Scan 29
Musical Courier 1896-12-16: Vol 33 Iss 876, 1896
41 lines. Read by computer on 25 September 2026. No printed page number was found. See the scan on archive.org.
1MUSICAL INSTRUMENTS
3This Paper has the Largest Guaranteed Circulation of any Journal in the Music Trade.
5No. 876.
6NEW YORK, WEDNESDAY, DECEMBER 16, 1896.
8The London MUSICAL COURIER is published every Thursday from 21 Princes street, Cavendish Square, Oxford Circus, W. London, England. This paper, while containing the salient points of THE MUSICAL COURIER of New York, devotes special attention to music and trade matters throughout Great Britain and the British Colonies.
10Specimen copies, subscriptions and advertising rates can be obtained by addressing the London office, or
11THE MUSICAL COURIER COMPANY,
12Union Square, West,
13New York City.
15SOME PLAIN TRUTHS ABOUT INSTALMENT PAPERS.
17NOW that the year 1896 is but a few weeks from its end, closing as it does the third of the dullest years in the piano business this country has ever experienced, it is, perhaps, well that an evil heretofore spoken of only in whispers and kept as much as possible in the background should be brought out into the light of publicity and frankly, openly discussed, to the end that it may be as far as possible remedied—perhaps altogether eradicated.
19The tremendous difficulties through which the trade as a whole has passed, and the individual difficulties that many have suffered, have brought some business men to a realization of actual, hard, incontrovertible facts by which some have profited, under which some have succumbed. Every failure that has occurred since the crisis of 1893, whether voluntary or enforced, has seemed to clear the commercial atmosphere and bring about more healthy conditions for those directly interested, and for the musical industries in general.
21There have been some honorable failures entered into as the only legitimate means for a readjustment of the affairs of the concerns involved; there have been some disastrous collapses of gigantic schemes too unwieldy to be engineered through the hard times; there have been some—a very few—contemptible failures that reflect discredit upon all participating, whether as prime movers or innocent dupes. Taken as an industry, an enterprise trafficking in one article to the extent of many millions a year, the piano business has made an excellent showing in comparison with other lines involving like amounts, and, when the peculiar nature of the business is considered, it may truthfully be said that the entire trade has done wonderfully well in the maintenance of its credits within its own limits, and with the supply sources and the banks. But the practice here to be spoken of must be stopped if the trade would retain its self-respect and the respect of the financial institutions that perforce must play so prominent a part in its operations.
23When the pinch in money came, immediately following the exceptional piano prosperity of 1892, the amount of money tied up in leases, mortgages or notes—according as dealers sold on the instalment plan—represented, as indeed it now does, the bulk of the money turned over in the business. Probably nine-tenths of the output of pianos reach the final retail purchaser through an agreement between the customer and the dealer to pay and accept a cash down payment for a small portion of the transaction and subsequent sub-divided payments to be made monthly, quarterly or at any other times mutually fixed upon. In all cases the ownership of the instrument remains vested in the dealer, secured by mortgage or lease, and a final bill of sale is not given the retail customer until all payments have been completed.
25It matters not what are the several State laws governing this class of transaction, the point remains that the dealer exchanges his piano for a written promise to pay in some form. The more active business is, the greater the number of these promises to pay the dealer gathers and puts in his safe. If the dealer has a fair capital, if times are good, which means prompt collections, he may manipulate his affairs, with occasional help from the manufacturer, so that his income from normal meeting of these small payments, together with his profits on a few cash sales or quick sales, will bring him in sufficient money to meet his current obligations, to purchase fresh stock, and lay aside an earned profit wherewith to increase his operations or protect himself from unforeseen delinquencies.
27But the root of the trouble is that few dealers have sufficient initial capital to swing their trade. They therefore depend on extraordinary, abnormal accommodations from the makers (who in the fierce struggle for mere existence too frequently grant them), and upon the reasonably prompt payment of their instalment accounts. So long as prosperity continues success on these lines continues. So soon as general business slackens, mills close, shops work half time, instalment payments cease or are strained. Then the trouble begins. There the temptation has its birth, and woe unto him who yields, for his nights shall be without rest and dishonor stare him in the face in his waking hours.
29The number of dealers in the United States who have enough money to carry on business in the instalment line without accommodation from outside sources is limited even in the best of times. When there is a stringency the number becomes so small as to be insignificant. The majority, the great majority, must turn their money quickly, and their only method is to dispose of their leases on their instalment goods outright—which is hard to do—or hypothecate them—which is easy to do.
31A money lender will make advances on good mortgages, on good notes, on good leases. Most banks will accept them as collateral, and all or nearly all manufacturers have been obliged to accept them either as payment or security in order to retain the patronage of the dealers. So it is seldom that the dealer can show in his safe any considerable number of liens on the goods he has sold. He runs his book accounts and makes his collections with which to keep these documents in good standing with their actual possessors, but he cannot afford to keep the amount they represent lying idle in his office. The manufacturers in turn must have settlements in some form for their goods to keep their factories running; they cannot get cash, the dealers' notes are not always safe risks unless secured, and so the leases find their way first to the manufacturer and then through him to the bank, so that the actual tangible document is far removed from the man who signed it, and very, very often he never sees it again. If he completes his payments he is satisfied with the dealer's receipt in full, if he returns the piano he is satisfied with the dealer's receipt for the instrument and a paper of some sort, any sort, to show the deal is off, or in seven cases out of ten he, being a clerk or laborer or mill hand, takes the dealer's verbal assurance that everything is all right and is glad to be rid of a hopeless effort to pay a debt he should not have contracted.
33The temptation of the dealer lies in his effort to maintain his credit. Of the 20 instalment accounts for which he has hypothecated the paper five do not pay promptly. He makes these payments out of his own resources. Then he runs short and he pays number 12's note with number 2's money and takes up number 2's with the payment of number 7 and so on and so on until he is involved. Then number 13 lays down on him altogether and sends back his piano. He has paid one-third the amount of the notes he signed, the dealer has "hocked" them for two-thirds their value. Business is dull and there is no money to send to New York or Boston or Chicago to lift that particular contract. The piano is in the store. It is sold again and another lease or mortgage or lot of notes is sent on its course—with the old papers still in existence and to be taken care of.
35In some States a dealer can get both a lease and a set of notes representing the same transaction. The notes he gives to his bank or to Mr. A, the manufacturer; the lease he uses as collateral to Mr. B, another manufacturer. And he must keep everlastingly at it to take care of those double dealings and watch that they don't clash.
37To complicate matters further, X, let us say, is a big dealer or jobber in a large city. He buys direct from the manufacturer Y. He supplies pianos to a small dealer in the upper part of his State, Mr. Z. A piano goes from Y to X, and he ships it to Z, who in turn sells it and goes through one of the processes set forth above, except that he sends his original customers' papers to Y, who disposes of them to Jenkins & Robinson, doing the same thing with the customers' papers that Z has sent him for a Jenkins & Robinson piano, except that he has turned these papers over to Y. And likely as not both Jenkins & Robinson and Y have used these original documents in their own banks.
39We know of one piano thus operated which was sold by a manufacturer to a jobber at an original cost of $100, which was sold to a dealer by the jobber, by the dealer to a customer, returned and resold, returned and sold back by the dealer to the jobber, resold by the jobber to another dealer, sold by him for cash—on transactions concerning which the banks advanced over $1,200, aside from which the final retail cash payment of $235 was realized, and the original maker of the instrument has not received a cent of actual money for it up to this day!
40Thousands, tens of thousands, have been involved
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