most overreached, not so much by the wit or cunning of those they had to deal with as by the secret promptings of their own avarice; wherein they abundantly verified an old proverbial speech or saying, namely, 'All covet, all lose;' so it was there indeed, and the cunningest, wisest, sharpest, men lost the most money.
There are two things which may be properly called over-trading, in a young beginner; and by both which tradesmen are often overthrown.
1. Trading beyond their stock.
2. Giving too large credit.
A tradesman ought to consider and measure well the extent of his own strengh; 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 over-buys 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 beginning, ought to be very wary of taking too much credit; he had much better slip the occasion 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 shopkeepers and young tradesmen to buy great quantities 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 payment the merchant expects his money, whether the goods are sold or not; and if he cannot pay, he is gone at once.
The tradesman that 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 may pass for a kind of an objection here, that there are some goods which a tradesman may deal in, which are to be bought at such and such markets only, and at such and such fairs only, that is to say, are chiefly bought there; as the cheesemongers buy their stocks of cheese and of butter, the cheese at several fairs in Warwickshire, as at Atherston fair in particular, or at fair in Gloucestershire, and at Sturbridge fair, near Cambridge; and their butter at Ipswich fair, in Suffolk; and so of many other things; but the answer is plain: those things which are generally bought thus, are ready money goods, and the tradesman has a sure rule for buying, namely, his cash. But as I am speaking of taking credit, so I must be necessarily supposed to speak of such goods as are bought upon credit, as the linen-draper buys of the Hamburgh and Dutch merchants, the woollen-draper of the Blackwell-hall men, the haberdasher of the thread merchants, the mercer of the weavers and Italian merchants, the silk-man of the Turkey merchants, and the like; here they are under no necessity of running deep into debt, but may buy sparingly, and recruit again as they sell off.
I know some tradesmen are very fond of seeing their shops well-stocked, and their warehouses full of goods, and this is a snare to them, and brings them to buy in more goods than they want; but this is a great error, either in their judgment or their vanity; for, except in retailers' shops, and that in some trades where they must have a great choice of goods, or else may want a trade, otherwise a well-experienced tradesman had rather see his warehouse too empty than too full: if it be too empty, he can fill it when he pleases, if his credit be good, or his cash strong; but a thronged warehouse is a sign of a want of customers, and of a bad market; whereas, an empty warehouse is a sign of a nimble demand.[12]
Let no young tradesman value himself upon having a very great throng of goods in hand, having just a necessary supply to produce a choice of new and fashionable goods—nay, though he be a mercer, for they are the most under the necessity of a large stock of goods; but I say, supposing even the mercer to have a tolerable show and choice of fashionable goods, that gives his shop a reputation, he derives no credit at all from a throng of old shopkeepers, as they call them, namely, out-of-fashion things: but in other trades it is much more a needful caution; a few goods, and a quick sale, is the beauty of a tradesman's warehouse, or shop either; and it is his wisdom to keep himself in that posture that his payments may come in on his front as fast as they go out in his rear; that he may be able to answer the demands of his merchants or dealers, and, if possible, let no man come twice for his money.
The reason of this is plain, and leads me back to where I began; credit is stock, and, if well supported, is as good as a stock, and will be as durable. A tradesman whose credit is good, untouched, unspotted, and who, as above, has maintained it with care, shall in many cases buy his goods as cheap at three or four months' time of payment, as another man shall with ready money—I say in some cases, and in goods which are ordinarily sold for time, as all our manufactures, the bay trade excepted, generally are.
He, then, that keeps his credit unshaken, has a double stock—I mean, it is an addition to his real stock, and often superior to it: nay, I have known several considerable tradesmen in this city who have traded with great success, and to a very considerable degree, and yet have not had at bottom one shilling real stock; but by the strength of their reputation, being sober and diligent, and having with care preserved the character of honest men, and the credit of their business, by cautious dealing and punctual payments, they have gone on till the gain of their trade has effectually established them, and they have raised estates out of nothing.
But to return to the dark side, namely, over-trading; the second danger is the giving too much credit. He that takes credit may give credit, but he must be exceedingly watchful; for it is the most dangerous state of life that a tradesman can live in, for he is in as much jeopardy as a seaman upon a lee-shore.
If the people he trusts fail, or fail but of a punctual compliance with him, he can never support his own credit, unless by the caution I am now giving; that is, to be very sure not to give so much credit as he takes.
By the word so much, I must be understood thus—either he must sell for shorter time than he takes, or in less quantity; the last is the safest, namely, that he should be sure not to trust out so much as he is trusted with. If he has a real stock, indeed, besides the credit he takes, that, indeed, makes the case differ; and a man that can pay his own debts, whether other people pay him or no, that man is out of the question—he is past danger, and cannot be hurt; but if he trusts beyond the extent of his stock and credit, even he may be overthrown too.
There were many sad examples of this in the time of the late war,[13] and in the days when the public credit was in a more precarious condition that it has been since—I say, sad examples, namely, when tradesmen in flourishing circumstances, and who had indeed good estates at bottom, and were in full credit themselves, trusted the public with too great sums; which, not coming in at the time expected, either by the deficiency of the funds given by parliament, and the parliament themselves not soon making good those deficiencies, or by other disasters of those times; I say, their money not coming in to answer
