Music Trade Review
Issue: 1925 Vol. 81 N. 20 - Page 11
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NOVEMBER
14,
THE MUSIC TRADE
1925
REVIEW
11
Music Dealers' Instalment Sales and
Their Collection Problems
How the Industrial Bank Liquidates Delinquent Accounts—Ways in Which the Music Merchant Can Benefit
From the Industrial Loan Plan—The Merchants' Co-operative Loan Company—The Greeley Plan
Makes Possible Shorter Terms and Cash Purchases — Seventh Article by J. K. Novins
N ever-present problem with the music
retailer is how to liquidate delinquent ac-
counts. Very often a customer will in-
volve himself for more debts than he could pos-
sibly settle at one time, and under such circum-
stances it is hardly likely that the music mer-
chant will collect, regardless of the pressure ex-
erted by the latter. If the tardy customer owes
only that one account, the music man has a
chance to make some arrangement with the de-
linquent, but when bills owed to a number of
A
none the worse off than before. The delinquent
borrower pays interest on the loan in advance,
as well as a small investigation fee, so the mer-
chants lose not a cent.
The industrial loaning companies are anxious
for such business, and the reliable among them
charge the legal interest and demand no fees
from the merchants who indorse the note. There
are loaning companies, however, which exact
such charges, and are, therefore, held in taboo
by reliable merchants.
Greeley, Colorado
19
..after date for value received, the undersigned promises to pay
DOLLARS
in
installment payments of t
payable on the
day of each month
I
Maturity
week
until this note and all just charges are paid.
Payable in
Installments of
any installment when due, the ho'.der hereof may declare the remaining principal due ar.H payable at\>nce and agree and consent th '
holder and Any o[ then*, without notice and that after such extension or extensions the liability of all parties shall rcm^'n as if no
been had. Unpaid principal jnd defaulting intereit shall bear interest at twelve per cent (12 per rent) per annum from maturity u
The underpinned hereby severally waive all benefits of homestead and exemption laws and agree'that should Ihis note be coll
Thii note
Chattel Note
No...
to the order of THE CITIZENS LOAN COMPANY at its office in Greeley, Colorado, the sum of
paid,
d by in at-
on the
.
day of each month week
hy-
Secured by
public or private safe at the option of the holder, without notice and without demand for payment. After deducting the expensei of such sale, IK
eluding attorney's fees, the proceeds thereof shall be applied on this note, . and
and in
in case
case of
of s-.ich
such sale
sale the
the holder
holder c of this note may become the pur-
and clear of any cl
icnrity and hold the
T H E CITIZENS LOAN COMPANY. Greelfy. Colo. •
A Typical Industrial Loan Note
The way the plan operates in cities visited by
retailers in the town fall due at the same time
the individual music merchant begins to lose the writer is as follows: A number of mer-
chants to whom the delinquent owes overdue
control of the situation.
The problem of liquidating the delinquent ac- accounts get together and suggest that he make
count is still more important right now, in view application for a loan. Very often it is the sec-
of the increasing prevalence of instalment busi- retary of the local retail credit men's associa-
ness. There is a tendency to overbuy. It is tion who engineers the arrangement. Charles
not always practicable nor profitable for the M. Reed, assistant secretary and manager of the
music merchant to resort to legal measures to Retail Credit Men's Association of Denver, acts
recover the merchandise on which the customer as a sort of liaison officer for merchants who
owes money. Very often the customer is hon- wish to liquidate a delinquent's indebtedness.
orable and has every intention to pay, but he He is in a position to do so, because he has a
labors under a severe strain induced by simul- complete record of the delinquent's indebted-
taneous pressure of several merchants, as a re- ness. John Smith, a music retailer, soon finds
sult of which he is apt to develop a thick skin out through Mr. Reed that John Doe, the de-
linquent, is indebted to three or four other local
and spiteful attitude.
The music merchant can suggest that the de- merchants. John Smith can then approach these
linquent make a loan at the bank, or at a regu- three or four merchants on the proposition, the
lar industrial loaning company. But a man in delinquent is asked to apply for a loan, and
such financial straits, unless he possesses good each merchant, in turn, indorses his note.
assets, will not succeed in obtaining a bank-
The music retailer indorses only for the
loan. Even if he had a job or profession com- amount the delinquent owes him, and he re-
manding regular income he would not find the ceives that amount directly from the industrial
banker sympathetic toward a small loan. A loan company. If, after making several pay-
regular loaning company requires collateral and ments on the loan, the delinquent drops out of
propertied indorsers, and very often the delin- sight or otherwise defaults, then each merchant
quent cannot produce the necessary security.
who indorsed his note must return to the loan
Helping the Delinquent to Borrow
company an amount of the balance proportion-
Retailers in a number of cities have solved ate to the amount of the indorsement.
the problem in a different way. They encour-
Suppose the delinquent owes $200 to five
age the delinquent who owes a number of local merchants, as follows: Music, $75; clothier, $50;
merchants to borrow the total amount at a local ready-to-wear, $30; auto dealer, $25, and grocer,
industrial bank, the merchants acting as in- $20. Each of these five merchants indorses his
dorsers. The total amount of the loan is then loan, being responsible only for the amount
apportioned among the merchants, in accord- owed him by the delinquent, that is, the music
ance with the amounts owed them by the de- man indorses for $75, the clothier for $50, etc.
linquent. The delinquent then has an entire
Then, suppose the delinquent pays back to the
year in which to pay back the amount of the industrial bank only $100 of the $200 borrowed
loan to the industrial loan company.
and then quits paying. The five indorsing mer-
There is a decided advantage in this ar- chants must pay the company the unpaid bal-
rangement. First of all, the honorable delin- ance of $100. Each indorser, therefore, pays
quent is given a definite inducement to get him- just half of the amount for which he indorsed.
self out of a difficulty. The merchants get their In case of serious accident or death of the de-
money without delay. They take no risk in in- linquent borrower, the indorsers do not suffer
dorsing the delinquent's note, for if he does not any loss, because the industrial bank usually in-
pay to the industrial bank as agreed they are sures accounts against such emergencies,
This practice is widespread among merchants
in Denver and other Western cities. According
to Mr. Reed, of the Denver Retail Credit Men's
Association, the retail merchants have benefited,
and in practitally all instances these loans have
been fully paid up by the delinquent borrowers.
Retailers Operate Own Loan Company
An interesting recent development is the or-
ganization of loan companies co-operatively by
retail merchants in several Western towns. On
February 5, 1925, the retail merchants of Gree-
ley, Col., and surrounding towns organized the
Citizens' Loan Co. as a regular department of
the Weld County Credit Association, to serve
the merchants in the entire district. The or-
ganization of the loan company was effected in
less than thirty days, with an initial fund of
$10,000 subscribed by twenty merchants.
As far as the writer could learn, the Weld
County merchants are the pioneers in this new
movement. Recently, the merchants of Canon
City, Col., and Laramie, Wyo., organized simi-
lar co-operative loan companies as functions of
their respective credit associations. At this
writing, the merchants of Grand Junction and
surrounding towns comprising Masa County,
Col., have organized a similar company, known
as the Citizens' Finance Co., managed under the
wing of the Masa County Credit Association.
The writer is informed that merchants in other
States are contemplating taking a similar
course.
It seems to be most popular among the coun-
try merchants, perhaps because of their finan-
cial weakness to carry accounts as compared to
the well-capitalized city stores and because of
the more complicated credit conditions that ex-
ist in the average rural community.
Realize $1,000 Weekly on Bad Accounts
For over a year the merchants of Weld Coun-
ty have had experience with this loan idea. At
first the Weld County Credit Association acted
as local representative of a regular industrial
bank in Denver. Ever since the Citizens' Loan
Company was organized in Greeley, last Feb-
ruary, an average of $1,000 in loans weekly
has been recorded, chiefly to delinquents, and
during that time, says Frank Field, secretary-
manager of the Weld County Credit Associa-
tion, "we have not had to write a single letter
to a delinquent." "The first few months," he
added, "none of the seventy-five loans had run
over three days past due without renewal, and
many pay in advance."
"Our newly organized company," Mr. Field
told the writer, "in less than four months has
earned 10 per cent gross and 8 per cent net for
stockholders. The total expense, including at-
torney fees and other organization expenses,
such as printing, supplies for a year, is only
$180."
Several of the stockholders of this co-opera-
tive venture are Greeley bankers. The bankers
find that the co-operative loan company does
not interfere with their loaning functions. It
actually serves them to good purpose by elimi-
nating the smaller bank loans, which are not
profitable to the bankers.
How Co-operation Benefits Merchant
An interesting feature of the Greeley experi-
ment is that not only is the money so loaned
used to finance merchants who suffer from
prevalence of delinquent accounts, but residents
are actually encouraged to use such borrowed
(Continued on page 13)
NOVEMBER
14,
THE MUSIC TRADE
1925
REVIEW
11
Music Dealers' Instalment Sales and
Their Collection Problems
How the Industrial Bank Liquidates Delinquent Accounts—Ways in Which the Music Merchant Can Benefit
From the Industrial Loan Plan—The Merchants' Co-operative Loan Company—The Greeley Plan
Makes Possible Shorter Terms and Cash Purchases — Seventh Article by J. K. Novins
N ever-present problem with the music
retailer is how to liquidate delinquent ac-
counts. Very often a customer will in-
volve himself for more debts than he could pos-
sibly settle at one time, and under such circum-
stances it is hardly likely that the music mer-
chant will collect, regardless of the pressure ex-
erted by the latter. If the tardy customer owes
only that one account, the music man has a
chance to make some arrangement with the de-
linquent, but when bills owed to a number of
A
none the worse off than before. The delinquent
borrower pays interest on the loan in advance,
as well as a small investigation fee, so the mer-
chants lose not a cent.
The industrial loaning companies are anxious
for such business, and the reliable among them
charge the legal interest and demand no fees
from the merchants who indorse the note. There
are loaning companies, however, which exact
such charges, and are, therefore, held in taboo
by reliable merchants.
Greeley, Colorado
19
..after date for value received, the undersigned promises to pay
DOLLARS
in
installment payments of t
payable on the
day of each month
I
Maturity
week
until this note and all just charges are paid.
Payable in
Installments of
any installment when due, the ho'.der hereof may declare the remaining principal due ar.H payable at\>nce and agree and consent th '
holder and Any o[ then*, without notice and that after such extension or extensions the liability of all parties shall rcm^'n as if no
been had. Unpaid principal jnd defaulting intereit shall bear interest at twelve per cent (12 per rent) per annum from maturity u
The underpinned hereby severally waive all benefits of homestead and exemption laws and agree'that should Ihis note be coll
Thii note
Chattel Note
No...
to the order of THE CITIZENS LOAN COMPANY at its office in Greeley, Colorado, the sum of
paid,
d by in at-
on the
.
day of each month week
hy-
Secured by
public or private safe at the option of the holder, without notice and without demand for payment. After deducting the expensei of such sale, IK
eluding attorney's fees, the proceeds thereof shall be applied on this note, . and
and in
in case
case of
of s-.ich
such sale
sale the
the holder
holder c of this note may become the pur-
and clear of any cl
icnrity and hold the
T H E CITIZENS LOAN COMPANY. Greelfy. Colo. •
A Typical Industrial Loan Note
The way the plan operates in cities visited by
retailers in the town fall due at the same time
the individual music merchant begins to lose the writer is as follows: A number of mer-
chants to whom the delinquent owes overdue
control of the situation.
The problem of liquidating the delinquent ac- accounts get together and suggest that he make
count is still more important right now, in view application for a loan. Very often it is the sec-
of the increasing prevalence of instalment busi- retary of the local retail credit men's associa-
ness. There is a tendency to overbuy. It is tion who engineers the arrangement. Charles
not always practicable nor profitable for the M. Reed, assistant secretary and manager of the
music merchant to resort to legal measures to Retail Credit Men's Association of Denver, acts
recover the merchandise on which the customer as a sort of liaison officer for merchants who
owes money. Very often the customer is hon- wish to liquidate a delinquent's indebtedness.
orable and has every intention to pay, but he He is in a position to do so, because he has a
labors under a severe strain induced by simul- complete record of the delinquent's indebted-
taneous pressure of several merchants, as a re- ness. John Smith, a music retailer, soon finds
sult of which he is apt to develop a thick skin out through Mr. Reed that John Doe, the de-
linquent, is indebted to three or four other local
and spiteful attitude.
The music merchant can suggest that the de- merchants. John Smith can then approach these
linquent make a loan at the bank, or at a regu- three or four merchants on the proposition, the
lar industrial loaning company. But a man in delinquent is asked to apply for a loan, and
such financial straits, unless he possesses good each merchant, in turn, indorses his note.
assets, will not succeed in obtaining a bank-
The music retailer indorses only for the
loan. Even if he had a job or profession com- amount the delinquent owes him, and he re-
manding regular income he would not find the ceives that amount directly from the industrial
banker sympathetic toward a small loan. A loan company. If, after making several pay-
regular loaning company requires collateral and ments on the loan, the delinquent drops out of
propertied indorsers, and very often the delin- sight or otherwise defaults, then each merchant
quent cannot produce the necessary security.
who indorsed his note must return to the loan
Helping the Delinquent to Borrow
company an amount of the balance proportion-
Retailers in a number of cities have solved ate to the amount of the indorsement.
the problem in a different way. They encour-
Suppose the delinquent owes $200 to five
age the delinquent who owes a number of local merchants, as follows: Music, $75; clothier, $50;
merchants to borrow the total amount at a local ready-to-wear, $30; auto dealer, $25, and grocer,
industrial bank, the merchants acting as in- $20. Each of these five merchants indorses his
dorsers. The total amount of the loan is then loan, being responsible only for the amount
apportioned among the merchants, in accord- owed him by the delinquent, that is, the music
ance with the amounts owed them by the de- man indorses for $75, the clothier for $50, etc.
linquent. The delinquent then has an entire
Then, suppose the delinquent pays back to the
year in which to pay back the amount of the industrial bank only $100 of the $200 borrowed
loan to the industrial loan company.
and then quits paying. The five indorsing mer-
There is a decided advantage in this ar- chants must pay the company the unpaid bal-
rangement. First of all, the honorable delin- ance of $100. Each indorser, therefore, pays
quent is given a definite inducement to get him- just half of the amount for which he indorsed.
self out of a difficulty. The merchants get their In case of serious accident or death of the de-
money without delay. They take no risk in in- linquent borrower, the indorsers do not suffer
dorsing the delinquent's note, for if he does not any loss, because the industrial bank usually in-
pay to the industrial bank as agreed they are sures accounts against such emergencies,
This practice is widespread among merchants
in Denver and other Western cities. According
to Mr. Reed, of the Denver Retail Credit Men's
Association, the retail merchants have benefited,
and in practitally all instances these loans have
been fully paid up by the delinquent borrowers.
Retailers Operate Own Loan Company
An interesting recent development is the or-
ganization of loan companies co-operatively by
retail merchants in several Western towns. On
February 5, 1925, the retail merchants of Gree-
ley, Col., and surrounding towns organized the
Citizens' Loan Co. as a regular department of
the Weld County Credit Association, to serve
the merchants in the entire district. The or-
ganization of the loan company was effected in
less than thirty days, with an initial fund of
$10,000 subscribed by twenty merchants.
As far as the writer could learn, the Weld
County merchants are the pioneers in this new
movement. Recently, the merchants of Canon
City, Col., and Laramie, Wyo., organized simi-
lar co-operative loan companies as functions of
their respective credit associations. At this
writing, the merchants of Grand Junction and
surrounding towns comprising Masa County,
Col., have organized a similar company, known
as the Citizens' Finance Co., managed under the
wing of the Masa County Credit Association.
The writer is informed that merchants in other
States are contemplating taking a similar
course.
It seems to be most popular among the coun-
try merchants, perhaps because of their finan-
cial weakness to carry accounts as compared to
the well-capitalized city stores and because of
the more complicated credit conditions that ex-
ist in the average rural community.
Realize $1,000 Weekly on Bad Accounts
For over a year the merchants of Weld Coun-
ty have had experience with this loan idea. At
first the Weld County Credit Association acted
as local representative of a regular industrial
bank in Denver. Ever since the Citizens' Loan
Company was organized in Greeley, last Feb-
ruary, an average of $1,000 in loans weekly
has been recorded, chiefly to delinquents, and
during that time, says Frank Field, secretary-
manager of the Weld County Credit Associa-
tion, "we have not had to write a single letter
to a delinquent." "The first few months," he
added, "none of the seventy-five loans had run
over three days past due without renewal, and
many pay in advance."
"Our newly organized company," Mr. Field
told the writer, "in less than four months has
earned 10 per cent gross and 8 per cent net for
stockholders. The total expense, including at-
torney fees and other organization expenses,
such as printing, supplies for a year, is only
$180."
Several of the stockholders of this co-opera-
tive venture are Greeley bankers. The bankers
find that the co-operative loan company does
not interfere with their loaning functions. It
actually serves them to good purpose by elimi-
nating the smaller bank loans, which are not
profitable to the bankers.
How Co-operation Benefits Merchant
An interesting feature of the Greeley experi-
ment is that not only is the money so loaned
used to finance merchants who suffer from
prevalence of delinquent accounts, but residents
are actually encouraged to use such borrowed
(Continued on page 13)
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