Evening star., 1947-08-08
Possibility Of Abuse
|0f InsfaI|menf Sales
Is Worrying Bankers
By the Assoeiafsd Press

NEW YORK, Aug. 8.-Rapidly ex-
panding installment buying, and the
end of all retail credit restrictions
November /, brought warnings this
week from the Nations bankers.
They are worried over possible abuse
of credit facilities.
"The days of a dollar down and a
dollar a week should not return" /"
Carl M. Flora, chairman of the
Consumer Credit Committee of the
American Bankers Association, said,
Excessive debt should not be
made attractive and merchandised
In easy payments"
Mr.. Flora's statement was made
as stores advertised the familiar
prewar 81 down-50 cents weekly"
for $25 watches and $50 down-$6
weekly" for $500 diamond rings.
"Up to Is Months to Pay"
Radios "A rarity Immediately
after VI Dsy-are on the market
now on terms as low as IS down.
up to IS months to pay"
The limit Of Is months to nav is
the uniform maturity prescribed by
the Federal Reserve Board under
the powers authorized by the ia
nous regulation w." Those powers
will expire on November 1 unless
sooner vacated by the President.
Many bankers are frankly worried
over the possibility that the easy
payment plan" may blossom as
rankly as 1t did in the boom-bust
days Of 1929.
The Federal Reserve Board be-
lteves the amount of consumer credit
outstanding should be under Gov
ernment regulation. Mariner s.
Eccles, board chairman, explained
this view recently to the Banking
and Currency Committees of the
Senate and House, when he said on
June 10:
Notwithstanding continued short
ages Of goods, particularly durable
goods, and Notwithstanding regula-
ton Of consumer credit, installment
credit expanded during the past IL
months by more than $4,000, 900, 900.
Prolonged Imitation Seen.
The economic effect of adding
borrowed dollars to current income,
together with the unprecedentedly
large volume Of savings in the hands
Of the public generally, can only be
to prolong the period OF inflated
prices"
Some bankers undoubtedly agree
with Mr.. Eccles' views on restric-
tions. Others believe restrictions
should be lifted and the banking
industry allowed to do its own police
work. A majority on both sides ap-
parently shares the view that certain
dangers are inherent In too free use
of credit.
The National Association of
Manufacturers, while outlining
some benefits to be derived from
consumer credit, has also said:
There are many abuses in the
use Of such credit.
High pressure sales by means of
such credit are undesirable both
from the point Of view of the indi-
vidual consumer and that of the
consumer as q whole"
Total Exceeds 10 Billions,
The latest report of the Federal
Reserve System shows total con-
sumner credit at the unprecedented
high Of SO 1884 ,000, 900 as of June 80.
Since the wars end the total has
expanded by leaps and bounds and
has already surpassed the pre-war
peak Of SO, ,1o7, ,o0o, 900 In September
194l.
Many observers believe that the
total is still within manageable
bounds. Comparisons with pre-war
days, they point out, should take
into consideration the great increase
in National income and population
and the high rate Of savings which
has accompanied increased borrow
ing.
Most agree, too, that further ex-
pansion should be carefully watched.