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Hokitika Guardian, 9 November 1927, Page 2

Addkkssixg members of tlio Hamilton Hot ary Club, Professor Belshaw, who will be remembered liere, and who is now Professor of Economics at Auckland University, gave an interesting talk on instalment selling. After outlining the features of the hire purchase system the professor pointed out that- in its favour it could TTe said it was probable that the losses from ordinary forms of book credit were probably greater. Secondly, it was an advantage to the trader to know when and in what quantities instalments may be received. He could then adjust his own finances accordingly, and work on a much smaller balance himself. In short, a smaller total amount of credit would be required to do a given amount of work. Further, the system might he of real ultimate advantage to the consumer in that payments must be provided against regularly, thus offering a direct incentive to orderly budgeting. Finally, instalment credit could be more readily systematised and controlled. This was a decided advantage, especially when it led. as in the United States, to special financial institutions specialising In j

kind of work. But the issue was not between equal amounts ol instalment and hook credit. The modern problem arose out of an appreciable increase in the volume of credit to hold goods in store; held, not in the hands of traders but of customers. After following this aspect through, the professor said that as was the case with so many economic problems, the general conclusion must lie a mixed one. As a substitute for hook credit, instalment credit was superior. As an alternative to cash sales, it possessed many advantages, and many dangers. I sed conservatively it was a useful commercial practice, but when retailers extended credit without adequate security or investigation, or on fragile or rapidly depreciating articles, or on terms such that the value of the goods was negligible when the final Instalment was paid, or when they extend so much instalment credit' that their own credit was strained, there were weighty objections. Similarly, when purchasers, drunk with the new wine of easy purchase and hypnotised In garish advertisements, or visualising the future through rosy-tinted spectacles from the pinnacle of prosperous times, over-burdened themselves with obligations, then disaster may follow. The fact was not realised, however, that the real danger lies in time of boom, when business was brisk and over-expansion was easy.