All this sounds businesslike and plausible, and the arrangement runs
smoothly for a time, probably six months, to allow the manufacturer
time to sell all his open accounts to the financial agent. Then
the loan shark sends in a statement of the account, and, if the
manufacturer complains, begins to show his teeth.
On the statement appears all money the manufacturer has received and
in addition an extra charge for $50 a month to cover the services of
their agent--the manufacturer's own bookkeeper. Also an additional
charge of from 1 to 2 per cent for additional service rendered,
although the agency has had absolutely nothing to do with the accounts
beyond holding them as security. All overdue accounts are charged
back to the manufacturer, and a request for a check to take them up
immediately accompanies the statement.
As few accounts, if allowed to mature at all, are received by a
manufacturer on the exact day when due, the check called for often is
a formidable one. The manufacturer is at his wits' end. He goes to the
agency post haste and, after they find it is impossible to hold him
up for a check, they say:
"Oh, well, never mind, the bank--always the bank--is pressing us on
those overdue accounts, but we can hold up the 20 per cent until these
accounts are taken care of. That will be satisfactory, we are sure."
[Illustration: DEBT]