Evening star., 1935-04-28
Small Industries Need
Long Credit Facilities
BY HARDEN COLFAX.

While loud chorus OF small ouSl-
ness voices, pleading for the extension
of N. I. r. A, was reaching the Sen
ate committee inquiring into the N.
r. A. this week. the Secretary OF Com
merce made public a report on small
industries submitted to him. after
months of study, by the Business Ad-
viSory and Planning Council.
The council strongly recommended
that the Government offer financial
facilities to small, sound industries,
and urged that an immediate and de-
tailed study of the entire subject be
made by the Reconstruction Finance
Corp. the Federal Reserve Board and
the Securities and Exchange Commis-
sion. Secretary Roper has submitted
this report through the Secretary of
the Treasury to the heads Of these
Federal agencies.
Long-term credit facilities. the re-
port advises, are essential to the proper
conduct OF small industries. The need
of these small industries, it would
seem, is more for investment purposes
than general credit.
The survey covered more than 5000
typical concerns in different parts Of
the country, of which some II per cent
were classified as borrowers" the re-
mainder being known as ''non-bor-
roWers" or concerns which have had
no credit experience. Some 80 per
cent of the total number reported
credit difficulties.
In general. the requirements OF
small industrial concerns which ap-
parently cannot be satisfied from nor
NAL sources are not so large as they
appeared to be six months ago. The
council is of the opinion that the credit
needs of small industries are now
being more adequately met by CON-
mercial banks and other financial in
stitutions than they were last Sum-
mer.
There seems little doubt, the coun-
Gil believes, that a large number oi
the smaller manufacturing concerns
throughout the country have been able
to withstand the effects, at least in
part, of the long depression. They
have done this through rather sharp
curtailment of their expenditures on
equipment and repairs, but more SO
through the reduction to a hand-to-
mouth basis Of inventories Of raw ma
terials, parts and supplies. Conse-
quently, it would seem that existing
equipment is wearing out at rapid
rate or becoming obsolete.
Furthermore, the handto-mouth
policy of buying raw materials in very
limited quantities prevents many con-
Germs from acquiring such neceSSltleS
at satisfactory prices. Both these FAC
tors, naturally, operate to increase
manufacturing costs and to reduce
profits. The inability of the smaller
concerns to modernize their machinery
and equipment helps to explain the
continued depression in many OF the
capital goods industries.
It is clear, the report says, that the
capital structure of American indus
try as a whole has been impaired by
these and other factors, and the abil-
ity of the smaller industrial concerns,
in particular, to borrow from the
banks for working capital purposes has
been correspondingly lowered. In this
connection, the council has been i'm
pressed by the fact that the bulk
of the advances and commitments
made by the Federal Reserve Banks
have been for periods Of more than
a year.
From a study Of census figures, from
surveys made by the Treasury Depart
ment (the Hardy report), and
figures supplied by the Federal Reserve
Banks and the Reconstruction Finance
Corp, as well as from the testimony
Of individual bankers and financiers,