Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-06
BACKGROUND OF EVENTS
BY PAUL Y. COLLINS.

Americans produce ninety billion dol
lars worth Of wealth every year-and
80 out Of every 100 retail merchants
who constitute the last link in the chain
which ties the producer to the con-
sumner become the missing link" every
ness so discouraged with his futile eff
forts as to constitute voluntary failure.
These statistics are derived from the
latest reports Of the Department Of
Commerce.
Very often, the surveyor of business
trends views with alarm" the develop
ment OF chain stores, mail order houses
and systems of house.to-house distribu-
ton as the cause of the failures of In
dividual merchants. But the Depart
known credit-rating firm" which shows
that only 3.6 per cent Of the failures are
traceable to competition-any COMPETE
tion-wh1le So per cent are charged to
simple incompetence" "Incompetence"
really ought to include the victims Of
competition, for If they had been COM
petent to analyze the conditions they
were facing they would, in many cases,
have foreseen the obstacles they must
race and avoided or conquered them.
A great business man who acquired
q vast fortune in merchandising once
declared that there never was q half
hour In the development Of the strong
est business that might not bring ruin
through blunder Of the management,
no matter how well organized. Yet the
incompetent merchant fails to study
the ever-changing conditions he Is fac
ing. He permits stock to remain on his
shelves which does not collaborating
that every hour 1t is drawing interest
~ iHar,A
through moth and rust" and styles
and costing its share of overhead, and
barring other items which might be &C
lively drawing customers. It Is the
turnover that makes the profits.
X X X
The same authority which attributes
SO per cent Of failures to personal In
competence adds the next IS per cent
to lack Of sufdcient capital to carry
on. This includes, doubtless, the yield
ing to the temptation which always
confronts the moderately successful to
branch out too thinly, hoping to in
spreading overhead expenses and weak
ening resources needed to meet emer-
gencieS. Bankers are prone to watch
this tendency Of their borrowing GUS
toners very closely and to guard
against encouraging too rapid expan-
sions.
Merchants who neglect to check up
the items Of their stock every season
or even more frequently-do not real
mains dead. According to DR.. Julius
Klein, Assistant Secretary Of Com
merce: Results developed through In
vestigation by the Department Of Com
merce have shown conclustvely that 1t
is very often possible to increase r1er-
chants profits substantially by means
of an extensive reduction OF the items
of his inventory. Sometimes SO per
cent cut in the number Of different
articles carried may bring about q 80
per cent increase In net returns"
The next cause of loss to the rner-
chant Is the credits extended and not
collected. Nearly q quarter OF the re-
tail business done In the United States
Is done on credit, and Of that sum
$24, 600, 000, 000-it Is reported that o
billion dollars are lost annually In poor
collections, aside from the running cost
Of making the good collections. II the
argument be made. that the extending
of credit stimulates and increases trade,
1t is only a confession that the cash
customers and the good-paying credit
customers absorb" the billion dollars
lost through the bad debts, and that Is
no argument at all Of the economic wis
dom Of the credit system. II that biz
lion dollars, now invested tn sustaining
the dead-beat system, were used IN le-
climate advertising and In better serv-
ice to the paying trade, it Is argued, the
result would be far more wholesome.
Yet It Is conceded that much legiti-
mate business Is based upon credit. In
GLIDING business Of large and small d.
mansions and with all classes Of So
ciety. While out Of the $4,000, 000, 900
of business now done on credit 81 ,000,-
smootias the daily "demnition grind" of
detailed affairs and makes it possible to
carry on while waiting until the month";
ly bills come In or the weekly pay check