The Christmas earnings

by Lucy Ellen Guernsey

"But how did the failure of others affect father?" asked Ethel. "I don't understand."

"Think a little, and perhaps you will," replied her mother.

"I see," exclaimed Ethel, after some consideration. "Father sold goods to the merchants, and depended upon the money he got from them, to pay for his materials and his work. Then if the merchants did not pay him, of course he could not pay the people that he owed, and that made him fail."

"Quite right," said Mrs. Fletcher. "I see you are learning to think. There is another way yet of failing. A man may buy a great quantity of some kind of property—bank stock or railroad stock, for instance—expecting it to rise so much in value that he will be able to sell it for a great deal more than he gave. Then if it goes down instead of rising, what becomes of him?"

"He loses his money," said Ethel.

"Yes, not only what he has spent, but what he expected to make. This is called speculation, and has ruined more people than I can tell you. This was just what Mr. Coles did. Now if the speculator treats the money he intended to make as though it were already in his pocket, and runs deeper and deeper into debt on the strength of it, you can easily see what disastrous consequences must follow, not only to himself, but to every one who has trusted him."

"Of course," said Ethel, "they would lose their money. But you have not yet told me what makes the difference."

"I am just coming to that. When your father found that he was not going to meet his obligations, as it is called—that is, to pay what he owed for goods and other things—he informed his creditors of it. He told them how much property he had, and that he should put it into the hands of assignees—gentlemen who would manage the matter and divide the property among the creditors, so that each might have an equal proportion. That was the reason that the house and all the things were sold, in order that the money might go in with the rest of the property to meet the debts. But after all there was only enough to pay about seventy cents on the dollar, as it is called—that is, if your father owed a man a dollar, he could only pay him seventy cents."

"That seems a pity, after selling all the things," said Ethel. "What did the creditors do then?"

"They very generously and kindly signed a paper, saying that they were satisfied that your father had done all in his power to satisfy them, and that they would be contented with what he had paid. This paper was called a release."