Evening star., 1948-08-08

vi liIdypC yoOl WAC 40 SoAAAPAOAA
ing about that worn-out hant
wringer washer and wants one o
those new automatic types, the ons
they advertise by showing the house
wife sitting calmly by smoking 6
cigarette while the laundry whirls
itself white behind the glass door
Credit Scars on Graph
You decide why not? Everybody
else is and, besides, that salesman
said you need put up only $2l 50
cash to buy the de luxe model. You
can have 18 months to pay of the
balance of the $2l995 sales price
Why that's only about 50 week
You can get the new radio-phono-
graph, too!
That's the kind of thinking that's
been going on in lot of American
homes the past year, a year that
has seen many Of the wartime -pur-
chased Savings Bonds cashed in and
few new ones bought.
In this past year, June to June,
the total of installment credit. the
name for this kind Of time-payment
purchasing, jumped some $4,000, 900,
600, or about Is per cent more than
the increase Of the previous year
On the graph, this credit has been
soaring up the same way as the
cost of living.
Public Sets Record
Normally the Nation can take a
big dose OF such installment credit
the bankers and economists agree
But, as Gov. r. M. Evans of the
Federal Reserve Board told the
House Banking Committee last
week:
During the three years that
have elapsed since VI day, the
American public has gone into debt
more rapidly than In any other
period in our history"
This has a double meaning: Saw
tngs have been used up and higher
prices make impossible all cash
payments for the bigger items peo-
pie buy, such as the washing
machine, and lot Of people are
getting in over their heads and
are going to be trapped If the ex-
pected toboggan in prices finally
arrives.
Right after the war. families with
an income OF over 5000 a year
we're living on their wages and
salaries. Prices were such that a
family could get by at the figure.
Those with less began using up
their wartime savings.
Credit Terms Relaxed
But in the last two years of
spiraling prices. which have meant
more of the family dollar tnan ever
must go for food, families in the
higher brackets have started
spending beyond their incomes. A
recent survey showed that families
with incomes up to $1,000, or even
$500, q year have fallen into this
practice. Last year, the survey
showed, q fourth of all American
families were spending more than
they earned.
Prices have been one reason. But
another is the increasing supply
of the so-called durable goods and
the easier credit terms on which
they can now be purchased. Only
the automobile is really in short
supply today. You can buy almost
anything else-even house-at a
price without going into gray or
. black market.
AS production has increased,
credit terms have been relaxed and
the papers have been full Of ad-
vertisements, including some Of the
prewar mo money down" variety.
Production Blamed
During the war when the So
called Regulation w" was N effect
1t took a one-third down payment
to buy. most Of the big consumer
goods such as automobiles, stoves,
dish washers, ironers, refrigerators,
washing machines, air conditioners,
radios. monographs. sewing ma
chimes, vacuum cleaners and house
furnishings.
Now, it appears, the one-third-
down rule is about to 60 back into
effect on many of these products.
The exact number and types of
products and the per cent that must
be paid in cash will depend on the
Federal Reserve Board, which is
given power under the new Repub-
lican anti-inf1ation bill to set the
figures.
The higher down payment and
6llldlleI HuLlUtI VI AOIlliiS OFc1
which nstsllments can be paid may
result in unemployment, could even
lead to the much-feared deflation
or-to use the horrid word-de-
preston.
For, as Mr.. Evans made clear to
the House committee, the reason
these goods are now being offered
at so little cash down is production
that very production which so many
people have been claiming Is the
only answer to imitation. For with
production comes competition be-
tween sellers.
Competition Big Factor
Competition has been the pri-
mary factor" said Mr.. Evans, lead
ing to lower down payments and
longer maturities: when one i'm
portant retail outlet in commu-
nifty relaxed terms, other stores soon
felt that it was necessary to follow.
The competition can only come
about when the stores have plenty
of things to sell and have to fight
to bring in the buyers.