Evening star., 1932-05-15
Business Demands Breathing Spell
BY FREDERIC ]. HASKIN.

Business leaders have reached the
conclusion that unless some sort of
moratorium Is unofioially arranged to
give debtors q breathing spell, still more
staggering losses of value are due to
| occur In the United States in connec-
tion with real property in the next few
months. With the world In ferment
and fresh enterprise held back pend
ing revival, the only way to preserve
values is to insure continuity Of opera
ton and liberal credit to such business
as remains.
This opinion Is strengthened bv a
| growing realization that Congress- Is
floundering in labyrinth of bewilder-
ment over policies Of taxation and re-
construction. The real responsibility
for constructive leadership rests upon
leaders OF private business and must be
assumed by them.
The most forward-looking banking
agencies of the country have taken the
lead and, In cooperation with debtors
have negotiated funding agreements
calculated to save all parties whole.
Some Of the most skillful bankers in
the country have gone into conference
with communities and companies which
have bonds outstanding and have
reached understandings with them
which viii tide over the worst of the
reorganization period through which the
entire Nation and much Of the rest of
the world now is passing.
A popular plan has been the retire
ment OF outstanding bonds on which
default Of interest has been threatened
and the issuance Of new bonds to take
their place. The new bonds carry a
lower rate Of interest. In some notable
instances the bondholders' committees
and the bankers involved have gone so
far as to make new deals, under the
terms of which DO interest whatever
| win accrue for period Of years Agree
ments nave been recorded postponing
interest payments for as long as 10
years.
Relieved Of this weight of interest.
the bonds themselves have regained
buoyancy and havs found a market. or
at least negotiable position, whereas
without such a stabilizing operation
| they might well have dwindled in value
to nothing. Depending on the arrange
mentS agreed upon, some of these is
sues merely pick I'D interest pay-
ments upon the arrival of fixed future
cate and go on from there, or. at a
definite time In the future begin pay
ment not only Of regular interest, but
amortization Of accumulated interest
charges.
Protects Securities.
Creditors have been willing to take
such steps because by doing so they in
sure. q continuing recognition Of value
In the security they hold. Should one
property after another fall In default,
the foreclosure market would be so
glutted with forfeited securities that
the property itself would not be worth
having, because ownership would con-
stitute liability, necessitating the pay
ment OF taxes and the expenditure of
money in upkeep and protection.
The policy of the Government and of
leaders of economic thought Is clear.
That policy is all in favor of wider and
more liberal extension of credit pending
q full recovery Of business activity. The
Congress has created the Reconstruc-
ton Finance Corporation for the pur-
pose Of granting credits freely to or
ganizations which are designed to per-
form useful functions, but which have
been estopped from doing so to their
fullest capacity by the tirnidity of pri-
vate capitalists.