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Show nfLivestoele fSituatioriJ jXNAUCHTOg ' Los Angeles, March 9. FINANCING FINANC-ING THE COWMAN is one of the problems of the day. In certain sections sec-tions it is reported that local banks have formed associations for the purpose pur-pose of broadening their livestock loan operations, relieving the individual individ-ual banks and making room for additional ad-ditional livestock loans or other use of available funds. Rediscount rates are not low to the contrary they are fairly high not due "to a lack of money but more properly to the lack of availability. The Federal Intermediate Banks have been and doubtless will continue to be the channel through which a very large part of our livestock loan will pass. The rediscount rate in California today is 5',2 per cent. This factor however varies from time to time according to the ability of the Intermdeiate Credit Bank to interest the public in buying this class of securities. se-curities. We must bear in mind however that in order to avail ourselves of the services of the Federal Intermediate Credit Bank that certain conditions are required and of course it is necessary nec-essary for the Loan Associations to have a sufficient 'margin to cover their expenses and pay something on their capital, to say nothing of a reserve re-serve to meet possible losses. The spread .today between the rediscount rate of the Intermediate Credit Bank and the amount that the Loan Associations may exact from the borrower bor-rower is 3 per cent, but our information informa-tion is that the current loan rate to the cowman is around 7 per cent as against a permissible 8V2 per cent. It is also necessary that the Loan Companies qualify to rediscount through these Federal Agencies by investing a certain amount of their capital for loan purposes and adds to the cost of the money. We not only need this important facility but we need the cooperation of the banks and all other legitimate agencies to adequately care for the needs of this fundamental industry. High interest rates generally stimulate stim-ulate investment and it seems apparent ap-parent that the old established channels chan-nels through which the livestock interests in-terests have been financed in the past may be relied upon to again function within the near future and that additional ad-ditional outlets may be created from time to time. We must recognize that livestock values are at the low point and many believe have reached bedrock, hence new money thus engaged en-gaged is fortified against further deflation. de-flation. There is this observation to be made in connection with the cattle loan business the same as any other financing problem; that the institutions institu-tions closest to home having the greatest interest in the material welfare wel-fare of the growers are most likely to be sympathetic and helpful in time of need. The great difficulty is, when we stray from the fold and get to dealing with people far removed from our situation, hence unfamiliar with local problems, we find ourselves up against a stone wall on payday. |