The Bossier banner. [volume] (Bellevue, Bossier Parish, La.) 1859-1952, 1883-06-21
600 out of his.own canital and .he.gnes

1
chant draws the note the SO, 600 viii
enable him to promptly meet an obliga-
ton, and the peep NOT $50 uFg{ptlbht,
that the balance can go over uffif the
next day. Inc. /. broker. Of course de-
duets his i0,008sas soon as-liel gets the
$50, 200, less the discount, and the bank
carries the full amount when the paper
goes into ats keeping1 lnofsfEFEfG.l
By the recognized rules, of trade the
normal credit is limited to fifty per cent.
more than itheseapitaED EDfI the1I@&eV To
take it beyond that limit reduces the
rating of the hoiise, ,.oa and makes the
paper what)iin lcommon ,parlance
would be called, iY'risky,a'1 In granting
credit the plan is to allow ten per
cent. for an individual account
In other words, if the capital of
house is 100000. the seller will
grant credit to the extent of $4,000.
Thus it would take ten transactions to
use up thelentire capital, and in this
way the Individual risk would be re-
duced to what would be called a mirii--
mum. This is not always the case, for
very often in special lines of goods the.
limit is exceeded, but if IS the funda
mental rule. A jebbing house will do
business of $8,000,000 a year on capi-
ital of 81 100000, ram investigator. Of
credits explained. 1t is, very seldom
that the volume Of business 8 Year
amounts to over eight times the capital
invested. The houseWiTI II the goods
on sixty days time. 1t will pay for the
goods on thirty days, but to do'this it
must have its bills dated ahead. They
house will buy in January and February
for the spring trade, but the bills will
date from April and May l. The credit
of a wholesale house depends naturally
very much upon the. rate atlhkhfehs 2fs
paper sells. Then, again, the money
market has certain influence which
has to be considered. Since the COM
mercial agencies have attained such,
magnitude the credits are based largely
on their Information. Owing ao.gthe
extent of the country the individual
merchant cannot keep track of the re-
ssponsibilitg OF. the traders in the d diferen5
States who may sdesife to. f5nrc base Of
him. To maintain their own re putation
the agencies must strive for accuracy
and tEustWRthness. and, .therafpEen,
their reports have come into widespread
'use. The establishment of commercial
ratings brings money that has been re-
tired into cireulati6n:a ~ ssueh COM
parative. perfection has the system been
reduced that the purchase of mercantile
paper has been made aDsafe and sadyanS
tageous investment A merchant re-
tires with, perhaps, & DO fortune of
81 ,500, 900. Government bonds and
stocks he may think de- not pay stlfik
cient amount for the use of his money,
and he finds aSkeady. market f6fs at
six and eight peg gcent.,ips neFeantile
paper. The method Of doing Business
has greatly changed, The ejobbers take
very little of their customers paper to-
the banks for discount. They hold it,
and deal in lsingle-name or their own
paper exclusively. They are known,
while their customers may not be, and
the discount on The tatters1 paper would
be too great. i. ase...f.4.f ,,-..ssgtt2
The practice of dating ahead has in
some measure taken the place of the
old system Of selling goods ON six
months credit, with the privilege Of
discounting at thirty days. at the end
of which settlement by note was re--
quired. The alerchant then would a'take
the note to his banker and have it dis
counted. Under the present plan, es-
pecially in the clothing IiHe, goods are
gsold on four months time and sixty
days extra, tirae without n0teS 50 Chat
credit to-day isas long inpsorne trades
as before the panicr There seems
however, to be an Inclination to reduce
the time on which goods are sold.
The rating'of new house istqiekEy
established. ). u. 1T. starts eat. Withs.as
capital Of Ssl00, 600 and buys $500, $50
worth Of goods, it, is considered to
have done an iniudicious thing. to say
the least 1t ought not to buy over
$150, 000,'Esorthi of goods atsH its stran-
sactions are at the rate of 100000 or
$500, 600 a year it viii soon have $780,
000 trusted out To start on borrowed
capital curtails the credit. Under or
dinary. ,cireumstancess thes credit 1aka
lowed In such cases is only two-thirds
of the capital, and the chances of the
success of house are greatly dimin-
ished. Three persons started q house
january / with laI SApital lof $50, coo
Edcn put III @zU,UVU, Wn1cl ne naQ
borrowed. The ,loaners stipulated that
the money should Be at the risk of the
business until 1885,, In other words, if
the business absorbed the capital before
that timeaaSe ilganefss could snH stepiih.I
to. save themselves but at the, expira,
tion of that period they could step IN
and close up the, ,business,if if they saw
fit. This is an Illustration of the man
ner in sEhich borrowed canital figures
In the mercantile trade. Until the
eventful day is passed the life of such
house, unoertaiR, and It must labsr
under many disadvantages. Without
good credit thel house oeaanot ex-
tend its business, and without
confidence it cannot obtain credit.
The commission business is lee ekeAHpoR
as the safest. A commission house win
make arrangsnianfs With asmill for it to
produce $500, 900 worth of goods. AS
soon as a-quantityof nereh andise IL de-
livered to the commission. merchant he
gives his acceptance IN the Shape of a
note at from thirtgs days. to four mopthss
for from one-third to three-fourths Of
the value of the goods The goods are