OF THE TRADESMAN'S ENTERING INTO PARTNERSHIP IN TRADE,
AND THE MANY DANGERS ATTENDING IT
There are some businesses which are more particularly accustomed to partnerships than others, and some that are very seldom managed without two, three, or four partners, and others that cannot be at all carried on without partnership; and there are those again, in which they seldom join partners together.
Mercers, linen-drapers, banking goldsmiths, and such considerable trades, are often, and indeed generally, carried on in partnership; but other meaner trades, and of less business, are carried on, generally speaking, single-handed.
Some merchants, who carry on great business in foreign ports, have what they call houses in those ports, where they plant and breed up their sons and apprentices; and these are such as I hinted could not carry on their business without partnership.
The trading in partnership is not only liable to more hazards and difficulties, but it exposes the tradesman to more snares and disadvantages by a great deal, than the trading with a single hand does; and some of those snares are these:--
1. If the partner is a stirring, diligent, capable man, there is danger of his slipping into the whole trade, and, getting in between you and home, by his application, thrusting you at last quite out; so that you bring in a snake into your chimney corner, which, when it is warmed and grown vigorous, turns about at you, and hisses you out of the house. It is with the tradesman, in the case of a diligent and active partner, as I have already observed it was in the case of a trusty and diligent apprentice, namely, that if the master does not appear constantly at the head of the business, and make himself be known by his own application and diligence to be what he is, he shall soon look to be what he is not, that is to say, one not concerned in the business.
He will never fail to be esteemed the principal person concerned in the shop, and in the trade, who is principally and most constantly found there, acting at the head of every business; and be it a servant or a partner, the master or chief loses himself extremely by the advances the other makes of that kind; for, whenever they part again, either the apprentice by being out of his time, or the partner by the expiration of the articles of partnership, or by any other determination of their agreement, the customers most certainly desire to deal with the man whom they have so often been obliged by; and if they miss him, inquire after and follow him.
It is true, the apprentice is the more dangerous of the two, because his separation is supposed to be more certain, and generally sooner than the partner; the apprentice is not known, and cannot have made his interest among the buyers, but for perhaps a year, or a year and a half, before his time expired: sooner than that he could not put himself in the way of being known and observed; and then, when his time is out, he certainly removes, unless he is taken into the shop as a partner, and that, indeed, prolongs the time, and places the injury at a greater distance, but still it makes it the more influencing when it comes; and unless he is brought some how or other into the family, and becomes one of the house, perhaps by marriage, or some other settled union with the master, he never goes off without making a great chasm in the master's affairs, and the more, by how much he has been more diligent and useful in the trade, the wounds of which the master seldom if ever recovers.
If the partner were not an apprentice, but that they either came out of their times together, or near it, or had a shop and business before, but quitted it to come in, it may then be said that he brought part of the trade with him, and so increased the trade when he joined with the other in proportion to what he may be said to carry away when he went off; this is the best thing that can be said of a partnership; and then I have this to add, first, that the tradesman who took the partner in has a fair field, indeed, to act in with his partner, and must take care, by his constant attendance, due acquaintance with the customers, and appearing in every part of the business, to maintain not his interest only, but the appearance of his interest, in the shop or warehouse, that he may, on every occasion, and to every customer, not only be, but be known to be, the master and head of the business; and that the other is at best but a partner, and not a chief partner, as, in case of his absence and negligence, will presently be suggested; for he that chiefly appears will be always chief partner in the eye of the customers, whatever he is in the substance of the thing.
This, indeed, is much the same case with what is said before of a diligent servant, and a negligent master, and therefore I forbear to enlarge upon it; but it is so important in both cases, that indeed it cannot well be mentioned too often: the master's full application, in his own person, is the only answer to both. He that takes a partner only to ease him of the toil of his business, that he may take his pleasure, and leave the drudgery, as they call it, to the partner, should take care not to do it till about seven years before he resolves to leave off trade, that, at the end of the partnership, he may be satisfied to give up the trade to his partner, or see him run away with it, and not trouble himself about it.
But if he takes a partner at his beginning, with an intent, by their joint enlarged stock, to enlarge their business, and so carry on a capital trade, which perhaps neither of them were able to do by themselves, and which is the only justifiable reason for taking a partner at all, he must resolve then to join with his partner, not only in stock, but in mutual diligence and application, that the trade may flourish by their joint assistance and constant labour, as two oxen yoked together in the same draught, by their joint assistance, draw much more than double what they could either of them draw by their single strength; and this, indeed, is the only safe circumstance of a partnership: then, indeed, they are properly partners when they are assistants to one another, whereas otherwise they are like two gamesters striving to worm one another out, and to get the mastery in the play they are engaged in.
The very word partner imports the substance of the thing, and they are, as such, engaged to a mutual application, or they are no more partners, but rather one is the trading gentleman, and the other is the trading drudge; but even then, let them depend, the drudge will carry away the trade, and the profit too, at last. And this is the way how one partner may honestly ruin another, and for ought I know it is the only one: for it cannot be said but that the diligent partner acts honestly in acting diligently, and if the other did the same, they would both thrive alike; but if one is negligent and the other diligent, one extravagant and expensive, the other frugal and prudent, it cannot be said to be his fault that one is rich and the other poor--that one increases in the stock, and the other is lessened, and at last worked quite out of it.
As a partner, then, is taken in only for ease, to abate the first tradesman's diligence, and take off the edge of his application, so far a partner, let him be as honest and diligent as he will, is dangerous to the tradesman--nay, the more honest and the more diligent he is, the more dangerous he is, and the more a snare to the tradesman that takes him in; and a tradesman ought to be very cautious in the adventure, for, indeed, it is an adventure--that he be not brought in time to relax his diligence, by having a partner, even contrary to his first intention; for laziness is a subtle insinuating thing, and it is a sore temptation to a man of ease and indolence to see his work done for him, and less need of him in the business than used to be, and yet the business to go on well too; and this danger is dormant, and lies unseen, till after several years it rises, as it were, out of its ambuscade, and surprises the tradesman, letting him see by his loss what his neglect has cost him.
2. But there are other dangers in partnership, and those not a few; for you may not only be remiss and negligent, remitting the weight of the business upon him, and depending upon him for its being carried on, by which he makes himself master, and brings you to be forgot in the business; but he may be crafty too, and designing in all this, and when he has thus brought you to be as it were nobody, he shall make himself be all somebody in the trade, and in that particular he by degrees gets the capital interest, as well as stock in the trade, while the true original of the shop, who laid the foundation of the whole business, brought a trade to the shop, or brought commissions to the house, and whose the business more particularly is, is secretly supplanted, and with the concurrence of his own negligence--for without that it cannot be--is, as it were, laid aside, and at last quite thrust out.
Thus, whether honest or dishonest, the tradesman is circumvented, and the partnership is made fatal to him; for it was all owing to the partnership the tradesman was diligent before, understood his business, and kept close to it, gave up his time to it, and by employing himself, prevented the indolence which he finds breaking insensibly upon him afterwards, by being made easy, as they call it, in the assistance of a partner.
3. But there are abundance of other cases which make a partnership dangerous; for if it be so where the partner is honest and diligent, and where he works into the heart of the business by his industry and application, or by his craft and insinuation, what may it not be if he proves idle and extravagant; and if, instead of working him out, he may be said to play him out of the business, that is to say, prove wild, expensive, and run himself and his partner out by his extravagance?
There are but too many examples of this kind; and here the honest tradesman has the labouring oar indeed; for instead of being assisted by a diligent industrious partner, whom on that account he took into the trade, he proves a loose, extravagant, wild fellow, runs abroad into company, and leaves him (for whose relief he was taken in) to bear the burden of the whole trade, which, perhaps, was too heavy for him before, and if it had not been so, he had not been prevailed with to have taken in a partner at all.
This is, indeed, a terrible disappointment, and is very discouraging, and the more so, because it cannot be recalled; for a partnership is like matrimony, it is almost engaged in for better or for worse, till the years expire; there is no breaking it off, at least, not easily nor fairly, but all the inconveniences which are to be feared will follow and stare in your face: as, first, the partner in the first place draws out all his stock; and this sometimes is a blow fatal enough, for perhaps the partner cannot take the whole trade upon himself, and cannot carry on the trade upon his own stock: if he could, he would not have taken in a partner at all. This withdrawing the stock has sometimes been very dangerous to a partner; nay, has many times been the overthrow and undoing of him and of the family that is left.
He that takes a partner into his trade on this account--namely, for the support of his stock, to enjoy the assistance of so much cash to carry on the trade, ought seriously to consider what he shall be able to do when the partner, breaking off the partnership, shall carry all his stock, and the improvement of it too, with him: perhaps the tradesman's stock is not much increased, perhaps not at all; nay, perhaps the stock is lessened, instead of being increased, and they have rather gone backward than forward. What shall the tradesman do in such a case? And how shall he bear the breach in his stock which that separation would make?
Thus he is either tied down to the partner, or the partner is pinned down to him, for he cannot separate without a breach. It is a sad truth to many a partner, that when the partnership comes to be finished and expired, the man would let his partner go, but the other cannot go without tearing him all to pieces whom he leaves behind him; and yet the partner being loose, idle, and extravagant, in a word, will ruin both if he stays.
This is the danger of partnership in some of the best circumstances of it; but how hazardous and how fatal is it in other cases! And how many an honest and industrious tradesman has been prevailed with to take in a partner to ease himself in the weight of the business, or on several other accounts, some perhaps reasonable and prudent enough, but has found himself immediately involved in a sea of trouble, is brought into innumerable difficulties, concealed debts, and unknown incumbrances, such as he could no ways extricate himself out of, and so both have been unavoidably ruined together!
These cases are so various and so uncertain, that it is not easy to enumerate them: but we may include the particulars in a general or two.
1. One partner may contract debts, even in the partnership itself, so far unknown to the other, as that the other may be involved in the danger of them, though he was not at all concerned in, or acquainted with, them at the same time they were contracted.
2. One partner may discharge debts for both partners; and so, having a design to be knavish, may go and receive money, and give receipts for it, and not bringing it to account, or not bringing the money into cash, may wrong the stock to so considerable a sum as may be to the ruin of the other partner.
3. One partner may confess judgment, or give bonds, or current notes in the name, and as for the account of the company, and yet convert the effects to his own private use, leaving the stock to be answerable for the value.
4. One partner may sell and give credit, and deliver parcels of goods to what sum, or what quantity, he thinks fit, and to whom, and so, by his indiscretion, or perhaps by connivance and knavery, lose to the stock what parcel of goods he pleases, to the ruin of the other partner, and bring themselves to be both bankrupt together.
5. Nay, to sum up all, one partner may commit acts of bankruptcy without the knowledge of the other, and thereby subject the united stock, and both or all the partners, to the danger of a commission, when they may themselves know nothing of it till the blow is given, and given so as to be too late to be retrieved.
All these, and many more, being the ill consequences and dangers of partnership in trade, I cannot but seriously warn the honest industrious tradesman, if possible, to stand upon his own legs, and go on upon his own bottom; to pursue his business diligently, but cautiously, and what we call fair and softly; not eagerly pushing to drive a vast trade, and enjoy but half of it, rather carry on a middling business, and let it be his own.
There may be cases, indeed, which may have their exceptions to this general head of advice; partnerships may sometimes prove successful, and in some particular business they are more necessary than in others, and in some they tell us that they are absolutely necessary, though the last I can by no means grant; but be that as it will, there are so many cases more in number, and of great consequence too, which miscarry by the several perplexed circumstances, differing tempers, and open knavery of partners, that I cannot but give it as a friendly advice to all tradesmen--if possible, to avoid partnerships of all kinds.
But if the circumstances of trade require partnerships, and the risk must be run, I would recommend to the tradesman not to enter into partnerships, but under the following circumstances:--
1. Not to take in any partner who should be allowed to carry on any separate business, in which the partnership is not concerned. Depend upon it, whatever other business your partner carries on, you run the risk of it as much as you do of your own; and you run the risk with this particular circumstance too, that you have the hazard without the profit or success: that is, without a share in the profit or success, which is very unequal and unfair. I know cunning men will tell you, that there may be provision made so effectually in the articles of partnership, that the stock in partnership should be concerned in no other interest or engagements but its own; but let such cunning gentlemen tell me, if the partner meets with a disappointment in his other undertakings, which wounds him so deep as to break him, will it not affect the partnership thus far? 1. That it may cause his stock to be drawn hastily out, and perhaps violently too. 2. That it touches and taints the credit of the partner to be concerned with such a man; and though a man's bottom may support him, if it be very good, yet it is a blow to him, touches his credit, and makes the world stand a little at a stay about him, if it be no more, for a while, till they see that he shows himself upon the Exchange, or at his shop-door again, in spite of all the apprehensions and doubts that have been handed about concerning him. Either of these are so essential to the tradesman, whose partner thus sinks by his own private breaches, in which the parnership is not concerned, that it is worth while to caution the tradesman against venturing. And I must add, too, that many a tradesman has fallen under the disaster by the partner's affairs thus affecting him, though the immediate losses which the partner had suffered have not been charged upon him; and yet I believe it is not so easy to avoid being fallen upon for those debts also.
It is certain, as I formerly noted, rumour will break a tradesman almost at any time. It matters not, at first, whether the rumour be true or false. What rumour can sit closer to a man in business--his own personal misfortunes excepted--than such as this-that his partner is broke? That his partner has met with a loss, suppose an insurance, suppose a fall of stocks, suppose a bubble or a cheat, or we know not what, the partner is sunk, no man knows whether the partnership be concerned in it or no; and while it is not known, every man will suppose it, for mankind always think the worst of every thing.
What can be a closer stroke at the poor tradesman? He knows not what his partner has done; he has reason to fear the worst; he even knows not himself, for a while, whether he can steer clear of the rocks or no; but soon recovers, knows his own circumstances, and struggles hard with the world, pays out his partner's stock, and gets happily over it. And it is well he does so, for that he is at the brink of ruin must be granted; and where one stands and keeps up his reputation and his business, there are twenty would be undone in the same circumstance.
Who, then, would run the venture of a partner, if it were possible to avoid it? And who, if they must have a partner, would have one that was concerned in separate business, in which the partnership was not engaged?
2. If you must have a partner, always choose to have the partner rather under than over you; by this I mean, take him in for a fifth, a fourth, or at most a third, never for a half. There are many reasons to be given for this, besides that of having the greater share of profits, for that I do not give as a reason here at all; but the principal reasons are these:--First, in case of any disaster in any of the particular supposed accidents which I have mentioned, and that you should be obliged to pay out your partner's stock, it will not be so heavy, or be so much a blow to you: and, secondly, you preserve to yourself the governing influence in your own business; you cannot be overruled, overawed, or dogmatically told, it shall, or shall not, be thus, or thus. He that takes in a partner for a third, has a partner servant; he that takes him in for a half, has a partner master--that is to say, a director, or preceptor: let your partner have always a lesser interest in the business than yourself, and be rather less acquainted with the business than yourself, at least not better. You should rather have a partner to be instructed, than a partner to instruct you; for he that teaches you, will always taunt you.
3. If you must have a partner, let him always be your junior, rather than your senior; by this I mean, your junior in business, whether he is so in years or not. There are many reasons why the tradesman should choose this, and particularly the same as the other of taking him in for a junior or inferior part of the trade--that is to say, to maintain the superiority of the business in his own hands; and this I mention, not at all upon account of the pride or vanity of the superiority, for that is a trifle compared to the rest; but that he may have the more authority to inspect the conduct of his partner, in which he is so much and so essentially concerned; and to inquire whether he is doing any thing, or taking any measures, dangerous or prejudicial to the stock, or to the credit of the partnership, that so if he finds any thing, he may restrain him, and prevent in time the mischief which would otherwise be inevitable to them both.
There are many other advantages to a tradesman who is obliged to take a partner, by keeping in his own hands the major part of the trade, which are too long to repeat here; such as his being always able to put a check to any rash adventure, any launching out into bubbles and projects, and things dangerous to the business: and this is a very needful thing in a partnership, that one partner should be able to correct the rash resolves of another in hazardous cases.
By this correcting of rash measures, I mean over-ruling them with moderation and temper, for the good of the whole, and for their mutual advantage. The Romans frequently had two generals, or consuls, to command their armies in the field: one of which was to be a young man, that by his vigour and sprightly forwardness he might keep up the spirits and courage of the soldiers, encourage them to fight, and lead them on by his example; the other an old soldier, that by his experience in the military affairs, age, and counsels, he might a little abate the fire of his colleague, and might not only know how to fight, but know when to fight, that is to say, when to avoid fighting; and the want of this lost them many a victory, and the great battle of Cannae in particular, in which 80,000 Romans were killed in one day.
To compare small things with great, I may say it is just so in the affair of trade. You should always join a sober grave head, weighed to business, and acquainted with trade, to the young trader, who having been young in the work will the easier give up his judgment to the other, and who is governed with the solid experience of the other; and so you join their ways together, the rash and the sedate, the grave and the giddy.
Again, if you must go into partnership, be sure, if possible, you take nobody into partnership but such as whose circumstances in trade you are fully acquainted with. Such there are frequently to be had among relations and neighbours, and such, if possible, should be the man that is taken into partnership, that the hazard of unsound circumstances may be avoided. A man may else be taken into partnership who may be really bankrupt even before you take him; and such things have been done, to the ruin of many an honest tradesman.
If possible, let your partner be a beginner, that his stock may be reasonably supposed to be free and unentangled; and let him be one that you know personally, and his circumstances, and did know even before you had any thoughts of engaging together.
All these cautions are with a supposition that the partner must be had; but I must still give it as my opinion, in the case of such tradesmen as I have all along directed myself to, that if possible they should go on single-handed in trade; and I close it with this brief note, respecting the qualifications of a partner, as above, that, next to no partner, such a partner is best.