Government Loans to Small Business

July 1, 1939

Report Outline
The Need for New Credit Facilities
Commercial Credit During the Depression
Loans by Federal Reserve Banks, Reconstruction Finance Corporation
New Credit Proposals and Criticisms
Special Focus

The Need for New Credit Facilities

Since the early days of the depression, there have been repeated complaints that recovery was being retarded and possible employment curtailed because the smaller business firms in the United States were unable to obtain adequate credit facilities. At the present time a subcommittee of the Senate Committee on Banking and Currency is conducting hearings on a bill introduced by Senator Mead (D., N. Y.) which would authorize the Reconstruction Finance Corporation to insure bank loans to business in amounts not to exceed $1,000,000.

President Roosevelt wrote to Chairman O'Mahoney of the Temporary National Economic Committee in May that “it is our task to find and energetically adopt those specific measures which will bring together idle men, machines and money.” While the President has not endorsed the Mead bill, he has indicated his desire for the enactment at this session of Congress of some legislation that will make it easier for small firms to borrow money.

The need for additional credit facilities, if it exists, is certainly to be found chiefly among firms of small or medium size. Officers of the United States Steel Corporation, General Motors, and General Electric have testified before the T. N. E. C. that they can meet ordinary capital requirements from company savings or depreciation accounts. Except for the railroads, which offer a special problem, this seems to be true of most large corporations. On the other hand, representatives of small business testified on May 26 that there were widespread opportunities for such firms to expand and increase employment if new lines of credit were made available to them. Bankers have asserted in rebuttal that banks are willing and anxious to lend wherever there is sound prospect of repayment. Nevertheless, the total volume of commercial loans by banks outstanding now is scarcely more than half what it was in 1929.

ISSUE TRACKER for Related Reports
Small Business
Jun. 19, 1987  Small Business
Jan. 28, 1983  Small Business: Trouble on Main Street
Oct. 23, 1957  Aid to Small Business
Aug. 24, 1955  Future of Small Business
Mar. 02, 1950  Financial Aid for Small Business
Mar. 21, 1945  Revival of Small Business
Mar. 04, 1942  Small Business and the War
Jul. 01, 1939  Government Loans to Small Business
Apr. 03, 1934  Small Business Under the N.R.A.
Small Business