The Seward gateway., 1922-01-26
CASH OR CREDIT

THE QUESTION is often asked why prices on commodities are as high as they are in Alaska. The reply most generally is that the freight rates are the cause of high prices. They have some effect, it is true, but freight rates are not the only determining factor which causes the Alaska merchant to charge more for his wares than on first consideration seems justified
 One of the biggest reasons behind the apparently high prices in Alaska stores that serves as excuses for our citizens to send to r\1 order houses is the credit system that prevails in all Alaskan towns. Of course the na- ture of our industries which provide work mainly in the summer has a great deal to do with the existence of this evil But the system is far too extensive to be justified by this ex- cuse
 This credit system affects prices in two ways First it has an effect on the wholesale price which the Alaskan merchant has to pay in the States. Often times individuals can send to a mail order house even for groceries, and get them at prices that the Alas kan merchant must pay for them at wholesale. Tn reason for this, if you should ask wholesaler in the States, is that it costs them more money to do business in Alaska and they must charge for for their goods when sold to Alaska firms than when sold to local firms.
 The reason for this, of course, is two-fold. They must wait for their money the length of time it takes for the goods to reach the Alaskan mer- chant and get his payment in return. This means that their money is tied up for certain period of time.
 In the second place, many of the Alaskan merchants are so fixed that they must wait until after the first of the month to make their remittances to the States because they must wait on the monthly payments of their credit customers. This adds further time that the Seattle wholesaler must wait for his money and he must charge for the time that his money is tied up.
 The second manner in which prices are affected by the Alaska credit sys- tenn is more decided. The exact situ- ation is this: that wherea merchant is doing business of s1O0,0O0 yearly, $10,000 of that business will be termed poor collections. The merchant does not mark this off to profit and loss and forget about it. He does not add ten per cent interest to these poor bills. This would be of no avail for if he cannot collect the principal what chance is there to collect the interest. It means that the merchant must fig ure on adding at least ten per cent to the price of a commodity to cover his losses
 If everyone would pay cash for what they get from the local merchants they could afford to charge at least ten per cent less for their wares When you send to a mail order. house you pay cash, and pay it in advance. You pay cash for many things, why not all?
 There is no excuse for the extensive credit that an Alaskan merAchant must carry The load reacts on the consumer and he has not realized it. Of course he complains of high prices but never stops to think that his man. ner of doing business is chiefly re- sponsible for such prices. Freight rates may be little high and we may howl to have them lowered; but before asking someone to relieve us we had better try to help ourselves. A cash payment for what you buy of the local merchant will do more toward bring ing prices down than all the lowering of freight rates that could be effected