KESTO
Presto Buyers' Guide
Analyzes and Classifies
All American Pianos
and in Detail Tells of
Their Makeis. TH
B714U1A
/«M THE AMERICAN MUSIC TRADE WEEKLY
Presto Trade Lists
Three Uniform Book-
lets, the Only Complete
Directories of the Music
Industries.
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CHICAGO, SATURDAY, APRIL 7, 1923
ASTOR. I t'NOX AND
T I L D E W FO n rvi D A T10 N 13
THE CO NSIQNMENT PLAN AS PRACTICED IN PIANO TRADE
One of the Oldest of AH Business Propositions, Brought Down to the Present Time, and How It Works to
the Profit of Active Business Men with Ample Energy but Limited Capital.
By JOHN J. GLYNN.
The Consignment Account is one of the oldest
known to history. It was born in Babylon, twenty-
five hundred years B. C. The wheat growers of
Mesopotamia consigned wheat to factors in the great
city of Babylon, and it was sold by them and the
proceeds were remitted to the consignors up the
Euphrates Valley. The code of Hamurabia pre-
scribed the remedy in case the factor (consignee)
defaulted. It insisted on written contracts and re-
ceipts. Clay tablets met the demand.
Eighteen hundred years later, King Solomon made
quite a little money on consignment, just as many
piano merchants still do. His household expenses
were rather heavy, so he opened a consignment
account with the horse-breeders of Phoenicia and
Lebanon. They consigned him horses which he sold
to good advantage in Judea and Assyria.
Consignment Plan Analyzed.
So # that consignment is not alone one of the earliest
forms of trading in vogue, but is, and always has
been, a commendable undertaking, as it capitalizes
honesty and places the capital of one man (in the
form of assets) in the hands of another man, so that
mutual financial benefit might accrue from the rela-
tionship.
In marketing pianos on consignment there often
is a hazy conception of what consignment is. Even
the enlightened trade press does not seem to be well-
posted on it. When a consignee proves dishonest,
and tries to beat the game by failing to differentiate
between "mine" and "thine," and is called to a
reckoning, there is a chorus of wise ones who say
that consignment business is a bad business for the
dealer. It would be as logical to say that selling
on time to the dealer is bad business for the dealer,
because dealers do, occasionally, let notes go to
protest, and sometimes become bankrupt and try to
beat the game that way.
In commerce at large a consignment account is
clearly defined. Goods are shipped by a principal
to an agent—often in a foreign country; the agent
sells them for his principal, deducts his freight, com-
missions or factorage, and sometimes a percentage
for advertising; then renders what is known as an
"Account Sales" to his principal and remits to his
principal the net proceeds due him from the venture.
No Credit by This System.
There is no credit. The principal believes in the
honesty of the agent. That is all. The man to
whom the goods arc shipped is variously designated.
He is, at times, a commission merchant, a broker, or
a factor.
Each transaction is, as a rule, complete in itself.
The ''account sales" disposes of it forever. The agent
is simply paid his factorage or commission. If he
gives credit in selling he does it on his own account.
Consignment in the piano business is different.
It is governed by stipulations contained in a written
document, the consignment agreement—con, with;
signare, to seal or sign.
This document, outside of well-known and estab-
lished usages of the trade, clearly defines all the
conditions under which the consignment exists. It is
a trusteeship of personal property, bestowing upon
the trustee a privilege to sell the goods and have for
himself a certain sum, taking written papers, usually
chattel mortgages or conditional sale contracts, to
conserve title to the instrument sold. This is neces-
sary because in selling the consignee is generally
obliged to give credit to the purchaser.
Keeping the Money Separate.
The property and moneys of the consignor should
be kept distinct and apart from the property of the
consignee, or agent, and should be easily distinguish-
able as such, either in the wareroom floor or the
account books of the agent, so that a clear and con-
nected chain of identity can be established.
The transaction is a specific trust—not a general
debt It is neither a "sale" nor an "account." A
"sale" implies a transfer of title in the thing sold.
An "account" being a statement of debits and credits
presupposes credit, whereas a consignment is gov-
erned by a contract and is a mere physical handing
over of moneys by the consignee to his principal
when a sale is made. It is analogous to what the
salesman does for the consignee himself when he
goes out for him and sells a piano for cash, or on
contract, and brings the money and contract back to
the house.
Law Makes Conversion Larceny.
Most of our States have specific laws on the sub-
ject, the general tenor of which is that fraudulent
conversion of consigned property by the consignee
or his agent, or servant, is larceny. If that was
more generally understood by consignment agents
there would be fewer complaints on the undesirabil-
ity of consignment.
As conducted by first-class houses, consignment is
the salvation of many dealers. It enables the honest
and aggressive man, with ability to sell, to go into
business for himself and succeed.
In effect it is the most liberal credit arrangement
known. It supplies the necessary assets wherewith
to make profit; being equivalent to so much capital
supplied by the manufacturer and which is payable
not as a fixed liability, at a specific and determinate
time, but from the proceeds arising from the sale of
the piano itself to a third party
Opportunity for Profit.
The financial obligation which the piano merchant
incurs is practically nil. The opportunity for profit
is even greater than in the most liberal open, or note,
credit arrangements.
It is easy to see how this is so. If he can't sell,
he returns the goods. The houses who specialize on
consignment are successful houses. To consign they
must have ample resources. They are therefore able
to market their goods at the minimum of profit.
Where, for the accommodations they give, they con-
sign goods at about the same consigned value that
they would have to sell the goods for on long time,
the dealer is not hampered by fixed liabilities. His
cash sales give him new capital; the advances made
him on consignment collections are a steady income.
He is able to care for and cater to a larger volume
of business, and can devote greater energy to the
selling end, as he is not worried by long or short
time notes coming repeatedly home to roost. He
never has to beg for a renewal or sacrifice an asset
to meet a note.
He is paying for the goods he sells, not out of his
own resources, but by the money coming in from the
actual sale of the goods, and no more can be ex-
pected from him than what he actually is able to
collect.
If he does not sell the goods, he has not incurred
a debt. In dull times, when collections are slow, his
worries are less, while on the other hand, when the
demand is large, he has the manufacturer's resources
back of him, and has no difficulty in obtaining all
the goods he can market.
Consignment and Credit Contrasted.
In comparison, take the man of even fair financial
worth, who stocks up with a couple of dozen of in-
struments and gets long credit. In the first place he
must pay an advance price for the accommodation
given him. Very often he pays interest besides. To
pay his notes when due he has to rely on the receipt
by him from the sale of the piano of money sufficient
to meet the note or notes, or he has the alternative
of falling back on the earned profit from some other
piano and utilizing that.
In consignment, that profit would remain in his
hands. The collections from each customer paying
for each consigned piano.
It is true that in consignment the chattel mortgages,
conditional sales, or leases taken on consigned pianos
are transmitted to the manufacturer. These become
his security. In case of the failure of the dealer he
can realize on them. Where credit to any large ex-
tent is'given and note settlements accepted, the same
thing in another way occurs. It is customary for
the manufacturer who gives long and bulky credit to
secure himself by collateral in the form of piano sale
contracts often in the ratio of two to one.
So that the buyer on credit and the consignment
agent are in the same boat. Each of them turns his
contracts over as security to the manufacturer.
Advantages of Consignment Plan.
The honest piano merchant has every advantage in
consignment where the price is right that he can
enjoy under long-time note settlements, and he has
more in some respects. The chief difference arises
in the fact that'a dishonest man has a greater oppor-
tunity to act the rogue in putting up straw collateral
where notes are given.
It can thus be readily seen that the small dealer
whose capital is limited is unquestionably nearer to
the road to success in connecting himself with a
strong house offering a liberal consignment proposi-
tion than he is by trying to paddle his own canoe or
borrowing from the local bank. Bankers are not
lying awake of nights in their anxiety to receive piano
paper. Even in flush times piano paper is paper the
ordinary banker fights shy of.
This is unfortunate, but it is true, as any dealer
will tell you. The consignment deal, generously fair,
with its substantial cash discounts on cash sales, ren-
ders the dealer independent of his local banker who
may be prejudiced against piano paper, and in times
of stress and financial stringency the dealer has the
further satisfaction of knowing that his bills payable
and contracts are not scattered, or in the hands of
third parties alien to him and his business, and in-
disposed to give him the extensions of credit that
he needs.
The consignment account is a big factor to the man
who can sell. The number of dealers who are build-
ing their success on it are the strongest refutation
of the erroneous impression that the plan is one to
be discouraged.
J. P. SEEBURG LEAVES IN MAY.
J. P. Seeburg, president of the J. P. Seeburg Piano
Co., Chicago, will leave sometime during the first
half of May, probably about the tenth of the month,
for Gothenburg, Sweden, to take part in the cen-
tennial anniversary and exhibition in that city, of
which he is a native. The official presentation of the
Order of Vasa, into which Mr. Seeburg was recently
knighted by the King of Sweden, will be conferred
during Mr. Seeburg's trip. A display of views of the
Seeburg factory at 1510 Dayton street, will be on ex-
hibition at the Gothenburg exposition, in the build-
ing devoted to Swedes in foreign countries.
BUSH & LANE IN CONCERT.
Charles T. Corbin, general manager of the Bush &
Lane Piano Co. of .Seattle, visited the Portland,
Oregon, branch last week. The Bush & Lane pianos
received considerable advertisement as a result of a
recital by Miss Hannah Davis, a pupil of Mischa
Pelz, one of Portland's most prominent piano teach-
ers. Both Mr. Pelz and Miss Davis have Bush &
Lane grands in their homes and are great advocates
of the instruments from Holland, Mich.
STORY & CLARK MAGAZINE ADS.
One of the attractive advertising features in a
group of national magazines for April is that of the
Story & Clark Piano Co., Chicago. Full page dis-
plays in the following magazines show the roproduc-
tion of the painting "Childhood Days": Atlantic
Monthly, Century Magazine, Harpers Magazine, Re-
view of Reviews, World's Word and Scribner's
Magazine.
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