The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1935-03-01
RANKING CREDIT AND BUSINESS
RECOVERY


Yorl il, IFS monthly bulletin, reports:
Commercial banks are almost coi'I-
pletely out of debt to the federal reserve
banks; and the latter's ratio OF reserves 10
liabilities stands at II per cent, as against
a legal minimum between 80 and Az per
cent. Therefore, the banking system is IN
"a position to finance not only normal re-
covery but an unprecedented business ana
price initiation
The foregoing statement is known to be
true bv millions of citizens who keep IN
formed about financial and business condi-
tions in the country. There is no scarcity
of money in the banks. Bank vaults are
bullying with cash. The commercial banks
the banks that are supposed to finance
business and keep it moving and growing
owe the reserve banks almost nothing
and are in position to finance not only
normal recovery but an unprecedented
business and price inflation,' according to
the public statement of one of the countrys
largest financial institutions.
Then, why is it the banks do not loan
money to business and bring about recOv-
cry?
The Guaranty Company's bulletin under
takes to argue at some length that it is be-
cause the business men of the country re-
fuse to borrow. The assertion is made that
the banks have immense sums of money
and are eager to make loans. That asser-
ton should be swallowed with a generous
portion of salt.
The Times-News has gathered consid-
cradle amount of information, from varl-
Gus sources and in various ways, relating
to banking conditions and bank credit in a
large area of the country; and the lntorma-
ton this newspaper has leads to the very
definite conclusion that large majority of
the country's banks are not bursting with
enthusiasm to make loans and boost bust
ness. The bankers talk glibly about their
willingness to finance sound propositions
and substantial business men and enter
prises but when it comes to showdown
Nth would be-borrowers, it is usually the
case that their terms are such as can be
met only by men or enterprises that have
nd need of borrowing. The individual or
business concern that could make an &C
!. esptable note at these banks would have
- stzk,l nj ondtion that there
81 81 10 reason for asking
for baHk efefl ther words, only those
who have no need of bank credit are con-
sidered good enough risks for loans
1--WE accept only United States bonds as
collateral for loans," is the usual formula
of the bankers refusal to extend credit.
1t would be interesting to hear some
banker explain why the owner of bonds
would be seeking bank credit at all, unless,
of course, the citizen happened to belong
fSStheclass that has superstitious faith in
federal government paper The most logi-
ca course for the owner of government
bonds who needed money would be that Of
selling the bonds.
kThe public has little faith in the SINGER
ity of such statements as those publicized
by the bankers and previously quoted il
this article; and no more than that amount
of faith in.the propaganda originating witt
government officials who tell us in teartu
accents how much the government is inter
ested in having the banks extend credit tt
business, and how the government is COINS
to. take steps (Which it is careful not t
taker to. compel the banks to meet tn,