The midland journal. (Rising Sun, Md.) 1885-1947, 1934-08-03

LCl VI ACNOAu anu
Increase surprisingly, nearly
all of the Individual
banks have shown increases In de-
posts and resources over year ago.
A couple of the largest banks In New
York showed such astounding in
creases in deposits as $100,0OO,OOO,
compared with June, 1888. But ire
spective Of the increase In deposits
that is, the money actually in posses
sion of the banks-almost none of
them disclosed any increase in the total
loans now outstanding. Indeed, the
rule was a decline from June 30,
1888.
Banking authorities in the govern
ment and outside tell me these figures
on deposits and resources clearly indi-
cate an improvement In the general
banking situation. The Federal Re-
serve board In its latest review Of con-
ditions declared the banking structure
was on a much firmer foundation. Yet,
the fact that the banks have not made
loans is being seized upon by certain
segment of politicians and alleged
economists as proof that the banks are
not doing their part. From very high
quarters in the administration we hear
intermittent yelps that the banks are
not cooperating and are not attempt
ing to loan money. This condition, as
they construe 1t, is being used as the
excuse for the existence of numerous
of the government loaning agencies
and for other activities under the New
Deal that result in getting money out
into the country.
The circumstances In the decline of
bank loans, however, is to my mind not
such as the critics Of the banks claim.
It must be remembered first of all that
bankers, when they make loans, are
putting out money belonging to you
and to other depositors. They must
be reasonably sure of getting it back,
even though we do have now the Fed
eral Deposit Insurance corporation
that Is supposed to prevent losses for
the depositors. Bankers, therefore, are
willing to make loans of the vast sums
of idle cash their banks hold II they
can only find someone who will put up
security guaranteeing return Of the
borrowed funds.
While some Of the critics Of the
bankers have been continuing their at
tacks, I note statements from the Pub
lie Works administration, from the Re
construction Finance corporation, from
the Home Owners Loan corporation,
and the Farm Credit administration,
among others, which show very clearly
that the government or its agencies Is
unwilling to make loans unless it can
foresee q reasonable chance for re-
payment. Just the other day, the Pub
lie Works administration withdrew an
ALLEGATION of some $6,877,000 for con-,
struction of a bridge in Chicago be-
cause, according to Public Works Adj
ministrator Ickes, the political subdi-
vision Of that city having jurisdiction
was unable to provide guarantee of
repayment of that loan. Every day
local units of the Home Owners Loan
corporation are turning down applica-
lions by home owners who seek gov
eminent money through mortgages on
their property to aid them in what
ever distress they find themselves. The
same statement may be made respecting
loans by the Reconstruction finance
corporation in its dealings with In
dustry.
Lately the various Federal Reserve
banks issued weekly statement of
their operations, and only three of the
twelve reserve institutions reported
having made loans to industry.
have inquired in numerous quarters
for reasons why borrowers were so
few. The consensus
Why BorrotO-given me by men
ers Are Few who should know, is
that there are two
distinct reasons for the small amount
of loans being made by banks and, of
course, the same reasons apply in the
case of government loans, except that
the government has been known to put
out money in places from which it
probably never will be returned. One
of the reasons mentioned was that In
dividuals and firms who most need
money have nothing but their own
signed obligations to put up as a
guarantee. Obviously, If an individual
or a corporation has no resources, the
note Of that individual or that corpora
ton Is Of little value, however honest
and we'll intentioned the borrower
may be.
The second reason, and one that is
quite as important, is the lack of con-
fidence which business men tell me
exists to large extent in commerce
and industry. Whatever is the basis
for this lack of confidence is not a
matter of concern in this discussion,
but its existence seem to me to be a
matter of the gravest Importance.
Whether taxpayers are afraid of the
burden in levies which they can fore
see, is the reason for their hesitancy,
is not now wholly apparent. Many
| observers are convinced IL Is an in