Evening star., 1926-03-16
|NSTALLMENT PLAN
SELLING GROWING
Reaches Peak of $1,000,
100000 a Year in U. S..
Trend Still Upward.

selling which has now reached q
beak of $1,000 900 900 annually, is
reflected i'll a preliminary survey
made hy the department of domestic
distribution of the Chamber of Com
merce of the United States, the re.
suits of which were announced yes
tcrd;A.
The department estimates that II
per cent of the entire amount Of con
sumner goods sold at retail are dis
posed of in this manner and the trend
IS stlll upward. 1t finds, however,
That Information concerning the eX-
tent and character of the practice is
TOO meager to justify a conclusion
as TO whether it is an economic men
ace or legitimate credit development.
The Farmers Loan and Trust Co.
estimates that S3,293, SIS worth
of automobiles. washing machines.
vacuum cleaners monographs. furni-
ture, pianos. jowelry and radio appara-
tuS are sold on the inStallment plan.
The General Motors Acceptance Cor
poration's operations for its seven
Years of existence totaled $509,2oO .454.
with Il loss ratio for 1925 of only .ol2
per cent.
Clothing and Radio.
1t is found that, outside of the trades
In which it is an established practice,
installment selling shows an increase
in the clothing and radio trades, and
that In others, hardware and pants
and varnish. its introduction has been
strongly resisted
Where such large sums are in
volved as the credits represented by
S. 900 900 900 annually" says the re-
port of the Domestic Distribution De-
partment, ''it was inevitable that some
form of financial aid would be evolved
and it is found now in the organiza-
ton of large numbers of So-called
finance companies or commercial
credit companies which were organ
ized first as an outgroWth of the i'm
mense increase in the production of
automobiles. At meeting in Decem-
her, 1924. 800 companies representing
80 per cent of all automobile financ-
ing, were organized as the National
Association of Finance Companies.
No accurate statistics as to the num-
her of such companies are aVaila bic
because the increase had been too
rapid. Many are purely local or are
used only in the sale Of one particular
device. and they appear and disappear
with great frequency.
The report continues:
1t is asserted further. that the credit
companies perform a service for the
banks in the supervision and collec-
tion of small sums, which. heretofore,
there has been no means of discount
ing III the United States, although,
for example. in France it is possible
to negotiate loans on accounts even
80 small as one dollar.
Added Cost to Consumer.
y principal objection to installment
sales has been based upon the added
cost to the consumer of merchandise
bought in that way. This however.
involves the CUES ion of turnover 50
far as the business of the retail mer-
chant Is concerned. and it is main
tanned by those who follow the prac-
tf"e that the price is not necessarily
Increased if the accounts are good and
Ibis form Of selling is not overdone
More on less prejudice has been
created against the practice because
OF the methods adopted hy a good
many oi the early instalment houses.
Further experience with the prac-
tire has shown that when confined to
articles of considerable unit value
and of more than temporary useful
ness it is not an improper amplitira-
ton of the credit idea and enables
thouSa anuS vi people 10 benefit by the
ownership of articles which if pro
curdble only 10y an immediate single
payment they never could have hoped
20 possess. Fer example. the appar.
cnt family income which iustifies the
ownership of a vacuum cleaner has
declined until the minimum seems to
he regarded as from s. 900 TO $500 a
wear.
When applied 10 the purchase Of
really uSeful articles the inStallment
plan Is almost in the nature Of a
savings doylC" and not necessarily an
ellInIIri cement ,tf il1nrp\,iIcn..n
maint:'ined by mos; economists until
within the past few years.
I.caA. Desirable Form.
AS the least desirable form of IN.
stallncnt selling "" have the small
establishments whore there is an ap-
parCnt Willingness. that customers
shall fail in their payments in order
that the merchandise may be repos-
ScSSed and resoid as new by concerns
conducting that Kind Of business. At
the other extreme is the large reputa-
bic department store in which only
legitimate sales are contemplated
with a frequently manifested desire
to accommodate their patrons in ev-
cry manner possible. Between these
are all degrees of collection methods
from weekly or monthly visits at the
homes OF customers to voluntary
calls or payments by mail by custom
ers of reputable firms.
1T must be obvious that any dis
tributor who adopts the installment
plan for tho sale ut selected articles
of merchandise should not burden his
ordinary cash customers with the
prices charged under the inStallment
plan. There should he ii material
difference in price between the two
classes of merchandise. since the eX-
pcnSe attending the sale of cash mer-
chandise is considerably less than
that attending the sale of merchan-
Lii. u irns,f f.,ll nh