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Show The National Enterprise, June 8, 1977 Page twenty Exchange Continued from page 17 me $200 if I hadnt gone through the exchange. The above exchange actually cost the furniture store owner $116, because the exchange charges the seller eight percent commission on the sale. But paying $116 for $200 worth of retail goods is still a heck of a deal, Riddle says. Internal control The secret to a successful business exchange, solely on the exchanges reputation when they let their merchandise go out the door. and the merchants a little wiser for the experience. Using another system. Business Exchange of Salt Lakes parent company issues to each monthly stamps member, indicating guaranteed net worth in credits to that merchant. Using the stamp as a kind of check guarantee card, members can then write checks on their exchange accounts. checks represent real value, since the holder forSuch says Rigby, is good internal control of membership. An application will be refused if the rolls already contain an abundance of merchants in that line. Conversely, Rigby will solicit memberships from retailers in areas he needs to round out his membership. Members must be able to trade for the things they want, or they will drop out of the organization and it will go bankrupt, he explains. merly exchanged real merchandise for credits. Their acceptance in lieu of cash depends on the trust members a have in their exchange trust necessary for the exchange to function. As one member points out, however, no federal insurance stands behind the solvency of an exchange. Members are relying DeGooyer Tile Co. let $5,300 worth of merchandise through its door and never saw a dime for it, according to Henry His business is DeGooyer. one of many stung by the failure of International Exchange Market in 1975. DeGooyer accumulated a bundle of credits, but later found nothing in the exchange The his business needed. managers kept saying they would get back to me with some of the dealers I wanted to do business with, but they never came through and pretty soon the whole thing folded, he says. Ill never mess with exchanges again. You can't beat good hard cash, he vows. Bountiful vacuum cleaner dealer Glen Curtis got involved in the same exchange, and dropped a quick $3,250 before he realized what was was going on. The exchange credpaying its employees in I its. he says, so when went out to spend my credits I found they didnt have any value at all. . .nobody wrould Curtis hasn t accept them. ruled out exchanges altogether, and in fact still trades in one of Salt Lakes major exchanges. It all hinges on the reputation of the manId agers," he advises. never join another exchange without first checking with the Better Business Bureau and Dun and Bradstreet. Tom Greene, organizer of an exchange named Interchange, was once associated with International Exchange Market but got out when I saw what Acthe bunch was up to. cording to Greene, the exchange created credits to get business moving, but the operation fell through and left Three of four Utah exchange companies have folded in the past five years, Rigby said. He blames these failures on exchange managers who get carried away with trading, and buy items from members with credits that dont exist. Others, he says, fail due to poor membership control. Bank functions about a million dollars in bad debts scattered around among hundreds of businesses. Interchange has taken over a number of the accounts and is trying to make their credits good. Thinking of filing suit He alleges other principals in the operation arranged trades insiders with who they knew were not capable of paying up when the time came. Others involved in the exchange maintain Greene was as much at fault as anyone. One disgruntled victim says he is still thinking of organizing as many fellow' victims as he can find, and filing a class action suit to recover losses. No tax advantage Exchange managers say an occassional businessperson will join, looking for supposed tax breaks. Surprise! No such advantages exist, according to CPA Dave White of Provo. White does tax work for members of various exchanges, and is, in fact, a member himself. In the eyes of the IRS, he says, spending credits to accumulate goods is no different than Where a spending dollars. third party is keeping records of every transaction, he adds, it is extremely unwise to attempt to pull the wool over Uncle Sams eyes. For their success, business exchanges depend on three In a way, a business exchange acts like a bank. Merchants who spend their entire on goods can build up a pile of credit, but will have no cash with which to replace inventory or pay the rent. Exchanges often loan such members cash, using credits as collateral, until their operations arc back on their feet factors: excluding wage earners; limiting membership and existing within a larger dollar economic system. The lack of any one of these would jeopardize any exchange, say their managers, but none see that as a likely possibility. Tight control, ry thats says Rigby, secret. 9 Banquet Rooms available free of charge (with meal). 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