Dry powder

Dry powder

Usage of the term dry powder originated during infantry battles fought during the era of gun powder and cannons. The gun powder had to be kept dry to be effective. It was stored in containers that were as waterproof as the technology of the times allowed, but this was not always reliable. Therefore, when the weather turned wet, commanding officers had to be concerned about retaining adequate stocks of the dry powder to effectively wage their battles.

The term is now used metaphorically in a variety of contexts. In business, unused financial capital must be kept in reserve for use in executing timely transactions. For example, homebuilders refer to keeping dry powder on hand to use when the real estate market becomes favorable. In other words, they need to have adequate cash reserves or accessible credit to purchase land and/or buildings when the investment climate is right.