Evening star., 1939-03-14
Facilitating Credit
For Little Business
Vital, Says Mead
Forum Speaker Cites
Need in Exploiting
Federal Participation


Federal Participation
Senator James M. Mead, Demo-
crat, of New York discussed pro-
posals for facilitating loans to small
business last night in the National
Radio Forum, arranged by The Star
and broadcast over Nationwide
network of the National Broadcast
ing Co. The text of his address
follows:
Small business is the backbone of
America. The little plant, factory and
shop contribute to the prosperity of
thousands of our communities. The
successful operation of small enter
prise means employment and spells
economic well-being. We know the
tragedy that comes to village when
the local plant which has been hiring
the bulk of that community's en-
ployables, closes its doors. In some
instances, that tragedy could not be
prevented, but in great many cases,
if adequate financial aid, reasonably
offered, were available, the story
would have been a happier one.
Congress is trying to do something
for small business. I believe it is
vitality necessary that the problem
be Immediately and thoroughly con-
sidered and that helpful legislation
be adopted.
At the last session of Congress I
introduced bill which had for its
purpose the establishment of Fed
eral industrial banks to make direct
loans to small enterprise on a long
term, low-interest rate basis. Ad-
mittedly, there was room for i'm
provement in its provisions, but
was astounded at the widespread
and favorable reaction to the pro-
posal. Since that time have re-
ceived hundreds of letters from every
State of the Union, coming from
shopkeepers, tiny merchants, remote
factory owners - explaining their
financial plight and, in nearly every
instance, pleading for easier and
more available credit. These letters
portray the plight of small business
more vividly than all the statistically
prepared reports and economic re-
views that have ever been published.
They say, in unmistakable terms, |
that private credit is not available
to them and that the Federal Gov
ernment must become the resuscltat- |
Ing agent to rescue them from flnan-
cial strangulation.
Letters Cite Problems.
For example, small employer at
Rochester, N. Y, writes: L have a
small business employing seven
people and 1 have tried to borrow
money from the local banks for ex-
pansion, where it is needed. I am
unable to get any money for this
expansion, although I can submit a
net worth statement OF $4,000. The
banks generally tell me that nothing |
that / have, such as my real estate
or accounts receivable, are worth |
anything and that the only thing on
which they can loan me money is
my insurance policies"
A merchant in Phoenix, Ariz., cites
his problem: THE banks do nothing
at this time to help the small mer-
chant no matter what his standing
I got So 500 on my personal note. In
1929 I went into the bank and asked
for $4,000 on personal note and got
1t without any trouble. Now, re-
Gently, I went to the same bank and
asked for $4,000, but all they would
allow me was $1,000. Now. nothing
has happened to my personal record.
I have had clear record since I
entered business in 1912. I want
to say that the fear that existed from
1880 to 1888 is returning and some
law must be enacted to relieve small
businessmen"
A small Philadelphia manufac-
turer is having his credit troubles.
He states: "Our business is small. |
We employ 10 employees steadily. We |
could add five to eight more employees
if we could procure $4,000 to $4,000.
This is not guessWork. We nave
developed new products but need
money to produce and market the
products. Like most small business
men, we want to stay in business,
but we have consumed most OF our |
working capital trying to hold our
business together through the oao
years and we are now unable to pro-
ceed without assistance. The papers
state that the banks are bulglng WIN
money. That is easy to understand
because they won't loan 1t out.
A Georgia businessman discusses
his problem and remarks: LAS
rule, when bank loans are aval!aole
for the small businessman 1t Is Tor
period of 60 to 80 days, and When
repaid leaves him in about the same
condition as when the loan was
made. The banks have plenty OF
money to loan. Loans on long terms
to solvent concerns would, in my
opinion, Immediately create de-
mand for more goods, which Wouio
mt more people to work and would
be a substantial aid to re-employ-
nent, to the banks and to their
stockholders"
Omaha Firm Explains Need.
An omaha (Nebr0 firm explains
What it has been refused loan OF
$4,000 because it failed to show
nrof1ts during the depression years
a long-term loan at reasonable
interest charge would put this i'm
nortant little industry back on its
feet.
B,,t it cannot be obtained, either
through private banks or through
the Reconstruction Finance Corp
The concern writes: I'VE feel our
case is typical of a great number
nf businesses in this country. 1t IS
the reason why the Federal Gov
ernment should take more action IN
providing capital for small business
30 that labor can be employed, plants
can be equipped and materials can
be purchased
Another Pennsylvania company
explains present day credit needs
ocSS a lSaHa&