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THE
MUSIC TRADE
REVIEW
Commercial Paper and Improved Credit
ISCUSSING commercial and financial conditions in the
United States, Leslie M. Shaw, Secretary of the Treas-
ury from ]o,oi to 1907, states that conditions can be bettered to a
point where panic will be almost impossible through an improved
credit system. In this connection he said: "In every other com-
mercial country in the world when goods are sold on thirty, sixty
and ninety days' time a draft is made upon the purchaser at the
corresponding date. The purchaser examines the goods, signs
the word accepted across the face of the draft and returns it to
the seller. The seller now has a piece of paper available for dis-
count at the bank.
"That is the best character of bank paper known to man. It
is the direct obligation of a reputable buyer of merchandise in-
dorsed by a reputable seller of merchandise and issued in the
ordinary course of business for goods sold and delivered. Both
parties must fail or the paper will be good. Two good names
make a piece of paper a thousand times as secure as only one
good name."
He pointed out further that acceptances were not used more
generally in this country because of our defective banking sys-
tem, which seems to have been planned to assist the stock mar-
ket at the expense of trade and commerce. To-day if one bank
indorses to another a time draft or bill of exchange it must re-
port the transaction as a "re-discount," and the statement gives
the impression that the bank is hard up and has to borrow
money. Thus in the United States our credits have become
unusable.
If our system encouraged the use of acceptances, the small
manufacturers and jobbers in all lines could dispose of their
credits as soon as they deliver their wares. "Can't you see to
what an extent the small men, the small factory owners and job-
bers would be assisted to meet the competition of the old-estab-
lished houses with an abundance of capital?" asks Mr. Shaw,
who answers: "It would well-nigh mean an industrial revolu-
tion, to the very great advantage of factories and institutions of
limited capital. It would enable them to compete with the great
combinations. All commercial banks would welcome it, while
D
such banks as loan only on stock exchange collateral would not.
"The use of acceptances would give banks such a volume of
excellent commercial paper that there would be little or no
money left in the country banks to be loaned for speculative pur-
poses, or on stock exchange collateral, or with which to buy
bonds.
"As soon as its advantages were understood we would have
in this country perpetually at lease $2,000,000,000 of well-rated
acceptances as liquid as water. When the banks of New Eng-
land have a surplus of money New Orleans will very likely be
able to supply excellent two-name acceptances, indorsed by the
banks that take them. When the wheat is moving in the fall,
Minneapolis can supply a great many banks' with excellent com-
mercial paper, bearing the bank's indorsement, because the bank
will investigate the paper before it takes it.
"Then when all the banks are supplied, when the banks of
Texas and the banks of Maine, the banks of Minneapolis and the
banks of New York, the banks of New Orleans and the banks
of Boston, have loaned to the limit of their capacity, if a great
strain comes as it came in 1893 a n c l m l 9°7> and is sure to come
once in about so often, then the banks must be permitted to
issue each a limited amount of supplemental currency which will
afford the relief necessary. This extra currency will stay out
ten, thirty or possibly sixty days. When the strain relaxes it
will retire.
"We may and will have periods of commercial and in-
dustrial depression, but we cannot have, under the plan I have
undertaken to explain to you, another currency famine, com-
monly called a panic."
The foregoing remarks of Mr. Shaw are of especial interest
to piano manufacturers and merchants in whose business com-
mercial paper is so important a factor. Leading authorities in
the financial world have long been of the opinion that the greater
use of commercial paper would prevent panics and the periodical
shortage of money which occurs when extra demand is made
on the banks for money, either for manufacturing expansion or
for moving the crops.
Importance of Looking After Minor Details
^^
in any line of business is due, in a large measure,
v 3 to the perfection of details. In the export field complaints
continue to reach us from South America of the indifference of
our manufacturers, or their employes, in looking after those
minor, yet important, details in a business way, such as placing
sufficient postage on letters destined for South American points.
In a letter received this week a Review subscriber and an
importer in Argentina says: "There is not one mail from the
States in which I do not receive letters with due postage, as all
your manufacturers seem to have the two-cent stamp fever.
For each letter I have to pay fifteen cents penalty postage, and
in addition to this I have to wait twenty-four hours more until
the letters are delivered to me. Will you not be good enough to
bring this matter to the attention of the readers of your valuable
paper?"
We do so gladly. Here is one point wherein Germany and
England are most particular, and that is to see that all corre-
spondence is carefully and correctly forwarded. The same care
and attention is devoted to sending letters in Spanish—that is,
correctly written. In this connection our correspondent says:
"Thousands of circular letters are sent out from the States
weekly in very bad Spanish, and all in the same style. It seems
to me that they must have been 'manufactured' by one trans-
lating office. Of course they all find their way to the waste
paper basket." He says further: "I find but little improvement
on the part of American manufacturers in the matter of packing,
and some recent shipments of musical instruments arrived here
in very poor shape. In brief, my admiration for European houses
and their methods increases as does my annoyance with the
indifference of American manufacturers to foreign trade needs
and possibilities."
This is a serious arraignment, and it is printed as an illustra-
tion of "a condition which we sincerely trust is not general.
During the past few years article after article has been
written emphasizing the importance of developing trade, par-
ticularly in South America along lines that are in sympathy with
the traditions and customs of the peoples of these countries.
The very matters complained of in the above communication
would indicate that there is manifested an indifference as to
what the importers in South America require. Such an appar-
ently small thing as postage on letters and catalogs is most
irritating to any business man, but particularly so to tHose of a
sensitive and exceedingly precise manner as our confreres in
South America.
Then there are the more serious matters, such as poorly
written catalogs and careless packing of goods. Such conditions
are inexcusable, and must be remedied in order that American
products may receive'the consideration to which they are entitled
in South America.
Our correspondent is especially qualified to speak on this
question, as he is representing in various South American coun-
tries a complete line of musical instruments made in France and
Germany, as well as in the United States, and his strictures must
therefore be received seriously.
Manufacturers cannot be too careful in looking after all the
necessary details in connection with the development of their
export business—the apparently minor matters are also essential
to success.
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