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DECEMBER 5, 1925
THE
MUSIC TRADE
REVIEW
Music Dealers Instalment Sales and
Their Collection Problems
Great Growth of Instalment Business in Rural Communities—Farm Mortgages and What This Means to
the Music Merchant—Weather as the Index to Credit Conditions—What a House Canvass Reveals
— Handling Rural Credits Co-operatively — Ninth Article by J. K. Novins
I
T is in the rural community that the instal-
ment business is now seeing its greatest
growth. Investigation by credit experts
shows up some amazing figures.
For instance, take Weld County in northern
Colorado. It comprises an area of more than
4,000 square miles—the size of the entire State
of Connecticut—with a rural population of
50,000. A recent survey by Frank Field, secre-
tary and manager of the Weld County Credit
Association, showed that during the first half of
1923 the chattel mortgages covering auto-
mobiles, pianos and Victrolas sold on contract
payments were almost half the amount of mort-
gages for financing crop operations.
You will get still a better idea when you are
told that these contract sales during the first
half of 1923 averaged $300 for each instalment
sale customer, and an average of $5 per capita
for every resident in the county!
Big Increase in Musical Instalment Sales
Further figures gathered by Mr. Field show
that, according to the instalment sale instru-
ments filed of record in the county during
four months of 1925 up to May 4, 1925, Weld
County residents had already obligated them-
selves on instalment payments for automobiles,
furniture, musical instruments and radios to the
extent of $505,909. This exceeded the record
for the same period the previous year by $41,403.
This means that during a four-month period
the average instalment sale per capita in this
county amounted to $10.
These figures represent typical credit condi-
tions in a typical agricultural district. You will
find similar conditions existing in other agri-
cultural communities, in the cotton, wheat and
fruit-growing belts.
Now let us look at another side of the picture.
A check made by the Weld County Credit
Association showed that in May, two years ago,
the chattel mortgages recorded in that county
totaled $1,500,000 for the month, as compared
with $85,000 the same month in 1918. In other
words, the extent of chattel mortgage incum-
brance was increased almost 100 per cent.
Taking into consideration the extent of instal-
ment sales, and also the extent of the farmer-
customer's legal encumbrances, you have a
pretty clear picture of the complicated credit
conditions that to-day exist in the rural district.
The music merchant who does business in
the rural community finds that his problems
are far more difficult of solution than they are
for the retailer in the big city. Credit condi-
tions in the rural communities have been less
stable in the rural communities than in the
cities, due chiefly to weather and crop market-
ing conditions.
The very life of the country merchant now
depends on shrewd judgment of crop conditions
and to the extent these conditions affect the
farmers' buying and buying capacity.
How Weather Affects Credit
The weather no doubt is the greatest factor
affecting crop conditions, and most often the
prosperity of the entire rural district. In dis-
cussing the development- of long-distance
weather forecasting and the effect on business,
Roger Babson', the eminent statistician, offered
the following suggestions at a recent conference
of weather forecasters:
"1. Be prepared for losses in any industry
or community which is dependent on a contin-
uation of the same weather conditions as have
existed for years. These changes may not come
for years, but they may come in 1926.
"2. Be prepared for crop failures in sections
where crops have been bountiful for many
years, and be prepared for bountiful crops in
sections which have been considered poor and
arid. Be prepared for dry, sunshiny weather
in sections which have long been humid; and
he prepared for frosts in sections which have
been considered frost-proof.
"3. Keep in touch with the studies being
made in connection with long-distance forecast-
ing. Don't swallow the theories all at once,
but on the other hand treat them with respect
and encourage experiments being made along
these lines."
"The trouble is," a retail credit man in an
agricultural district said recently, "that rural
district business men, like farmers, go from one
extreme to another extending liberal credit
when crop outlook is very good, to no credit,
even to farmers who have ample resources to
pay even if crops were a total failure."
There is need, therefore, for a central organ-
ization to advise the music retailer when it is
safe to extend liberal credit and when it is
necessary to "tighten up."
House-to-house Canvass
In Greeley and surrounding towns of north-
ern Colorado the retail merchants have created
such an organization. Not only does the Weld
County Credit Association check up on the
credit standing of the local residents, but it
makes it part of its functions to study crop and
business conditions and to make this informa-
tion available to the merchants at the most ap-
propriate time.
To indicate the extent to which such infor-
mation is gathered, the writer has in mind an
experience recently related to him by Frank
Field, the active secretary-manager of this As-
sociation. Recently he made a house-to-house
canvass in the town of Brighton, which boasts
a population of 3,000. During a thirty-day pe-
riod he secured information from 1,000 families,
including those residing in the environs of
Brighton. He found out which of the families
owned their own homes, whether their homes
were encumbered and with whom they traded and
banked. In this way he opened a fertile mar-
ket for the Brighton retail merchants. He gave
them information that not only guided them in
extending credit to certain Brighton residents
but he gave them valuable sales leads. The
ones who especially benefited from the informa-
tion were the music houses.
Watchtowers of Credit
Mr. Field has found that one of the best
sources of information on credit conditions are
the automobile financing companies. These
companies use skilled judgment, based on thor-
ough investigation, when it is best to make
credit easy or hard, and Mr. Field advises the
retail merchants to watch the operations of the
financing companies.
Here is a typical message Mr. Field delivered
to the merchants, May 25, 1925:
"Greeley auto dealers and finance companies
closely checking all applications for loans on
cars due in Fall, 1925. Especially true in Long-
mont and Mead district, where reservoir water
is scarce and it can be determined already by
the farmers that they cannot expect to meet
secured obligations on new cars this Fall if they
have obligations for financing crop operations."
Other good sources, Mr. Field finds, are the
field men of the various sugar companies in the
district. It is the business of these experts to
estimate crops prior to harvest time, and this
information, when passed on in time to the
local merchants, will guide them whether to go
easy or tighten up on credit.
Indexes to the prosperity of the district are
bank clearances, the extent of bank loans, the
sales reported by wholesale houses, increase or
decrease of express shipments, post office re-
ceipts and the sales reported by building mate-
rial concerns. The music merchants can also
benefit from the business reports by furniture
and other stores, especially those selling on the
instalment plan. The report of automobile sales
also furnishes a reliable index to the prevailing
purchasing power in the community.
A 250-mile Retail Business Survey
Recently Mr. Field made a 250-mile trip
through the towns in the county in order to de-
termine the state of business and credit. He did
this because the local merchants were a bit
nervous about conditions, and they were in
need of some definite guide to the purchasing
capacities of the consuming public. During the
trip Mr. Field visited twenty-one towns, and up-
on his return he prepared a report which he
circulated among the merchants.
Several extracts from Mr. Field's report will
illustrate the type of information that the coun-
ty merchant now finds most valuable:
"AULT (name of town)—Bank deposits gain
$78,399, loans decrease $3,577. Crops—Rain
needed, but thirty days' run water available.
Wheat crops very light. Beans and spuds good
prospects, good net returns—as average year—
beet crop very short. Good dry land crop east
of Ault, will help trade this fall. Elevator re-
ports $31,000 over business of year ago. Garages
30 per cent slump since June. Hardware and
general stores 5 per cent and 10 per cent ahead
of last year.
"EATON—Bank deposits gained $65,425.
Loans decreased $9,705. Beet and other labor
conditions helped materially by sugar company
employing seventy men on new receiving sheds.
Beet acreage Eaton factory still estimated at
7,000. Water will be short, only sixteen days'
run left for Eaton Ditch, some of which will be
used this week. Crop yields estimated ten tons,
as compared with sixteen tons a year ago. Rain
very badly needed for crop. Wheat cutting
starting—acreage 15 per cent larger, but yields
will be less. Barley and oats crop made big
improvement past month. Trade conditions—
Garages, 30 per cent slump in car sales, repair
business normal. Lumber yards, 10 per cent
increase volume. Implement dealers, material
reduction since May. General stores, $4,000
ahead of last year, but expect big reduction in
farm and beet labor trade rest of year. Cloth-
ing firm, 10 per cent increase volume. Grocery
stores, slight decrease volume since June.
(All Rights Reserved.)
Death of A. D. McCall
SAVANNAH, GA., November 30.—Angus D. Mc-
Call, for several years a member of the music
firm of Alnutt & McCall, of this city, died re-
cently at the Savannah Public Hospital as a
result of apoplexy. Mr. McCall was thirty-eight
years of age. He is survived by his widow,
one daughter and two sons.