Evening journal., 1893-03-20
NEWSPAPER OPINION.
Causes of Failure.

Louisville Courier-Journal.
The Bradstreet Company has sent
small pamphlet containing the record OF
an investigation into the causes of busi-
ness failure This investigation covers
the three years. 1890, 1891 and 1892
The causes of failure in business are
separated into two grand divisions
causes due to the fault Of those failing
and causes not so due. Under
the first head we have as sub divisions
incompetence, neglect of business and
fraudulent disposition of property T;
under the second, disaster, failures Of
other apparently solvent and special or
undue competition. Some Of these are
furthur sub.dlvided The total failures
in the United States last year were
TO- .270 This includes only those
whose creditors susi aimed some loss, and
not those who sacrificed their invest
ments In whole or in part OF these
failures ,343, or 1915 per cent, were due
to lack of capital or trying to do too
much business for the capital employed
lncompet ence Is credited with 1S 9 dls-
aster, 1872; fraudulent disposition OF
property 10 3 inexperience o 2: unwise
credits, A. outside speculation, 1 9;
neglect OF business 3; extravaganza, 1. 4;
| lhlAuIC VI UNnNAof % Ah0hN Noh HNNANAN As
/ z per cent. This classification relates
merely to the number of failures, and
takes no account of their Importance,
as indicated by the amount of liabilities.
OF the failures last year, the PERCENTAGE
of liabilities due TO incompetence
was i 2 8 inexperience. B lack Of capital,
q; unwise credits, 43; outside specula.
tion, neglect of business, @ extrava.
gance, is fraud 9.3 disaster % g; fall
ure of others, Go; undue competition, 1 2.
The results shown by these estimates are
interesting and in some instances sur.
prising. The small number of failures
due to unwise credits, speculation and
neglect Of business are of the latter
description. It is to be noted, at the
same time, that while speculation i:
credited with but 10 Of the number oi
failures, il produces z per cent, of th,
liabilities, showing that spectators fai
for much more than the averag,
amounts. Ii may also be noted that
while disaster including, fire, food
crop failure and commercial crisil
caused less than one. fifth Of the failures
Il was responsible for more than one
fourth Of the liabilities. On the othe
hand, the lack Of capital produces
larger percentage of the number Of fail
ures than OF the Liabilities. In Othe
words. it produces more small failure
! than large ones A comparison Of th
failures in Canada with those Of tb
United States shows that 65 per cent
there, OF twice as many as here, are do
to lack Of capital, while 8 per cent al
que TO fraud or only half as many 8
In the United States II wOul
hardly DO correct to infer from thi
that the Canadians are twice as homes
as we are, but have relatively Onl
half as much money The different con
ditions under which business is done
the two countries NAV account for th
( difference, Whicn IS very striking on
undar any aspect Of the case. The mos
salient feature Of the record Is that
: shows that the overwhelming majority q
J. failures is due to the fault of the person
failing, only 22 8 per cent. being pu
' down as not due TO this class of causes
1t must be remembered, however, tha
=, the faults here meant are not all q
u chiefly moral delinquents, but iauli
r from business standpoint, such as il
l. competence. errors of Judgment, incluC
ing as the most important Of all, Oh
error Of trying TO do more business tha
ones capital iustihes