Evening star. [volume] (Washington, D.C.) 1854-1972, 1923-05-20
RATES FOR MONEY
ARE GOING HIGHER
Rise in Interest Expected to
Help Check Growing
Construction Costs.
HARDER TO OBTAIN LOANS
Curtailment in Borrowing May Cut
Down Auto Buying by
Installments.
HARDER TO OBTAIN LOANS
BY HARDEN CoLFAx.

The price of money has beguH--to
climb. For more than two years idle
dollars have glutted the mones
markets, vastly exceeding demand. bur
within the past fortnight interest rates
have begun TO stiffen. calls for money
have poured into the banks at an in
creasingly rapid rate and credit ha.
frightened. Borrowing money today Is
not the easy thing it was two months
ago and the borrower is paying
higher toll.
A billion dollar increase in nationa
loans within the year and the govern
ments recent entry into the none
markets with A demand for at lea -
$500, 100000 have contributed to m,
upward tendency
May Check Building Costs.
rise of one per cent in fntercsl
rates appears small TO the man in the
street. but officials here point out that
In the aggregate it means a tax on
business of not less than $1,000, 600 !,
DAY TO the country over and in times
OF great activity-such as the preSen'
when the use of credit becomes
general. it may top that figure sew
price of money, of course. is paid
hnally by the ultimate consumer-the
general public-and enters into the
cost of all commodities.
Paradoxically. the higher interest
rates in prospect are confidently ex-
pected by Commerce and Urea sury De
partment officials here to check the
runaway tendency manifest in the
building trades. 4 recent survey In
dicateS that the cost of residence cor
struction in the east is about one
fourth greater today than it was last
fall. From New York and elsewhert
have come reports within the past two
weeks that millions of dollars of con
postponed because OF high prices.
The stiffening of interest rates j.
expected here TO place a healthy bal
ance upon further increases in build
ing costs.
Bears ON Auto Industry.
1t would not surprise officials here
II the higher interest rates resulted
also, in slowing down the automobile
industry TO more normal speed. The
world has never seen such a demand
for automobiles as that of the past
sixty days. Bank records indicate
that about half of all the cars manu-
featured are bought on credit and%jn
such cases, mostly by persons whose
credit is greatly strained by the
transaction. A rough estimate of the
demand on the banks for credit of
this kind places the total at about
$1,000, 100000 a month for the past
tnree months.
AS direct result of this situation,
the government felt il desirable to
announce recently that its budget
would balance this year-that is. that
there would be an excess of revenues
over ex penditures. The ANNOUNCE
nnent was made by Secretary Mellon
In connection with his latest Offering
of bonds, which. incidentally, carry
an attractive Interest rate.
u. 8. Finances Sound.
Mr.. Mellon was asked puintedly by
some of the country's chief bankers.
in advance of the offering, whether
such an announcement could be made.
They told him that the public would
respond much more quickly to his
plea if il could be assured that gov
eminent finances were on a sound
businesslike basis There had been
talk of d deficit Of small proportions
in the years operations and Mr..
Mellon was advised to dispel all
doubt. if the facts warranted. b.
making il clear that the government
was not exceeding its income in the
conduct of its affairs.
In the light of this suggestion
the outgrowth of developments in tho
money markets-the Secretary OF the
Treasury made a careful invcStiga
ton and was enabled to state that the
government was operating this year
AT a rate which would leave about
sl25,0O0,000 excess of receipts over
disbursements.
Copyright. 1928