The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-02-17
eATURDAY. FEB. u. laaa
GOVERNMENT BANKING


a FTER pouring more than one billion dol
lars Of the taxpayers money into 5000
banks Of the country with the idea that that
was the quickest way to provide credit for
business recovery, the federal government is
now considering more direct financing Of in
dustry through new intermediate banks. The
plan is under discussion by President Roose-
welt and Governor Black of the federal re-
serve board.
implications Of the plan are very broad
It is far cry, indeed. from the keep-gov-
eminent days. Government
financing Of business could mean in the long
run only one Of two things.
Either the government would pay out the
money with little or no strings attached-and
thus stand to lose vast sums on unwise invest
ments earlier rejected by private bankers, or
the government would exact terms of the Dor
rover similar to those under which private
banks in the last decade became the real
rulers Of American industry.
Doubtless there viii be official denials that
the latter is the intention of the government;
nevertheless. the implications are clear.
It is true Of course, that the administra-
ton is not considering this proposition of It's
own free will Rather it is being forced by
circumstance to consider a financing function
which it has hoped and begged the private
banks to undertake Repeatedly, during the
last few months, administration officials have
appealed to banks to loosen up their credit
policies. to cease boarding.
Just ten days ago Jesse H. Jones Of the
Reconstruction Finance Corporation repeated
this plea to a meeting of the New York State
Bankers Association. 1t deserves attention.
He said:
"Will our banking be continued in private
hands. or of necessity be supplanted by the
government? The answer is with you-the
banker 80.
Il would be less than frank. however, If
did not say that the President would be great
" disappointed if the banks do not assume
their full share in the recovery program by
performing all the functions that banks are
intended to perform and that, of course, in
cludes providing credit where credit is needed
and can be ext ended with reasonable safety"
The customary reply of the bankers is that
they would like to loan more money to indus
try but that industry for the most part does
not want to borrow and the exceptions are
apt to be unsound risks. There has been some
truth in this. especially as it applied to large
corporations carrying on a capital strike
against the new deal. But certainly there is
less excuse for such capital strike since dol
lar devaluation and Qualification of the RooSe-
welt monetary policy.
Anyway, it is not the big corporations but
the small companies that have difficulty get
ting credit. Against the private bankers alibi
that these small companies seeking credit are
unsound. is the authoritative statement of
Chairman Jones that:
There is never a day that the RFC does
not have applications for individual and indus
trial loans that are perfectly sound. They are
not loans that normally would be Iquidated
within a few months, but many of them could
be made by the local banker and could be
liquidated If the borrower is given reasonable
time and notice"
If any truth in these days is self-evident.
it is that credit TRANSMISSION into the veins of
small industry is essential to recovery. If
banks after getting this credit from the gov
eminent refuse to pass it on to industry, the
government has no choice other than to do the
banking Job itself under proper safeguards. 1t
can not let the industrial patient die while
the private bankers hoard the nations credit.