Business failure

“ The [179] capital invested fails to make a return. The loss of income which ensues decreases the purchasing power of the community; and this combines with the sudden loss of business confidence caused by the failure of the enterprise to bring about a general panic and crash which affects the whole community; and by checking enterprise and industry, damages the country ten times the amount of the original loss.
The waste of competition is by no means confined to railways. ”

“ In view of this, we are not surprised to learn that the chances were considered several to one in favor of the failure of any given business enterprise, and that it was common for persons who at last succeeded in making a hit to have failed repeatedly. ”

“ Thus, if a man embarks the whole or greater part of his means in speculations which do not succeed, he becomes instantly embarrassed with the Government, and, with no incomings to relieve him, may perhaps not succeed in recovering his first failure. Most of the merchants being men who are selected merely on account of their capital, the management of their business is entirely in the hands of those they employ, for whose honesty or capacity they are mainly dependent for success. ”

“ Shortly after, the rascality of a business partner developed itself by the announcement of a failure. This was followed soon after by universal depression of all securities, which seemed to threaten the extinction of a good part of the income still retained, and for which I am indebted to the kindly act of friends. At this juncture the editor of the Century Magazine asked me to write a few articles for him. ”

“ That thinking first of money instead of work brings on fear of failure and this fear blocks every avenue of business—it makes a man afraid of competition, of changing his methods, or of doing anything which might change his condition. ”

“ Moreover, every change in the adjustments of business, every slightest alteration in the condition of commerce or manufactures, not to speak of the innumerable business failures that took place yearly, even in the best of times, were constantly throwing a multitude of men out of employment for periods of weeks or months, or even years. ”

“ A large percentage of those who embark in commercial undertakings fail, according to the records of commercial agencies.
Why do men fail? Why do adventures into business, happily launched, terminate in disastrous wreck? ”

“ Everything seems to be going on as usual, commerce and industry vigorous and expanding, when suddenly there comes a shock, as of a thunderbolt out of a clear sky—a bank breaks, a great manufacturer or merchant fails, and, as if a blow had thrilled through the entire industrial organization, failure succeeds failure, and on every side workmen are discharged from employment, and capital shrinks into profitless security. ”

“ The danger of failures in business would still exist. Some factors would tend to lessen this danger as, the prevention of stock- watering, misappropriation of funds, excessive salaries, and the unfair competition of rivals. But failures could no longer be averted by squeezing wages, neglecting conditions of production, or lowering the quality of goods. The employers may well ask, in bitterness, what right the Government has to close their chances of high profits when it leaves the chance of total loss. ”

“ But who is there foolish enough to expect that general business enterprise and real prosperity can revive so long as the danger of a great monetary revulsion, with all its concomitants of repudiation and bankruptcy, hangs over us like a dark storm-cloud? ”

“ The loss in business, in commerce, in industry—in a state which just begins to realize that it has lagged in new efforts in these respects—is too costly even in prospect and in early results. It would be disastrous in the long run. ”

“ Daring speculations fail; the struggle in unnatural competition with men of large capital, or dishonourable dealings, wears out at last the overtasked frame—life is spent in a whirl—death summons them, and finds them unprepared. Everybody who has any settled business is overworked. ”

“ The risk of bankruptcies, with all their attendant evils, would be done away with entirely. Business would have a stability unknown to our present individualistic industry, and businessmen would be freed from that anxiety that drives so many today to a premature grave. ”

“ The temptation of excessive gains leads from the beaten path of business. Speculation without money takes the place of honest industry, extending from the stock exchange everywhere. The failed paper of the Government teaches the lesson of bankruptcy. The Government refuses to take up its notes, and others do likewise. ”

“ To get on the highway of fortune, you must rush headlong down the Road to Ruin, continue straight on till you come to the Insolvent Court, and—there you are. Let business grow dull, and capital object—like a fat turtle—to be turned over and over, and the haberdashers have still the safe expedient left them of being ruined before taking in their spring goods. About six "fearful bankruptcies" will make an enterprising tradesman comfortable for life. ”

“ A recent French economist reckons that ten out of every hundred who enter business succeed, fifty vegetate, and forty go into bankruptcy. In America, where internal competition is still keener and speculation more rife, it has been lately calculated that ninety-five per cent, of those who enter business "fail of success." ”

“ The whole business horizon seemed full of coming storms, which burst successively with desolating severity, not only on merchants and manufacturers, but on others who had long before retired from business. ”

“ What are the causes of so many failures among our enterprises, especially those that gave promise of great success? This question like the historic ghost will not down, but walks at unseemly hours, both by day and by night, calling for an adjustment of our commercial and economic sins, that it may go to its rest. [Pg 196]
Our men do not have that thorough grasp of business principles, that comes with years of experience. One cause for our mistakes is that we do not have the opportunity of apprenticeship. ”

“ It may happen to any person in business, to be disappointed of the resources on which he had calculated for meeting some engagement, the non-fulfilment of which on a fixed day would be bankruptcy. In periods of commercial difficulty, this is the condition of many prosperous mercantile firms, who become competitors for the small amount of disposable capital which, in a time of general distrust, the owners are willing to part with. ”

“ Once a struggling business issued a notice that it is likely to close or substantially reduce its work force, then creditors, suppliers, and customers would disappear, eliminating any chance of survival the business might have had. ”

“ The distorted joints of the cripple do not help him to fight. The firm is not rich because its business is done by tragedians and walking-gentlemen, but in spite of them. If the doctor fails to give his medicine, if the fighting grows too rough for the cripple, if business grows slack, or if some good business man with competent assistants starts a strong opposition–what happens? What must inevitably happen? Why, the sick man dies, the cripple gets the worst of it, and the theatrical firm of merchants goes straight into bankruptcy. ”

“ These stories are but a sample of the iniquities that were going on in that day, and yet then, as now, the feeling of legislators and business men seems to have been that it was dangerous to trade and business to sweep this horrible system away, so blind are people to the wrongs they see every day, so dull are ears to cries of pain and distress that are continuous and never cease. ”

“ Business establishments, manufactories, mercantile houses, unable to get the money for meeting their obligations, will by the hundreds succumb to their embarrassments and tumble down like a row of bricks. Others will cautiously restrict their operations to the narrowest possible limit, and wage-earners by the thousands will lose their employment and be turned into the street.
No class of society will be spared the destructive consequences. Every frightened creditor, pressed by his own creditors, and apprehensive of a growing loss by every day's delay, will eagerly pounce upon his debtors. ”

“ It runs until you are declared bankrupt; and you are not bankrupt until you are dead. Then of course as a business firm I shall lose what I have not already collected from you; but there are enough others to keep the concern prosperous and going. ”

“ And if any person whatsoever should complain that he was ill-used, in the value and goodness of what he bought, the matter should be examined, the persons injured be fully satisfied by the whole corporation without delay, and the dishonest seller be struck out of the society, unless it appeared evidently that the failure proceeded only from mistake. ”

“ But such an investigation and possible prosecution of corporations whose prosperity or destruction affects the comfort not only of stockholders but of millions of wage earners, employees, and associated tradesmen must necessarily tend to disturb the confidence of the business community, to dry up the now flowing sources of capital from its places of hoarding, and produce a halt in our present prosperity that will cause suffering and strained circumstances among the innocent many for the faults of the guilty few. ”

“ The uncertainty of the results of an enterprise will often deter capitalists, naturally cautions and distrustful, from making an investment, without some assurance that, in case the business become profitable, they shall not encounter the danger of its destruction or diminution by competition. ”

“ But while most of such manufacturing associations of workingmen have failed, some have succeeded, and the story of the latter seems to show that there is nothing false in the principle, the failure being due to the results of injudicious management, as above indicated. ”

“ Everybody demands payment, and he who fails to pay is a failure. Owing to the competition, owing to the complexity of modern life, owing to the thousand things that must be known in order to succeed in any direction, on either side of the great highway that is called Progress, are innumerable wrecks. As a rule, failure in some honest direction, or at least in some useful employment, is the dawn of crime. ”

“ The higher exigencies of the captain of industry's personal fortunes, as distinct from those of the corporation controlled by him, may from time to time be best sewed by an apparent, if not an actual, mismanagement of industrial affairs. A convincing appearance of decline or disaster will lower the putative earning-capacity of the concern below its real earning-capacity and so will afford an advantageous opportunity for buying with a view to future advance or with a view to strategic control. ”

“ In actual fact a whole year is wasted in most cases, failure spoils the reputation of the company, running expenses have continued, and further working capital cannot be raised, because all concerned have lost confidence by the failure to obtain returns promised. ”

“ Unscrupulous men, versed in all the dark ways of the financial world, found their opportunity in those palmy days, and, purchasing and amalgamating, converted prosperous private firms into unwieldy and over-capitalised public companies. In the thick of all this juggling with millions, and snatching of commissions and vendors’ profits, the bubble burst, and an honourable and highly prosperous industry was wrecked, and became a bye-word and a reproach all the world over. ”

“ Corrupt, plundering, and law-breaking officers of banks, and railway, insurance, and other large corporations have, in many cases, been exposed and shown the error of their ways, and we have in consequence a higher business morality than we had before we passed through this ordeal of purification. ”

“ Many of the business men of our little city became unable to meet their obligations and had to make assignments. Indeed, the making of assignments was so much the order of the day that men familiarly asked one another on the street whether they had already made, or when they were going to make theirs. Gradually all feeling of bashful embarassment, all shamefacedness about such things vanished, and bankruptcy appeared to be the natural condition of business men who owed any money. Nor was there any atmosphere of gloom about it in our community. ”

“ On the other hand, alarmed by sudden success, achieved by the disruption of long-lived business methods, and the loss of confidence in exchange values, on the part of the public in consequence of this disruption; the generals of the competitive system, aided with but few exceptions, by the press, university and pulpit, have shrewdly endeavored to evade responsibility, for the disastrous panics which have followed such revolutionary methods. These panics have left the country disturbed and embarrassed, by armies of unemployed men. ”

“ In addition to the usual difficulties of all business, insufficiency of capital, incompetency of buying and selling agents and of managers, dishonesty of trusted officials or of debtors, commercial panics, and other adversities to which coöperative, quite as much as or even more than individual companies have been subject, there are peculiar dangers often fatal to their coöperative principles. ”

“ The death of the managing partner, the defaulting of payments for goods sold, the chances of unwise or dishonest conduct on the part of clerks or overseers, always impend over a business, but these dangers are at a minimum when the man who is at the head of the force of managers has capital of his own in the business. ”