Looking Ahead

By Alvan T. Simonds, President Simonds Saw and Steel Co.

Not so long ago, the middleman was the target for.all kinds of misunderstanding and abuse. It seemed at that time from the attitude of the American buyer as expressed in speeches, articles and books that the middleman would soon be as extinct as the dodo.

But the American is given to contradictions and paradoxes. He moves fast in tvhatever direction he is headedthen suddenly he reverses or is off at a tangent. Instead of doing away rvith middlemen (those who take a profit between the producer and the consumer), he has reversed and greatly increased their number by a very unusual extension of installment buying. This form of buying has added to the number of salesmen, of credit men, financiers. collectors, clerks and others and has increased the spread between the cost of production and the price to the ultimate consumer.

It is nelv only in being extended into new fields. Fifty years ago serving machines were sold on the installment plan and furniture for almost as long a time. To get a home or an education by paying for it on installments was approved by all. It developed strength of character and made goocl citizens. Consumer's credit is not new' The easy terms upon which it may be had and the kind of purchases to rvhich it may be applied are new in installment buying. Is it good business and rvhere is it leading?

It is doubtless good business temporarily at least for the seller if he does not carry the risks of financing it. It is for the time at least good business for the seller, who carries the financing, if credit is extended only on sound principles such as the best banks follor,v.

It is good business for the buyer if he gets more for hi-s money than he rvould by saving it month by month, until he has eriough to buy for cash. In the first case he has the use of the article while paying for it ancl in the end he pays considerable more for it-estimated variously from 25 to 100 per cent more.In the second case his money has been earning interest in the savings bank. He has had the fun of watching it grow and the great joy of making his desired purchase at a worth-while discount forcash. In a period of falling prices like the present, he may also make a considerable saving on the purchase price in addition to the discount for cash. He has had the savings during the time they were gathering as an emergency fund. He has developed the habit of saving and of thrift. He has been, during the time, free to change his mind about the purchase and to use his savings for something that he may really need and desire more.

It is a bad thing for the bu1'er if he over-extends, as he is tempted to do when credit requirements are relaxed. Over-extension is one of the most frequent causes of business failure. In buying on installments, the buyer is really in business using credit and, as in any business, he is open to the danger of over-extending.

The most important question is what is to be the effect of installment buying upon the general welfare present and future.

The standard of living in the United States has been raised in the last few years by increasing wages and lowering production costs.Is the consumer offsetting the savings in the cost of production by adding (by buying on installments) to costs o{ distributing and selling? Is he in this way braking or stalling the rapid upward movement in the standard of living rvhich has been so noticeable since 1922?

Has installment buying slorved up the accumulation of additional capital in the United States? The world is short of capital due to the losses of the war. Much of the distress in foreign cottntries is due to this fact. Our pros- perity in the long run depends to a greater extent than most men know, or are willing to admit, upon the prosperity of the other peoples of the earth.

It is claimed that installment buying has so increased the clernand for some goods as to make mass production possible n'hich has resulted in decreased purchasing prices for all ctinsumers. It is to be noted in this connection that Flenly Ford hacl developed mass-procluction before he adoptecl the plan of selling on iirstallments. Competition l>y others who also desire to produce in great quantities seelrs to have introduced installment buying into the automobile business.

It is claimed that installment buying has abolished strikes which formerly cost hundreds of millions annually. A rvorker with installments to be paicl for months ahead is not likely to strike.

Some say installment buying is curbed and checked by creclit rates and tlrat there is no more danger from this

(Continued on Page 46)

Tlwre' s Money in this Kitchen lor YOU

THE modern way to sell casework is to handle it com, plete, just :rs you would doors.You never sell just the material for a door-why sell just the material for all new built,in conveniences? Sell them complete. The Prer.rlss line of built in furniture consists of more than 8o dif,erent units. Every one of them is popular and a god seller. We give exclusive agencies.

'Wriufur

(Continued from Page 45) kind of credit than from other forms to r,vhich we are accustomed. In Europe business cycles are called credit cycles. Rates for credit in tl-re United States rapidly increased in 1920. Credit rvas restricted, butthisdid not prevent the depression of. 192I. Credit restriction with high rates practically ah,vays shorvs a dangerous condition lvhich is corrected only by depression in business. IJnsottnd credits accumulating, after a time, cause a ltusiness depression with unemploymer.rt ancl an extraordinary number of business failures.

Whether installment buying has created and is now adding unsound credits, the future (and very likeiy the near future) will shorv. Even a comparatively slight slorving wENDLTNG NATHAN oo.

PAcrFrc LUMBER. oo.

A. L. HOOVER - 706 Standard Oil Bld!.

PHONES VArdlkr t5l2 TUckrr 1I

J. H. BAXTER & CO.

WHOI.ESALE LT,'MBER

Polee-Pilol"4rrolotrd Mrtrrid

Calnl Bldt.

TRinity Gl32 of business below what it is now in December, 1926, will bring unsound credits to notice. A few unexpected business failures may start the ball downward, gathering material and momentum as it goes, picking up unsound credits extended for installment purchases.

There are moral questions involved which we have not sufficient space to consider. Does installment buying undermine the ancient virtues of thrift, prudence and selfdenial ? Does it encourage reckless buying and spendthrift habits? Does it weaken moral fibre and judgment as to real values? These and many others.-From "Simonds Guide for Millmen", January, 1927.

J. E. PEGGS RETURNS FROM TRIP TO MILLS

J. E. Peggs, W. R. Chamberlin & Co., San Francisco, has returned from a two weeks' business trip to the Northwest, rvhere he was looking over lumber market conditions and calling on their mill connections. He visited the mill operations of the Clark-Nickerson Lumber Co., Dempsley Lumber Co., Defiance Lumber Co., Barnet Lumber Co. and the Whitney Co.

'IV. M. BEEBE

Southern-HARDWOODS-Southern Oak Flooring and Maple Flooring f lO9 First National Banh Buitding Telephone Douglar 9117