The Complete English Tradesman Part 30

The answer is short. Two things raise credit in trade, and, I may say, they are the only things required; there are some necessary addenda, but these are the fundamentals.

1. Industry. 2. Honesty.

I have dwelt upon the first; the last I have but a few words to say to, but they will be very significant; indeed, that head requires no comment, no explanations or enlargements: nothing can support credit, be it public or private, but honesty; a punctual dealing, a general probity in every transaction. He that once breaks through his honesty, violates his credit--once denominate a man a knave, and you need not forbid any man to trust him.

Even in the public it appears to be the same thing. Let any man view the public credit in its present flouris.h.i.+ng circ.u.mstances, and compare it with the latter end of the years of King Charles II. after the Exchequer had been shut up, parliamentary appropriations misapplied, and, in a word, the public faith broken; who would lend? Seven or eight per cent, was given for antic.i.p.ations in King William's time, though no new fraud had been offered, only because the old debts were unpaid; and how hard was it to get any one to lend money at all!

But, after by a long series of just and punctual dealing, the Parliament making good all the deficient funds, and paying even those debts for which no provision was made, and the like, how is the credit restored, the public faith made sacred again, and how money flows into the Exchequer without calling for, and that at three or four per cent.

interest, even from foreign countries as well as from our own people!

They that have credit can never want money; and this credit is to be raised by no other method, whether by private tradesmen, or public bodies of men, by nations and governments, but by a general probity and an honest punctual dealing.

The reason of this case is as plain as the a.s.sertion; the cause is in itself; no man lends his money but with an expectation of receiving it again with the interest. If the borrower pays it punctually without hesitations and defalcations, without difficulties, and, above all, without compulsion, what is the consequence?--he is called an honest man, he has the reputation of a punctual fair dealer. And what then?--why, then, he may borrow again whenever he will, he may take up money and goods, or anything, upon his bare words, or note; when another man must give bondsmen, or _mainprize_, that is, a p.a.w.n or pledge for security, and hardly be trusted to neither. This is credit.

It is not the quality of the person would give credit to his dealing; not kings, princes, emperors, it is all one; nay, a private shopkeeper shall borrow money much easier than a prince, if the credit of the tradesman has the reputation of being an honest man. Not the crown itself can give credit to the head that wears it, if once he that wears it comes but to mortgage his honour in the matter of payment of money.

Who would have lent King Charles II. fifty pounds on the credit of his word or bond, after the shutting up the Exchequer? The royal word was made a jest of, and the character of the king was esteemed a fluttering trifle, which no man would venture upon, much less venture his money upon.

In King William's time the case was much the same at first; though the king had not broken his credit then with any man, yet how did they break their faith with the whole world, by the deficiency of the funds, the giving high and ruinous interest to men almost as greedy as vultures, the causing the government to pay great and extravagant rates for what they bought, and great premiums for what they borrowed--these were the injuries to the public for want of credit; nor was it in the power of the whole nation to remedy it; on the contrary, they made it still grow worse and worse, till, as above, the parliament recovered it. And how was it done? Not but by the same method a private person must do the same, namely, by doing justly, and fairly, and honestly, by every body.

Thus credit began to revive, and to enlarge itself again; and usury, which had, as it were, eaten up mankind in business, declined, and so things came to their right way again.

The case is the same with a tradesman; if he shuffles in payment, bargains at one time, and pays at another, breaks his word and his honour in the road of his business, he is gone; no man will take his bills, no man will trust him.

The conclusion is open and clear: the tradesman cannot be too careful of his credit, he cannot buy it too dear, or be too careful to preserve it: it is in vain to maintain it by false and loose doing business; by breaking faith, refusing to perform agreements, and such shuffling things as those; the greatest monarch in Europe could not so preserve his credit.

Nothing but probity will support credit; just, and fair, and honourable dealings give credit, and nothing but the same just, and fair, and honourable dealings will preserve it.

FOOTNOTES:

[42] [How strikingly was this proved in the last war, when the British government obtained credit for no less than six hundred millions to conduct warlike operations, and by these means was ultimately victorious.]

[43] [The author's praises of credit must be received with caution. If his descriptions of the credit system of his own day are true, an improvement has since taken place, as business neither is nor can be now carried on to such an extent upon credit--a circ.u.mstance that redounds to the advantage of all parties.]

[44] [Defoe speaks of such cases as if there were something laudable in them, whereas it is obviously for the interest of all honest traders, that no such men should be allowed to carry on business.]

[45] [Defoe almost appears in this place to lay capital out of the question, and to represent credit as all in all. Credit is a matter of great consequence; but we must not attempt to carry on business by its means alone. It should only be considered as an aid to capital. Those who, without capital, endeavour to set up in business by means of credit, or, when capital is exhausted, attempt to struggle on by means of credit alone, will, in general, only have a life of anxiety and dispeace for their pains.]

CHAPTER XXV

OF THE TRADESMAN'S PUNCTUAL PAYING HIS BILLS AND PROMISSORY NOTES UNDER HIS HAND, AND THE CREDIT HE GAINS BY IT

As I said that credit is maintained by just and honourable dealing, so that just dealing depends very much upon the tradesman's punctual payment of money in all the several demands that are upon him. The ordinary demands of money upon a tradesman are--

I. Promises of money for goods bought at time.

II. Bills drawn upon him; which, generally speaking, are from the country, that is to say, from some places remote from where he lives.

Or,

III. Promissory notes under his hand, which are pa.s.sed oftentimes upon buying goods: bought also at time, as in the first head.

IV. Bonds bearing interest, given chiefly for money borrowed at running interest.

1. Promises of money for goods bought at time. This indeed is the loosest article in a tradesman's payments; and it is true that a tradesman's credit is maintained upon the easiest terms in this case of any other that belongs to trade; for in this case not one man in twenty keeps to his time; and so easy are tradesmen to one another, that in general it is not much expected, but he that pays tolerably well, and without dunning, is a good man, and in credit; shall be trusted any where, and keeps up a character in his business: sometimes he pays sooner, sometimes later, and is accounted so good a customer, that though he owes a great deal, yet he shall be trusted any where, and is as lofty and touchy if his credit be called in question, as if he paid all ready money.

And, indeed, these men shall often buy their goods as cheap upon the credit of their ordinary pay, as another man shall that brings his money in his hand; and it is reasonable it should be so, for the ready-money man comes and buys a parcel here and a parcel there, and comes but seldom, but the other comes every day, that is to say, as often as he wants goods, buys considerably, perhaps deals for two or three thousand pounds a-year with you, and the like, and pays currently too. Such a customer ought indeed to be sold as cheap to, as the other chance customer for his ready money. In this manner of trade, I say, credit is maintained upon the easiest terms of any other, and yet here the tradesman must have a great care to keep it up too; for though it be the easiest article to keep up credit in, yet even in this article the tradesman may lose his credit, and then he is undone at once; and this is by growing (what in the language of trade is called) long-winded, putting off and putting off continually, till he will bear dunning; then his credit falls, his dealer that trusted him perhaps a thousand pounds previously, that esteemed him as good as ready money, now grows sick of him, declines him, cares not whether he deals with him or no, and at last refuses to trust him any longer. Then his credit is quite sunk and gone, and in a little after that his trade is ruined and the tradesman too; for he must be a very extraordinary tradesman that can open his shop after he has outlived his credit: let him look which way he will, all is lost, n.o.body cares to deal with him, and, which is still worse, n.o.body will trust him.

2. Bills drawn upon him from the country, that is to say, from some places remote from where he now dwells: it is but a little while ago since those bills were the loosest things in trade, for as they could not be protested, so they would not (in all their heats) always sue for them, but rather return them to the person from whom they received them.

In the meantime, let the occasion be what it will, the tradesman ought on all occasions to pay these notes without a public recalling and returning them, and without hesitation of any kind whatsoever. He that lets his bills lie long unpaid, must not expect to keep his credit much after them.

Besides, the late law for noting and protesting inland bills, alters the case very much. Bills now accepted, are protested in form, and, if not punctually paid, are either returned immediately, or the person on whom they are drawn is liable to be sued at law; either of which is at best a blow to the credit of the acceptor.

A tradesman may, without hurt to his reputation, refuse to accept a bill, for then, when the notary comes he gives his reasons, namely, that he refuses to accept the bill for want of advice, or for want of effects in his hands for account of the drawer, or that he has not given orders to draw upon him; in all which cases the non-acceptance touches the credit of the drawer; for in trade it is always esteemed a dishonourable thing to draw upon any man that has not effects in his hands to answer the bill; or to draw without order, or to draw and not give advice of it; because it looks like a forwardness to take the remitter's money without giving him a sufficient demand for it, where he expects and ought to have it.

A tradesman comes to me in London, and desires me to give him a bill payable at Bristol, for he is going to the fair there, and being to buy goods there, he wants money at Bristol to pay for them. If I give him a bill, he pays me down the money upon receipt of it, depending upon my credit for the acceptance of the bill. If I draw this bill where I have no reason to draw it, where I have no demand, or no effects to answer it, or if I give my correspondent no advice of it, I abuse the remitter, that is, the man whose money I take, and this reflects upon my credit that am the drawer, and the next time this tradesman wants money at Bristol fair, he will not come to me. 'No,' says he, 'his last bills were not accepted.' Or, if he does come to me, then he demands that he should not pay his money till he has advice that my bills are accepted.

But, on the other hand, if bills are right drawn, and advice duly given, and the person has effects in his hands, then, if he refuses the bill, he says to the notary he does not accept the bill, but gives no reason for it, only that he says absolutely, 'I will not accept it--you may take that for an answer;' or he adds, 'I refuse to accept it, for reasons best known to myself.' This is sometimes done, but this does not leave the person's credit who refuses, so clear as the other, though perhaps it may not so directly reflect upon him; but it leaves the case a little dubious and uncertain, and men will be apt to write back to the person who sent the bill to inquire what the drawer says to it, and what account he gives, or what character he has upon his tongue for the person drawn upon.

As the punctual paying of bills when accepted, is a main article in the credit of the acceptor, so a tradesman should be very cautious in permitting men to draw upon him where he has not effects, or does not give order; for though, as I said, it ought not to affect his reputation not to accept a bill where it ought not to be drawn, yet a tradesman that is nice of his own character does not love to be always or often refusing to accept bills, or to have bills drawn upon him where he has no reason to accept them, and therefore he will be very positive in forbidding such drawing; and if, notwithstanding that, the importunities of the country tradesman oblige him to draw, the person drawn upon will give smart and rough answers to such bills; as particularly, 'I refuse to accept this bill, because I have no effects of the drawer's to answer it.' Or thus, 'I refuse to accept this bill, because I not only gave no orders to draw, but gave positive orders not to draw.' Or thus, 'I neither will accept this bill, nor any other this man shall draw;' and the like. This thoroughly clears the credit of the acceptor, and reflects grossly on the drawer.

And yet, I say, even in this case a tradesman does not care to be drawn upon, and be obliged to see bills presented for acceptance, and for payment, where he has given orders not to draw, and where he has no effects to answer.

It is the great error of our country manufacturers, in many, if not in most, parts of England at this time, that as soon as they can finish their goods, they hurry them up to London to their factor, and as soon as the goods are gone, immediately follow them with their bills for the money, without waiting to hear whether the goods are come to a market, are sold, or in demand, and whether they are likely to sell quickly or not; thus they load the factor's warehouse with their goods before they are wanted, and load the factor with their bills, before it is possible that he can have gotten cash in his hand to pay them.

This is, first, a direct borrowing money of their factor; and it is borrowing, as it were, whether the factor will lend or no, and sometimes whether he can or no. The factor, if he be a man of money, and answers their bills, fails not to make them pay for advancing; or sells the goods to loss to answer the bills, which is making them pay dear for the loan; or refuses their bills, and so baulks both their business and their credit.

But if the factor, willing to oblige his employers, and knowing he shall otherwise lose their commission, accepts the bills on the credit of the goods, and then, not being able to sell the goods in time, is also made unable to pay the bills when due--this reflects upon his credit, though the fault is indeed in the drawer whose effects are not come in; and this has ruined many an honest factor.

First, it has hurt him by drawing large sums out of his cash, for the supply of the needy manufacturer, who is his employer, and has thereby made him unable to pay his other bills currently, even of such men's drafts who had perhaps good reason to draw.

Secondly, it keeps the factor always bare of money, and wounds his reputation, so that he pays those very bills with discredit, which in justice to himself he ought not to pay at all, and the borrower has the money, at the expense of the credit of the lender; whereas, indeed, the reproach ought to be to him that borrows, not to him that lends--to him that draws where there are no effects to warrant his draft, not to him that pays where he does not owe.

But the damage lies on the circ.u.mstances of accepting the bill, for the factor lends his employer the money the hour he accepts the bill, and the blow to his credit is for not paying when accepted. When the bill is accepted, the acceptor is debtor to the person to whom the bill is payable, or in his right to every indorser; for a bill of exchange is in this case different from a bond, namely, that the right of action is transferable by indors.e.m.e.nt, and every indorser has a right to sue the acceptor in his own name, and can transfer that right to another; whereas in a bond, though it be given to me by a.s.signment, I must sue in the name of the first person to whom the bond is payable, and he may at any time discharge the bond, notwithstanding my a.s.signment.

Tradesmen, then, especially such as are factors,[46] are unaccountably to blame to accept bills for their employers before their goods are sold, and the money received, or within reach: if the employers cannot wait, the reproach should lie on them, not on the factor; and, indeed, the manufacturers all over England are greatly wrong in that part of their business; for, not considering the difference between a time of demand and a time of glut, a quick or a dead market, they go on in the same course of making, and, without slackening their hands as to quant.i.ty, crowd up their goods, as if it were enough to them that the factor had them, and that they were to be reckoned as sold when they were in his hands: but would the factor truly represent to them the state of the market--that there are great quant.i.ties of goods in hand unsold, and no present demand, desiring them to slack their hands a little in making; and at the same time back their directions in a plain and positive way, though with respect too, by telling them they could accept no more bills till the goods were sold. This would bring the trade into a better regulation, and the makers would stop their hands when the market stopped; and when the merchant ceased to buy, the manufacturers would cease to make, and, consequently, would not crowd or clog the market with goods, or wrong their factors with bills.

But this would require a large discourse, and the manufacturers'

objections should be answered, namely, that they cannot stop, that they have their particular sets of workmen and spinners, whom they are obliged to keep employed, or, if they should dismiss them, they could not have them again when a demand for goods came, and the markets revived, and that, besides, the poor would starve.

These objections are easy to be answered, though that is not my present business; but thus far it is to my purpose--it is the factor's business to keep himself within compa.s.s: if the goods cannot be sold, the maker must stay till they can; if the poor must be employed, the manufacturer is right to keep them at work if he can; but if he cannot, without oppressing the factor, then he makes the factor employ them, not himself; and I do not see the factor has any obligation upon him to consider the spinners and weavers, especially not at the expense of his own credit, and his family's safety.

Upon the whole, all tradesmen that trade thus, whether by commission from the country, or upon their own accounts, should make it the standing order of their business not to suffer themselves to be overdrawn by their employers, so as to straiten themselves in their cash, and make them unable to pay their bills when accepted. It is also to be observed, that when a tradesman once comes to suffer himself to be thus overdrawn, and sinks his credit in kindness to his employer, he buys his employment so dear as all his employer can do for him can never repay the price.

And even while he is thus serving his employer, he more and more wounds himself; for suppose he does (with difficulty) raise money, and, after some dunning, does pay the bills, yet he loses in the very doing it, for he never pays them with credit, but suffers in reputation by every day's delay. In a word, a tradesman that buys upon credit, that is to say, in a course of credit, such as I have described before, may let the merchant or the warehouse-keeper call two or three times, and may put him off without much damage to his credit; and if he makes them stay one time, he makes it up again another, and recovers in one good payment what he lost in two or three bad ones.