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It is an observation, indeed, of my own, but I believe it will hold true almost in all the chief trading towns in England, that there are more tradesmen undone by having too much trade, than for want of trade.  Over-trading is among tradesmen as over-lifting is among strong men:  such people, vain of the strengh, and their pride prompting them to put it to the utmost trial, at last lift at something too heavy for them, over-strain their sinews, break some of nature’s bands, and are cripples ever after.

I take over-trading to be to a shopkeeper as ambition is to a prince.  The late king of France, the great king Louis, ambition led him to invade the dominions of his neighbours; and while upon the empire here, or the states-general there, or the Spanish Netherlands on another quarter, he was an over-match for every one, and, in their single capacity, he gained from them all; but at last pride made him think himself a match for them all together, and he entered into a declared war against the emperor and the empire, the kings of Spain and Great Britain, and the states of Holland, all at once.  And what was the consequence?  They reduced him to the utmost distress, he lost all his conquests, was obliged, by a dishonourable peace, to quit what he had got by encroachment, to demolish his invincible towns, such as Pignerol, Dunkirk, &c., the two strongest fortresses in Europe; and, in a word, like a bankrupt monarch, he may, in many cases, be said to have died a beggar.

Thus the strong man in the fable, who by main strength used to rive a tree, undertook one at last which was too strong for him, and it closed upon his fingers, and held him till the wild beasts came and devoured him.  Though the story is a fable, the moral is good to my present purpose, and is not at all above my subject; I mean that of a tradesman, who should be warned against over-trading, as earnestly, and with as much passion, as I would warn a dealer in gunpowder to be wary of fire, or a distiller or rectifier of spirits to moderate his furnace, lest the heads of his stills fly off, and he should be scalded to death.

For a young tradesman to over-trade himself, is like a young swimmer going out of his depth, when, if help does not come immediately, it is a thousand to one but he sinks, and is drowned.  All rash adventures are condemned by the prudent part of mankind; but it is as hard to restrain youth in trade, as it is in any other thing, where the advantage stands in view, and the danger out of sight; the profits of trade are baits to the avaricious shopkeeper, and he is forward to reckon them up to himself, but does not perhaps cast up the difficulty which there may be to compass it, or the unhappy consequences of a miscarriage.

For want of this consideration, the tradesman oftentimes drowns, as I may call it, even within his depth ­that is, he sinks when he has really the substance at bottom to keep him up ­and this is all owing to an adventurous bold spirit in trade, joined with too great a gust of gain.  Avarice is the ruin of many people besides tradesmen; and I might give the late South Sea calamity for an example in which the longest heads were most overreached, not so much by the wit or cunning of those they had to deal with as by the secret promptings of their own avarice; wherein they abundantly verified an old proverbial speech or saying, namely, ‘All covet, all lose;’ so it was there indeed, and the cunningest, wisest, sharpest, men lost the most money.

There are two things which may be properly called over-trading, in a young beginner; and by both which tradesmen are often overthrown.

1.  Trading beyond their stock.

2.  Giving too large credit.

A tradesman ought to consider and measure well the extent of his own strengh; his stock of money, and credit, is properly his beginning; for credit is a stock as well as money.  He that takes too much credit is really in as much danger as he that gives too much credit; and the danger lies particularly in this, if the tradesman over-buys himself, that is, buys faster than he can sell, buying upon credit, the payments perhaps become due too soon for him; the goods not being sold, he must answer the bills upon the strength of his proper stock ­that is, pay for them out of his own cash; if that should not hold out, he is obliged to put off his bills after they are due, or suffer the impertinence of being dunned by the creditor, and perhaps by servants and apprentices, and that with the usual indecencies of such kind of people.

This impairs his credit, and if he comes to deal with the same merchant, or clothier, or other tradesman again, he is treated like one that is but an indifferent paymaster; and though they may give him credit as before, yet depending that if he bargains for six months, he will take eight or nine in the payment, they consider it in the price, and use him accordingly; and this impairs his gain, so that loss of credit is indeed loss of money, and this weakens him both ways.

A tradesman, therefore, especially at his beginning, ought to be very wary of taking too much credit; he had much better slip the occasion of buying now and then a bargain to his advantage, for that is usually the temptation, than buying a greater quantity of goods than he can pay for, run into debt, and be insulted, and at last ruined.  Merchants, and wholesale dealers, to put off their goods, are very apt to prompt young shopkeepers and young tradesmen to buy great quantities of goods, and take large credit at first; but it is a snare that many a young beginner has fallen into, and been ruined in the very bud; for if the young beginner does not find a vent for the quantity, he is undone; for at the time of payment the merchant expects his money, whether the goods are sold or not; and if he cannot pay, he is gone at once.

The tradesman that buys warily, always pays surely, and every young beginner ought to buy cautiously; if he has money to pay, he need never fear goods to be had; the merchants’ warehouses are always open, and he may supply himself upon all occasions, as he wants, and as his customers call.

It may pass for a kind of an objection here, that there are some goods which a tradesman may deal in, which are to be bought at such and such markets only, and at such and such fairs only, that is to say, are chiefly bought there; as the cheesemongers buy their stocks of cheese and of butter, the cheese at several fairs in Warwickshire, as at Atherston fair in particular, or at fair in Gloucestershire, and at Sturbridge fair, near Cambridge; and their butter at Ipswich fair, in Suffolk; and so of many other things; but the answer is plain:  those things which are generally bought thus, are ready money goods, and the tradesman has a sure rule for buying, namely, his cash.  But as I am speaking of taking credit, so I must be necessarily supposed to speak of such goods as are bought upon credit, as the linen-draper buys of the Hamburgh and Dutch merchants, the woollen-draper of the Blackwell-hall men, the haberdasher of the thread merchants, the mercer of the weavers and Italian merchants, the silk-man of the Turkey merchants, and the like; here they are under no necessity of running deep into debt, but may buy sparingly, and recruit again as they sell off.

I know some tradesmen are very fond of seeing their shops well-stocked, and their warehouses full of goods, and this is a snare to them, and brings them to buy in more goods than they want; but this is a great error, either in their judgment or their vanity; for, except in retailers’ shops, and that in some trades where they must have a great choice of goods, or else may want a trade, otherwise a well-experienced tradesman had rather see his warehouse too empty than too full:  if it be too empty, he can fill it when he pleases, if his credit be good, or his cash strong; but a thronged warehouse is a sign of a want of customers, and of a bad market; whereas, an empty warehouse is a sign of a nimble demand.

Let no young tradesman value himself upon having a very great throng of goods in hand, having just a necessary supply to produce a choice of new and fashionable goods ­nay, though he be a mercer, for they are the most under the necessity of a large stock of goods; but I say, supposing even the mercer to have a tolerable show and choice of fashionable goods, that gives his shop a reputation, he derives no credit at all from a throng of old shopkeepers, as they call them, namely, out-of-fashion things:  but in other trades it is much more a needful caution; a few goods, and a quick sale, is the beauty of a tradesman’s warehouse, or shop either; and it is his wisdom to keep himself in that posture that his payments may come in on his front as fast as they go out in his rear; that he may be able to answer the demands of his merchants or dealers, and, if possible, let no man come twice for his money.

The reason of this is plain, and leads me back to where I began; credit is stock, and, if well supported, is as good as a stock, and will be as durable.  A tradesman whose credit is good, untouched, unspotted, and who, as above, has maintained it with care, shall in many cases buy his goods as cheap at three or four months’ time of payment, as another man shall with ready money ­I say in some cases, and in goods which are ordinarily sold for time, as all our manufactures, the bay trade excepted, generally are.

He, then, that keeps his credit unshaken, has a double stock ­I mean, it is an addition to his real stock, and often superior to it:  nay, I have known several considerable tradesmen in this city who have traded with great success, and to a very considerable degree, and yet have not had at bottom one shilling real stock; but by the strength of their reputation, being sober and diligent, and having with care preserved the character of honest men, and the credit of their business, by cautious dealing and punctual payments, they have gone on till the gain of their trade has effectually established them, and they have raised estates out of nothing.

But to return to the dark side, namely, over-trading; the second danger is the giving too much credit.  He that takes credit may give credit, but he must be exceedingly watchful; for it is the most dangerous state of life that a tradesman can live in, for he is in as much jeopardy as a seaman upon a lee-shore.

If the people he trusts fail, or fail but of a punctual compliance with him, he can never support his own credit, unless by the caution I am now giving; that is, to be very sure not to give so much credit as he takes.

By the word so much, I must be understood thus ­either he must sell for shorter time than he takes, or in less quantity; the last is the safest, namely, that he should be sure not to trust out so much as he is trusted with.  If he has a real stock, indeed, besides the credit he takes, that, indeed, makes the case differ; and a man that can pay his own debts, whether other people pay him or no, that man is out of the question ­he is past danger, and cannot be hurt; but if he trusts beyond the extent of his stock and credit, even he may be overthrown too.

There were many sad examples of this in the time of the late war, and in the days when the public credit was in a more precarious condition that it has been since ­I say, sad examples, namely, when tradesmen in flourishing circumstances, and who had indeed good estates at bottom, and were in full credit themselves, trusted the public with too great sums; which, not coming in at the time expected, either by the deficiency of the funds given by parliament, and the parliament themselves not soon making good those deficiencies, or by other disasters of those times; I say, their money not coming in to answer their demands, they were ruined, at least their credit wounded, and some quite undone, who yet, had they been paid, could have paid all their own debts, and had good sums of money left.

Others, who had ability to afford it, were obliged to sell their tallies and orders at forty or fifty per cent. loss; from whence proceeded that black trade of buying and selling navy and victualling bills and transport debts, by which the brokers and usurers got estates, and many thousands of tradesmen were brought to nothing; even those that stood it, lost great sums of money by selling their tallies:  but credit cannot be bought too dear; and the throwing away one half to save the other, was much better than sinking under the burden; like sailors in a storm, who, to lighten the ship wallowing in the trough of the sea, will throw the choicest goods overboard, even to half the cargo, in order to keep the ship above water, and save their lives.

These were terrible examples of over-trading indeed; the men were tempted by the high price which the government gave for their goods, and which they were obliged to give, because of the badness of the public credit at that time; but this was not sufficient to make good the loss sustained in the sale of the tallies, so that even they that sold and were able to stand without ruin, were yet great sufferers, and had enough to do to keep up their credit.

This was the effect of giving over-much credit; for though it was the government itself which they trusted, yet neither could the government itself keep up the sinking credit of those whom it was indebted to; and, indeed, how should it, when it was not able to support its own credit?  But that by the way.  I return to the young tradesman, whom we are now speaking about.

It is his greatest prudence, therefore, after he has considered his own fund, and the stock he has to rest upon ­I say, his next business is to take care of his credit, and, next to limiting his buying-liberty, let him be sure to limit his selling.  Could the tradesman buy all upon credit, and sell all for ready money, he might turn usurer, and put his own stock out to interest, or buy land with it, for he would have no occasion for one shilling of it; but since that is not expected, nor can be done, it is his business to act with prudence in both parts ­I mean of taking and giving credit ­and the best rule to be given him for it is, never to give so much credit as he takes, by at least one-third part.

By giving credit, I do not mean, that even all the goods which he buys upon credit, may not be sold upon credit; perhaps they are goods which are usually sold so, and no otherwise; but the alternative is before him thus ­either he must not give so much credit in quantity of goods, or not so long credit in relation to time ­for example: 

Suppose the young tradesman buys ten thousand pounds’ value of goods on credit, and this ten thousand pounds are sold for eleven thousand pounds likewise on credit; if the time given be the same, the man is in a state of apparent destruction, and it is a hundred to one but he is blown up:  perhaps he owes the ten thousand pounds to twenty men, perhaps the eleven thousand pounds is owing to him by two hundred men ­it is scarce possible that these two hundred petty customers of his, should all so punctually comply with their payments as to enable him to comply with his; and if two or three thousand pounds fall short, the poor tradesman, unless he has a fund to support the deficiency, must be undone.

But if the man had bought ten thousand pounds at six or eight months’ credit, and had sold them all again as above to his two hundred customers, at three months’ and four months’ credit, then it might be supposed all, or the greatest part of them, would have paid time enough to make his payments good; if not, all would be lost still.

But, on the other hand, suppose he had sold but three thousand pounds’ worth of the ten for ready money, and had sold the rest for six months’ credit, it might be supposed that the three thousand pounds in cash, and what else the two hundred debtors might pay in time, might stop the months of the tradesman’s creditors till the difference might be made good.

So easy a thing is it for a tradesman to lose his credit in trade, and so hard is it, once upon such a blow, to retrieve it again.  What need, then, is there for the tradesman to guard himself against running too far into debt, or letting other people run too far into debt to him; for if they do not pay him, he cannot pay others, and the next thing is a commission of bankrupt, and so the tradesman may be undone, though he has eleven thousand pounds to pay ten with?

It is true, it is not possible in a country where there is such an infinite extent of trade as we see managed in this kingdom, that either on one hand or another it can be carried on, without a reciprocal credit both taken and given; but it is so nice an article, that I am of opinion as many tradesmen break with giving too much credit, as break with taking it.  The danger, indeed, is mutual, and very great.  Whatever, then, the young tradesman omits, let him guard against both his giving and taking too much credit.

But there are divers ways of over-trading, besides this of taking and giving too much credit; and one of these is the running out into projects and heavy undertakings, either out of the common road which the tradesman is already engaged in, or grasping at too many undertakings at once, and having, as it is vulgarly expressed, too many irons in the fire at a time; in both which cases the tradesman is often wounded, and that deeply, sometimes too deep to recover.

The consequences of those adventures are generally such as these:  first, that they stock-starve the tradesman, and impoverish him in his ordinary business, which is the main support of his family; they lessen his strength, and while his trade is not lessened, yet his stock is lessened; and as they very rarely add to his credit, so, if they lessen the man’s stock, they weaken him in the main, and he must at last faint under it.

Secondly, as they lessen his stock, so they draw from it in the most sensible part ­they wound him in the tenderest and most nervous part, for they always draw away his ready money; and what follows?  The money, which was before the sinews of his business, the life of his trade, maintained his shop, and kept up his credit in the full extent of it, being drawn off, like the blood let out of the veins, his trade languishes, his credit, by degrees, flags and goes off, and the tradesman falls under the weight.

Thus I have seen many a flourishing tradesman sensibly decay; his credit has first a little suffered, then for want of that credit trade has declined ­that is to say, he has been obliged to trade for less and less, till at last he is wasted and reduced:  if he has been wise enough and wary enough to draw out betimes, and avoid breaking, he has yet come out of trade, like an old invalid soldier out of the wars, maimed, bruised, sick, reduced, and fitter for an hospital than a shop ­such miserable havoc has launching out into projects and remote undertakings made among tradesmen.

But the safe tradesman is he, that avoiding all such remote excursions, keeps close within the verge of his own affairs, minds his shop or warehouse, and confining himself to what belongs to him there, goes on in the road of his business without launching into unknown oceans; and content with the gain of his own trade, is neither led by ambition or avarice, and neither covets to be greater nor richer by such uncertain and hazardous attempts.