12. A system based on abnormal transactions.— The essence of this system lies in the fact that all the information received and dispensed is of a nega tive or unfavorable character, since it is a record of new credit sought and of slow payments. Oppor tunity is given the inquirer, however, to indicate by a check mark upon the inquiry ticket whether, in the case of an old customer, the last bill was discounted, paid at maturity, slow or collected by draft or at torney. Only those transactions that involve new or considerably increased credit are reported.
The peculiar value of the information given out by the central office lies chiefly in the fact that such information is not based upon anybody's opinion, as for example that of an agency reporter, nor does it have any reference to what the dealer may say about himself—either or both of which may be at variance with existing conditions. On the contrary, such a report is a concise and uncolored record of actual transactions, being made up wholly from the informa tion furnished by the inquirers at the time their in quiries were made.
Accordingly, the satisfactory customer—that is, the retailer who always buys in normal amounts from the same supply houses, and who pays his bills with regularity—will not appear prominently in the files of the interchange office, for the simple reason that no one has had occasion to inquire about him. The unsatisfactory customer, on the other hand—that is, the retailer who is habitually slow with his creditors, and who for that reason is always compelled to seek new credit—is likely to have a: great deal of informa tion recorded about himself, since in his case, and under the rules of the system, each slow payment and each request for new credit will have brought an inquiry, accompanied by a statement of the facts that caused the inquiry to be made.
13. Growing recognition of credit interchange.— Inquiry made of a number of prominent -manufac turers and distributors in various parts of the coun try shows that the value of credit interchange is to day duly recognized by all progressive manufac turers and merchants. Without exception, these houses were found to be participants in some form of ledger-experience system, either thru one or more agencies, or by means of direct reciprocal exchange with other houses. This is not at all surprising in view of the freshness and reliability of the informa tion that may be obtained in this manner. It indi cates, moreover, that in the future the search for relevant credit information will be increasingly in the direction of the credit-seeker's present activities—his purchases and his payments, rather than his posses sions and antecedents.
This tendency is wholly salutary and indicates a growing comprehension of the true basis of commer cial credit.