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.