ERIC HUTTON August 10 1963


ERIC HUTTON August 10 1963


Suddenly, everybody’s owing it


Nine out of ten Canadian families are now living and playing with things they haven’t paid for — five billion dollars’ worth. To most of us, it seems, credit these days looks cheap at any price — and sometimes it is

A FEW WEEKS AGO a thirty-seven-year-old Toronto accountant went shopping with his wife for a new TV and refrigerator. They found what they wanted in a chain appliance store. The total cash price, allowing for trade-in on their old appliances, was six hundred dollars. The husband signed an agreement to pay that, plus seventy-eight dollars “cost of credit,” in eighteen instalments of $37.66 a month.

Being an accountant, he easily calculated that he was paying a little more than seventeen percent on his debt — nearly three times the traditional bank rate of six percent. But this did not worry him or his wife. In their ten years of married life, most of the things they have bought, other than food, shelter and small incidentals, have been on credit. In fact, the new refrigerator and TV brought to exactly ten thousand dollars the amount of credit they have used. They have repaid all but twelve hundred dollars and paid also an average of eighteen percent interest, on take-home pay that has never quite reached one hundred dollars a week. (For a graphic look at their purchases, see the following pages.)

"When I bought our first TV ten years ago, 1 had sleepless nights for a week, worrying about the debt,” the accountant told me. “This time we celebrated.” But he asked me not to identify him by name. “I realize,” he said, “there’s still a stigma attached to living on credit, and 1 don’t want my employers and

neighbors to find out how deeply we're in volved."

The stigma of debt may be real, but in 1963 there are very few Canadians left who don’t find it quite bearable — provided the boss and the people next door don't know. By the end of last year Canadians owed more than five billion dollars for consumer credit, or eighty percent more than their debt in 1955, the year in which buying on time started to become a major phenomenon in the Canadian way of life. What Canadians now owe for personal goods and services they have bought on time amounts to more than one third the national debt, more than half the total money Canadians own in the form of savings. ( But this does not mean that the average Canadian could repay his debts twice over if he chose — more than one third of credit users have no savings at all or savings less than the amount that they are owing.)

At any given time in 1963 two out of three Canadian families with incomes between

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car in ten years costs its five owners, in credit charges,

Top interest rate to finance a new car 10 years ago was 18 % on balan ce due, say $2,500 after trade (today’s rate is 14%.) For a two-year-oid car credit cost is 20%; four-year-olds call for up to 24%.

When the car’s price drops below $1,000 the finance companies usually don’t want the business, and usedcar dealers often do their own financing, charging 30-35% interest.

Life on the cuff: how a $100-a family spent $10,000 long before they earned it


twenty-five hundred dollars and seven thousand dollars owe nearly six hundred dollars each, on the average, for consumer goods. Most, of the remaining families in this bracket have paid off their debts for the time being and intend to buy on credit again in the foreseeable future. Only one Canadian family in ten leads a wholly cash-and-carry existence. (A larger proportion than that seem to think they do. Several 1 have spoken to insisted they bought only for cash, then added, “except the car, of course, and gasoline -— and our department store charge accounts." These self-styled cash only buyers actually use credit in categories that account for more than half of all credit buying in Canada.)

What has caused the unprecedented increase in credit buying? Surely a whole nation doesn't change its spending habits spontaneously in less than a decade? Two factors are chiefly responsible:

® First, the banks, once known to ordinary people only as places where they could save money, have gone in for mass lending, at a cheaper rate than the finance and loan companies. [heir five thousand branches offer more handy places where people can borrow, and they make rather more respectable the once dubious business of getting into debt.

( The f inance and loan companies admit they cannot match the banks' “image of respectability.”) In the few years since they started making easy loans to individuals, the banks have become the largest moneylenders of all: they had $1,183,000,000 outstanding at the end of last year.

■ Second, the “climate” for getting into debt has improved immeasurably for millions of Canadians. Government and industrial social security measures increasingly take care of pensions, income in case of disability, medical and hospital expenses. (Younger men may not realize it, but not so many years ago an employer made one deduction — for income tax. The earner had to plan for all other eventualities on his own initiative.) The new social security works two ways. It gives the earner

a smaller proportion o': take-home pay. but it so surrounds him with safeguards that he feels free to make the most expansive use of the money that's left over — which is to buy credit with it.

Credit debt has risen faster since l 955 than cither prices or population, and the proportion of take-home pay pledged to repay consumer debt has climbed twenty percent. The typical Canadian user of consumer credit is not concerned with these technical reasons for his credit-spending spree. Fie has reasons of his own. As the accountant mentioned earlier put it, "Credit buying has given us a much higher standard of living than we could have afforded if we had had to save for everything. The cost of our ten thousand dollars of credit — eighteen hundred dollars — might seem outrageous to some people, but we feel it has been a cheap price to pay for things we would not have had otherwise.

“In my own case, saving before spending would have given my family a very bare standard of living. I'm a natural non-saver and frittcrer. One time we got all our debts paid and I decided to try saving for a fur jacket for my wife. Gradually the account reached seventy-five dollars — then I saw a bargain car radio and bought it. Incidentally, that was the largest cash buy I've ever made. I got the fur on credit, and since then we have never paid cash for anything that could be had on credit.”

Canadian families' needs and wants — and hence what they buy both for cash and on credit — vary surprisingly from region to region. Consider the spending habits of typical families with incomes of twenty-five hundred to seven thousand dollars a year in Montreal, Toronto, Winnipeg, Edmonton and Vancouver.

The average Montreal family in this group spends more on "high living” -— eating, drink-



CLOTHES & Toys 4 $1100

i)espiie a ,izo~1e,vj salary. a i'oronio bank accountant bou~/it the //ijni~'s above for himself, his uife (111(1 two children, In living credit. 1-le says about cost.


is the actual retail price of the thin~qs th

ing and smoking — than similar families in the other cities. Toronto families set the cheapest tables. When they eat a home-cooked meal that costs $2.25, their Montreal counterparts are enjoying a $2.78 menu. (Jn Edmonton it’s $2.42: Vancouver $2.45; Winnipeg $2.46.) Edmonton families are the most abstemious. They spend one third less than Montrealers on drink and tobacco.

Those items don't involve much consumer credit, of course, but they do have a bearing

on what s lelt over for credit buying. Since Montreal families are also the most expensive dressers — they splurge a hundred dollars for clothes and jewelry for every seventy-eight dollars their Winnipeg and Vancouver counterparts spend — they are at or near the bottom of the list in other purchases. For example, they spend less than half as much on automobiles as do similar families in Vancouver, who head the car spenders in Canada's five biggest cities. Montrealers make up for this by being the top spenders on taxis and other public transportation. Edmontonians, thriftiest in personal indulgence, furnish and equip their homes more lavishly than the others, and spend most on recreation, but they are stingiest when it comes to gifts and charity.

Toronto families are just average in most of their expenditures, but — and many Canadians may find this hard to swallow — they lead the others in generosity and erudition. They give most to charity and spend most on reading matter. Winnipeggers are the most securityminded. They spend a larger part of their budget on insurance policies and pension plans.

Canadians' credit-borrowing habits also vary

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CARS & REPAIRss2,850

It ni/gilt look ol1trageoji,~, mu ui'e feel it has heeui cheap. Ciedit huvi,i~ has IIc~,i /(5 /17(1(11 hi~'hiei standard of /it'ing i/ian if i~e had saved for everything."

ugh/L o ver ten years. n fop, Interest cost


continued from page 13

You can buy a TV set on credit and show 100% cash profit

widely from province to province. Families in the Maritimes make the most per-capita use of small-loan companies — there's a loan outstanding for every two and a half families, but the amount is smaller than elsewhere in Canada. Saskatchewan, as befits a socialist province, gives the least patronage to this form of private enterprise (but Saskatchewan people borrow more per capita from credit unions than do other Canadians). British Columbians borrow the largest individual sums from loan companies.

The emergence of credit buying as a major phenomenon of the Canadian way of life poses a number of questions:

■ Is five billion dollars — eighteen percent of take-home pay — too much for Canadians to owe in consumer credit? If not, what is the danger level of personal debt?

■ Is massive buying-on-time good family economics or evidence of improvidence?

■ Where has that five billion dollars of credit come from, what does it cost the borrower, and what is the cheapest method of obtaining credit?

■ What kind of people get credit readily and what kind have trouble persuading lenders to trust them?

When the present credit explosion started, James Coyne, then president of the Bank of Canada, said that the 1955 level of consumer credit, a little under three billion dollars, had not reached the danger point, but any significant increase would be an overextension of borrowing. Today Mr. Coyne, a private financial consultant, says, "1 have made it a practice not to comment on matters of this sort."

Dr. Jacques Singer, a Toronto consulting economist, believes the consumer debt level can safely go considerably higher than at present, provided the upward trend of income also continues among the people who use consumer credit. Fie finds it reassuring that the income groups which have, or think they have, the highest job security are the biggest users of consumer credit.

The Bank of Nova Scotia's economists have drawn up suggested budgets for families making from two hundred and fifty to seven hundred dollars a month in take-home pay, and these show what the bank thinks is a safe level of consumer spending. For a family of four with a four-hundreddollar income the bank recommends about forty-five percent be devoted to “home operation, clothing, transportation and development,” of which the major items are goods and services normally bought on consumer credit.

Professor James Poapst of the University of Toronto's school of business, who recently made a survey of Canadian spending and saving habits

and concluded that a high level of consumer credit was, in general, good rather than bad, says he knows of no Canadian economist who views with alarm the present level of consumer debt.

"The real danger." says Professor Poapst. “would be a recession rather more severe than any we have had since World War II. A debt of five billion — or maybe seven or ten billion by that time — combined with falling incomes, would mean that a high percentage of available income would go into paying off debts, leaving little for current and future purchases. There would be a smaller demand for consumer goods — and a smaller demand for workers to make them, which in turn would mean that more and more people would have to put more and more of their income into paying off past debts instead of contracting future ones.

"What degree of recession it would take to start this disastrous chain reaction, nobody knows for sure. My own opinion is that the Canadian economy is very unlikely to reach that point."

Until last year, credit buying came equipped with a sort of built-in safety factor: people bought less or stopped buying on credit after they had taken on a certain level of debt. For example, in the past decade a big year for automobile sales has been followed by a smaller year. But for the first time, two successive years, 1962 and 1963. will both be big years. “Maybe," says a finance company spokesman, "it means that credit buying has broken through the old ceiling and is headed for higher levels."

There's one trend, though, that the moneylenders consider dangerous: buyers are demanding longer and longer credit. In five years, the average repayment time on new cars has risen from twenty-four months to nearly twenty-eight months; on major appliances from twenty months to nearly twenty-five months. “It's an axiom in this business that what a man buys on credit must always be worth more to him than the amount he owes on it," said a finance company official. “The longer the terms, the more risk we run that the buyer will decide before he's paid off his debt that the amount he owes is more than the thing he bought is worth, and stop making payments.”

Apart from its possible dangers, is buying on time good economics? Yes, says Professor Poapst firmly. His survey showed, for example, that a family might show a cash profit of fifty to a hundred percent on the price of a television set. “This is money saved on movies and other entertainment that the TV replaces; on baby-sitters; on transportation to and from the outside entertainment; on incidentals like parking and aftertheatre restaurant snacks. Add to that the convenience and pleasure of having entertainment on tap, and it becomes obvious that it's cheaper to buy a television set than not to buy one, even when it must be bought on credit at a comparatively high rate of interest.”

Not even the most enterprising moneylenders have thought of selling the credit idea by claiming that spending is saving. They do claim, though,

that consumer credit plays a big role in the West’s high standard of living compared with the more spartan way of life in underdeveloped countries and behind the iron curtain. Recently a Pakistani banker visited Canada to study our consumer credit setup and returned home with the definite intention of introducing credit buying of articles like sewing machines and bicycles.

“You have shown me how people with small incomes can buy things they could never save enough money for,” he told the bankers who were his hosts in Canada.

In Russia until three years ago, says Dr. M. R. Neifcld, a consulting economist with the Beneficial Finance Co., the official attitude toward consumer credit was that it was a capitalistic device for enslaving the workers, and existed only because workers received such low wages.

"Suddenly the party line switched and the government announced the invention of a system ‘to create very favorable conditions for buying durable goods.’ It turned out to be good old consumer credit, although on a very limited scale.”

Another difference is that in Russia consumer credit is a government monopoly; here it’s private enterprise at its most competitive. The innocent Canadian shopper is aware that he can buy most things on time, or, as one observer puts it, "You can walk through almost any door on a business street in a Canadian city, town or village and walk out owing money.” What the average shopper is not aware of is that behind the scenes a number of giant financial institutions arc competing for his debts.

The principal sources of consumer credit are:

The banks: Their lending upsurge started in 1954 when the bank act was changed to allow banks to do what loan and finance companies were doing — lending money on the security of the borrower’s automobile,

appliances, furniture and the like.

The sales finance companies: They do not le id money to individuals; they buy sales contracts from retailers for cash, and collect the balance owed, plus interest, from the customer. The sales finance companies have been the comparatively big losers in the scramble for consumer credit customers. From 1955 to 1962 the money owed to them increased only from $600 million to $771 million.

The small loan companies: They compete directly with the banks in making cash loans, but despite this their volume has zoomed — from $279 million in 1955 to $689 million last year. Unlike the sales finance companies, there is no specific purpose tied in with their loans. What do people do with the money they get from them? The Niagara Finance Co. recently made a check and found that the largest group of borrowers used the money to consolidate scattered debts. The other uses in order w'ere: To buy or repair automobiles; for household repairs; for home furnishings and appliances; for travel and vacations; for clothing; for medical, dental and hospital bills; to pay insurance premiums; to pay taxes; to help relatives and friends; for wedding expenses.

Department stores: balances owed to them increased from $227 million in 1955 to $427 million last year.

Other retail dealers: The thousands of assorted businesses which give retail credit had a modest increase of less than twenty percent in eight years, because retailers are increasingly turning over the handling of their customer credit to finance companies and banks.

Life insurance companies: These are the reluctant lenders of consumer money. "We have to lend money on a policy if the policyholder asks for it,” said the head of one company. “But the loans are usually comparatively small, the six percent we charge hardly pays for the bookkeeping, and

a policy with a loan against it is more likely to be allowed to lapse than one with no loan.” Nevertheless the life insurance companies have been drawn into the flood of consumer buying — policy loans increased from $250 million in 1955 to $371 million last year.

Credit unions: These are the child prodigies of the credit world. A credit union is a non-profit “club” whose members have something in common — they work for the same company, attend the same church or belong to the same co-operative. The members deposit savings in the credit union and the accumulated fund is available as loans to members. The idea has caught on so fast that total credit union loans increased from $174 million in 1955 to $590 million last year — the fastest rate of growth of any of the moneylenders.

Oil company credit cards accounted for $20 million in outstanding consumer debt in 1955, $49 million last year. The credit card business is expected to increase even more rapidly in the next few years, with at least two major oil companies establishing small accessory and sporting goods stores on service station sites.

Considering that one dollar bill is worth exactly as much as another, the cost of credit varies more than anything else Canadians buy. Some of it is free; some costs thirty and even thirty-five percent: most of it costs between six and twenty-four percent. (I’m talking about moneylenders who are ethical or reasonably so. with rates related to the cost of doing business, to competitors' rates, and to the risk

involved. Borrowers who get trapped by racketeers on the fringe of the business can pay a lot more.)

Here are the various costs of credit, and where to get them.

Free credit: Some fashionable stores, in the form of extended credit to regular customers without extra charge. Some jewelry stores. In both cases the prices are high enough to cover the cost of credit, but the point is that credit buyers pay no more than cash buyers. Department store charge accounts allow thirty days’ free credit, oil company credit cards up to six months. Credit cards like Diner’s Club and American Express, carried by more than a hundred thousand Canadian executives, salesmen and status seekers, cost nothing if paid reasonably promptly (the retailer the creditcard holder deals with pays six or seven percent of the tab).

Six percent credit: The banks, on loans secured by bonds or blue-chip stocks. (Sometimes a borrower can wangle a 5% percent rate if his security is higher than the loan.) Also, the banks on demand notes, unsecured loans to persons with substantial salaries, high job security, and judged reliable by the bank manager. The life insurance companies on policy loans. And, strangely enough, small loan companies and moneylenders, on loans between one thousand and fifteen hundred dollars. It is a curiosity of the Small Loans Act (the loan companies use a stronger term) that although a company can charge twenty-four percent on loans up to three hundred dollars and twelve per-

cent over three hundred dollars and up to one thousand dollars, they arc limited to six percent on loans between one thousand and fifteen hundred dollars. As a result it is almost impossible to obtain a loan of that size. Last year, out of 1.170.000 loans made to Canadians under the Small Loans Act. only two percent were between one thousand and fifteen hundred dollars. Above that sum. the volume of loans expands again, and the rate is usually one to one and a half percent a month.

Seven to ten percent credit: The credit unions. Actually they charge twelve percent, but they return dividends at the end of the year ranging from two to five percent.

Eleven percent credit: The banks, on loans secured by chattel mortgages. This is the type of loan that has given the banks their new hillion-dollar-ayear share of the consumer money business. Each bank's rate varies a fraction, but the average is close to eleven percent.

Twelve percent credit: Small loan companies, on amounts between three hundred and one thousand dollars, and over fifteen hundred dollars.

Sixteen to twenty percent credit: Department stores, late-model-used-car dealer s, appliance and furniture dealers.

Twenty-four percent credit: C ash

loans of under three hundred dollars.

Twenty-five percent-and-up credit:

Used-car dealers on older cars.

To the average credit seeker who doesn't belong to a credit union and doesn't own securities, it's obvious that the banks offer credit at the low-

est rate. But the finance and loan companies are not conceding any advantages to the banks in the struggle for the credit customer. One advantage they have is a vast store of information on the credit rating of millions of people who have done business with them. They do not share this information with the hanks.

"In our business not all the customers are gentlemen of honor.” the president of a finance company told me. "We are geared to handle the reluctant payers. But in a hank nobody speaks over a polite whisper. Can a hanker write a tough letter or make a phone call that will persuade a delinquent borrower to come in and settle up? A lew days ago a man with a long overdue loan of seven hundred dollars came in with a cheque in full payment. He had borrowed it from a hank. It was a happy moment for me, in more ways than one.”

The banks admit they are at a temporary disadvantage in the matter of credit ratings, but a bank spokesman said: "We haven't got more delinquent accounts than the finance companies, and we don’t expect to." The fact is that the hanks' personal-loan business is not being run only by people trained in traditional hanking attitudes. The hanks have raided the I inanee companies anti hired away hundreds of people “geared to handle the reluctant payers.” One hank has hired three hundred former employees of finance and loan companies.

The finance companies have another advantage: they have become deeply entrenched in the automobile

financing business by lending dealers the money to buy their cars from the manufacturers in the first place. (Surprisingly, the giant automobile industry is largely a cash-and-carry business as far as the manufacturers arc concerned.) Last year finance companies lent dealers one and a half billion to buy cars at what they term a “loss leader” rate of six-and-a-half percent interest. Jn return the dealers contract to give the finance companies their more profitable retail financing business. Until recently the banks’ share of automobile financing has been on the basis of a cash loan to a car buyer, who pays the dealer directly. But already one bank has gone into the automobile dealer financing end, and others are following.

On one point, though, the rival banks and finance companies agree. They arc opposed to Senator David ('roll's senate bill that would require all organizations that lend money or give credit to disclose to the customer his cost in interest pcrcentum per annum — that is, the charge made for money in the possession of the borrower during the course of a year.

Senator ( roll says the lenders oppose his hill because it would make them disclose a higher rate of interest than do the euphemisms they now use. Many lenders quote a “discount percentage rate" which is only half the true rate because the borrower is repaving the loan in equal instalments. Thus a six percent discount rate is actually a twelve percent simple interest rate.

“I'm not trying to limit interest rates.” said Senator ('roll, “but to get it so that the borrower has uniform information on the cost of a loan and can shop around for the best rates.”

The lenders say they arc willing to reveal the cost of loans in dollars and cents, but that simple interest is outmoded. “It belongs to the days when a farmer borrowed a lump sum for running his farm, and paid it back in a lump sum once a year, after the harvest. In our industrial economy people are paid by the week or month. Their cycle of need for credit isn't necessarily the farmer's year, but may be longer or shorter. So pcrcentum per annum has no real meaning for them.”

But Senator ('rol! says he is confident his bill will pass the Commons this year, on his fifth try. “Interest disclosure won't reduce consumer credit," says a finance company official. “It will just make people worry about something they didn't worry about before.”

Some people don't have to worry about credit — because they can’t get it. Over the years the credit companies have worked out a formula based on experience with millions of loans, and they find that five percent of borrowers are deadbeats who resist paying their debts until taken into court. Another ten percent are people who have honest intentions, but are careless or disorganized in money matters and have to be prodded into paying

“Those problem payers ai en t ver yprofitable customers.” commentée the manager of a finance company. "Based on the overhead costs of running this business, it costs us one dollar to send out a dictated letter to a delinquent customer, seventy-five cents to phone him, and fifty cents to mail him

a form letter. If we have to send a company collector after him. it costs us a minimum of two dollars and often a lot more. It doesn't take much of that to wipe out the profit on a small loan.”

Paradoxically, although the nonpaying borrower is the natural enemy of the moneylender, his very existence is an index of successful moncylending. Recently John A. Ross, treasurer of Shell Oil, said that although in the past a credit manager’s success used to be judged by how few bad debts he got stuck with, nowadays “too low a bad-debt ratio indicates an improperly restricted sales volume which tends to reduce rather than increase profits . . . a progressive credit policy may quite properly include extending credit where it is plain that some bad debts will be incurred.”

Occupational danger signals

A finance company president put the paradox more earthily: “If you don't come up with some rotten apples, you’re not digging deep enough into the barrel. If 1 had a credit manager who produced no bad debts I'd fire him — otherwise I'd go broke.”

But he’d go broke a lot sooner if he didn't keep non-paying customers to a healthy minimum. Three percent is considered a tolerable bad-debt ratio, and the credit companies take elaborate precautions to keep it there.

In addition to the names of bad-pay individuals, the credit companies have compiled a list of professions and occupations according to their "good repayment" records. On the basis that eighty-five percent of all borrowers are prompt repayers, these occupations rate better than average:

Business executives, accountants and auditors, retail managers, doctors and dentists, engineers, farmers, armed

services officers, office workers, university professors, railway clerks, skilled factory workers and post office employees.

The below-average list contains some surprises. It includes hotel and restaurant managers, school teachers, clergymen, nurses, public officials, lawyers and judges, policemen and firemen, tenant farmers, non-commissioned servicemen and — near the bottom of the list — musicians.

Doctors are high on the list of prompt payers, but patients who don't pay their doctors don't necessarily lose their credit rating. Recently a finance company employee showed his manager a credit application and commented: “I don’t think we should accept this man. He has owed his doctor fifteen dollars for over a year.”

"Any other unpaid bills against him?” asked the manager.


"Then accept him. Who pays doctors' bills promptly? I've got an overdue bill myself.”

One finance company provides employees with this analysis of personal and occupational “danger signals" for detecting below-average credit risks: People who live in furnished apartments are less reliable than tenants who buy their own furniture; single persons living at home arc more reliable than those who board out, but people who work for relatives are suspect. Persons who arc suspected of being alcoholics or drug addicts arc poor risks: so are “individuals who try to impress you with their extreme desirability as credit risks.’’ Indians living on reservations are unpreferred risks, and so are foreigners with some form of diplomatic immunity, those from blocked-currency countries or living in Canada on visitors' permits.

“Occupational danger signals" apply to people who work in glamorous

but relatively poorly paid jobs like chorus girls and boys, models and dance hall hostesses. Call girls and prostitutes can be among the most reliable credit risks, but their job security is low, and a girl doing ninety days in jail isn’t likely to keep up her payments. Other credit suspects are people who work in their own home or in the home of clients, such as music teachers, tutors, masseurs and fortune tellers. Also people in "unstable or hazardous occupations” — bartenders, taxi drivers, dishwashers, longshoremen, maids, waiters, laundry workers, countermen, garage workers, painters, steeplejacks. Highly mobile workers are also likely to be suspect — demonstrators, campaign fund workers and subscription solicitors. Another low-rated group comprises people who work for carnivals, racing tip sheets, race tracks, vending machine companies.

This finance company finds, too, that nationality has a bearing on credit reliability. "The Italian immigrant is our top credit risk,” the president told me. "We give them all the credit they want and just about without checking. After they become Canadianized they're no better and no worse than average Canadians.

"At the bottom of the list are the so-called freedom fighters who have escaped from behind the Iron Curtain. They're taboo with my company. They seem to think that Canada owes them a debt of gratitude for coming here — a debt they don't have to pay.

"Chinese are good credit risks if they have fixed assets. But when they default they are protected by others Chinese and it's hard to locate them. It's no cliche to our people that all Chinese names sound alike and all Chinese look alike. 1 once asked a Chinese delinquent about the tradition that all Chinese pay their debts on New Year's Day. He laughed. ‘1 never heard of that until I came to Canada,’ he said. ‘It's a white man's invention.’ ”

Jews who seek consumer credit arc considered poor risks by loan companies. A finance company president, who is himself Jewish, explained: "Jews are big users of commercial credit, of course; but there's something in the mystique of the religion or the culture that makes credit buying for personal use repugnant. Even a wealthy Jew in a fifty-thousand-dollar home will leave rooms unfurnished until he can pay cash for the furniture. So when a Jew applies for consumer credit, we suspect him."

He recalled the case of a wealthy resident of Toronto's Forest Hill Village who had always paid cash for his household furnishings. But he decided that he would have broadloom installed wall-to-wall in his home on credit by the T. Eaton Co., reasoning that if the installation were unsatisfactory he could fall back on the company's "goods satisfactory or money refunded" policy. But Eaton's wouldn't give him credit — he had no credit record with any of the credit reporting services. So he went across the street to the Peoples Credit Jewellers branch, bought the cheapest watch on display, and two days later Eaton's informed him that his credit rating had been established and he could have his broadloom. ★