Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-11-12
Revision Needed
In Credit System

From the Roanoke Times
The statement that $500 ,0O0, 900 an
nually is lost in bad accounts by de-
partment stores, specially shops and
other retail dealers is one that is of vital
concern to all Of us. For naturally the
customers whose credit is good and who
pay their bills with reasonable prompt
ness must eventually make up, at least
TO some extent, the losses suffered by
business as q result OF extending credit
where 1t is not deserved.
The Bureau of Foreign and Domestic
Commerce Is satisfied as result of its
inquiry into the subject that the indis-
criIninate extension of credit is respon-
sible for a large number of stores wind
ing up in bankruptcy. In all cases It
was found that the number of losses Of
unsuccessful stores averaged much
higher than the losses Of successful
stores: in the former case the percent
ages ranged from to 33, while In the
latter it ran only from ] to 26.
Retailers throughout the country are
now engaged in trying to figure out
whether the all-cash or the credit sys-
tenn viii be better for their particular
business. One school of thought insists
that the all-cash plan is the better one
IN the long run, while another is in
clined to believe that the credit sys-
tenn pays IN spite OF losses. Many peo-
pie, 1t Is argued by those belonging to
this latter school, buy things on credit
and ultimately pay for them. which
they would not buy at all if compelled
to pay cash. That is undoubtedly true
as lar as 1t goes. Credit experts are
studying the figures in an effort to ar
rive at some basis of Judgment upon
which to form a correct conclusion.
upon the results OF their inquiry de-
pend the eventual decision as to whether
business shan continue to extend credit
Freely and indiscriminately to all who
seek it, or whether there shall be mate
rial curtailment of credits. Certainly
the TACT that bad credits are responsible
Tor an annual loss of $7.5O0, 900 900
would argue that the credit method has
been followed unwisely and recklessly
by many merchants in the desire to take
business away from their competitors.
All stores, 1t should be explained, have
credlt men, who are in charge of the
matter OF extending credit to customers
When credit Is asked the customer. is
usually referred to the credit man who
interviews him with a view to ascer-
tanning his income, the amount of prom
erty ne owns, and his general credit
standing. In spite of the efforts to con-
me the extension Of credit to those who
merit lt, the bad debts Of the country
amount TO billions every year. The De-
partment OF Commerce in its survey Of
23,779 retail establishments finds losses
on credit accounts amounting to a lsrca
percentage OF business done.
In recent years tradesmen have got
INTO the habit Of extending credit to
almost every one asking for it. They
are beginning to realize that this poll
ICY, temporarily advantageous. is a
nlgnl" dangerous one, and they are now
debating among themselves WAYS and
means of revising it without driving
away customers. 1t is safe to nredict
that the credit system is sure to undeT-
go rather sweeping revision In the not
distant future. -'o'