THE INSTALMENT SYSTEM

Hokitika Guardian, 26 January 1926, Page 1

THE INSTALMENT SYSTEM

TT TS SOUND BUSINESS.”

H i„ well known that in the United States of America it is a commonplace for the worker to own his own car, and it is likewise common kowledgc that the instalment system in regard to the purchase of cars has an extraordinary vogue in that country. AVhat is not generally appreciated is the fact that the practice of buying by instalments lias been extended into all classes of merenhndise, and lias, indeed, become an important phase in American commerce. Under the circumstances it is of interest to note Hie testimony of independent commercial experts as to the results of this method of dealing when carried out on n large scale. The commission recently sent by the Federation of British Industries to U.S.A., to obtain information on industrial conditions in U.S.A., reported us follows :

During the last two years there has boon a spirit abroad amongst the consuming public which is often referred lo as the “ consumers’ strike.” This failure to rise is all the more remarkable in view of the enormous extension of the deferred payment system, which now includes not only automobiles, furniture, pianos, etc., but every range of commodities, including clothes, radio sets and even paint for the house. The financial risk is not taken by the producer. but is insured, and special finance corporations have been formed to undertake this class of business, which is widely reinsured. Tt appears to be the general opinion that the instalment system is sound business, and that its great, extension in the United States has contributed substantially to the existing prosperity.

The system, has certainly acted as an incentive to work, in view of the necessity of keeping up regular payments, avid the chief danger in it would appear to bo that in a trade reaction considerable losses would he incurred, and also that, since' the requirements of the future would have boon so largely anticipated bv this system, people would hold off buying for longer than a. normal period, and thus accentuate the depression. However, there seems little danger of this at present, and wc would suggest that, in view of present conditions in Great Britain, it might he well worth the whole of .British* 3 business to examine the possibility of extending this system to England to the extent to which it operates in the United States.