Music Trade Review
Issue: 1923 Vol. 76 N. 16 - Page 3
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
REVIEW
ffUJIC T^ADE
VOL. LXXVI. No. 16 Published Every Satwday by Edward Lyman Bill, Inc., 373 4th Ave., New York, N. Y.
X
April 21, 1923
8ln
*J»
$2.00
P«r Tew
lllWlilKlllKlllKlliKlllKIIIKIIlHlIM^
Using the Local Investor to Finance Piano Paper
IKIIIKIII^IIIKIIIKIIIKIIIKItlKIIIKIIiKIIIKIIIKIIIKIIIKIIIK
T
H E suggestion made by the Baldwin Piano Co. in a recent bulletin to its dealers that they solve their
financing problems in part by selling their paper to local investors presents an interesting angle to the
question of the financing a retail piano business.
At first glance the suggestion seems logical, but it will be interesting to learn just how it works out
in actual practice should dealers make the attempt. It is pointed out in the bulletin that the general investing
public absorbs many issues of stocks and bonds of corporations and it is a known fact that a substantial pro-
portion of those issues are of a distinctly speculative character. Yet the average small investor will sink his
savings in a stock of an unknown concern located in another city without hesitation when he receives promises
of returns that in themselves indicate the insecurity of the investment and regarding which he has no certain
means of obtaining information.
The piano man in offering his paper as an investment is unquestionably offering good security, for it is
protected by the instrument, the customer's signature and the dealer's own endorsement. Yet it is likely that,
offered on a basis of 6 per cent interest, or perhaps at a rate 1 or 2 per cent higher in certain cases, the local in-
vestor will hesitate and then bite on wildcat stocks, unless he is properly educated.
The suggestion of the Baldwin Co., however, is worthy of earnest consideration on the part of the
trade in general, for it should be possible in one way or another to educate the public to the real worth of piano
paper. The bank will only handle a certain percentage of it, and then as collateral for short-term notes, because
the banker is not in a position to invest in long-time securities. His business is to make short-term loans, or
loans that can be quickly liquidated, in order to keep his assets fluid to meet depositors' demands. The position
of the banker in relation to piano paper has already been set forth at length in the series of articles on "Financ-
ing a Retail Piano Business" just completed in The Review.
The citizen who seeks to secure something more than savings bank interest for his money is distinctly
an investor and properly secured paper running from thirty to thirty-six months or so should make an invest-
ment really worth while providing collections are made regularly and interest paid promptly. As a matter
of fact, if the investor buys his paper for cash at the existing bank discount rates he is in a position to realize
a return on his money that is likely to be somewhat higher than that offered by even gilt-edged bonds.
In giving consideration to this plan of financing, as a general rather than an isolated practice, it should
be realized that the investing public must be educated to the real value of piano paper from the investment
angle. Its soundness and safety must be emphasized and the proposition as a whole be presented attractively
through advertisements and regular investment channels if public interest is to be aroused sufficiently to make
this sort of financing general enough to be worth while.
As an investment piano paper has few of the drawbacks associated with the general line of investment
securities, for in the event of difficulty the buyer is in a position to proceed against both the dealer and the
original purchaser and maker of the note, and is likewise in a position to have the instrument itself seized.
Although, like many securities, piano paper would likely find no ready market in the event that the buyer
sought to realize suddenly on his investment, at the same time it is sufficiently sound to be acceptable to the
average man as collateral for short-term notes to meet any sudden emergency that might arise. Inasmuch as
the same procedure must be followed in the case of the usual securities, piano paper does not suffer any com-
parison!
It might be well in the case of any general consideration of the financing question by the organized
trade bodies to give some thought to ways and means for acquainting the investing public with the true status
of piano paper, providing, of course, that the plan of financing through local investors has been tried out suc-
cessfully in definite localities.
THE
REVIEW
ffUJIC T^ADE
VOL. LXXVI. No. 16 Published Every Satwday by Edward Lyman Bill, Inc., 373 4th Ave., New York, N. Y.
X
April 21, 1923
8ln
*J»
$2.00
P«r Tew
lllWlilKlllKlllKlliKlllKIIIKIIlHlIM^
Using the Local Investor to Finance Piano Paper
IKIIIKIII^IIIKIIIKIIIKIIIKItlKIIIKIIiKIIIKIIIKIIIKIIIKIIIK
T
H E suggestion made by the Baldwin Piano Co. in a recent bulletin to its dealers that they solve their
financing problems in part by selling their paper to local investors presents an interesting angle to the
question of the financing a retail piano business.
At first glance the suggestion seems logical, but it will be interesting to learn just how it works out
in actual practice should dealers make the attempt. It is pointed out in the bulletin that the general investing
public absorbs many issues of stocks and bonds of corporations and it is a known fact that a substantial pro-
portion of those issues are of a distinctly speculative character. Yet the average small investor will sink his
savings in a stock of an unknown concern located in another city without hesitation when he receives promises
of returns that in themselves indicate the insecurity of the investment and regarding which he has no certain
means of obtaining information.
The piano man in offering his paper as an investment is unquestionably offering good security, for it is
protected by the instrument, the customer's signature and the dealer's own endorsement. Yet it is likely that,
offered on a basis of 6 per cent interest, or perhaps at a rate 1 or 2 per cent higher in certain cases, the local in-
vestor will hesitate and then bite on wildcat stocks, unless he is properly educated.
The suggestion of the Baldwin Co., however, is worthy of earnest consideration on the part of the
trade in general, for it should be possible in one way or another to educate the public to the real worth of piano
paper. The bank will only handle a certain percentage of it, and then as collateral for short-term notes, because
the banker is not in a position to invest in long-time securities. His business is to make short-term loans, or
loans that can be quickly liquidated, in order to keep his assets fluid to meet depositors' demands. The position
of the banker in relation to piano paper has already been set forth at length in the series of articles on "Financ-
ing a Retail Piano Business" just completed in The Review.
The citizen who seeks to secure something more than savings bank interest for his money is distinctly
an investor and properly secured paper running from thirty to thirty-six months or so should make an invest-
ment really worth while providing collections are made regularly and interest paid promptly. As a matter
of fact, if the investor buys his paper for cash at the existing bank discount rates he is in a position to realize
a return on his money that is likely to be somewhat higher than that offered by even gilt-edged bonds.
In giving consideration to this plan of financing, as a general rather than an isolated practice, it should
be realized that the investing public must be educated to the real value of piano paper from the investment
angle. Its soundness and safety must be emphasized and the proposition as a whole be presented attractively
through advertisements and regular investment channels if public interest is to be aroused sufficiently to make
this sort of financing general enough to be worth while.
As an investment piano paper has few of the drawbacks associated with the general line of investment
securities, for in the event of difficulty the buyer is in a position to proceed against both the dealer and the
original purchaser and maker of the note, and is likewise in a position to have the instrument itself seized.
Although, like many securities, piano paper would likely find no ready market in the event that the buyer
sought to realize suddenly on his investment, at the same time it is sufficiently sound to be acceptable to the
average man as collateral for short-term notes to meet any sudden emergency that might arise. Inasmuch as
the same procedure must be followed in the case of the usual securities, piano paper does not suffer any com-
parison!
It might be well in the case of any general consideration of the financing question by the organized
trade bodies to give some thought to ways and means for acquainting the investing public with the true status
of piano paper, providing, of course, that the plan of financing through local investors has been tried out suc-
cessfully in definite localities.
Future scanning projects are planned by the International Arcade Museum Library (IAML).