HIRE PURCHASE

Timaru Herald, Volume CXLVII, Issue 21530, 18 December 1939, Page 12

HIRE PURCHASE

ENORMOUS DEVELOPMENT OF SYSTEM A London accountant remarks that when historians of the future come to write the story of the twentieth centuiy. they will have to give a prominent place to the development of the hire-purchase system. For the growth of the consumer-credit system—from an insignificant turnover some forty years ago to its present-day total of £200.000.000 a year in England alone — most certainly constitutes a minor revolution in economic methods. It is a development, too, which shed interesting light on the other vast changes which will be noted in the history books as taking place during our generation. “Although it is only during the last two or three decades that hirepurchase has played an important part ni our financial structure, the system itself is no new thing,” continues the commentator. “Antiquarian researches have, indeed, shown that the payment of debts by instalments was practised in the ancient w’orld. Again, on the introduction of railways in the nineteenth century, there grew up a practice whereby collieries could acqurie railway wagons on a basis of hire over a long period, with an option to purchase. “Later on there came the ‘tally-man,’ who travelled round his district selling all sorts of clothing and household goods, for which he was paid by weekly instalments. His only security was. of course, the integrity of his customers and his own ability to collect his dues. “The development of the system went on very slowly until the Great War. Then, of course, it was arrested completely. And so to all intents and purposes the growth of the system to its present vast dimensions has taken place in the last twenty years. “What has caused this phenomenal increase? Well, chiefly the fact that the post-war period has seen the largescale introduction of a large variety of inventions which make life easier and more pleasant for ordniary people. Motor-cars, radio, vacuum cleaners, refrigerators—all these and many more have been perfected in this period. But their prices, while representing good value, were more than the average person was prepared to put down in one sum. So the normal laws of supply and demand stimulated the use of the hire-purchase system, in order that these new inventions could be used on the scale they deserved. The increased demand which resulted made reduced prices possible, so that the demand increased still further. Thus the use of all these small luxuries grew, and the hire-purchase system with it.”