CASH OR INSTALMENTS?

Poverty Bay Herald, Volume LII, Issue 17088, 17 July 1926, Page 8

CASH OR INSTALMENTS?

ECONOMIC ADVICE.

PROFESSOR CONDLIFFE 'S

ADDRESS,

(Special to the Herald.) CHRIBTCHURCH, this day

"Will wo pay in cash or by instalments."' That question was answered • o-day when the young' business men of ChristehurcU rcceivefl economic advice worth noting. Enterprising members of the Canterbury Chamber of Commerce are seeing to it that the youth and budding brains of their office si all's equip themselves mentally in a way to suit best the man beyond the door marked "private.'-' At 1 p.m. to-dav the Chamber of Commerce introduced the first of its "lunch hour''' lectures, when Professor J. B. Condliffe addressed some 'lO young busjnes men on "The economics of instalment buying." The idea is a new one to Christchureh business circles, and promises to lie highly successful. The lectures tire reserved exclusively for members of the staffs of the Chamber of Commerce men, and after a portion of the lunch hour had been spent in hearty food consumption, an Aral menu was presented, the professor serving in attractive fashion, the fruits of his economic knowledge.

SYSTEM OF PAYMENT. The system of payment by instalments 'was a new development of the credit system, said the professor. For consideration of having payment deferred over a lengthy period a man had to pay higher for the goods in question. One reason why such a large amount of money was spent on draper}', was because it was easy to get credit from drapers. Tailors-' bills were proverbial, but drapers' bills should be ma.ua notorious, as married men knew. Recently there had been a considerable extension of the instalment system of buying goods. It was not a new system: it could be recognised in such trading as housing. Itwas legitimate and to some extent a sound method of doing business, but in some instances it had extended to goods that were not so suitable. It wan possible in tho United States to pet; one's house painted, or to buy a cow, by instalments. The security for these was not so permanent and people were apt tc cot used to a high standard of living which might be followed by times of adversity. There is a great temptation for people with limited pur- | chasing power to transfer their businesses from cash purchasing to chan- ; nels through, which they can get easier : terms.

UNEXPECTED CONTINGENCY. Professor Condliffc continued: The result is that if any unexpected contingency comes or a reduction in wages takes effect, the payments become too heavy. There are eases where working men have mortgaged vip to 90 per cent, or' their wage on instalment purchases. That is all right unless reaction in wages comes. The tendency of instalment buying was considered to encourage harder work among piece-laborers, and in America was considered to have raised the working standards, but on the other hand it encouraged extravagance and too optimistic a view of the future. It had had the effect of lowering the amount of wool clothing used. People devoted their money to gramophones, radio sets and motor cars. In such t'mes, as caused by overimportat'on and slight unemployment the instalment system was apt to lead people into difficulties. In New Zealand it had become possible to see times of stringency coming six months ahead, and it therefore was possible for the people to watch the trend of events, and prepare ucordingly. Instalment buying re-acted on the proper credit system during hard limes that caused a little trouble. .The payment of instalments to finance companies was a legitimate form of banking, but there was a danger in that such companies hud at tunes to be propped up by the banks when instalments were hard to collect. Overdrafts therefore were increased, and an extension of the instalment system ndded another straw to the over-overdraft load. It was easy for a firm to go hard for this kind of business during a boom, but it was apt to cause trouble in times of depression. A business man of that type was only a unit in the community, and if his methods were copied by everyone else, the community would have to pay in the long run.