Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-09-15
CREDIT EXPANDED
ALONG FOUR LINES
TO SPEED RECOVERY
Continued From First Page.)

relief can be had by the organization
and Use of local mortgage companies OF
substantial nature to supplement bank
lending where loans are OF sound
character but slow.
"A liberal use of the above plans
coupled with widespread cooperation
by banks in experimenting the Nation S
banking structure through issuance OF
Per cent preferred stock to be sold
to the Reconstruction Finance Corpora
ton. will naturally bring the banks in
more effective assistance in the Presi-
dents recovery program"
Two Per Cent Margin Allowed.
Borrowers under the short term per
cent interest plan will be required to
relend to manufacturers and merchants
at rate not exceeding per cent, thus
allowing the bank margin as high as
per cent.
collateraled." Jones said. by the short
term note OF the manufacturer or mer-
chant, secured by a valid assignment Of
an unconditional order for the finished
product or mortgages, real or chattel,
on plant equipment, real estate, raw
materials or finished product. or in any
OtNer manner aCCepLdDle 10 tne DaukS
and to the r. F. c."
When banks do not want to borrow
for such purposes or in those instances
where the loan is more in the nature
OF operating capital. but the necessity
for which. as well as the security, can
be definitely established. Jones sug-
gested the organization Of bona fide
mortgage companies in each commu
nifty or borrowing through those al
ready in existence.
Such loans to mortgage companies
on q longer than six months basis.
when properly secured. generally will
be made up to five times the cash or
sound capital of the company. and
will carry per cent interest rate
from the r. F. c. Mortgage companies
borrowing on such terms to relend will
be required to charge fair rates" to
! their borrowers.
Jones called in a large group Of news
paper men to make his announcement
In the course of questioning he was
asked about prospects for imitation.
Credit Imitation.
This is imitation - in the form Of
credit" he said. The best thing for
| industry Is business Give the people
plenty Of it and they will work out OF
this thing"
| As a result of the Federal Reserve
Systems continued and recently en-
larged open-market operations ON
| Gals estimated that member banks
have on deposit in reserve banks $780,
O00, 900 more than the percentage OF
| time and demand deposits requires by
| law This money was said to be avail
able for business loans.
In q concerted drive to aid banks
especially those now restricted OF
closed. the Government enlisted the
assistance Of the home owners loar
system and farm credit administration
to supplement the r. F. C.'s capital
stock purchases and formation Of the
Federal Deposit Guaranty Corporation
j. F. T. O'Connor, controller Of the
currency, has ruled national banks may
hold home owners loan securities ir
their portfolios, and was expected Il
make similar ruling covering the
farm administrator paper. Each
authorized to issue 81 600, 900 900 ir
bonds. with the interest but not thu
principal guaranteed by the Govern
ment
1t was said OConnor's ruling woult
enable a bank to exchange slow first
mortgage paper for an equivalent
amount of the bonds.
In pushing the campaign to get more
public works money into circulation
ofncials said that every dollar so spent
would be multiplied several times ir
new credit.