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Author:
Terry, Samuel Hough
Title:
How to keep a store
Place:
New York
Date:
1891
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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
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Terry, Sajnuel H.
Hox>r to keep a store.
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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
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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
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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 an
rigidly adhered to, three-fourths of the failures among
retailers would never occur ; as experience shows that
in fully that proportion of failures undue expenditure,
either consciously or unconsciously, was largely the pro-
moting cause of the disaster. The continuance of an ex-
penditure averaging five hundred dollars a year — or even
three hundred — in excess of the net profits, running through
five or six years, makes serious inroads into the capital of
A Good Method to Zimit Expenses,
279
most retailers, and generally ends with the creditors of
the concern being called on to take from twenty-five to
fifty per cent of their claims, and thus they in the end
have to foot the bills of the dealer's expenditure.
This ruinous result is often aided by a disregard of
what may be called the uncertain losses of the business*
At the end of the year the expenses have been incurred, and
the business has not been prosperous, but the dealer does
not like to own to himself that he has expended more than
he has made : so he omits making a sufficient reduction on
his old stock of merchandise, and defers carrying over to
his profit and loss account outstanding claims which are
really hopeless, but which he strives to think will yet
turn out good, and by these means or omissions a nomi-
nal profit on the year's business is shown which fully
covers his private expenses.
When the business is not large, and is in its character
somewhat uncertain, as most are in the extent of sales
and profits, it may prove unsafe to estimate for the expen-
diture of the coming year entirely from the results of
previous years. The business may fall off largely during
the year, and it is advisable therefore that whatever has
been set down as the limit for private expenses should be
subject to reduction as the year advances.
In a very small business, "where perhaps the capital
would be sunk by such drafts before the year expired
if there were diminished profits, it is a safe way to limit
the expenditure to a certain per cent on the profits of the
week. The exact proportion of the profits being settled
upon, that can with safety to the business be drawn for
private expenses without diminishing the capital, which
is still retained intact to keep up the business, they can
be daily or weekly set apart and used for such purposes.
This method requires very little knowledge of book-keep-
\a
ill
\\i
280 Importance of Economy to the beginner.
ing, or of accounts, only enough to know what the aver-
age per cent of gross profits on each dollar sold is, and
what proportion of this can be used as the net profit
It is peculiarly applicable to small dealers and mechanics^
as thread and needle stores, milliners, green grocers,
butchers, bakers, smiths, etc., and has the merit of being
easily comprehended and a pretty safe guide in enterprises
of a more extensive character.
Probably more fortunes are made by a saving econoraj
in expenses during tlie first few years of business, than
are made by great profits. The difference of five hundred
dollars a year in expenses, for the first ten years of a young
man's business life, will possibly be all the difference be^
tween poverty and a competence at sixty.
It is not only the yearly $500 and its interest accumula-
tions which make the sum total, large as these are shown
to be, further on in this book ; but it is the advantages de-
rived from the habit of economy gained, which con-
tinues to some extent through life, and from having this
surplus of profit to use in the early years of business, and
which is worth to the dealer at this period far more even
^han the simple interest which it would bring if invested.
CHAPTER XIX.
COPARTNERSHIP.
The custom of forming copartnerships to carry on va-
rious branches of mercantile business, is so prevalent that
it is quite appropriate to discuss some of the most promi-
nent features of this relationship, and indicate the par-
ticular points which should be kept in view in forming one.
The main object to be attained by the formation of a
copartnership would seem theoretically to be the creation,
by the joint abilities of two or more persons, of one whole,
complete, and perfect business management.
One who has ability to plan and arrange, and initiate
business enterprises, may think himself lacking in perse-
vering attention to details, without which his undertakings
will rarely be profitable. Another with but limited
ability for the inception or origination of projects, can
efficiently aid by his indefatigable energy and industry,
those who can plan. Other circumstances being not un-
favorable, two such persons would ordinarily succeed well
in business as copartners. Again, one man may be prompt,
bold, and almost rash in his business enterprises, though
able to both plan and carry out his projects ; if connected
with another who is over-cautious and too timid to en-
gage in even ordinary risks, the alliance might be bene-
ficial to both. Or one man may have sufficient capital
for a business without the proper experience ; he would
require in a partner, not capital, but business ability and
skill ; and the two would together bring to the business
all that is necessary for its successful prosecution.
I
282
IfTiat is Required in a l^artner.
It will be readily seen, therefore, that what is more
especially needed in selecting a partner is not similarity
of business attainments, but rather such different charac-
teristics as will make each partner the complement of the
other. Though it is not meant that in practice this is
reached, or can be, as all men have more or less know-
ledge or ability on all points. It is only intended to refer
to the prominent points or characteristics.
When a person is proposing to form a partnership, the
first consideration should be what he can do well himself,
and what he can not do so well. Then the consideration
as to whether the proposed partner can and will supply
his deficiencies. These enquiries are generally too cur-
sorily made, and it is often found after a partnership
has been formed, that the partners were greatly de-
ceived in regard to the peculiar abilities of each other.
We are too ready to jump at the conclusion, when we are
lacking in any qualification for business, that any other
person whom chance may happen throw in our way as a
partner, can supply our deficiency.
There ought also always to be a clear understanding
between the contemplated partners, as to the various de-
tails of the business which each is best fitted to take care
of It is sometimes found after a partnership is made,
and the actual work of business is commenced, that this has
not received sufficient attention. Each partner has thought
over the matter, and assigned that duty to the other,
this to himself, all through the work ; and it is found when
the trial comes that there are many things to be attended
to, which neither wants to do, nor can do well. If this
subject was freely canvassed beforehand, and no undue
encouragement given to either partner to undertake duties
he felt himself unequal to, and the labor of the business
was fairly divided between the partners according to
diversity of Gifts -Harmony of Yien^s* 283
their qualifications, many of the difficulties and quar-
rels which sometimes occur in such associations would be
avoided.
" I was very much deceived in that man," is often the
exclamation of one just released from a disagreeable or
incompetent partner. But why deceived? Nine times
out of ten because it had been assumed at the outset that
the partner would perform certain duties, which he had
never agreed to perform, and for which he had not suffi-
cient skill or experience to bring to a profitable issue.
No man who forms a copartnership with another with-
out a full understanding on these points, has any more
right to regard himself as deceived by his partner's course,
than he would be deceived, if confiding in the disposition
of a strange horse to stand without tying, he should
leave him in the street unfastened, and after a mo-
mentary absence return to find him running away.
While there should be a diversity of business attain-
ments and gifts between copartners, it is desirable that
there should be a concord and harmony of views in rela-
tion to the best method of transacting the business, so
that each one's time is not diverted from his department,
or too much occupied, in urging upon his copartner tht,
adoption of his ideas upon what might be called the
fundamental principles on which the business shall be con-
ducted. Nor should there even be such a diversity of
opinion about the daily transactions as to require too long
a discussion to convince a reluctant partner. The object
supposed to be accomplished in having the consent of all,
is a better chance of success when the operation is con-
ducted under the joint intelligence of two or more part-
ners. But when this mutual consent is only to be ob-
tained after long and continuous urging on one side,
^nd then perhaps only a reluctant assent at last, as will
284
Importance of TTnanimity,
generally be the case where the copartners have diverse
views on the fundamental principles, the business is
likely to be a failure, not only in its theoretical end, but
also in its practical end of profit.
The enterprises of a business require a promptness in
action to make them profitable, which is only attainable
by a full and complete conclusion of the mind, that the
end will be a successful one. So long as there are doubts
intervening, or a partner who is from time to time urging
objections to the transaction while it is in progress, so long
will there be hesitancy and procrastination, and therefore
unthrift in the business.
It is in this view that Bonaparte's remark that " one
bad general is better to conduct an army in battle than
two good ones," becomes a truth. The one, from his
ability to come to a ready conclusion, will act promptly
and with vigor, and even if on account of bad general-
ship, he is only half successful, still in the main his re-
sults will be greater than if two men of superior attain-
ments have charge of the army, when from failure on
their part^to agree quickly as to the best course to be pur-
sued, the golden opportunities will pass by in inaction.
In business as in war, things are proper to be done or
left undone, according to the circumstances of the hour.
It may be very desirable to buy or sell an article to-day
at the market price, and very unadvisable to do either to-
morrow. And a man who expects to succeed in business
must therefore make up his mind quickly in view of the
. present circumstances, and act promptly.
To obtain this advantage in a copartnership it is a good
plan for each partner to have a special charge over certain
departments of the business, and be the prime mover and
operator in these departments ; the action of the other
partner in them being only advisory or assisting. A very
!t>iyision 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« yearly «30,000. Vitl
?/rhox;i - i-riTh^^ i-
ing for cash, he might, by a losing hnsinel sinkt i h
tal, and yet simply from his sal^s of $2 C l""*""
**|^ gnen tune be no more than the r5^1..c ^ r
r;^"^o,fndStrfhXi:^----
by getting six months crd on hi T ''""""^'' """^
still paypromptlyatmati AndbvCr" '" """''^
,monthscredit-a not unusual credit a r^"^"" "°'"
could be «IO,000 behind, am m meet IT- '"" "^"T''"
out borrowing. Should he so^ pa;'™' fTr •"'"'■
ture he .^„M owe for eight mLfhT^lLl^'lVoOO
and have but $1C,J>00 of stock to pay with Wh ''. ,'
ho stopped bef ?<^W th, i;„A Jli*: ^^^"^ •"'■"'
_1"'S tt^" tost $5,000, he would havu
Reason for postponing the Suspension. S49
owed only 115,000, and would have the same amount of
Btock to make a dividend from. He eould as easily have
paid fiay per cent dividend at the earlier period of insol-
vency as he could thirty-seven and one-Yialf per cent at
the later period. This cause for the creditor's objection
can be avoided by taking a semi-annual or annual ac-
count of stock, and by keeping a running account of pur-
chases and sales, with an estimate of the profits as re
commended in Chapter XVI. by which the dealer may
always know very nearly his true condition at the end of
each month, and certainly at each stock-taking.
The third reason for continuing on in the busmess after
the dealer is insolvent-that of a belief that the losses
are reparable-may be a satisfactory one even to a losing
creditor. The loss may have been a peculiar one, not
likely to occur again-as a theft, a fire, failure of debtors
under peculiar circumstances, or other like causes. A
dealer who had been prosecuting a successful busmess for
a series of years, would be justifiod, when meeting with
such a disaster, in continuing on m business when the pros-
pect was fair that he could in a year or two retrieve the
loss. But the chances ought to be carefully considered.
The dealer should endeavor to take the position of a cred-
itor looking back on them after a failure has subse-
quently occurred. It is useless to continue on under such
circumstances, if the way is not fully clear If there is
doubt or hesitation, the chances are that further strug-
gles will be unsuccessful. The dealer is somewhat in the
position of one caught in a quagmire. If he can reach
firm land by a struggle or two, all is well; but if he is
too far from the solid ground, he will do better to make
his situation known by crying out as speedily as possible,
as struggling will only sink him deeper, without reliev-
ing him. ^^
^50
Cotifide7itiat ±>€bt.
When a man in doubtful circumstances of solven(5y
5nd8 himself short of funds to meet his payments, and
cannot succeed in getting a greater length of credit on
his purchases, he sometimes has recourse to borrowing
from his friends. Creating a debt of such character that
m case of failure, it must first be paid out of his asseti,
and this gives cause for —
The second objection of the creditor.
The insolvent, in creating this character of debt, has
gone from bad to worse. The most difficult obstacle to
overcome in obtaining a compromise, when it exists, is
a large confidential indebtedness. It is so often used in
the emergency of failure for a covei* to some means re-
served for the insolvent's benefit, or to make good the
loss of some one or more favored creditors, that it is al-
ways looked on with suspicion. To show how onerously
a comparatively small confidential debt bears upon the
general creditors, take the case of an insolvent, as men-
tioned a couple of pages back; and suppose him at the sec-
ond stage of downward progress, 15,000 behind, and buy-
mggoodsatsix months. Instead of obtaining credit on
longer time, let him make good his deficiencies in part
by borrowing to the extent of $2,500, which it would
generally not be difficult fo'r him to do. When he sus-
pends after losing the $5,000 more, he would owe $2,500
confidential and $17,500 general indebtedness. Paying
the first in full out of the assets would leave, (counting
the assets at the same value as before,) only 28^ per cent
dividend for the general creditors, instead of 37^, as before.
Doubling the amount of confidential, would reduce the
dividend to the general creditors to only 16^ per cent.
Confidential debt should always be' avoided by a
dealer in doubtful circumstances of solvency; and if
it has been considered necessary to create such a debt in
The Creditor's Third Objection.
351
the endeavor to retrieve his position, it is better to con-
tinue on in the business long enough to pay up the con-
fidential, under any circumstances not otherwise discred-
itable. Although the result is the same to the general
creditors, the confidential debt is not present m the sched-
ule to prejudice their minds. ^ ^
The third ohjection-Xh^t of a change increasing the
amount of indebtedness unfavorably to the creditor, since
actual insolvency, is one difficult to overcome. A credi-
tor who, on looking over the accounts of an insolvent
debtor, finds that his own claim is much larger m com-
parison with other creditors, than it was at some prior
period when the debtor was also insolvent, is ordinarily
very unwilling to accept any offered compromise, till he
18 put on an equality with the other creditors, by the pay-
ment in full of so much of his claim as is in excess of the
former proportion. Nor will it obviate the objection that
the increased amount was made at the urgent solicitation
of the creditor, although that is always a mitigatmg cir-
cumstance. The creditor may not be able to impugn the
the motive of the insolvent in the increase of the debt,
but he will feel the increased loss just as keenly.
A dealer knowing himself in such doubtful position,
should, therefore, be careful not to unduly increase the
amount of his indebtedness with any one creditor. It is
not enough for him to show that he has not increased the
acffregate of indebtedness in contemplation ot failure.
This is not the point of objection. From the time when
the debtor is in doubt of his solvency, he ought to regard
himself as acting not only for himself, but as a trustee
for his creditors-that is, for each individual one, as well
as for the whole body of them. He should so manage
that the interest of any one or more of them is not sacn-
ficed for the benefit of the others, which is done when
►!.
i i
;h
352
^quaUzlnff the Losi,
one's account is reduced materially and another's increas(^d
When he has actually failed, he can not satisfy those whc.se
claims are increased by balancing off against them others
whose claims are decreased. These may, it is true, more
cheerfully give the aid of their influence in his efforts to
obtam a compromise ; but they are very prone to ascribe
their advantageous position among the creditors to their
own discernment, which *' saw signs of his failure, and
managed to reduce the amount of his indebtedness to
them," rather than to any favor or simple-mindedness of
the insolvent.
There are often premonitory signs of coming failure
that shrewd creditors can see, which induces them to
refuse a continuance of credit. Such refusals are fr.=»-
quently the alleged reason for increasing accounts in other
houses, or for opening new credits. It would be better
policy, in view of the probability of failure, and certaioly
more honest if there is any doubt of ability to pay ia
full, to refrain from purchasing except from those who
are already creditors. Refusals of this character are conta-
gious, quickly running from one creditor to another.
And It IS particularly incumbent on a dealer, when so re-
fused by any former creditor, to carefully review his po-
sition and be quite certain that he can get out of his diffi-
culty, paying not only his indebtedness in the old houses,
but m such new ones also, as he may open accounts in,'
and this, too, even though he should be refused by a large
number of his old creditors. If he can not be sure of
this, It IS better for him to stop payment at once, even
though he may think he will only need an extension of
time m which to make his payments. By going on at
this time, and opening accounts in new houses, should hii»
expectations not be realized, and he b^ compelled to fail
these new creditors will raise— '
i< The i>eht Ought to hare been Co?i/identiaL" 353
The fourth ohjection-Th^X never having made any
thing of moment in their dealings with him, they cannot
afford to lose by accepting his compromise offer, and re-
leasing him. It is very difficult, too, to avoid the impu-
tation of intentionally contracting a debt without the
intention to pay, when a dealer asks a compromise on
tlie first or second purchase he makes from a party, ims
imputation should be rendered less possible, by not opovi-
\nan^ers of the Position*
compromise, will be in desirable goods, and will be aft
tive capital.
Among those who have failed and compromised their
debts it is noticeable that very few succeed afterward,
Who do not fully realize the change that there is in their
position among dealers. Those that keep straight on with
the same amount of stock, and same expenses, under the
Beemmg impression that as they have compromised their
debts, and owe now perhaps not more than one half of
what they did before, they will have no difficulty of suc-
ceeding in the future, are almost sure to fail ag.iin.
There are several things which more than comiterbal-
ance the nominal advantage of a reduction in the amount
of indebtedness. The prestige which surrounded the
dealer when he was thought a successful trader is gone ;
and with it in a great measure his credit. Where he
before purchased on credit, and often sold the goods be-
fore he was called on to pay for them, he must now pay
cash— if not down, at least in very short time. Many
will even doubt his ability to pay the notes given in com'-
promise out of his assets, and until his success is estab-
hshed by a year or so of new experience, but limited credit
can be expected.
The extension, which is generally obtained on the com-
promise payments, sometimes allows the dealer a tem-
porary use of the money which is taken in from day
to day. But this must be cautiously used. For the first
few months after such a settlement, until one or two of
the extended payments mature, the dealer will find him-
self very easy in his circumstances ; and in comparison
with his former struggles, before failure, will feel so re.
lieved as for the time to think that his difficulties are all
ended. But this ease is deceptive, and leads him often
astray, by encourajjin^: a disposition to hold on to unsale-
Obtaining JVew Credit,
378
able stock for a better time, or to the purchase of more
goods than the diminished capital warrants. This seem-
ing abundance of money at this period should be used
judiciously in laying the foundation for a new credit,
with the old creditors, by discounting the compromise paper
under an arrangement that a new credit for goods can be
had to the same amount. Or if it is impossible to get
this, which it often is, then by using the money to i>ur-
chase for cash in other houses, and by these cash pur-
chases preparing the way for a future credit when needed.
It is, with regret it must be said, as a general thing,
easier to get credit in a new house than again in the old
houses, and yet justice requires that an insolvent when he
recommences, should give his trade to those who have
suffered by his failure, if they will sell him goods as favor-
ably as others, and when he is in doubt of the compara-
tive favorableness, to incline rather to the side of his old
creditors. Nor should he be too sensitive if they occasion-
ally refer to the loss they have sustained by him, in such
a way as to make him feel that they remember it. These
references to his failure may incline him to go to other
places to deal, where he will not hear of his misfortunes,
but unless his old creditors show, by putting up their
prices, or by other clear indications that they do not want
a renewal of his trade, he will do better to submit to this
humiliation, and outlive its temporary action. One of the
best recommendations a dealer, who has recently compro-
mised his debts, can have in the market where he buys
goods, is to have it said that those who compromised with
him are willing to sell him again on credit. Their con-
fidence in him has double the influence that credit in en-
tirely new houses will possess.
The business world seems to have not yet settled upon
the precise scale of expenditure which a dealer who has
374
deducing Tj- irate Expenditure.
What is made by the Compromise,
375
recently compromised his debts may adopt as the rate for
his private and family expenses, without rendering him-
self liable to the imputation of supporting it by a dis-
honest settlement with his creditors, and probably it
never will. Each individual case differs from others in
many points, and what might seem in one case a suffi-
ciently reduced expenditure, may in another case seem too
extravagant. Especially so to the creditors who have
lost money by the failure.
And yet it is desirable that this matter of the expense
und style of private living should be considered, as very
often much of discredit will attach to a dealer recently
failed, if a too liberal style of living is continued. It will
be said of him that he is living on the money he
made by failing, and his reputation as an honest man will
suffer, and that quickly reacts on his business credit and
standing. If any general rule could govern all cases, it
might be one that would reduce the yearly expenditure
precisely in proportion to the rate of reduction from the
full amount of the debts by the compromise. That is, if a
dealer has been living at a yearly expense of $2,000 a
year, and failing, should pay fifty per cent to his creditors,
he would not subsequently be liable to reproach if he
limited his expenditure for private living to $1,000 a year ;
provided, too, there was reasonably apparent an income
from the resuscitated business to maintain the expenditure.
The question of what profit or advantage an insolvent
may be allowed to make by the compromise of his debts,
other than his release from liability, as a compensation to
him for the time and ability given in settling up the
estate, or which the leniency of his creditors should leave
to him, as a sort of exempted means to keep himself and
family from want, is a delicate one, and is, it must be
CPAfessed, appro achec^ with diffielence. The principle*
are all unsettled. We recognize that tlie old rule of
'Spaying whatever is nominated in the bond," even to
" the pound of flesh," has passed away. And it is al-
ways more easy to find fault with and dispossess old
established usages than it is to propose and adopt new and
better ones. Such innovations often have very extensive
ramifications, seriously affecting other accepted and hon-
ored laws and observances, and nothing short of a prac-
tical trial can prove either their beneficial or mischievous
influences.
We will consider first, the least liberal view, as exem-
plified in the case of a dealer who ftils and gives up every-
thing to his creditors. In conformity with the principles
of all insolvent or bankrupt laws, he should then be per-
mitted to go clear, and turn his attention to such modes
of obtaining a living for his family as he may think ad-
visable. His creditors sold him the goods, relying on
his means and his honest and faithful management of
them, without any lien or mortgage on his future, if at
any time he gave up all his means. These assets that he
gives up may have cost him as much as he owes, but they
are seldom worth that to the creditors, who to realize a
dividend from them, must place them in the hands of an
assignee or other receiver to make sale of them and di-
vide" the proceeds. Such sales must necessarily be forced,
and out of the proceeds must be paid the expenses of the
assignee and of the liquidation, resulting generally in a
large reduction from the dividend which the assets would
have made at their nominal value. Now, if the debtor is
willing to pay this reduced amount, devoting the time he
would bestow on other pursuits in settling up the estate,
there would seem to be no especial favor shown in per-
mitting him to do so. The profit he would make by it
would depend very much on his energy and ability, and
376 Tropriety of a More Ziberal Troyision,
whatever it might be, it would seem liardly just to say that
it was made out of his faihire, at least in any bad sense.
But we will take a more liberal view, and consider
how much could be reserved to the insolvent, not as
earned by any service to the estate, but in the spirit of
property exempt from execution. As previously remarked,
the homestead laws seem to recor^nize some such liberal
exemption as beneficial, not only to the debtor, but also
to the community generally.
As a creditor, the author was always willing, when sat-
isfied of the honesty and good intent of the insolvent, and
when none of the objections, heretofore named, could be
justly urged, to accept such a compromise as would leave
the debtor's capital to bear just such a share of loss as Iiis
creditors sustained. That is, if the dealer startin- i„
business with $5,000 capital should, after a year or two" be-
come insolvent, and able to pay only fifty i>er cent of his
debts, he might be permitted to retain fifty per cent o'
his capital, or $2,500, for the future prosecution of his
busmess. When his capital had been reduced, to his own
knowledge, prior to the creation of the indebtedness
which he owed when failing, then such reduced capital
was to be considered the amount of which he might
retain the proportion. As, for example, if the same
dealer before cited should find, after one or two years
business, that he had sunk a part of his capital, and was
only worth $3,000, and still continued on in business, again
buying goods, he should be allowed to retain the propor-
tion of $3,000 only. For the knowledge that he was
losing money in his business, should have put him on his
guard, and if he continued on in business he could not
well avoid the imputation that he had purchased goods
on credit, foreseeing his insolvency. At least he could
uot have the justification that the losses which caused
;;±dvantage of It to the Creditor,
377
his failure were unexpected, and therefore in a measure
unpreventable.
On the other hand, no sudden, unrealized and nominal
increase of capital, which a previous two or three years
trade had shown by the balance sheet to have been made,
was to be taken into account. The balance sheet of a
year or two previous might have shown an increase of the
capital from $5,000 to $8,000, but if the dealer became
insolvent within a year or two after, this increase should
be regarded as only nominal, and the original amount oi
capital ought to be taken as the basis.
If some corresponding principle or rule could be uni-
versally established, there would be but little induce-
ment for the insolvent debtor to disguise the position ol
his afiTairs from his creditors. It would be his interest, as
well as his duty, to stop when he knew himself to be in-
solvent, so that by making the largest possible dividend
to his creditors, he would retain the largest possible divi-
dend for himself.
It must be remembered, that as a general thing, the in-
solvency of a man in the retail business does not come
upon him suddenly. There will often be season after
season when, althtjugh his balance sheet shows a nominal
capital left to him, it is so only by shutting his eyes to
the fact, that much of his stock is not worth what it cost
him, and is taken at, and many of his outstanding ac-
counts, which go to swell up the sum total of his assets,
are uncoUectable and nearly worthless. And he can at
best only hope that business will turn out better in the
future, so that he may get through without failure. Even
when his nominal surplus is so reduced by and by, that
he positively knows it is insufficient to pay his liabilities,
he still holds on, hoping against hope. He will retrench,
he will sell off bis old stock, he will make extraordinary
878
^ ^^ev ailing Cause /or :Sad J^allures.
■i
efforts to collect in his old accoants, he will include the
sale of some other articles in his business—anything, in
fact, rather than fail. That can not be thought of. With
a family to support, the contemplation of it, and its prob-
able result in thrusting him out of business, with no re-
source from which to get a living for them, almost un-
nerves his energies. To struggle on is the certainty of a
hvmg for his family, for a time at least, while to stop now
and acknowledge his insolvency is poverty. Forward
then be stumbles, faint and disheartened with the pros-
pect, but trusting in the vague hope that there will be a
war or soine other concurrence of circumstances, which
Will make such a demand for goods that his old st6ck can
be sold off profitably, or some extraordinary good for-
tune to his debtors, which will enable them to pay up
rather than in his personal ability to recover himself from'
his failing position ; borrowing to-day from one friend
to-morrow from another to repay that, occasionall v making
some sacrifice of his assets to raise money to push through
a period of heavy payments, till finally, after exhausting
the patience of his friends, and the forbearance of his
creditors, he comes to a stand still, with barely sufficient
assets left to pay his borrowed money, leaving nothing
fo/ his general creditors, and all chance for a release from
them gone, except through the kindly agency of some
bankrupt law.
How much better for all concerned, creditois as well as
debtors, if some provision were admitted for the insol-
vent, founded upon the dividend he should pay, which
would induce him when insolvent, to suspend when he
oould stUl pay a considerable dividend to h:g croditom.
BUSINESS QUALIFICATIONS.
CHAPTER XXIV.
HAVING specially considered each important subject
likely to be of use in the retail business, it will not be out
ot place in conclusion to say something in reference to
the qualifications of the man himself.
There are certain characteristics which are required and
which we expect to find in all men simply as men, what-
ever their pursuits in life may be, such as honesty, truth-
fulness, justice, civility, patriotism, philanthropy, and
other moral and social virtues. Assuming that the busi-
ness man has all these in common with other men, and
that he has ordinary common sense, we pass on to con-
sider a few other qualities vitally essential to his success
in business. Some of these are in a measure constitu-
tional, and cannot readily be gained when one is deficient
in them ; but something may be done, when a man knows
his weak points, to supply the deficiency. Reflection on
the subject may lead a man to see that he has not suffi-
cient economv — is inclined to be extrava^i^ant for his
means, or that he is rash in buying his goods. If such a
one would put up conspicuously, where he would see
them hourly, one or two of Franklin's prudential max-
ims for saving, and a current maxim or two in the tra le,
as " it is better to cry after the goods than over them,''
and get these ideas so instilled into his mind, that when-
ever he would spand or buy, the maxim would be a moni-
tor, he might soon feel their influence in controlling his
Actions,
i
880
ft
JShotf r/iyself."
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Account of Daily Sales for 1866
(Described on page 266.)
"•o?
JANUARY.
FEBRUARY, f
month
Cash.
Credit.
Cash.
Credit. |
1
33.36
92.12
2
« • • a •
42 69
3.46
8
46.90
81.33
12.17
00
4
&3.41
41.17
15.86
21.82
5
33.69
50.16
• » • • • •
6
27.50
80.43
43.21
2..36
7
101.63
17.19
17.02
12.26
8
• • • • • •
27.82
9.13
9
94.69
36.48
36.40
10.27
10
87.60
89.23
18.76
10.98
11
78.94
1264
89.16
15.46
12
88.68
14.16
• • • • • •
13
50.11
10.18
47.38
18.06
14
99.04
25.50
15
• • • « • ■
• • • • • •
16
86.74
17.51
17
88.46
12 91
18
79 23
16.45
19
40.16
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20
60.72
18.56
21
104.40
10.11
32
« • • ■ • •
• • • • •
33
108.46
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34
41.49
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38.69
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26
28.49
32.40
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83.12
7 19
28
40.06
11.49
29
. ..
• • • •
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22.41
78.15
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29.32
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$1603.00
$60739
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How to Examine Heads.
How Character is Manifestbd.
The Action of the Faculties.
The Relation of Phrenology to M«rA<
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Value of Phrenology as an Akt.
Phrenology and Physiology.
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ICTo-bxces o± -bii.e IPniress-
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NEW PHYSIOGUOMT
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OR, SIGNS OF CHARACTER.
Aj manifested in Temperament and External Forms, and especial 1}
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Previoum S^atema given, includiug
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Oentrmt PrineipUa of Physiognomy, or
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^riatotle and St. Paul.--k Model Head
— ^Viewsof Life — Illustrative Anecdotes-
Detecting a Rogue by his Face.
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LOOKING FORWARD
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THEIR INTEREST AND SUCCESS.
— BY —
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[218 pp., 12mo, Extra Cloth, Price, $1.00.
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The Tounff Man and His Time.
The Tounff Man and His Habits,, \>
The Tounff Man and His Pleas-
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The Tounff Man and His Jteadinff,
The Tounff Man and His Hopes.
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to
UKE FATHVR VR MOTHER ?
AND
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BY NELSON SIZER,
This work gives practical instruo^
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Men and Women Differ in Character.
^o. 1.
10.2.
NO. 3.
Ko.4.
[POBTBAITS FROM LiFB IN " HeADS AND FACKS."]
James Parton. No. 5. Emperor Paul of Eussia. No. 9.
A. M. Rice. No. 6. George Eliot. No. 10.
Wm. M. Evarts. No. 7. King Frederick the Strong. No. 11.
General Wisewell, No. 8. Prof . George Bush.
Genera} Napier.
Otho the Great
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having devoted nearly fifty years almost exclusively to the reading of
character and he here lays down the rules employed by him in his pro-
fessional work. It will show you how to read people as you would a
book, and to see if they are inclined to be good, upright, honest, true, kind,
charitable, loving, joyous, happy and trustworthy people, such as you
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A knowledge of Human Nature would save many disappointments in
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This is the most comprehensive and popular work ever published for
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Date Due
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END OF
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