Finance Companies' Part In Economy Discussed

Press, Volume C, Issue 29488, 14 April 1961, Page 20

Finance Companies' Part In Economy Discussed

The part finance companies played in the economy of the country was discussed by Mr J. K. Burtt when he addressed a meeting of the Christchurch Accountant Students’ Society yesterday. It was not so long ago that people buying goods on hire purchase were looked on as lower than the dust, he said, though those who frowned on them were probably buying a house on terms. Those who bought goods on hire purchase enjoyed the use of them and were compulsorily saving something on an asset. He was speaking of capital goods and not consumables, said Mr Burtt. He was not sure that people realised what hire purchase did in maintaining a steady economy and keeping goods at a reasonable price. A lower unit cost of such goods as home appliances, was a result of the greater sales, mainly caused by hire purchase.

Finance companies were in the spotlight mainly because of the popular conception that that was the way to make money. Mr Burtt spoke of the different types of finance companies. What most people understood as a finance company was one formed to finance the sale of a chattel. motor-cars and home appliances being generally thought of in that term.

Mr Burtt dealt with hirepurchase agreements and other forms of agreement covering the transfer of sale and purchase of goods. “I would hate you to think it is easy for finance companies. They are subject, to terrific controls,’ ’ he said. He gave instances of these controls and referred to “the multiplicity of companies formed each with a capital of £10,000.” In New Zealand, banks did not go into finance company business because they were restricted in their funds.

The dividends paid by finance companies did not compare favourably with those paid by trading concerns. It was a common fallacy that the interest rates charged by finance companies were exorbitant. The interest rate was probably wrongly named for it was really a charge for all its services, said Mr Burtt.