American Association of Flint & Lime Glass Meeting; Hemingray, Fry, & Jenkins in attendance

GLASS MANUFACTURERS AT ATLANTIC CITY.

THE attendance at the forty-second annual convention of the American Association of Flint and Lime Glass Manufacturers was the kargest in more than twenty years. The members began to arrive on Friday and Saturday by train and automobile, the majority being there by Sunday, leaving only a scattering few to come in on Monday evening.

A preliminary meeting was held in the basement of the Marlborough-Blenheim at ten o'clock — the regular one, for the election of officers and other business, being called for one o'clock.

The latter was preceded by luncheon, at which were the following:

N. Kopp, Pittsburgh Lamp, Brass and Glass Co.

John Kunzler, Actuary, Pittsburgh.

L P Martin, Lancaster (O.) Glass.

E. J. Barry, Libbey Glass Co.

Thos. Evans, Macbeth-Evans Glass Co.

Marshall W. Gleason, Gleason-Tiebout Co.

H. A. Black, speaker of the day.

Arthur J. Bennett, Cambridge (O.) Glass Co.

W. A. B. Dalzell, Fostoria Glass Co.

E. P. Ebberts, Phoenix Glass Co.

H. B. Duncan, Duncan & Miller Glass Co.

Marion G. Bryce, U. S. Glass Co.

J. G. Kaufman, "China, Glass and Lamps."

J. F. O'Gorman, "Pottery, Glass and Brass Salesman."

Geo. M. Jaques, CROCKERY AND GLASS JOURNAL.

A. W. Kimes, "National Glass Budget."

George Dougherty, U. S. Glass Co.

Andrew P. Duncan, Duncan & Miller Glass Co..

Wm. F. Dorflinger, C. Dorflinger & Sons.

A. H. Heisey, A. H. Heisey & Co.

R. G. Hemingray, Hemingray Glass Co.

E. Wilson Heisey, A. H. Heisey & Co.

F. L. Fenton, Fenton Art Glass Co.

George R. West, Westmoreland Specialty Co.

Geo. A. Steele, Gillinder & Sons.

E. A. Gillinder, Gillinder & Sons.

Jas. M. Lewis, Consolidated Lamp and Glass Co.

Howard C. Jenkins, D. C. Jenkins Glass Co.

D. C. Jenkins, D. C. Jenkins Glass Co.

I. J. Collins, Hocking Glass Co.

C. L. Gaunt and F. W. Merry, Indiana Glass Co.

R. C. Faris, Belmont Tumbler Co.

W. H. McClure, Hazel-Atlas Glass Co.

Henry Lemier, Central Glass Works.

Edw. J. Shaub, Central Glass Works.

A. B. Paxton, Hazel-Atlas Glass Co.

H. L. Heintzelman and K. A. Rock, Monongah Glass Co.

W. W. Davies, Superior Glass Mfg. Co.

Harry S. Potter, Wellington Glass Co.

Harry Northwood, H. Northwood Co.

C. B. Roe, Fostoria Glass Co.

C. M. Rodefer, Rodefer Glass Co.

C. E. Voitle, Assistant Secretary Nat. Association.

A. J. Smith, McKee Glass Co.

Jas. F. Challinor, U. S. Glass Co.

Reuben Haley, U. S. Glass Co.

Thos W. McCreary, Phoenix Glass Co.

J. Harvey Strong, Gill Bros. Co.

J. E. Kewley, Euclid Glass Division.

E. O. Cross and J. P. Goggin, Nat. Electric Lamp Works

H. A. Schnelbach, Jefferson Glass Co.

Edward E. Bartlett, Bartlett-Collins Glass Co.

E. J. S. Van Houten, Williamsburgh Flint Glass Co.

Howard S. Evans, Macbeth-Evans Co.

John Bieswanger, Gill Bros. Co.

After all had taken thier seats President Gleason made a little speech of welcome and concluded by asking the guests to rise and drink (in cold water) the health of Woodrow Wilson, President of the United States.

MENU.

Little Neck Clams

Pickles      Olives

Mulligatawny Soup

Roast Lamb       Baked Pototoes

Tomato Salad

Ice Cream       Cake

Coffee     Cigars    Cigarettes

A little after two o'clock President Gleason called the company to order. He said that he was glad to see such a large attendance. It showed that the members were taking deep interest, and argued well for the future of the Association. "At previous meetings it has been the custom of the Association to transact its business before the speakers were heard," he continued. "That meant that our guests had to sit through a lot of routine matters that did not interest them at all; and I therefore propose that this time we change the procedure, and have the speaking first. We have a gentleman with us to-day who will speak on 'The Trade Acceptance.' Through the courtesy of Louis E. Pierson, of the Irving National Bank, New York, we shall have the privilege of listening to a gentleman who has made trade acceptances a study, and it gives me great pleasure to itroduce to you Mr. Balck, of Alexander Bros., Philadelphia."

Mr. Black prefaced his formal speech with a statement that while he was not an expert, he possibly knew more about the subject than many others. "The war," he said, "has shown us the need of co-operation. We must utilize every dollar, and my paper on trade acceptances will, I trust, show you how you may conserve many of them."

ADDRESS BY H. A. BLACK.

I am not unmindful of the fact that I have been honored by an invitation to speak to you on the subject of Trade Acceptances, and to that subject I shall presently address myself. These are days, however, when it is difficult to refrain from saying something on another subject, one which is claiming not only our time and attention, but our bodies and souls as well. They are days when certain words and phrases of national significance are upon the tongues of everybody; we speak fervently of patriotism, of loyalty, of devotion to our country, and to our colors; we speak in glowing terms of this "land of the free and home of the brave," and with all the force of our beings express our unutterable loathing of the Imperial paranoics and butchers across the water, who have brought suffering, horrors and losses untold upon peaceful and liberty loving peoples.

We do more than talk. Hundreds of thousands of the flower of our young manhood and womanhood are backing up their patriotic instincts, with their lives, and all of us are ready to sacrifice and be sacrificed for the land of our birth and for the God-given institutions which we all hold dear.

The man or woman whose pulse does not beat faster, and whose blood does not run hotter at the remembrance of all the wrongs, sufferings and losses which we, in common with our gallant allies, are now needlessly enduring, because of the hellish ambitions of the most colossal egoist with which this world has ever had the misfortune to be cursed, is not worthy of being called a citizen of the good old U.S.A. To remain untouched and unmoved in these momentous days of our country's peril would be to proclaim us poltroons and ingrates.

The present is an especially opportune time to consider the adoption of Trade Acceptances, because the need of utilizing commercial credits in every practicable way is bring increasingly accentuated by the unusual and growing demands upon us created by the world war. The United States has entered upon a period when its own economic salvation as well as its ability to help needs nations depends largely upon the manner and extent to which it marshals and utilizes its credit and other resources. National needs demand that every dollar of credit and capital be utilized to the practicable limit; that they be kept busy — all the time — and be made to yield all possible dividends. Methods of finance, no less than methods of production and distribution, should be efficient, economical, profitable.

It is not the guns or armament

Or the money they can pay,

It's the close co-operation

That makes them win the day;

It is not the individual

Or the army as a whole,

But the everlastin' team-work

Of every bloomin' soul.

The subject of Trade Acceptances is increasingly compelling the attention of thoughtful business men. It is compelling the attention of thoughtful business men. It is compelling their attention because it is a vital and integral part of the Federal Reserve System, which all students of finance agree is here to stay, and which they further agree is the most constructive piece of financial legislation ever enacted in this country.

Four years ago we were working under the old National Bank Act, an admittedly incomplete and inadequate financial system. In the short space of four years we have advanced to a system which no less an authority that Sir Edward H. Holden, Governor of the largest bank in England, says is the best in the world.

We have made particular progress in the improvement and development of our commercial credit methods. Credit has rightly been called the "life blood of business," and the framers of the Federal Reserve Act planned for the broader and safer development of our credit system, and for the utilization of the country's merchandise as a basis of credit, in its provisions for the discounting of Trade Acceptances at preferential rates. They also planned for an elastic currency system — one that will help provide funds as they are needed by business, both as regards volume and locality, thereby minimizing and possibly preventing periods of money stringency and commercial depression.

The need for greater mobility and elasticity in our monetary system was long and keenly felt prior to the adoption of the Federal Reserve Act. The framers of that act in devising the Federal Reserve system laid solid foundations for these two essentials by providing for a currency secured by commercial paper. The volume of business in a given community, or in the country as a whole, governs the amount of commercial paper in use, and a currency based thereon must contract or expand or flow to the section where needed, this providing the essential elements of elasticity and mobility.

In view of the fact that the Trade Acceptances is a draft designed to cover original commercial transactions only, it must be apparent that it is at once the safest and most representative form of commercial paper extant. When it is recalled that Federal Reserve notes may be issued against gold, or gold and trade paper combined, on the basis of 40 per cent of the former to 60 per cent of the latter, it becomes evident that the increased use of Trade Acceptances assists in giving elasticity to our currency system, and in making it quickly responsive to the needs of business, to the extent to which they are used as security for Federal Reserve Notes.

This credit instrument is not entirely new to this country, a draft with a somewhat similar form and intent having been used advantageously prior to the Civil War. It is, therefore, not an experiment with us, and is now and long has been a vital part of the credit and financial systems of Canada, England, France and Germany. Prior to the passage of the Federal Reserve Act, however, our own financial system included no adequate provision either for discounting Trade Acceptances in large volume or for rediscounting them, consequently there was no broad market for them and little incentive to promote their use.

Under present commercial methods manufacturers, merchants and others are obliged to carry open book accounts in large volume. This is a costly practice, requiring a use of capital that is neither prudent nor profitable. A general adoption of the Trade Acceptances would remedy this condition by substituting a negotiable instrument for non-negotiable book accounts. It would also tend to minimize the use of the cash discount system, decrease the percentage of borrowings to business done (thereby promoting business), discourage the hypothecation of Accounts Receivable, mutually benefit both the buyer and seller, and thereby facilitate trade extension.

It is from this standpoint — as a substitute for the illiquid open book account — that the Trade Acceptance method should be considered primarily. It should not be considered as a competitor of, or as designed to supersede, any present cash or credit instrument. It is not a promissory note, neither is it a sight draft. Its special functions and characteristics as a credit instrument, designed to cover original commercial transactions only, differentiate it from both of the former two.

The irregularities resulting from the open book account are both numerous and serious, but most all of them would be eliminated, or at least greatly mitigated by the adoption of the Trade Acceptance. For example: There is a surprisingly large number of business men who pay their bank loans with scrupulous fidelity, and yet either premeditatedly or carelessly "take their own good time" in paying certain of their creditors who they know will wait. They think nothing of taking twenty, thirty, sixty and even ninety days extra time — without the payment of interest — and usually without the desire or the consent of the seller. This utter disregard of obligations, which should be considered as definite and binding as those contracted at banks, sometimes leads to the failure of the "easy" creditor, and always reflects adversely upon the business ideals and credit standing of the purposely or carelessly tardy debtor. Any system or method which will eliminate or greatly minimize this unfair practice must naturally commend itself to thinking business men.

The claims of the Trade Acceptance to consideration and distinction lie not only in its value as a corrective and in the ease, economy, and profit with which it may be applied to nearly every kind of business, but also in the fact that its use automatically makes for bigger, better and sounder business through the logical and safe development of that great national asset — commercial credit. It makes for both flexibility and stability to have in our financial system a credit instrument which may be used to represent newly created values, and yet may be so promptly and surely redeemed that credit inflation is impossible.

The first question which naturally presents itself is "What is a Trade Acceptance?" This, I believe, to be a most important question because our understanding of any given subject depends largely upon the clarity and accuracy of definitions.

A Trade Acceptance is a self-liquidating draft or order to pay, drawn by the seller and accepted by the buyer, and represents transactions in merchandise only, which fact must be stated on the face of the draft. It is a method whereby sound assets, represented by open book accounts, may be readily converted into immediate means of payment through discount at preferential rates.

Further defining the instrument, and speaking negatively:

It will not make a bad debt good.

It will not make an honest debtor out of one who is dishonest.

It is not designed to supersede the sight draft, with bill of lading attached, or not attached.

It is not designed to usurp or take the place of any present cash or credit instrument.

These negative definitions naturally raise the question, "What is the primary purpose of the Trade Acceptance Plan?"

The primary purpose of the Trade Acceptance plan is to utilize the country's merchandise as a basis of credit by substituting the negotiable Trade Acceptance for the system of non-negotiable book accounts.

The far-reaching effects of the success of such an effort may be estimated when we remember that the amount of business to which the Trade Acceptance is more or less adaptable in this country is represented by approximately $4,000,000,000 worth of open book accounts.

Right here the thoughtful business man is likely to ask, "Well, what are the real objections to open book accounts?"

In order that I may be brief and to the point, let me read some of the objections usually advanced against the open book accounts system, and show wherein the Trade Acceptance plan is superior:

Open book accounts are not surely payable on any definite date. A Trade Acceptance is payable on a definite date, or discountable at a preferential rate on any previous date.

Payment of an open book account is easily deferred. The custom of having sales terms requiring that accounts be closed promptly, either by cash or by Trade Acceptances, would remove this objection.

Open book accounts are temptations to slow payers to take unearned cash discounts. This objection also would be removed throough prompt settlement by Trade Acceptances

Fear of offending a customer, or of endangering a past due account, frequently results in the extension of unwarranted credit, both as to time and amount. Definite settlement terms, including Trade Acceptances, would eliminate this fear. They would also remove automatically practically all excuses for delays in making settlements.

Open book accounts frequently are costly to collect, because of sales terms' abuses, time extensions, letters, statements, postage, etc. These costs would almost be eliminated if sales transactions were promptly closed by Trade Acceptances

The "Accounts Receivable" item on a financial statement is usually accepted at only 50 per cent of its face value by bankers because the approximate liquidated value of the asset is not apparent. If the item were Trade Acceptances Receivable it would represent, among other things, the pledged word of creditors in settlement of commercial transactions only, and the probabilities for prompt and full liquidation would be apparent.

Open book accounts tie up capital for indeterminate periods. If accounts were closed by cash or by Trade Acceptances, the length of time such capital remained inactive would be decided by the seller and not by the purchaser, as at present.

The open book account, from a legal standpoint, is a lax method of doing business, providing the seller with no adequate evidence of complete and satisfactory sales transactions. Trade Acceptances do provide such evidence, without affecting just claims.

Some very pertinent questions very naturally present themselves at this point. First, in what other ways to Trade Acceptances help a man in his business as a seller? Briefly:

They convert non-negotiable book accounts into negotiable — therefore, quickly available — assets.

They are a deterrent against overselling. Sellers are less likely to oversell those who neither discount nor sign Trade Acceptances.

They reduce losses from bad debts. The seller who has a Trade Acceptance in hand is likely to be given preference by the slow payer.

They discourage the "returned goods" evil, which the book account method fosters.

They are two-name paper and should, therefore, be more acceptable to the banks than single-name paper.

They are discountable at banks at preferential rates, and are, therefore, cheaper than single-name paper.

They tend to limit borrowings to actual rather than to estimated needs, and thereby save interest charges.

They improve financial statements to the extent to which they minimize unexplained Accounts Receivable; and further, they indicate commercial transactions with customers willing to obligate themselves definitely to pay on schedule time.

In what way will Trade Acceptances help one in his business as a buyer?

They increase his sense of responsibility as regards definite financial obligations, therefore:

They incite to forehanded financial planning.

They are deterrent against overbuying. Overbuying frequently is due to an effort to stock up to the limit of his ability to pay as promised.

They improve his credit standing with vendors by putting him in a class of preferred buyers. (He relieves his creditors from the necessity of financing him for long periods.)

They tend to secure better terms through time, credit and other concessions. The time buyer who settles his obligations promptly by Trade Acceptances has reason to expect terms either as good as, or closely approximating those given to cash buyers.

"Trade Acceptances Payable" on a financial statement, instead of "Accounts Payable," indicate (a) recent merchandise transactions; (b) approved financial methods; (c) decision to pay promptly; all of which a banker will naturally regard favorably.

Under the open book account method a buyer's credit is often undefined and uncertain. Definite Trade Acceptance terms would reverse this condition; he would know on what he could depend.

By always meeting Trade Acceptances when they fall due a business man would fairly quickly establish a valuable credit standing, not only with his creditor, but also with his banker, who could not fail to note both the character of his customer's obligations and the promptness with which they were settled.

It enables the buyer — and also the seller — to finance transactions fully which a bank would ordinarily finance for only two-fifths of its value, if al all; i.e. 50 per cent of say Accounts Receivable, minus 20 per cent balance of loan which remains on deposit.

Finally, the buyer may receive as well as give Trade Acceptances, and therefore, secure their dual advantages.

Right here an important basic question is raised. What rightful and mutually profitable advantages enjoyed under the open book account system are lost by either party by the adoption of the Trade Acceptances plan?

None; the Trade Acceptance is not intended as a substitute for any present cash or credit instrument or mutually profitable practice. It is intended as a negotiable substitute for the sound assets represented by non-negotiable book accounts. These accounts, in negotiable form, are equivalent to available capital, and the business house that can realize at will upon its Accounts Receivable is, therefore, in a better position to assist really worthy customers than it would be if operating under the book account system.

A few more questions of importance, and I shall have concluded.

In what respect do Trade Acceptances differ from (a) Promissory Notes, and (b) Sight Drafts?

(a) A promissory note is a promise to pay, and is given for either a debt or a loan. It is not designed for the transfer of funds. It is drawn by the debtor and does not necessarily represent a commodity transaction. Unless they contain or are accompanied by evidence that they represent commodity transactions they are not eligible for discount as preferential rates at member banks, nor are they eligible for rediscount at Federal Reserve Banks.

(b) It is considered that sight drafts for collection of open accounts reflect on the credit standing of the drawee. They are not payable on a definite date. With the sight draft with bill of lading attached the title to the goods remains vested in the seller until the draft has been paid — at some indefinite date.

On the other hand, Trade Acceptances are drawn on the purchaser by the seller. They are orders, not promises to pay. They represent recent commodity transactions, and cannot be given in payment of either a loan or past due account. They are, therefore, to all intents and purposes, self-liquidating paper, and as such are eligible for discount at member banks. The title to the goods passes to the buyer when the transportation company gives evidence of having received them.

Finally, the rule limiting the loaning priviledge of a bank to any one borrower to 10 per cent of its capital and surplus does not aplply to Trade Acceptances, which may be discounted practically without limit.

What is the meaning of the term eligibility as applied to Trade Acceptances — the quality which makes the instrument eligible for purchase by Federal Reserve Banks?

(a) The draft must show in its face that it represents a commercial transaction.

(b) The date of maturity at time of purchase or discount must not exceed ninety days, exclusive of days of grace, excepting when it represents a transaction in agricultural products or in live stock, when it may have a maturity of six months.

(c) The draft must be endorsed by member bank, or be accompanied by satisfactory evidence of the financial condition of the parties thereto.

What is the usual method of procedure?

To make out a Trade Acceptance, of the same date as invoice, for net amount, and mail it to customer with the invoice, on which it stated special terms, if any, offered for prompt acceptance and return of draft. Special terms, which frequently are time extension, may be either net or with such change of discount as would be compatible with regular terms.

(In view of the general unfamiliarity of business houses with this form of commercial paper it would probably be well for a while to send a form letter with each draft calling attention to the advantages of the plan.)

There is no rule. If invoices are large, it might be better to send individual drafts, otherwise several invoices might be included in the amount of one draft. Some business houses send drafts for amount and average date of enclosed weekly, semi-monthly or monthly statements. The procedure would be determined largely by sales terms and the credit standing of the buyer.

Should Trade Acceptances be sent to customers who discount?

There would seem to be no sufficient reason for oing so, unless the discount period were an unusually long one.

May a Trade Acceptance be renewed?

Not without violating the intent of the plan, which is to have the instrument cover original transactions only. If the acceptor found that he could not pay he could probably arrange for an extension by giving a promissory note.

In what respects are Trade Acceptances preferable to single-name paper?

(a) They contain the names of two responsible parties instead of one.

(b) They are more readily negotiable than single-name paper.

(c) They have a lower rate of discount.

(d) They are self-liquidating.

How do discounted Trade Acceptances affect a company's line of credit at its bank?

Trade Acceptances at the present time are looked upon as a part of the line of credit, but most banks are willing to discount a larger volume of Trade Acceptances than of single-name paper, because of the additional security represented.

Have Trade Acceptances any special legal advantages over open accounts?

Yes; for example, in suing to collect an open account, the vendor is required to prove the correctness of the book entries. This is not always an easy task. Trade Acceptances would, in most cases, be prima facie evidence of contract, delivery and receipt.

How should Trade Acceptances be shown on Financial Statements to banks and others (a) by holders; (b) by acceptors?

(a) Holders should list them as "Trade Acceptances Receivable." The amount of discounted unmatured Trade Acceptances should be shown in a foot note (not listed) on the statement. They are contingent liabilities.

(b) Acceptors should list them as "Trade Acceptances Payable." They are, of course, quick liabilities, but they do not impair a financial statement; in fact, they improve it to the extent to which they reduce the amount of unexplained notes payable and accounts payable.

The argument is advanced that there is little difference between the open account and the Trade Acceptance Plan as regards the amount of capital required to do business. "A" now gets credit through his open account with "B," and extends the same credit to "C"; under the Trade Acceptance plan "A" would neither get or give any advantage.

The reasoning is fallacious. "A" does not relinquish the value of his open account with "B." He gives his Trade Acceptance in settlemtn and thereby gives evidence of his intention to pay his obligation on schedule time. "B" discounts this "evidence of inention," and this enables him not only to finance with certainty, but also to keep borrowings at the minimum.

In what way will they help provide funds as needed (a) individual business; (b) general business?

(a) They may be discounted as soon as received, or only as funds are needed, thereby minimizing discounts costs.

(b) When they come into more general use they will represent fairly accurately the fluctuations and demands of business credit both as regards locality and volume. Trade Acceptances will be discounted in large volume by member banks, and their Reserve Banks will rediscount and supply them with needed currency.

Why is a consideration of the Trade Acceptance plan, with a view to adopting it, a civic duty?

For at least three good reasons: Fist, because it is a Federal measure, designed solely in the interest of business; second, because it would be unpatriotic as well as unbusinesslike to oppose, without investigation or trial, a measure which it is believed must ultimately benefit all; third, both directly and indirectly it is an aid to general business, and, therefore, to the prosperity of the country.

It is not claimed that the Trade Acceptance is a cure for all financial ills, but is has been tested sufficiently in practice to enable us to judge fairly and accurately of its ultimate value to us. The numerous and critical tests which thus far have been applied have not disclosed any weaknesses and it seems safe, therefore, to conclude that, when used within the scope of intent, with such modifications and changes as the times demand, the plan will perform all that is claimed for it.

The room had become so warm and the air so close that it was deemed advisable to adjourn to the basement, where there was a little breeze.

Here the roll was called and the minutes of the previous meeting read, and then Mr. Gleason announced that the next business would be the election of officers, and appointed Messrs. Hunter, Duncan, Beiswanger and J. Howard Evans as a committed on nominations.

The treasurer's report was read and proved very satisfactory.

The nominating committee returned and said it was the unanimous opinion of the members that the present incumbents be continued in office for another year. They are as follows:

President, M.W. Gleason; first vice-president, N. Kopp; second vice-president, M.G. Bryce; treasurer, E.P. Ebberts; secretary, John Kunzler.

Board of Directors — M. W. Gleason, N. Kopp, M. G. Bryce, W. F. Dorflinger, W. a. B. Dalzell.

In a very short but pretty speech Mr. Gleason thanked the members for the honor they had conferred on him. He said he felt gratified at the expression of their comfidence in his administration; but assured them that the success achieved had only been through their co-operation.

Marion G. Bryce, Nicholas Kopp and E. P. Ebberts also returned thanks for their re-election.

The meeting then went into executive session and listened to the reports of the Tariff Committee, the Freight Committee, and the Committee on Packages.

The discussion on packages wa svery animated, and the question was gone into more thoroughly than ever; but owing to a clause in the constitution and by-laws calling for a referendum vote, decision was necessarily deferred until such vote could be taken. It is expected that the action of the Association in the matter will be made known within a week.

On motion of Marion G. Bryce, seconded by half a dozen members, it was resolved that no action be taken by the Association in the matter of trade acceptances, their adoption being left to the discretion of the individual firms.

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