Specialized organization that supplies information on the creditworthiness and financial strength of business firms. The first such agency, the Mercantile Agency, was founded in New York City in 1841. It provided information to businesses that were expanding nationally and were unable to assess the credit history of prospective customers in distant locations. It changed its name to R. G. Dun & Co. after 1859 and merged with the Bradstreet Co. in 1933 to form Dun & Bradstreet, Inc., the best-known mercantile agency. Mercantile agencies may provide information on all types of business firms or may limit their investigations to firms in a particular line of trade or a particular region. Most agencies provide both general and special reports. General reports, issued periodically on all firms investigated by the agency, assign a rating to the firm's financial statement and creditworthiness. Special reports containing more detailed information are issued to clients of the agency on request. Seealso credit bureau.
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In Great Britain and some European countries trade protective societies, composed of merchants and tradesmen, are formed for the promotion of trade, and members exchange information regarding the standing of business houses. These societies had their origin in the associations formed in the middle of the 18th century for the purpose of disseminating information regarding bankruptcies, assignments and bills of sale.
The mercantile agency in the United States is a much more comprehensive organization. It came into existence after the financial crisis of 1837. Trade in the United States had become scattered over a wide territory. Communication was slow, and the town merchant was without adequate information as to the standing of many businessmen seeking credit. Undoubtedly the severity of the collapse of 1837 was due in part to the insufficiency of this information. New York merchants, who had suffered so severely, determined to organize a headquarters where reports regarding the standing of customers could be exchanged. Lewis Tappan (1788-1873), founder of the Journal of Commerce (1828) and a prominent anti-slavery leader, undertook the work, and established in New York, in 1841, the Mercantile Agency, the first organization of its kind. The system has been wonderfully developed and extended since.
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