PRODUCE AND MARKET REPORTS FROM DAY TO DAY

Evening Post, Volume CXIII, Issue 112, 14 May 1927, Page 11

PRODUCE AND MARKET REPORTS FROM DAY TO DAY

HIRE PURCHASE

MAKING OF PROPERTY. OWNERS

"Evening Post," 14th May. JMuch has been said against the hire-pur-chase system-, especially as applied to motor-cars. At the moment bankers in New Zealand are. taking a far from sympathetic interest in this class of-business. There, ia, however, something to be said for it, but very much depends upon the nature of the article* the ability of the prospective purchaser to pay for it, and the terms of purchase. The system has long been applied to pianofortes and other musical instruments, house furniture, sewing machines, agricultural implements, and machinery, typewriters, and other articles. But of recent years it lias been extended to motor vehicles, especially in the United States. Some of these vehicle* have been for strictly business purposes, others solely for pleasure. The motor trade of the United States, and subsequently that pi other countries, found that selling faci-' hties of the hire-purchase character were absolutely necessary if the business was to successfully expand. Eventually some colour was given to the current saying in the United States that "anybody with ten cents can get an automobile." Prof. I : I. Selignian, of the Columbia University, in a recent address to the Academy of Political Science of New York, dealt with the motor-car aspect of hire-purchase business. He perceived in it. an incentive to work and save; a means of turning idle hours into energy; and created a sense of property-owning which in itself made for a stabilised society.

.AMERICAN EXPERIENCE. ."In America (the professor said) the gale of, motor vehicles on credit has assumed greater proportipns than any. other country in the world, and the "experiences there are an excellent guide for the expressions of opinion elsewhere. The losses which have occurred by credit-giving companies are remarkably low. During the years 1922, 1923, and 1924, one company purchased consumers' obligations aggregating 278,223,000 dollars. All of these have been paid except 238,073 dollars, representing bad debt losses. This loss is under one-twelfth oM.percent; It is true that these cover three years of prosperity, but few banks lending money for producers' credit can point to as good a loss record for the jams period. The 1925 and 1926 figures are not included because the statistics arc-not yet completed, but the credit losses to date on 444,573,000 dollars of consumers' obligations purchased from Ist January, 1925, to. Ist October, 1926, aggregate 135,322 dollars, or about one-thirtieth of 1 per cent. ■ V "A man may be accustomed tc spend »U he gets and have nothing to chow for it; he enters into, an instalment contract^ and still spending all he gets, he now has something to show for it. This'convert* him into, a property-owner* and as a property-owner he feels a new kind of self-respect, and he also finds himself hungry for more property. MOTOR? AND MORTGAGES. "That the purchase..of motor vehicles on credit does not decrease accumulations of saving is proved by the fact that life insurance in force; 'in the United States of America has increased from 42,330,000,» 000 dollars in 1920 to, 72,000,000,000 dollar* .in 1925, while our savings bank deposits have not alone doubled in the last seven years, but to-day represent 49% per cent of the total banking power of the country as against 49 per cent, ten years ago. "Although 75 per cent, of the cars sold in the United States are sold on the basis of.consumers' credits/ the fact is frequently overlooked that consumers'income has been quite sufficient to"-enable them. to meet their payments,' and' that at least four-fifths of all the cars now in use have been fully paid. Thu*. the cara which are in process of being paid for at present out of current income represent not more than one-fifth of the country's total cars, i and these are more than half paid for. . . Consumption requires production, production requires work, work demands wages, wages mean consumption,; and so the circle of prosperity is completed—the motor is work, and the motive power:, a willingness to work. There are few, i£ aiiy, successful men who have progressed without assuming some debt or responsibility which resulted in the incentive to work and accomplishment."