ADDRESS. 13 



sale, is worth just what it can be sold for, and no more ; no 

 matter what it has cost, it must take the market. The laws 

 of supply and demand fix prices. What then is the use of ascer- 

 taining the cost so exactly ? Because it is well to know from 

 day to day, if you are making or losing money ; because if a 

 price below your cost, is to be permanently the ruling price of 

 the market, and is not the temporary result of a spasmodic action, 

 one of three things must happen : you must reduce the cost, or 

 stop producing or supplying yourself with the article to be sold, or 

 see your capital daily diminish and grow smaller. It happens fre- 

 quently, from exceptional causes, as a tight money market and con- 

 sequent pressure to sell, or an over production and glut, that prices 

 will temporarily lurch downwards, and rule below cost of produc- 

 tion. This is an evil which cures itself, as, to a great extent, 

 production ceases, and the natural consumption soon clears the 

 market. In such an event a wise business man hesitates to sell, 

 as he knows that prices will soon advance by the operation of 

 natural causes ; and thus we see, not only the necessity of ascer- 

 taining, as near as may be, the cost of merchandize, but, by the 

 course of our reasoning, are brought to another essential to busi- 

 ness success. The business man must have plenty of capital. 

 Otherwise, regardless of circumstances, he must convert his 

 products into cash as soon as possible, taking the market as he 

 finds it, regardless of cost, in order to meet his obligations. 

 While, with capital in abundance, he can pay his debts, and 

 hold his goods, till the markets are favorable. 



I have already defined the term capital. Theoretically it 

 makes no difference whether a man owns his capital, or bor- 

 rows it. It is in both cases, a mere matter of interest. Please 

 understand me here ; I do not mean to say that if a man borrows 

 !$5000, it is just the same as though he owned it, but that in 

 either case, the business ought to pay the interest, before reckon- 

 ing any profit. That is, if you have .^5000 of your own, you can 

 loan it on security so as to make it absolutely safe, and get, say 

 •i>800 per year, without incurring any trouble or risk. If instead 

 of this, you invest it in business, you must deduct f 300 from the 

 profits, for interest on the capital, and you would do no more, if you 

 borrowed the money, and actually paid the interest to another party. 

 The same thing, let me say in passing, is true of one's own per- 

 sonal services. Whatever could be fairly earned in the employ of 

 another, with the same devotion of time and attention which one 

 would give to his own business, is fairly chargeable to the busi- 

 ness, and should be deducted from the earnings, before setting 



