Business: Credit Men

Assembled in Richmond, Va. last week for a five-day annual convention was the National Association of Credit Men, second biggest trade organization in the U. S. Its membership of 20,000 is exceeded only by that of the U. S. Chamber of Commerce. In unity of spirit, however, NACM has the edge on the Chamber because its members to a man are wrapped up in one subject: the payment of bills. “Pep and Song Periods” opened each general NACM session. Executive Manager Henry Herman Heimann, a tall, slender Michigander, keynoted broadly on “The Next 40 Years.” One day the credit men and their ladies went to nearby Williamsburg to view the wonders of Rockefeller restoration. There were special meetings for bankers, for credit women, for the fun-loving boosters of the “Royal Order of Zebras.” Politics played small part in the proceedings. Whether a Democrat or a Republican sits in the White House, bills must still be collected.

Only banks, wholesalers and manufacturers belong to the Association, retail credit being a wide field unto itself. NACM facilitates the pooling of credit information. Every bank, every company that extends credit is constantly prying into the private affairs of its customers. They study balance sheets, earnings statements, profit & loss accounts, weigh character, reputation, personal habits. But the final element in credit is “ledger experience,” the record of how bills were paid in the past. Local credit associations collect ledger experience from their members, pass it on to a national clearing house in the National Association. Between 2,000,000 and 3,000,000 credit records are always on file for the use of members.

More spectacular, though less significant, than the routine of ledger experience is NACM’s fraud prevention bureau, which is entirely staffed with onetime G-men. Director Charles Joseph Scully headed the Department of Justice’s bomb squad in New York for years, helped bring about the deportation of Anarchist Emma Goldman. Director Scully is very proud of his rogue’s gallery of leading U. S. commercial racketeers. This type of crime is lucrative, involves no physical danger, is seldom punished with jail sentences of more than three years. Typical commercial racketeers are the Brothers Minos and Pericles Ziongas, Greeks. Once they set themselves up in Newark. N. J., as Euro-American Corp., obtained credit with impressive but wholly fraudulent financial statements, proceeded to buy $100,000 worth of groceries. When the creditors finally went around to see why their bills were not paid, the only tangible asset they could find was a case of catchup. The rest of the goods had long since been sold, the proceeds pocketed by the Brothers Ziongas. Later it was learned that the Ziongas ring had similarly and simultaneously diverted another $75,000 worth of groceries through a dummy concern in Trenton N. J.

Sometimes commercial racketeers merely go into business under the name of a reputable company but using a slightly different address. If the manufacturer’s shipping department fails to note that difference, the racketeers get the goods, the reputable company the bills. This game can be played for only 30 days. Another racket is to go suddenly into bankruptcy after having disposed of every asset not nailed down.

If caught, commercial racketeers can usually be convicted for mail or bankruptcy fraud, both Federal offenses. But in retail trade a creditor has no recourse against a dead beat except to sue. It is no crime to charge a mink coat, then fail to pay for it.

The organization that watches personal credit is the National Retail Credit Association, which will hold its annual convention this week in Omaha. Unlike NACM, NRCA has no central credit exchange. But records of no less than 60,000,000 U. S. chargers are on file with local credit bureaus in more than 1,000 cities. The Credit Bureau of Greater New York has 3,000,000 alone. These local credit bureaus are, in the main, non-profit-making organizations owned by their members, mostly stores, and any charge account not paid in 120 days must be reported. Delinquencies are entered on a permanent record available to all other members and, through a system of standardized fees, to all other credit bureaus in the land.

Thus if Mrs. John Jones moved from Chicago to Los Angeles, any good Los Angeles store could quickly learn how promptly she paid her bills in Chicago. It might learn that she was a widow of 40 with no children, enjoyed no visible means of support, lived in swank apartments, entertained unsavory characters, was late with her rent, lived in Chicago for only two years and left with $500 of unpaid bills. In that case Mrs. Jones would have a hard time opening a charge account in Los Angeles.