Trading company

“ We very frequently see that great trading companies become the means of establishing public credit; on which occasions, it is proper to distinguish between the trading stock of the company, which remains in their possession, and the actions, bonds, annuities, contracts, &c. ”

“ If you find them inclined to trade, keep the 54goods which they seem most greedy after at so high a value that none may be sold, nor bartered without great profit. Likewise take nothing but what you are convinced will turn out profitable to the Company, which in trading you will learn. It will be particularly necessary to bring samples of the most rare things to be found there, and of all the rest exact account, to see what returns from thence can be made, and for the future may be serviceable. ”

“ The great development in stock-exchange business in recent times is due chiefly to the sale of foreign and colonial bonds, and the remarkable growth and spread of joint-stock companies since the Joint-Stock Company Act of 1862. ”

“ Dangers of the new system of business; promotion of unprofitable enterprises.—The appeal of joint stock companies to the public through the medium of the stock exchange proved to be so effective in gathering capital that a great many worthless undertakings were floated. When times were good, that is, when enterprises had proved successful, when people had saved money for investment and looked with confidence to the future, almost anything in the shape of a158 company could get subscribers to its stock. ”

“ The company were to be enabled to purchase lands, &c., and to exercise all the usual powers of bodies corporate; but were not to trade in the buying or selling of any goods or merchandise, except that they might deal in bills of exchange, and in buying and selling of bullion, gold, or silver, and in selling of any goods or merchandise which should be pledged to them for money lent thereon, and might also sell the produce of their own lands. ”

“ In regard to the latter class of goods, it is a matter of common knowledge that there has been an increasing tendency of late years to eliminate the middleman, and establish direct trading between producer and consumer. Just as the small shopkeeper will purchase from the manufacturer, and avoid the wholesale dealer, so, also, there are individual householders and others who eliminate even the shopkeeper, and deal direct with advertising manufacturers willing to supply to them the same quantities as could be obtained from a retail trader. ”

“ No one who is not a member can trade on the exchange, and every member is bound to follow certain rules in his dealings, but every member keeps his capital and profits distinct from those of the others.
The larger part of the early English commercial companies146 were regulated companies of this kind. To a certain extent they attained the objects of association which have been enumerated above; some of the worst evils of individual trade were impossible so long as the company adopted wise regulations and could force members to live up to them. ”

“ The success and improvements of trade depend wholly upon supplying the commodities cheap at market; and whoever can afford those of equal goodness at but half per cent cheaper than his neighbour, will command any sale. Now it is impossible that any company can do this upon equal terms with a private merchant, nor would they if they could. ”

“ It certainly cannot, I submit, with reason, be said that there is not the same unity between the operations of a manufacturer who makes his goods in one state, and sells them in another, as there is between the operations of an express company. The sale of the manufactured goods is as essentially necessary to the profits of the manufacturer as is the manufacture of the goods themselves. ”

“ This general trading, which, on the one hand, seriously threatens the small trader, and on the other hand offers greater possibilities of profit to the proportionately small number of persons who can undertake business on so large a scale, becomes infinitely more formidable when the general dealer endeavours not only to attract the trade of a town, but to make his place of business a centre from which he distributes by post his goods to remote parts of the country. ”

“ To protect ourselves from loss in our sales for London account we had to take from time to time an interest in the market and this made us dealers. To complete our sales we were compelled to import the material and thus became importers.
With the opening of the year 1889 we found ourselves possessed of fairly large capital and a firmly established credit with bankers. These facts, combined with the best facilities for doing the business, decided us to eliminate the brokerage phase entirely, except in our transactions with our speculative clients. ”

“ Applied to a permanent undertaking, and to men who had no property to invest, but depended for their livelihood on what they could earn, this system was certain to break down, and the natural result was that the Company’s servants made use of the information they gained in their official capacity to engage in trade on their own account. ”

“ But his business ability was of a broader type than was needed for such services only, and in the process of evolution, through which the old-fashioned broker was practically eliminated, his place being taken by a new type of dealer, who although not always or even usually trading for his own account, yet makes most of his transactions in his own name, and is chiefly differentiated from the jobber only from the fact that he buys and sells in round parcels and does not break them up to shop out into smaller lots. ”

“ The company, on the other hand, says they have no idea of selling goods out of their own stores, for the purpose of enabling others to enter into competition with them, and that they will spare no expense to keep the trade as long as they can, in their own hands. ”

“ When a company of merchants undertake, at their own risk and expense, to establish a new trade with some remote and barbarous nation, it may not be unreasonable to incorporate them into a joint-stock company, and to grant them, in case of their success, a monopoly of the trade for a certain number of years. ”

“ Anderson has given us a curious table of the crowd of new projects that jostled one another in the money-market, and also an interesting description of the general scene of competition and clamour among the dealers and purchasers of the various stocks, which seems to be taken from personal observation. Of the great legal corporations whose stock was raised for the time to extravagant prices he enumerates, besides the South Sea Company, whose original 100l. shares came at last to sell for 1000l. each, the East India Company, whose 100l. ”

“ That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of another corporation engaged also in commerce, where the effect of such acquisition may be to substantially lessen competition between the corporation whose stock is so acquired and the corporation making the acquisition, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce. ”

“ The wholesale trade is conducted by three classes of persons: dealers or merchants, commission men, and brokers. The dealer is one who buys the goods outright and takes his own risk on making a favorable sale to the retailer. The commission man is one who receives the goods, sells them at such price as he may be able to obtain and remits to the seller the amount obtained less expenses and his commission. The broker is a man who effects a sale without coming in contact in any way with the materials sold. ”

“ We were told the business could not be given to us, no matter how advantageous our terms might be, and our inference was that the object of the trust was not to get the material at the lowest price, but to give the business to a favored firm without competition.
This large contract naturally excited much interest in the trade and great efforts were made to ascertain its terms. The generally accepted theory was that the firm supplied the material as wanted and the price for each month's deliveries was fixed by the average of the market for the last ten days of the month. ”

“ The wholesale dealer, by affording a ready market to the manufacturer, by taking his goods off his hand as fast as he can make them, and by sometimes even advancing their price to him before he has made them, enables him to keep his whole capital, and sometimes even more than his whole capital, constantly employed in manufacturing, and consequently to manufacture a much greater quantity of goods than if he was obliged to dispose of them himself to the immediate consumers, or even to the retailers. ”

“ HOW BUSINESS IS TRANSACTED When the broker, armed with his client's order, goes to the market in which it can be executed, and confronts the jobber with whom he usually deals because he finds he does his business best, he asks the jobber to make him a price in the stock concerned. ”

“ Supply Companies.—A supply company differs from an ordinary merchants’ firm in that it does not keep goods in stock. It is a mammoth general agency for procuring whatsoever you desire. Specimens only are kept in the store, and from these the customers make selections. The advantage of supply companies is the saving of large rentals, of expensive clerk-hire, and of loss or damage in the long keeping of goods, and, most of all, of risk in unsalable articles, and in the fall of prices. Thus, a supply company can undersell an ordinary dealer, and if alert and prompt can make vast profits. ”

“ That, of course, is not the only advantage of employing a broker as agent to deal with a jobber who is a merchant. The wares of the Stock Exchange are numerous and varied; more than four thousand separate securities are quoted in the Official Price List of the market, and the number of stocks and shares dealt in which are not quoted in this list is legion. One might wander about the Stock Exchange all day, and frequent hundreds of brokers' offices which surround it, without being able to find a seller of the certain stock one wants to buy, or a buyer of the certain stock one wants to sell. ”

“ Ownership of a majority of its stock constitutes the control of a corporation, when the inquiry is whether a combination or monopoly has been formed to stifle competition between two or more rival and competing railroads. ”

“ It will often happen that one dealer will make two or three times as much on his invested capital as his neighbors and competitors, and yet sell his goods to the public at a lower price, or, what is the same thing, sell better goods for the same money. ”

“ Most of them conduct their business on modern principles with typists, cashiers, messenger boys and so forth. Not a few of them are frequently in a financial position to strike a bargain and settle a transaction before the European firm can get a cable reply from the home directors. They are up-to-date traders in being able to supply anything which may be demanded of them, or if not in stock they will promise it—and keep the promise—on a given day. ”

“ This is the constant multiplication of intervening agents—middle-men, factors, brokers, speculators, contractors, and distributors of every sort—between the producer and the consumer, or between the primary owner and the ultimate owner of almost everything which is the subject of ownership and trade. Those two, who are the actual persons brought chiefly into relationship by the thing in question, are put quite out of sight of one another in most of the transactions of modern industry and commerce ”

“ The broker plays a prominent role as the middle man in the import-export business, but this does not mean that an importer must necessarily seek the services of a broker in bringing merchandise into the country. ”

“ Most wholesale merchants are content to confine themselves to one branch of trade: lumber, iron, wool, leather, grain, etc. Most of these merchants, moreover, rely further on specialists to help them with certain parts of their business. They depend constantly on the banker, the speculator, the broker, the forwarder, the warehouseman, the commission merchant, and agents of many different kinds. It is impossible, in this book, to do more than suggest the complex commercial organization which has grown up in the course of the century. ”

“ This plan was carried out; and in every instance when I called on a merchant and displayed all of my trays on his counter, he would take the cards up one after the other, and after reading the word "experience" on each and every one, would ask its meaning. I always explained that I had more experience than capital, and as I valued it very highly, I considered it perfectly legitimate to figure it as stock in trade. This generally brought a smile from them, and as a rule seemed to work to my benefit. At any rate, I sold jewelry to almost every dealer I called upon. ”

“ Meantime, brokers who are not members of the Stock Exchange—outside brokers, they are called—flood the newspapers with advertisements of a description so flaring as to rival or surpass those of the patent medicine vendors ”

“ On every article sold there is first of all the profit of the manufacturer, then of the wholesale dealer, and finally of the retailer. There is commonly a fourth, that of the freighter. If you keep a retail store, you must pay the man who makes the goods, the man who transports the goods, and the man who keeps the goods in large stock, and all this leaves you only a small margin of profit. ”

“ The discussion here concerns those firms which usually keep their finished stock well ahead of sales but because of the exigencies of the market find themselves behind their sales. Such a situation is sometimes called a sellers’ market. If purchasers contract for goods with full knowledge of factory conditions, such sales are in the nature of work on contract and might in unusual instances be so treated. Usually, however, conservative management requires that no profits be taken under such circumstances. ”