The Richmond Virginian. (Richmond, Va.) 1910-1920, 1917-03-04
EVILS SHOWN OF
CASH DISCOUNTS
Despite These Evils. However, Retail
Dry Goods Men Continue to
Favor the Practice.


That part OF the business world
which has been following the move
ment to abolish the cash discount. a
movement that is favored by many
manufacturers and wholesalers. re-
ceived with more than passing inter-
est reports of the disCdSsIon of this
matter that took place in the recent
convention of the National Retail Dry
Goods association in New York. Not
only did the association members Pass
a resolution condemning the move
ment. thereby ratifying similar actor
previously taken by their board Of d.
rectors, but one of them is ere lifted
with the statement that he regarded
the cash discount as his bread and
butter
In spite of the fact that there are
apparently many makers ard 1istri-
buffers Of goods VINO favor the drop
ping of the cash discount. There ere
othe q who are as unwilling to change
their methods or doing business as
the retailers are 10 have them do it,
Reasons given for this attitude range
all the way from the at was good
enough Cor father. it is good enough
for me attitude to the expression of
fear of lost business. on the other
hand. there are men who are cut
spoken in their sympathy with the
abolition movement.
1T has for years been a mNster, to
me-" said one of these wholesA ere.
why the retailers Of the country ple
fer buying their merchandise VIII
huge discount included in the price to
buying il ON a net basis, The former
method is simply case OF robbinG
Peter to pay Paul and the retailers
<S CT Inc
there can be none who is so innocent
as to think that he is getting mis-
goods cheaper by The discount method
than by buying on i net basis
There are manv reasons why the
net basis is best for both, not tn least
of these being the solution of the
wholesalers financial problem. sup
pose sell a man 4 bill ~ goods on
"A net, .ten-day basis II he lives up
to his part of the agreement, l have
my money in ten days, ana can FUR
Their my own buying without recourse
to a bank for funds for that purpose.
If. on the other hand. ] SCH the same
goods on a 6--t0-60 basis ! have to
wait seventy days for NV money. If
later | see an advantageous Opportu-
nifty TO buy line OF merchandise, a
chance4to get something At a price
that will mean profit both to me and
the retailers sell the goods 20, / am
helpless unless | 'eln raise outside
funds sufficient for my needs.
IF raise these funds / nave to
pay interest or them. for NO financial
institution does business solely for tho
fun of the thing. SO naturally | have
to pass this interest charge along in
the price OF the go Is Not 70 do so
would he practically the sama as a
Frv,
portant item of expense into his over
head, thereby selling MS goods for
what they cost him, O. possibly less.
Some of the big MAJ who oppose
the abolition of the ash discount adj
nit that they pay for banking on the
merchant just as they would have to
pay If thev got similar accCmm 0da-
lions from their banks. Just why
they want the pract:"e 20 continue. in
view OF this. is more thar I can see.
Perhaps they are operating on too
large a scale for the amount ~ capt
tai they have, and are afraid 70 apply
to their local banks for accomnoda
tions for fear this facy viii become
apparent. their applications wO he
refused. and their cr33it standing VIII
DE injured.
There is always a possibility that
the wholesaler. through no desire OF
his own. will be forced into a similar
position by his customers He, may
have thousands of dollars worth OF
Al accounts receivable on his boales
and yet get into serious trouble
through lack of ready cash. His own
bankers may be carrying him to the
fullest extent they can afford to. This
either forces him TO carry his burden
to A strange bank, there TO go through
a strenuous third decree and doubt
less get a refusal. or TO hypothecate
his accounts. With the banks only
too willing NOWADAYS TO jump on the
least little thing that signifies fnan-
cisl difficulties in mercantile house,
and the credit men of merchandise
creditors almost as anxious to find
something wrong as n buZZard Il 10
find Carrion, trying 10 raise mo Aey
in either of these ways may start
s,mething that will end in an inyol-
untary petition in bankruptcy.
The time is coming-because
wholesale competition is getting so
fearfully keen--that the thing will
have to come to showdown. Either
the retailers will have to paddle their
own financial canoes or a lot of whole
sale houses will be sacrificed to make
a modern Roman holiday. Especially
will this be true In the case of whole
salers engaged in a business in which
style is the dominant factor. where
the turnover must be made quickly,
and where the losses arc sharp.
Another thing that ] have noticed
in cases where discounts and long Sat
ings are allowed is the ease with
which a certain class Of retailers let
their bills run past the due date. and.
when they finally pay them. take the
discount just the same. II has been
admitted that these bills have been
left unpaid because OF a shortage OF
ready money at the time they became
due. and so the wholesaler was called
on in the time of need instead of
bank. Apparently no thought is given
to the fact that the wholesaler may
have obligations to meet also. and
that ne is counting on the money due
him to pay his debts.
Sometimes a liberty of this kind
on the part of the retailer is CLOSED
over by averaging, that Is, by paying
some bill a short time before it is due
in order to offset another that has
been allowed to run past the due date,
While In sense this offsets the bur
den imposed by letting the first bill
run over. It lis poor practice at best.
And one of the ironical features OF
II is that bill on which payment Ia