Port Elizabeth of Yore: Dreyfus’ Revolutionary Credit Policy

A prominant business in Market Square in the late 1800s located in front of St. Mary’s Church on the site where the UBS Building would be built in the early 1930s was a one storey building with the name prominently displayed as L. Dreyfuss Merchant.  

What was so unusual about its business practices that made it successful?

Main picture: L. Dreyfuss’ shop in front of St. Mary’s Church

Prior to Dreyfus’ shop
St Mary’s Church received a land grant in April 1825 of an erf extending from Main Street along St Mary’s Terrace up to where the Divisional Council offices ultimately would be located. In order to finance the construction of St Mary’s Church, the church took the decision in 1843 to sell a prime portion of the erf being that section abutting Main Street. This was a grave error which would have a profound impact on St Mary’s visibility as ultimately UBS would build their high-rise Regional Head Office in front of the church thereby obscuring it from view. Today St Mary’s is only visible from St. Mary’s Terrace on the southeastern side.

In terms of the original sale, the purchaser was restricted to only erecting a single storey building which would not obstruct the front view of the church. It was at this time that a Mr Joseph Graham opened a store in this one storey flat-roofed building nestling meekly beneath St. Mary’s. Even in the 1840s the maxim of location, location, location applied. As this property in Market Square and all the major roads in the town such as Jetty, Main and Baakens Streets terminated here. From this store Graham operated a number of businesses being a grocery store, a shipping business and a law agency.  

Interestingly Graham was also civic-minded and in 1849 had been elected Wardmaster of Ward 2 in Port Elizabeth. Wardmasters were the forerunners of City Councillors. Ward 2 embraced the area bounded by the Baakens River, Jetty Street, Whites Road and Prospect Terrace.  

Trading conditions
During the 1860s and the 1870s, Port Elizabeth merchants took long credit from London but gave long credit in South Africa. This policy was adopted in order to support country traders often with disastrous consequences.  A system of promissory notes among the merchants was initiated in order to stave off the evil day and trade was becoming shaky with many merchants lacking the requisite cash flow to escape insolvency.

The Eastern Province Herald noted in an article on the 18th September 1856 that “….in no part of the Cape Colony is business managed on a looser principle than in Port Elizabeth……As was once said, we believe by the Attorney General, the usual sign-board of the merchants of Port Elizabeth seems to be “unlimited credit here and no questions asked”

Dreyfuss’ solution
Then in 1865 along came the enterprising German, Ludwig Dreyfuss, whose credit policy would overturn the existing approach and philosophy to extending credit to customers. On opening his well-stocked store in the prime commercial location in front of St. Mary’s Church in Market Square, he declined to extend credit at all.

Initially Dreyfuss was roundly mocked for his inane policy. As it dawned on his competitors that he was able to undercut their prices as he no longer had to bear a hefty write-off every year due to the inability of their customers to pay, they rapidly modified their policies and adopted Dreyfuss’ no credit policy.

As a consequence of his actions, local trade was gradually placed onto a healthier basis.    

St. Mary’s Cathedral-previously St. Mary’s Collegiate Church nestled snuggly between the UBS and the building on the right with the church invisible behind the UBS

Future of this site
In 1924, the church attempted to recover the portion of land sold without thought of the impact and consequences. The ultimate solution was the modern equivalent of the Curate’s Egg id est, good in parts but bad in others. But what choice did the church have. In order to obtain two fifths of the Main Street frontage for use as a nave, the owner of the remainder being three fifths demanded to be allowed to build a tall building. The problem was intractable. The nave would be dwarfed by the high-rise building and the church would be totally blocked from view. However for the first time the church would be complete with its long-desired nave. In my opinion, this was a poor solution as the nave is not prominent as it is partially hidden by the surrounding buildings.

Disaster during demolition
On Christmas Eve in 1930, while Dreyfus’s building was being demolished to make way for the UBS Building, the roof collapsed killing several customers in the store.

More about the Beresford Party (Looking Back, Volume II, No. 2, June 1962

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