The Newberry herald and news. (Newberry, S.C.) 1884-1903, 1889-08-08
Old Methods of Business.
fAmerican Grocer

Before the 'late unpleasantness be-
tween the North and South very large
proportion of the business was done on
long credits. The wholesale jobber OBJ
tanned long credits on goods he import
ed; the home manufacturer gave long
credits, frequently selling his goods to
the jobber on ''open account" simply
charging the goods to his customers IN
his books. The settling days were lst
of July and lst Of january, and then
notes were taken running from four to
six months for the amount of the ac-
count. These notes were then used by
the receiver by endorsing the same and
getting them discounted at the bank
where he kept his account. Notes OF
this kind were called "double name
paper" and the banks thought such
was desirable to discount: us it was
supposed that the merchant had taken
precautions to know, as sar as was pos
sible to know, that the notes ct the
firms to whom he had given credit
were good, and then they had the ad-
ditional guaranty Of the endorsement OF
their customers. At that period nearly
all of the notes to be found in our banks
were of this character.
At the breaking out Of the War we in
this country first began to feel the
| effects Of what was termed internal
revenue" taxes. On every article that
could be taxed to best advantage there
was an internal revenue duty levied,
and on many Of these articles the tax
was from two to six times more than
the cost to manufacture prior to this
duty being imposed. The taxes it was
necessary to pay before the goods could
be removed from the factory for sale.
| This caused the manufactured to raise
large sums Of money beyond the
amount that before that time was ne
cessary to pay for materials, labor and
other expenses incident to the cost Of
production. This new state of things
changed totally the terms upon which
goods were sold, and merchandise that
prior to the time mentioned had been
selling on time varying from four to
twelve months the:terms were altered
to "quick cash." (that is, from one to
fous days;l and "cash seven days" or
"cash ten days." while some. few We're
made leash thirty days" 49,
This state Of trade made it necessary
for the jobbers to change their terms,
but competition in business did not
allow them to bring their credits within
shorter time than thirty days, so that
1t became necessery for them to have
more cash capital of their own in their
| business, or else borrow money more
largely: to prosecute their trade. AT
this time firms who. were thought to be
good, finding that the different articles
they dealt in took 50 much more capt.
J tai to do the business than it formerly
did, and many of our banking institu.
tions having more money to lend than
their customers could furnish, "double
named" paper to use, the banks began
to buy from brokers notes that were
made, as it was termed, to "sell in the
street." This being very easy and
convenient mode Of acquiring capital
by the makers of such notes, and fol, 8
long period of time the notes thus made
being promptly met at maturity, it be-
came vast credit system. This was
extended largely by mote brokers,
who had the confidence of the officers
of banks and trust companies as to theil
knowledge of the character and means
of the firms for whom they sold paper
1t. became in this city Il business thai
assumed enormous proportions, and, a;
it usually happens, the case oi raising
money in'this way stimulated jobber'
to unduly increose their business, anc
also through the facilities afforded many
firms that did not have large resources
succeeded in getting their notes known
SO that they ''sold on the street"
But the time can when many con
Germs could not "foat" their paper, anC
not having the resources to do the bust
ness they had been transacting, were
obliged to fail, and large losses resulted
to buyers of commercial paper. The
losses thus incurred awakened Il feelin:
of distrust on the part Of those wh'
bought notes "made to sell" and no
given in the regular way Of busincs
for merchandise, and the result was ;
decided check to the credit system.