THE CREDIT SYSTEM.

Pukekohe & Waiuku Times, Volume 9, Issue 587, 26 November 1920, Page 2

THE CREDIT SYSTEM.

"90 PER CENT. HABIT AND 10 PER CENT. NECESSITY."

Very interesting is the following | letter received from Mr. L. G. Arm- j strong, draper, mercer and clothici.j of Te Awamutu, by way of comment j on a .subject receritjy dealt with in a leading article in the "Franklin and Pukekohe Times,'' entitled "The Credit System": Sir, -I read with interest you" leader of November 12. 1 have given careful thought to the subject, and the practical results of my conclusions are shown in enclosed pamphlet. Since issuing it 1 have had expressions of approval from many surprising sources. Especially gratifying to me is the manner it has been received by well-known and vr.lueu ciedit customers with whom 1 haw had business transaction over

period of years.. "Credit is 90 per cent, habit and 10 per cent, necessity. i"We stand to lose the 10 per cent., or, rather the business it represents. If we can educate the 90 per cent, into paying cash, and I believe wc can, we are compensated. Any soft goods' retailer will tell you that most names on his books were first introduced into his business through getting goods on approval, and this phase is the hardest to deal with. "The law to-day implies that to give credit is foolish. The debtor is shielded and the creditor's pathway is full of obstacles. The procedure is cumbersome in the extreme when an attempt is made to recover at law. It pays better in most cases to write off "doubtfuls." But the trader is not established as a philanthropist, and these losses are probably reflected in his margin of profit. I hope to demonstrate that your leader is wrong inasmuch as it applies to this class of business, and if a combined universal movement to trade for bash only could be brought about purchases would be kept within due bounds, lower prices could be charged • —the public would benefit as also would the' trader."

COMMENT. The "Times" quite agrees with Mr. Armstrong that the cash system is far the better one„ the only point of difference between us being the practicability of enforcing cash transactions alone. His admission that the practice of taking goods on approval is the hardest phase to deal with rather surprises us: we should think that in these times when epidemicsplagues, influenza, scarlatina, typhoid fever, and other pestilential diseases are often experienced, the Ministry of Health would sternly forbid merchants to send clothes out on approval which may go into homes where a contagious disease exists and afterwards be sent back to the shop if the size, colour, style, or texture does not suit, and ultimately be distributed again over the counter. The practice is wrong, grievously wrong, and should be put a stop to immediately in the interests of the health of the community.

The following are the "pointers" contained in the pamphlet issued by Mr. Armstrong, and are certainly convincing. If he can carry them out he will be doing a service to his customers:

The Desire is Economy.—After a careful analysis of my business charges, 1 am convinced that a considerable economy can be effected by the elimination of credit. Prices 'an, and will, be reduced when the cash system is in vogue. Think what it means.—Credit involves-' tfce cost of stationery, postages, and the many other charges which are inseparable from the booking system. It is appanent that the customer has to pay these charges over and above the real value of tne goods purchased. Without credit un unnecessary item in price fixing can be dispensed with, and the purchasers benefit accordingly. Buy More: Spend Less.— By adopting a uniform cash system my customers will be able to make their purchases on the best possible basis. The economy will not be a slight one; it will make possible a big average "reduction in prices. In practice it will enable you to buy more and spend less. One Pi ice and One System.—There will be only one price at which goods in all departments are sold, that is the cash price. Obviously, too, therecan be but the one system, and under no circumstances will credit be given. This will apply in every transaction —to everybody. Do not ask for Credit. —It is realised that monetary inconvenience may occasionally occur. Years of usage has established the credit system, and it is not easy to forget old habits that have been followed almost instinctively and without counting the ccst. You have had to pay for bookkeeping in the past, and it is going to pay you not to expect credit in ho future. Best of Service for Cash. —In announcing the introduction of a cash system, an assurance is given that the best of. service will be at public disposal. A system which makes possible large economies is well worth while, and will prove moneysaving for all who take advantage of it.