On account of this mutuality of interest the whole saler has an undoubted right to demand the fullest in formation regarding the retailer's facilities for resell ing his goods at a profit and regarding his ability and willingness to render payment to the wholesaler at the expiration of the credit period. The retailer, real izing that his profits depend upon his ability to ob tain such goods on credit for resale, should be equally anxious to prove to his creditor in the most conclu sive manner possible that he really may be intrusted with the latter's merchandise. In other words, the in terests of both retailer and wholesaler lie in giving and receiving the fullest information touching the former's title to receive goods on credit for the purpose of resale. Therefore, whatever prevents this informa tion from being freely given, retards to some extent the transfer of merchandise from wholesaler to con sumer by way of the retailer.
On this account the property statement has been made a means of conveying information which will test the existence of credit title in the retailer, a printed form being usually submitted upon which the credit-seeker enters the information asked for.
5. Growing importance of the property statement. —In years gone by the property statement was usu ally requested with an apology and either refused or rendered with bad grace. It was regarded by many dealers as an unwarranted attempt at prying into their business, and was often resented as an im plication of distrust, if not as a personal insult. To day, modern ideas have made men understand that business confidence does not thrive in the dark and that credit, to be free and untrammeled, requires that the fullest light be admitted to the conditions which surround credit transactions.
This view of the matter has acquired increased em phasis by reason of the smaller profit margin upon which business today is being done. In most lines of business competition has driven prices down to a point where a few bad credits might wipe out the larger part of a season's profit. On that account credits are being surrounded with greater safeguards than formerly, since every precaution must be taken to insure the payment of all bills at maturity. Hence, in their demand for a property statement, whole salers are embodying questions which probe more deeply into the retailer's status than was formerly the case.
6. Periodical revision of signed regard to the frequency with which signed property statements should be demanded there is much differ ence of opinion. For fear of offending a customer who may be opposed to giving signed statements, some credit men ask for property statements only when cir cumstances of, a grave or suspicious nature make such requests imperative. Others ask for signed state ments only in the case of a new account, while still others request one from each of their customers new or old, at stated intervals—once a year and in some cases even oftener.
One nationally known manufacturer makes it a rule to obtain a financial statement from every new customer, either direct or thru the .commercial agencies. The absence of such statement, he says, is viewed with suspicion. Another prominent manu facturer insists upon receiving a signed statement if the customer's credit title is in the least obscured. A similar attitude is taken by the Hamilton Brown Shoe Company of St. Louis, whose credit department de mands a statement whenever circumstances make such a demand expedient.
Certain other prominent houses, among which is the H. J. Heinz Company of Pittsburgh, do not usu ally demand a statement of a new customer, nor do they, as a rule, request periodically revised statements of old customers. Such houses usually have branches thruout the country, in each of which there is a credit department. The Heinz Company has about thirty such branch houses, each with its own credit depart ment.
In view, however, of what was said about the rela tion between the parties to a credit transaction, it appears that requests for initial and periodically re vised statements are fully justified, unless the informa tion sought is obtained in other ways.
Moreover, such periodical "looking the facts in the face," as the frequent revision of his property statement involves, is not a bad thing for the debtor himself. It keeps him hewing close to the line, pro motes economy and efficiency, and checks the tendency to overbuying. The value of a signed property state ment is further increased by the fact that the court will hold its maker accountable for any wilful mis representation of the facts as stated therein. When the statement is issued for the purpose of obtaining goods on credit, such misrepresentation will be con strued as an attempt to obtain goods under false pre tenses, and the maker will be liable to punishment for the offense.
7. Common forms of property several forms of property statements here shown are among those most generally approved. The first two are representative of the information which a bank seeks to obtain from an applicant for credit; the re maining three are forms employed by commercial houses.
It is not necessary to comment at length upon these forms or to discuss in detail the special questions they raise. A study of them will show in what particular facts the credit departments of a bank and of a mer cantile house are interested, and in what special form such information is most conveniently presented. It will be noted that two types of forms are given, one for the use of an individual or partnership, and the other for a corporation.
The questions asked by the corporation statement show both in their number and character how much more intricate is the organization of capital in the corporate form than in the individual or partnership form.