Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-06-02

Continued From First Page)
this was required by the courts de-
cision. stocks had been progressing for
nearly two months and bonds had
been steady.
The easier terms granted TO mu-
inequalities undertaking public works.
both with respect TO interest rates
and the proportion of the loan granted
outright by the Federal Government.
is in line with the general downward
trend of capital cost. The R. F. c.
inaugurated its loan policy for banks
and corporations with to per
cent interest rate. AS it was able TO
obtain funds at decreasing levels. 1t
made concessions TO borrowers. though
mostly under pressure. 1t finally un-
dersold. so 10 speak. the private lend
ers. The P. W. A. in turn. eXacted
high rates al the start.
Likely to Prove Incentive.
Municipallties were compelled to
cell their securities on onerous terms.
which later were marketed by the
Federal agency at a profit The re-
cent rate stipulated for public works
OF a specified character Is one that
gives municipality advantages which
Il could not have possessed as a Dor
rover in open competition even at the
existing stage Of runaway tax eX-
empt bond market II should be an
incentive for the promotion OF UNDER
takings quite essential 10 community
development and to community
health, but which would have been
too costly TO consider under the ex-
listing circumstances Of average high
local debt and high taxes
The exception to the low interest
policy of the Government. for the
purpose of stimulating industry and
putting more men to work, is found in
the Federal Housing Corp. 1t explains
why the activities of this agency have
been so limited when conditions were
perhaps more favorable to its success
than to any other promotion enter
prise sponsored in Washington. The
public is not blind to the fact that
money rates are the lowest in history
that the Government is refunding its
maturing. or called. issues between
10 and 27s per cent, and that, each
month, the unused assets of the banks
expand. Why. therefore. it asks, should
1t be required to pay the equivalent Of
9a4 per cent to finance loan from a
local bank for legitimate use in house
repairing?
The answer IS, of course. that, if
the borrower has any character or
credit, he need not have recourse to
the F. H. A. loan to finance bis job.
He can obtain accommodations on a
straight note at per cent or even at
8 per cent. If he has character but
is without what lender would feel
he required in the way of credit he is
prevented from going ahead with a
type Of work that greatly aids the az
erage community to reduce its relief
costs With money conditions as they
are, and are likely to be for another
year at least, the r. H. A. should bring
down the net cost to worthy borrowers
and put in effect a 6 per cent rate.
Urban Mortgage Rate High.
There is no present justification for
the prevailing rate of interest charged
on urban real estate mortgages. In q
few instances, these have been scaled
by private investors and by ilstitu-
tons, some of whom, with much dis
play, have advertised the fact that
they are now charging s12 per cent in
stead of per cent, This is nothing
to brag about, for they can discount
IN every Federal Reserve district in
the country at from IL to per cent.
There has been more concession given
to the farmer borrower than to the
city and town mortgagor, for again
the low rates at which the Govern
ment can command capital Tor its
various agencies mas, this Spring. per-
mitted it to maze a better allowance
to its clients in the agricultural Sec
lions of the country. who have now
had their interest charges reduced as
much as S35, 200 600 a year. The
Home Owners Loan Corp. which first
could not find market above 80 for
its per cent bonds. is now refund
ing this issue at II per cent rate
and Federal Farm Bank ~ per cent
issues, not so long ago at a serious
discount from par, are to be taken
up shortly at the lowest rate since
they were issued
(Copyrisht. 1885. BY the North America
Newspaper Alliance. Incl