Evening star., 1948-08-20
New Credit Controls
Effective Sept. 70 on
Consumer Purchases
By Chalmers IA. Roberts

{ q
brake on consumer credit, effec-
tive a month from today, but it
Is far from certain what effect
the new move will have on in
flation in general or the high
cost of living in particular.
The new rules, taking effect Sep
tember 20, will require a 20 per
cent down payment on the major
home appliances such as refrisera-
tors and on furniture and q third
down on automobiles.
Announced last night by the Fed
eral Reserve Board, the consumer
credit controls were considerably
less stringent than those in effect
during the war when everything
under controls except furniture re-
quired a third down. The board
appeared today to be moving back
into the credit control field cau-
tiously in order not to cause any
violent reaction which might upset
the Nations economy.
Items Under $50 Not Affected.
The new regulations were ordered
under authority of the Republican
anti-inflation bill passed at the spe-
cial session of Congress and signed
by President Truman this week.
The credit control was the only
point in the Truman anti-infiation
program which Congress approved
as he had asked for it.
| ThA nouy r,y1o roN,,{roe o0B -,
cent down payment on automobiles
and 20 per cent down payment on
the following items: Cooking stoves
diShwaShers. ironers, refrigerators,
washing machines, combination
units of any of these items, room
unit air conditioners, radio and
television sets ana monographs,
suction cleaners and furniture and
soft-surface floor coverings such as
rugs.
There are no controls on items,
such as small radios. costing $50 or
less. Controls over all items listed
costing more than $50 and up to
5000.
Top Limit Raised to 5000.
Where the cost Is subject to
control and does not exceed $1,000,
the buyer will have up TO and in
cluding Is months to pay the in
stallments. For. items costing above
81 900 and up to 5000, the buyer
will have 18 months to pay. In this
latter category, however, monthly
payments must not be less than $40
The old wartime top limit of items
under control was $1,000, but the
soaring price of automobiles led the
board to raise the figure to 5000.
The ordinary charge account at a
store is not affected by the new
rules, although the Reserve Board
has authority to impose controls on
this type of consumer credit as well
Personal loans. the kind repayable
in monthly installments, are subject
to the new controls as to time limits.
Single payment loans and loans on
houses are not affected.
Known as Regulation w.
The new controls will be known
as Regulation w." as we're the war;
time controls which ended last No.
vember l.
y A board spokesman said it is pos
sible the new controls may bring
lower prices on some Of the items
affected. This may result, he indi-
Gated, because sellers will have to
shift from competing with each
other by offering easier credit terms
to competing by offering lower
prices.
However. the advertising manager
Of one large Washington chain now
selling appliances for 10 per cent
down. said ne did not expect any
price changes as result of the
new rules. He said the holiday pick
up In business in the fall may be
enough to counteract any loss caused
by the higher down payment re-
quirements. He added he favors
the new rules because they put the
dealer in healthier position"
Bank Reserve Unaffected.
The Reserve Board spokesman also
said that the board has no imme-
diate plans to put into effect the
other power granted 1t by Congress
the right to raise bank reserve
requirements. The authority granted
was less, however. than the amount
asked by President Truman.
The board, in ordering the new
controls, said terms now offered
buyers by merchants and lenders
extending credit have been relaxed
considerably. The rquirements Of
the new regulations are somewhat
less restrictive than those of last
November, but considerably tighter
than terms now in effect"
The boards statement said that
it was considering the advisability
Of an amendment" to bring INSTALL
ment credit for home improvements
: under control.
The new credit rules provide
fines for criminal violation Of the
rules Of up to $4,000 and a 10-year
jail penalty or both. The regula-
tion also is enforceable by court in
junction.
Exempt from the credit controls
are medical, dental, hospital, edu-
cational and funeral expenses; credit
for the purchase of stocks and
bonds; loans to pay for fire and
casualty insurance; business or agri-
cultural loans; credit to dealers and
Salesmen and other religious, chari-
liable or educational institutions,
and any credit under the Govern
ment's rehabilitation and readjust-
ment programs.
Also exempted are such things
as jewelry, silverware, pianos and
other musical instruments, all of
which were under wartime credit