Hire Purchase and Trade

Dominion, Volume 23, Issue 257, 26 July 1930, Page 21

Hire Purchase and Trade

4 4 year no fewer than 265 persons were placed in I prisons in Scotland for debt at the instance of hire-purchase B 0 firms” (says the “Scotsman”). “During the first quarter of H the present year the number was 25, which gives a much smaller proportion, so that it would seem that people are learning their lesson. One of these unfortunates in 1929 was kept in prison for no fewer than 119. days; the longest period of imprisonment during the present year has been 24 days. “There are two applications of the hire-purchase idea which are sound. The man who buys his house on instalments is putting his money into a durable asset, and he will derive both pleasure and satisfaction from the sense of ownership, even though, on a narrow computation of profit and loss, it may not be a paying proposition to own one’s house. “Similarly, the man who buys a life insurance policy by paying annual premiums is making a good investment. If he cannot keep up the annual payment, he has still a marketable asset, for the insurance company will always give him the surrender value of his policy. But when we get

into the region of perishable commodities, the economics and ethics of hirepurchase become a little more involved. “It has been represented that hire-purchase Is thrift. It is, of course, nothing of the kind. Thrift represents deferred enjoyment; hire-purchase is immediate enjoyment. Hire-purchase is not thrift, but spending, and it is spending on the basis of, an income that has not been earned, and may never be earned. In times of industrial and commercial prosperity, the risk in hire-purchase may not be obtrusive. “When prices and wages are rising, the man who buys on the instalment, system wins. When, on the other band, wages “nd prices are falling, he loses; and if, as the result of industrial depression, he is thrown out of work, he may be unable to meet his instalments when they fall due, and so forfeit the goods which have never been actually his, but have remained (he properly of the hire-purchasing firm. “He may even be involved in financial disaster in an effort to fulfil a contract into which he had entered on the faith of his financial condition remaining the same as at the date of the contract..