Evening star., 1945-01-07

Se0A&~A~6
needed the cooperation of every
one for war production. Banks
should occupy the leading role in
this field. 1t is their responsibility
to meet the credit needs of the
country, and If it takes a little
extra trouble to look after small
business, man, the banker should
welcome the opportunity. He should
know that if he does not meet it,
the Government will, and his nat
ural field will get narrower and
narrower.
The future of small business does
not, however, lie entirely in the
hands of those who may enter it
after the war.
There are, at the present time,
2,500,00 establishments which may
be classed as small business. They.
for the most part, have weathered
the stresses and strains of operation
in wartime and their problems are
concerned not so much with the
present, which, because of consumer
demand, is relatively bright-but
with what will happen after the
war
Representatives of the Depart
ment of Commerce, in the \past six
months, have, met with many
groups-geographically well dis
tributed-in order to find out what
was worrying these businessmen.
The distributors, mostly retailers,
were primarily concerned with the
sale of surpluSes to spectators
rather than through regular chan
nels. with upgrading of merchandise
by manufacturers, making it i'm
possible to maintain low and me-
dium priced goods in stock; and
with postwar competition from
large manufacturers with their own
outlets and chain stores, which
could buy up new merchandise as
fast as it came on the market.
Some retailers were disturbed by
growing competition from consum-
er co-operatives, manpower short
ages, job freezing and inequitable
freight rates.
The manufacturers, almost all Of
whom employed 100 or less people
at the time, were almost uniformly
concerned over the distribution Of
surplus goods; their inability under
present tax laws to build UP cash
reserve essential for quick recon-
version to civilian production; need
for equitable freight rates.
Tax Changes Vital.
In both categories, credit needs
were most frequently advanced un-
der the discussion of taxation. The
solution to the problem of postwar
risk capital was uniformly taken up
as tax question, not in terms of
borrowing more funds.
do not take this cross section Of
small business opinion to mean
that there will be need only for tax
relief in the reconversion period,
but income tax rates. regulations
and schedules will need to be re-
vised if the smaller units in busi-
nesses of all kinds can pay their
debts from earnings over reason
able time, and there is no other
way for them to pay their debts
other than from earnings.
We cannot expect business, little
or big, to put risk or venture capi-
tai to work under a tax system
which does not enable the investor
of the money to get either a profit
on his capital or the opportunity of
amortiZing his obligations in an
orderly way.
We cannot abridge the right Of
honest and ambitious men to enter
the business field because our f.
financial institutions are unwilling to
take chance on the future of the
| United States.
AS matter of fact, there is little
or no risk involved for the banker.
! The RFC has for a good many years
and is still willing to participate
with banks in making industrial
loans in any degree up to 80 per
cent. No system of guaranteed
loans could reasonably go any fur
ther than this and certainly any
banker should be willing to take at
least 10 per cent share with his
Government in the advancement
of his own community.
Small Loans Not Hurtful.
To put it another way, a loan
application made by fellow citizen
in which local bank is not willing
to take some of the risk is either
very poor loan or great reflection
upon the fitness for his job of the
banker who turns it down
I do not believe. however, that the
bankers of the United States are
going to make the mistake of deny
ing credit to reputable men and
women of character in amounts ap-
propriate to the circumstances. And
as for little business and little loans,
I would remind the banker that no
bank ever got seriously hurt from
small loans.
In many communities banks have
either already established credit
pools to finance small business or
are in the act of doing so. Some
of these pools will contain as much
as $100,000,000. They should be
operated on constructive basis.
The RFC stands ready to participate
with these pools so that there may
be no lack of credit for legitimate
enterprise, regardless of size, that
will provide employment and oppor-
tunity.
This proposal, which we will be
glad to consider in any part of the
country-if the banks want RIGS
co-operation-will not~only provide
greater amount of available credit
but will be, in effect. participation
by the RFC in any loans which are
made. 49,
The banks of the country ought to
go to work postwar just as every one
else to assure high level of pro-
duction and employment. Too
stringent policies in the operation
of the credit pools will make them
ineffective. Liberal policies may
mean some losses, but there again,
there will be profit enough in the
interest rate to cover them.
Our experience has convinced us
that an organization operated along
constructive business lines-as the
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