Since capital is a commodity that is bought and sold, much the same as other goods for which there is a fluctuating demand, and since prices in general are affected by the rate of interest, it follows that the credit man should have some knowledge of the cur rent financial situation, the work of the stock exchange and the investment market. He may at certain sea sons of the year have funds to invest, just as at other seasons he may take advantage of the low interest rate and borrow for current requirements. Without a fair knowledge of investment he will find it difficult to use the firm's funds and credit to the best advantage.
Insurance is likewise a live topic to a credit man. He will nearly always wish to make sure that the re tailer to whom he extends credit has his store and stock adequately insured. For that reason, some knowledge of fire insurance, the various kinds of in surance policies, insurance companies, etc., is very desirable. In the same way, familiarity with real estate law relating to the holding and transfer of title is often of great value to the credit man.
A certain knowledge of law is of course indispens able to a successful management of the credit de partment. Such subjects as contracts, agency, ne gotiable instruments and bankruptcy, in addition to exemption and homestead laws in the states in which his house is doing business, should be known and un derstood well enough to guide a credit man in the ordinary transactions of his office. It is not meant by this that he should undertake to be his own lawyer, but he should know enough law to be warned when he is approaching legal difficulties, so that he may summon competent legal aid in time to prevent loss.
Above all, the credit man should understand the subject of credit. This statement may appear so ob vious as not to call for emphasis. This requirement, however, is not met by a mere familiarity with credit routine, as is often seen in the short-sighted credit policy of some houses. It is found rather in that broader view of the subject which takes cognizance of the nature of credit, not as a necessary evil but as a great boon, the right use of which promotes trade by facilitating the exchange of commodities and assures business permanency and freedom from commercial loss.
7. The credit man as a business force.—Aside from the immediate duties involved in checking or ders and collecting credit information about custom ers, actual and prospective, the modern credit man finds a line of work awaiting him which fully equals these duties in importance. The manufacturer and
wholesaler recognize more and more clearly that the best way in which to promote their own business is to promote the business of the retailer. In other words, if they can make the retailer a better merchant so that he sells more goods, they thereby make of him a larger buyer of their goods and a prompter payer of his bills.
A glance at the commercial mortality statistics will show how many retailers, especially in the rural dis tricts are in need of the help suggested. According to figures prepared by R. G. Dun and Co., there were in 1915, in the United States, more than twenty-two thousand commercial failures, with liabilities of more than three hundred million dollars. The significant fact in connection with the large number of annual failures is that about eighty per cent of them were directly due to the faults of the failing merchants. What these faults were, specifically, we shall see in a subsequent chapter.
Meanwhile, the question naturally arises : How can such faults be corrected, and how can dishonest dealers be eliminated as credit customers? As a matter of fact, the deliberately dishonest dealer is rare. On the other hand, the hopelessly in competent constitute a very considerable percentage of the smaller merchants of the country.
In the interest of sound business practice, the credit man should refuse credit to those who are incompe tent, just as he should by every means at his disposal endeavor to make better merchants of those who tho inexperienced appear to be made of the right material.
More than a superficial knowledge of each dealer is required to draw the line thus sharply between good and bad. And even where there can be no doubt that a certain dealer is in need of help and guidance, there remains the problem of supplying such help in a way that shall prove effective without giving offense. Ex perience shows that if suggestions for the improve ment of their business methods are tactfully pre sented, the majority of retailers are willing to receive them. Accordingly, certain wholesale houses have made systematic effort to learn in what particular de partments of business their customers are deficient.