ing the 24th of one month are paid for on the first Tuesday of the month but one following. To a large extent, however, these have been succeeded by a system of payment within a week or a fortnight, the premium in this case being 2 per cent. In retail business the practice has rapidly gained ground during the past ten years of paying at once for all purchases at the time they are made. This practice has been largely promoted by the co-operative distributing associations, which, under various names, have been established for the purpose of reducing retail prices for the benefit of their members. The principle adopted by these societies is invariably that of prompt payment, and so signally successful has it been that private traders have found it to their interest to reduce their prices, and at the same time to make immediate payment an essential condition of their business. The action of the various co-operative societies in establishing this cash plan in payment for all orders and sales has had a powerful influence in extending the system to all sound retail dealers in the country. In this reform the example of these co-operative societies has been very useful and a great benefit to sound trade. It must not be understood that there was not, even before the impulse of the co-operative societies was felt, a large amount of ready-money business in the retail trades. It has, however, been greatly extended, and the effect of its extension has been to lessen the cost of distribution by abolishing the charge for interest in the book credits of retailers, as well as the loss from bad debts in the case of all who have put their business upon a strictly prompt cash basis. Following this system, prices have been lowered, retail dealers have been spared great loss and annoyance, and a healthy and sound reform has been inaugurated. 5. To what extent do losses incidental to business prevail?—It is impossible to state with any approach to precision what is the propor tion of losses incurred in business. As no statistics of any real value are available here in this connection for making a comparison, it is only possible to make a general answer to the query under this head. From careful inquiries among business men I have received widely different answers to this question. It is safe to affirm, however, that in wholesale transactions the losses arising from the granting of credit are, allowing for the bad state of trade existing for some years past, much less than they were formerly. In the course of a commercial cycle, seasons of expansion and contrac tion of credit have always succeeded each other, and the losses incurred during a season of contraction are usually the simple result of liquidating previous bad business. If, therefore, allowance be made for losses due to previous bad trading, the amount due to current or recent business must be put down as comparatively small just now. The habits of business firms differ so widely in the credits they give that no general average of losses can be struck, or at least none of any value as a fair estimate. 6. Do tradesmen extend credit to mechanics and laborers readily?— Traders do not now extend credit to mechanics and laborers so readily as in former years, and the reason is obvious from what has been said about the rapid growth of the prompt cash system. This has had the effect of making tradesmen more anxious to cultivate the ready-money business and of inducing workmen to find in prompt payment a method of appreciably economizing their expenditure. In this country the desire to secure a "shop" for the sale of commodities is very great among the working classes. Formerly this passion to become small dealers led many to engage in business on very small capital, and to rely largely on credit for their supplies. This system led to frequent failures and much loss and distress on the part of wholesale merchants. The healthier cash plan adopted by the co-operative societies has wrought a great change in this respect, and now ready payment is demanded of the retail class as a general rule. Where cash is paid for stock it is easy to insist on prompt payments when the same is sold at retail. 7. What advantages have cash buyers?-Prompt cash buyers get the best of everything and the most of it that is to be had for the money. The advantages of this plan are so well understood among retail dealers now that cash buyers are the rule. The competition among retail dealers is now so keen that purchasers on credit cannot command the best retail customers, in competition with dealers who pay cash for their supplies to the wholesale merchants. 8. Is interest demanded on time accounts?-Interest is not often demanded in time accounts unless they have run on much beyond the due date. In the markets for raw materials, the Liverpool cotton market, for example, interest accounts are strictly kept. But in the cottonmanufacturing districts wholesale transactions in goods and yarns are usually conducted without charges for interest, other than those which may be involved in the differences between the rate of premium or discount for prompt payment and for "monthly terms" already alluded to. As a rule, a few days' delay in payment does not involve the necessity of paying for interest as well, although in some few cases it undoubtedly does. 9. With what classes are the evils of credit most conspicuous?-Credit, within proper bounds, is in theory and by the practice of modern communities acknowledged to be useful. It is productive of evil principally when it is excessive. The tendency amongst all classes in this country has in recent years been towards a contraction of credit, and it is impossible to say whether or not such evils as still remain are more conspicuous in any one class than in another. The so-called "lower classes" here are probably the ones who suffer most from the evils of credit. These include mechanics and small tradesmen who unwisely and on small capital attempt lines of trade far beyond their financial strength. Frequently small legacies are left to this class, and then the almost universal desire is to set up in trade for themselves. Lacking needed experience, and frequently without any practical knowledge of business methods, this class of dealers rely largely on credit for their supplies, giving credit when sold, and, as a result of bad repayments and loose management, come to grief in a comparatively short time. In such cases, and they were formerly very numerous, the granting of credit was a positive evil to those who were able to obtain it. They almost always failed, and were left discouraged and penniless. cash system does away with this evil. The 10. What kind of produce or manufactured articles command cash returns?—There is no single commodity which at the present moment commands cash returns in preference to any other. As a rule, however, it may be taken for granted that raw produce meets with a readier sale for immediate cash than articles which are further advanced towards the stage of final completion. Credit obtains much more extensively in the distribution of perfected articles than in raw commodities. The reason is easily discovered. Raw produce may, as a rule, be sold at any moment and the holder may at any time borrow money upon it. But the merchant who buys finished goods must await the demand for them. Raw produce, such for example as cotton, may be converted into goods in a thousand different ways, but when once it is made into, say, 68 A-No. 43- 2 a bale of prints of definite texture, patterns, and colorings, the possible 11. Are credits of record (mortgages, judgments, &c.) prevalent; and, if so, among what classes?-The only credits of record in England are judgments, and the custom of confessing a judgment so as to give the creditor security has fallen almost entirely into disuse. Mortgages of realty are largely prevalent among the richer classes. In some cases they are effected for the purpose of securing to the daughters and younger sons of land-owners the payment of their "portions," the estate being devised to his eldest son subject to such payment; and in others to enable the owner to raise money for the purpose of drainage and other improvements upon the land, and in a few instances to cover his reckless expenditure. Among the middle classes, mortgages are largely used as a means of making profits by buying and selling land with the least possible expenditure of capital. The poorer classes are not owners of land to any appreciable extent. Throughout the numerous manufacturing towns, of These which this city is the commercial center, and even to some extent in Manchester itself, workmen are owners of small houses. are occasionally built upon freehold land, but much more frequently upon land leased for 999 years, subject to an annual payment for rent, which usually varies from one penny to six pennies per yard. In very rare cases these houses, or cottages as they are commonly called, are built by the work people themselves, but for the most part they are bought from speculative builders. The number in the possession of a single owner is from one to a dozen of these cottages. In some cases they are mortgaged in the usual way, but more frequently they are held as security by a building society, from which the owner has received an advance. Every month a payment to the society becomes due for interest and in reduction of the principal sum lent. Usually the scale of repayment is so adjusted as to extinguish the debt in the course of about The workman is thus enabled out of his earnings to besixteen years. come, in course of time, the owner of his own dwelling; and, it may be, of one or more other cottages besides. The funds at the disposal of the societies are derived mainly from deposits, upon which the rate of interest allowed is five per cent. Although these deposits are subject to repayment at short notice, a rule is inserted in the constitution of most societies providing against the risk of a sudden "run" upon their funds by depositors. This provision takes the form of a regulation by which repayments can only be demanded to the extent of the funds actually in hand. About five years ago much alarm arose amongst the depositors in consequence of the heavy fall which had taken place in the value of buildings and of the consequent losses which some of the socieA rapid withdrawal of deposits set in, and the societies had sustained. ties were obliged to put in force the rule to which reference has been made. Depositors who had given notice for the return of their money could therefore receive it only in installments out of the funds accumulating month by month from the repayments of borrowers Of course, during this period of excitement, which extended over the greater part of six months, the societies gained few fresh deposits. Even now there is nothing like the former readiness to deposit money with building societies, and some which are still struggling with their difficulties can command no new funds. This feeling of distrust has grown out of the belief that property is depreciating in value, and that a general fall in rents must inevitably follow. Those who place small deposits in such societies are often easily frightened, and a "scare" once started takes a long time to run its course. On the whole, however, the position of these societies is much improved and confidence is steadily growing. There can be no doubt that some of the societies have been badly managed, but the chief source of their difficulties has been the excessively high price to which real estate in English towns rose between 1875 and 1878. In the former year the report of the Parliamentary committee on foreign loans was published. It showed that vast sums of money saved in the United Kingdom had been invested in foreign government or municipal loans, and that much of it had been irreparably lost. From that moment foreign investments fell in the estimation of the public and a reaction in favor of home investments set in. It was one consequence of this reaction that deposits with building societies became a favorite method of employing savings. There can be no doubt that the readiness with which the building societies were able to obtain funds contributed largely towards raising the value of urban real property between 1873 and 1878, and that it was the cause of much of the mismanagement of these societies. An abundance of funds made them overventuresome, and unsound schemes for enhancing the value of property through new buildings led to a lot of foolish undertakings, many of which proved disastrous failures. The ruins of some of these enterprises are still felt by subscribers, and this, too, keeps alive the fears about this species of investments. At present, however, the position of the building societies is rapidly improving, but some of them are not vet quite "out of the woods." The value of real property is not now falling, or at least not to an extent lately seen, and in some directions there are distinct signs of a reaction. If these should increase, there can be no doubt that a lively competition for this class of property would follow. Mortgages of chattels or bills of sale (as they are here called) were until the beginning of this year in very large use amongst the lower classes and small tradesmen. Registration, with a view to publicity, was required in most cases, but, when registered, bills of sale gave the creditor absolute priority over any one (except the landlord) even in case of the debtor's bankruptcy, and they were on that account very • extensively used by the worst class of money lenders, and in some hands they became instruments of gross extortion. This priority has now, however, been abolished by the bills of sale act of 1882, which, by making void all bills of sale for amounts below £30, and by other salutary and stringent provisions, has remedied an iniquitous system, and has reduced the number of bills of sale to about one-twentieth of that formerly existing. 12. When a person has once failed, or has been discredited, can he resume, and what are obstacles to such resumption?-When a person has once failed in business and has obtained his discharge, there is no obstacle to his resuming except the difficulty of obtaining credit, and of course this is a very serious one. The failure of a man in business here is generally considered upon its merits. If a failure, in the opinion of the people, has been caused by a lack of reasonable caution or undue extravagance, it is very hard for the bankrupt to again secure the confidence of capitalists or to obtain credits from old customers. If, however, business misfortune is the result of the accidents common to the trade, and where misfortunes have carried down an honest and plodding merchant, then great sympathy is sure to be shown him in his efforts to build up his shattered fortunes anew. The good old rule that "honesty is the best policy" is in active force here, and where honest dealers fail there is a chance always for them to rise again through the aid of friends who do not hesitate to assist in re-establishing them in business again. But for tricksters this is a bad atmosphere. "Once bit, twice shy," is a saying that has a wide application in this center. 13. Is bankruptcy frequent?-The number of bankruptcies is dependent almost entirely upon the condition of trade. This, in fact, is an almost universal rule, applicable to all civilized countries. During the current year they have not been unusually frequent, although it has been known that a new and stringent measure for dealing with insolv ents was before Parliament. This fact speaks volumes for the general character of business, even at a time when a series of poor harvests and a period of low prices in manufactures has prevailed. The new bankruptcy act, to which allusion will presently be made, has received the royal assent, and some of its provisions came into effect on the 25th ultimo. The greater portion of them, however, do not come into force until the 1st of January next. A table of comparative failures for several years will be found at another place in this report. 14. To what extent do relief acts in bankruptcy prevail?-A copy of the new bankruptcy act is appended to this report. The chief improvements which it is intended to introduce into bankruptcy procedure are these: No arrangement for composition or liquidation will be valid which has not received the sanction of the court. The proceedings must throughout be conducted under the cognizance and with the final approval of the court. The proceedings are hastened, and the power of the settler to turn the liquidation to his own advantage through the agency of friendly creditors is much lessened if not altogether taken away. Then, too, the funds realized in the liquidation of a bankrupt's estate must be promptly lodged within the control of the board of trade, and chiefly at the Bank of England. All debtors must be publicly examined in court with regard to their affairs. An important order has just been issued in pursuance of this act, requiring all trustees and other persons holding undistributed funds on account of former bankrupts to furnish particulars of them to the board of trade and to pay any amounts remaining in their hands or under their control to the Bank of England to the credit of the board of trade. This provision is timely and meets a demand that has long been felt for the prompt realization and settlement of bankrupts' estates. There has been great laxity in the past in this country in dealing with such estates, and the present law furnishes a sharp and sure remedy for past evils in this connection. 15. Are fortunes readily made and lost?-Fortunes are not readily made just now. It may, also, be claimed that they are not readily lost. During seasons of rapidly fluctuating prices, as, for example, during the "cotton famine" and the period of the late American war, and during the Franco-German war, large fortunes were frequently made and some of them were very quickly lost within a short period of the time when they were acquired. But at the present time in this district there are small hopes of acquiring fortunes at a venture, or of losing them, as the conditions surrounding business are such that plodding methods are enforced by banks and all business men. There has been a hard fight during the past four or five years among many of the great interests in this district to hold their own without any reference to adding to their fortunes. The race for wealth is a keen one at present, and competition renders it no easy matter for business men to rapidly amass fortunes. |