Evening star., 1932-01-05
.UNSOUNO BUSINESS
FIRMS DESTROYED
Depression Has Resulted in
Wedding Out Sharp PraC-
tiCes in Trade.
BY WILLIAM LEE.

Ihe low level OF business activity that
has tested the resources of all business
has accomplished purpose which trade
organizations and even law-enforcement
groups have been unable to do, name
ly, drive out of existence unSOund and
unethiCal firms and individuals, accord
ing to information obtained from the
Department Of Commerce.
The depression therefore, has acted
as something of a purge for business,
and while it may not be said that all
business is pure" it is the firm conVlc-
ton of the department that there has
been an improvement in this direction.
Nature took its course against the sharp
practice dealers and cleanSed the for
eign field as we'll as the limited number
of hangerS-On who had been able to
stand out against the keen competition
put up by Americans engaged in the
export trade.
1T is worthy of comment" said the
department in statement, that the
number of cases of unethical business
practices reported to this office during
1881 has not increased This indicates
that one result of the general depreS-
SIGN has been an elimination of un-
sound firms and individuals in the mer-
camille field"
fEODiCHS Oh Exporters.
Exporters have been forced to cope
with some of the worst problems Of
modern times during the last year, but
it is the belief of the department that
they have learned lessons which they
may capitalize as the foreign demand
picks up. They have had to meet mora
toriumS, bankruptcies liquidations md
extremely difficult exchange conditions,
SO that their path has been far from
rosy. But the fact that tricky and il
legitimate competition is on the decline
must be considered as a point in their
favor, especially as regards the future.
AS a result of the changes that have
been going on in the direction of elm
mating the unsound and unfair ele-
mentS in trade, it was suggested that
exporters obviously are going to have
more confidence in their foreign outlets.
For one thing, the exporter will not be
persuaded so frequently into taking a
chance with firm or an individual who
may have been regarded in normal
times as hardly worth selling effort, but
whose business is sought when the gen.
eral level of sales is low
It is by this type of prospect that
domestic distributing channels, as well
as the exporters, get nipped for losses.
Records of adviCeS officially received
S1lO" IAldG III GIlC IlISlOIy VI SOOO IildIly
legitimate businesses there is a steady
recurrence of pleas for another
chance" from the unsound and the un-
ethical prospects. The human element
enters in, the seller grants the request,
too frequently to his regret.
In the domestic trade the problem is
not so serious because machinery exists
by which better check-up is obtainable
as to the risk. This is said to be true in
the export field also, where that export
market is large and established chan
nels are maintained. But the newer
markets and the markets where the
volume is not so large are the points
where much Of the trouble arises.
New Markets.
1t is easy to see that in a small mar
ket an exporter cannot maintain an
organization to do the necessary inves-
tigating to protect himself, and the en-
tering of new market carries some Of
the same difficulties These are things
which, in the opinion of experts, the
exporter cannot fully overcome, what
ever method he may adopt.
When the depression eliminated some
of the unsound firms along with some
of the sharp practice dealers, who gen.
orally may be classed as unsound also,
the exporter certainly has gained last
ing benefits.
At any rate, the development has
been one of the type that occasions con-
siderable interest among the economic
students in the department, and they
are likely to watch that phase of in
creased business with a better under
standing of conditions than they have
held heretofore.
Copyright, 1922