The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1918-08-03

Makes Plain to PcOplc NhJ Ihcy
Must Not Ask for Unnecessary
Leans-To Banks Why They Must
Not Grant Them Should be Read
and Carefully Pondcred by Every
Patriotic Citizen-Sets Forth What
Loans Necessary-What Unneces-
sary.
The Federal Reserve Board thinks
it the appropriate time to issue
statement expressing it's views upon
the principles which should guide the
action of the banks in the curtallment
CT unnecessary credits.
1t is clear that if the war require
nlents of the government are to be
financed without undue expansion OF
banking credits, not only must there
be some reduction of existing credits,
but there will have to be applied
rigid check upon the further eXpan-
sion of credit in directions not clearly
essential for the prosecution of the
war. and for the health and necessary
comfort of the people. 1t is no more
possible to superimpose upon the vol
ume of prewar credits the immense
volume of additional credit required
by the government for war purposes
than to superfmpose upon the vol
une of prewar production OF goods
the immense volume Of additional
goods required by the government TO
prosecute the war. Our problem IS
to convert less essential into more es-
sential credit, and to convert less es-
sential to more essential production
and distribution of goods. The saw
ing Of credit and money goes hand IN
hand with the saving of labor and
materials in the program Of adjusting
the business of the nation to war
basis, and our best hope of avoiding
competition between the government
and its citizens for credit, money, Ia
hor, and materials. which can only
result in credit and price imitation ana
higher costs of living, is saving.
AS trustees of the individual bank
ing credit of the country, the bankers
are charged with the duty of studying
and understanding the program IN
order that each and every one may IN
turn educate his borrowers and the
people of his community to the ne
cesity of saving credit as we'll US
food and other materials, and may
thereby conserve the credit OF his oarh
for the use of the government as far
as may be practicable.
1t is not the purpose of the board
TO suggest the specific ways IN whlch
credit should be conserved, or un-
necessary expenditures curtalled; each
banker must determine this for him
self. The board can only discuss the
subject in general terms, with empha-
sis on the necessity that while credlt
conservation should be undertaken
promptly it should be carried out
gradually, with reasonable discretion
and with the least possible avoldaoie
embarrassment to the business OF IN
dividual and industries. Proper edu-
cation of borrowers and customers to
the needs of the situation will accoma
Ulish far more than abrupt discrlml-
nation or pressure
In the absence of any official c1assi7e
fication of the ..1ore essential and the
less CSSe1lLldl anu S1A|NA - 49,
will be necessary for each banker III
determining how he may 90 his snare
in the conservation of credit to use
his own Judgment. There seem to be,
however, two clearly defined groups
of loans:
(a) Loans to facilitate production
or distribution.
/ for nnnnrO611ctlVS or
nondistributive purposes.
Loans for Nonproductive or Nondls-
tributive Purposes.
Loans for nonproductive or nond1s-
tributive purposes are usually loans
for nonessential purposes. The fol-
lowing are types of this class OF loans.
Loans for purchasing or carrying
nroperty. whether real estate or per
sonal securities.
Loans for additions to Or improve
raents of property not used in produc-
ton or distribution.
Loans to States or municipalities
for Improvements.
By inquiring the purpose for which
each new loan is required, ana decnn-
ing wherever practicable to grant
loans of these classes. and by gradual
IL causing existing loans of these
! classes to be reduced or eliminated
bankers could conserve credit with
cut causing hardship and also give
| many people an impetus to save at
I,time when saving is of vital import
ance to the nation.
Loans to Facilitate Production or DIS
tribution.
The three main groups OF borrower:
fo,. productive or diStribuuve pur'
poses are farmers, manufacturers, anf
merchants.
1. Farmers.-The farmers are be
ing asked to produce more than eve
before and loans for productive pur
roses must have the right cf way
Fut the kind Of loans which should b.
discouraged or declined are:
fa) Loans for the acquisition
ad itional property. unless the are;
under production is to be Increase
thereby and immediate results ma.
be expected;
b) Loans for any construction no
necessary to the productiveness o