A NUMBER of the bills on war goods surplus introduced in Congress recommend or require that surplus must not be sold to “speculators.” This point is emphasized in these bills because of loose handling of surplus property after World War I. Some of this property got into the hands of persons who bought large quantities of material and equipment at a fraction of its original cost and made huge profits on selling it.
After 25 years of observation in the used machinery and equipment field, we can go on record by stating that there were not any fortunes rolled up by this sort of speculating in machinery and equipment. The records of this publication contain in some form or other the history and financial status of practically every known firm or individual identified with the used and rebuilt industrial machinery industry. We can go back to 1919 in our findings.
Webster’s definition of “to speculate” is: “a hazardous commercial or other business transaction entered into in the hope of large profits.” That definition does not apply to the established used machinery dealer. In the first place, there is nothing hazardous about buying a standard engine lathe or a 3-phase, 60-cycle electric motor with the idea of reconditioning and reselling; and in the second place, while we have heard of dealers making an unusual “buy” in machinery and thereby taking a large profit, these are rare exceptions and the deals most often mentioned. No one brags about his mistakes nor of his average profits on his day-to-day sales. What hazards there are in buying and selling surplus industrial equipment exist because one is dealing in commodities which in some form or other are termed “obsolete” or “second hand.” Witness the American aversion to a “second hand” automobile or any other piece of machinery which does not carry the original maker’s guarantee.
One sensible description of a speculator is a trader who buys socks and shirts today and next week is back in the market buying bolts and nuts for quick turnover. This kind of speculation is a far cry from the business of the average machinery dealer who buys a carload of machine tools and ships them to his warehouse or rebuilding plant and who then must seek out a manufacturer customer who has confidence in his own knowledge of machinery as well as confidence in the dealer who is offering the rebuilt equipment.
We have contended for years that there is more used machinery bought through confidence in the seller than through any other single factor. This is a fact well worth considering when the bugaboo of “speculator” enters into the disposition of our country’s surplus war property.