Cash or Credit

The cherished American custom of buying the good things of life on the installment plan has been greatly restricted by Regulation W, a wartime emergency measure. Buyers have had to plunk down one-third of the purchase price on cars, refrigerators, etc., pay off the rest within 15 months. Last week, President Truman said he would soon scrap Regulation W as he does not feel that such war measures should be retained indefinitely. But he hoped Congress would make consumer credit control permanent. Marriner S. Eccles, chairman of the Federal Reserve Board, told the House Banking and Currency Committee why it should.

There is over $4 1/2 billion of installment credit on the books now. If the lid is taken off, said he, the amount may easily reach "$17 billion by 1950." Families would go heavily into debt, he predicted, for goods that are not only highly priced but of inferior quality. A depression would cause so many defaults that the whole economy would be dragged further down, in much the way the top-heavy credit structure helped drag it down in 1929.

The only people who are against credit control, said Eccles, are "the people who sell credit--the banks and the loan companies." Eccles said that in a poll of automobile dealers--usually considered the main beneficiaries of the installment system--only 51% voted for decontrol, 48% favored consumer credit legislation. Despite his plea, observers saw only one chance in five that Congress would make credit control permanent.

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