THE CREDIT SYSTEM.

Manawatu Herald, Volume XXX, Issue 391, 30 May 1908, Page 4

THE CREDIT SYSTEM.

Views of Shopkeepers.

‘ ‘ Giving credit has caused more failures in business that anything else I know. Some tradespeople are incapable, it is true, others have not the necessary capital to meet the first rebuff that comes along, but the credit system has led to more widespread disaster than either of these—that is quite evident from our bankruptcy proceedings.” This indictment was from one of Auckland’s most preminent merchants, of 2i years’ standing. “In the wholesale line.” he continued, 1 ‘ there must always be credit, but in the stress of present-day competition it seems to me that the merchants are inclined to give longer terms th ay there is any justification for, and this leads to inevitably disastrous results. Credit has an absolutely stultifying effect on trade, both wholesale and retail.” Shopkeepers of many years’ experience in the city and suburbs admit generally that it is no easier matter for them to get their money in than it was io or 20 years ago ; but then, unfortunately, increased competition has shortened prices, and as one grocer tersely puts it, “ he cannot afford to make bad debts of even £5 —the prices are cut so fine that a loss takes too much pulling up.” The butchers the baker, the grocer, and all and sundry shopkeepers are clamouring for a cash principle of doing business ; but, without entire unanimity, little can be done. This is the stumbling-block, together with the fact that nothing can be done to prevent new men coming into the trade and reinstating the credit system, to flourish again. Many of the bakers look upon the coupon system with disfavour, and as has been pointed out there are many difficulties in the way of introducing coupon sales successfully. “ My books generally run between ,£6OO and a month,” said one baker, and as I do not see why the good customers should suffer for the bad, I generally charge the latter in booking a halfpenny a loaf additional. In fact, I think that it is the general rule. Then, if my customers run over a fortnight I want to know the reason why. But, despite that, my bad debts average about .£1 week all the year round. I have written that amount off for the Government returns, any way. My opinion is that there should be one price for cash and another for booking.” Another baker said if he received cash all round, or if the coupon system was properly established, he would be prepared to reduce bread from, 3s 6d per dozen to 3s 3d.

A suburban butcher went one further. “If credit is abolished,’' he said, “ I will reduce the price of meat by a penny a pound all round. We are out of pocket the whole time owing to the advantage that is taken of the credit system, which is the curse of the butcher - ing trade.” ‘ ‘ There is altogether too much pleasure in this country,” asserted one knight of the block ; ‘‘far too much horseracing and gadding about. The lady of the house will spend her weekly allowance at the races, and we never see it. Then the Government should pay weekly instead of fortnightly or monthly—the present system of payment does not favour cash sales.” Other trades do not feel the pinch so seveiely, though all shopkeepers are unanimous in their disapproval of the credit system. "It is rotten to the core,” said a grocer, ” but while competition is so keen credit will be rampant. And not only is it a curse to the grocer, but also to the people.” Drapers and other tradespeople expressed similar views, the general verdict being that business on a sound cash basis would mean an all-round reduction in the price of life’s ne.cessities.

It was repotted at the meeting of Wellington bakers on Thursdaynight, at which it was decided to adopt the cash coupon system with respect to the sale of bread, that the butchers of Palmerston North had followed the lead of the bakers by charging cash for meat, which is an indication of what a far reaching effect the decision of the New Zealand Master Bakers’ Association, at their last annual meeting in New Plymouth, may have on all trades devoted to everyday food stuffs.

The coupon (or cash) system was brought into practice by the Hastings bakers on April i. Interviewed, a leading baker stated that customers were taking kindly to the innovation. He commenced with 6000 coupons in hand, which he found insufficient to meet the day’s demand. At a meeting of the Auckland Master Bakers’ Association the coupon system, as introduced in the South, was discussed at length. The members appeared to generally favour the cash system. No decision was arrived at, but a further meeting will be held this week, when definite action may be decided upon. The Wellington Master Bakers have adopted the cash or coupon system of trading.