The circle banner. [volume] (Circle, Mont.) 1914-1939, 1920-03-19
MERCHANT
CURTAILS CREDIT
UNUSUAL CONDITIONS FORCE
MANY TO ADOPT A CASH
BASIS FOR 1920
Rapidly Rising Prices Present Many
Problems to Montana Retailer,
Forcing Him to Double His Invest
ment in Three Years, to Replace
Stock as Sold.

More merchants will adopt the
cash basis in 1920 than during any
previous year in the history of
merchandising in Montana, accord
ing to predictions made by whole
salers and prominent retail men in
all parts of the state. They are
being forced to this course as a
result of the unusually difficult
! conditions which have developed
during the past three years.
Montana merchants have watched
with growing concern the shrinking
margin of safety" and the decreas-
ing margin of profit during the past
year, according to George W. Sturm,
who for 25 years has conducted one
of the largest credit retail groceries
in his section of the state and who
has recently adopted the cash basis.
Mr.. Sturm points out that the contin-
ually rising market not only has re-
suited in smaller and more uncertain
profits, but that 1t also has necessi-
tated much larger investment than
many of the merchants have been in
a position to make without straining
their resources.
''The high cost of living has been
felt keenly by every farmer, laborer
and clerk" says Mr.. Sturm, "but it
has presented even more serious
problems to the merchant than to
the average consumer, whose income,
with but few exceptions, has kept
pace, at least to some degree, with
the rising prices of necessities.
Investments Doubled
"The merchant who started In
business few years ago with $780,
900 capital, and who probably was
carrying on his books as many ac-
as he could with safety. has
been called upon to double this in |
Vestment during the past three years |
in order to carry a stock as large as |
The one he started with"
"a careful average of wholesale |
costs in all lines shows that the in
crease has been nearly so per cent"
said A. j. Mcintyre, secretary of the |
Montana Wholesale Grocers' associa-
ion. Merchants who have been un-i
lble to make this additional invest
nent have been forced to be content
With a much smaller stock, replacing
,nly portion of the goods sold"
In groceries, dry goods, and other
ines where the turnover" Is rapid
he merchant has not made enough
,rofit to make the additional invest
nent necessary without outside aid
The many who are. per force, doing
BUSINESS with smaller stocks than
hey had in 1915 are not making
ny larger margin of profit than they Il
i'd In former times-in fact they are
aking Z smaller gross profit-yet
heir sales are curtailed to q certain
xtent because of the limited lines
'hfch they are now carrying.
If q merchant had bought COM I
lete stock of staple goods three
ears ago and closed mp his store for I
Tree years. to open II and sell goods {
,day, he would. At present prices
AXE more than 100 per cent gross
rofit on every article he sold.
But Few Profit BY Advance 2
As q matter Of fact, instead OF r
by constantly Increasing t
llues, he has beep compelled to abb b
'rb many advances before raising l.
3 retail price He has turned hir r
och many times during the past II
rec years, replacing the goods sold c
lth tho same brands II N advanced Il
ho1esale cost The instances where
haa bought heavily In or
n lines and held The goods for . y