3 JANUARY 1964, Page 14

Sta,—The criticism expressed by Mr. E. 0. Smith on trading

stamps and dividends (Spectator, Decem- ber 20) failed to clarify the matter.

CWS dividends are in fact different from divi- dends paid by other companies. Dividends come from profits which are a measure of the extent to which a customer has been overcharged. The Co-op by declaring a dividend admit this overcharge and return the excess amount to the purchaser. In con- trast, dividends declared by other companies find their way into the pockets of the shareholders—the owners of the company—who may or may not be the people who were overcharged.

From the consumer's standpoint the Co-op approach is attractive and morally sound. Whether the same can be said for trading stamps remains to be seen. Mr. Smith appears to imply that given time a most marked reduction will occur in the number of shops competing for a housewife's trade, and that the monopoly thus established will lead ultimately to price increases. Such reasoning is of a conjectural nature. Time will tell, so let the ex- periment proceed. If Mr. Smith's worst fears materialise into fact then legislation may be neces- sary, but at this moment, nothing appears to justify any curtailment of the procedure.

B. J. MEADOWS

184 Northfield Road, King's Norton, Birmingham 30