“The latter, of course.”

“Very well.  Don’t you understand that credit is capital?”

“It isn’t cash capital.”

“What is the difference, pray, between the profit on ten thousand dollars’ worth of goods purchased on time or purchased for cash?”

“Just five hundred dollars,” said Watson.

“How do you make that out?” The jobber did not see the meaning of his customer.

“You discount five per cent. for cash, don’t you?” replied Watson, smiling.

“True.  But, if you don’t happen to have the ten thousand dollars cash, at the time you wish to make a purchase, don’t you see what an advantage credit gives you?  Estimate the profit at twenty per cent. on a cash purchase, and your credit enables you to make fifteen per cent. where you would have made nothing.”

“All very good theory,” said Watson.  “It looks beautiful on paper.  Thousands have figured themselves out rich in this way, but, alas! discovered themselves poor in the end.  If all would work just right—­if the thousands of dollars of goods bought on credit would invariably sell at good profit and in time to meet the purchase notes, then your credit business would be first rate.  But, my little observation tells me that this isn’t always the case—­that your large credit men are forever on the street, money hunting, instead of in their stores looking after their business.  Instead of getting discounts that add to their profits, they are constantly suffering discounts of the other kind; and, too often, these, and the accumulating stock of unsaleable goods—­the consequence of credit temptations in purchasing—­reduce the fifteen per cent. you speak of down to ten, and even five per cent.  A large business makes large store-expenses; and these eat away a serious amount of small profits on large sales.  Better sell twenty thousand dollars’ worth of goods at twenty per cent. profit, than eighty thousand at five per cent.  You can do it with less labor, less anxiety, and at less cost for rent and clerk hire.  At least, Mr. Johnson, this is my mode of reasoning.”

“Well, plod along,” replied Johnson.  “Little boats keep near the shore.  But, let me tell you, my young friend, your mind is rather too limited for a merchant of this day.  There is Mortimer, who began business about the time you did.  How much do you think he has made by a good credit?”

“I’m sure I don’t know.”

“Fifty thousand dollars.”

“And by the next turn of fortune’s wheel, may lose it all.”

“Not he.  Mortimer, though young, is too shrewd a merchant for that.  Do you know that he made ten thousand by the late rise in cotton; and all without touching a dollar in his business?”

“I heard something of it.  But, suppose prices had receded instead of advancing?  What of this good credit, then?”

“You’re too timid—­too prudent, Watson,” said the merchant, “and will be left behind in the race for prosperity by men of half your ability.”