The Rise of David Levinsky

by Abraham Cahan

CHAPTER VI

MY business continued to grow. My consumption of raw material reached gigantic dimensions, so much so that at times, when I liked a pattern, I would buy up the entire output and sell some of it to smaller manufacturers at a profit.

Gradually I abandoned the higher grades of goods, developing my whole business along the lines of popular prices. There are two cloak-and-suit houses that make a specialty of costly garments. These enjoy high reputations for taste and are the real arbiters of fashion in this country, one of the two being known in the trade as Little Pans; but the combined volume of business of both these firms is much smaller than mine.

My deals with one mill alone—the largest in the country and the one whose head had come to my rescue when my affairs were on the brink of a precipice—now exceeded a million dollars at a single purchase to be delivered in seven months. The mills often sell me at a figure considerably lower than the general market price. They do so, first, because of the enormous quantities I buy, and, second, because of the "boost" a fabric receives from the very fact of being handled by my house. One day, for instance, I said to the president of a certain mill: "I like this cloth of yours. I feel like making a big thing of it, provided you can let me have an inside figure." We came to terms, and I gave him an advance order for nine thousand pieces. When smaller manufacturers and department-store buyers heard that I had bought an immense quantity of that pattern its success was practically established. As a consequence, the mill was in a position to raise the price of the cloth to others, so that it amply made up for the low figure at which it had sold the goods to me.

Judged by the market price of the raw material, my profit on a garment did not exceed fifty cents. But I paid for the raw material seventy-five cents less than the market price, so that my total profit was one dollar and twenty-five cents. Still, there have been instances when I lost seventy-five thousand dollars in one month because goods fell in price or because a certain style failed to move and I had to sell it below cost to get it out of the way. To be sure, cheaper goods are less likely to be affected by the caprices of style than higher grades, which is one of several reasons why I prefer to produce garments of popular prices.

I do not employ my entire capital in my cloak business, half of it, or more, being invested in "quick assets." Should I need more ready cash than I have, I could procure it at a lower rate than what those assets bring me. I can get half a million dollars, from two banks, without rising from my desk—by merely calling those banks up on the telephone. For this I pay, say, three and a half or four per cent., for I am a desirable customer at the banks; and, as my quick assets bring me an average of five per cent., I make at least one per cent. on the money

Another way of making my money breed money is by early payments to the mills. Not only can I do without their credit, but I can afford to pay them six months in advance. This gives me an "anticipation" allowance at the rate of six per cent. per annum, while money costs me at the banks three or four per cent. per annum.

All this is good sport.

I own considerable stock in the very mills with which I do business, which has a certain moral effect on their relations with my house. For a similar purpose I am a shareholder in the large mail-order houses that buy cloaks and suits of me. I hold shares of some department stores also, but of late I have grown somewhat shy of this kind of investment, the future of a department store being as uncertain as the future of the neighborhood in which it is located. Mail-order houses, on the other hand, have the whole country before them, and their overwhelming growth during past years was one of the conspicuous phenomena in the business life of the nation. I love to watch their operations spread over the map, and I love to watch the growth of American cities, the shifting of their shopping centers, the consequent vicissitudes, the decline of some houses, the rise of others. American Jews of German origin are playing a foremost part in the retail business of the country, large or small, and our people, Russian and Galician Jews, also are making themselves felt in it, being, in many cases, in partnership with Gentiles or with their own coreligionists of German descent. The king of the great mail-order business, a man with an annual income of many millions, is the son of a Polish Jew. He is one of the two richest Jews in America, having built up his vast fortune in ten or fifteen years. As I have said before, I know hundreds, if not thousands, of merchants, Jews and Gentiles, throughout this country and Canada, so I like to keep track of their careers

This, too, is good sport

Of course, it is essential to study the business map in the interests of my own establishment, but I find intellectual excitement in it as well, and, after all, I am essentially an intellectual man, I think

There are retailers in various sections of the country whom I have helped financially—former buyers, for example, who went into business on their own hook with my assistance. This is good business, for while these merchants must be left free to buy in the open market, they naturally give my house precedence. But here again I must say in fairness to myself that business interest is not the only motive that induces me to do them these favors.

Indeed, in some cases I do it without even expecting to get my money back.

It gives me moral satisfaction, for which money is no measure of value.