Credit Suggestion

In Manhattan's glittery Hotel New Yorker last week, more than 1,000 members of the National Retail Credit Association argued for four days and adopted a resolution: to tighten the screws on installment credit.

Because of the rush to buy automobiles, refrigerators, radios, other installment goods, total retail credit outstanding has already soared far above 1940's record $4,036,000,000 (1929: $3,300,000,000). This not only threatens inflation. It also means that consumers are finding it easy to buy many goods (autos, e.g.) whose production must be curtailed for defense, and that many U.S. citizens, mortgaging their future now, will have less money to spend after the boom when spending will be needed.

The N.R.C.A. resolution:

> Refrigerators (75% sold on credit) should be sold for minimum terms of 20% down, 16 months to pay, instead of the present average of 5 to 10% down, 36 to 60 months.

> Furniture (70% sold on credit) down payments should be upped from 5 to 20%, payment periods shortened from the maximum of 36 to 15 months.

> Stove and range buyers should put 20% down, pay off the balance within a year (present: 5% down, 24 to 36 months).

> Terms for radios, washing machines, ironers should be proportionately tightened.

Such terms undoubtedly would brake credit sales, have a healthy deflationary effect. But the resolution was only a suggestion: no credit man last week knew how it would be enforced. Because dealers feared losing customers, it took General Electric six months, many a hot sales talk, to cut refrigerator payment periods from 36 to 30 months. If the big installment lenders (like Commercial Credit, Commercial Investment Trust, General Motors Acceptance Corp.) get too strict, thousands of banks and small credit men stand ready to steal their business with more liberal terms.

The New Yorker corridors crawled with rumors of Federal enforcement. Next month the credit men will meet again, try to remold their resolution into a practical operating code.

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