No man has the right to indulge in costly pleasures unless he is able to pay cash for them. The man who mortgages his home to buy an automobile cannot expect sympathy from bustness men if it becomes necessary to foreclose the mortgage. The man who "mortgages" a moderate income to purchase on the instalment plan an automobile to be used merely for pleasure displays no better judgment. In the face of these facts the fundamental soundness of purchasing automobiles on the time-payment plan may be questioned.

Those who have studied the time-payment plan of financing hold that a man with sufficient income to permit him to buy an automobile exercises sound business judgment if he buys on time rather than for cash. This is predicated upon the probability that the purchaser's money is already invested at 6 per cent. If, in buying a machine for cash, he uses money bringing in 6 per cent, and in addition pays retail prices for insurance protection, he will be losing money on the transaction.

For example, the rate chart issued by the automobile department of the Industrial Finance Corporation shows that a Ford automobile selling for $938.02 can be purchased by paying down as little as $341.65, the balance to be paid in six monthly instalments. The total charge for financing the transaction, including the cost of fire, theft and transportation insurance for the period of a year, on valued form of policy, for 80% of the selling price of the car, with collision insurance (also for one year), all interest charges on the amount loaned, etc., is $86.94. There are no other charges. The purchaser is not required to get an endorser other than the dealer who sells him the car.

Is Your Money Worth 6 Per Cent. Before a purchaser, who has plenty of money in the bank, decides to pay cash for his new car, he should figure that his money is worth 6 per cent interest. In the above example, figuring the value of the purchaser's money at 6 per cent, and the average amount outstanding at $398.59, the amount of interest is $11.96. Adding to this amount the cost of retail fire, theft and transportation insurance (New York rates) and collision insurance we have a total of $113.59, showing a saving under the Morris Plan of the difference between the chart charge of $86.94 and $113.59 or $26.65. The purchaser can hardly afford to pay cash no matter how much money he has.

In short, if the automobile can be purchased on the above basis, it is bad business to pay cash' for it. It is just as bad business as it would be

to pay $5,000 in cash for a $5,000 life insurance policy. In buying life insurance we obtain all of the benefits immediately upon payment of the first small premium. In buying an automobile on time, the machine is delivered immediately to the purchaser upon receipt of the down payment and the purchaser at once obtains all of the benefits of owning the machine and of its insurance protection.

Then, too, the saving feature is an important one. The purchaser can keep his savings in the bank and set aside enough out of his salary to meet his monthly instalments. It often occurs that business men have money invested in stocks or bonds which at the particular time they wish to buy an automobile are selling low and it would entail a considerable sacrifice on their part to liquidate their holdings in order to pay cash for the automobile. It is certainly good business in such cases for a purchaser to hold his stocks, put them up as security if necessary, and purchase under this plan. This has been done in many cases and is becoming more and more a common practice.

The automobile is becoming to a large proportion of business men a necessity. The small merchant finds it necessary to purchase an automobile and at the same time increase his stock. He uses his cash to increase his stock, which will give him a large return on his money, and buys his automobile on the instalment plan, which costs him only a reasonable rate. The dividends from the investment in stock of a sum of money equal to the purchase price of the car will yield him in a year's time quite a substantial margin over and above the amount paid to finance the purchase of his automobile.

In the commercial field there are a great many men who require large or small automobile trucks for the development of their business. The fact that they are able to obtain immediate use of a fleet of trucks for a small down payment is a big accommodation to them. They reap a double advantage in being able to develop their business by the use of the machine and to actually save money by purchasing on time instead of paying cash outright.

A frequent criticism of the use of the timepayment method in selling automobiles is that it promotes extravagance. It is undoubtedly true that many thousands of Americans are today putting off the just demands of their butchers and grocers in order to meet the next payments due on their pleasure cars. But the arguments in favor of this plan are not directed to this type of individual. They are directed to the man who

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can well afford to pay for his pleasures but who has a sufficiently keen sense of business to realize that he can have as much pleasure at a smaller cost by taking advantage of the time-payment method.

Is This Sound Business?

The first thought in the mind of a credit man naturally will be: Is this business safe? In answer to that I will say that the facts speak for themselves. Take our Detroit experience, for example: from December 15. 1919, to the end of February, 1920, the Industrial Finance Corporation financed 1,000 Ford cars in the city of Detroit. Nearly all these transactions were on the basis of one-third down, the balance of the obligation being paid in 12 monthly payments, though a small percentage was on a 10 months' basis. Our reports show that at the end of April of these 1,000 accounts 29 were delinquent one payment, four were delinquent two payments and only one was delinquent three payments that is, 35 delinquencies in all. It is hardly fair to count the 29 accounts that were delinquent only one payment, as experience has shown us that many otherwise perfectly good accounts become technically delinquent through a delay on the customer's part of one or two days in making remittances. It is entirely probable that most of the 29 accounts, which were delinquent one payment. belong to this class.

An indemnity of the highest standing and substantial assets writes an indemnity bond behind cach of these retail automobile transactions. In case of failure of the customer to make his payments, the car is repossessed and resold for what it will bring and if the price received for it on the resale does not cover the customer's obligation, then in that event the indemnity company makes up the difference. The cost of this indemnity bond is included in the charge which the customer pays at the time of making the transaction. In addition to the indemnity bond, all automobiles sold on this plan are insured (as stated above) against the usual hazards Though we have no exact figures, it is entirely probable

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that 50 per cent of the automobiles sold in the United States are now sold on some form of time-payment. Many time-payment plans are unscientific and unsafe-and certainly any plan is unsafe which permits any individual to walk into an automobile dealer's place and pay down one-fourth or one-third of the price of the car and drive away with it without any thorough investigation of his ability to pay for the car through his earnings.

The Industrial Finance Corporation, through its 103 Morris Plan banks, has, we believe, put automobile financing on a scientific banking basis. Through this plan any man who ought to own a car and who has the ability to pay for it can purchase an automobile and pay for it out of his earnings without disturbing his investments or drawing his savings on a savings bank. When a car purchased in this way is finally paid for it has been literally earned. The advantage under such a scientific banking plan for automobile financing is shown by the fact that the volume of business has grown from practically nothing a year ago until now it runs into several millions of dollars a month.-The Credit

Helped Make Angels.

Hon. "Bob" Miller, Mississippi's most famous criminal lawyer, was attending a convention in New Orleans where he engaged in an argument with Dr. C. A. M. Dorrestem over the relative merits of their professions.

"I don't say that all lawyers are crooks," said the physician, "but you'll have to admit that men of your cloth don't make angels."

"You are right," retorted "Colonel Bob." "You doctors have the best of us in that respect."

Jack "Why do you call that barrister 'Necessity'?"

Jock-"Because he knows no law."-Tit-Bits (London).

NEW YORK

with the country. It is useless to talk about increased production to meet an increased standard of living in an increasing population without a greatly increased transport equipment. Moreover, there are very great social problems underlying our transport system; today their contraction is forcing a congestion of our population around the great cities with all that these overswollen settlements import. Even such great

disturbances as the coal strike have a minor root in our inadequate transportation facilities and their responsibility for intermittent operation of the mines.

Important phases of our shipping problems should receive wider discussion by the country. As the result of war pressure, we will spend over $2,800,000,000 in the completion of a fleet of nineteen hundred ships of a total of 11,000,000 tons-Nearly one-quarter of the world's cargo shipping. We are proud of this great expansion of our marine and we wish to retain it under the American flag. Our shipping problem has one large point of departure from the railway problem for there is no element of natural monopoly. Anyone with a water-tight vessel can enter upon the seas today and our government is now engaged upon the conduct of a nationalized industry in competition with our own people and the world besides. While in the railroads government in efficiency could be passed on to the consumer, on the seas we will sooner or later find it translated to the National Treasury. the Government continues in the shipping business, we shall be disappointed from the point of view of profits. For we shall be faced with the ability of private enterprise to make profits from the margins of higher cost of government operation alone. In this whole problem there are the difficult considerations requiring the best business thought in the country.

A National Budget System.

If

Another matter of government organization is in the matter of the national budget. To minds charged with the primary necessity of advance planning, co-ordination, provision of synchronizing parts in organization, the whole notion of

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our hit-or-miss system is repugnant. A budget system is not the remedy for all administrative ills; it provides a basis of organization that at least does paralyze administrative efficiency as our system does today. Through it, the co-ordination of expenditure in government departments, the prevention of waste and overlapping in government bureaus, the exposure of the pork barrel, and the balancing of the relative importance of different national activities in the allocation of our national income can all be greatly promoted. The budget system in some form is so universal in civilized governments and in completely conducted business enterprise (it has been adopted in thirty of our States) that its absence in our Federal Government is most extraordinary. It is, however, but a further testimony that it is always with our citizens a far cry from efficiency in their business to interest in the efficiency of their government.

Co-operation Between Employer and Employe.

Another great national problem is that of the relationship of employer and employe in industry. In this, as in many other national problems today, we are faced with a realization that the science of economies has altered from a science of wealth to a science of human relationships to wealth. We have gone on for many years throwing the greatest of our ingenuity and ability into the improvement of processes and tools of production. We have, until recently, greatly neglected the human factor that is so large an element in our very productivity.

I am daily impressed with the fact that there is but one way out, and that is to again re-establish through organized representation that personal co-operation between employer and employe in production that was a binding force when our industries were smaller of unit and of less specialization. The attitude of refusal to participate in collective bargaining with representatives of the employes' own choosing is the negation of this bridge to better relationship. On the other hand, a complete sense of obligation to bargains entered upon is fundamental to the process itself. The interests of employe and

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employer are not necessarily antagonistic; they have a great common ground of mutuality, and if we could secure emphasis upon these common interests we would greatly mitigate conflict. Our government can stimulate these forces, but the new relationship of employer and employe must be a matter of deliberate organization within industry itself. I am convinced that the vast majority of American labor fundamentally wishes to co-operate in production and that this basis of good will can be organized and the vitality of production recreated.

If union labor would adopt the definite gospel of maximum effort and skill of each individual worker and the sharing of its results with the employer, then the largest part of the friction in obtaining its other objectives-conditions of labor, proper hours, remuneration, and so forthwould disappear. It is possible for it to recreate the whole spirit of craftsmanship by co-operation to attain greater efficiency-and to make greater gains for itself than any hitherto made.

Control of Corporations.

The dominant idea of establishing and preserving an equality of opportunity has carried us on a far different road of social and political ideals from that in Europe. We have no frozen class distinctions. We have developed a far better distribution of necessities, comforts and wealth than any other place in the world. The assumption of class distinctions between labor, capital and the public is a foolish creation of false consciousness and is building for us the very same kind of foundations upon which Europe rocks today. All panaceas of socialism, syndicalism, communism, capitalism or any other "isms" are based on the hypothesis that class division necessarily exists in the United States and thence they launch into logical deductions after the acceptance of this false premise.

The combination of capital for large unit production and distribution is in itself economically sound up to some point of expansion. It is not, however, sufficiently recognized that overgrowth of such units leads them to bureaucratic administration and eventually renders them less efficient

than smaller units. From a social point of view the moment they begin to dominate the community, either in wages or prices or production, or to prevent the growth of competition, they are in flagrant violation of the primary principle of equality of opportunity.

Distribution of Wealth and Taxation. There can be no equality of opportunity if the ownership of the tools of production and service is to become frozen to a narrow group of holders either through large combination of capital or unrestricted accumulation of wealth.

The present inheritance, income and excess profits taxes tend to a better distribution of wealth. It has been proposed to extend these taxes in larger fortunes beyond their mere purposes of revenue to accomplish better distribution and better equality of opportunity, thereby recovering to the community extravagant gains.

The inheritance tax is theoretically a direct transfer of capital to income in the hands of the State, and thus might be criticized as stifling the increase of capital. Practically this would be answered if the State applied such receipts to the extinction of national debt or to reproductive expenditure in the improvement of the national properties in rivers, lands and so on. Such a curative of unfair distribution of wealth is no violation of the economic or social principle stated above.

The use of increase in income taxes to secure a better distribution of wealth breaks itself down at a certain point because it discourages initiative and effort more than does the use of inheritance taxes for such purpose. Beyond a certain point in care of dependents the human animal is chiefly interested in comfort in this life.

The use of excess-profits tax for this purpose or even for revenue-except as a war emergency coupled with controlled prices-breaks down not only from the discouragement to initiative, but worse, because it stimulates rank waste and is in the main passed on to the consumer and contributes to the high cost of living.

Curbing Speculation and Inflation. As regards control of speculation there are 818-816 Hammond Building

me: