NEED FOR CONTROL

Dominion, Volume 22, Issue 263, 2 August 1929, Page 13

NEED FOR CONTROL

CASH ORDER SYSTEM COMMISSION’S FINDINGS IMPORTANT PROPOSALS The need for confining the activities of the cash order system within such limits as will be of most benefit to the general public was stressed in the report on the investigatoin of the system, presented in the House of Representatives yesterday by the Minister of Industries and Commence (Hon. J. G. Cobbe). The report stat A that control by the State was necessary, and a proper control could only be made fully effective by law. It will be recalled that the Commission of Inquiry, which consisted of the Minister and the Secretary of the Department of Industries and Commerce (Mr. J. AV. Collins) heard evidence in the four centres from representatives of trade organisations, principals of cash order trading companies, retailers, and householders. The report of the commission stated that the cash-order system had been in operation In. New Zealand for at least thirty-three years, but except for the last two years had not shown any marked tendency to increase. The system had grown most rapidly in certain States of Australia. Whilst not so deep-rooted and far-reaching in New Zealand, it was undoubted that in Auckland the system had shown great strides during the past year, but the steady resistance of an influential section of the retailers in Wellington, Christchurch, and Dunedin had cheeked its development. The majority of the general public was unaware of the manner in which the system was conducted. and but for the publicity arising out of the inquiry would probably have remained ignorant of its purpose and ramifications. Considerable concern had been expressed by many retailers at the proposal to establish companies conducted on the same lines as those in the Commoirwealth. with a view to popularising and spreading the system throughout the chief and secondary towns of New Zealand. Extent of Operations. Dealing with the present position of companies and individuals engaged in the business of granting credit by cash orders, the commission found that in New Zealand thore were ten companies established—five of which were located in Auckland—and about twenty proprietary concerns. Some of these latter, especially in Dunedin and Wellington, did quite a substantial business. As to turnover, it was difficult to obtain definite figures, but approximately the value of orders in 1928 issued in Auckland totalled £140,000; in Wellington, £120,000: Christchurch, £15.000; and in Dunedin. £14,000: a total of £259.000. The report stated that the commission confessed that it was faced with considerable difficulty in making its recommendations, because the mass of evidence tendered by witnesses was either strongly in favour of the system or, on the other hand, was just as strongly against it. Therefore, to arrive at definite recommendations, the commission asked the following questions. the answers to which embodied its views:—

Is the system so general in New Zealand as to constitute an undesirable form of credit?— lt has not yet reached such a stage, but in Auckland if it remains unchecked it is likely to reach such dimensions as to raise tbe cost of living generally. There is a danger also of the system spreading in the other centres and towns unless some control is exercised. Is the system of benefit to the working classes?—To a limited extent, yes. This form of credit is no doubt of assistance to workers in casual employment, and not in receipt of regular wages. We are definitely of the opinion, however, that the beneficial scope for this class of credit is limited, and that it is probably one of the most expensive forms of credit of which the worker could avail himself. Is the system conducted on a basis that

is fair to clients and to retailers?—As conducted by a few firms in its present limited application, particularly in the South Island, it imposes no great hardship on clients or on traders. Does the system act disadvantageously to the genuine cr.sh buyer?—Generally, yes. Very little recognition, we regret to say, is given by traders to those tendering cash. The evidence stresses most markedly that those possessing cash orders receive on the whole equal treatment to those paying actual money. Of 147 traders approached on the question as to whether a cash customer was allowed any discount. 74 answered “no,” 33 answered “yes” (they did not state the amount of the discount), five gave 24 per cent., six 3} per cent., and twenty-nine 5 per cent. This in effect shows that over 50 per cent, of the traders consulted did not allow any discount for cash, whereas to cash order firms a discount of 124 per cent, was generally given. If the system became more general, would it increase the cost of living?—Emphatically, yes. The consensus of thoughtful opinion supported this view, and traders who warmly support the system were of the opinion that if over 5 per cent, or 10 per cent, of the turnover were done in cash orders, prices would need to be revised upward. Are the methods of securing business by the cash-order traders open to question?—Despite the conflict of evidence on this point, we are of opinion that the methods practised by the majority of those issuing cash orders are most undesirable, particularly in the collection of instalments at people’s homes, at the doors of factories and offices, and the securing of custom by canvassing, and the signing of the orders by housewives surreptitiously. In this connection we had evidence from a reliable witness employed as a collector on behalf of one of the companies stating that his visit to make the collections had to be made very discreetly and secretly. The instalment cards were hidden in secret corners, apparently out of sight of husbands and other occupants of the house. He was promised a definite round of two hundred customers providing he could, within a fortnight, increase the clientele to five hundred by canvassing. Another undesirable feature, and one to be strongly condemned, is the issue of booklets oi pamphlets, often cleverly illustrated and worded so as to appeal" to the more ignorant and careless sections of the community. Reliable evidence was given that in several eases where there was delay in payment of instalments housewives were threatened by the collectors that the transactions "would be divulged to their husbands. In one instance a women had taken out two orders practically at the same time, each of £5. from two separate eash-order companies, and had given a false name in one instance. On finding difficulty in meeting the payments each had threatened disclosure tc her husband. She then appealed in great distress to a friend, who paid up both balances due, and produced the receipts for our inspection. Does the System Encourage Extravagant Buying?— The sj-stem certainly has that tendency, but the weight of evidence shows that those possessing the orders were discriminating buyers. In cases, however, where the full order was not expended, the balance of the money was frequently wasted on goods other than necessities. Is it Desirable that the System Should be Controlled by Legislation?—We believe that control by the State is necessary. and are further of the opinion that in the public interest legislation is necessary, and that proper control can only be made fully effective by law. Unfortunately the system has burst the narrow limits where little or no harm could have been done to the general public, and it is now necessary to discipline it in such a way as to put it on a fair basis. With this end in view we have to. recommend that the Government favourably consider the following proposals : — (1) That the charge to clients should not exceed 6d. in the pound sterling. (2) That the trade and cash discounts allowed by retailers accepting the orders should not exceed 10 per cent. (3) That canvassing for orders should be prohibited. (4) That po mail-order propaganda be allowed. (5) That the cash-orders be open to any firm willing to accept them, and not limited to one firin or individual. (6) That all orders should be issuable from a registered office only. (7) That no orders shall be issued to persons under the age of 21, or to married women, without the consent in writing of their husbands. (8) That no order be issued to any person who has not completed payment of any previous order. Three Montlis’ Notice Commenting briefly on the recommendations, the Commission suggested that three months’ notice be given to the cash-order companies and individuals to express their willingness or otherwise to conform to the preceding proposals. If acquiescence was shqwn then it should be stated that the Government would not proceed with legislation. Such notifications should be made to the Department of Industries and Commerce within three months of the publication of the report. Failure to send notification would be taken as an indication of refusal to comply. It was further suggested that the secretary of the Department should report the result to the Government durin the approaching session of Parliament. “We desire to place on record our aporeciation of the manner in which the evidence was tendered to us. and for the help given which enabled us to complete the inquiry within about six weeks from the date of its Opening.” concluded the report. “There was no failure on the part of anv section to disclose information. ... even that of a confidential nature was freolv given. We should also like to observe that the witnesses had generally prepared their cases in a very able manner. and that we did not lack any information in order to enable us to come to our findings." The Prime Minister (Kt. Hon. Sir Joseph Ward) stated that the House would be given an opportunity to discuss, the report after the debate on the Budget.