Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-10
BY CHARLES BENEDICT.
From the Masazine of wall Street.

From the MaEszine of Wall Street.
The excess stocks Of commodities must
be lifted from the bent back of business
and restricted and depressed markets
relieved of the SURPRISES which keep the
prices of cotton, wheat, copper, coal,
oil and other raw materials below the
cost of production, if we are to expert
ence an early termination of the de-
preston which has beset world trade
and industry for nearly two years 1t
is further evident that such relief must
be in progress before the coming harvest
adds its weight of abundance to the
current oversupply of agricultural
products if fun benefits are to be de-
rived. And if, in addition, foreign mar
kets are simultaneously improved by
the injection of new vitality, restored
credit and relief from suffering in the
weaker nations which have been most
sorely afflicted by the economic cata-
clysm of 1930-193l, then revival and
recovery will indeed, be assured.
Restore a reasonable degree Of sta
bility in raw material prices by broad
ening of the channels of consumption,
and many of the current ills of the
world, economic, social and political,
will be cured at once.
This seeming Utopian condition is by
no means impossible of realization. 1t
calls for no more than a mixture of
common sense with modicum of cour-
age.
1t has been commonly and truly said,
that present Ills are largely attributable
to redistribution; that potential con-
sumption exists for all the SURPRISES.
The answer then Is in bringing the
consumer, whether he be in Argentina
or Zanzibar, in touch with the seller
nd MIL 10
ceptable to the latter and within the
capacity of the former. Nor is this all
fine theory It has been done before.
1t is being done now.
Some Companies Gain.
In this second year Of a depression a
handful Of companies are showing spec
tacularly mounting sales records Of me-
chanical refrigerators solely as result
of suitable extension OF credit terms
terms by which people who could not az
ford to buy refrigerator even in good
times are buying this modern comfort
for the small cost of what they would
normally expend daily for ice. In other
words the companies manufacturing
! these devices have been smart enough
to seize the possibilities in the buying
power represented by the few cents a
day for ice.
Ten years or more ago the automobile
industry followed a similar procedure.
Leading manufacturers found their mar
kets dwindling. as all those who could
afford automobiles had them. They
sought new markets in the thousands of
potential BUYERS who had the desire TO
buy, but neither the cash nor the credit,
Just as We as nation must today seek
new customers for our goods among the
nations which should be aggressive buy
ers of commodities, whose physical
needs are large. but whose national purse
is fiat. and whose credit is nil. When
the motor car makers tackled this prob
lem Of converting potential market
into an actual one they did not do it
BY lending money TO every possible GUS
toner. E.. supplying a bank account
against which 10 draw on account of
purchases made--as is the custom in
making loans, but by adopting a system
Of long term credit TO the individual and
to dealer groups. Familiarity known as
installment selling 1t was no novelty
even then. 1t had been applied success
fully for wears before The automobile
industry merely adapted it to its own
needs
What happened as a result is too
we'll known to be recounted The
market quadrupled in size What is
moro, nobody lost by the enormous
bad Discount or financing companies
were established, and as it became In
creasingly evident that risks we're
sound. that re-poSsessions and defaults
( IN payment were no more than
/ fraction OF per cent, installment
I paper became q commonly accepted,
easily discountahle credit instrument.
/ The fact that this plan was used dur
4 ing the boom to oversen an already
saturated market Of known buying
! power is not the fault of the INSTALL
ment plan idea, but its application.
Parallel Cited.
| Now the situation of this country in
/ its commercial relations abroad is not
unlike the domestic situation of the
| electric refrigerator manufacturers to-
/ day or the motor car industry few
years back We have an abundance of
/ goods--more than we can use-so
4 much indeed that we have considered
| destroying 1t or giving il away. In
Brazil they are getting rid of surplus
/ coffee BY burning it. Yet there are
millions OF potential customers in
! various parts of the world for goods
and who are in need Of the very
4 essentials of life. 1t is not only
/ humane, but good common sense as
well TO supply these people with the
commodities which they need, on
| long term credit basis because by doing
so We increase the value of the goods
Of the remaining normal supply to
point where 1t more than equals the
amount sold in this way. Instead OF
adding to our already embarrassing
/ position on foreign loans--why not
stop these money loans and (loan)
sell some of our overSupply OF COM
/ 49,