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Before the Depression, bankers turned up their noses at financing automobile sales, preferring to stick to industrial or stock-market loans. They participated in installment credit only indirectly by advancing funds to established automobilefinance companies to enable them to sell on installment. While many conservative economists had warned that firms who sold on credit would suffer in hard times, the opposite proved to be true. While the stock-market crash froze many industrial and real-estate loans, the average consumer met installment obligations promptly. Retailers with accounts receivable in 1929 subsequently collected ninety-eight cents on the dollar. Hundreds of banks went under, but the big automobile-finance companies came through the economic crisis without a deficit. Commercial banks suddenly had a change of heart. Seeking employment for idle funds, they decided in 1934 that automobile financing was just what they heeded.
Source: Newsweek, 8 (15 August 1936): 33.
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This section contains 145 words (approx. 1 page at 300 words per page) |
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