Evening star., 1947-01-05
Credit Battle
Is Shaping Up
More Consumer Leeway
Felt Justifed-Some
Want Regulation
Bv WilIiam d. Horean

NEW YORK.-While the Nations
consumers are starting off the new
year deeper in debt than at any
time since prewar days, last-ditch
fight to abolish all credit controls is
shaping up.
Consumer borrowing has increased
tremendously since the end of the
war despite the fact that the ma
tional pay envelope has bulged to
record proportions.
People want more credit for two
reasons: To buy goods unavailable
during the war and to cope with the
steady increase in the cost of living.
The explanation carries with it a
prediction that credit demands will
gain in volume as more consumer
durable goods come to market.
The often bitter wrangling over
relaxation of the credit curbs i'm
posed during wartime broke out
soon after vi day.
Last Barriers Due to Fall.
Opposition to continuation of any
controls has now reached such a
crescendo that the most enthusiastic
proponents for retention of curbs
concede defeat by midsummer Of
1947.
:, The Federal Reserve Board ad-
ministers the controls still in effect,
pertaining mostly to durable goods
such as refrigerators and radios, and
in Federal Reserve circles are to be
found some of the most outspoken
supporters of continued regulation.
On the other side of the fence,
crying vociferously for what they
term help for the consumer, are sew
eral members of Congress as well as
various credit groups
Demand for abolition of controls
has spilled over from consumer
goods to securities. The Federal
Reserve requires that purchasers of
securities must pay cash on the
barrelhead, method under fire by
among others, the New York Stock
Exchange and the Investment Bank
rs Association. They ask return
to the days of purchases on margin
Benefits of Regulation Cited.
The Federal Reserve frankly
wants to put its war-granted con-
troll powers on a permanent foot
Ing. Peacetime control of credit ia
cilities, the board claims, could act
as a check on excessive inflationary
or deflationary tendencies.
Opposition to continued credit
curbs is based in part on the ground
they have outlived their usefulness
The charge has also been made
that regulation "W," the basic
credit control law, favors the rich
Present terms are too severe, ac-
cording to this slant, for the low
income group of consumers to pur-
chase high-priced articles.
These opinions have been echoed
on Capitol Hill and it appears likely
the new Congress will thrash out
the entire question early this year.
Stores Map New Policies.
Retailers, meanwhile, are ap-
preaching the entire problem of
credit with considerable caution.
Most are in favor of repeal of regu-
lation wv" but couple this view with
plans to apply their own curbs to
too generous use of credit in their
stores.
Reports of an increase in credit
delinquencies are already in the
news. This was expected to follow
&pickup in charge accounts and in
stallment purchases, although store
executives are on the alert to keep
credit abuses to minimum.
Despite the huge postwar jump in
credit, the total is still comparative
lyssmaH when taken in relation to
consumer income.
The Federal Reserve Bank of New
York noted this fact and stated in
its December review of business con-
ditions:
Since w day consumer credit
has been rising faster than incomes
but the ratio between them is stifl
far below the prewar figure.
THE total volume of consumer
credit currently outstanding could
more than double before the prewaI
relationship between consumers dis
possible income at the present level
and consumer credit outstanding
would be restored"
distributed hy the Associated Press-)