The Washington herald., 1918-05-03

ance in your business family?
II you haven't you probably will
have soon, for they're coming, and
in some instances arc already here.
so we are told.
No. there's nothing to be scared
about. Nor is there anything to
indicate that the war is going to
ruin the country or anything like
that. as a whole. We can all be
calm.
A trade acceptance. to reduce IL
to terms for the layman, is merely
a promissory note for value re-
ceived Simplest little thing in the
world when you once understand it.
They are business aids, you can
be assured. and no matter what
grave doubts may fill your mind
about them, you will sooner or later
be convinced of the desirability of
boosting them.
The seller forwards goods to mer-
chants and when the goods are re-
ceived the merchants send back a
receipt for them and this is the
trade acceptance acknowledging the
debt and agreeing to pay for the
goods on a certain date.
The seller can indorse the accept
ance when he receives it, and at
once take it to the bank and get
money on it, subject to a discount.
of course.
This enables bank resources to
be utilized in the financing of bust
ness of the country instead of the
private or corporate capital.
Merchants capital is not tied up
in such an enterprise, neither is the
manufacturer or wholesalers. The
goods can be sold before time for
their payment arrives. and thus the
merchant can pay his note when
IL is due. In this lies one super
latively great advantage of the sys-
tenn.
The financial editor of the World 5
Work speaks of the change in this
wise:
"They permit the handling of much
larger business by manufacturers and
retailers without necessitating an in
crease in their working capital. This
reduces the cost of doing business,
which benefits the buyer, the seller
and the consumer. The business man
who discounts his bills has in times
Of slack business considerable idle
capital; IL he buys on trade accept
ances he can permanently invest this
capital and have it always earning
for him. At this time he can buy
liberty bonds. The merchant who
was in the habit of taking longer
than the time allowed for payment
of bills will find that he is being
quoted better prices and conditions.
He can sell his goods lower and the
volume of his business will be lin
tied not by his capital but only by
his opportunities. The wholesaler
can grant longer time for payment.
IL he receives acceptances. than he
can il selling under the old system
of open accounts.
."lf you are a business man. pay
your bills by acceptances; 1t is the
businesslike way. 1t will raise your
credit standing, and when the method
is generally adopted 1t will release
| good part of $4,000. 900 capital now
ted up in the open ledger accounts.
In our new banking system ac-
ceptances are a preferred class of
commercial paper because based on
actual business transactions. The
Federal Reserve Banks will redis-
count them for member banks at a
rate Of 1-2 of l per cent less than for
other commercial paper"
Tomorrow there is to be a reyo-
lutionary meeting in New York CITY
at which the matter will come UP
In acute form. For the business
which 1t is thought will be swept
into the trade acceptance realm at
one time-and possibly as a result
OF this meetings. the cotton busi-
ness. And one of the objects of
this gathering is to discuss the
matter from all angles and to agree
upon a course of action which will
benefit the industry the most, and
which will bring stability and en-
couragement to it at once.
The Boston financial writer of
the Philadelphia Public Ledger has
this to say of the acceptance as
viewed from the angle of the cot
ton industry--and in fact as viewed
by other industries which are not
greatly different from it:
Trade acceptances have loomed
up as revolutionizing factor in
future operations of the New Eng
land textile industry. Great possi-
bilities are inherent in this new
form Of credit--new only to Ameri-
can business, as it has had wide
application lin foreign markets
beneficial to. the seller and buyer OF
merchandise and helpful to the
banking system OF the country. In
fact, many states are now adoptips