The Pay-as-You-Use Idea
| Author | Frank Parker |
| DOI | 10.1177/000271623819600110 |
| Published date | 01 March 1938 |
| Date | 01 March 1938 |
| Subject Matter | Articles |
57
The
Pay-as-You-Use
Idea
By
FRANK
PARKER
T HE
very
fact
that
this
topic
has
been
designated
for
inclusion
in
this
volume
on
consumer
credit
is
prima
facie
evidence
that
the
consumer’s
pay-
ing
for
his
articles
as
he
uses
them
is
either
so
novel
a
concept
in
the
field
of
credit
as
to
warrant
some
explanation
or
it
is
so
heterodox
a
practice
on
the
part
of
consumers
as
to
demand
justifi-
cation.
Apparently
the
getting
of
an
imprimatur
for
the
pay-as-you-use
idea
is
as
impracticable
of
accomplish-
ment
as
having
economic
sanctions
ap-
plied
by
the
League
of
Nations.
As
a
matter
of
fact,
the
pay-as-you-
use
idea
is
as
respectable
as
antiquity
and
as
chronic
as
the
money
economy.
Plutarch
himself
relates
how
Crassus
once
acquired
half
of
Rome
by
the
proc-
ess
of
buying
up
houses
following
holo-
causts
and
thereafter
selling
them
on
the
installment
plan.
Even
in
the
money
economy,
the
pay-as-you-use
idea
is
coeval
with
the
institution
of
commercial
credit.
Indeed
the
whole
structure
of
commercial
credit,
whether
it
flows
from
one
business
enterprise
to
another
or
from
a
commercial
bank
to
a
business
enterprise,
in
so
far
as
the
proceeds
of
the
credit
are
used
for
work-
ing
capital
purposes,
particularly
mer-
chandise
inventory,
is
predicated
on
the
acceptance
and
practical
use
of
the
pay-
as-you-use
idea.
Similarly,
the
application
of
the
pay-
as-you-use
idea
has
existed
in
the
field
of
investment
ever
since
the
first
bond
issue,
properly
protected
by
adequate
sinking
fund
provisions,
was
floated
by
a
business
corporation.
One
has
a
demonstration
of
the
pay-as-you-use
idea
each
time
a
segment
of
merchan-
dise
inventory
or
a
piece
of
machin-
ery
bought
on
open
account
or
on
installment
credit
is
used
in
the
routine
processes
of
a
mercantile
en-
terprise.
EVOLUTION
OF
IDEA
IN
UNITED
STATES
To
Cowperthwait
and
Sons
of
New
York
City
belongs
the
credit
for
inaug-
urating
in
the
United
States
about
the
year
1807
the
sale
of
commodities
on
installments.
Applied
by
Cowperthwait
first
to
furniture,
it
was
gradually
ex-
tended
to
other
articles
of
housekeep-
ing.
About
1850
the
Singer
Sewing
Machine
Company
resorted
to
the
pay-
as-you-use
idea
to
expand
the
market
for
sewing
machines.
About
the
same
time
the
installment
book
trade
as
it
exists
today
had
its
inception.
Twen-
ty-five
years
later
the
piano
business
discerned
the
potentialities
of
install-
ment
credit
and
adopted
it
as
one
of
the
standard
sales
plans.
Further
im-
pulse
was
given
to
it
by
the
modern
finance
company
which
first
came
across
the
business
horizon
in
1905.
However,
the
first
significant
im-
petus
to
the
pay-as-you-use
idea
in
the
sale
of
goods
came
with
the
inaugura-
tion
of
automobile
installment
selling.
Between
1910
and
1915
the
practical
development
of
the
principle
of
mass
production
made
feasible
the
continual
reduction
in
the
sales
price
of
automo-
biles,
which
in
turn
resulted
in
the
gradual
widening
of
the
area
of
profit-
able
markets.
Each
reduction
in
the
sales
price
made
possible
profitable
in-
cursions
into
a
lower
income
class,
and
each
step
of
penetration
inevitably
forced
to
the
attention
of
the
manu-
facturer
and
the
dealer
the
need
for
adopting
some
terms
of
sale
which
would
depend
primarily
on
the
income
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