The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-08-20
Recovery on the Installment
Plan
New York Herald-Tribune)

The national housing campaign,
which Mr.. Moffett and Mr.. Richberg
now announce themselves prepared
to launch, Is In some respects one of
the most interesting Of the New
Deals many inventions. Mr.. Moffett
quite frankly describes it as primar-
lily sales promotion" effort; and
reduced to its fundamentals it is, in
fact. simply an attempt to sell the
American people $1,000. 100000 worth
OF housing repairs and renovations on
the installment plan.
This IS striking-although, one
must grant, Enthusiastically Amer
ican-remedy for what began to ap-
pear last spring as one of the more
ominOuS weaknesses in Rooseveltian
recovery. It was observed at that
time that the considerable measure
OF improvement in the so-called
consumption" industries did not re-
fleet itself in the durable goods"
industries; the great PWA expendi-
lures, though they helped, failed to
revive great areas Of heavy industry,
and the theory developed that the
one loose cog in the machinery was
here. II the durable goods industries
could be restarted. the hoped for
balance" would have been achieved
and all would be well: and housing
still seemed to offer the best lever
for restarting the durable goods in
dustry.
It was administratively difficult,
however. to pour government funds
into private house repairs, even If
the budget could stand the strain.
The solution was the installment
plan-the device which had financed
SO important part Of the boom era
consumption and which had stood
up SO surprisingly well under the
strains Of the depression. Though
house repairs are made by the dur
able goods industries. they are &C.
tually a form of consumption, and
though the housing act does not pro-
vide in terms for the installment
selling of paint jobs or new plumb
ing. its provisions really come to
much the same thing in the end.
The citizen is invited to borrow up
to $1,000 at his bank for house reno
walton. The bank is induced to lend
it to him by the governments guar
anty that it will cover losses on such
loans up to 20 per cent of their total
amount. Studies Of banking expert
ence with unsecured personal loans
indicate that losses on an average
should not run to more than 20 per
cent; and since the government is
authorized to accept liability up to
5000 1000 900, as much as $1,000, 900 ,00C
IN all can be loaned on this basis
But to get that amount circulating
to the building industry, 1t is obvious
that Mr.. Moffett's selling campaign
must succeed on two fronts. He must
"sell' the idea to the bankers that
the guaranty is adequate to cover the
risk And he must find at least hall
million responsible house owners Of
good character and credit standing
and then sell" them the idea OF re.
pairing their houses.
It seems likely that many interest.
ing lessons as to the nature OF oul
economic problem may be learned
from the success or failure Of thi!
campaign. Do the customers exist;
Il it possible to finance" the con.
sumer in this way out Of the de-
preston. or Is he failing to consum.
now because prices are too high TO
him to afford it, even on time.
payment plan? Can selling cam
paigns and the provision OF consum
er credit Mre buying power out o
the recesses to revivify q last lagginl
element in recovery, or is the slack
ness In the durable goods industrie
in reality evidence Of deeper malad
justments, which can only be over
come BY cost and price readjustment
far more drastic than anything con
templated by the New Deal? Thi
resort to consumer credit in housin
Is q final application Of the pump
printing" theory; because It u no
done merely by governmental fiat
Is perhaps . sounder test Of the eco
monte verities involved. Il It doe
not work. or Il, though selling larg
amounts Of house repairs. It still doc
not result Ia = normally functionin
economy. It will be necessary to fac
anew oil the broad bases Of the Re
covery program. At bottom the pro
gram assumes that the provision q
) enough credit Ia III the corree
| places VIII Ut the machine runnin
. Il used 70 run. We should kno
more about that when Mr.. No3lett
hn1AAs Snnrmn1skkAA - $3.50