[The Credit System and its Evils. TO THE EDITOR.

Otago Witness, Issue 1936, 2 April 1891, Page 12

[ The Credit System and its Evils. TO THE EDITOR.

I Sir,— Having for the last fire years been connected In various ways with different trades in New Zealand, I have had some opportunity to remark the very loose way in which things are carried on, espeoiallyas regards the credit system. This latter is carried on to an unheard of extent, and must doubtlets be very demoralising in its effects, not only to tradesmen themselves, but also to the general public. Nothing is easier nowadays for a man than to live at the expense-of the tradesmen. Hundreds of times have we seen this done. A man runs up an acoount with the storekeeper, and when asked for the money given all kinds of promises— (never fulfilled nor ever intended to be)-and all kinds of excuses. He forthwith starts dealing with another storekeeper, where in .the beginning he buys for cash, but soon starts " "putting it down," until alto this storekeeper gets anxious and asks the customer to " oblige him with a cheque." Thus the man goes from one storekeeper to another until the whole line is gone through, when one fine day he disappears, leaving behind him the lamenting tradespeople. This Is an old, old story, as no doubt every tradesman in the country knows to his own cost. This kind of dealing has, it cannot be doubted, a very bad influence on the people, and it is a fact well known to all how this kind of loafers always have money to spend in ihe pubio house, but never can find it ill their power— in fact, have the grea.eit dislike— to pay for the necessities of their own and family's life. This class of people are getting daily more numerous. Just as In London the professional beggars have a system of their own whereby to notify their fellow beggars wheie there is a soft thing on— that is, where the inhabitants of fcho house are inclined to give alms, do this class of credit-getting people learn from one another the tricks of the trade and where the best place is for getting long credit. The infection seems to be highly contagious, judging from the way ifc is daily spreading : yes, even to children, who, scarce able to speak, will go, with or without their parents' knowledge, to the grocer for a pennyworth of lollies -and tell the storekeeper to " put it down to mother." It fs easier for all of us to g.i down than up, easier to amass bad than good qualities ; and when a man discovers that his fellow workman can run accounts where be pays Cftsh, ho will very soon start' the same— in the beginning fully Intending to pay at the end of the month, ana then if porohauea he be short of caßh at the time the mouth is ouh he will put it off and off until It grow* too big for him altogether. Onoa on this slope and he will very soon do as others do. People are apt; to say that " credit is the soul of trade"— a well-sounding phrase enough, but only true to a very limited extent. Is it fair, for inBtanca, that half of the population— the one half that pay their way — should have to pay from 30 to 50 per cent, more for their goods beoause ff those that do not choose to pay? Certainly no 4, and yet it is so. Ask any tradesman you like, and he will tell you that were it not for the bad debts and long outstanding accounts he could sell his goods considerably cheaper. Thus the honest man pays not only his ewn share, but so much extra for the sake of the above-mentioned class of people. Many an honest, hard-working tradesman has gone to the wall on acoount of this uufortunate credit system. How is a man who stares with but a smill capital to stand the strain of the long- winded customers who either can't or won't pay cash, and would consider themselves highly insulted if asked for the money. In fact, to such an extent— yea, habit — has this credit system grown' that even men with plenty of money — men who could draw on their bank there and then for what they buy— prefer to keep their tradesmen waiting for six or 12 months ; not becau-e they don't intend to pay. but rather from a kind of habit ; they some-; bow dou'o like to pirt with it, like to keep possession of it, although they know that it virtually does noti belong to them. And meanwhile the tradesman has to meet bis bills and other obligations (the renewal of the former will cost him from 10 to 12} per dent.), and if he can't, then goodbye; and the next step ir bankruptcy. Of course it is always orjen, to tradesmen to summon their customers, but to do this with justice, as it were, they would have to summon about half their customers, and would soon find the remedy worse than the disease. Ihe law in faot affords but little protection to the tradesmen. Take the baukruptoy law for example. It seems to be made, if anything, in favour of the. bankrupt ; or else how is it that people going bankruptthe one day are the next Inevena more prosperous condition than before, having plenty of money to start afresh or even go travelling to Europe, &o. ; while their creditors perhaps get 5s in the pound. (I am oiting facts ) The very basis of the law seems wrong. The official assignee, who it there for the protection of the creditors," turns out to be in most oases a rather expensive luxury, vide the following cue which has come under our notice s— A man who was pressed by one of his creditors and was not able just then to satisfy the claim was adjudged a bankrupt by the creditors. The creditors finally reoeived 10s in the pound, but 16 was proved that the estate had virtually paid 22s in the pound— that is, the creditors got 10* ; the other 12s was swallowed up in the expenses^ the a«sign-e, bankruptcy court, fto, This can scarcely be said to beabenefioial administration for the creditors ; in faot, there is but little doubt in the mind of most tradespeople that the bankruptcy law affords them but little protection. It is not altogether without some truth, although it was meant for a joke, when a man told a new ohum that he had no ohance of getting on in the colonies before having been a bankrupt onca or twice. But to return to th 9 credit system— that evil spirit of our commerce. Is there any way of altering and improving it ? Best wbuid it be for all concerned could it be done away with altogether; but so firmly established is it now that this would ,*be impossible. Two things suggest themselves to my mind— first; partly to do away with the bankruptcy law altogether This seems at firtt sight stupendous} but let us look at it a little nearer- It is a fact, as before mentioned, that it does not afford the creditors much protection, and I take it for granted that if the tradespeople knew there was no bankruptcy law they would ba careful not to give credit to such large amounts as they often do now. It would thus , have the effect of decreasing the oredit system to a certain extent, and there would always be left to the tradesmen the ehuneeof recovering by summons:. But another, and, perhaps, better suggestion is trades unionism. Instead of driving the spirit of opposition so far as not to oomult together, and being afraid of divulging the names of customers to one another bow much better would it be to have monthly meetings of the principals (of a strlotly private oharaoter of course), and each to produce * list of the "profit and loss customers," or any, say, whose acoount was outstanding more than six months , and an agreement come to that every tradesman in the union pledget himself to stop all oredit to those whose names the union, after careful consideration has placed on the blackboard. This would, if effectually carried out. at least prevent the system abovementioned of a man running up an account with every storekeeper in the town. It would ba a mutual protection to all the tradesmen, compel the roan to buy for cash only, and thus gradually decrease the fatal credit system. Of oonrse eaoh tradesman would lose the custom of these " profit and loss " or blackboard customers, now compelled to buy for oath only, as soon as his oredit was stopped. He would naturally wish to buy from anyone else rather than the one he'owed money to. But this of course would work both ways. What the one tradesman lost the other would gtiu. and vice versa. I am convince.! that before long something of this kind must be done, or else what will happen — in faot, has already happened— in the big centres in New Z "aland ? A tradesman in possession of the necessary oash starts a strict cash business, which of course enables him to sell his good* at a much lower price than his opponents in the trade. The oonsequence is that the people will buy there whatever they have the oash ready for, and what they have not the cash for they will get on oredit from tbe other tradesmen. But these latter will soon find out that there is a material decrease in the little cash they used to take over the counter, and find it even more difficult than before to get their money from the customers. I repeat that a united stand must sooner or later be made by the tradespeople in this colony against fcha ever-increasing t'de of credit-giving, and the sooner it is done the better for themselves and the community at large. No doubt every tradesman in the colony Has felt the pinch of tbe shoe, and should be able through dearly-bought experience to give some advice how to cope with the evil.— I am, &c, Commkeob.

Tapanui, March 27.