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June 7, 1959
Hon. Mariner S. Eccles
Governor of Federal Reserve Banks
Washington,
Dear Governor:
We notice, with appreciation, that you are using your effort,
as we understand it, to broaden the purposes of Government lending agencies
in order to help small businesses. You, of course, know of the difficulties
of small businesses that are in need of relief more than we do. We are
taking the liberty, however, of writing you regarding a particular case,
because no doubt there are many similarly situated.
The Western States Machine Company was incorporated in the State
of Utah over twenty years ago and established its business here and carried
on a successful business and later moved its operations to Hamilton, Ohio.
The company has about three hundred stockholders, most of whom reside in
Utah, some residing in Ohio and some in New York, the manager of the company being Mr. Eugene Roberts of New York City. The company is engaged
in the manufacture of sugar machinery, more particularly centrifugals for
the refinement of sugar in beet factories as well as in the refining
factories. Our machinery is in practically all of the beet factories
and in a large number of cane sugar refineries. It employs from fifty
to one hundred men permanently and last year did over $500,000 worth of
business.
Over two years ago, the company took an option on the building
and plant in which the machinery was being manufactured at a price of
$150,000, which was considered then and is now a very small price for
the property. $50,000 of the purchase price was paid by the company over
a year ago "and $50,000 last fall. The balance, #50,000, becomes due this
fall, and unless it is paid, the option or agreement to purchase will
be forfeited and the company embarrassed. Because of the depressed
business conditions existing, it now seems almost certain that unless
the company can procure a loan for at least $50,000, it will be financially
embarrassed and lose what it has put into the property.
¥fe made an application for a loan from the R»F. C. and it was
denied for the reason that the principal part of the money for which the
loan was asked was to be paid on the purchase of property or for the
payment of existing debts. The local bank at Hamilton, Ohio was willing
Hon* Mariner S. Eccles
#2
6/7/39
to take 10% of the loan, but still the R.F.C. refused to approve
the loan*
We take the liberty of suggesting that some help should be
procured from the Government to cover cases of this kind where it is
to complete the purchase of property or to pay obligations incurred
in the purchase of property.
Our machinery is not only being used and sold in the United
States, but also in foreign countries; such as, England, Holland,
Australia, Argentina, Brazil and elsewhere, and if its business is
discontinued, our employees Tiri.ll necessarily lose their employment.
We are "writing you in the hope that you will, as no doubt from the
newspapers you are trying to help this situation and bring this
particular instance to your attention as one of the cases in which
there ^ould seem to be necessity for relief. No doubt you are acquainted
with other similar instances.
Thanking you for anything you may do and congratulating you
on what you have and are doing, we beg to remain
Yours truly,
MOYLE & MOILE
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June 16, 1939.
Mr. Oscarft.Moyle
First National Bank Building
Salt Lake City, Utah
Dear Mr. Moyle:
of June
ing the
Machine
has had
Mr. Eccles has asked me to reply to your letter to him
7th in which you comment on his recent testimony respectMead Bill and mention the situation of the Western States
Company which you say is in need of a long-term loan and
its application for such loan rejected by theft.F. C.
I have contacted theft.F. C. informally respecting the
loan referred to and they advise that the application was denied
last January principally for the reason that the current position
of the company was rather unsatisfactory and that the appraisal of
the Company1 s property did not justify a loan in the amount asked
for, namely $100,000.
the same time it was recognized that tne
earnings of the company for the first ten months of 1938 were very
creditable, being some $31>000 after adequate depreciation. If the
company's earnings for the current year are anywhere near satisfactory,
it is my belief from the tone of the conversation I had with theft.F. C.
that they would look with favor on a new application for a smaller
amount, say $75*000. If* on the other hand, the earnings for 1939
have been very small, I doubt that they would car to reconsider the
proposition for any amount.
Undoubtedly the loan which the Western States Machine
Company desires is just the type of credit which Mr. Eccles has
pointed out as being very difficult to get under present conditions.
Banks are loath to make long-term loans although they are beginning
to get into them, and I have been told that theft.F. C. in most cases
declines loans which the local bank is not willing to make, or at least
to participate in to a substantial extent. In this connection, I doubt
that theft.F. C. would look with favor on a new application from your
Mr. Oscar vu Moyle - 2
people unless the local bank were willing to take a somewhat
larger participation, say twenty per cent.
With best wishes and trusting the foregoing information
may be of some assistance to you and your associates, I am
Yours sincerely 9
Lawrence Clayton
assistant to the chairman
LC:fgr
@FedFRASER