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Why do Men Fail in Business?

When a man fails in business, nowadays, and in the courae of events is brought face with the Official Receiver appointed under the Bankruptcy Act, he is invited to state his own opinion as to the reason why he came to grief. The Inspector-General in Bankruptcy, whose annual report has just been distributed to members of Parliament, has collected a number of these bankrupts' reasons, and comes to the conclusion that insolvent tradesmen are very fond of making every excuse for failure but the right one. Shamming illness appears to be the favorite device ; for though in fully a third of the cases investigated insolvency is attributed to the debtor's illness, or that of some member of hiß family, it is found on inquiry into the circumstances that the alleged illness plays a very small part in the failure. The weather bears the blame of many a bankruptcy. Some shopkeepers have boldly assigned the Whitechapel murders as the cause of their financial difficulties. Husbands are apt to put the blame upon their wives, and wives have attributed business misfortunes to their husbands. A straw hat manufacturer complains that his wife was in debt when he married her. His creditors' money, therefore, really went to pay off her debts. Some debtors allege their large families as the cause of their distress, while others are brought to the ground by the diminution of their family, and the consequent funeral expenses. Depression of trade, excess of competition, and insufficiency of capital are phrases figuring frequently in'the explanation of misfortune; and Inspector-General Smith finds it quite a I refreshing exception to have to name the case of a debtor who frankly said of his failure " I fear it is through bad management to some extent." There is, of course, a measuro of truth in the reasons assigned. A long, bad winter might well contribute to an innkeeper's failure. "The fine summer of 1887," or any fine Bummer, would naturally be unlucky for the waterproof trade. The bad Bummer of 1888 may, as alleged, have helped to send so many photographers, florists, and drapers to the wall. But all these pretexts remind one of the old saying applied to the bad harvestman: " A bad shearer never had a good hook." The main cause of insolvency, as proved by the returns sent in to the InspectorGeneral, is fraudulent and reckless trading. The excuses of debtors in many cases plainly imply this; but the debtors themselves do not seem to see it. It is complained in some cases that outgoings are in excess of profit; but ought that not to be a crime in the case, for example, of a tradesman who calmly incurs household expenses to the amount of L 2.234 in three and a half years, thongh only making profits of L 627 in the same period ? or, of another, who making about fifty pounds a year, spends four hundred ? Bills of sale are alleged as causes of failure ; but what right has a man to carry on business that cannot be maintained without Buch expedients ? The usual rate of interest on a bill of sale, the Inspector-General says, is not less than 60 per cent., which cannot of course be paid out of the ordinary profits of trade. A grocer opens five shops, and then coolly attributes his failure to " inability to personally superintend the businesses." Others of the same class complain of competition, which they themselves, trading without capacity or proper means, have originated. A workman with savings amounting to LSO starts a boot and shoemaking business without even knowing the price of leather, and has to Bell large quantities of goods at a sacrifice to pay wages. Similarly, an enginefitter takes to drapery, a stationer turns grocer, a sugar-boiler becomes, match manufacturer, and a boot and shoemaker undertakes to deal in pictures. When Buch men fail ought they to be regarded as unfortunate or really culpable ? The Inspector-General has analysed all the cases in which the liabilities last year were over L 25,000, and shows that in most of them debtors culpably reckless of their neighbors' interests and incompetent to manage their own affairs have been let loose upon the mercantile community. The mischief done by this kind of trading must be enormous. It is an illegitimate competition, inflicting losses upon the community far in excess of the direct loss of fifteen to twenty millions a year, which is caused to the traders of this country by insolvency. The moral Mr Smith draws for the benefit of the trading community is that they should not confine their attention to foreign competition when seeking for the causes of depression of trade, but consider how much of that depression is certainly due to " the fraudulent and reckless competition of insolvent, and therefore irresponsible,

traders." This points, of course, to tho necessity of a still more drastic bankruptcy law. _ Some have contended that the present law is stringent enough, and has only resulted in the increase of private arrangements; but as deeds of arrangement must now be registered, Mr Smith is able to showthat the total losses of creditors have really been reduced since 1883, and that to au amount exceeding eight millions sterling per annum. —«The Eastern, Australian, and South African Journal of Commerce.'

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Why do Men Fail in Business?, Issue 8048, 26 October 1889, Supplement

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Why do Men Fail in Business? Issue 8048, 26 October 1889, Supplement

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