CHAMBERS'S INFORMATION FOR THE PEOPLE. 



than he can purchase with his own money, he 

 could sell them also at a profit Hence he bor- 

 rows capital, or buys goods on credit ; and after 

 paying interest on the former, and the additional 

 price for the latter, he has a profit remaining to 

 himself. But if he incautiously commit the mis- 

 take of buying more goods than he can sell at a 

 profit before he requires to repay the borrowed 

 capital, or to pay the price of the goods bought 

 on credit, he has taken too much credit, and is 

 overtrading ; the result of which, if continued, 

 must be insolvency. 



Defoe, who wrote upwards of a century ago, 

 makes the following observations on credit and 

 overtrading in his Complete English Tradesman : 

 'There are two things which may properly be 

 called overtrading, and by both of which trades- 

 men are often overthrown : I. Trading beyond 

 their stock [or capital] ; 2. Giving too large credit. 

 A tradesman ought to consider and measure well 

 the extent of his own strength ; his stock of money 

 and credit is properly his beginning : for credit is 

 a stock as well as money. He that takes too much 

 credit, is really in as much danger as he that gives 

 too much credit ; and the danger lies particularly 

 in this, if the tradesman overbuys himself that 

 is, buys faster than he can sell buying upon 

 credit, the payments perhaps become due too soon 

 for him ; the goods not being sold, he must answer 

 the bills upon the strength of his proper stock 

 that is, pay for them out of his own cash ; if that 

 should not hold out, he is obliged to put off his 

 bills after they are due, or suffer the impertinence 

 of being dunned by the creditor, and perhaps by 

 servants and apprentices, and that with the usual 

 indecencies of such kind of people. This impairs 

 his credit, and if he comes to deal with the same 

 merchant or clothier, or other tradesman, again, 

 he is treated like one that is but an indifferent 

 paymaster ; and though they may give him credit 

 as before, yet depending that if he bargains for 

 six months, he will take eight or nine in the 

 payment, they consider it in the price, and use 

 him accordingly ; and this impairs his gain, so 

 that loss of credit is indeed loss of money, and 

 this weakens him both ways. 



'A tradesman, therefore, especially at his begin- 

 ning, ought to be very wary of taking too much 

 credit ; it would be preferable to let slip the occa- 

 sion of buying now and then a bargain to his 

 advantage, for that is usually the temptation, than 

 buying a greater quantity of goods than he can 

 pay for, run into debt, and be insulted, and at last 

 ruined. Merchants and wholesale dealers, to put 

 off their goods, are very apt to prompt young shop- 

 keepers and young tradesmen to buy great quanti- 

 ties of goods, and take large credit at first ; but 

 it is a snare that many a young beginner has 

 fallen into, and been ruined in the very bud : for 

 if the young beginner does not find a vent for the 

 quantity, he is undone ; for at the time of pay- 

 ment the merchant expects his money, whether 

 the goods are sold or not ; and if he cannot pay, 

 he is gone at once. The tradesman who buys 

 warily, always pays surely, and every young 

 beginner ought to buy cautiously. If he has 

 money to pay, he need never fear goods to be 

 had ; the merchants' warehouses are always open, 

 and he may supply himself upon all occasions, as 

 he wants, and as his customers call.' It certainly 

 ' is not possible, in a country where there is such 



484 



an infinite extent of trade as we see managed in 

 this kingdom, that either on one hand or another 

 it can be carried on without a reciprocal credit 

 both taken and given ; but it is so nice an affair,, 

 that I am of opinion as many tradesmen break 

 with giving too much credit as break with taking 

 it. The danger, indeed, is mutual, and very great. 

 Whatever, then, the young tradesman omits, let 

 him guard against both giving and taking too 

 much credit.' 



Orders. An order is a request from one dealer 

 to another to supply certain goods. An order, 

 when in writing, should be explicit, and contain 

 no more words than are necessary to convey the 

 sense in a simple, courteous manner. 



Counting-house (in French, bureau; in Dutch, 

 kantoor). The counting-house is the office in 

 which a merchant's literary correspondence, book- 

 keeping, and other business is conducted. Almost 

 every different business requires a different set of 

 books, but the mode of keeping them is essentially 

 the same. Books may be kept either by single 

 entry or double entry. Single entry only enables 

 the merchant to ascertain the periodical profit or 

 loss on the whole of his business. Double entry 

 enables him to ascertain this on any branch of 

 it. For example, it will enable the grocer to tell 

 what he has made or lost upon tea since last bal- 

 ance, as well as on his business generally. The 

 strictest care and accuracy are desirable. It is 

 an understood rule, that no book should shew 

 a blot or erasure ; a leaf should never on any 

 account be torn out, whatever blotch or error it 

 contains. The reason for this scrupulous care is r 

 that a merchant's books should be a clear and 

 faithful mirror of his transactions, and an evidence 

 of his integrity. In the case of misfortune in 

 trade, or for some other reason, the books may 

 be subjected to a rigid judicial examination, and 

 an erasure or torn-out leaf may lead to conjec- 

 tures of an unpleasant nature and consequences. 

 Besides, in the event of any dispute being brought 

 before a court of law, the books, if vitiated or 

 altered, although with no improper motive, do- 

 not afford prima-facie proof of the transactions 

 having taken place which they record. When an 

 error occurs in book-keeping, it is proper to let 

 it remain, and write error below it. 



From the books kept by a merchant, a con- 

 densed view of his affairs ought to be given at least 

 once a year. To get this, there must, in the first 

 place, be the operation of what is called stock- 

 taking that is, of making an inventory and valua- 

 tion, called the stock sheet, of the goods and 

 property of the concern at cost price, and of the 

 debts and bills due to it ; the whole forming what 

 are called the assets. The stock sheet also con- 

 tains a list of the bills, accounts, or other debts 

 due by the concern, forming what are called its 

 liabilities. 



Balance Sheet. This is prepared on the data of 

 the stock sheet The assets are placed on the 

 credit side, the liabilities on the debit If the 

 latter exceed the former, the concern is insolvent. 

 The balance being on the credit side represents 

 the net capital. Profit and Loss Account. The 

 net capital, as shewn by the balance sheet, with 

 partners' drawings for the period, are placed on 

 the credit side of the account ; and the net capital, 

 as shewn by the previous balance sheet, with five 

 per cent interest, is placed on the debtor. The 



