Evening star., 1947-10-12
Continued High Price!
Feared After End Of
Insta||ment Curbs
By the Assoe;oied Pres,


Government economists expressed
fear yesterday that present level
prices will be kept up by expiration
Of controls over installment credit
terms November /.
The controls, in effect for six
years, now requires q one-third
down payment and full payment
within Is months on installment
purchases of automobiles, refrigera-
tors. washing machines and other
costly household appliances.
Some economists said that when
dealers are free to lessen the down
payment and lengthen the INSTALL
ment term, they are likely to do
Just that rather than mark down
prices when the demand for their
goods falls below supplies on hand.
Price Propping Seen.
Competition, the economist said,
will then center around who'll pro-
vide the easiest or most painless
down payment and monthly pay
ments instead of on prices, thus
tending to bolster the latter artific-
tally.
But they conjected that price
propping of that kind would last
only temporarily and If prices held
beyond installment buyers ability to
pay, the dealers would get caught
with severe losses in the end and
be forced to widescale repossessions
Events of that kind tend to induce
similar repercussions on the whole
economy. they added
The economists said they did not
expect any dire developments of
that kind to flow quickly from the
ending of credit controls three weeks
from now. Only when supplies be-
come plentiful in relation to demand
would anything be expectable.
The automotive field will be
watched closely by the economists
because new cars are In heavy de-
mand despite recent price increases
and most used cars are still bring
ing high prices.
They look for q weakening of
used-car prices as new cars become
increasingly available. but expressed
belief the decline may be STAYED off
by dealers relaxation of installment
credit terms for the older autos.
Both Government and private
business analysts have forecast that
the end of controls will mean an
easing Of credit terms, but mostly
they steer shy of predicting how
much effect it will have on the
amount of credit outstanding in the
near future. =
The volume Of installment credit
has jumped sharply since wars end,
rising by $2,030,000,O00 in the last
year alone to total of SIS, 1876 600 600.
Higher incomes, higher prices and
increasing availability Of goods would
carry the volume in a relatively
short time above the $4,000, ,00o, ,00C
record established in q precontrol
days even if controls remained in
effect, they say.
Firthefmore. they assert. an In
crease of installment credit to up
wards of $4,000, 900 900 would not be
out of line with the prewar relation
ship it bore to the national income
level.
Nevertheless, fear over additions to
present irflationary pressures have
led Mariner S. Eccles, Federal Re-
serve Board chairman. and Preston
Delano, controller of the currency,
to suggest that bank supervisors
keep a close watch on installment
lending.
Private lending and selling asso-
Citations, including the American
Bankers Association, have urged
conservative credit practices when
the controls go off, stressing reten-
ton of large down payment require
ments even where the repayment
time is extended.
The bankers association suggested
this schedule of terms:
New cars, one-third down and "a
months to pay; 1916 or later used
models ,one-third and 18 months;
1940- -through-1942 models, 40 per
cent and Is months; refrigerators,
ranges, ETC., 20 per cent and So
months; radios and monographs, Is
ner cent and ~ months