Principle of Trade Discount.-The principle of trade discounts is not only to afford the manufacturer a ready mode of adjusting his selling prices, but as it were to act as a buffer between him and the trader's customer, and to protect the interest of the middleman against loss, and insure him a reasonable return for his outlay, and expenses in conducting his business.

Again, in the case of the manufacturer: he may make the same kind of goods in several different qualities of materials, and weights of those materials; yet for each he has but one gross price, and he, therefore, regulates his net price of the various qualities by quoting a different discount.

Trade Discount and Profits.-Trade discounts sometimes affect the profits of the factor or dealer in proportion as he is able to retain the discount he is allowed by the manufacturer, or the difference between the manufacturer's discount and the discount he may have to allow his customer. Nowadays, it is in some business transactions usual for the manufacturer or retailer to allow his customer a certain discount on the manufacturer's price list, and in the manipulation of a trade discount in this sense it may be a profit or a loss.

With the manufacturer the trade discount is no real loss, as it is a fictitious price put upon the costs of production, and these include profits on capital.

A trade discount may, however, be the rock on which a trader's profits may be wrecked and a loss sustained. Through error or carelessness in operating the discount between manufacturer or wholesaler and the consumer, the retailer may make a loss while he imagines he is making a profit, or he may suppose a given transaction leaves him a larger gain than it actually does.

The subject of gaining a given rate per cent ourselves while we allow another who buys from us a discount also, is a matter which is not as well understood as it might be, and many a trader has discovered on balancing up his affairs that his gross and estimated profits were widely different.

The Case of the Dealer. It will be generally conceded that a merchant or dealer who keeps a large and varied stock of a certain manufacturer's goods, and who buys in large quantities, is entitled to better terms and lower prices than the consumer who possibly only consumes as many dollars' worth annually as the other does thousands. To place them on an equality in point of price is a real injustice, and manifestly unfair to the dealer; nor is it equitable to try to do business with the trade and the public on the same terms.

It may be justly held that a merchant or dealer is entitled to some consideration for his local knowledge, and for the attendant expenses and risks of keeping stock and giving credit, and for his representation of a variety of manufactures. Granted there is no abstract right on the part of the middleman, old custom counts for something, and it is obvious that the dealer is able to render services for which he is entitled to some adequate remuneration. He is a buffer between the manufacturer and bad debts; and to sell to one hundred old-established and respectable merchants or traders is clearly less risky than dealing with one thousand persons of whom the manufacturer knows nothing at all.

Some Exceptions.-There are certain exceptions to the above argument: there are many large firms, making special goods, in which they can not be beaten, and possibly own a monopoly of the things they manufacture; and in the case of government, public works, or railway contracts, are invited to tender direct. These corporate bodies in most cases prefer to obtain their supplies direct, and save intermediate profits, and it is to the mutual advantage of both, credit being short and payments prompt.

In considering the question of trade discounts, we must remember that when a wholesale buyer is purchasing goods for stock, he will generally have a manufacturer's catalogue before him, with prices printed therein. It will be obvious, therefore, that a net list, or one subject to a small discount, will be a great convenience. But

the catalogue has also to serve the purposes of the salesman when selling to a customer, and to him the discount is an important item, for be the prices never so low, the customer will rarely pay any extra carriage or other expenses connected with getting special goods to order. To press the point may send the customer elsewhere in the hope of finding what he requires in stock, in order to save what he considers an extra charge.

The prices, therefore, should be subject to such a discount as will enable the retailer to profit by the transaction; profit in this case meaning something over and above working expenses and special charges incurred in getting goods to order.

Discount Must be Sufficient.-The discount should be sufficient to cover special expenses on a cheap article; these are always heavy in proportion, and occasionally the same may be said of more expensive goods.

Take the case of a special lot of electrical fittings, which are to be fixed at a short notice, and to insure this several telegrams are required; the goods have to be forwarded by express, perhaps a hundred miles, and then delivered by wagon several miles more. In this case it will be obvious that the expenses may be fourfold; yet, probably a direct charge can not be made for these; but if the dealer avoids the low, discount catalogues, the margin he has to work on will be sufficient to insure him an adequate return for his outlay.

There is another matter deserving attention. The merchant or retailer frequently has transactions in which another tradesman is concerned. Perhaps a builder brings one of his patrons to select certain goods at a hardware store, even though the goods may be debited to the former; and, unless the builder receives his percentage of the discount, his trade may be diverted into other channels.

Manufacturers who have been accustomed to sell at net prices take exception to lists subject to a large discount, on the ground that they involve greater possibilities of error, extra staff of clerks, and so forth; but this objec

tion is a small matter, because net prices may be used in invoicing, and a price list, subject to discount, reserved 'for the retailer's purposes.

It is then comparatively easy for the retailer to quote prices that permit fair profits, since he can add to the invoice prices such expenses as are incident to delivery in any particular case. He can also make allowances for any special discounts required in his own sales.

VI

REAL ESTATE

I. DEFINITION AND CLASSIFICATION

1. Personal Property-2. Real Property-Legal DistinctionsEstate in Land-Estate in Fee Simple-Life Estate-Rights of the Holder of a Life Estate Estate of Dower-Estate by Courtesy-Homestead Estate, or Right-Estates held jointly in Common-Equitable Estates.

2. RIGHTS AND RESTRICTIONS IN LAND

Mining Regulations-Waters-Ice-Products of the Land-Fixtures-Some General Rules-1. Physical Attachment-2. Use of the Fixtures-3. Relation to the Property-Rights of Adjoining Owners-Support of Land-Easements—Building Laws and Regulations-Permits-Definitions-Areas-Real Estate Measurements in General Use-Excavations-Limitation of HeightFire-escapes-Unsafe Buildings.

3. SALES AND CONVEYANCES

1. Title by Descent-2. Title by Purchase-Land ContractSpecimen Land Contract-Liens on Real Estate Searching the Records-Deeds-Specimen Warranty Deed-Clauses of the Deed -The Quit-Claim Deed-Delivery and Acceptance of the DeedRecording the Deed-Registering Land Titles-Simplicity the Keynote Title Insurance-Four General Guaranties.

4. MORTGAGES

What may be Mortgaged-Equity of Redemption Status of the Mortgage To-day-Form of the Mortgage-Specimen Mortgage-Bond-Recording the Mortgage-Discharging the Mortgage-Form of Discharge of Mortgage-Subrogation-Foreclosure of Mortgages-Second Mortgage, etc.-Effect of Foreclosure on a Second Mortgage-Assignment or Transfer of Mortgages-Form of Assignment of Mortgage-New Idea in Mortgages Mortgages as Investments.

A. B. M. VOL. 3