BRITAIN GOES IN FOR INSTALMENT BUYING
"SELL everything on the instalment plan," is the new slogan of British manufacturers, we are told by London correspondents, who say that this is the way British industry will try to accomplish its comeback in the next year or so.
But not all British authorities are pleased about the tendency. Mr. A. M. Samuel, the British Minister of Overseas Trade, attacks the instalment plan as a "drug" and a "dope" for trade, which may do all right in America, 'where the people have "wealth to burn," but which can only make trouble in England. Mr. Samuel said at a recent Chamber of Commerce meeting in London, as reported in an Associated Press dispatch:
Production and sale of motor-cars, phonographs, radios, pianos, and clothes on "tick" is a trade system built upon sand. When the inevitable cycle of depression comes round, trade will collapse and bury in its ruins those who have produced on "tick," sold on "tick," and bought on "tick," goods, which neither earn their cost nor redeem themselves out of earnings.
But in spite of this warning, instalment selling is on the increase in Great Britain. And it is being encouraged for these reasons, according to Constantine Brown, London correspondent of the Chicago Daily News:
Difficulties in placing the existing over-production at home and abroad have made manufacturers realize that something must be done to avoid at least temporarily the ever-increasing slump. Experts who visited America lately returned with the advice that British traders adopt the American method of selling on small monthly instalments, thus enabling wage earners to purchase things which heretofore have been out of reach.
"This isn't a radical solution of our difficult problems," a leading British industrialist explains to this correspondent, "but it is a palliative which will enable us to carry on for a little time while our economists and the Government find the proper solution."
An intensive campaign of advertising British goods is planned for this fall and everybody will be offered the opportunity to buy a home, a motor-car, furniture, clothing, and even stocks and bonds on small monthly payments. Manufacturers are seeking the support of the Government for a plan by which large banking houses will charge only nominal rates of interest to carry the instalment buying, while the Government will endeavor to find some scheme guaranteeing producers against eventual loss incurred through the inability of some buyers to carry out their bargains.
This is the first step toward the long-heralded economic readjustment which the English economists advocate. The idea is to increase home consumption to the maximum so that British industries may escape dependence on foreign trade.
Source: The Literary Digest for November 5, 1927