ABUSE OF CREDIT

Waikato Times, Volume 88, Issue 13462, 17 April 1917, Page 3

ABUSE OF CREDIT

A COACHBUILDER'S VIEWS.

J At the Coach Trades Convention at Wellington, Mr H. A. Whitakcr (Hamilton) read a paper on "Credit and its Abuses." His object in writing the paper was, he stated, more for the purpose of drawing attention to and creating a discussion on the very unsatisfactory relations existing between the client who seeks and the business man who gives credit; and his remarks were moic applicable to the smaller transactions involved in daily business life, matters involving large sums being fixed up only after mature consideration. The credit system had grown rapidly in the Dominion, and he had been much impressed by the way in which credit was practically forced upon tradespeople here in comparison with parts of Australia. The wonderful prosperity of the Dominion had made it possible for business people to carry large book debts, and the keenness of rival trading concerns had also contributed towards the growth of the credit system, until to-day people did not ask for credit; they expected and took it as a matter of course. He had heard an auditor of large practice say that from his own personal observation he was convinced that the trading capK tal of many people were represented by their debts to other people, or, in other words, if these people paid their debts they would have no capital left to carry on their own businesses. That, from a man in the know, was not reassuring. Many coachbuilders, particularly in the country districts, were familiar with the customer who paid his account only once a year, thereby using their capital for his business. "A close study of the business of the Official Assignee," added Mr Whitaker, "shows that by far the greater number of his cases come from the class of men who start small businesses with little capital and still less business capacity. Every man worthy of the name is fired with the ambition to better his position, and the right to start on his own cannot be denied him. But, coming right home to our own trade, how many instances do we know of where such a man will leave a well-paid service job and commence business on lines which, from the very commencement, can mean nothing but disaster. When his estate gets into the assignee's bands the debtor invariably tells the same tale:—Capital nil, or very nearly so, too many book debts, sickness in the family, etc. He never adds that be was doing his work or selling his goods at cost or below cost, and that he never took stock or employed a registered auditor to advise him afc to his position at stocktaking periods. The assignee would take a stand for the right, but usually the creditors are too busy or too sick of the usual story to bother their heads or waste time over the matter, and so the bankrupt escapes, and disappears to other parts, where he probably after a few years repeats the offence, and another ambitious chap takes his old premises aid does likewise. The Official Assignees do their best to punish these offenders, and they utter warnings and threats, but," declared Mr Whitaker, "they are practical! v powerless under our present laws and few guilty persons are brought to book; hence a premium is placed on dishonesty. It was, he said, manifestly unfair to the business people who were running their trading concerns and factories on sound commercial lines to be placed in competition with these dishonest people. Was it not time that some move was made to purge from the business community the persons who practised commercial dishonesty ? Could the State not compel every man starting business to register, and disclose his capital to the merchants with Whom he desires to do credit business? Or, better still, compel every business to be registered and to have a stocktaking and balance every year, under th« supervision of a registered auditor, copies of the balance-sheet to be lodged with the registrar of companies? Under this scheme each business man would at least know his position, and if he so manipulated his stock-taking as to get a false balancesheet he would have no defence when he ultimately arrived in the assignee's hand 8. It was very discouraging to members of their trade, and in fact every trade, to be continually up against the man who, while murdering his own business, did a great harm to the honest trader. Associations like theirs could do much to put down this abuse. The vary act of association was a factor, and from the result of the better understanding, friendships, and interchanges of experiences, methods, and ideas among members, the way was made clear for their association to educate the erring members of their fraternity, and also to impress on the wholesale hardware houses the fact that by giving undue credit, etc., to such people, they were inflicting hardship on the very people who were doing their best to place coachbuilding on a proper business footing."