DtXKMBER 1, 1918.] 



THE INDIA RUBBER WORLD 



137 



Trade Acceptances for the Rubber Goods Manufacturer. 



By Russell Raymond Voorhces. 



IN our discussion of trade acceptances in the May, 1917, issue, 

 we took up the advantages that this financial paper offers to 

 the buyer of rubber goods. We found just what the benefits 

 are to the rubber goods dealer and that they are certainly vital 

 enough to warrant every dealer using them when he makes time 

 purchases. But in addition to the advantages that trade accept- 

 ances offer to the dealer they also possess equal advantages 

 for the jobber and manufacturer. Every jobber or manufac- 

 turer of rubber goods should ask for trade acceptances when 

 he sells goods on credit. They are just as valuable to him in 

 his way as they are to the dealer when he makes a purchase. 



In the first place, the use of trade acceptances will fix the 

 exact amount of the bill at once. It is too often the case in 

 business that 

 when the time 

 for payment 

 comes the buyer 

 may advance a 

 derogatory claim 

 with reference to 

 the goods in or- 

 der to defer the 

 date of settle- 

 ment. Of course, 

 in many cases 

 the claim is just, 

 but at least it 

 should have been 

 taken up before 

 the last minute. 

 Mistakes are 

 bound to happen 

 in any business, 

 yet it would seem 

 that the bulk of 

 such mistakes 

 could at least be 

 rectified at once 

 without waiting 

 until the date of 

 payment arrives. 

 If a trade accept- 

 ance is asked for 

 when a jobber 

 or manufacturer 

 sells the bill of 

 goods there will 

 be no come-back 

 later as to the 



amount owing. Since the exact amount of the obligation is 

 written across the face of the instrument and by endorsing it 

 the buyer accepts the amount as correct, it can be seen that 

 trade acceptances are a means of practically closing a trans- 

 action at the time of purchase. 



One of the common abuses of business is the unearned dis- 

 count. Time buyers all too often take off the regular cash dis- 

 count when they come to pay their bills, and jobbers and manu- 

 facturers in many cases are helpless to remedy this evil. They 

 fear that if they try to put a stop to this practice the buyer will 

 take his trade elsewhere regardless of who is in the right. For 

 this reason it is often allowed to run on, with the result that time 

 buyers buy on the same terms as the cash customer, which is 

 most unfair to the buyer and to the seller. Trade acceptances 



Table showing the value of Trade Acceptances bouiht in the open market since the law went into etj 

 and held by Federal Reserve Banks as per schedules on file with the Federal Reserve Board 

 on dates specified, distributed by classes of accepting institutions. 



are not subject to discount at the time of payment, and as they 

 have the exact amount written on the face there can be no op- 

 portunity offered for taking an unearned discount at the time of 

 settlement. The general use of trade acceptances will without 

 doubt remove from business this more unhealthy practice and 

 give to every jobber and manufacturer all that is due them. 

 In addition to the saving of unearned discounts, trade 

 acceptances will give the seller of rubber goods a cheaper method 

 of collecting his accounts. When the buyer of the goods gives 

 the acceptance, he writes across the face of it the bank at which 

 it is to be paid and when it falls due, and that bank attends to 

 the collecting, thus removing a bother and an expense from the 

 hands of the jobber or manufacturer. This certainly is an 



economic method. 

 Overbuying is 

 without doubt 

 one of the big 

 causes of failure 

 in this country. 

 There is far too 

 much speculation 

 in the average 

 business and 

 sooner or later 

 some companies 

 fall by the way- 

 side with large 

 stocks on hand. 

 And just as sure- 

 ly as overbuying 

 is one of the 

 chief causes of 

 failure, so is 

 overcredit one of 

 the chief causes 

 for overbuying. 

 Too many deal- 

 ers who buy on 

 time take no 

 thought of meet- 

 ing their obliga- 

 tions, but plunge 

 ahead until the 

 day of reckoning. 

 When trade 

 acceptances are 

 substituted for 

 the open account 

 it is only a short 

 time liefore the poor risk is brought face to face with obligations 

 that are due and many failures to meet them will prove his 

 undoing. A buyer who gives an acceptance at the time of pur- 

 chase will realize that he is making an obligation that he must 

 meet, and it will generally be found that he will try harder to 

 meet it than if it were simply an open account where promises 

 can take the place of cash. 



And right along this line there is a point that is worth men- 

 tioning. The loss that jobbers and manufacturers incur by 

 means of bad accounts will be materially lowered. It will be 

 but a short time, a few months, when the bad risk will be elim- 

 inated and when that is done it will be found that profits will 

 be materially higher than at present. More accounts will be 

 paid when due and less will be lost through failures. 



