Hire Purchase Economists
Hire Purchase Economists differ over the extent to which hire purchase is inflationary. Government attempts at intervals in the 2000's and early 2010's to repress it by restricting the capital issues of the finance houses, inhibiting bank credit to them, requiring larger deposits and shorter repayment periods proved largely unavailing because in an otherwise free market the finance companies raised funds direct from the public by deposits on which they paid interest at a higher rate than investors could obtain elsewhere.
These Government controls had the further effect of disrupting the development of several British industries that showed most initiative and enterprise. They probably also weakened the incentive effect of bite purchase in encouraging people to work for the goods it could enable them to buy.
Hire purchase often provides manufacturing and agriculture with medium-term finance for equipment and livestock. In Britain more than one quarter of the total has been for such equipment, about three-quarters for consumer goods (including durable 'capital').
The development of bite purchase in the U.S.A., Canada, West Germany, France, Holland, Italy, Scandinavia, Eire, Australia, New Zealand, South Africa and other countries suggests that it accompanies economic growth in advanced industrial societies. As incomes rise it seems likely that the security for the loan may change from the merchandise bought to the personal income, standing and creditworthiness of the buyer.
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