The Waterbury Democrat., 1934-10-19
Finds Banks Willing, Borrowers Cautious
Prominent Writer Refutes Statements Bankers Re-
 fuse Sound Loans Reasons for Reduced Credit

.I
 piled by typical, well-managed banks in different parts of the country show that high propor- ffon of all applications for locns have been granted in the past year or two, says Albert w. Atwood in a recent article in the Saturday Eve ming Post on "The Idle Dollar" Ex- cerpts from MT Atwood's article follow:
 Frequently banks state that as high as 90 per cent of all such ap- plications are granted and for from 60 to 75 per cent of the amount hslked for. Allowing that the bank CTS make these figures as favorable to their own case as possible, it seems strange that we are told again and again that banks are not lending.
 If we take into account the < whole class of regular bank bor- rowers, the plain fact is very few want to borrow yet. For the word
 Borrow is merely another name ' tor the word debt and we face a great worldwide drive to get out of debt.
 "An experienced small-city bank z er, asked if banks were lending freely enough, wisely replied: The really good borrower does not wish 10 borrow now. In fact, I think our customers are making remark able fine schowing in paying off their loans, especially loans of long standing
 The Shrinkagc of Credit "Or if we think of business con- cerns rather than of individuals, 1t is conservative to say that those able to maintain high credit rat ings have been mostly the ones able to maintain ample cash resources and, therefore, least in need of < credit. As prices and costs fell, many concerns found themselves with plenty of cash because of the shrinkage in operations. Cash re- Sources were still further swollen by reduced dividends, and smaller Inventories made bank borrowings still less necessary.
 eExpressed in another way, banks cannot expand credit, they cannot make loans, unless there is a demand for the same. Funda- mentally, the business transaction makes the loan, the loan does not make the transaction. It is Q mis- J organizations funds which they do not need. Under the circumstances, the idle dollar is a natural and \ proper enough phenomenon. A de- mand for credit is difficult to SGreate artificially, and there is al- Swsys danger in so doing. Banks must be liquid enough at sall times to pay depositors. The sfdoa of a commercial loan is that sit represents a self-liquidating Sprocess in business. If the banker znakes only those advances that are Inherently sound, and selects his srraturities wisely, he will have in- sct,niing funds to meet demands. Government Lending
 "As everybody knows, the gov- <ernment has vast lending agencies, for home owners, farmers, and tho like. These have nothing to do witt, the subject of this article, except { that all such government opera tions would be impossible if the banks did not lend the government money for the purpose.
 s.No one can set a time when Borrowing will be resumed. But it will come when men once more feel that conditions are sufficiently settled to warrant them in taking chances, in entering upon deals, and in trying to make money" s MT Atwood says that it may be that the banks are overcautious now. just as they were overcon- sfident in 1929, but calls attention 10 the fact that until little more than year ago banks were failing
 'partly because they had loaned too ~f~, INtx. a,-i< tnt0 right and left for precisely that" He adds:
 Indeed. the banks which had been cautious in their lending pol icy came through the crisis safely. NUnder such conditions it is utter 1y useless to criticize banks for not amaking loans. After the experience they had for several years, especial fly in 1882 and 1883, 1t is only nat sural that they should relax their { Requirements very slowly and grad 'nally.
 "Unfortunately, many of the ap- l splications for loans are not from people who want temporary bank ing accommodations for three or six months and are quite able tc meet their maturity dates, but are from those who really need per- manent capital. They are bust ed and they want someone to stake them to a new start. What they really seek is a partner to furnish them with longtime capital. But { depositors insist upon being paid on demand, and, therefore, it is a grave question whether banks should tie up their funds for any ! length of time."
 - -