Middlemen in English Business 359 



Commission House. The line of demarkation between factor and 

 commission house cannot be absolutely drawn, because a commission 

 merchant is a factor. A commission house buys and sells in foreign 

 trade, in its own name, for a number of principals a variety of goods, 

 on commission. It receives the goods by consignment from a mer- 

 chant or manufacturer. It is entrusted with the possessions, control, 

 management, and disposal of the goods sold. It does business in its 

 own name but on the account and at the risk of the principal. 



These houses are houses of reputation, capital and credit. They 

 allow the consignor to draw on them for a large per cent of the value 

 of the goods consigned, immediately upon receipt. Such advances 

 require large capital on the part of the consignee. They store the 

 goods, sell them in their own name, and guarantee payments of the 

 accounts to the consignor. They carry out the shipping details, 

 caring for lading, shipping, insurance, commercial papers, etc. They 

 also buy goods upon order from foreign houses, and finance and ship 

 the order, collecting their outlay from the consignee. Their profits 

 arise from the commission paid, interest on their outlay, insurance, 

 profits, etc.^ 



The advantages that are realized by a foreign firm in buying through 

 a commission house are first, that all orders may be forwarded and all 

 payments made to one person instead of dealing with various firms; 

 and that likewise all shipments are received on one bill of lading; and 

 secondly that larger credit is likely to be got from a commission house, 

 it being acquainted with the general condition of trade and having 

 wider banking connections. Ricard declared it to be "le plus advan- 

 tageux de toutes les branches de commerce."- It is equally advan- 

 tageous for the producer to dispose of his goods through the commis- 

 sion house, for the house carries out the details of shipping and pro- 

 cures lower freight rates on the large bulk shipments than can l)e had 

 on the small quantities the manufacturer would have to ship; and 

 further the commission house is a home firm whose financial strength 

 is easily investigated, against which suits for the recovery of debts are 

 made according to home laws, whereas if the dealing was done directh- 

 by the producer, collections would be made abroad. 



The obvious disadvantages engendered in the dealing through the 

 commission house are that the house handles a variety of goods and 



^ Description of the business of the commission house may be found in Savarj', 

 Par. Neg., II, 130; Mod. Bus., II, 75, 100, 102-5; Schmoller, Grundriss, II, 35-6; 

 Manes, Lehr. Hand., 215, 229, 230. 



- Ricard, II, 443. 



