The daily independent., 1937-04-17

changes, are offsetting labor
gains through increased wages o.
shorter hours.
Time" Sales at New High
This slowing down of retail
trade, however. is probably only
temporary because most of the
factors which caused it are only
mCnentary. There is one treno
in the current retail picture, how
ever. which I fear is not temper
ary. ] am speaking of the RAPID
increase in inStallment selling
There a~e no figures available
which give grand dollar total
of instalmeat credit outstanding
but there are several reliable baro-
meters. For instance, the per-
c-ntagc Cf new cars bought "on
time" in 1886 reached an all
time peak-65 per cent CT the
| total Another yard-Stick is the
percentage to total of easy pay
ment" sales in New England de-
partmcnt StoreS:-the 1886 hgure
being 10 per cent and a new re-
cord
l am making 10 sweeping ac-
cusaticn against inS.almcnt-Sell-
ing. If credit in one form or
another did not exist, total pur-
chaSeS p.uS savings could, CT
course. be no larger than money
income. You could then spend no
more than you received either for
living items or investments.
Through means Of credit, how
ever, you can spend more than
you earn. You can buy a house,
an autCmCb le. or a suit Of clothes
without being Immediately able to
pay for them. At certain periods
in the business cycle, an cIpan-
SIGN in time" sales gives busi-
ness = hca'nY boost. At other
times, however, such an cXpan-
sion CnIy helps 10 knock over the
top -hea"y credit pyramid.
"Nothiny DCwn-Twcn.y Years
To Pay"
t,ct Cnly the time but the type
of inStament sales expansion is
important. For example, the
article which is bought on credit
may be a machine. While the
buyer cannot pay for it at the
moment. the saving of labor in
the use of the machine will be
more than sufficient to pay for
it over a period of time. An auto
matte c-StOker is an illustration
However. when the article pur-
chased is for immediate COnSump-
ton. that is a horse of another
color. If credit is so easy that
it is extended to cover consumer
goods. then time" sales are no
longer sound merchandising prac-
tiCe. Buying shirts, dreSSeS-and
even furniture-Cn budget plans
is dangerous, particularly if the
percentage Of such purchases to
the total is too high. Such credit
is simply adding to PRESENT
buying power at the expense Of
FUTURE income and employment.
Such an unfortunate trend is
taking place today Easy pay
ment plans are being steadily
| broadened. Originally. install
/ ment-buying was confined to arti-
/ cleS which could be repoSSeSsed
and resCld if payments we're not
met. Today, however. personal
services such as permanent waves
and ocean cruises not only can be
/ paid for in inStalmentS, but can be
paid for in inStalmentS, but can
be paid for after the service is
/ performed. Moreover. length Of
( payment periods has just about
been doubled. Low interest rates,
which mean cheap operating costs
for the financing agency, are a
major impetus behind this trend
Another is the governments pro-
motion of home renovation work
and electric appliance sales on its
/ own guaranteed-inStalment loans
A third factor is the entrance OF
commercial banks into the con-
/ sumer-credit field.
Shop Now
In fairness I should point out
4 that easy payment" plans are in
many instances a vast improve
ment over certain perviouS meth
odS. For instance, the l9-year in
4talment mortgage on new homes
Is Sounder real-eState financing
than the old three-year mortgage
whose renewal was uncertain
Also easy payments" are more
| conservative in some instances
than charge acCountS-partiCu-
larly those charge accounts which
are habitually SLOW" So long
as our national income is swell
ing. the volume Of inStalment to