12 APRIL 1975, Page 29

A fool and his money

Get your discount here

Bernard Hollowood

We could do with a little more honesty in financial advertising. Well, no, not honesty exactly, more realism perhaps. Local authorities are offering interest of 10 per cent on one year loans, and building societies and banks are making similar magniloquent gestures, when in fact they are really offering negative interest rates of something like 12 or 15 per cent.

I offer a prize of £1 to the first building society, local authority or kindred borrower to come right out with it and say: INVEST IN COKETOWN BONDS Your £100 will really be worth £87 (approx) in a year's time if we have upped it nominally in the meantime to £110.

Foxed? You needn't be. What we mean is that with inflation at its present rate we expect to pay a real negative interest of 13 per cent per annum. Part of your money is safe with Coketown. Write to Town Hall, Coketown, for particulars.

You don't need telling, do you, all you investors, that your money is shrinking in value unless you are being paid interest of something like 25-30 per cent? And you're not getting anything like that. Financial experts tell me that I ought to run into debt in order to make money. Borrow £1,000 today and even if you pay interest at 15 per cent you make a profit on the transaction: you cough up eventually in depreciated currency and discover that the lender has actually paid you handsomely for borrowing his money. But you know all about that.

Has it occurred to you though that you can win a substantial income for yourself merely by mislaying your cheque book? Every month the bills roll in from the butcher, baker, newsagent, grocer and so on and you are given an average of two weeks' credit. That in itself is worth quite a bit — say 2-21/2 per cent off the real value of the bill, but if you are tough enough and unfeeling enough to let your cheque book slip out of sight behind a cushion, so that you don't settle the butcher's account until next month, why, you've made 4 or 5 per cent!

Traditionally, tailors suffer most from bad debts and slow payers, and I heard the other day about poor old Joe Levinson, of Savile Row, who's just gone bankrupt. One of his oldest customers was a retired army officer whose family had always considered prompt payment a mark of social inferiority. The ex-officer, like his forbears, regarded suppliers as servants who couldn't really be trusted with money. By refusing to settle his account with Joe he genuinely thought he was doing the tailor a favour.

"Joe knows his money is safe," he would have reasoned, "as safe as

the Bank of England. My father paid Joe every five years, so Joe always knew he'd got capital in

reserve, and not having it in cash he wasn't tempted to spend it ion riotous living or some new-fanglbd addition to his shop. It seems right that I should follow my father's and grandfather's example. I'm not likely to forget the account because

Joe sends me a reminder (how's it go: " . . . beg leave to draw your attention to the amount outstanding"?) every month, though why he does so when he knows his money's safe is quite beyond me."

Well, when Joe hit Carey Street an accountant pointed out to the ex-army type that a suit he'd bought in 1969 for £65 was now worth £270 and that the £65 due would now buy (for Joe) only about 30 per cent of the cloth or groceries it would have bought in 1969, The Brigadier (ret'd) was deeply shocked, though it took the accountant a very long time to convince him of the facts of the situation. Economics wasn't his strong subject and even when he finally settled he considered deep down that he was Joe's benefactor.

Mr and Mrs Average, who are wage-earners, don't enjoy the advantages of consumer credit. they pay for everything on the nail at the supermarket, chain store or department store, though they may be allowed a few days' grace if there's a corner shop that will put purchases "on the slate". No, it's only the relatively affluent who pay reluctantly and late in funny mon-4 ey, and it's no surprise to me that dealers everywhere are now offering discounts for payments in cash. No, offering is wrong: they leave the initiative to the customer, and in my case the bargaining has had mixed results.

I had no trouble at Foskett's Mart when I bought a new stereo radio . .

"How about discount?" I said to the man behind the counter.

"On E212 I could give you £6," he said, "making the cash price £206."

"That's less than 3 per cent," I said. "I can do better at Walmsley's in the High Street."

"Okay, guy," he said, "I'll make it a level £200 and that's the best I can do."

I bought the stereo radio and saw it in the window of Super-cargo a day or two later at £193.50.

I had even worse luck at Archmarket Superstores when I went grocery shopping with my wife. She took aisles 1, 2 and 3 and 1 concentrated on 4 (biscuits, cornflakes, tobacco and canned beer), and when we met at the check-out point we seemed to have enough provisions for a voyage of Tai Ki. Like greased lightning a girl ladled the goods from the baskets and pummelled the cash register. Incredible legerdemain, and every prod a blow for Women's Lib. The bill came to £9.68.

"What's the discount," I said. "I've no time for clowning," she said. "£9.68."

"Will you settle for £9?" I said.

"There's no discount!" she shouted. "Come on, I haven't got all day."

"But . " I said, and she put two fingers in her mouth and was clearly about to emit a piercing

whistle to summon the manager. So I paid up.

"You fool," said my wife, when we got outside.

"How was Ito know?" I said.

But my biggest surprise was the incivility of a young man at Glowstone Motors. I had previously sold a 1969 Daf for £33.50, and as I eyed the smart Jap car in the showroom I reminded the young man of the fact.

"We'll be lucky to get a fiver for it as scrap," he said.

"What can you let me have the Mitsu Dart for?" I said.

"The price is very clearly marked on the window," he said.

"I know, but surely there's room for negotiation. I mean ..."

"The price is £1,498 cash," he said.

"But suppose I pay you by cheque in a month's time?"

"Then, if the boss agreed, you'd pay interest on the £1,498 at 15 per cent. Look, if you haven't the cash, why not pay in instalments — £498 down and the rest at £100 a month."

"There then!" I said triumphantly, so you do allow discount of a sort."

"Not exactly, mate," he said ("mate," and I was old enough to be his father!). "You see there'd be twelve payments of £100, making a total selling price of £1,698."

"But that's daylight robbery!" I said. "Good-day to you." I went home on the bus. I didn't argue about the fare, but the pensioner sitting next to me flashed a card and paid a mere 3p for a 6p journey.

There's no justice.

Bernard Hollowood, formerly editor of Punch, writes this column weekly in The Spectator.