The Portland daily press., 1883-05-18

mess If they saw fit. This Is an illustration
OF tue manner in which borrowed capital
figures In the mercantile trade. Unti the
eventual day is passed the life of such
house is uncertain, and IL must labor under
many disadvantages. Without good credit
the house cannot extend its business, o d
without confidence IL cannot obtain credit
The commission business Is looked upon as
the safest. A commission house will make
arrangements with mill for II to produce
100000 worth of goods. As soon MS a guam
tity of merchandise is delivered to the COM
mission merchant he gives his acceptance in
the shape of note at from thirty days to
four months for from one-'hird to three
fourths of the value of the goods. The goods
are held as security. The merchant sells the
goods at from to II per cent. commission,
and receives the interest on his advances.
The commission merchants paper sells at
favorable rates, because the miller cannot
fall and leave him unsecured. The profits
of the commission merchant are not large,
but the volume OF business is heavy and the
risk light.
Where the pecularitles of the credit sys-
TEN are best shown are In the advantages
and disadvantages of the use OF paper. The
regular rate Of discount GU purchases is IL
per cent. per annum. A house whose stand
ing enables 1t TO sell Its paper at per cent
discount, which is considered iirsl-class
rate can negotiate Its note at the time of
making its purchase, and secure the dis
count on tue BILL TO such great extent is
paper used thai many merchants make
study OF the most favorable way OF creating
market for their paper. II is the perfection
10 which the system has been brought that
Keeps business in such an even channel and
prevents disasters. Greater dangers lie in
the contraction of business than in the ex
tension Of it. II is not from the credit sys-
tenn itself, said an Investigator, that disas-
tiers are to be feared but from the lack OF
safeguards. Speaking of influences that af-
fec,ed credits, the Investigator said that the
situation had much to do with the sjandlng
For instance, houses In Chicago, Cleveland,
Kansas City, Minneapolis, and ST. Paul.
which Were looked upon as growing cities,
were regarded with greater favor than those
in other parts Of the country. Boston and
Philadelphia We're losing their coign Of van
tage in the mercanti trade. Til was par
tlcularly true OF Boston.
The Investigation of credits has almost DO
come part of the trade. Many houses
send reports of their sales to a new concern
To the recognized commercial agencies. The
concern itself is asked to make statement
The reports aud the statement are COM
pared, and whatever other Information eau
be obtained is used in making a rating. AT
'Vt"0u II tii'ic II EtdsOt 10 suspect tflat the
concern is going beyond the bounds oflsafety
reports are called for from the houses with
which IL deals and written statement from
Itself which can, If necessary, be-
used in the legal proceeding ii asked
for Judgement must be coupled with the
notes at hand, but the sources whence III
formation may be ohTained--lhe business
houses, the legal records, the banks, and the
lise--s:e s. many that the real standing IL
the concernmay b. arrived at with reas-
enable degree of accuracy. Many houses re-
qaire customers, whose standing they doubt,
to make written statement on the pur-
chase Of goods, and sometimes 10 swear TO
IL. A statement made to obtain general
credit holds good in the courts. Where mer-
chants go on after they have become insOl-
vent, 1t is oftener the case that credits were
90 easy than that ii was their intention to
entail loss upon their creditors. There are
ipbbing houses in New York city that do
business on $4,000, but they are compelled
10 keep within bounds aud content them
selves with small trade. There is one
house in the City with capital Of $4,000,
0u0 which is believed to do a business OF
SIS, 00u 600 year, and another with cap
iial of 81 100000 which is said to do bust
ness Of S50,000.00O.