Milford chronicle., 1956-09-28
TIGHT MONEY


Just about everyone has heard of the
Federal Reserve Board. Most people prob
ably know, in vague and general way, that
this body, which is entirely non-partiSan and
nOn-political, has great powers of control
over the nations money supply. 1t is equally
probable, however, that many of us feel that
the Boards policies have little if any iniu-
ence on the life of the average man, and that
they are of direct interest only to large fl
nancial and industrial interests.
That feeling-as numbers of people are
now learning at first hands gravely in er-
ror. 1t is true that what the Board does in
limiting or expanding the money supply has
a powerful impact in business. 1t is also true
that it has an equally powerful impact on
individuals. feature article in the Septem-
Der Ia issue of u. S. News and World Report
tells the current story in clear and concise
fashion.
For some time the Board has been pur-
suing what is known as a tight" money
policy. The reason, as u. S. News expresses
it, %. is to make money less abundant and
more expensive and thus discourage borrow
ing. Borrowed money, when spent, adds to
demand for foods and for labor-both some
times in short supply. The result is pressure
for rising prices that government officials
want to prevent" In other words, it is an
anti-infation policy
Then u. S. News provides several illus
trations of how 'the pinch on money" will
affect various people and groups as practi-
cal matter.
The instalment car buyer-a classifca-
tion which seems to include the majority of
us-is encountering some changes. There is
plenty of credit available, but larger down
payments are asked, and the number of
months allowable for paying the balance is
being reduced. That means larger monthly
payments.
Home buyers, used to limitless credit at
low rates of interest will also find that things
have changed. Larger down payments are
required, and in many cases amortization
time is shortened On top of that interest
rates generally are up-by full one per
cent.
county, embarking on school-buiding
venture financed by bonds, finds the market
less favorable. 1t has to offer higher inter-
est rate. Over 20-year period the increased
interest cost ON a $10,000,000 issue could
amount to $1,0000O0.
Businessmen needing money for inven-
tories and plant expansion, are in similar
fix. Interest rates are up, by about one per
cent On big, long-term bond issue that
may involve $3O,0O0,0O0 in additional inter-
est costs.
Even the u. S. Treasury is not immune
from the impact of tight" money. In World
War III days, it used to issue its 91-day-bills
of which it sells $1.5 billion worth week
at an interest rate of 38 of one per cent.
Now the rate is 81 per cent.
builder with plans for 200 homes may
find loans both harder to get-and more ex-
pensive. In a competitive market, that dark
ems his profit potential
So it goes. As the magazine puts it, the
aim of the men on the Federal Reserve Board
is g. to supply an amount of money con-
sidered adequate for normal needs, but to
keep the supply tight enough to discourage
lots of undertakings that can be postponed"
&G3N&
PUBLIC TASTE CHANGES
Our tastes in food change, as some fac
tual information from the American Meat
Institute indicates. 1t shows which meats
have gained in consumption since the 1885,
80 period and which have lost ground. Beef!
made the best showing by far with rise!
of 81 per cent in per capita consumption.l
Pork and veal also gained in popularity, by
10 per cent and II per cent respectively. On
the other side of the ledger, lamb and NUT
ton fell off by 81 per cent.
The character of the livestock from
which our meat comes also changes-and for
the better. A good example here is found in
the heavily increased demand for lean, meat
type" hogs, as against the exceedingly heavy
specimens.
Then, for no know reason, there are very
wide variances in public taste between diff
ferent sections of this country. Certain cuts
of lamb, for instance, may be great favor
ite in one region, while in another region a
few hundred miles away they may find small
favor.
A big part of the meat industry's job is
TO keep up with the changes, large and small,
tnat take place in the markets and to satisfy
them. 1t sees that people everywhere get
what they want-and when they want IT.
And they do that for an amazingly small
charge, as the fact that the packers averaged
less than. a cent of profit on each dollar of
sales last year proves.