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September 4., 1934
Dr. Viner
Mr. Secies
Re: Proposed consumer credit b i l l of National
Ll Credit Associa

i s ^rob&biy • plfcO* in our financial
I ,V>r institutions
that will provide for port
: or radiscountlng of tumiiHMH creait
>er, not only
II of unlocking certain frozen c
r credit
but also as l paMNMOt lid to
•U.biisiii.rvnt of fT€
e.ecoE2iOustions to consumers and to
H LOfMMBt o f i
dicing p m
tieess. In ordtr thfci
-• -uouiiting f a c i l i t i e s ba ^ avail :. xiaaedi&tely will /robably r* ill
finni limn)til WM&st&nce and 1 see no
reason why tfiis should not be e yroper ui>e for ft. F. C, funus.
If eiitimatos "upon the shrinkage in tbi VolmM of M M H cr a i t
-licbl^ i t would M
ireble for p f t m
iOM tii.
ter attesipt b
to obtain a iaore nonMkl voluae
of sucn credit, A fuiiaing of exiBting debt voald I
9 relievo pres
sure of liquia^tion • na fa—d off oOosible bsnkraptcies. Also i t would
enable business concerns to carry larger amo,nito of eonoujser credit if
^retient frozen craait were iiniwrtrwi. If redise^uuting f t c i
vere offeree
>.ouiu be 3 gre^.t r incentive to offer creoit
to constiaiers ana if financea properly would l«sd to a d
increase in tne supply of ^ioney in the country.
co.:33arcial banks woula probably be morv. viiling to HIEI advances to i n s t i t u t i o n s of t h i s type provided they are soundly c^.-it-ulised. Considering the small voiuiae of acceptable loan applications
from business firsaB ;:.n^ the \&Tg9 fohmM of m m resexv | -;, lu by
banks, iliOTil to O M Kr creait mdi<COUtttlag agenci«3 offer a field
O O t
thut t
...s of the country uiight ;.>rufitably exploit. Of course the
;T i s not eligible for rediscount at tue Fea^ i,l ec
d t>iis
t al^iit :-ove MMMklt of I ceter: ^nt.
So far as tne pr»S«at b i l l i i concerned i t i
• I i t is
too obviously for the iMMtflt of UM ./rtisent creaitoro r^ta^r toen t l
oo&soMfW •
» t any b i l l Mist i o n t y i t t a M y tr«
p i c t u r e to receive y.c. ministration
• l l probt-bly too .
I itllB^d in bhll b i l l , and " .
-ily no profit aliov,
to tlM
wuo uso thfl fftOilltlet oi thMl in • t i t u t i o n s .
k tent tive mpOiil ui^ht be : value of the
lotms V:i;cri :re turned over to the corporations % Laercriant creaitors

should not be paid out in f u l l but that I 15$ deferred credit should be
held b;? the corporation to protect i t agai&st , . i Lo ^s from the
consumers failure to •
i l r 1 Tutu twenties ai 34
T% ."-•'•.id off the
Deferred credit* would Hum
> U
> I crdcitorr vfac b d
reciiscoLinted or sola paper to tje iviGtitutioo.K. B w much rtrtttl
be silovfed on these fancis woulu ue^crici upon :
-ofits of tUe lsatitM*
tioxi but yroi>ably tuere SHOUIQ bm I iv-tiisr low Li&xiiiium that M f bt -id
, that if |
raflti ippinr consumers thfful<! benefit by obtaining lower i n t e r e s t uacu^gyB. Vhat ^-rcentage shoula bm kept M dafarrvd
creait l i of course d i f f i c u l t to say but i t M W to afl that i t wouic,
M k
bottar to start oat with a fifur* like 15% wuich wouia be relstivoiy
ah-_n md then as new iftaiM art offered to the i n s t i t u t i o n s in the future
tnere migiit be a . revision wnicn would p«2Vlt the E ?• €• to require
sore o r ley to remain with the i n s t i t u t i o n a M exoarisnee in losaes i s
obtain^Q. Uunough actual operation* The ; : . tm C.*s .tion to DTQ~
ferreci stock suoulci be h
a to secure acieqiic 1
In regard to the ;.nanage:ient of these i n s t i t u t i o n s i t might bo a l l
right to have the director* eppolated ay the bmitmen who would
voting rights in proportion to the amount of defer
ta v ich.
they have with tne i n s t i t u t i o n s , However, the R« F. C* ahcmld have the
power of tiaatflfitimi and supervision of the i n s t i t u t i o n s ~.n& aboold iee
that loscea are promptly ch.fe.rged off md that the :u.ndlin . of the i n a t l tiitiotu; i s t5uch that coi-.sum'ars are given the advii^taga of ai lov