Evening star. [volume] (Washington, D.C.) 1854-1972, 1943-02-24
FiIene Urges U.S..
10 Guarantee Capital
In Small Business
Boston Merchant Would
Broaden V-PIon TO
Stimulate Investment
BY CARTER BROOKE JONES.


How the Government could apply
to small industries urgently in need
of capital the same guarantees it
has given many farm investments
was described by Lincoln Filene,
Boston merchant, in statement
placed in the record of the Senate
Small Business Committee today.
Many conservative investors,
Mr.. Filene pointed out, ARE holding
Government guaranteed bonds
representing private and public
funds invested in farms and in farm
operations.
rs 1t now in order, when small in
dustry is seen to be so vital to the
prosecution of the war and to the
country after the war. for the Fed
eral Government to set this same
principle to work for the benefit of
small industry"
In the absence of Mr.. Filene who
is in California. the statement was
read by William Leavitt Stoddard.
president of the New England In
dustrial Development Corp, which
to further the development of small
industries in New England Mr.
Stoddard followed with his own de-
scription of the corporations sctiv-
tiles, as guided by group of pub
lic-spirited New Englanders.
Principle Now in Use.
Mr.. Filene, who is director of Will
liam Filenes Sons, pointed out that
the principle he outlined already
was in wide and successful applica-
ton in the so-called v plan, under
which the Government guarantees
up to 80 per cent of loans made by
commercial banks to industries with
war orders. Urging that this policy
be broadened to guarantee capital
invested. he added:
Il cannot think of anything that
the Government could do which
would stimulate private investment
in small business to greater extent.
With such standing offer from
he Government many hitherto timid
holders of capital would feel secure
in putting their money into oppor-
tunities for employment of their
funds without asking the Govern
ment actually to advance it's funds.
Let me emphasize that I am
speaking of capital investment in
small enterprise. not short-term
loans. Current loans from the banks
will be easily available when bust
ness has adequate capital financing.
l would not confine this Government
guarantee to war industries, but for
the present at least 1t would cover
to major extent the war industries
and those which we are beginning to
call essential civilian industries. Yet
we should not forget that what is
now happening to small industry
without war orders is seriously af-
fecting, through pressure for relief.
the war activities of the community
and the Government"
Says Industry Needs Capital.
The principle of a Government
guarantee, Mr.. Filene pointed out,
is not being applied to the basic
problem of providing capital, Il
have knowledge" he added of in
stances where agencies have ex-
tended credit to the limit but where
the industry is still not functioning
as 1t should. because 1t lacks the
backlog of permanent capital
Mr.. Filene urged that the Gov
eminent, not only as war measure
but as measure of permanent pol
icy, may declare that under condi-
tions of reasonable business pru-
dence 1t will guarantee certain types
of capital investment by private in
vestors in carefully scruitinized
small manufacturing industries"
IF this is DONE" he said. 'it will
result. l believe, in breaking the log
jam of capital which for so many
years has held back the development
OF prime, small producers of a null
titude of things which the people of
this country need and will purchase.
This plan will help save and develop
vast productive energy which will
help make America strong in war
and prosperous and strong in peace.
Holding companies could be form
ed to reinvest funds of diversified
groups OF small industries, Mr..
Filene pointed out, adding: Not all
the industries in such a group will
fail, some may, but others are sure
to more than compensate for the
few that fall by the wayside."