The morning call., 1893-09-02
CREDITS MUST Go.
Eastern Business Ways
Will Prevail.
COLLECTION DAY DOOMED.
VIII the Merchants Follow the Lead
of the Banks and Stop
Long Credits?
COLLECTION DAY DOOMED.

Yesterday the banks OF this city and
State adopted the non-overdraft system.
What effect will it have upon the trade
relations between local and State mer-
chants?
This is a question that has interested
business circles not a little of late. Yes
terday it was vigorously discussed. If
from now on our merchants can only raise
money from banks on personal paper, will
they not be likely to require the same
security from their buyers?
There is a difference of opinion as to
this. There is a difference of opinion as
to whether it is advisable at present to al
tempt to introduce such a system. There
is a difference Of opinion as to whether
such a system can be inaugurated out
here. But there is no difference of opinion
on the question of the utility of such a
system.
All are agreed that if business were
done on certified paper alone. profits
would be larger and collections easier. In
this case when Mr.. Jones has purchased
bill of goods from the wholesaler he will
be required TO give his note for the amount
Of the bill. This note, indorsed by the
paYee, is negotiable at the bank. When
the thirty, sixty or ninety days is up, the
bduE e6uQS d CUllCClRJ W MI. OOHNS. anu
Mr.. Jones cannot put the bank off, as he
might the wholesaler.
This is the Eastern method of doing
business, and merchants generally are
agreed that it is also the correct way to do
business.
One of the results of the system is that
1t makes the banks do the collecting.
Thus, collection day becomes only a ira
ditiOn, and merchants and business men
who do not pay cash must square their
accounts when the paper has expired or
tell the reason why.
It is a much safer and surer method,
but can it be done?
lit must come TO that very shortly"
SAID San some street merchant. "Of
course, 1t will take some time, because
merchants will be tmid about putting the
system into effect, knowing that to require
paper from customers will place them at
disadvantage with their competitors.
For little while trade rivalry will
keep collection day real thing, but only
III limited way and not very long at that,
for merchants viii soon see that a few
good sales are far more advantageous than
manv poor or Indifferent ones.
This idea of unlimited credit is pecu-
liarly California idea. In the early days
when money was plentiful and goods
scarce 1t was all right. Times have
changed now. Money is scarce and goods
plentiful. Unlimited credit must cease.
The wonder really is that collection day
has lasted as an institution a long as it
has. We have never had really hard
times here before as they have had in the
East. That is tie secret OF the matter
And now that the banks have taken the
initiative business men and merchants
must follow. They will be forced into it
for self-pTotectiOn. They will find it un-
profitable to pay interest to the banks
on personal paper, and will be driven to
the necessity OF seeking negotiable paper
from their customers.
ALREADY several of the larger houses
have commenced this system. and some
few of them have followed it successfully
for some time, even before the banks took
the stand they have.
1T cannot be DONE" says one OF the
officers OF the Board Of Trade. Not but
what IL would be a most salutary thing if
il could be accomplished. but precedent in
the other directi on is 70 o firmly established.
The credit system is too easy in California,
you say. Gran TED, but for that very reason
IT will be an impossible task to overcome
it."
And go it goes. There is wide diverg-
ence OF opinion as to the practicability of
The new step being applied to the relations
between merchant and merchant, between
wholesaler and retailer.
Hereafter no 0verdrafts will be allowed
from the banks. Accommodations from
them can only be secured by depositng an
0terest-bearing GOte and such other col
lateral as the banks may deem necessary
Everybody admits that this will be
benefit all around. Bankers. of course,
will profit most by the change. Their
earnings will be proportionately greater,
while the number of bookkeepers will be
materially decreased.
And 1t seems to be in the nature of things
that the merchants will be apt to follow
the lead of the banks-in fact will be
forced into 1t for self-protecton.
Instead of maintaining open accounts,
which may or may not be collectable when
collection day comes around, merchants
will require notes from purchasers, and
these being of a nature susceptible of dis
counting will doubtless find their way into
the banks for that purpose.
Mr. Brown will find he owes the bank
instead OF his brother merchant, and this
is quite another matter, for the bank can
NOT be put off.
OF course, this system will not prevail
Tor some time yet with the smaller ac-
counts, but even this will come in due pro-
cess, and 1t really looks as though the old
California merchant would some day wake
EET pFln Orld