Dun & Bradstreet 2/2

This was so that he could set up a network of informers throughout the country, but sadly that didn’t get rid of all the company’s problems.

What vexed Lewis the most was the failure of his subscribers to live up to their contracts. Although they were sworn to secrecy, they wouldn’t keep the information about their purchasers to themselves, so there was no way for Tappan to maintain the value of his company.

Tappan pointed out that if non-subscribers received the data, there would be a decline in future subscribers because there’d be no need for them to access the data if they already had another source.

In the 19th century the way to deal with this, or the way Tappan dealt with it, was to fit out his office with a higher counter separating the clients and staff. It went something like so:

  1. Subscribers would write out the name and address of the individual or firm for which they wanted information and hand it over to one of the clerks.
  2. The clerk would bring out the appropriate over-sized ledger and read the desired information while the customer took note.

Of course, subscribers were on their honour to keep the information confidential and for their use only, but then this only contradicted Tappan’s hopes for expansion.

To keep people interested and to leverage on growth, he guaranteed his clients a one-third reduction on a year’s subscription if they brought in a new client. Of course, in the modern day, this is equivalent to Deliveroo’s promo codes or Uber’s get a free ride when you invite someone to join.

Great thing is, at FiftyFor, we operate on a Freemium pricing policy allowing you to roam and follow freely across your network for up to 50 companies.  Follow any company, anytime, build your network and change the way you do business in Africa.

Back to Tappan, he received complaints, namely from his correspondents at the other end of the business.

Some of them were sure that subscribers misinterpreted their reports, or that clerks had miscopied them or that their identity was known to the traders who might react.

Above all, they insisted that they got too little for their hard work. Tappan’s correspondents were supposed to send in reports twice a year in order to be in time for the autumn and spring sales when inland storekeepers would descend on New York.

Reporters only earnt their way through collection cases. When a delinquency occurred, the reporter in charge of dealing with the issue would get a commission fee out of whatever amount he could extract from the defaulting storekeeper.

In this way, reporters had no immediate return on the information they gave to Tappan, only the prospect of having more business from the New York subscribers.

On the other hand, if Tappan paid all his local reporters directly, the costs of the Agency would triple.

Subscribers, however, complained that the attorneys were too slow in collecting bad debts, that there was insufficient coverage across the country, especially in the South, and that reports were sometimes incomplete and too long delayed.

This kind of idea is similar to the situation across Africa. Certain regions are well covered with verified and comprehensive information on companies, while in others, company information is hard to come by.

Given that Tappan was the middleman between reporters and subscribers, he could see the weaknesses of both groups, they were acting as if only they mattered, instead of seeing themselves as part of the bigger picture.

This meant that the general public also began to mistrust the operations of the new company.

Inland merchants were convinced that there was a conspiracy against them and anti-evangelical institutions maintained that the Mercantile Agency was a business running in everyone else’s but its own.

He was convinced that the suspicions were unfair since every storekeeper with a good credit rating benefited by having his status known to all the subscribers!

If credit information had been more reliable at the time, eventually the consumer would gain when lower interest rates brought down the charges on the goods he bought. Despite this, it took several years for the public to accept the innovation in credit reporting.

The crisis in the Mercantile Agency didn’t come in the early stages but when it was already 3 years old and apparently firmly established in the Manhattan trading community

As in Part 1, the source of Tappan’s problems was the same – his antislavery convictions.

Even though Tappan had over 300 reporters, they were all based in the free states – parts of Missouri, Wisconsin and Iowa. Ever since his difficulties with his reputation, he pretty much abandoned the Southern states.

Competitors imitating his system became a real threat in 1844 as they provided a wider coverage that spanned the Southern states.

Essentially, Tappan excluded himself from a big chunk of the market by being so bold with his views. He was now too old to make any real change and so he reached out to a Mr Edward Dunbar.

Edward Dunbar opened the Boston office for the Mercantile Agency.

When he arrived in New York he saw that subscribers were leaving to take advantage of rival offerings and Tappan’s unpopularity was affecting the growth of the company.

Dunbar convinced Tappan that a network of Southern correspondents had become imperative.

Dunbar and some associates went to tour the South and spoke to attorneys under a different company name without mentioning that they were under the leadership of Lewis Tappan.

Tappan, although furious when he found out, preferred the deception as opposed to the company’s public demise.

From then on, Dunbar handled things on his own, he succeeded in getting Tappan to relinquish himself as a partner of the Philadelphia office on payment of a sum of their profits, which allowed Dubar to swoop in and take the reins.

Luckily for Lewis, he didn’t give up that easily and so when Dunbar attempted to do the same with the Baltimore office, Tappan took it badly and the project was abandoned. From then on, relationships between the two were icy.

Dunbar made the argument that Tappan was only going ahead with his anti-slavery activism to the detriment of the company and then tried to force Tappan out of it, but it didn’t go very well.

Dunbar didn’t possess the necessary capital to buy him out, and Tappan’s reasonable estimate of the company’s value at 25 000 dollars  (equivalent to $753,400.96 today) was beyond his means.

Dunbar announced his intention to dissolve without consulting the other partners in Boston and Philadelphia and ascertaining their positions. He then grossly underestimated his rival by trying to shame him into accepting- he accused Tappan of angering New York merchants with his antislavery activism but all to no avail.

Tappan’s position was very clear – it wasn’t up to him to alter his opinions to suit the convenience of the company or its clients. His principles were not for sale – only his services.

The two went to court to fight over the company and Tappan won with Dunbar being banned from the credit rating business. He left to California to turn over a new leaf.

The Agency didn’t suffer that much of a blow, Tappan had to repair relationships in Boston and Philadelphia but the profits grew steadily for the next 3 years. He soon acquired the Jabez Pratt Company of Baltimore.

By the end of 1846, the combined agencies had nearly 700 correspondents. Taking Dunbar’s place was Benjamin Douglass – he had one-third of the partnership.

Douglass was valued because of his knowledge of the Southern trade, having once been a merchant of Charleston. Tappan didn’t ask about his religious views and just was thankful for his work in expanding the company.

By 1849 Tappan was wholly retired and Douglass really had complete control over the booming business.

In 1859 he transferred the company over to Robert Graham Dun who immediately changed the name to R.G. Dun.

This relationship would mark the future of Dun and Bradstreet, as you can probably tell, the clue is in the name.

Dun was responsible for expanding the business over international boundaries.

A long time passed and the credit rating agency developed and grew, but it was in 1933 that the next major milestone would come into play.

R.G. Dun merged with competitor John M. Bradstreet to form the name that today we know and love – Dun & Bradstreet.

The historic merger was engineered by Dun’s CEO.

The successor J. Wilson Newman worked to increase Dun’s range of products and services and expanded dramatically during the 1960s by engineering ways to apply new technologies to evolving operations. The major one being the invention of the Dun & Bradstreet Data Universal Numbering System in 1963 – the one and only company identification number – everyone uses it. It’s cool.  

All in all, every company that’s just starting out goes through a tough stage in development, it happens to the best of us. Even the legendary Dun & Bradstreet was on the brink of closing down but it’s important to see the light and try and adapt. At FiftyFor we’re striving to make our product as best as can be for you. So, if you ever have anything to say drop a comment below or get in touch with our Customer Success guru, Praise.

If you don’t really have anything to say and just want to find out more head over to app.fiftyfor.com for more information.

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