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THE HONGKONG DAILY PRESS
THE FIVE LEADING BEERS ON THE MARKET.
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A trial is solicited.
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BOLE AGENTS:
GANDË, PRICE & CO., LTD.
HONGKONG.
IN TIME OF TROUBLE"
THINK OF
THE
STEAM
THE INSTALMENT PLAN.
RAPID INCREASE OF SALES.
·AMERICAN ANXIETY,
& well
TUESDAY, JUNE 8TH, 1926
41
stock of the movement. The critics of of goods, or nothing more than a current study the mortality of both manu unrestricted - instalment trading" are consumption of goods, know that people facturers and desiers in this industry, vigorous in their denunciations of it, have bought in 1925 all that they they may become less obsessed with the but it has no less stalwart defenders could afford to pay for, and nearly idea that automobile experience is a good- "Are we hürt 1" siked one of the isttar, | 85,000,000,000 more.
guide for others. a short time ago, in apparent scorn of
BUYING AND SAVING.
THE MOTOR-CAR INDUSTRY. There is nothing new to Americans the rising spirit of caution. "Or are
White there is not room here to go into
This reference to the automobile in- about buying on the instalment plan Thee scared!" Which it is, however, does many phases of the problem presanted dustry is a reminder that large-scale in- rusful description of its working, not seem to matter much. The main by the wide extension of instalment trad. stalment, dealing was really created by it. dollar down and a dollar a week for the thing to determine would appear to being, it is worth noticing that ordinary to afford an outlet for mass production. rest of your life," dates back to 13 years how much good and how much harm charge accounts in the shops and stores From the beginning motor cars were solk ago, as the very least, and even then instalment dealings do, and what are have not apparently been displaced to at wholesale for cash in advance of the
their proper limitations, if any. If "buying by instalment
any extent by instalment accounts. The delivery of the goods. For a long while,” established practice in the United States the opponents of instalment trading, the instalment buying had any plain in facturers strenuously objected to their
there is anything in the arguments of volume is as large as over. Nor has too, retailers ecld only for cash. Manu For many a grandmother of to-day whole welfare of the country is being fluence on savings. The curve of savings time went on it became plain that dealers. selling on the "instahnent plan. But as the strongest memory of her girlhood is jeopardized. by its uncontrolled expad deposits up to June 30th, 1995, showed could not handle the much bigger, output of monthly visits of the collector Torsion Instalment plan credit
Row no tendency to fatten out. However, the payments on the piano that rosewood amounts to 20 to 23 per cent. of the ardi-effect of instalment buying is shown, not their credit facilities. Nor were the of the factorics without an enlargement symbol of prosperity which was for nary floating or current credit in the in the period of baying but in the sub- years, in successive hands, to work havoc United States, according to a calculation sequent period of paying. with "The Maiden's Prayer." Fifty published in the Journal of the Ameri- It is argued that instalment buying years ago, too, they used to buy sewing caa Bankers' Association by Mr. George does violence to old teachings of thrift, apposition to retail selling on instalments. machines that way as well; and memoirs W. Norris, Governor of the Philadelphia that easy payments encourage the par- of Civil War generals and “The Holy Federal Reserve Bank. Obviously, then, Land Illustrated," in 12 parts, 4to.it is of moment that its relation to the And somewhat later on, there were stores structure of credit in general should be atarted for selling by instalments: But thoroughly understood, and, if necessary, Fit was not until a long while afterwards į brought under regulation..
that sales by instalment extended to many other commodities. The spread of the practice was slow enough-swift, indeed, only in comparison with the development of the system over the 2,000 years since Crassus sold houses on the instalment plan outside the walls of Rome.
So it was until a few years ago. And then, suddenly, instalment dealings 'developed vast proportions, became epidemic, pandemic. Now not less than five billion dollars' worth of merchandise
CRITICS OF THE SYSTEM.
Critics of instalment trading are gen erally agreed that it is comparatively harmless, and may even be beneficial when applied to commodities which have permanent or productive value, or when it does not interfere with savings in such forms. But there is a great deal of buying by instalments which has no such justi Beation. Moreover, it is argued, in stalment buying of many commodities is
in time it is bound to produce un- at the expense of other industries, and
balanced trade. This seems to be true of the buying of motor-cars, at least. If
ably, it certainly has had a damaging it has not affected anything else notice"
influence on. Tailors and clothing merchants complain the clothing industry bitterly that men and women alike, since
chase of unnecessary, goods or of un- necessarily expensive goods. Of that there can be little doubt. On the other hand, as one commentator points out, "it is the desire to have the things we want which stimulates the ambitions and energies of the people and constantly raises the standard of living." Instal ment buyers, however, pay high for what they get. To quote Mr. Norris again
Ita (instalment buying indebtedness) only security is a mortgage upon future carnings. It is not borrowed at a per cent., & per cent., or 6 per cent., but it is estimated that when it is handled through so-called credit corporations of which something like 1,400 have grown up in this country in recent years the interest charge approximates 20 per cent. This additional charge must be borne by someone. Either it comes out of dealers' else it is Borne by the consumer, in which profits which we know it does not or case the interest burden must be added to the cost of distribution, and therefore to the consumer's price.
position
ordinary commercial banks in a facturers were forced to give up their to fiance retail time sales. So the manu-
They had to go farther still; they had france companies. Some of those com- to help to organize special automobile. panies are to-day owned by motor vehicle manufacturers.
made by Mr. C. C. Hanch, general man- Last year, according to computations ager of the National Amociation of Finance Companies, the total retail value of cars and trucks sold was $4,100,000,000. Of this amount $3,100,000,000 represented
sales on the instalment plan. cash
The
LAUNDRY. a year is sold in the United States on partial payment terms: 85 to 90 per cent. of all, furniture, 80 per cent of all phonographs, 75 per cent. of all automobiles and washing machines, 63 per cent of all vacuum cleaners, 40 per cent. of all pianos, 25 per cent. of all jewelry, 13 per cent of all radio a motor-cara have become common, pay very ability to buy merchandise. Great in- per cent or less on new cars and 33 per
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'KEPLER
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paratus, and nobody knows - what multitude of things besides-more this year than a year ago, more this week than le, and no doubt more next week than this. You can buy-and under the
much less attention to their dress than
clothes. That is so true that clothing they did formerly, and so buy fewer dealers in their own defence are taking
ments, and other goods for 30 payments. The acknowledgments of indebtedness
down payments amounted to.. $1,000,000,000, and the total of paper outstanding at a given time, for now and used cars, was $1,500,000,000 The aver age note taken was payable in 18 monthly, instalments. The average loss ratio on an aggregate of $195,500,000, for which data are available, was less than one- both new and used cars. Assuming that fifth of 1 per cent, the paper covering 12 equal monthly payments and one-third down on new cars and 40 per cent.. on used cars constitute standard terms, there of special" paper. Paper calling for is now outstanding about 37 per cent.
15 per cent. of the total paper handled, more than 12 equal payments.constitutes and paper with a down payment of 23
campaigns to stimulate consumptive per cent. of the total paper handled. In says, have organized cent. or less on used cars makes up 101
and salaries are paid weekly or monthly, parently passed its peak, and both dealers capacity for over-production-to educate M. Hanch's opinion, the tendency to the public to the idea that because wages deviate from sound credit terms has ap- buying on the instalment plan is a and Enance companies are showing a 13 per cent of the total, which he regards.
special paper to
York Correspondent. as the maximum desirable.-Times New
Another critic observes, with some sales for a time; but every dollar acerbity, that instalment selling increases consumer pays for interest lessens bis dustries,
he
If, he says, these who talk much of what field through the use of this method will has been accomplished in the Automobile
GREEN ISLAND CEMENT CO., LTD.
impact of high-pressure salesmanship." up instalment selling of suits and over-logical, economical, and desirable course, disposition to reduce you often do buy a house on the instalare selling all sorts of apparel on defer coats; and even some department atores ment plan and furnish.it; you can get a red payments. A few of the stores go new roof for it, bave it painted, fit it ing still farther, have advertised that with a central heating system, fill your they will sell any of their merchandise, bins with coal and reconstruct your no matter what, on a system of weekly electric, lighting arrangements and your kitchen ranges-all on partial payment
or monthly payments. They will sell the contracts. Wearing a partly-paid-for
more perishable articles-those, for exam- suit, you stroll" across your instaliment
ple, which can hardly be made to secure plan lawn; and joined by your wife in chattel mortgage for 15 weekly pay- a fur coat or a smart "ensemble," in which she has a 20 per cent. equity, and by your easy payments," Airedale, you can set forth, if you like, in a splendid by the bank which finances & particular new motor-car-$500 of its 82,500 coat store. Then the customers pay off their store at a charge of 2 per cent to the paid to the regions of green fields and running brooks, with no more money in your pocket than 50 cents for ferry tolla. Punctures, break-downs? No need to worry about those. Read what it says on the hoardings here, thare, and everywhere: "Buy your tires for a dollar, down"; "Pay for your car repairs in six months or a year." This is not advice, but an invitation,
CHURCHES IN COMMON.
real
given by the customers are "accepted"?
obligations with weekly deposits. The Price they have had to pay for the goods thus bought is about 6 per cent, above the price to cash customers.
To get what they want buyers by in- stalment are mortgaging their future income. Is this a good or a bad thing 7 There is a great difference of opinion about it. From one point, of view it is decidedly bad. The great majority of The instalment plan has even, in a
those who buy on the instalment plan
way, reached out into religion. Around.
are people whose income is derived from many of the larger cities, most notably wages or salaries. Few of them have any New York, Chicago, St. Louis, andurance that they will continue to en- Pittsburg, high reats have driven many which they will be indebted. If there joy that income over the full period for persons to co-operative buying of apart should be a business depression, hun- ment houses in bear suburbs. "Here and dreds of thousada, perhaps millions, of there little communities of such apart them would be without funds to keep up ments have grown up. They house per their payments. The result would be a ple of many different denominations, but mass of frozen credit hardly to be match- denomination to make fesasible the ed the country's progress is 1920-21, building of a church for their own con- Then, as Governor Norris points out, if gregation. What often happens then is that the tenants of many denominations in 1923, to be paid for in 1926, that means 85,000,000,000 worth of goods were bought get together and build a church in com that the production and distribution of mon. Ironing-out of minor religions goods in the United States that year were differences, & tendency to create a stan sufficient to provide for the normal pur dardized religion-this is the result; chases of the year, and also to provide by-product, so to speak, of buying by for 85,000,000,000 worth of goods that instalment.
under former conditions would not have been produced and marketed until 1926.)
Mr. Norris says
COD LIVER OIL with MALT EXTRACT usually there are too tow of any one ed by even the frozen credit that paralys
"Fortifies the
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Increases
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Reduced facsimila
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All Rights Resermál
It is coming to a pass, now, where one will be able to bun almost any thing in the United States on part pay menta. Or, to speak more accurately,
In other words, 1925 has borrowed
it was coming to that until a few months 35,000,000,000 worth of business from ago. Then there was a reaction of a 1926 and assuming that it is already 30 kind. It did not, to be sure, stop the per cent paid for is going to absorb extension of the system, but it caused probably 83,500,000,000, or 5 per cent., it to slow down. It is hard to say just of the national income of 1928 to pay when the country as a whole began to for it. If this performance can be re- show anxiety, for there were always peated in 1926, all will be well, but it good many questioners of the wisdom of manifestly makes the whole situation less unregulated instalment dealings, but sound. The manufacturers and there can be no doubt that it is thorough merchants of the country, instead of ly awake now to the necessity of taking knowing that there is either a chortage
Best Portland Cement.
SHEWAN, TOMES & CO.
GENERAL MANAGERS,
HONGKONG.
Established 1914
Kelvinator
Electric Refrigeration
KELVINATOR supplies perfect automatic refrigera
tion to every home which has electric wiring, KELVINATOR maintains a constant dry cold, thus doing away with the messy drippings of melting ice and preventing the decay of food and thẹ growth of harmful bacteria.
KELVINATOR supplies the home with all the ice needed, made in any size, and makes possible all those little frozen luxuries that help to make "Hongkong tolerable in the Summer.
THERE IS
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CALL AT OUR OFFICE FOR A DEMONSTRATION.
Sole Agents for Hongkong & S. China: HOLYOAK, MASSEY & CO, LTD. OF BHOW AT
Messrs Lane, Crawford's,
The Hongkong Electric's Showrooms, The Hongkong and China Gas Co's Showrooms, AND KOWLOONAT
The China Light and Power Coʻs Showrooms. [ARE]
2017
11