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MUJIC TIRADE
V O L . L V . N o . 12.
Published Every Saturday by Edward Lyman Billfat 373 Fourth Ave M New York, Sept. 21,1912
SINGL
fioo°PER S VE O AR: ENTS
Credit Is Distinctly Personal
A
MANUFACTURER sent me a communication recently, in which he referred to one of my edito-
rials, "Sentiment in Business," and asks me if I believe that sentiment extends as far as being- a
governing force in credit rating.
In other words, if I would grant credit on the basis of sentiment if I were wholesaling.
Certainly I would, for I hold that credit is not impersonal—it is strictly personal; therefore, must be
founded on a personal and sentimental basis.
If it were made personal every credit man could arrange a regular schedule of credits upon the basis of
reports supplied him by mercantile agencies or by the merchants direct; but it does not work out that way.
There is no fixed rule which can be applied to all cases where a man who owns certain assets is entitled
to fixed and unalterable credit amounts. If this were true then a ten-dollar a week clerk would work out
the rule in each individual case and there would be no use for high salaried credit men.
There are plenty of merchants whose reports indicate a substantial financial condition; and yet the
very men who are doing business with them do not place credence in their reports.
Why?
They distrust the men and they demand that payments be made them for merchandise when certain
fixed rules under which they establish and insist upon are being lived up to.
I have in mind a special case—a Western piano merchant whose reports concerning his condition
would obviously entitle him to practically unlimited credit and yet I know of at least two manufacturers
who would only sell him pianos on rigid terms and not on the elastic conditions which the merchant asked.
They knew the man was deceiving in his reports.
As a result when the inevitable crash came their losses were trifling, while other manufacturers, who
had been guided somewhat by the carefully doctored statements sent forth, were big financial losers.
It is said that some of this merchant's transactions were of such a character that the law may yet
impose a strict penalty upon him for his misdeeds; and the end of the legal entanglements is not yet.
I know of other cases where men have started with little or no capital save character assets, and on
these they have obtained substantial credit, the result being that they have built up business properties
", which reflect credit upon the enterprise and ambitions of the men themselves.
Some years ago two young pianomakers commenced business in a modest manner by occupying a
loft in New York. They had very little capital, but were long on character, hence they were ^iven what
credit they desired. They had an arrangement between themselves that in order to keep their profits
on a cumulative basis each was to draw five dollars for each piano on weekly shipments. This plan
was adhered to, and as they built good pianos the business grew through this nurturing at a rapid pace.
I remember that a leading supply man told me that these men could have any amount of credit from him,
as he believed in their character and ability as business builders. He was right in his judgment, for the
surviving partner controls to-day an aggregation of manufacturing enterprises which are vast and far-
reaching, a credit to the genius behind them.
Now, if credit had been figured out strictly on a mathematical schedule with no sentiment or no con-
sideration of character, these men could not have obtained liberal credit at the start and would not have
become business builders of colossal size.
I hold, therefore, that sentiment does exist in the granting of credits, and it must, for it is personal,
and whenever a personal action enters into anything, sentiment also slips in and it establishes cordial
and friendly relations.
•
Tt removes much-of the doubt and suspicion which is bound to exist if it be overlooked.
No! I affirm that the man who denies the existence of sentiment in business is still groping around
in the darkness.
I do not for one momnt advocate a policy whereby sentimental feel-
ings should be carried to an extreme point; but sentiment in business
should be encouraged, for the whole business structure is based on senti-
ment—-on character. Destroy these and many of the influences which make
life pleasing and enjoyable are removed. . . . ••--•••-