GASH ORDER SYSTEM

Evening Star, Issue 20117, 6 March 1929, Page 3

GASH ORDER SYSTEM

HOW IT OPERATES [Per United Press Association.] WELLINGTON, March 5. Further evidence was heard by the Minister of Industries and Commerce (the lion. Mr J. G. Cobbo) to-day in connection with the Government inquiry into the cash-order trading system," certain features of which are alleged to be uneconomic and socially undesirable. About a dozen witnesses representative of business interests have already been heard, a summary of their evidence being released for publication to-night. The first witness said that he had conducted a cash-order company o'er a period of eighteen months, that it possessed a capital of £3,500, and that there were ten shareholders. His company had dealings with fifty-five trading concerns, mainly drapers, tailors, ironmongers, furnishers, and boot and shoo dealers. Recently dentists and opticians had been added. The traders included most of the leading firms in each section. His company satisfied itself as to the ability of the applicants to pay the instalments and carry _out the contract. For an order of £5 a charge of os for the service was paid, and the principal was repaid at the rate of Is in the £ every week for a period of twenty weeks, so that the total received from the applicant was £5 ss. No canvassing was done for those orders, the worthiness of an applicant being judged largely by the references obtained and information which was secured by the company confidentially. Advertising to a very limited extent was indulged in. The company was getting as much business as it could handle without advertising. The first year's trading had resulted _m a not loss, due to wrong policy and insufficient knowledge of the local tei ntorv. A good many bad debts were contracted and the manager accepted personal responsibility for the loss. Two men were employed in checking over applications and estimating the reliability of prospective clients and collecting instalments due. In the general course the clients came into the office and paid the instalments regularly, 80 per cent, to 85 per cent, of the amounts due being paid in this way. For the last half-year the firm had shown a small net profit. The witness produced definite evidence to show that the recipients of orders received ordinary marked cash prices—in fact, the traders were under a signed agreement to give the best terms. It was stated that the virtues of tire system were that it enabled clients to purchase thenneeds just when they wanted them instead of having to wait and thereby inconvenience themselves until they had saved sufficient money to make a cash purchase. The traders invariably allowed a discount of 12* p3r cent, on the order to the cash-order trading company, but in some cases 15 per cent., plus 5 per cent., was paid. No orders were issued unless the company was satisfied that the contract would be fully kept. The next witness, a loading draper, stated that he was accepting orders from four cash-order firms. These were individual traders. Ho had refused to deal with companies. His drapery firm paid 12* per cent, to the people issning the cash orders, and his turnover in the system averaged over £IO,OOO par year. The system enabled him to avoid bad debts and saved considerable sums in advertising. He looked upon it as an overhead charge. He was strongly in favour of the system if it was properly conducted, and considered that the rates barged on the orders —namely. 5s for £s—were yory reasonable. He had been trading

iii the business for ten years, and had never had a bad account. The system was growing, and was favoured by his customers. The people possessing the orders usually bought ordinary household articles, and were very careful in their buying. Xho third witness, a clothier in a large way of business, expressed himself as strongly against the cash-order system. As the cash-order companies required him to give per cent, on all the orders cashed in his shop ho felt that it was too great a discount to give considering the cheapness of his prices. He felt that he was forced to accept the ciders, because his competitors did so. The fourth witness had conducted an extensive cash-order business over a period of fourteen years, and his turnover had now reached considerable dimensions. He did not advertise or canvass for these orders. The business had simply grown from a small beginning to its present large dimensions by one client recommending another. Eighty per cent, of his clients were married women, who signed the orders with the consent of their husbands. No orders were given to persons under twenty-one years of age, and no tra payment over the 5s for service was charged to those in arrears. Generally the witness claimed that the orders were of great benefit to the poorer classes, and that the money was spent wisely. The Commission will leave to-mor-row for Christchurch, where it will sit on Thursday and Friday.