| Show 0 0 interpreted by william bruckart washington the tha president lately j y has been stressing the necessity ot of providing cred more credit it loans of money demanded to those who want to do business but who the resources after four years of the depression to get going gain again jesse jones chairman of the recon reconstruction s truc tion finance corporation has made several speeches urging that the banks make loans freely to the butcher the baker and the candlestick dle stick maker make r from eleew elsewhere here in the g government 0 vern ment there Is the cry that more credit shall be provided credit here credit there and credit otherwise all of which has moved observers here to inquire whither boest thou uncle sam students of finance and economics who are regarded as knowing their oats tell me that there must be liberal use of credit at any time in this country it seems to be tile the system we have built up now more than ever I 1 am told la Is there a necessity for liberal terms to borrowers they predicate their views on that which Is the fact nai namely nely that in every community there are businesses that would like to get going again on something like normal basis it if they had the resources these resources however have been depleted by four extremely difficult years and consequently the business men have to proceed slowly but the continued shouting that there must be credit has more to it than just the fact that money ought to be loaned the economists admit frankly that other factors must be considered in the first instance when the banker of your community makes a loan he be loans your money that has been entrusted to his care in the form of deposits in his bank in the second place the business man who borrows Is taking a risk for lie he has to put up collateral security with his note to the bank and nee nc edless diess to say that collateral Is always sufficient clent to insure the bank against loss losa so if the borrower falls to make a profit on the money he be borrows or if he be makes a bad guess on the investment of that money and loses he not only loses the amount borrowed but his collateral era as well so even if lie he has the resources to put up the required collateral lie he Is going to think twice before he borrows summed up therefore the question of private credit or private loans on liberal terms Is not limited to the banks by any means in other words you can lead a horse to water but you cant make him drink in this case sometimes there Is no horse to lead to water and sometimes there Is no water when the horse gets there 4 but let us turn to a consideration of government credit the government Is putting out money in a dozen different ways and it Is using the semi government agency the federal reserve system to put out other money yet the same factors are influencing that situation as those that tire are at work in the field of private finance when the federal reserve system was created during the administration of president wilson one of the dreams ot of its sponsors was that it would make credit easy that it would provide money when business needed it this hns has been found to be true banks that are members of the federal reserve system have the privilege of discounting notes they have taken from their business house customers with the federal r reserve erve hanks banks what they do actually Is sell that note to the reserve bank and get it but they agree to take it up in a specified time it la Is almost like borrowing from a local bank except that the transaction Is between two banks instead of between an individual or a corporation and the local bank tile the federal reserve banks are operating now BOW on what Is known as an easy money easy money pol policy c y they are holcy loaning money to the member banks on discounts at a very low rate of interest in addition the reserve banks are engaged in open market operations under which they fire are buying united states bonds and treasury notes at the rate of about fifty million dollars worth a week the theory of this la Is that the reserve banks having an elastic stock ot of money will put out cash every time they buy one of those government bonds which are acquired wherever they can be bri bought tight that hm put out cash hut from what tile the financiers tell me the release of that currency has not resulted in banks loaning additional funds to their customers for the reasons outlined above since there has been no swarm of borrowers fit at the hank bank windows vin dows the carh that has been put opt by the reserve hanks banks simply has found its way hack into the banks as deposits whitt what then the hanks banks have taken that cash to pay off whatever debts they ha have ve nt at the reserve hanks and have taken their customers notes hick to t hold them until they mature which Is per factly natural because the banks call earn a profit only from the interest they receive on loans and if tile the customer paid 6 per cent and the hanh bank discounted that note with a reserve bank it would have to pay a part of that 6 per cent as interest on its borrowings from the reserve banks hence with the note back in its possession the hank gets all tile the interest now ns its to the loans that nrc are being made by the reconstruction ruction fl nance corporation tile department of agriculture the farm farin credit administration the federal home owners loan corporation and whatever other agency there may be it Is the same old story none of them can cah loan unless the security Is ample that Is a farmer cannot borrow unless lie lias has a farm which ho he can mortgage or a growing crop or some work stock and the city man cannot borrow unless lie he hag bas a house which he can mortgage it if it were not that way tile the government would be putting out money without a chance of getting repaid unless the borrower wanted to do it it takes no fortune teller or soothsayer to foresee where that would lend lead and what it would amount to in fit the end it would simply be taking money paid into the federal treasury by taxpayers and virtually giving it away obviously soon the taxpayers would quit paying it in and having mentioned the taxpayers I 1 gather from conversations conversation a with unbiased observers here that the taxpayers are due for a tremendous shock anyway before this recovery plan Is completed the yc alast en ln eff 0 many ways that it Is difficult if not impossible to tell bow much the thing Is costing 0 secretary wallaces plan to buy up about six million pigs weighing less than 1100 wallace plan pounds and one half success million sows bows about to farrow as it means of cutting down the hog surplus and forcing prices higher appears to have been only about half successful or to say it another way the program failed department part ment experts wont say wh why y I 1 it t failed but there has hag been a good deal of discussion in the capital that the secre plan missed fire because it did not take into consideration the practical the human side of the equation it was a beautiful theory I 1 think the secretary secret nr ought not to be charged wholly with it however because it had its inception in the minds of certain men who claim to be leaders in agricultural thought who put their leads head together with some of the professors who are so numerous around wash washington ington from divers sources I 1 get the information that farmers in many sections of the country held oft off marketing their pigs and their BOWS even with the premium the department of agriculture was paying because they wanted to wait for those higher prices that the department of agriculture ri said would come quito quite obviously they expected the little pigs to grow up and when they became bigger pigs and prices were higher there would be bigger amounts of money the net result of the whole show was that the department of agriculture put out only about in its pig program whereas it had estimated that there would be approximately expended A part of the total paid out went to the processors such as the meat packers and butchers as compensation n for the work they did the coun arys hog population was reduced by the extent of about four million pigs while instead Iru stead of one million sowa being bought and killed there were not more than one hundred thousand notwithstanding the failure of the program to buy pigs and sown the outlook for expect lower hog supplies in shipments tho the principal mar bets during the coming coining marketing year Is for lowr lower L shipments than in several years tho the marketing year ending october 1 1033 1133 saw roughly head of hogs slaughtered that total and it Is fairly accurate because federal inspectors see all of the hogs killed was the largest in to four ur years but tile the marketing year J just lot now starting gives every indication of a considerably smaller and slaughter and that probably means higher prices according to the experts the relationship between hog bog prices and corn prices has been unfavorable for hog production in the last three months and the prediction from the department of agri culture Is that this condition will continue for probably a year it Is to he be assumed that this will result in a smaller pig crop this fall than Is usual although since the plan to liny buy pigs failed to materialize ant satisfactory results I 1 do not see how the exports experts can guess the dimen alons of the pig crop C 19 3 3 western News newspaper peper union |
