Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
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VOL. LXXV. No. 16
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Published Every Saturday by Edward Lyman BUI, Inc., at 373 4th Ave., New York.
Oct. 14, 1922
Single Copies 10 Cents
S3.00 Per Year
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The Question of Terms Again Arises in the Trade
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OT so many years ago there was much comment made on the fact that manufacturers were offering
pianos to dealers on terms running as high as eighteen months, and the practice was frowned upon
severely as being detrimental to the interests of the industry. Then came the war and post-war period
with a scarcity of instruments and the consequent shortening of terms that led to the belief that the
piano industry had finally found itself in the matter of credits and would maintain wholesale terms of well
under twelve months.
As a matter of fact, the question of terms has loomed up again recently and in a manner to make mem-
bers of the trade ask where the end will be, for it is declared that pianos are being sold today on longer terms
than at any period in the history of the trade, thirty months being allowed in some instances.
While all this is going on we find members of the industry solemnly advising the dealers to maintain
short terms for their own protection, with thirty months as a maximum, keeping their paper within such
limits that they can finance their own businesses to a large extent, and depending upon outside agencies, such
as banks, to as small a degree as possible.
Just how the retailer who is getting thirty months from his manufacturer is going to handle his own
credits would appear to represent only a small problem. He is going to go the manufacturer one better and,
taking advantage of the liberal credit extended him, pass the favor along to the retail buyer.
This tendency towards long terms is regrettable for many reasons, chiefly because it is calculated to
lead the retailer beyond his financial limitations and force him to place as much of his paper as possible with
the banks, and the balance with other agencies who are likely to exact a very generous interest for their cash.
It seems, too, that the piano trade is going -to lose a fair amount of prestige that it won in banking
circles during the past few years when piano paper was on a sufficiently short basis to be regarded as col-
lateral instead of as an investment.
This movement for an extension of terms comes at a rather inopportune moment, for an upward
movement in the matter of prices is to be expected very shortly. Lumber and cabinet woods have already
taken sharp advances. Wool, and consequently felts, as well as steel, are showing an upward trend due to the
new tariff and, in part, to the law of supply and demand. Instances have already been recorded where piano
manufacturers have notified their dealers of price increases and other notifications along that line are due
very shortly. This heavier capital investment serves to make long terms a genuine menace.
There are piano manufacturers in the field today who are selling for cash, or on terms approximating
cash, quoting low prices, and at the same time making money. There are concerns in other fields, and we need
go no further than the talking machine field to find them, which encourage dealers to discount their bills,
borrowing the money from the banks if necessary to do so, rather than grant them extended credit.
One of the fallacies of the piano trade in the past has been to figure its progress by production rather
than profit—to brag about the number of instruments of certain makes that have been sold at wholesale or
retail within a given period without stopping to consider the basis upon which those instruments were sold,
and whether or not fewer sales on a cash or short term basis would not have been productive of greater
results in the profit column at a lesser expenditure of effort.
Thirty months' credit is admitted to be the maximum for the dealer in a trade where long credits are the
accepted custom, and on that basis it is certain that the same credit terms offered by the manufacturer are little
short of dangerous. The real evil lies in the fact that manufacturers, and for that matter dealers, who go
beyond the sound lines of credit are a menace to themselves and to the trade at large as well.
If the industry as a whole can be brought back to the point of thinking of quality, price and turnover
possibilities, instead of simply terms, the benefits that result will pay dividends on the effort expended.