"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 capital so tightly involved in other ventures that he was unable to save this concern, and it was therefore sold under the hammer. The creditors received their little eleven cents on the dollar. The owner's capital investment was, of course, a total and complete loss.