HIRE-PURCHASE.

Auckland Star, Volume LXI, Issue 195, 19 August 1930, Page 5

HIRE-PURCHASE.

DEFENCE OF SYSTEM.

"BENEFIT TO INDUSTRY."

The advantages and disadvantages of ■the hire-purchase system were discussed at a meeting of the. Auckland Advertising Club this afternoon. Mr. W. T. Taine presided.

Considerable anxiety had been aroused ■by the spread of the system, eaid Mr. Taine, Avho opened the discussion. Its effect was to purvey unnecessary goods at a high rate of profit, on what was known as a system of "easy payments." But in reality an extortionate rate of interest was*levied to meet expenses. He thought the system was a trap to the unwary purchaser. Criticism levelled against the system was not substantiated by fact, said Mr. E. A. Laidlaw. He quoted figures to show that business could be run more cheaply on hire-purchase than on the "cash and carry" method, provided the administration was efficient. By extending credit 'to the- consumer the system had stimulated quantity production and caused a general lowering of prices. Costs were thus reduced for the cash buyer as well as for the hire-purchascr.

The consumer was entitled to credit as much as • the manufacturer. Hirepurchase, however, involved much more careful investigation than the old. "open" system. It did not encourage extravagance, but induced the consumer to budget liis income and purchase durable goods. Mr. Laidlaw quoted facts to show tliat' the hire-purchase sale of motor cars was not responsible for depression. Further extension of credit was rather necessary to stimulate industry. Dr. E., P. Ncale pointed out that many usual criticisms were not against 'the system itself, but against faulty administration. The extra, charges made were not wholly interest rates, but were levied to cover book-keeping expenses. Properly administrated, the system was undoubtedly ■beneficial to manufacturer, merchant and consumer.

Mr. P. Free and Mr. G. Campbell also spoke.