TIME PAYMENT

Hawke's Bay Tribune, Volume XVII, 9 December 1927, Page 4

TIME PAYMENT

(JVHE “TIME-PAYMENT” and

“hire purchase” system of trading has come in for a great deal of discussion among British communities recently. To-day we have a Sydney message which attributes to it a “reckless expenditure” which in many cases militated badly against the welfare of the mother and her baby. The authority quoted, a doctor, says that it affords facilities for indulging in a false ambition on the part of poorer folk to follow the example of those more fortunate with regard to income. In an article giving consideration to the pros and cons of the case, the “Yorkshire Post” says much the same thing. “The disadvantages of the hire-purchase system arc not difficult to detect. In many cases the apparent ease with which a coveted article can be obtained leads people into making a purchase which they cannot really' afford. The temptation to snobbery, to outbid some envied neighbour by acquiring a particular article of luxury on a small initial payment, with small instalments to follow, is great.” Then, once the commitment is undertaken, the payments may have to be made in circumstances of unforeseen stress, and can only be met by allowing other commitments to go neglected. The motorcar or the piano may be retained only at the expense of the grocer or the butcher, whose bfll will have to take second place to the instalment that has to be paid in order to save the pride of the debtor.

Having admitted this, the English paper goes on to disagree with criticis who urge that the enjoyment of a possession before it has been fully earned has a bad moral reaction. It contends that the first payment entitles to the use or enjoyment of the article, and so with each succeeding payment. The argument then proceeds on the lines that the time-payment system is really a great incentive to thrift. It trains the purchaser into habits of acquiring possessions of lasting value with money which would otherwise be frittered away in passing pleasures. In addition, it makes possible a fuller and more enjoyable life than could be secured if purchasers, before acquiring the commodities to be enjoyed, had to wait until the price was saved. All this is, however. conditioned to purchasers of non-luxury character. It is the type of purchase, with relation to the present and prospective financial resources of the buyer, which is the test of the value of the system. “A system which induces people to the thrifty acquirement of the reasonable amenities and necessaries of civilised living is so far good. A system which tempts people thriftlessly to acquire luxuries for display or for the gratification of a merely snobbish ambition is so far bad.”

Coining to the broader aspects of the question, we find that both in America, where the system has grown to huge proportions, and in the Old Country, where it is extending daily, it is attracting the serious consideration of even big financiers. They are beginning to be afraid that there is growing up an immense mass of trade credit that may well in times of stress prove a menace to the community. Credit is being piled on credit

from the producer of the raw material to the ultimate user of the finished article. Though, so far, no g'reat harm may have come from this, and indeed some considerable apparent good in the way of increasing sales and so stimulating production and providing employment, there l are still doubts as to the ultimate soundness of the system when carried to the extent it has already reached, to say nothing of that to which it promises-to reach. As yet, however, there cannot be said to be any real consensus of opinion among them as to the side on which the balance tips, that of advantage or of danger. In the meantime the safe course recommended to both sellers and buyers is to have due regard to the relation between the suitability of the purchase and the fairly assured capacity of the purchaser to pay for it.