Business & Finance: Mass Credit

A large school of economic thought scoffed instalment buying in 1928, blamed it for the catastrophe of 1929, foretold its speedy annihilation. But no annihilation has come about; instalment selling has withstood Depression well. Although purchases of all goods, especially those which may be bought "on time," have dropped, and although the price per unit is less, the National Association of Credit Companies reports that the industry has shown surprising stability except for radio sets and mechanical refrigerators, both of which, however, have made steady gains. Four hundred and two automobile finance companies did a $547,000,000 business in the first half of this year against $683,000,000 in the same period of last year, $844,000,000 in the first half of 1929, $585,000,000 in the first half of 1928. The percentage of defaults remained at 2.8% in 1928 and 1929, jumped to 3.6% last year. Figures for the first half of this year are not yet available but the association expects no serious increase, finds the U.S. consumer anxious to meet his obligations.

Two biggest independent companies in the field are Commercial Investment Trust Corp. and Commercial Credit Co. Commercial Credit has $168,000,000 in assets (furniture & fixtures: $7); Commercial Investment has $152,000,000 (furniture & fixtures: $8). Both are listed on the New York Stock Exchange. During the first half of the year Commercial Investment bought $195,000,000 worth of bills and accounts, earned $2,601,000 on the common while Commercial Credit purchased $152,000,000 worth of receivables, earned $1,056,000 on its common.

Chairman of Commercial Credit is Alexander Edward Duncan, 53, canny Kentuckian of Scotch descent. With only a high-school education he started his first credit company in 1907, organized Commercial Credit in 1912 with $300,000 capital. He foresaw the motorcar as a great opportunity and his company now has 62% of its business in that field. Chief of his motor customers is Chrysler Corp. He likes fishing and horse-races, is more of a home man than a clubfellow. He lives in Baltimore where the company began, still maintains its home office although it is represented in 191 cities. The directorate over which he presides includes James Bruce, president of Baltimore Trust Co. and brother of David K. Este Bruce, Secretary Mellon's son-in-law; Waddill Catchings; Ambassador to Japan William Cameron Forbes; Banker David R. Forgan of Chicago; Drugman Louis K. Liggett of Boston; Howard LaVerne Wynegar, president of the company. Last week quiet President Wynegar saw no reason why the instalment business should not continue prosperous.

Said he: "People who have analyzed the relation of finance companies to general business will see how largely they have contributed to lessen the Depression. They have made available larger amounts of consumer credit to support industry operating on the mass production basis. Mass production calls for mass credit."