CREDIT AND ITS ABUSES.

Press, Volume LIII, Issue 15872, 11 April 1917, Page 5

CREDIT AND ITS ABUSES.

A COACHBTJILDER'S VIEWS

At the Coach Trades Convention at Wellington on Saturday Mr H. A. "Whitakor {Hamilton, Waikato) read a paper on ''Credit and its Abuses." His object in writing tho paper was, ho stated, more for the purpose of drawing attention to and crea'ting a discus- ! sion on the very unsatisfactory relations existing between tho client _ who kooks and th© business man what gives credit; and his remarks were more applicable to tho smaller transactions involved m daily business life, matters involving largo sums being fixed up onlv after mature consideration. Tho credit system had grown rapidly in the Dominion, and ho had been much impressed by the way in which credit was practically forced upon tradespeople here in comparison with parts of Australia._ The , wonderful prosperity of the Dominion had made it possible for business peoplo to carry large book debts, and the keenness of rival trading concerns had also contributed toward tho growth of the credit system, until to-day people did not ask for credit, they expected and took it as a matter of course. Ho had heard an auditor of Jar go practice say that from his own personal observation he was convinced that the trading capital of many people was represented by their debts to other people, or, in other words, if these people paid their debts they would have no capital left to carry on their own businesses. That, from a man in tho know, was not reassuring. Many coachbuildcrs, particularly in tho country districts, were familiar with tho customer "who paid his account only once a year, thereby using their capital for his business. "A close study of the business of the Official Assignee," added Mr Whitakor, "shows that by far the greater number of his cases como from tho class of*men who 6tart small businesses with, little capital and still smaller business capacity. Every man worthy of the name is tired with the ambition to better his position, and the right to start on his own cannot be denied him. But, coming right homo to our own trade, how many instances do we know of where such a man will leave a well-paid service job and commence business on lines which, from th© very commencement, can mean nothing but disaster. When his estate gets into the assignee's hands the debtor invariably tells tho samo tale:—Capital nil, or very nearly so, too many book debts, sickness in tho family, etc. He never adds that h<* was doing lus work or selling his goods at cost or below cost, and that lie never took stock or employed a registered auditor to aaviso him as to his position at stocktaking periods. The assignee would take a stand for tho right, but usually the creditors aro too busy or too sick of th© usual story to bother their heads or waste time over the master, and so thb bankrupt escapes, ana disappiears to other parts, where he probably after a few years repeats the offencc, and another ambitious chap takes his old premises and does likewise. The Official Assignees do their best to pimisli/these offenders, and they utter warnings and threats, but," declared Mr Avid taker, "they are practically powerless under our present laws and few guilty persons aro brought to book; hence a premium is placed on dishonesty." It was, he said, manifestly unfair to tho business peoplo who wero running ! their trading concerns and factories on sound commercial lines to bo placed in competition with these dishonest people. AVas it not 'time that 6omo move was made to purge from the business community th© persons who practised commercial dishonesty ? Could the State yot compel every man starting business to register, and disclose his capital to tho merchants with whom he desires to do credit business? Or, Letter still, compel every business to be registered and to have a stock-taking and balance every year, under the supervision of a registered auditor, copies of the bal-ance-sheet to be lodged with the registrar of companies? Under this scheme each, business man would at least know his position, and if ho so manipulated his stock-taking as to get a false bal-ance-sheet hp would have no defence when he ultimately arrived in the assignee's hands. It was very discouraging to members of their trade, and in fact every trade, to bo continually up against the man who, while murdering his own business, did a great harm to the honest trader. Associations like theirs could do much to put down this abuse. The very act of association was a factor, and from the result of the better understanding, friendships, and interchanges of experiences, methods, and ideas among members, tho way was made clear for their association to edueato the erring members of their fraternity, and also to impress on the wholesale hardwaro houses the fact that bv giving undue credit, etc., to such, people, they were inflicting hardship on the Tery people -who wero doing their best to placc coachbuilding on a proper business footing."