10. to the foregoing report the test of capacity which, as will be remembered, we divided into technical and financial, we note at once • that the firm is credited with possessing only "fair" ability, from which we gather that their business abil ity is really poor, tho their skill as practical trunk makers may be excellent. This conclusion is strengthened by the further evidence that altho they have been in business for six years, the partners ap pear to be merely holding their own and are making no appreciable headway. This condition is readily accounted for if, as the trade believes, their product is sold on too close a margin of profit—a circumstance which lends additional support to the opinion that the partners are men of small business ability, as is also suggested by their refusal to submit a financial state ment.
It is not doubted that their technical ability as trunkmakers is satisfactory. Their long experience must be accepted as sufficient guaranty of that fact. The ages of these partners must also be regarded as being in their favor.
Under the second C—capital—the information is not sufficient for us to form an intelligent opinion. We know that six years ago the business was bought for $12,500, but in the absence of a financial state ment we have no means of knowing whether the as sets of the business at the present time total that amount.
The information before us does not indicate whether the business premises are owned by the part ners or are merely leased by them. The supposed equity in the properties of the individual partners should not be taken into consideration as a basis of credit. Nor do we know whether the plant is fully insured—not even whether it is insured at all.
Under the third C—character—we note that the partners are said to have a "fair" reputation, which implies that there are things in their history which show them to be not wholly upright or trustworthy. This makes us cautious. There is nothing in the re port to indicate that the partners gamble, drink or neglect their business, nor are we warranted in con cluding that they are extravagant, either in their per sonal or in their business expenditures. But we do know that they are somewhat slow in paying their bills—in the words of the report, only "fairly prompt." To sum up our analysis, we find that the partners' business ability is not such as to give assurance of the ultimate success of the business. 'As to their cap ital, we are not sufficiently informed either as to its amount or condition (quick or slow assets) . It is
true that two creditors declare themselves willing to continue selling the firm, but it is highly probable that these creditors are in possession of certain informa tion that is withheld from us. Until we know what the firm's assets and liabilities are we cannot be cer tain that there is capital sufficient to guarantee us against loss.
As to the question of character, we unfortunately lack definite proof that we are dealing with men of proper moral standards.
Under the circumstances we are not warranted in accepting the firm's orders except on a cash basis. It is quite probable, of course, that a first bill of rela tively small amount would be paid, but even on that eventuality we cannot afford to take chances. If our customers will not open their hearts to us and give us their confidence, they cannot in reason expect us to open our stock rooms to them and give them pos session of our merchandise. Until we have fuller and more satisfactory information we shall decline the order.
11. Report on a general clothing following is a mercantile agency report that was is sued on a firm of retail clothing dealers: John C. Ferguson and Brother. Syracuse, New York.
Clothing, Shoes and Men's Furnishings.
John C. Ferguson Allan C. Ferguson Are unmarried men, aged respectively forty and thirty eight. Came here about five and a half years ago from Buf falo, N. Y., where they had been employed as clerks in the same line of business. They bore a good reputation in Buf falo and since coming here have been attentive to business, temperate, and are well regarded by the trade. They are conservative in their purchases, economical in their expendi tures, and display good business judgment.
On March 1st, 1913, and on March 1st, 1915, their total assets and liabilities, as shown in the statements of those dates, were respectively : Their staternFnt is accepted as correct, according to their books, but it is believed that their stock cannot safely be valued at more than $38,000. It is likewise thought that furniture and fixtures should not be considered worth more than $2,000. Their store is being extensively remodeled, in 'volving considerable expense, which fact, taken in connection with the other items, is believed to bring the net total worth down to about $32,000, which may fairly be accepted as a basis for credit.