The times. [volume] (Richmond, Va.) 1890-1903, 1891-05-28
Tn. Commercial Death Rate.

The latest publication VI 'ho - -. 81
Statistical Association. which bears the rather
.aLing title of The Commercial Death Rate
is one that appeals more especially. OF course
10 business men, but yet contains good zeal
az information of general interest. IL IS pre-
nared by Mr.. A. G. Stevens. the editor OF
Rradstreet's. and seeks to set forth the num-
Der of firms and individual business men that
and also the cause of their demise. The stats
tics are compiled from the regular reports
of failures throughout the country that
are printed in Mr.. Stevens paper. and
as these reports are recognized as
the most authoritative record OBTAIN
able on the subject the CONCLUSION
that they compel may be accepted as SUBS
stantialy correct. In some respects these
conclusions are different from what popular
preconceptions would point TO. thus the
statement that "95 per cent. OF Gil VINO ell
gage in business fail at some time during their
commercial life" has been so often repeated
that in the popular mind 1t has come 20 DC
accepted almost as a settled tact. but Dne
statistics do not bear it oIt. The number or
failures is greatly exaggerated IN common
Imagination. Indeed. Mr.. Stevens mas tnaO
the total number of actual failures. IN the sense
of BANKRUPTCIES, is only ten 10 eleven thousanu
. year in the whole United state. whue the
lumber of frmssand individuals doing bulne 8
- not much less than a million. Here Is a
rate of only per cent of failures each year
and if we estimate that the average business
career of a man is twenty years the proper
ton of men who fail could not be more imam
one-ffth Indeed it would not probably pe
as high as that since we must make some al
lowance for those who fail repeatedly. In the
city Of Providence the number OF arrests Is
each wear about ACKNOWLEDGEMENTS OF the pop
ulatiOn; but that does not mean that every
twentyfour wears the entire population Is AZ
rested. And 50 from the fact that one nrIn
out of a hundred fails every year 1t does not
necessarily follow tnat every I"eh'J JO"i'
one-tifth of all fail.
On the other hand. however, in considering
what proportion of business men fan TO sue
coed we have TO allow for those who. without
being actually forced into bankruptcy, quletly
drop out of business each year wlthouI III
Aictino any loss on their creditors They
merely wind up their affairs and disappear.
The number of these is very large In 1871
Mr. Stevens puts it at 22JOOO or nearly
quarter of all the firms doing business III the
country. Some of these disappearance are
no doubt owing to the consolidation OF ola
firms or the separation OF partners 70 form
new ones, and 80, as MT; stevens ca.
presses il, are to be classed IN the lst
of commercial marriages and divorces
rather than in that Of commercial
deaths But the larger part Of them were
probably failures. in the sense OF failing %
succeed-that IS. failing to make prohts
enough to justify continuance IN business
Even however, with all due allowance TOR
these practical failures. it is evident that the
number of men who fail IN their business I'M
dertakings is nowhere near as large AS the pro-
portion set forth in the current statements
that we all frequently hear and when has Sc
cured standing in common belief. Ilrhlng
TO the causes Of the actual failures, III the
sense of bankruptcies. or TO continue the
figure. to an examination of the diseases
which led TO these commercial deaths
we find that Unexpectedly few are
owing TO fraud. Out Of 1858 failures
last year Mr.. Stevens reports that only 4l6. or
4 per cent. were due to personal dishonesty.
Compared with this cause 10 per cent. were
due to nexperience and the unwse extension
of credits: II per cent 10 neglect Of business;
II per cent. to causes beyond the control OF
the bankrupts, such as disasters, the failure
OF apparently solvent debtors and special
competition: 10 per cent. 10 lncapaclty and 5o
per cent to the lack of capital. On the whole,
then this investigation of causes dlscloses
a high standard of commercial moralty-per-
haps "a higher one than would generally nave
been expected. But at the same time vital
weakness in cur American business methods
is clearly revealed in the fact that by tar the
most frequent cause of failure Is the lack OF
capital. The experience and observation OF
business men will no doubt cOTObOrate the
testimony of the figures IL this respect Over
ambition, or rather ill-regarded the DISPOSE
ton TO extend operations rashly ana prema-
turely beyond the limits of safety prescribed
by the capital possessed, these mistakes which
are not uncharacteristic of the modern
American spirit, are the most fire.
auent causes of business failure. The
Younger business men especially, in
their desire for prominence in the business
community and for the speedy acquisition of
wealth. are much disposed to start on a larger
scale than the capital they can control
will safely warrant or, having started, 10
branch ont and extend the magnitude of their
trade more rapidly than their capital accumu-
lates from profits. 1t is disposition which
should be rlgidly restrained. The testimonyof
experience and observation as well as of the
statistics points 10 the danger of it. five had
an authentic record of business failures and
their causes for fifty years or more back,
we should doubtless find that the proportion
of failure 10 success in business enterprises
was much less in the earlier years when there
was more conservatism among business men,
and when. as a rule, they were more content
than now TO do a moderate business with rea-
sonable profit on a safe basis instead of seek
ing more fabulous gains by rlskily extending
operations on slender support Of capital
Providence Journal