The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1878-12-02

eOCkO SS,VVUOuRnt 10 sell SZu,UUu 10 80
. cooper year. Suppose merchant sells
customer bill OF 500 once month at
profit OF 10 per cent. and each bill Is pai
promptly I'M 30 0days!, That Sl00 Of capita
has produced during the year apfoft O
SI00. But suppose that the bills were sol,
on six months time at the same profit, thel
each 500 worth OF capital invested woulI
have produced but Sl2 OF profit. Now, il
this latter case, II the merchants expense
per annum are 20 per cent Of his, capital u
business land that Is bout the usual ratio
then 1t has cost him as much TO sell tn,
goods as he gets profit, and he has mad
absolutely nothing on the transaction
This simple example shows the wide dii
ference between short and long credits
and illustrates the fact that those who sci
on short credit for prompt pay can afforC
to turn over their goods al q smaller mar
gin than those who give long time, and /
proves also that the merchant cannot af
lord to let any considerable part OF his cap
ital be invested in long-timed notes or &C
counts at any reasonable or even any un
reasonable rate OF interest.
Theprinciple laid down by the Price Cur
rent anditisa sound one, Is that no mer
chant can afford to be both a banker ant
merchant. Or, in other words, he can
not afford to furnish the capital both fol
his own business and that Of his customer
The practice OF doing so is largely RESPONSE
bic for all the seventies OF the panic, II in.
deed it is not responsible for the panic
itself. 1t encourages pernicious system
Of credits in the country that induces
farmers and others to go into debt, and
that crowds every village and Gross Roads
with two or three retailers where there
should only be one.
The Price Current contends that no re.
taller who buys goods with the expecta-
ton Of paying for them when the farmers
have sold their wool, or killed their hogs,
or "after harvest" or on the basis OF any
such contingencies whatever, has any
right to .Bein business. What is needed
is a class Of merchants who expect to pay,
and who will pay, promptly every 80 days,
or, what is better still, who have means
enough to pay cash. They can buy
cheaper and sell cheaper, make more
money for themselves and save more for
the farmer. :.
In connection with.this same subject we
notice some remarks in pamphlet put
out by the Western Wholesale Drug As
sociation that set forth the point made by
the Price Current in very striking light
We quote as follows from them: lliil''a W
at is very evident to every dealer that
the times require the most decided conser-
vative measures, and that caution and dis
cretion should be used in giving credits,
that it would be wiser for the retailer OF
drugs and medicines 10 require cash pay
ments-that in buying of-the- Wholesale
dealer on credit OF 10 days he is tempted
to give credit as the time OF payment seems
distant, and he hopes TO collect Us the time
elapses, but in the majority OF cases he
hopes in vain. The committee were OF the
unanimous opinion that return to cred
il OF 80 days would be better for all parties;
that IN selling on so days the risk is less
ened and accounts are not oyerlapped that
the risk in selling on go daysis four-fold,
and on;90 daysitis nine-fold. "a
Again, 1t must be considered as an i'm
portant fact, that, in these times OF close
margins, capital must be turned frequently
to make it pay--small profits on short cred-
its will accumulate much faster thanlarge
profits with long credits.
To illustrate:
81 900 on q credit of 12 months at 10 per
cent profit will yield in sixyears S1,77l so.
$1,000 on a credit OF 6 months at 10 per
cent profit will yield inisix years S4;1Q9 50.
$1,000 on credit OF 4 months at 10 per
cent. profit will yield in Q years s5,56s,sl;
SlOOO on n credit OF l2 months at % per
cent. profit will yield in Q years s., 9S5.0 co..
81 600 on credit OF 6 months, ut 20 per
cent. profit, will yield in six years S.
$500. .--,---ss.-ssr.-,'s, 's,s''-''l'''- ''.7'-
$1,000 on o credit OF months at ! per
cent. profit will yield in Q years S26, ,623. 30:
That Is profit OF 81 1856, or q profit OF
Sos 623 so in the same time at the same
rate OF profit, the difference being in the
length OF credit. -14 --s..as----4.sa'
Or, to take another example,
81 600 ON q credit Of co days at 10 per cent
lfOltiWlll give lui1A luuutnh h.thtttAA" - =
81 900 on credit Of 80 days at 10 per
cent profit will give in l2 months So
1888 80.
Or, still another illustration,
1000 al. 10 per cent profit every 50 days
viii yield in l9months So, ia ITO lkI u.
$1,000 at 10 per cent profit every 4
months will yield in 0 years s, $50 90.
Or, in other words, 81 600 sold on a
credit Of 80 days will produceinf 10 months
a larger result than 81, 900 at same profit on
4 months credit viii do inc years. In
other words, the same benefit Will accrue
in 10 months by short credits as would be
obtained in years by longer credits.
Or. to give q still simpler illustration:
81 600 on credit Of so days will produce
at 4 profit Of 20 per cent in Q months-as
large as 81 900 on credit oil 60 days at
same profit will do in IL months.
It may be said that capital cannot be
turned over every so days, neither can II
be five sell on 20 days turned over every
60 DAYS, but the shorter thecredit evident
" the better capital will be held In hand.