Evening star., 1933-01-03
DENIAL OF CREDIT
RAPED IN REPORT
Industrial Conference Board
Finds Business Handicapped
BY Lack of Loans.
By the Associated Press.


NEW YORK, January 3.-The Ma
tional Industrial Conference Board, in
comprehensive study of the avail
ability of bank credit, says the depres-
sion has been deepened by the failure
of the banking system at large to pro-
vide adequate credit to business.
This is the major conclusion Of
study made by the boards research
staff, at the invitation of the Banking
and Industrial Committee of the New
York Federal Reserve district.
1t was explained however. that this
failure was not found specifically in
the refusal of banks to grant loans, but
mainly in the change in methods of
financing industry, from the old-faSh-
ioned direct loans to more indirect
methods. such as extension Of consumer
credit, particularly through loans ON
securities and fixed assets This made
banking stability hinge more largely on
security and property values.
Report Follows QUESTIONABLE.
Viewed from the standpoint of bank
ing and financial statistics" said the
report, 1t is patent that the course of
the present depression has been made
deeper by the failure of the banking
system at large to extend adequate
credit accommodation to industry and
trade as whole" Except in SO far as
facts drawn from general sources were
used in Interpretation, the report was
based on replies to confidential ques-
tionnaire sent to business concerns.
OF 3,438 replies, 86.4 per cent reported
that they had no bank-credit problems
and 38.5 per cent said they had no
credit experience with banks. relying
entirely upon their own capital re-
10 &C.,
Forty-eight per cent of the total said
they had had no difficulty in getting
bank loans, and 1876 per cent reported
they had been refused accommodation.
Despite the small number reporting
credit refusal. the board believes that
it is of greater significance than the
number indicates. BY considering only
those concerns which reported dealing
with banks, 2,116 in number, 1t is seen
that the percentage of those refused
credit Is 20 per cent. The board does
not estimate how far its figures may be
conceived as representative OF all in
dustry, although 1t said every effort
was made to make the sample compre-
hensive and unbiased.
The figures further show SO per cent
of the 466 firms which we're refused
credit are very small or small concerns
according to numbers of employed and
81 per cent according to capital size.
Credit Ratings.
In the whole industrial picture these
small and very small concerns employ
about AZ per cent of the Nations wage
earners and contribute about 20 per
cent of the value of all industrial pro-
duction.
AS for the credit rating Of those
concerns refused loans, the board CAL
culates that 30.7 per cent had had high
ratings: 1872 per cent, good; ia, fair;
limited, 0.6 per cent, and not rated,
391 per cent. Making the comparisons
only for those for whom ratings were
available so per cent were rated high;
80 per cent, good, and 20 per cent, fair
or limited.
The board says "a cautious inference
would be that If the consensus Of trade
opinion ranks so many of these concerns
good or high. in at least small pro-
portion Of the cases thus ranked the
credit restriction or refusal was not
altogether justified from the standpoint
of their general credit character"