Evening star., 1934-11-25
U. S. Studies Program
To Spur Trade Loans
BY HARDEN COLFAX.

It has been charged frequently in
recent months that, in their desire
to remain liquid, the banks Of the
United States are hesitating to take
normal risks Thus. by failing to aid
industry and trade, as the Govern
ment has aided farmers and home
owners, it is asserted that they have
retarded industrial recovery ana re-
employment.
The Federal Government Is looking
rather closely into this subject. Some
months ago the Small Industry Com
mittee of Secretary Roper's Business
Advisory and Planning Council re-
ouested the Bureau of the Census to
undertake a survey Of the capital and
credit requirements of the smaller
manufacturing establishments. THIS
survey is now practically completed.
While the findings and recommen-
dations have not yet been made pub
lie II Is understood they do IN fact
support the assertion that the small
business man has suffered more than
his share during the depression and
that as yet he has not benenteo as
much as have others from New Deai
legislation.
The weak point, it is believed. Is
in the credit situation-not trade, put
bank credit-and it seems to be as
s,Imed that the banks, In fear OF not
being found liquid at all times py
Federal examiners, have re1ralneo
from loaning to meritorious clients on
really sound security.
Ouestionnaires were sent to more
than 10000 firms whose ratings
showed them to be good risks" One
of the officials connected with the
survey, while not willing to be quoted,
admitted that 1t had shown great
many of the manufacturers who could
obtain only limited funds, or none at
all. to be financially sound and such
as would normally be regarded as
most acceptable credit risks.
The criticism Of the inadequacy OF
the present sources of capital and
credit has come from Q large number
of small manufacturers. The nature
and extent of the complaints are
naturally regarded as one barometer
Of the credit problems Of small in
dustry.
The criticisms are principally di-
rected against sudden changes in
bank policy, the attitude of bank
examiners, and the apparent mad
eouacy of the existing financial sgen-
cies of the Federal Government as
means of direct aid to indusry. The
amassing of large sums in the hands
of bankers, without distribution OF
these monies to industry through
loans, 1t Is said, reduces employment,
restricts production and curtails con-
sumption.
The survey, while under the general
auspices of the Bureau OF the Census,
was aided also by the N. r. A. and
the Treasury Department. Its impor-
tance was stressed by Secretary
Roper, who said the Planning Council
is devoting a great deal of attention
to the immediate credit needs OF
small business and industry and the
application Of N. r. A. to the small
and medium sized unit.
Serving the credit needs Of small
ENTERPRISES, WIlCn CNC1i hA RASoPSASNs
times have difficult access to the Sc
curity markets, is also problem in
other Industrial nations. In Great
Britain and Germany, and to some
extent in France, institutions es-
pecially created for this credit pur-
pose are utilized. Information COM
ing to Federal departments from
their agents abroad indicates that
British, French and German COM
mercial bankers are particularly
anxious, as are our own, to prevent
the freezing" of their portfolio loans
that cannot be moved easily. Most
of these institutions are private,
rather than governmental, in charac-
ter. They are accustomed to finance
their advances to small business
through use Of their long-termed Sc
curities or other funds not subject
to sudden withdrawal.
Il
Some years ago, Parliamentary
Committee in England studied this
subject and reported that, since the
joint stock banks and private bankers
had been unwilling to accommodate