necessary, in order to round out
and complete our line, to add some new items which cost us quite a little.
But we are in good shape now and the sales are increasing. We shall soon
be able to take care of all of our outstanding obligations."

"How much are your outstanding obligations?" asked the capitalist, with a
sinking heart.

"Well, about two hundred and fifty thousand dollars, I should say. But it
won't take us long to clean that up now that we've squared away."

"You'd better come right over here and bring your books with you. I want
to go into this thing."

WHY HE FAILED

It took only a few hours' investigation of the books to convince the
capitalist that his mail-order business was hopelessly insolvent. It took
expert accountants to find out why it was insolvent. The trouble was that
the young manager had proceeded with only the vaguest and roughest kind of
an estimate of cost, based, not upon facts, but mostly upon his own superb
guesswork. New business had been brought in by reducing prices. "Low
prices" had been one of the slogans of the young man's campaign, and he
had cut under all of his competitors. On the other hand, there had been
the slackest kind of management inside. Overhead expenses had mounted and
mounted. The young man had been altogether too easy and generous in fixing
salaries, granting promotions and increases, and in giving positions to
those who applied. He was really a splendid young fellow, with a
sympathetic heart and a generous hand, and it was very difficult for him
to turn away anyone who could tell an artistic hard-luck story. Expensive
equipment had been purchased which had far greater capacity than the needs
of the business required; therefore, many machines and other fixtures had
stood idle seventy-five per cent of the time, eating up money in interest
charges, depreciation, space, light, heat, and other expenses. In addition
to these out-and-out expenditures, there were dozens of little leaks in
all the departments of the business, all busily draining away not only
possible profits, but the working capital, and, finally, the limit of the
concern's credit.

As a result of this kind of management, the final accounting showed the
liabilities of the concern to be in the neighborhood of four hundred
thousand dollars and its assets only about forty-five thousand. No one
could be found to take the business, even as a gift, and assume its
obligations. The owner himself had his cap