CASH-ORDER SYSTEM.

Otago Witness, Issue 3889, 25 September 1928, Page 15

CASH-ORDER SYSTEM.

A PERNICIOUS PRACTICE. SIR GEORGE ELLIOT’S CONDEMNATION. AUCKLAND, September 19. The system by . which certain retail firms recognise orders given by financial concerns, known as cash order companies, was severely condemned to-day by "Sir George Elliot, speaking -to the shareholders of Messrs Milne and Choyce, x. Sir George stated that the system, which was unfortunately growing, was thoroughly pernicious. A customer secured orders on certain firms from a cash order company and was then able to obtain immediate possession of goods, having first paid a small deposit to the financial company and signed an undertaking to pay the balance in regular instalments. The usual practice was for the retailer to pay 12| per cent, as commission to the financing company. His firm had been "approached on several occasions with a request that it should recognise these orders It had refused, and he had no hesitation in saying that if it attempted •to sell its goods at the present prices and gave such a discount to the middleman it would not only be unable to pay share holders dividends but would be on the road to liquidation. No firm could do it It stood to reason that the customer had to pay this 124 per cent. Moreover, the person using the system had to pay as interest to the cash order company a much higher rate of interest than he realised. Nominally 6 to 10 per cent., it would pan out as high as 30 per cent, when every factor was taken mto consideration.