December 22, 1917 



HORTICULTURE 



655 



as a result of the coal shortage, and considering also the 

 curtailment in flowering plant supply by the absence of 

 the always popular azalea, the querj' arises as to whether 

 the possible retrenchment in holiday expenditure by the 

 purchasing public will offset this reduced production. 

 One man's guess is as good as another's. That the sup- 

 ply of holiday plants througliout the country will be 

 materially reduced seems to be authenticated. That 

 the sale of holiday plants will be reduced is not yet in 

 evidence. We feel quite safe in advising our readers 

 to secure their holiday plant supply at the earliest pos- 

 sible moment if they have not already done so. Hoit- 

 ticcltuee's advertisers should naturally have the first 

 call. The attitude of business houses that do not ad- 

 vertise their wares in Horticultdre would seem to be 

 that they do not seek the business of Horticulture's 

 readers. Probably our readers can stand it if they can. 



Now that well directed efforts toward 



Reforming ^jjg adopting of modern business 



credit methods publicity methods in the flower 



trade have been fairly inaugurated 

 we may perhaps venture to look for some general ex- 

 pression of sentiment and, let us hope, resultant or- 

 ganized action towards an improved credit and billing 

 system among all those engaged in the various horti- 

 cultural industries and tributary trades. The necessity 

 for some radical reform in this direction has long been 

 realized and not infrequently discussed wherever the 

 craft has foregathered and in this respect of unsys- 

 tematic bookkeeping and collecting we are not materi- 

 ally different from the majority of people in other lines 

 of commercial endeavor. The exigencies forced upon 

 us all in this country at the present time have uncovered 

 to our plain sight many weak spots in our methods of 

 business and economic habits and unquestionably one 

 of these most pressing for general reform is our credit 

 system or — to be more correct — lack of system. In this 

 connection we would call attention to a pamphlet re- 

 cently issued by the Irving National Bank of New York 

 City containing an address by Lewis E. Pierson before 

 the American Trade Council and the New York Credit 

 Men's Association on the proposed "trade acceptance" 

 system and urging its adoption. The movement for 

 this reform has already received the endorsement of 

 the Federal Reserve Board, Chamber of Commerce of 

 the United States and other institutions best qualified 

 to speak upon commercial credit matters. So strong a 

 hold has it taken already that we may assume that it 

 has come to stay and that this method of doing a credit 

 business will soon work to supersede the old-style book 

 account system. We all have long been familiar with 

 the complaint of the merchant that he was compelled 

 to sell on credit and that the thirty days' credit which 

 he granted was usually strung out to ninety days, four 

 months or longer, this carelessness about paying up 

 leading to collection costs, litigation and bad debts, 

 not to mention the loss of interest on the money tied up. 

 Then, too, what merchant hasn't complained at various 

 times because his banker insisted on living up to the 

 "two for one rule," dcclijiing to loan the merchant 

 more than 50 per cent of the accounts receivable shown 

 on his statement, and how often has the average mer- 

 chant, especially in small towns, been hampered by the 

 "10 per cent rule" under w.hich, regardless of the securi- 

 ty offered, he could not borrow an amount in excess of 

 10 per cent of the capital and surplus of the bank. It 

 is claimed that no one class of business men will piofit 

 more from the trade acceptance system than the retail 



merchant, for no other class is more often taken advan- 

 tage of by those who purchase goods on credit. To these 

 woes of the average retail merchant there is usually 

 added the competition of the mail order houses who get 

 their pay in advance and do not gi'ant any credit at all. 

 We clip from the Journal of Commerce the following 

 summary of the workings and advantages of the pro- 

 posed new system, which we believe will, at least, inter- 

 est our readers, if not convince them of its desirability 

 from the standpoint of self interest, efficiency in busi- 

 ness and patriotism. 



"The adoption of the trade acceptance by a merchant 

 merely means that he will send a letter to his customers 

 at the end of the month when he sends out the invoices 

 for the past month's accounts, and that he will attach to 

 each of these invoices a trade acceptance properly filled 

 out. In the letter he will call attention to the desire of 

 the Treasury Department and the Federal Reserve Board 

 to have the credit position of America in the most liquid 

 possible condition as a basis for the successful financing 

 of this great war, and will call attention to the desirability 

 of having credit instruments called trade acceptances take 

 the place of the old-fashioned open book accounts, which 

 are unavailable as a convenient basis for loans. He will 

 state that each customer is urged to do his part in reliev- 

 ing unnecessary strain on the country's financial resources 

 by sending a check in payment of his account promptly at 

 the end of each month, but when this is sufficiently incon- 

 venient, so that an extension of credit is necessary, then 

 he will "accept" the trade acceptance attached to his In- 

 voice and return it as evidence of the fact that he wishes 

 to take advantage of the credit terms stated therein. 



If the customer returns a check (and it he has to sign 

 either a trade acceptance or a check he will oftentimes 

 sign a check, while under the old system he would just 

 let the account "run awhile" as a matter of habit), the 

 merchant will charge the account off of his bills receivable 

 ledger, marking the account "paid by check," and if the 

 customer returns the trade acceptance the merchant will 

 make a similar charge, marking the account "paid by trade 

 acceptance." In this way each account will be settled up 

 and taken off the books every month, and the bothersome 

 account of long standing with its many entries represent- 

 ing purchases, and its many payments of odd amounts 

 "on account" will be done away with. 



When these trade acceptances are received the mer- 

 chant can take them to his bank and discount them for 

 approximately 100 per cent, of their face value, instead of 

 50 per cent, as with the open book accounts, and the "10 

 per cent, rule" does not apply to them unless trade ac- 

 ceptances for an amount larger than 10 per cent, of the 

 capital and surplus of the bank have been accepted by 

 some one customer. In which case the "10 per cent, rule" 

 would apply to the acceptance of this one customer only. 

 Furthermore, the rate of interest will often be somewhat 

 lower than the rate on the old-fashioned single name note, 

 because the bank can turn the acceptance over to the 

 Federal Reserve Bank at a preferential rate and thus make 

 a good profit for the bank, as well as save money for the 

 merchant by the lower rate granted him. 



All of the conveniences of the open account can be 

 retained, such for instance as the right to make partial 

 payments, which can be arranged with the bank, and it 

 the customer is not able to meet the trade acceptance when 

 it becomes due and the merchant wishes to help him out 

 he can do this by having the customer sign a promissory 

 note with interest so that the merchant grants him the 

 favor of an extension, but without the loss of interest that 

 occurs under the old system. Trade acceptances are never 

 given for renewals or old accounts, as these should always 

 be settled with notes drawing interest. 



Trade acceptances make it necessary for customers 

 to pay up within a reasonable time after the goods are 

 bought, and the merchant does not continue to carry the 

 old long-drawn-out account which made it possible for bis 

 customers to buy of him "on tick" and at the same time 

 use their ready money to buy of the mail order houses. 

 The merchant complains about mail order competition, but 

 in a majority of cases he himself is financing these very 

 mail order purchases throush the old-fashioned trouble pro- 

 ducing open book account. 



