Sales Finance Subsidiaries and Their Growth

Seed Allen H. , “Should You Set Up a Finance Subsidiary?” Controller, Nov. 1959, p. 501.

“More Financing by Captives,” Business Week, Nov. 18, 1961, p. 71.

Phelps Clyde William , The Role of Sales Finance Companies in the American Economy (Baltimore: Commercial Credit Co., 1956), pp. 19–21; and “Ford Introduces New '60 Model Credit Agency,” Burroughs Clearing House, Oct. 1959, p. 12.

See the statement of Frederic G. Donner, Chairman, General Motors Corporation in U.S. Cong., House, Hearings Before the Antitrust Subcommittee of the Committee an the Judiciary, 87th Cong., 1st sess., serial 11, part 1, p. 517.

Plummer Wilbur G. Young Ralph A. , Sales Finance Companies and Their Credit Practices (New York: National Bureau of Economic Research, 1940), p. 262.

Banner Paul H. , “Competition, Credit Policies, and the Captive Finance Company,” Quarterly Journal of Economics, May 1958, p. 242; Seed , op. cit., pp. 501–503; “More Financing by Captives,” op. cit., p. 71; and Andrews Victor L. , “Captive Finance Companies,” Harvard. Business Review. July-Aug., 1964, pp. 81–82.

Banner , op. cit., p. 241.

J. I. Case Co., 1957 Annual Report, p. 4.

Ibid.

Ibid.

J. I. Case Co., 1959 Annual Report, p. 3.

Banner , op. cit., p. 243.

Seed , op. cit., p. 501; and Chapman John M. Jones Frederick W. , Finance Companies: How and Where They Obtain Their Funds (New York: Columbia University, Graduate School of Business, 1959), p. 13.

On this point, see especially the exchange between Stradella Charles G. , Chairman of the Board of GMAC and Representative Emanual Celler in Hearings, op. cit., pp. 450–454.

Andrews , op. cit., p. 80.

That this is possible is illustrated by the following statement from an operating agreement between a parent and its subsidiary, and from the prospectus for the public offering of a captive's securities. “It is the intent of the parties that the relationships between [the parent] and the Company covered by this agreement shall generally be on terms which in the regular course of business will afford reasonable compensation for the financing services rendered by the Company to [the parent] in respect of [the parent's] products… . The purchase price at which the Corporation [the captive] may acquire accounts … is designed to produce an earnings coverage of at least one and one-half times the fixed charges on debt of the Corporation.”

“More Financing by Captives,” op. cit., p. 72.

Ibid.

Phelps Clyde William , Installment Sales Financing: Its Services to the Dealer (Baltimore: Commercial Credit Co., 1953), pp. 18–20.

Plummer Young , op. cit., p. 270.

Hearings, op. cit., part 2, pp. 1098–1100.

“A Finance Company All Your Own,” Business Week, June 23, 1964, pp. 59–64.

“How Long a Rope for Captives,” Business Week, July 13, 1963, pp. 93–94.

Hearings, op. cit., part 1, pp. 1–2.