My dear P.M.,
INSTALMENT PURCHASE SYSTEM
I do not know if your Trade and Customs Department, or other Commonwealth Department, has made a study of this comparatively new extension of the Credit system.
I started lately to try and find out something about it and enclose some papers as a matter of interest and in case you might have someone looking into the subject for you from the Commonwealth point of view.
By chance, as so often turns out, the last number that has reached me of the Melbourne Stock Exchange Record contained an article on the subject. I find another in the current number of the Midland Bank Monthly Review, both of which I enclose.
I find that the Board of Trade here have made no research into the question, nor, as far as I can find, has any other Government Department.
I am told from several quarters that the only book of any consequence on the subject is a stout two-volume work by Professor Edwin A. Seligman, Professor of Economics in Columbia University (U.S.A.), called, I think, 'The Economics of Instalment Selling', which deals with the subject from the American viewpoint.
There is a three-page article on the subject in Volume 2 of the three-volume 1926 edition of the 'Encyclopaedia Britannica', under 'Instalment Selling', which is well worth reading by anyone studying the question.
I see in the article in the Midland Bank Review that in a future article on the subject they propose to '... make mention of a far distant new country, Australia, where particularly instructive events have taken place'. I will send you this when it appears.
A friend to whom I sent the article from the Melbourne Stock Exchange Record writes:-
On the whole I think the article is sound. My fear is that people will tend to load themselves up too much. A system should be devised that would entail disclosure of all hire purchase obligations when a new one is being entered upon -a tall order, I am afraid! I don't think it will go far wrong in U.S.A.-so far the statistics for U.S.A. appear quite sound. The arguments regarding Australia do appear to show the need for great caution in developing the business. But I still contend that buying on credit has always been conducted on slipshod lines, and is only another form, and perhaps a less desirable one, of instalment purchase.
After all, does it not seem that the opposition to the system is based on the assumption that it will be abused? I confess that I am apprehensive of the evils that might arise in connection with this method of purchase but we have to bear in mind that, so far as I know, such evils have not actually become apparent. As a general philosophic pronunciamento, I think that in most prognostications in most fields the worst never happens, except in the case of death!
Yours sincerely, R.G. CASEY