The Bale He Could Not Buy

Dear friend,

The riddle first, as the tradition demands. Back in the old town, where two ropemakers spun for the same quay at the same price a fathom, and one of them ended the year eleven pounds the poorer without ever lowering a figure.

Two ropemakers on one coast, the same hemp off the same ship, the same tarred yarn, the same price a fathom.
Both spun for the same rope house, the same two farms and the same three coasting masters.
One was paid when the rope went out, or inside the fortnight, because the order said so in writing.
One was paid at the quarter day, or near it, because nobody had ever said anything different.
At the year's end the second had sold the same rope for the same money, and was eleven pounds short with three idle weeks behind him.
Where did the eleven pounds and the three weeks go?

Hold your answer. Story time.

The Story

Two ropemakers, in a town I have never named. Each had the use of a ropewalk, a quarter mile of trodden ground under a long open shed, and each walked it backwards all day paying out yarn from the hackle at his waist. Both bought their hemp by the bale from the same importer on the quay, both smelled of tar from the collar down, and neither was the cheaper.

Their trade went the same three ways. A rope house took the heavy cable, two farms up the valley took halters and well rope, and three coasting masters came for standing rigging whenever the weather had been at them. Honest customers, every one, and none of them ever meant either man the least harm.

The first ropemaker kept an order book with a ruled column at the right hand side, and in that column, against every order, he wrote the words: payable within fourteen days of delivery. He said it aloud as well, in the same breath as the price, before the customer had decided anything. A fathom of three strand, so much. Payable within fourteen days. Now, how many fathoms are we talking about. In eleven years of putting it that way he was argued with perhaps a dozen times, and twice a master asked for longer and got it, at a figure, written in the same column.

The second ropemaker thought that cold. He had known the farms since he was a boy at his father's walk, and he could not see himself dunning men of that standing over a halter. So he wrote the fathoms and the price and nothing else, and his customers, having been told nothing, settled with him when they settled everything else, which on that coast meant the quarter day. Some of them the quarter after.

You can follow what that cost him through one Michaelmas. The hemp ship came in on the Tuesday at the year's best figure, and the importer, who had terms of his own and kept them, wanted paying inside the fortnight. The second ropemaker had twenty-four pounds owing to him up and down that quay and four pounds in the box. He could not buy the bale. He took a half bale instead at seven shillings the hundredweight more, and in October his walk stood empty the better part of three weeks while he waited on the quarter, turning away a coasting master who could not wait and went to the other man.

In November he borrowed against his order book at the bank, which cost him what borrowing costs. Add that interest to the seven shillings on the hundredweight and there is the eleven pounds. He never once cut his price. He lent fifty days of his own money to every customer he had, bought it back from the bank at a rate, and called the arrangement good manners.

The Lesson, Since You've Earned It

A price is a number and a date, and if you give the customer only the number he will choose the date, which is a discount you never agreed to and cannot see in any book you keep. The figure you quoted and the figure you were worth part company on the day the work is finished, and the gap between them is the length of the wait.

Money has a price in time, and that price is paid by whoever holds the gap. Borrow to cover it and you pay the bank. Cover it out of your own pocket and you pay in the plainer coin of things you could not do: the bale at the good figure, the stock bought while it was cheap, the job refused because the materials wanted paying for on the Friday. That second cost never appears as a cost. It appears as a quiet year, and quiet years get blamed on the weather.

Notice who else in the chain understands this. Your supplier has terms. Your landlord has terms. The bank has terms and will explain them twice. Every party to your trade has set a date beside a number without apology, and the only one invited to lend for nothing is you. Somebody has to name the date, and when nobody does, the slower party names it by saying nothing.

You will hear the usual remedy offered, which is a discount for early settlement, and it deserves arguing rather than dismissing. Take two and a half in the hundred off to be paid in ten days instead of sixty, and you have bought fifty days of your own money at something near eighteen in the hundred by the year, which is dearer than almost any bank will charge you. The discount is honest and it does move money, but it is expensive money, and a trade that needs it every quarter has a terms problem rather than a cash problem. Shorten the term at the full price first. If a customer truly cannot pay sooner, put the wait into the figure and let him buy it, rather than paying to be rid of a wait you never agreed to.

Terms sort people besides. You know already that asking for the first money sorts the serious from the enthusiastic, and a stated last date does that same work at the other end of the job.

Two cautions. First, terms stated after the work is done are a request, and terms written before it starts are a condition. The date belongs in the quotation, in the same sentence as the figure, where it is a dull piece of information and nobody minds it. The same words on an invoice three weeks later read as mistrust, which is why the asking goes wrong so often that the last impression a customer has of you is a man reluctantly chasing money. Second, not every wait is a wrong. A steady payer whose volume carries your quarter may be worth carrying, and a long job cut into stage payments beats a short term nobody honours. What ruins a trade is not giving credit but giving it by accident, to everybody, in the dark, and never counting it. A penalty for lateness collects far less than a date said plainly at the start. You are after a habit, not a quarrel.

Three questions, and the first wants doing tonight with your book open:

1. What is lying out there tonight? Add up every invoice unpaid and write down the date of the oldest. Most trades have never put that figure on paper, and most are startled by its age rather than its size.
2. Which of your prices has a date in it? Read the last three quotations you sent out. If the day you expect to be paid is not written there, you quoted half a price and left the other half for the customer to fill in at his convenience.
3. What is the waiting costing by the year? Take the sum usually owing to you and multiply it by what money costs you, whether that is the overdraft rate or the margin on work refused for want of materials. That is the annual price of saying nothing, and it is generally several times the discount you have been refusing to give.

The Answer to the Riddle

Where did the eleven pounds and the three weeks go?

Into bank interest and seven shillings the hundredweight on a half bale of hemp, which is the same loss twice over. The second ropemaker lent fifty days of his own money to every customer on that quay, free, for years, and then rented it back at the bank's price. The three weeks his walk stood empty were not a slack season. They were the hole where his own money should have been, and it was out working in other men's yards.

The verse:

The price you name is half a price until the day goes with it,
For money owed is money gone to labour somewhere else.
Put down the date beside the figure in the hour you give the figure,
And buy your hemp with coin that has come home when it was due.

Until next time. Go and write the payment date into the next quotation you send, in the same sentence as the price.

P.S. There is a quieter advantage to a short term, and it has nothing to do with your own money. A customer who cannot find fourteen days is telling you something about his condition, and telling you early, over a small sum, while you are still free to act on it. The man who lets a modest first invoice run to ninety days is rarely a difficulty in that one respect alone. Better to learn it on a halter than on a cable.

Also in the archive: The Deposit, Sent Before Six and Half a Crown Each Monday.