Instalment Business

Fortunate indeed is the corporation whose 1930 earnings are running ahead of 1929's. Notable among last week's reports was that of Commercial Investment Trust (see p. 41). No investment trust in the new special sense, Commercial Investment specializes in buying receivables created out of instalment buying. Although this business would seem the most susceptible to depression and thinner bankrolls, C. I. T., earned $4,738,683 in the first half, against $4,042,110 for the same period last year.

Helping to make this money were C. I. T. employees (more than twenty-five hundred of them) throughout the U. S. and in 70 foreign countries. But the chief credit is due, as in every other year, to Henry Ittleson, founder-president of C. I. T. In 1908 President Ittleson was secretary and general manager of the May department store in St. Louis. He saw that credit was necessary to customers, that giving credit tied up the firm's funds. He had an idea which probably led to the birth of instalment financing. But he prefers to say he merely developed a situation.

With the idea and two assistants he started a $100,000 company to buy receivable accounts of manufacturers and wholesalers. The next step was to buy receivables of merchants covering their instalment sales. With it has grown instalment selling, which is estimated to involve several billion dollars a year. Ably Mr. Ittleson will argue that the growth in instalment selling has been only the increasing demand for new modern appliances-- that previously instalment selling was restricted to such things as homes, chiefly because they were the only expensive products in demand. Without instalment selling, he can show, there would be little mass production, automobiles would be 100% more expensive, 75% less in number.

C. I. T. has many potent clients-- among them Radio Corp., Timken Oil Burner, Studebaker Motors, Westinghouse Electric, Cleveland Tractor, Hoover Vacuum Cleaner, Detroit Aircraft, Koken Barber Supply, Hudson Motors, Majestic Radio, Petroleum Heat & Power.

Although C. I. T. is not as large as General Motors Acceptance Co., its gross is greater than any independent company's. To obtain this it is led into many fields. Thus at one time its files contained contracts on the printing equipment of 25 metropolitan newspapers, four Great Lakes steamers, plus the usual amount of soda fountains, scows, refrigerators, machinery. At present retail domestic automobile notes form the largest single item (29.54%) among C. I. T.'s receivables. Last December, however, this business formed 36.71% of the whole. The reduction did not occur because of any question in Mr. Ittleson's mind as to the desirability of receivables covering the purchase of automobiles but because auto mobile production and sales fell so far behind last year that the same amount of business was not to be had.

Of course the present business depression has had some effect on C. I. T.'s condition, but how very little is shown by the fact that the reserves for possible losses were 1.86% on June 30 against 1.73% last December. In making his excellent earnings report Mr. Ittleson said: "The Corporation's commodities are Credit and Service. This specialized combination is in demand and will continue in demand."

Smaller than C. I. T. but potent and ancient in the instalment business is Commercial Credit Co. of Baltimore. Last week Commercial Credit also made its report, showed profits of $2,271,256 for the first half against $2,929,624 in the same period last year. Said Chairman A. E. Duncan of these figures:

"They are better probably than has been generally anticipated." While Commercial Credit's chief trouble is likewise with automobile paper, on June 30 only .0047% of retail automobile notes were more than two months past due.

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