One of the most important financial developments of recent years has been the growth of hire purchase. According to the official statistics, total hire purchase and other instalment credit outstanding grew from less than £500 million in the middle of 1958 to a peak of over £950 million in the middle of 1961 and still totalled nearly £900 million in the middle of 1962. Three-quarters of this debt is financed by specialist hire purchase finance companies, widely described as finance companies. The Board of Trade, who have for many years collected statistics of hire purchase debt, recently began to collect detailed statistics of the assets and liabilities of these companies. They published the first set of figures in this series, for December 1961 and March and June 1962, in their Journal for the 19th October, where a full explanation will be found. These figures are summarised in the table which appears on page 262, and some are also mentioned in the text. Previously the only composite statistics of liabilities of finance companies were published in the evidence given to the Radcliffe Committee and related to the years 1954 to 1958. They covered the members of the Finance Houses Association, to which the large finance companies belong, and the Industrial Bankers Association, which embraces about thirty of the medium-sized and smaller concerns. The purpose of this article is to describe the sources of the finance companies' funds and to review the main changes that took place between 1958 and 1962. Before doing so, however, it is worth saying a little about the size and nature of the business that is financed.
Sources of funds of hire purchase finance companies 1958-62