TERMS OF CREDIT.

Otago Daily Times, Issue 10899, 4 September 1897, Page 2

TERMS OF CREDIT.

'■'■', [Communicated.] . j The question of credit given to, or rather, taken by, the public from, the retail trader is now under consideration by the Retailers" Association, and not without reason. It must be obvious that; any extension of terms ■of credit beyond the limit granted from. the ; wholesale merchant to the trader must be paid j for by the latter at current rates of interest, ; and yet ibis found "that'persons'dealing with'; the shopkeeper think nothing of taking from six to 12'm6otbs< credit, and feel aggrieved if j asked for a settlement at the end of that time, i It has bsen pointed out that direatly the -retailer.extends to his.cusfcomers a longer period : of credit'than that which,he himself receives he actually out of' pocket for interest for every day .of such extension—a fact of which many : appear to be ignorant. An extended credit of "six months beyond trade limits meacs 5 per cent, out of the profits, reckoning interest; at •tbo ,rate of 10 per cent.,per annum, and in j some rare instances such credit, is taken A as actually, absorbs the .whole of the prpfita'.,,.-'We .understand that the. Retailors' •Association has affirmed 'the principle' that, ithree. months,-'.ate' long enough for ' the" retail trader to lie out of his money, and as 'any further term means a loss to him those' ■taking longer to settle should be charged reasonable interest for the accofnmodiitiba. There can be nothing-unfair in this, since the majority of persons seeking credit are paid at stated intervals, and therefore know exactly what their income is, and ought not to run into., debt beyond their powers of settling. There may be some who through ill-health or want of employment have fallen into arrears through bo' fault of their owd, and have bsen compelled .!to.lean, upon the generosity of the ehopkeeper, who, for ; the sake of old times, does not like "to press for payment or to rafisse credit to those who at brie time were regular payers,; but. there are, unfortunately, others who go.' from shop- to1 shop and run up acconnts j on credit which from the first they had no iotention of paying, and unfortunately under our present laws they cannot be made to do so, since when proceedings are taken they plead that they ara not earning sufficient to pay old debts. It must be clear that this is very unfair especially to the suppliers of the Decessaries of life, Euch as grocers, butchers, and bakers, for we have no hesitation in saying that were it .not j for the credit given by this clasa of trader to j persons out of employment many families would j actually starve, and yet it is often the case that T directly these, very people get into work then- ! old' debts have to lie over and there is co | redress—or else the estate is put into bankj ruptcy,—assets nil, dividend to mitch, and | tbo debtor goes on his way rejoicing i clear of all liabilities, draws his pay, 'and begins de novo. It would be a i good thing" if the Bankruptcy Act were | altered so that every debtor should be compelled to set aside frem his future earniogs a i sum sufficient to pay those who supplied him i and his family with the necessariea of life a dividend of at least 10s in the pound before i getting a clearance—cases of extreme hardship |to be considered on their merits. No doubt the I most effectual way to avoid bad debts is to, give [no credit to anyone, and several flourishing [businesses have been built up under this system ; but in the colonies at any rate to expect credit has become an established commercial custom, and very few traders can do without it, even if it is only a credit from week to week. And talk as we may about the desirability of all transactions being for cash only, the commerce of the world could not get on without some credit, though' it is true that the old-fashioned saying that "a man's word is as good as his bond " does not now meet with much acceptance in the market unless accompanied with a stamped document to which his signature is attached, and sometimes.tangible security. But while credit may be necessary, unlimited credit i 3 bed both for buyer and seller, as-it induces the former to purchase above his iannadiate wants and the latter to run greater, risks than his business warrants, and, therefore, the Retailers' Association has- done well to grapple with the matter at once and endeavour to kesp it within reasonable limits. , '..■■.. .'.