The Big Stone Gap post. [volume] (Big Stone Gap, Wise County, Va.) 1892-1928, 1893-04-13
CAUSE OF FAILURE.

CAUSE OF FAILURE.
Statistical Review OF the mistakes "i
American business Men.
The Bradstreet company has sent
out a small pamphlet containing the
record of an investigation into the
causes of business failures. The IN
vestigation 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 fail
ing, and causes not so due. Under
the first head we have a subdivision
incompetency, neglect Of business and
fraudulent disposition of property;
under the second, disasters, failures
of others apparently solvent, and
special or undue competition. Some
of these are further subdivided.
The total failures in the United
States last year were 1920. This
includes only those whose creditors
sustained some loss. and not those
who sacrificed their investments in
the whole or in the part. OF these
failures 3343, Of 1928 per cent, were
due to lack of capital, of trying to
do too much business for the capital
employed. Incompctcncy IS credited
with 1876; diastcr 1872; fraudulent
disposition Of property, 1913; ilrex-
pcrcncc, So; unwi&c credits, /; out
side speculation, 9; neglect Of bust
ness, 3; extravaganza, Ia; failure OF
others, 1.9; undue competition, IL;
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 failure last year, the pcrccA-
tage of liabilities due to cncompctency
was - 3; incxpcricncc, ); lack OF
capital 81; unwiSe crcliting credltinS,
4.3; outside speculation, I; neglect
of business, 1.G; extravaganza, 10;
fraud, 90; disaster, 25.S; failure OF
others, Sc; undue competition, IL.
The results shown by these estimates
arc interesting and in some instances
surprising. The SMALL number of
failures due to the nilwise credits,
speculation and neglect q business
are of the latter description. 1t
is to be noted at the same tine, that
while speculation is cre;litc;i with but
is Of the numbers of failures, il pro
duces I per cent, Vi .he liabilities,
showing that spectators fail for
much more than TIE average
amounts. 1t may also be noted that
while disaster (including fires, food,
crop failure, and commercial crisis,
caused less than onc-fifth Of the fail
urcs, it was responsible for more than
onc-forth of the liabilities. On the
other hand, the lack of capital pro-
duccs larger percentage OF the mum
Der of failures than of tile liabilities;
in other words, it produces more
small failures than large ones
A comparison of the failures iii
Canada with those OF The United
States shows that Is per cent. there, or
twice as many here, arc due to lack
of capital, while % per cent. are due
to fraud, or only half as many as i'll
the United States. 1t would hardly
be correct to infer from this that the
Canadians are twice as honest as we
are, but have relatively only half as
much money. The different condi-
tions under which business is done in
the two countries may account for the
difference, which is very striking I'M
der any aspect of the case.
The most salient future Of tie rec
ord is that it shows that the owe
whclmins majority Of failures is due
to the fault of the persons failing,
only 22.S per cent being put down as
not due to this class of causes. 1t