MILLIONS TO LEND.

Star (Christchurch), Volume LXVI, Issue 20455, 7 November 1934, Page 1

MILLIONS TO LEND.

Frozen Capital Refuses to Thaw. ICE CREAM STILL COLD. (By PAUL MALLOX.) WASHINGTON', October 5. The gr-r-r-eat Government drive to unfreeze the capital market has been accompanied by more ballyhoo than anything since the N.R.A. Jesse Jones, the Reconstruction Finance Corporation chairman. has talked himself hoarse. Even the staid old Federal Reserve Board crowd took to the radio. Together, they have done everything short of ramming money down the throats of business men in an effort to get rid of the £116.000.000 which Congress authorised for this noble experiment in credit expansion. No one will believe it, but to-day, after three months of effort, they have managed to put out less than £1.000.000. That leaves them only £115,000,000 to go.

The latest tabulations by the R.F.C. and F.R.B. are incredible, but official. On October 6, the R.F.C. had exactly £471.400 outstanding in loans of this character. On October 3, the F.R.B. total was £493,400. Add them together and you find that the Government has “ unfrozen ” the capital market to the tune of £964,800 up to very recent dates. The heat from that would not be enough to unfreeze an ice cream cone on a July day.

It is so bad that one cannot blame the Government agencies for trying to make it look a little better by giving more prominence to the amount of loans authorised, instead of loans actually made. The R.F.C. has authorised about £2,400,000 and the F.R.B. £2,000,000. If these loans actually are made later, the measure of success will be £5,364,800, which might unfreeze something, but certainly not the credit structure.

There is just one reason for this—human nature. That is one of the few 1 things which cannot be changed by ballyhoo. In the first place, no honest ; Government official is going to make a : bad loan, if he can detect that it is bad. Certainly, Jesse Jones and the Federal Reserve Boarders are not. No ; one knows how many applications ! Jones has turned down, but there are figures to show that, out of the first 2800 applications received by the j F.R.8.. about 1300 (nearly half') were j rejected. The reasons were that the I borrowers could not offer good col la tj eral, were not in good financial condiI tion or were ineligible.

In the second place, no business man with good collateral or in good financial condition is going to borrow money from the Government, or anyone else, unless he thinks he is going to make a profit out of using the money. This current experience is a rather conclusive indication that the people who want to bring back prosperity bv artificial credit expansion are trying to make the horse run backwards. All the credit in the world will not move a bobbin industry unless it is accompanied by expectations of future business profits.— (N.A.N.A.)