Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-04-03
BUSINESS ON CREDIT.
A Civilization Advances Cash Payments
Are More Frequent-Dinerence Between
Sales Of Raw Material and Manufactured
Products-AmericansE Educated to Sound

Finances.
rwR1rrEN FOR THE DrsPArcH1
Few persons have q clear idea of the
enormous extent to which the civilized
world lives and works on credit. 1t has been
estimated that over 90 per cent of the trans
actions of settled nations is done on q credit
basis. In fact, everybody engaged in any
sort of employment transacts a piece OF
credit business every day in the year. A
laborer or mechanic employed by the week
and paid at its end gives his employer credit
from Monday to Saturday evening. In the
same manner he who orders a suit of clothes
or pair of shoes gets credit from his tailor
or shoemaker while he is making them.
In studying the history of credit 1t is
curious to note that in countries diffe ring
so widely in their economic and social con.
ditions as Siam aud Canada the amount OF
business done on credit is estimated at the
same, viz: 80 per cent. That is to say, both
countries use credit in the same measure
relatively to the volume of their trade. 1t
should be remembered, however, that the
proportion credit sales bear to cash ones in
a new country like Canada or the United
States, while the same in figures, is entirely
different in meaning from what it does in a
poverty-stricken country as Yucatan, for
instance. This difference is one Of short
and fixed terms instead of long and indef-
mite ones: credit must affect nation differ
emily that lives upon it than another that
trades with 1t.
Tho Money Lenders of Turkey.
Among poorer nations credit seems
almost q necessity of life. Take Turkey, for
instance, the poorest country in Europe. In
the first place wages and salaries are gen.
orally in arrears. Officers in the army and
navy are from 10 to 12 months behind in
their pay, whitz soldiers and sailors some
times remain unpaid for two or three years.
Workmen are almost as slowly paid for their
labor. As Iatght be expected, the primary
necessities of life are got on credit: the re-
taller requires credit of the wholesale
dealer, who in turn buvs his stock on
longtime payments. Farmers borrow
on their crops and land owners on
their land. The consequence is that
everybody is in the clutches of the
money lenders, who bleed their victims un-
mercifully. And yet the average loss in
CURED by credit in Turkey is actually lower
than it is in most countries; in fact, it is be-
cause such Is the case that this system of un-
limited credits has endured.
Social and religious sanctions in that
country are so severe that the Turk, while
not noted for his punctuality, still keeps his
arrears from excess for fear he will 1ose
face''-as the Chinese picturesquely put it
and If he loses credit he loses everything.
That credit is so universal in Turkey is sufh-
cient proof that bad business there as else
where is after all but an insignificant frac-
tion of the business of the world.
Cash for Raw Materials.
Turning to richer nations we discover
that credit is no longer a necessity of life
but means of increase. The terms are
shorter and it is less universal in some
channels of trade, while it is more concen-
trated in others. The first restriction of
credit we note is in raw material. All Eu-
kind Of farm produce-when sold by the
producer-a cash article. In Scotland, pig
cash. Canada has n long list of
cattle, horses, sheep, grain, and also coal
and iron. Fresh ish, meats and coffee in
Brazil always command cash. In such
countries as France, Spain, Holland and Bel
while manufactured articles are sold on
credit. The same is true of the trade of
this country.
Now the question arises. why is produce
are not? Some writer's have offered the ex-
PLANTATION that cash articles are perishable,
while credit ones are not. To this the objec-
tfon may be made thata piece of furniture is
as pcrishable as the lumber of which IT is
made. Another theory is that cash articles
are necessities of life. But again this does
not meet the facts, as clothing which be-
longs to the credit trade, is as necessary to
life as food.
Why Raw Materials Bring Cash.
The true explanation is that the cash
article is the product of a year and the
credit article Is the product OF a day or q
week. A farmer can gather only in the
autumn his harvest, the seed of which he
planted in the spring. The same too can be
zai0 with Cruth of StOCkman-
on the other hand, have the
advantage that they can work the entire
year round and in some cases can turn out
The finished article to-day that they received
as raw material but yesterday.
Writers on finance have often in recent
years pointed out that credits are becoming
shorter and shorter as the result of in
creased facilities of transit and communica-
tion, which ena Dles manufacturers and mer-
chants to realize more rapidly on their
goods in foreign markets. Another i'm
portant factor in the shortening of credits
Is the abolition of middlemen. Formerly if
cotton was to be shipped from New
Orleans to spinners in Europe, let us say
to the interior of Germany, it would be first
consigned to a New York house, the New
York house would then consfgn it to Liver
pool, Liverpool to London, London to Ham,
burg, and from Hamburg it would be finally
delivered to the spinners. At the present
lime German and English spinners go direct
10 the producer, and thus save number Of
commissions as we'll as much
lime in transit As communications become
more direct and less expensive, 1t Is natural
that credits should become shorter.
Influence Of Newspapers on Credit
-Everyone is familiar with the fact that
.etail trade to-day is conducted much more
IN a cash basis than formerly. The prin-
,ipal causes of this are the general spread Of
wealth among the masses, the progress of
he cooperative movements in England,
md the wise preference shown in this coun-
ry by the wage enrners for the cash system
because, having Iimired means, they know
hey are always the greatest sufferers from
n newspaper and other advertising In recent
ears has had the effect of educating people
o the habit of buying where they can get
he most for ready money.
The retail merchant who presses credit
Ipon his customers. does SO because he be-
ieves he has better hold upon the continu-
nee of their trade, and will be able to soil
more to them II they keep an account with
i'm, and he is shrewd enough to know he
an charge them higher price by reason OF
he accommodation. Whatever advantage
he credit system may be to some sharp
credit II the
rade would be q benefit to everybody else.
{ is continued temptation to the weaker
ort of persons to live above their means,and
o make those who pay cash bear the burden
f their semi-honest neighbors.
Seems Natural to California Soil.
Robert Louis Stevenson, the novelist,
n narrating his adventures during short
ojourn in the old Pacific capital, Monterey
ala, 10 or 15 years ago, graphically de-
cribes the accommodating druggist and
double sort of storekeeper poor
teyenson, in his incessant battle with bad
ealth and the pursuit of good literature,
as had much intercourse with - Deg
ing Stevenson with fervor to let his account |