also sometimes be allowed for. For in- stance, a pair of shoes may have cost five dollars at whole- sale, and could not be bought for less; but on account of being shopworn they would only readily bring the five dollars at retail. A fair allowance for profit from this ought therefore to be made in estimating their value, as between partners, and if such shoes ordinarily sold at a dollar a pair profit, the value of this pair would be really four dollars only. Nor would this rule, unless modified, on the other side, always do full justice to the seller. Particularly in such things as might be regarded as the tools of the trade — as fixtures, machinery, etc. A platform scale, for instance, for weighing coal and hay, which had been in use for two or three years only, and but slightly worn, would not probably bring — if to be removed — one-half its cost, owing to the expense of resetting, while to the dealer using it, it would be worth possibly within twenty per cent of what it cost ; and if he could not get another readily to replace it, it would be worth to him often even more than it cost, as without it his business could hardly be conducted. The plan for estimating the value of such partly worn articles, is to take their present new value by a fair com- parison with other and more improved articles of the kind, if any, and from this deduct the worth of the ma- terials after the article may be regarded as worn out. The balance is the amount which is to be sunk through the number of months or years it will last. To properly divide this loss, in most articles a liberal allowance must be made in favor of the last half of the period of wear, owing to the increased cost ordinarily for repairs, and the less perfect working of the article in the later period. A grocer's wagon, for instance, might fairly be regarded as half worn out whenever by actual wear some part gave way and required to be renewed. Though on a cur- sory inspection it may seem nearly as good as new, a certain amount of wear has taken place in all its parts, and they may be expected to give way, one after another requiring frequent repairs, the cost of which alone will go far to balance the benefit of its use. So that the last two years of its use would not probably be so advanta- geous to enjoy as it would be to have one year's wear of it when new. CHAPTER XX. INFLUENCE OF SOCIAL INTERCOUKSE ON BUSINESS. WHILE a man who prudently and intelligently pur- roases his goods, and sells them at reasonable profits, and in a manner pleasing to his customers, and faithfully at- tends to his business, will generally succeed in making njoney, it is noticeable that some of those who do so be'- come more popular with the community, have a larger circle of customers, and make money faster than others do, who are equally faithful and skillful in all that apper- tains strictly to the business. This success is sometimes the result of family influence, the one having a large circle of relatives in the com- munity, who arc interested in his advancement, and not only patronize him in their dealings, but use, also, their influence over their acquaintances in his favor, while the others have no such advantage. This is of course an advantage which one man is born to, and another not, but there are many favorable influ- ences in social life which can be honorably subordinated to a dealer's interest, if he gives the subject the attention ii deserves. Inattention to them Avill not especially endan- f-;eT his prosperity, but it may seriously retard it, and com- pel him to labor a life time for the same reward which with their fivor he could obtain in comparatively a few years. In business, the next best thing to having many friends, is ha\-ing many acquaintances. The first are hardly won by years of honesty and integrity, but the latter are the daily rewards of a courteous and afiable demeanor. Enlarging the Circle of Acquaintances, 299 We employ our physician and lawyer, deal with our baker, butcher, coal-man, grocer, druggist, smith, shoe- maker, tailor, etc., not half the time because they are the best of their kind, but simply because we are ac- quainted with them. They go to our church, belong to our society, lodge, or company, or we meet them socially at the houses of our acquaintances, and when we need any thing in their vocation, our thoughts revert naturally to them, as able to supply our want. And it is besides pleas- anter to deal with those with whom we are acquainted. It should, therefore, be the aim of a retailer to enlarge and extend his circle of acquaintance among those who are so situated in life as to be customers to him ; as far, at least, as he can without taking too much time from his actual business. He should not become so tied down to the details of his business as to feel that an hour or an evening taken occasionally to attend to social interests is entirely lost to him. On the contrary, he should feel a citizen's interest in all the moral, intellectual and benevo- lent enterprises and associations of his neighborhood, and take part in them. I do not mean to inculcate the duty of doing this as a business expedient, or that he should tluw go among his fellow men, as it were, drumming for pat- ronage. Nothing is more odious than to see a jjerson in social gatherings soliciting custom. He should pursue such a course, simply as he would be honest in his deal- ings, not because it is the best policy, but because it is right. The influence of an intelligent, upright business man in a community ought to be beneficial, and it is his duty to extend such an influence in all legitimate and pro- per ways, not looking to any reward which may be made to him therefor, or thinking that he earns any thereby, but at the same lime receiving the compensation as the result of an acquaintance oriccinatcd. from other jnotives. 300 Membership in Associations, It is not necessary that a retailer who thus connects himself actively with associations in the community, should take upon himself duties in official positions in them which greatly take up his time or interfere with his a^ tention to business. He can be content with minor offices which will give him opportunities to be useful, as well as bring him in personal contact with the members of the association. Thus the office of treasurer is preferable to that of president or secretary ; in a military corps that oi major or lieutenant rather than of colonel or captain. Such subordinate positions ordinarily have less arduous duties, and therefore do not make such serious demands upon the attention due to the business ; nor are they so likely to excite the envy of the dealer's associates. There are in every community more or less of associa- tions in which a person may take part, or not, as his in- terest dictates. There are no moral obligations involved either way. In such as these a dealer can properly con- sider the popularity of the association. In a Quaker com- munity, membership in a military company would not add much to a dealer's influence ; and more mav be lost than gained in this association in any locality, unless great caution is exercised in keeping the expenditure therein, of time and money, within due bounds. Neither can political associations be greatly recom- mended as productive of increased gain to a man's busi- ness. While it is incumbent on every man in a republi- can government to vote, and to make no secret of the na- ture and character of the ticket he intends to vote, and be ever ready in a modest way to give a reason for his political views, it is very bad policy for a retailer to turn his storehouse into a political club room, and have it known as the headquarters of this or that party or clique. While party feeling runs so high, he can only expect to The Zeadhiff Store in the Tlace, 301 /nake enemies of those opposed to him politically, while many of his own side will be jealous of his position and influence in the party, and will be only lukewarm friends at best. Ready to say — when, on account of neg- lecting his business, his trade is broken up — " poor fel- low, he would have done well enough if he had only let politics alone," but at the same time quite well satis* fied to see him out of the way of their ambition. It is always an advantageous position for a dealer, to be considered by the community as having the leading store in the place in which he is. Usually this honor is accorded to the one that has the largest and most varied stock of goods, and who does the largest business. But it sometimes happens that a dealer doing a smaller business, by careful attention in selecting choice styles of goods, and being the first to introduce new designs, obtains a higher reputation as a leader, and giitheis around him a class of customers who are leaders of the fashions and opinion in the community ; and by his courteous manner of dealing, and possibly his deserved social standing in the community, earns for his store the reputation of being the leading one, though there may be others that do a much larger business than he does. There must, however, be a spirit of popularity in such a busi- ness — it must be a growing one — and seem to be moving onward to a higher position, in point of magnitude of sales, than those around it, or it will only be patronized by the select few, and will fail to receive the sympathy and patronnge of the great body of the people. We all like to take the coming man by the hand, that we may say in after years, we appreciated him before the world found out his merits. So we like to deal with those that we think will by and by be great men in their vocations. In future years when Mr. A. has grown to be a millionaire, and 26 302 Injurious Social JnJluenceS* in a magnificent five story marble front store, we shall be happy to remind him that " we were among his custom- ers when he kept store in the little dingy brick around the corner," and shall expect then to have greater affa- bility and better bargains from him. ' It is of importance for a retailer to take some trouble to accommodate and conciliate the leading people in the community — those who to some extent give tone and color to the prevailing opinions. These are not by any means always the most wealthy people, as is cpiite gener- ally supposed. They are the talkers — the visitors around — a half dozen of whom may easily make or mar the reputation of a dealer as they speak well or ill of him. Generally it is not hard, in small towns especially, to se- lect out this dozen or two of the community, and by spe- cial attention to treating them liberally keep them on the dealer's side There are some injurious influences arising from social intercourse, which it is necessary to guard against. . One is the tendency to form cliques and caucuses amon"" those who assemble from time to time around a dealer's store, as referred to a page or two back in refer- ence to political matters. But it is not always confined to politics. Men of the same sentiments in any associa- tion, naturally delight to get together and talk over their views, and arrange plans to carry them out in the regular meetings afterwards. A retailer may often be led by a few such to take sides with them, and they meet at his place of business to consider and arrange their plan*. The first thing the opponents of these particular views know about the movement, is that it is sprung upon them at one of the regular meetings of the association, and car- ried througli before the objectors have time to organize an opposition. Subsequently those o[)posed condemn the 3)anger of JVeglecting the ^Business, B03 action as the work of a clique around 's store ; and the proprietor comes in for the largest share of their ani- madversion, though possibly he had but little to say in the matter, merely giving it his countenance. It would be better for the retailer, if his particular friends in the matter felt that he could not be trusted to second any underhanded attempt to carry out their peculiar ideas, and should therefore refrain from canvassing the matter at his store, or in his presence ; or if they did not, that instead of countenancing their projects, he should take good care to condemn all such secret plotting, as at least discredit- able, if not dishonorable. Another danger arising from social intercourse, is the tendency which the diversions and duties thereof have in causmg a neglect of the dealer's business. It is some- what difiicult for a person — no matter how strong his resolution — to take a hearty interest in the opera- tions of any association, which in its details requires the time of some of its members, without gradually yield- ing to the occasion and allowing such demands to absorb more of his business hours than is profitable. That some time is necessary to be given is admitted ; exactly how much must be the consideration of the individual, in view of the circumstances of his position. Whatever he may, on full view of the matter, decide as proper, and within Ins ability without risk of neglecting his business, to so much he shoitid restrict himself, whether one hour in the week, or one hour each day — taken at the most favorable period. Instances are frequent where retailers are drawn into one association after another, becoming president of this, secretary of the next, and treasurer of another — pos- sibly director in a fourth — so that fully one-half their time is taken up with these matters, to the manifest injury of their business. \ 304 Opposing Social JB!xh'avagance, 1 ' Anotlier clanger from social influences, is their tendency to so bind a man to a locality that he is unwillinj; to leave it when such changes occur decreasing the population, or increasing the rival stores, as to make it of great advan- tage to him pecuniarily to seek another location for his business. One of the principal reasons why people of foreign birth are so often more successful in business than the na- tive born, is their indisposition to remain long in any place after their trade becomes unprofitable. Strangers alike in all places, all are alike agreeable, or disagreeable, socially, and there are no strong friendly ties to be rup- tured when interest prompts a removal. Society exerts a great influence on a dealer's ambition — sometimes, no doubt, beneficial in inciting those to efforts, who without the influence would be indisposed to strive — but too often the influence is pernicious. A man who starts in life in a modest way, aiming to make only a certain reasonable amount, after which he purposes retiring, and giving place to others more needy, often finds that the tinsel and frippery of fashionable society, and the love of display, have so invaded his home, and too often his own heart, that he is under the necessity of continuing on in business long after he has reached the goal he originally started for. So powerful are these in- fluences that men are often allured by them to all sorts of dishonesty, and become swindlers and rogues, to obtain means to satisfy their insatiable and mischievous desire for ostentatious display. The retail dealers throughout the country can do much to keep in check this national sin of extravagance, by a prudent and unostentatious style of living themselves, and by their example and advice discourage it in others. In rural communities the retailer generally holds such a The heater* s Inftuence on Society, 305 position that he has a large influence in this matter on those around him. Too often, unfortunately, it is so used as to lead the community to greater extravagance. As in any given locality, the morals of the people will be mainly a reflection of the character and fiithfulness of the clergy; their health of the wisdom and skill of the physicians ; their domestic comforts of the industry and thrift of the producers ; so will their responsibility and promptness in pecuniary matters depend very much on the business character and habits of the traders among them. If they inculcate the duty of exactness and prompt- ness in fulfilliiig all contracts and promises, no matter how trifling, and uniformly manage their business on these principles, not only strictly carrying them out in their own obligations, but strictly requiring them of others, they will keep alive and active that high sense of honor in the community, which induces a man to consider his word as obligatory as his bond. All that is necessary, beyond their own example is the general commendation of those who conscientiously and faithfully fulfill their promises, and an extension to them of a higher degree of honor and respect, no matter what may be their comparative social position in the commu- nity ; and as general a censure of all that neglect such duties, and a withdrawal of confidence to a greater or less extent, according to the demerits of the case. Too often a customer, who by his actions, has repeat- edly shown that he feels no conscientious obligation to pay his debts at maturity, or within any reasonable time thereafter— and postpones payment until the money is fairly worried out of him by dunning, at an expense of time and thought, quite suflicient, if differently directed, to earn the amount of the debt, will be immediately en- 306 Zetilty in i>€/auUs, treated, on the payment of tlie debt, because he is known to be wealthy, to renew the account by the purchase of other goods on credit ; receiving in all respects as affable and generous treatment as if he had paid honorably and punctually according to his promise. When men in the community who are well able to pay, are treated with so much lenity in their defaults, it is not strange that those less able should think that there is but little honor or respect gained by promptness in meeting their obligations, and so gradually decline from their ideal standard of moral rectitude. If the dealers in any given locality would have the in- dependence to adopt and practice the course sujrjrested, they would soon find it a pleasure to do business, instead of a continual toil and exasperation, as it generally is when the dealer, having lax ideas on this important duty, virtually teaches the community to disregard these obli- . gations, or to yield only a tardy and grumbling compli- ance when urged again and again. CHAPTEH XXI. ON BUYING GOODS AT AUCTION. THE plan of selling dry goods at wholesale by auo tion seems yearly to increase in favor, and no retailer of this kind of goods, whose business is of any extent, can expect to cope with the competition he will inevitably meet, who does not to some extent adopt this plan of purchasing. Like many other things, it may be done to excess, and probably he who buys the half of his goods at auction, will be about as badly off as he who nev^r buys any there. Though he may have his stock of goods cheap enough, he will have a great many articles not adapted to his trade. As auxiliary, though, to private purchases the auction room offers great advantages. Originally this plan of selling goods was only availed of in times of great mercantile distress, to raise money, or near the end of the season to close out certain kinds of goods, which in another year might be out of fashion, or for the sale of antiquated, imperfect or other undesir- able goods which the wholesale dealer either would not, or could not sell to his regular customers. And it was then, as a general thing, only at the periods of the year when the retailer was more anxious to sell than to buy, that really desirable goods could be obtained in the auction room. But within the last thirty years this has mate- rially changed, in New York city at least. And while the same circumstances as before still continue to furnish goods for the auction room, other influences induce many importers and manufactui-ers to sell their desirable goods 308 c^necdote of an Inexperienced ^teyer. in this way, at the time of year when they are most in demand. And tliat retailer must liave a very fastidious set of customers indeed, who can not every week in the season find in the auction room such goods as will suit his trade. The main consideration will be, therefore, the ability to buy them at right prices. There is a great deal of art in buying goods in the auc- tion room, doubtful though it may seem when "the highest bidder is^the buyer," but it only needs a visit or two there to see that experienced buyers often succeed in obtaining a lot of goods out of a line at a price five or ten per cent less than others pay. As most of my readers probably know, goods are fre- quently put up in the auction room in " lines " of four to six, or more lots, each lot alike or nearly so^ the line be- ing the contents of one case of goods, and there is but little difference often in the various lots in the line. A retailer in a distant town, not much accustomed to buying in the auction room, remarked to the writer, one day after the purchase of several lots of goods in such an auc- tion sale, " These auctions are queer places to buy goods in. Whenever I buy the first lot in the line, to make sure of having one, the price always falls off on the other lots, and when I let the first lots go, and buy towards the end of the line, I have to pay an advance, I don't under- stand it." Yet naturally this is the result when no shrewdness is exercised. If even one buyer withholds his competitive bid the piice recedes, and when he comes in again the price advances. Inexperienced buyers often pay in this way higher prices, from too readily concluding that the price at which they buy is the lowest the goods will be sold for, simply because it is lower than they have been asked for the goods at private &«ale. But the shrewd business man fie /^ui sites of an Auction f5uyer. 309 will never be satisfied that he has bought an article cheap enough if another buys it lower an hour or two after- ward. To make a good buyer at auction, it requires several things ; among them are : 1st. A knowledge of the relative values of different qualities of goods, and in this to be able to decide when there is no real difference in quality ; so as not to be mis- led by catalogue descriptions of " finer," " superior," '* ex- tra," etc., applied to a series of lots of similar goods, the quality of some of which does not vary, while of others it may. 2d. A knowledge of the prices at which the goods have «old at previous sales, and their price at private sales, so that more is not paid for them than they can be bought at in private. 3d. Good judgment as to how prices will tend for the day, or are generally tending, whether upward or down- ward, and how much either way — as governed by late- ness of the season, general dullness or activity of trade ; and sometimes by circumstances connected with the day and location of the sale, which keeps back buyers, or brings them out in larger numbers than usual. 4. A well-timed promptness and energy in bidding at the right moment — neither so eager as to unduly run up the price, nor so dull and slow as to fail of getting such lots as are w anted, except by paying an extra price for them. 5. Such repression of feeling, that no visible manifest- ation is made of the desire to buy any special lot or style of goods. None of these are diflJcult for any ordinary business man to attain. They are indeed required to some extent in buying in private, though the exact knowledge of th© 310 The Auclion IPrice, price of goods is not so essential in buying of a reputable house in private, as the seller there makes the price, and if too high he is liable to reproach afterward, and often has to make a reduction to retain his customer, while in the auction room the buyer makes his own price, and has no one to blame if he makes it too high ; as it is the auc- tioneer's duty to get the best price he can for the owner, and ignorant buyers bidding against each other will often run the price of a lot of goods up ten or twenty per cent above private sale prices. The buyer at private sale ought indeed also to know what the goods have sold at in auction, even although he may not be able to buy them there at that time ; as they may be in the hands of his rivals at such prices that they can afford to sell them cheaper than he can now buy them. In making an estimate of the price or value of any specific lot of goods in an auction room, while the buyer ought to know the private sale price so as not to bid over that, yet it is not safe to be too much governed by it, and decide that the goods are cheap simply because they are even much below that price. The private sale price is generally based on the cost of manufacture alone, while the auction price is based on the customer's appreciation of the goods in comparison with other goods of like char- acter of different manufacture. One man may not have the facilities another has for manufacturing cheaply, and his goods are rated ten per cent higher^ though really no better in the eyes of the consumer. Claiming that they are brighter in color, smoother in finish or more durable, he may succeed in selling enough of them at the ten per cent higher price, to establish for them a sort of standard price at private sale, but they would not be cheap to buy in auction at ten per cent reduction. Again, an importer will order a dozen different styles of goods Fluctuations in l^rices. 311 from a European manufacturer, all at the same cost. He liolds them all at the same price, and may sell eight of them out at private sale. The other four being inferior in color or style do not sell, and are sent to the auction room. They may not be so cheap at twenty-five per cent reduction as the choicer styles were at the full price. New styles of goods are often sent out from the other side of the Atlantic to try the^market; they do not suit the taste of the community, or perhaps better goods arc made here at home at less than they cost, but they will be held, some- times for months, at private sale, at an enormously high price, and when at last they are turned over to llie auc- tioneer by order of their owner, they often prove a losing speculation to the buyer, who concluded that they must be cheap, because he bought them so much less than the private sale price. The prices of goods generally decline as the period of the year passes by in which they are in demand, and though this reduction takes place in private sales as well as in public ones, it is noticeable that the public sales generally lead the decline. A temporary dullness in trade at private sale is one of the chief inducements for put- ting desirable goods in auction. The wholesale dealer or importer is disinclined to make such reductions in price as are demanded, and the result is a lull in business till a trial is had at another public sale, and the old standard of prices thereby sustained or a new one formed. Some- times after goods have been sold very low early in the reason at auction, and the wholesale dealers seem to have conformed to the low price in their private sales for a time, business becomes so good that an effort is made to advance prices, and the auction test being again applied, it is found that they bring higher prices. These fluctua- tions in price will sometimes be from ten to fifteen per 812 Marking the Catalogue. \ cent during the season, without the goods being specially lower in price at the end of tlie season. Again, sales will take place on days when buyers are very busy at home ; or when the weather is inclement, and they would not freely come from a distance ; or there may be other sales of somewhat similar goods going on the same day, so much more important as to draw away buyers ; or recent heavy sales of the same kind of goods where many were fully supplied with them, and will not be buyers now; any of which circumstances may have an influence on the prices for the day alone. All these mat- ters require to be well weighed before this estimate of the price can be properly made. The practical part of the work is of the utmost import- ance. The catalogue should always be carefully marked beforehand, and no one not well acquainted with the work should undertake to buy goods in auction on the spur of momentary excitement, or without having previously made a thorough examination of the goods and carefully marked his catalogue. This should be done at an early hour of the' day before the sale commences, or at least before it reaches the lines of goods that are de- sired, as it is no time to make a proper examination of them surrounded with the noise and excitement of sell- ing. In marking the catalogue, special care is always needed to compare the number on the lot of goods in- tended to be marked with the catalogue number, as through the many handlings which the goods receive from the different buyers, they are often misplaced in the line, and mistakes occur in this way, the buyer marking on the catalogue an entirely diflEerent lot from that he looked at. As it is one of the ordinary auction rules that " widths, sizes and descriptions of goods are not warranted," it is Marking the Outside 'Price. 313 well in these examinations to correct the cataloorue in tho more important particulars ; such as where goods are cat- alogued as thirty-six inches wide, which are only thirty inches ; or called six-fourths when only three-fourths ; or when in lines of goods the description on the catalogue indicates by such terms as " finer," " superior," " better," etc., that each succeeding lot of the goods increases in value, when there is no real difference. When such errors as these are left unnoted, there is a tendency some- times, when the moment comes for buying, to suppose that a mistake has been made in marking, and the buyer loses confidence in his own ratings. The extreme or very highest price which the buyer will pay for the goods, is the one that should be marked, and not, as is often the case, some very low price, at which it is hoped the goods can be bought for. It does not follow because the full price is marked on the catalogue that the goods shall not be bought as low as they can be, while if a low price is marked, and the buyer allows himself to go beyond it, he has no limit, and very often in the excitement pays more than is proper for his goods. Besides, goods always seem cheaper when in store that have been bought under than over the mark. When the buyer determinedly ad- heres to the prices he has marked on his catalogue, and will not go beyond them, (as he ought not to, except in very extreme cases,) if he has marked his catalogue too low, he shuts himself out from purchasing the lots which are most desirable for his trade, or which please him best, by thus marking them ; and feeling the necessity of buy- ing something, he will take a lot here and there, which he did not mark nor carefully examine, on the strength ol some other person's purchases, but which are really just as high in price as the more desirable lots, which he failed to get from marking them too low. 814 Choice of JLots, It is verj unsafe for a retailer to buy on the strength of another person's purchase in the auction room, even though he may know the person to be a good judge of the vahie of the goods. The purchaser may have an interest in running up the goods. Besides, each dealer's cus- tomers, to some extent, differ, and what would be de- sirable for one to purchase might not be for another. When the buyer does not feel fully satisfied with his own conclusions as to price, and that will often be the case, it is a good plan to mark two prices — at least on those lots of goods which he especially desires — one which he re- gards as the fair value of the goods, according to the then circumstances of the trade, and the other the utmoBt that under any circumstances he will give for them. Then when he bids up to the lower price, he can suffer the ten- dencies of the day's sale, and the extent of his previous purchases therein, to govern him about going up to the higher price. In buying fancy-colored dry goods, there are often cer- tain colors which make one or more lots out of the case more desirable for the buyer's trade. As the choice of lots is offered in the line comprising the case, some little man- agement is necessary to get the desired lots without pay- ing an extra price for the first selection. If the colors desired are those generally sought after, and there is but one lot in the line containing the color, there is no other way but to bid up and get the first choice. But it often will happen that the special colors wanted are not those most in demand, and in such circumstances it would be un- wise to bid up for the first choice. For example, suppose that in a case of French merinos, comprised in six lots in the auction room, there is only one piece of scarlet, which a buyer wants, among other colors, and at the same time scarlet is so much in surplus that when sold alone it does Intimacy with the Auctioneer, 315 not bring within twenty per cent of ordinary colors. This surplus of scarlet color would probably cause the lot having the piece in it to be one of the last taken. Natur- ally the person bidding for the first choice pays most, and the price falls off a little, according to the desifableness of the different colors in each lot. If the buyer who wants the lot with the piece of scarlet in it holds off till two or three lots are sold, he will have a fair chance of getting the one he wants at a less price. There is, in such in- stances, too often a fear that the special lot may be taken, and he will therefore miss getting it; but even then there is not much loss, if he gets all the colors he wants in another lot, except the scarlet, as on account of its abundance in the market he could probably purchase a piece of it at private as cheap as it sells then in connection With the other colors. Indeed the purchaser of the lot with it in, if sought out, will often be found to have se- lected that lot for some other colors in it, and will be glad to get the piece of scarlet off his hands at cost. Of course, before a buyer can use this kind of finesse advantageously, he must know something of what other buyers are in need of, as well as what he needs himself, which is as- certained to a great extent by being among them and conversing with them at other times. An intimate acquaintance with the auctioneer is quite necessary to enable a buyer to obtain these little advan- tages. A nod, or wink, or almost a look from an old buyer is sufliicient for a bid, and the auctioneer's attention is turned often towards such persons, looking for the signal, while the intimations of the stranger, intended for bids, pass by unheeded, not being understood except when very open and apparent. And when three or four are calling out their names simultaneously for some special lot of goods, the most familiar name is likely to be 816 Avolfi/n^ disputes during the Sale. first called. Hence the first thing for a new buyer to do is to make his face and name familiar to the auctioneer. This he can do socially, by such advances or means as he may find best suited to the case. It ought to be more than an ordinary acquaintance, and should reach to a kindly feeling, or at least all unkindly feelings, if any exist, should be allayed. To this end honest and straightfor- ward dealing, when buying goods, is essential ; as stand- ing to a bid when once made, or not denying it, as is often done ; nor should any dispute be made about the price of goods if it can possibly be avoided. The most honorable auctioneer may seem sometimes to have run up the price of the goods without a bidder. It must often happen that he forgets who made the last bid, and the price per- haps being a little high, he fears that the bidder will not claim them when they are knocked down, and therefore calls out the name of the one he thinks was the last bid- der. The person whose name is thus called may deny that he bid with such manner and tone as to convey the impression that he thinks the auctioneer is trying to cheat him, and thus arouse an unpleasant feeling towards him in the mind of the auctioneer, or he may relieve the latter from his unpleasant predicament by simply saying, ** I did not mean that for a bid," or " I wish you would let rae back out from that," or some remark of such import, that will not lead the buyers present to think the auctioneer at fault ; and by so doing create a kindly feeling in the auc- tioneer towards him. Though the auctioneer can not al- y ways know from his catalogued price whether the lot he is selling is really cheap or not, he very often does know, and his friendliness may save a buyer from many a hard bargain, or his enmity cause him to pay much more for a lot of goods than he otherwise would. It is often of great importance to get in a bid just in ^ M^anagemeni of the bidding. 81Y the right place. After an article is over fifty cents in price, and up to, say two or three dollars, it generally is advanced five cents at each bid, though sometimes only two and one-half cents, of course when near being struck ofl:' one cent will often be taken, but as a general thing only when two claim the even bid. And it is very com- mon, as we all know, to fix even prices to goods, as $1.00, 11.50, $1.75, &c. Suppose an article be started at $1.25 by one of two bidders, both of whom have marked it at $1.50, the second bidder's advance would be to $1.30, the first one again $1.35, the second $1.40. Now, it will be plain that if the first bidder goes to $1.45 the second will in all probability go to $1.50, and get the lot. The first one should therefore break on the regular advance, and call out $1.42^, leaving the second to make the next ordinary advance, which will be to $1.45, when the first bidder again takes it up by bidding at once to $1.50, and unless the second bidder will advance the ordinary bid oi five cents probably gets the goods. The advance at one bid from $1.45 to $1.50 is preferable to an advance to $1.46, which very prudent buyers sometimes adopt in such cases — as in the recurring bids the $1.50 bid would come to him should the competition run it up so far. But generally one cent bids only lures the competitor on, and when $1.50 is reached, the second bidder is tempted to bid one cent moi'e than he marked the goods, and thM rate oi advance is by that time so established that the price will run still higher. Indeed, in bidding the $1.46 the auc- tioneer might possibly go to $1.47^, giving the second bidder the chance to come in on the $1.50 bid. The dis- position of an auctioneer to sometimes advance the full bid, though a smaller advance was actually bid, is often an advantage to a shrewd buyer. Under circumstances such as above mentioned, when the bid is at $1.40, and 318 The <' Choice and ^PrivitegeJ* two and one-half cents more is bid, the auctioneer may dechnetotake it and go to 11.45 for the first bidder. Now, if his competitor is not very shrewd, he may argue that the first bidder will decline to take it at $1.45, as he only bid $1.42^. and think that he will come in when it is knocked down and take it. He will be at least loth to bid to $1.50, in the prospect of getting in at the $1.45 bid, and consequently the first bidder should quickly, by some quiet indication, let the auctioneer know that he assents to the advance to $1.45. Sometimes buyers in these cases do not give this indication and the compe- titor or some third bidder does ; and though when the lot 18 struck oflf to another, the first can fairly claim that the bid was taken as nis, and he is willing, under the rule that "when there are two claimants the lot must be put up again," to advance another bid, it does not work well; an excitement is created, other bidders perhaps come in, and the goods are run up above his mark. On any short line of goods, of say half-a-dozen lots, or what may comprise a case or bale, when they are all about alike in value, it is a common custom to give the " choice and privilege," that is, the person to whom they are struck off may select any one or more of the lots, or take them all, at his option. This is advantageous to'the owner, as, if there are but two persons, each wanting a single lot, their competitive bidding will run the price up to about the value ; and if it does not, the goods are passed when the first buyer has taken what he wants. If the price first made is satisfactory, the other bidder or any others may take a lot, if he or they will, and then the bal- ance are passed. Of course it may often happen that two such "bidders alone run up the price beyond the ex- pectations of the seller, who would gladly concede from the price they make to close out the balance of the lots JR^owtedge of the Competitors. S19 but as there are no other buyers wanting them, he regards it as unwise to unnecessarily offer them lower. When a person wants to buy a lot in a line so offered, it is advantageous to him to be in such a position as to see who his competitors are. From the magnitude of their business and what he has seen of their previous purchases, he can judge somewhat of the probability of their taking the whole line, and hold off or advance in his bid accord- ingly. Suppose, for instance, in a line of goods offered in this way, a dealer desires to buy a single lot, and has marked to go as high as one dollar. He starts the goods at seventy cents ; we will call him No. 1. He notices that he has two competitors bidding on the goods, one of whom we may call No. 2, who ordinarily buys only single lots, and the other. No. 3, a buyer for a large house, who often takes the whole line. The price has reached 90 cents, which is the bid of No. 3. No. 1 bids 92i cents, and No. 2, 95 cents. No. 3 has withdrawn and does not bid again. Now, No. 1 in ignorance of his competitor, might bid up to $1.00, his marked price, fearing that the whole line would be taken ; but knowing who is his competitor, he can be very confident that if struck off to him at 95 cents, he will only lake one lot, and an opportunity will be afforded him (No. 1,) to get a lot at the same price, or possibly even a chance of the price falling off to his bid of 92J cents. The risks against his getting it are mainly two : one that the larger buyer, who has stopped at 90 cents, is lying in wait to come in and take the balance at 95 cents so soon as the first bidder is supplied ; the other, that on account of the low price the owner will pass^ the balance. The probability of either of these events is to be considered before the goods are struck off at 95 cents. It may be sufiicient to induce an advance to 97i by bidder No. 1. An acute observer may detect in buyer 820 f>tipticate Zoh, S'lfnP '°"!'"^ *""■■ "" <'Pl'°'-^"""r to come in andswcen cent, t!. iT *' S*""^' ** ^ P"«e above 90 or owner {,f present) may be so forcible of an intention to pass the balance, if the first lot taken sells at 95 cents hat , may .nduce him to make the advance. Tho„5 th.s .s not always a safe guide, being frequently used to stimulate the biddin- ^• sold if th.v ''T'' ''''"'°° *'"'' ^"'y <"'« '°' Will be sold, If they are afterwards sold at less price, he has a &r clam, that his lot shall be reduced to le sime p L as the balance sold at. ^ n^alTofthe'r'/"'' "'" ^^ ™"^'' '"^"'^^ ''^ *•>« -"gh nsage of the auction room, that instead of exhibiting lines of them, only one lot is sampled, and if that brings a sa^ I factory p„ce, " duplicates " are offered. When the dt ttTth? ""'' °° ''' '''''''^' - otherl men tioned the same management can be used to get a dupli -to lot at a low price, as in buying from " line "of £" When the existence of duplicates is unknown but su ! pected, there ,s no harm in asking if there are anv Z^ govermng the bidding according t^o the answer Ordba^y a duphcate IS worth more than the s.ample, on ac o unt o^ bemg m order, but it has its drawback in ^fteu beln" in tenor in quality, or style, or assortment to the aSp e' owing to te tendency that most men have to pick ou"?: be to show; on precisely the same principle that the best peaches are very often put on the top of the basket In this connection it may be appropriate to remind the trom what the auctioneers and owners do not say, as from Running tip the ^Prlce, 821 what they do. When the bidding is progressin^on a line of goods, as above mentioned, and it halts at about 87^ cents, notice may be given with some emphasis that only the one lot will be sold, which notice is frequently repeated as the bids advance ; but when they reach 95 cents, nothing more is said about passing the balance, or if repeated, it is with quite a reduced earnestness, in- dicating that though the price of 90 or even 92J cents is not satisfactory, 95 cents may be sufficiently so to induce the selling of the other lots of the line. An inference may be drawn from silence in other cases, also, as when certain lots are commended for some special quality — as being "all wool," "pure silk," "madder colors," etc., while nothing is said about it in subsequent lots. The author is glad to believe that the swindling cus- tom of running up goods on the bidder by the auctioneer, so much in vogue years ago in the comparative infancy of the business, is no longer encouraged in respectable auc- tion houses — in New York city, at least. There may be an occasional lot of goods, for which a certain price has been guaranteed to the owner, or perhaps occasionally one of the old-time cryers drops into his old tricks, or some neophyte just commencing, who has yet to learn that " honesty it the best policy," attempts it, but the buyers have learned to detect it. An auctioneer may, as before mentioned, easily forget sometimes who made the bid, on which he struck off the goods, and have to go back to the previous bid ; but when this occurs every three or four lots, or the name of some absent or unknown buyer that no one sees bidding is frequently called off, there is some- thing worse than mere forgetfulness. When our begin- ner sees these indications of dishonesty, it will be better for him to refrain from buying from this auctioneer, until he learns enough about the i)ossible deceptions of the auction room to take care of him-^elf in any coni])!! y. B22 jiroldhig the Appearance of AAxiefy. So that the buyer may not niuliily tempt the auctioneer to run the bids up on him, he slioukl manage to liide his desire to bid again. When a verdant buyer, after making a bid, stands with eager eye and gaping mouth waiting for the bargain, like a cherry, to fall into it, there may be a strong temptation to the auctioneer, particularly if the price is very low, just to try if he will not go one bid more. It is more difficult than most people would suppose for a bidder to disguise his anxiety to get a lot of goods which is standing on his bid, from the eye of the auc- tioneer. He may unconcernedly look away, or toy Avith his catalogue, or speak to his neighbor, but there is very apt to be something in his manner not natural, which be- trays his desire to the auctioneer. Neither is it good policy to show any more concern about buying the lots you really want, than those you d«) not want. To guard against this tendency, some buyers put on an appearance of earnestness and anxiety to buy every lot, so that they may disguise their wish to buy cer. tain lots. Others try to remain calm and collected at all times, but there is a tendency then to refrain from bid- ding on the goods they do not want, and the mere circum- stance of bidding on other goods indicates their desire t<:» buy them. There are other advantages to be gained by frequently bidding on lots of goods which the buyer does not wish to buy, care being taken, of course, not to bid high enough to get them. By this frequent bidding the buyer's presence is more prominently brought' to the notice of the auc- tioneer, and when he really wants to buy, his bidding is more likely to be noticed. The risk of getting i} lot occasionally, tliat is not wanted, will always limit this ad- ventitious bidding within due bounds ; though there are The Starting Sid, 323 always many lots of goods offered in an auction room not inherently desirable at the prices they will probably sell at, which may be bid on and bought at a lower price without risk of lossv Such frequent bidding is not dis- advantageous to the auctioneer, but is rather favored, as giving more life and animation to the sale. In starting the bidding on a lot of goods, it is best to commence at a pretty fair price. A very low start often attracts persons who did not think to buy, to bid on the lot, and they continue afterward to be competitors to the final bid. Indeed, it is often good policy to start a lot of goods, when it can be done without the notice of the other buyers, at a price nearly or quite up to the mark to buy at. Some buyers will be led to think from such a start that the price will go beyond their mark, and will withdraw their attention for the moment, while others may be disposed to withhold an advanced bid under the supposition that the auctioneer has started the goods him- self and has no bidder. There is a good deal of this finessing practicable and useful in buying goods in the auction room. It only needs a little experience, with some acuteness and observation, to enable any one acquainted with the value of goods to embrace the opportunities which are offered. Perhaps a few words of caution may be in place, in re- lation to " mock auctions." These swindling concerns have such protean forms that it is impossible always to recognize them by outward signs. For so soon as any feature becomes prominent enough to be noticeable, or pointed out as something to be aware of, naturally it is conformed to the style of the regular business. If the writer were to say that to-day a man would be safe in buy- ing in those auction rooms where a regular catalogue of the goods is issued, and in danger whenever he found 324 "MocL^> AucHo)is. himself m an auction roon. where there ;« n„ . i he would be correct But In, "^. " '*"''^<' " "" catalogue, distinctive feature Idter; ^^l^^ '^'-'''' "^ "^ Ses" t^trvr""::' ^^^'^'^ "^'•- ^-^ making them Tin m / » '"' "" ''"•''^'■' •''"<' '^'Ao-t .enerJl, d^d h tn^ ^IS^I^-^^PI^ periencpfl in th^ « I- ^^Livjueeis, and one inex- inr:;t:ti:;ir„E:ttLt" "^'^ -■' '- '-^ - from chance warfare sorTh! ^ '"''"""'' ""'''•'« """ maybe in lel'ne wi h [h r""''""'"" ^"'' " '^'^' ^''•' merchants in tfocl V tt.t""'"''-'"' '"'" ■•*=''''»"« tioneers, and who most need to be r>n t) , "*'" class who never read the pap rs if th ev dif T:'' "" *'^ learn that the reffular a„otinn ' , ^ *''^-'' ''■°"''' sales in one or mo e of he " "'^' "'^"^'^'■^^ *'-'' -me extent, theTLd an l^r ''rih'"^"^""^"' '" will be sold, the hour when the sL' 'III b -^"t ^'''''''' of the sale, whether for ca:.. • T ^: .'^t^d t'lV'^'T' on tie^Hnc^s thi ::i:;;rr;;,:r -^^ '-^^^-^ along, by the sound of the crver's *« ^nl ^ n "^ ^ lar-one dollar-wi clolla^-irdo J" o; ^ ''' red flag hung out at the door! ' '^' ^'"'^'"'^''^ CHAPTER XXII. INVESTMENT OF THE PROFITS OF BUSINESS, iT would seem natural to think that men who succeed in making money in their business will know how to take care of it afterward. But having seen so many instances where they did not — where money was drawn as profits from the business, when there were really no surplus profits, and so invested as that not only that amonnt was lost, but even more had afterward to be drawn from the business to ward off disaster and loss on the first invest- ment, to the injury of the business itself, — I believe that a work of this kind would be incomplete without some suggestions on this point. Before entering on the main subject, a few remarks may not be amiss, after the manner of the oft-quoted Mrs. Glass, on first having the profits to invest. Atten- tion to this is of more importance than in her directions for cooking a fish, for while there may be grave doubts whether anything in the semblance of a fish could be dressed and cooked until it was causrht — we have most of us seen money drawn from a business under the sem- blance of profits, and invested, when there were really no profits to invest. The great importance of having sur- plus profits before any attempt is made to invest them, is therefore strongly impressed on the dealer. Some people there are, of extreme prudence, who hold to the opinion that a trader should never withdraw any money from his business so long as he is in debt for goods purchased ; or, if in consequence of such withdrawal he 28 ' :■!' I:! 326 Making the Profits ^fore Investing. i^ afterward under the necessity of going in debt for his business purchases. Such a course would be certainly a very prudent one, and if not always to be advised, it at least deserves consideration; for, as a general thing, a man can never so profitably invest his ready money as in the prepayraoct of his own indebtedness-certainly in nothing so safe. Necessarily this would require a large amount of capi- tal m proportion to the business where the sales are to any great extent on credit, and there will often be in- stances where so proportionally great a capital can not be kept m profitable use the whole year. In some kinds of busmess the full capital would only be in use three or four months of the year, and if a proportion of the purchases could be advantageously made on credit, during these months, it might be profitable to withdraw some of the capital and substitute the credit for it. It is a part of the dealer's business to keep his capital actively at work earning interest. This he fails to do when it lies idle half the time. It can hardly be expected that any one can so accurately calculate the chances of trade as to always use the whole of a certain amount of capital, and yet never at any time be in need of money. While It IS safest to be on the sure side, and err by retain- ing too much rather than too little, yet with some men It IS more profitable to retain only just so much capital in their business, that they will be sometimes pinched a little to get along, and are even under the necessity of borrow- ing temporarily. This occasional necessity for money stira- alates their energy, and induces them to look more closely to selling off their goods, and collecting in their outstand- ing accounts. The natural disposition of the dealer should be considered in this matter, and his action governed ac- cordingly. If, witii the accumulation of profits and con- Surplus Money not ulways Trofits, 327 sequent plethora of capital, he finds himself growing lax in pressing sales and making collections, he would doubt- less be benefitted by such a partial withdrawal of capital, that he would sometimes be in want of money. The points necessary to be considered, in deciding that there is a surplus of profit which may be advantageously drawn are, therefore, the following, namely: 1st, Abso- lutely no need of it, as the purchases can all be made for cash without it. 2nd, Or if not, that for the short periods when credit is needed on some of the purchases, the differ- ence in price, or discount which can be obtained by paying cash is inadequate to pay for the use also of the money during the rest of the year. 3rd, The certainty of re- ceiving from sales and collections sufficient money to pay for the goods purchased on credit at the maturity of the credit, or if this is uncertain, the certainty of obtain- ing temporary loans, without sacrifice, to meet any emer- gency. And 4th, Whether the capital, if left in the busi- ness, could be temporarily used or loaned in such way as to be safe and earning interest, at the periods when it is not wanted in the business. How shall these be considered ? In a business which is nearly regular throughout the year — about the same amount of purchases and sales one month with another — it is not difficult to come to satisfactory conclusions. When the stock of goods is once all paid for, the ordinary monthly receipts will pay for the monthly purchases, .and any considerable amount of money left over after paying for the purchases, may be regarded as surplus profits; that is, if the stock of goods is up to the ordinary quan- tity. But when the business comes in seasons, as many kinds of retail business do, and for two or three months in succession, at each of the two or more dull periods of the year, the stock of goods is greatly reduced, there will ^ 328 Temporary Investmentt. be correspondingly large amounts of money on hand over and above the requirements for paying, which can not be withdrawn without danger that, when the time comes to increase the stock for the busy season, this money so with- drawrn will be needed, and for want of it the business will be endangered. It is the dealers of this class who are most tempted to withdraw undue amounts from their busmess, under the name of "surplus proHts,"-or excess of capital beyond their business wants-even at times when they may be owing large sums for goods bought on credit, but not yet due. Unable to get what they think an adequate reduction as discount for prepayment, they seek other ways of using their money, intending that this other use shall be only a temporary one ; but too often to their sorrow, they find it so permanent that afterward when they require the money in the business, they can not restore it without a sacrifice. Assuming, however, that any contemplated withdrawal of money as sur,>l„s profit has been duly considered, and the capital really found in excess of what can be advan- tageously used in the business, we will pass on to con- Bider, first, some of the disadvantageous ways in which It may be invested, trusting that the remarks may be in some measure, useful in warding off a calamity which often overtakes the heedless. Scarcely a reader of this with ten years experience, but will be able to call to mind some .acquaintance who, while doing a prosperous business, in the belief that he had made I good deal o money, was induced to take some of it out of his business Ws flZe " '" '"^^^'''"■•«' ^hich eventually caused f/ ^'Tl^"^' for example, really made a couple of thousand dollars, which he docs not need in his busi- ness. He sees what he regards as a good opportunity Investments that Call for Mbr^ 329 to invest it in purchasing a piece of land in the outskirts of the village or town in which he lives. The lot costs twice the amount he has to spare from his business, and he leaves the balance unpaid on mortgage, trusting that even before the mortgage matures he will have made enough more in his business to pay the balance. There comes on a prolonged decline in trade, however, owing to ordinary causes, and when the mortgage is due he has to draw the money out of his business to pay it, knowing that it is not made/but relying on occasional borrowing at bank, or from his friends, to help him out in any tight pinch of the money market. Soon his payments are not made with the same promptness as heretofore, and his credit sutlers. On this account his business is still less profit- able, and he barely makes his expenses, if even that. His land meanwhile lies dead on his hands ; he can not sell it except at a loss, and it brings in no income. With a view to make it earn him something, he concludes to take up money on a mortgage on the lot and build a honse to rent out. But after the house is built it does not rent, and so he occupies it himself, thus saving the rent of the house which he before rented. True, the interest on the mortgage which he now has to pay, is much more than the rent he before paid, and as the house is new it needs many additions to make it comfortable — the lot must be fenced and graded, and sodded — and all this takes time and money. During all this period he can not so faithfully give his attention to his business. He has too much other work on his hands, and the business does not prosper. Soon the crisis is at hand ; he is at the end of his borrowing and is compelled to fail. To fail simply because he invested, in a disadvantageous way, the two thousand dollars he had actually made in his business. Such results are found not only in investments in town / 330 ^ I^'eH' Experiences, lots, but often follow the more speculative enterprises which a trader may be led into as an investment for his surplus moneys, such as manufacturing enterprises, steamboat or stage lines, newspaper establishments, patents, wild lands in the west, gold, silver, copper, lead or iron mines, etc. ^ A few instances of many, that are within the recollec- tion of the writer, will show how uncertain is the limit to, and the profit of, some investments. One dealer, having a surplus of five thousand dollars in his business, concluded to invest it in building a store to save what he regarded as an exorbitant rent. This amount was deemed by the builder fully sufficient to complete the work ; yet when the store was entirely finished, it had required an outlay of nine thousand dollars. The extra amount had to be taken from his business ; and the loss to it thereby, together with the want of the proper atten- tion to the business, while the building was in progress of erection, so injured his trade, that in a period of com- mercial adversity, about eighteen months after, he had to suspend payment, much to his mortification and loss. Though in itself the investment in the building was a good one, still it proved a bad one for him, as it ruined his business which was of far more value to him than the $5,000 he had first intended to invest. Another instance is of a retailer in a western town, who having some $6,000 to spare, concluded to unite with a man who had a like amount, and who also had ex- perience in the business, in erecting a hotel in the town which needed one. Each party was to furnish $6,000, and it was fully sufficient to build and furnish the house! The walls were not far above ground, however, when the other party failed to respond with his share of the money something having occurred by which he lost the means he had intended to put in. The necessity was placed on Jnyestme7ii: In a Hotel , Btc, 331 the retailer of either abandoning the enterprise and sink- • incr what he had put in, or of taking upon himself the whole bm-den. He chose the latter, and managed by borrowmg money on mortgage on the building at high rates of in- terest, to complete the house, but before he could get an occupant, the interest on the mortgage became so heavy that he could not respond, and the house was sold under foreclosure, actually leaving him in debt on the bond. In the meantime his business had been losing ground. In the struggle to sustain himself in the hotel investment he had drawn too heavily on his business, which from tem- porary inattention had declined, and he was compelled to fail. His creditors could not understand how a man who stood so fair a short time before could be so badly oif, and quite generally refused his compromise offers. He was compelled to make an assignment, his business was entirely broken up, and he became a poor, shiftless wan- derer, dying a few years later, leaving not even sufficient to decently bury him. Still another recurs to my mind, who dealt quite consid- erably, in an article which he sold to several manu- facturers in the neighborhood, and having made some money for which he had no use in his business, concluded to invest it in manufacturing this article, with a view to getting it cheaper. It was to require but two thousand dollars, and this amount was invested. But he soon found that if he would manufacture the article cheaply, he must do it on a larger scale. He gradually added to it ns he could spare funds, until he had over ten thousand dollars invested, and he then told me that notwithstandmg the time he gave to it himself, purchasing the raw ma- terial and selling the manufactured goods, the net profit did not exceed simple mterest on the capital. Fortunately his original business was not nfglected, and continued llL Ii / 332 Specutattve Inrestmetits Dangerous, 7h'o Lei^ons to be Learned. 33S proatable, enabling him to draw these additional suras without injury to it. A small dealer in a western town thought he had five hundred dollars surplus, which he drew out of his busi- ness to invest in an enterprise in getting out lumber from the pine forests of Michigan, in the belief that he could surely double it each winter. In two years after he failed, and It then turned out from careful investigation, that he had not made anything in his bu.«iness when he took the «500 out, and that subsequently he had put into the same adventure *1,000 more ; and these two amounts were more than his original capital. He had never drawn or realized a dollar of profits from the lumbering, and the only thing he had to show his anxious creditors for this withdrawal of so-called profits, was a quarter interest in a steam saw-miU in the Michigan wilderness ; which though reasonably well mortgaged, he still insisted was a good investment, if the concern could only raise money enough to get a new boiler, the old one being about worn out. The *1,500 was not much to invest, it is true, but in this case it was more than his original capital, and more than he could have realized from the business by closing it up under the most favorable circumstances. In add^ tion to the loss of the capital, there had been nearly as great a loss while the lumber speculation was goin- on from reduced sales, depreciation on stock, lessened profits and the careless trusting out of goods-the natural re- sults of mattention to business. All these misfoHune, made it impossible for him to pay over twenty-five per cent of his indebtedness, which his creditors eventually accepted, leaving him to try his skill once more Tliese instances are fair examples, and sufiicient to show the folly of not letting well alone. The business world generally regarded those that foiled as unfortunaU. Had tliey been considered incompetent, it would have been more correct. Two lessons are to be learned from such experiences. One, thfit no investment of surplus money in a business should be made in any scheme or undertaking that will subsequently require more money to be added to it which has yet to be made ; the other, not to invest in anything which is likely to largely take up the dealer's time and at- tention in looking after the investment. Even though all of the dealer's experience tends to prove that he will easily make the additional sum of money in his business by the time it will be required, still it is unwise to venture it. There are too many contingencies in business for any one to say what the future will be, and it is by far the safer plan to invest only just so much as is made, keeping clear L>f any obligation to add to the investment at any future ^me. It may be said that it is not hard to see the difficulties :ind dangers that stand in the way of any enterprise after we have stumbled over them, but it is no assumption to Bay that if the surplus profit, or even supposed surplus profit, of either of the unfortunates in the cases cited, or in Rimilar circumstances, had been carefully invested in good bonds and mortgages, or in sound dividend-paying stocks, the difficulties which subsequently occurred to them would have been avoided. A retailer who has a good paying business, which re quires his time to keep it in due order and profitable con- dition (and every business, as the means increase, should be extended to that point, when, as in most cases, it can be done advantageously), ought to discard in his investments all idea of speculating or profiting in any way on the money invested, exxjept simply by the interest. What- ever of gain thw3 is, more than this, will either be at the Ili ,: 1 S34 yfhat are Oood Investments, Ootids and Mortgages, 835 risk of the principal invested, or will require more or less of the dealer's attention and time which should be de- voted to his legitimate business. Whatever superior powers he may possess, or tliink he has, for business en- terprise, will be more advantageously kept at work with- in the range of his regular operations, and he is far more likely to accumulate wealth in an increased degree, in- side of his business, than by outside adventures. There is quite a diversity of opinion among business men, as to what are good investments. Whatever will surely yield the legal interest, and securely hold the prin- cipal sum loaned, without care and attention on the part of the lender, may be regarded as such ; and whatever carries with it the risk of loss of the principal or a part of it, even though the promise of large annual gains, are connected with it, shoiild be regarded— simply as an in- vestment — a poor one. It may be a good operation or speculation, but not a good investment. The highest class of investments are no doubt good bonds, secured by mortsjages on improved real estate, to one-half or two-thirds tlui value. This is a favorite in- vestment with those who have made their money by slow and sure methods, and desire in all their investments not to incur loss. It is pretty nearly the only investment which may not at times induce a spirit of speculation. An investment of $1,000 in railroad or state bonds, or bank stock, which at the end of a year returns not only the regular interest, but has advanced in value ten or fifteen per cent, presents a strong inducement to speculate by the buying of another $1,000 worth of some other stock which is now depressed, but which must soon be higher— in the opinion of the newspapers at least. So also in the purchase of reai estate. If the investment is found. o^tpr a vear or two, largely increasing in value, besides t" g yield ilr^gulfr Income, there is a temptation to infelt more money in the like manner, even when it r not be spared, and the -estor's thou^^^^^^^^^ tinually running upon the prospects of ^^e --^^ ^ value in different localities around him. The perlect se curity of the principal, and the regular payment ot m- eSis less sought 'after, and every -estmcnt . r^^^^^^^ a Bpeculation which is to largely increase t^e P ma^^^^ invested. Like drawing a small prize m a lottery tW is always a strong desire to try it over again. And w hen a man once gets into that adventurous habit, in what l"ud be caufious business transactions, there are more chances against his eventual success than there are m his Money loaned on bond and mortgage brings its regular income, with the least possible care on the -der s p H. The principal is never worth more, and rarely worth less^ It presents no inducement to speculate, nor does it need 2 time that should be devoted to t^^ -g"lar bus es. Taken all in all, these investments w.l. be found fully as profitable as any other class, which may promise more from an increase of value of the principal invested. Those that have not given the subject especial a ten- tion will be surprised to notice how fast a fund will ac- - cumulate at even seven per cent interest, when there are no drawbacks, and the in:erect is regularly compounded or re-invested, which could always be done by on ^ho invested only his surplus profitD each year. It is at lea. essential to consider this as done when we -mpare result with a real estate investment or «P-""^^-"' "^^ ^ .f ^'^ for year, no income is realized, and it may be ^^id to be re'ilvested year after year, showing its results m the end in the increased value of the real estate. 336 ^apid Accumulation of Interest. Suppose, for example, a dealer at thirty years of age m such a business that he can safely draw $1,000 of sur- plus profits out of it, with a continuing ability to draw the same amount out yearly, till he shall be forty years, of age. If the $1,000 is invested each year, and tho yearly mterest of seven per cent added to the investment, It will amount in the ten years to $15,783. Continued for ten years longer, or until he shall be fifty years old, he will have $44,865. And in another ten years, or when he 18 sixty years old, $102,073. Now, $1,000 a year is not a large net profit for a retailer to make, takincr one year with another. The most of those sellincr even $10,000 of goods a year expect to make that much clear of all expenses. And yet how few are there among all who have been in business, that have accumulated at'fifty years of age $45,000, or will be worth at sixty years of age, should they continue in business so long, $100,000? There are instances of men who have made money through fortunate investments in real estate, much more than they could have made by investing their means in securities bringing *nly a regular interest ; but they are fewer than is generally supposed. They are like the prizes in a lottery^many blanks to the one prize. It is very doubtful whether the annual net income from real estate, throughout the whole country, includincr the advance in value, and deducting the depreciation, the wear of buildings and improvements, and also, makin^r a fair allowance for the services of those who do the work required to earn the income in gross, will exceed four per cent. There are thriving cities where the increase of value alone in some localities, gives greater average yearly results than that rate; but it must be remembered that this increase is first obtained by a large expenditure, that is lost sight of, m assessments for street openings, pavin^r *Jie