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FED ERAL R E SER VE BANK OF NEW YORK Fiscal A gen t o f the U nited States r Circular No. 3 7 8 6 1 L November 26, 1951 J TREASURY FINANCING To all Banks, and Others Concerned, in the Second Federal Reserve District: Acting Secretary o f the Treasury Foley announced today that the subscription books will open on Monday, December 3, for an ll^ -m o n th l 7/s percent certificate o f indebtedness to be issued in exchange fo r the 2Y4 percent Treasury Bonds o f 1951-53, which were called fo r redemp tion December 15, 1951, in the amount o f $1,118,051,100. The new l 7/s percent certificate o f indebtedness will be dated December 15, 1951, and will mature December 1, 1952. Copies o f the Treasury Department circular setting forth the terms o f this offering and official subscription form s will be mailed to reach you on December 3, 1951. A llan S proul, President. 3 SECOND D IST R IC T C O M M E R C IA L -? B A N K IN G V O L U N T A R Y C R E D I T R E S T R A I N T C O M M IT T E E Created pursuant to the Program for Voluntary Credit Restraint authorized by the Defense Production Act of 1950 33 LIBERTY STREET N E W Y O R K 4 5 , N. Y. November 27, 1951. To the Chief Executive Officer o f each Commercial Bank tn the Second Federal Reserve D istrict: On November 9, 1951, the National Voluntary Credit Restraint Committee released a digest o f a sampling o f opinions which had been expressed through September 1951 by the regional committees on typical cases referred to them by individual lending institu tions. The National Committee believes that the release o f information on typical cases will assist cooperating financing institutions in conducting their operations in accord ance with the principles o f the Program, and that the publication o f these digests should also be o f interest to borrowers in planning their operations and to the public at large. F or your information, a copy o f the digest o f opinions is printed on the following pages. Although the digest o f the cases is necessarily brief, we hope that it will be helpful to you in indicating the general approach o f the regional committees to problems arising under the Program. It is still necessary, o f course, fo r lenders to consider each proposed loan or investment on the basis o f the facts o f the particular case. W e believe that you will want your lending and investment officers to be fully familiar with this material, and we shall be glad to furnish you with additional copies fo r this purpose upon request. I f you have any question as to whether a proposed loan or investment conform s with the principles o f the Program as amplified by the various bulletins which have been sent you and by the digest of opinions, we shall be glad to review the case and let you know our views promptly. Please submit your request fo r consideration of a specific loan or invest ment on Form CR-CB1. This form should be prepared in triplicate and sent to G. M o r g a n B r o w n e , Secretary of the Committee, 33 Liberty Street, New York 45, N. Y., to whom requests for additional copies of the form should be addressed. Your continued cooperation in the Program will be greatly appreciated. G eorge W h it n e y , Chairman. VOLUNTARY CREDIT RESTRAINT PROGRAM Digest of Opinions Through September 1951 S E A S O N A L A N D IN V E N T O R Y LO A N S B orrow er and Purpose Opinion W holesale seeds.— To buy and clean seeds fo r resale to retailers o f seed for use by farmers in necessary reseeding operations. Favorable R etail dry goods.— F o r normal seasonal inventory acquisition. Favorable R etail hardware, lum ber and building supplies.— F o r normal inventory acquisi tion to care fo r summer and early fall trade. Favorable R etail fu el oil.— To purchase 1 million gallons o f fuel oil (one-tenth o f annual volum e) fo r storage and sale during the 1951-2 season. Favorable P u b lic accountant.— Seasonal loan fo r operating funds. Favorable R etail hardware.— To enable borrow er to carry inventory disproportionate to his normal business operations. Unfavorable R etail sewing m achine.— To increase inventory o f imported machines in anticipa tion o f future curtailment in domestic manufacture o f sewing machines. Unfavorable B U IL D IN G P R O G R A M S M achine tool com pany.— To build new plant to take care o f present needs. Pres ent rental property too small and unsuitable fo r increased volume and employment. Favorable Delicatessen.— T o build a new store building to serve a newly developed resi dential area. Favorable R etail farm tractor and im plem ent dealer.— To erect sales and service building in order to retain franchise. Unfavorable Grain elevator and feed m ill— Sale o f feeds and seeds to farmers.— To erect a new building to replace present facilities which are not very convenient from standpoint o f services to customers. Unfavorable M unicipality.— To erect agricultural-live stock exhibition building. Unfavorable Nursing hom e fo r aged.— T o b uy existing building which is suitable fo r needed additional space fo r operations. Favorable M ortuary.— To build a new m ortuary in replacement o f present quarters which are inadequate fo r needs o f community. This is the only mortuary serving the area. Favorable Tourists’ hotel.— To construct 25-room motel in vacation and recreational area. Unfavorable E ducational institution.— T o finance partially construction o f a library. Unfavorable M unicipality.— F o r construction o f needed school buildings. Committee deferred its opin ion on financing fo r that part o f program which extended beyond current fiscal year. Favorable Church.— To build a new church in replacement o f present structure which is in unsafe and hazardous condition. Favorable Church.— To build a parish hall and an addition to Sunday School building. Unfavorable N E W P L A N T OR E Q U IPM E N T Publisher o f daily newspaper.— To purchase a printing press in replacement o f outmoded press which does not take care o f present requirements. Favorable Tankship owners.— To purchase oil tanker for charter to an oil company. Favorable N E W P L A N T OR E Q U IP M E N T (Continued) Opinion B orrow er and Pur-pose Excavating contractor.— T o purchase diesel tractor shovel to replace worn and obsolete equipment now in use. Favorable W holesale petroleum .— To buy tractor-tanker units necessary in operations— one replacement and one additional unit. Favorable P u blic utility.— F o r improvements to its gas distribution system. Favorable M unicipality.— F or community. needed fire-fighting equipment in rapidly expanding Favorable Laundry.— To purchase new machinery and equipment fo r expansion o f plant. Deferrable unless program had been started and commitments made p rior to inauguration o f V C R Program. U nfavorable Social club and recreation center.— To purchase bar and equipment together with furnishings fo r social room. Present facilities not adequate to demand. U nfavorable M O D E R N IZ A T IO N Farmer.— To repair and remodel farm buildings on 176-acre producing farm. Favorable Retail variety store.— F or modernization and enlargement o f store building. A pproval based on facts that architect’s plans drawn and materials con tracted for prior to inception o f V C R Program. Favorable R etail ladies ready-to-wear.— T o modernize store, add new fron t and increase floor capacity to maintain competitive position. Unfavorable Gasoline service station.— F o r purchase and modernization o f equipment and facilities o f two existing gas stations. Unfavorable W O R K IN G C A P IT A L LO A N S W oodw orking— M anufacturer o f business fixtures and equipm ent.— F o r neces sary and normal w orking capital in connection with contract work in process. Favorable Metal stamping plant.— F o r necessary and normal w orking capital. Sixty-five per cent o f present volume is under defense contract. Favorable Shoe manufacturer.— F or necessary and normal working capital. Favorable D E B T R E T IR E M E N T A N D R E F IN A N C IN G R etail autom obile dealer.— T o repay existing bank loans. Favorable Manufacturer o f electrical appliances.— F o r reduction o f bank debt. Favorable R etail m ilk dealer.— T o refinance existing indebtedness held by form er owner of business. Unfavorable Chain variety stores.— To retire outstanding preferred stock. Unfavorable A C Q U IS IT IO N O F E X IS T IN G B U S IN E S S E S H otel operator.— To purchase building and equipment o f hotel from owner who is retiring because o f ill health. Failure to effect transfer m ight create hard ship fo r community in having hotel closed. A pproval based on assumption self-financing purchaser cannot be foun d or that seller is unable to accept a purchase-money mortgage. Favorable Trucking.— To purchase motor trucking com pany and equipment fo r expansion o f present operations. Trucking business to be acquired is currently hauling foodstuffs but continued operation by present owner is assured until a sale can be made. Unfavorable ( over) A C Q U IS IT IO N O F E X IS T IN G B U S IN E S S E S (Continued) B orrow er and Purpose Opinion Pharmacist.— To purchase business, inventory and fixtures o f an existing drug store. Unfavorable A ccountant.— T o purchase an established accounting business. Unfavorable A C Q U IS IT IO N OF S T O C K H O L D E R S ’ OR P A R T N E R S ’ IN T E R E S T S Individual (officer and principal stockholder— m achine tool m anufacturer).— To acquire one-third stock interest in com pany from widow o f borrow er’s form er partner. Proceeds o f this loan, used to purchase the m inority interest in the com pany, would preserve continuity o f management and avoid the m inority stock interest’s getting into possibly unfriendly hands. Favorable R etail novelty store.— To buy other p artn er’s interest in business to become sole owner. Unfavorable W holesale iron and steel.— T o purchase m inority shareholders’ interest. Unfavorable Trucking com pany.— Fam ily group operating com pany wishes to buy back 51 per cent o f stock now held by outside interests. Unfavorable N EW VENTU RES Retail groccr.— To stock a new store to be opened in a new and expanding com m unity now lacking a grocery. Favorable R etail grocer.— To stock a new grocery store which facility appears not to be necessary in the community. Unfavorable Dentist.— To purchase furnishings and equipment necessary to operate a dental office. B orrow er recently graduated from dental school. Favorable Retail m en’s clothing.— To open new m en’s clothing store. City has sufficient retailers to satisfy the demand. U nfavorable R etail gasoline distributor.— To equip a new self-service station. Present facilities in community are adequate. U nfavorable Amusem ent park.— F o r erection o f plant and purchase o f equipment necessary fo r operations. Other amusement and recreational facilities are available in area. Unfavorable L O A N S TO F A R M E R S , E TC . Rancher.— T o purchase and carry cattle. Favorable Farm er.— T o clear 50 additional acres o f land fo r pasturage. Favorable Farmer.— To purchase 260-acre farm fo r purpose of putting it into production. Favorable Farmer.— T o purchase farm land fo r lease as an investment. Considered specu lative in character where the land is already in production and borrower desires simply to increase his holdings o f real estate. Unfavorable D EV E LO PM E N T OF LAN D Individual.— To purchase acreage fo r housing developments in a defense area. Favorable Individual.— T o purchase and develop land fo r sale as building lots. Unfavorable M unicipality.— To acquire unim proved land for erection o f parking facilities. Unfavorable O T H E R LO A N S H ousewife.— T o buy single premium life insurance contract. purchase o f discounted premium life insurance contract. T o provide fo r Unfavorable Individual.— To purchase real estate fo r investment. Property is already financed on a long-term basis. Unfavorable State Government.— F or payment o f bonus to veterans o f W orld W ar II. Unfavorable N E W Y O R K -N E W J E R S E Y M UTUAL S A V IN G S BANK V O L U N T A R Y C R E D I T R E S T R A I N T C O M M IT T E E Created pursuant to the Program for Voluntary Credit Restraint authorized by the Defense Production Act o f 1950 33 LIB E R TY STREET N E W Y O R K 4 5 . N. Y. November 27, 1951. To the Chief Executive Officer o f each Mutual Savings Bank in the States o f New York and New Jersey: On November 9, 1951, the National Voluntary Credit Restraint Committee released a digest o f a sampling of opinions which had been expressed through September 1951 by the regional committees on typical cases referred to them by individual lending institu tions. The National Committee believes that the release o f information on typical cases will assist cooperating financing institutions in conducting their operations in accord ance with the principles o f the Program, and that the publication o f these digests should also be o f interest to borrowers in planning their operations and to the public at large. F or your information, a copy o f the digest o f opinions is printed on the following pages. Although the digest of the cases is necessarily brief, we hope that it will be helpful to you in indicating the general approach o f the regional committees to problems arising under the Program. It is still necessary, of course, fo r lenders to consider each proposed loan or investment on the basis o f the facts o f the particular case. W e believe that you will want your lending and investment officers to be fully familiar with this material, and we shall be glad to furnish you with additional copies for this purpose upon request. I f you have any question as to whether a proposed loan or investment conforms with the principles o f the Program as amplified by the various bulletins which have been sent you and by the digest o f opinions, we shall be glad to review the case and let you know our views promptly. Please submit your request for consideration o f a specific loan or invest ment on Form CR-SB1. This form should be prepared in triplicate and sent to G. M o r g a n B r o w n e , Secretary of the Committee, 33 Liberty Street, New Y ork 45, N. Y., to whom requests fo r additional copies o f the form should be addressed. Your continued cooperation in the Program will be greatly appreciated. Joseph A. K a is e r , Chairman. VOLUNTARY CREDIT RESTRAINT PROGRAM Digest of Opinions Through September 1951 S E A S O N A L A N D IN V E N T O R Y LO AN S B orrow er and Purpose Opinion W holesale seeds.— T o buy and clean seeds fo r resale to retailers o f seed fo r use by farmers in necessary reseeding operations. Favorable Retail dry goods.— F or normal seasonal inventory acquisition. Favorable Retail hardware, lum ber and building supplies.— F o r normal inventory acquisi tion to care fo r summer and early fall trade. Favorable Retail fu el oil.— To purchase 1 million gallons o f fu el oil (one-tenth o f annual volum e) fo r storage and sale during the 1951-2 season. Favorable P u b lic accountant.— Seasonal loan fo r operating funds. Favorable Retail hardware.— T o enable borrower to carry inventory disproportionate to his normal business operations. Unfavorable R etail sewing m achine.— To increase inventory o f im ported machines in anticipa tion o f future curtailment in domestic manufacture o f sewing machines. Unfavorable B U IL D IN G P R O G R A M S M achine tool com pany.— To build new plant to take care o f present needs. Pres ent rental property too small and unsuitable fo r increased volume and employment. Favorable Delicatessen.— T o build a new store building to serve a newly developed resi dential area. Favorable R etail farm tractor and im plem ent dealer.— To erect sales and service building in order to retain franchise. Unfavorable Grain elevator and feed m ill— Sale o f feeds and seeds to farmers.— To erect a new building to replace present facilities which are not very convenient from standpoint o f services to customers. Unfavorable M unicipality.— T o erect agricultural-live stock exhibition building. Unfavorable Nursing hom e fo r aged.— T o buy existing building which is suitable for needed additional space fo r operations. Favorable Mortuary.— To build a new m ortuary in replacement o f present quarters which are inadequate fo r needs o f community. This is the only mortuary serving the area. Favorable Tourists’ hotel.— To construct 25-room motel in vacation and recreational area. Unfavorable Educational institution.— To finance partially construction o f a library. Unfavorable M unicipality.— F o r construction o f needed school buildings. Committee deferred its opinion on financing fo r that part o f program which extended beyond current fiscal year. Favorable Church.— T o build a new church in replacement o f present structure which is in unsafe and hazardous condition. Favorable Church.— To build a parish hall and an addition to Sunday School building. U nfavorable N E W P L A N T OR E Q U IPM E N T Publisher o f daily newspaper.— To purchase a printing press in replacement o f outmoded press which does not take care o f present requirements. Favorable Tankship owners.— T o purchase oil tanker for charter to an oil company. Favorable N E W P L A N T OR E Q U IP M E N T (Continued) Opinion B orrow er and Purpose Excavating contractor.— To purchase diesel tractor shovel to replace worn and obsolete equipment now in use. Favorable W holesale petroleum .— T o buy tractor-tanker units necessary in operations— one replacement and one additional unit. Favorable P u b lic utility.— F o r improvements to its gas distribution system. Favorable M unicipality.— F o r community. needed fire-fighting equipment in rapidly expanding Favorable Laundry.— To purchase new machinery and equipment fo r expansion o f plant. Deferrable unless program had been started and commitments made prior to inauguration o f V C R Program. Unfavorable Social club and recreation center.— To purchase bar and equipment together with furnishings fo r social room. Present facilities not adequate to demand. Unfavorable M O D E R N IZ A T IO N Farm er.— To repair and remodel farm buildings on 176-acre producing farm. Favorable R etail variety store.— F o r modernization and enlargement o f store building. A pp roval based on facts that architect’s plans drawn and materials con tracted for p rior to inception o f V C R Program. Favorable R etail ladies ready-to-wear.— To modernize store, add new fron t and increase floor capacity to maintain competitive position. Unfavorable Gasoline service station.— F o r purchase and modernization o f equipment and facilities o f two existing gas stations. Unfavorable W O R K IN G C A P IT A L LO AN S W oodw orking— Manufacturer o f business fixtures and equipm ent.— F o r neces sary and normal working capital in connection with contract work in process. Favorable Metal stamping plant.— F or necessary and normal working capital. per cent o f present volume is under defense contract. Favorable Sixty-five Shoe manufacturer.— F or necessary and normal working capital. Favorable D E B T R E T IR E M E N T A N D R E F IN A N C IN G Retail autom obile dealer.— To repay existing bank loans. Favorable Manufacturer o f electrical appliances.— F o r reduction o f bank debt. Favorable Retail m ilk dealer.— T o refinance existing indebtedness held by form er owner of business. Unfavorable Chain variety stores.— T o retire outstanding preferred stock. Unfavorable A C Q U IS IT IO N O F E X IS T IN G B U S IN E S S E S H otel operator.— To purchase building and equipment o f hotel from owner who is retiring because o f ill health. Failure to effect transfer might create hard ship fo r com munity in having hotel closed. A pproval based on assumption self-financing purchaser cannot be foun d or that seller is unable to accept a purchase-money mortgage. Favorable Trucking.— To purchase motor trucking com pany and equipment fo r expansion o f present operations. Trucking business to be acquired is currently hauling foodstuffs but continued operation by present owner is assured until a sale can be made. Unfavorable (over) ACQUISITION OF E X IST IN G BUSINESSES (Continued) B orrow er and Purpose Opinion Pharmacist.— To purchase business, inventory and fixtures of ail existing drug store. Accountant.— To purchase an established accounting business. Unfavorable Unfavorable ACQUISITION OF S TOCKH O L D E R S ’ OR PART N E R S ’ INTERESTS Individual (officer and principal stockholder— machine tool manufacturer).— To acquire one-third stock interest in company from widow of borrower’s former partner. Proceeds of this loan, used to purchase the minority interest in the company, would preserve continuity of management and avoid the minority stock interest’s getting into possibly unfriendly hands. Retail novelty store.— To buy other partner’s interest in business to become sole owner. Wholesale iron and steel.— To purchase minority shareholders’interest. Trucking company.— Family group operating company wishes to buy back 51 per cent of stock now held by outside interests. Favorable Unfavorable Unfavorable Unfavorable N E W VENTURES Retail grocer.— To stock a new store to be opened in a new and expanding com munity now lacking a grocery. Retail grocer.— To stock a new grocery store which facility appears not to be necessary in the community. Dentist.— To purchase furnishings and equipment necessary to operate a dental office. Borrower recently graduated from dental school. Retail men’s clothing.— To open new men’s clothing store. City has sufficient retailers to satisfy the demand. Retail gasoline distributor.— To equip a new self-service station. Present facilities in community are adequate. Amusement park.— For erection of plant and purchase of equipment necessary for operations. Other amusement and recreational facilities are available in area. Favorable Unfavorable Favorable Unfavorable Unfavorable Unfavorable LOANS TO FARMERS, ETC. Rancher.— To purchase and carry cattle. Farmer.— To clear 50 additional acres of land for pasturage. Farmer.— To purchase 260-acre farm for purpose of putting it into production. Farmer.— To purchase farm land for lease as an investment. Considered specu lative in character where the land is already in production and borrower desires simply to increase his holdings of real estate. Favorable Favorable Favorable Unfavorable D E V E L O P M E N T OF LAN D Individual.— To purchase acreage for housing developments in a defense area. Individual.— To purchase and develop land for sale as building lots. Municipality.— To acquire unimproved land for erection of parking facilities. Favorable Unfavorable Unfavorable O T H E R LOANS Housewife.— To buy single premium life insurance contract. To provide for purchase of discounted premium life insurance contract. Individual.— To purchase real estate for investment. Property isalready financed on a long-term basis. State Government.— For payment of bonus to veterans of World War II. Unfavorable Unfavorable Unfavorable E A S T E R N IN S U R A N C E V O L U N T A R Y C R E D I T R E S T R A I N T C O M M IT T E E Created pursuant to the Program for Voluntary Credit Restraint authorized by the Defense Production Act of 1950 33 LIB E R TY STREET N E W Y O R K 4 5 . N. Y. N ovem ber 27, 1951. To the C h ief E xecu tive Officcr o f the L i f e Insurance Company A d d ressed : On N ovem ber 9, 1951, the N ational V olu n tary Credit R estraint Committee released a digest o f a sam pling o f opinions which had been expressed through Septem ber 1951 by the regional comm ittees on typical cases referred to them by individual lending institu tions. The N ational Committee believes that the release o f inform ation on typical cases w ill assist cooperating financing institutions in conducting their operations in accord ance with the principles o f the P rogram , and that the publication o f these digests should also be o f interest to borrow ers in planning their operations and to the public at large. F o r you r inform ation, a cop y o f the digest o f opinions is printed on the follow in g pages. A lthough the digest o f the cases is necessarily brief, we hope that it w ill be helpful to you in indicating the general approach o f the regional comm ittees to problem s arising under the P rogram . It is still necessary, o f course, fo r lenders to consider each proposed loan or investment on the basis o f the facts o f the particular case. W e believe that you will want you r lending and investment officers to be fu lly fam iliar with this material, and wo shall be glad to furnish you with additional copies fo r this purpose upon request. I f you have any question as to whether a proposed loan or investm ent conform s with the principles o f the P rogram as amplified b y the various bulletins which have been sent y ou and by the digest o f opinions, we shall be glad to review the case and let you know our views prom ptly. P lease submit you r request fo r consideration o f a specific loan or invest ment on the special fo rm devised fo r that purpose (F orm C R -IC 1 ). This form should be prepared in triplicate and sent to Gr. M o r g a n B r o w n e , S ecretary o f the Committee, 33 L iberty Street, New Y ork 45, N. Y., to w hom requests fo r additional copies o f the form should be addressed. F razar B. W il d e , Chairm an. VOLUNTARY CREDIT RESTRAINT PROGRAM Digest of Opinions Through September 1951 SEASONAL A N D INVENTORY LOANS B orrow er and Purpose Wholesale seeds.— To buy and clean seeds for resale to retailers of seed for use by farmers in necessary reseeding operations. Retail dry goods.— For normal seasonal inventory acquisition. Retail hardware, lumber and building supplies.— For normal inventory acquisi tion to care for summer and early fall trade. Retail fuel oil.— To purchase 1 million gallons of fuel oil (one-tentli of annual volume) for storage and sale during the 1951-2 season. Public accountant.— Seasonal loan for operating funds. Retail hardware.— To enable borrower to carry inventory disproportionate to his normal business operations. Retail sewing machine.— To increase inventory of imported machines in anticipa tion of future curtailment in domestic manufacture of sewing machines. Opinion Favorable Favorable Favorable Favorable Favorable Unfavorable Unfavorable BUILDING PROGRAMS Machine tool company.— To build new plant to take care of present needs. Pres ent rental property too small and unsuitable for increased volume and employment. Delicatessen.— To build a new store building to serve a newly developed resi dential area. Retail farm tractor and implement dealer.— To erect sales and service building in order to retain franchise. Grain elevator and feed mill— Sale of feeds and seeds to farmers.— To erect a new building to replace present facilities which are not very convenient from standpoint of services to customers. Municipality.— To erect agricultural-live stock exhibition building. Nursing home for aged.— To buy existing building which is suitable for needed additional space for operations. Mortuary.— To build a new mortuary in replacement of present quarters which are inadequate for needs of community. This is the only mortuary serving the area. Tourists’hotel.— To construct 25-room motel in vacation and recreational area. Educational institution.— To finance partially construction of a library. Municipality.— For construction of needed school buildings. Committee deferred its opinion on financing for that part of program which extended beyond current fiscal year. Church.— To build a new church in replacement of present structure which is in unsafe and hazardous condition. Church.— To build a parish hall and an addition to Sunday School building. Favorable Favorable Unfavorable Unfavorable Unfavorable Favorable Favorable Unfavorable Unfavorable Favorable Favorable Unfavorable N E W PLANT OR EQUIPMENT Publisher of daily newspaper.— To purchase a printing press in replacement of outmoded press which does not take care of present requirements. Tankship owners.— To purchase oil tanker for charter to an oil company. Favorable Favorable N EW PLANT OR EQUIPMENT (Continued) Borrower and Purpose Excavating contractor.— To purchase diesel tractor shovel to replace worn and obsolete equipment now in use. Wholesale petroleum.— To buy tractor-tanker units necessary in operations— one replacement and one additional unit. Public utility.— For improvements to its gas distribution system. Municipality.— For needed fire-fighting equipment in rapidly expanding community. Laundry.— To purchase new machinery and equipment for expansion of plant. Deferrable unless program had been started and commitments made prior to inauguration of V C R Program. Social club and recreation center.— To purchase bar and equipment together with furnishings for social room. Present facilities not adequate to demand. Opinion Favorable Favorable Favorable Favorable Unfavorable Unfavorable MODERNIZATION Farmer.— To repair and remodel farm buildings on 176-acre producing farm. Retail variety store.— For modernization and enlargement of store building. Approval based on facts that architect’s plans drawn and materials con tracted for prior to inception of V C R Program. Retail ladies ready-to-wear.— To modernize store, add new front and increase floor capacity to maintain competitive position. Gasoline service station.— For purchase and modernization of equipment and facilities of two existing gas stations. Favorable Favorable Unfavorable Unfavorable W O R K I N G CAPITAL LOANS Woodworking— Manufacturer of business fixtures and equipment.— For neces sary and normal working capital in connection with contract work in process. Metal stamping plant.— For necessary and normal working capital. Sixty-five per cent of present volume is under defense contract. Shoe manufacturer.— For necessary and normal working capital. Favorable Favorable Favorable DEBT RETIREMENT A N D REFINANCING Retail automobile dealer.— To repay existing bank loans. Manufacturer of electrical appliances.— For reduction of bank debt. Retail milk dealer.— To refinance existing indebtedness held by former owner of business. Chain variety stores.— To retire outstanding preferred stock. Favorable Favorable Unfavorable Unfavorable ACQUISITION OF EXISTING BUSINESSES Hotel operator.— To purchase building and equipment of hotel from owner who is retiring because of illhealth. Failure to effect transfer might create hard ship for community in having hotel closed. Approval based on assumption self-financing purchaser cannot be found or that seller is unable to accept a purchase-money mortgage. Trucking.— To purchase motor trucking company and equipment for expansion of present operations. Trucking business to be acquired is currently hauling foodstuffs but continued operation by present owner is assured until a sale can be made. Favorable Unfavorable (over) ACQUISITION OF E X IST IN G BUSINESSES (Continued) Borrower and Purpose Opinion Pharmacist.— To purchase business, inventory and fixtures of an existing drug store. Accountant.— To purchase an established accounting business. Unfavorable Unfavorable ACQUISITION OF S TOCK HOLD ERS’ OR PAR T N E R S ’ INTERESTS Individual (officer and principal stockholder— machine tool manufacturer).— To acquire one-third stock interest in company from widow of borrower’s former partner. Proceeds of this loan, used to purchase the minority interest in the company, would preserve continuity of management and avoid the minority stock interest’s getting into possibly unfriendly hands. Retail novelty store.— To buy other partner’s interest in business to become sole owner. Wholesale iron and steel.— To purchase minority shareholders’interest. Trucking company.— Family group operating company wishes to buy back 51 per cent of stock now held by outside interests. Favorable Unfavorable Unfavorable Unfavorable N E W VENTURES Retail grocer.— To stock a new store to be opened in a new and expanding com munity now lacking a grocery. Retail grocer.— To stock a new grocery store which facility appears not to be necessary in the community. Dentist.— To purchase furnishings and equipment necessary to operate a dental office. Borrower recently graduated from dental school. Retail men’s clothing.— To open new men’s clothing store. City has sufficient retailers to satisfy the demand. Retail gasoline distributor.— To equip a new self-service station. Present facilities in community are adequate. Amusement park.— For erection of plant and purchase of equipment necessary for operations. Other amusement and recreational facilities are available in area. Favorable Unfavorable F avorable Unfavorable Unfavorable Unfavorable LOANS TO FARMERS, ETC. Rancher.— To purchase and carry cattle. Farmer.— To clear 50 additional acres of land for pasturage. Farmer.— To purchase 260-acre farm for purpose of putting it into production. Farmer.— To purchase farm land for lease as an investment. Considered specu lative in character where the land is already in production and borrower desires simply to increase his holdings of real estate. Favorable Favorable Favorable Unfavorable D E V E L O P M E N T OF LAN D Individual.— To purchase acreage for housing developments in a defense area. Individual.— To purchase and develop land for sale as building lots. Municipality.— To acquire unimproved land for erection of parking facilities. F avorable Unfavorable Unfavorable O T H E R LOANS Housewife.— To buy single premium life insurance contract. To provide for purchase of discounted premium life insurance contract. Individual.— To purchase real estate for investment. Property isalready financed on a long-term basis. Slate Government.— For payment of bonus to veterans of World War II. Unfavorable Unfavorable Unfavorable E A S T E R N I N V E S T M E N T B A N K IN G V O L U N T A R Y C R E D I T R E S T R A I N T C O M M IT T E E Created pursuant to the Program for Voluntary Credit Restraint authorized by the Defense Production Act of 1950 33 LIB E R TY STREET N E W Y O R K 4 5 . N. Y. N ovem ber 27, 1951. To the A d d ressee: On N ovem ber 9, 1951, the N ational V olu n tary C redit R estraint Committee released a digest o f a sam pling o f opinions which had been expressed through Septem ber 1951 by the regional com mittees on typical cases referred to them b y individual lending institu tions. The N ational Committee believes that the release o f inform ation on typical cases will assist cooperating financing institutions in conducting their operations in accord ance with the principles o f the P rogram , and that the publication o f these digests should also be o f interest to b orrow ers in planning their operations and to the public at large. F o r you r inform ation, a cop y o f the digest o f opinions is printed on the follow in g pages. A lthough the digest o f the cases is necessarily brief, we hope that it w ill be helpful to you in indicating the general approach o f the regional comm ittees to problem s arising under the P rogram . It is still necessary, o f course, fo r lenders to consider each proposed loan or investment on the basis o f the facts o f the particular case. W e believe that you w ill want you r lending and investm ent officers to be fu lly fam iliar w ith this material, and wo shall be glad to furnish you with additional copies fo r this purpose upon request. I f you have any question as to whether a prop osed loan or investment conform s with the principles o f the P rogram as amplified b y the various bulletins which have been sent you and by the digest o f opinions, we shall be glad to review the case and let you know our view s prom ptly. Please submit you r request fo r consideration o f a specific loan or invest ment on the appropriate form devised fo r this purpose. T his form should be prepared in triplicate and sent to Gr. M o r g a n B r o w n e , S ecreta ry o f the Committee, 3 3 L iberty Street, New Y ork 45, N. Y., to whom requests fo r additional copies o f the form should be addressed. Y ou r continued cooperation in the P rog ra m w ill be greatly appreciated. P ercy M. S tew art, Chairman. VOLUNTARY CREDIT RESTRAINT PROGRAM Digest o f Opinions Through September 1951 SEASONAL A N D INVENTORY LOANS Borrower and Purpose Wholesale seeds.— To buy and clean seeds for resale to retailers of seed for use by farmers in necessary reseeding operations. Retail dry goods.— For normal seasonal inventory acquisition. Retail hardware, lumber and building supplies.— For normal inventory acquisi tion to care for summer and early fall trade. Retail fuel oil.— To purchase 1 million gallons of fuel oil (one-tenth of annual volume) for storage and sale during the 1951-2 season. Public accountant.— Seasonal loan for operating funds. Retail hardware.— To enable borrower to carry inventory disproportionate to his normal business operations. Retail sewing machine.— To increase inventory of imported machines in anticipa tion of future curtailment in domestic manufacture of sewing machines. Opinion Favorable Favorable Favorable Favorable Favorable Unfavorable Unfavorable BUILDING PROGR AMS Machine tool company.— To build new plant to take care of present needs. Pres ent rental property too small and unsuitable for increased volume and employment. Delicatessen.— To build a new store building to serve a newly developed resi dential area. Retail farm tractor and implement dealer.— To erect sales and service building in order to retain franchise. Grain elevator and feed mill— Sale of feeds and seeds to farmers.— To erect a new building to replace present facilities which are not very convenient from standpoint of services to customers. Municipality.— To erect agricultural-live stock exhibition building. Nursing home for aged.— To buy existing building which is suitable for needed additional space for operations. Mortuary.— To build a new mortuary in replacement of present quarters which are inadequate for needs of community. This is the only mortuary serving the area. Tourists’ hotel.— To construct 25-room motel in vacation and recreational area. Educational institution.— To finance partially construction of a library. Municipality.— For construction of needed school buildings. Committee deferred its opinion on financing for that part of program which extended beyond current fiscal year. Church.— To build a new church in replacement of present structure which is in unsafe and hazardous condition. Church.— To build a parish hall and an addition to Sunday School building. Favorable Favorable Unfavorable Unfavorable Unfavorable Favorable Favorable Unfavorable Unfavorable Favorable Favorable Unfavorable N E W PLANT OR EQUIPMENT Publisher of daily newspaper.— To purchase a printing press in replacement of outmoded press which does not take care of present requirements. Tankship owners.— To purchase oil tanker for charter to an oil company. Favorable Favorable N E W PLAN T OR EQUIPMENT (Continued) Borrower and Purpose Excavating contractor.— To purchase diesel tractor shovel to replace worn and obsolete equipment now in use. Wholesale petroleum.— To buy tractor-tanker units necessary in operations— one replacement and one additional unit. Public utility.— For improvements to its gas distribution system. Municipality.— For needed fire-fighting equipment in rapidly expanding community. Laundry.— To purchase new machinery and equipment for expansion of plant. Deferrable unless program had been started and commitments made prior to inauguration of V C R Program. Social club and recreation center.— To purchase bar and equipment together with furnishings for social room. Present facilities not adequate to demand. Opinion Favorable Favorable Favorable Favorable Unfavorable Unfavorable MODERNIZATION Fanner.— To repair and remodel farm buildings on 176-acre producing farm. Retail variety store.— For modernization and enlargement of store building. Approval based on facts that architect’s plans drawn and materials con tracted for prior to inception of V C R Program. Retail ladies ready-to-wear.— To modernize store, add new front and increase floor capacity to maintain competitive position. Gasoline service station.— For purchase and modernization of equipment and facilities of two existing gas stations. Favorable Favorable Unfavorable Unfavorable W O R K I N G CAPITAL LOANS Woodworking— Manufacturer of business fixtures and equipment.— For neces sary and normal working capital in connection with contract work in process. Metal stamping plant.— For necessary and normal working capital. Sixty-five per cent of present volume is under defense contract. Shoe manufacturer.— For necessary and normal working capital. Favorable Favorable Favorable DE B T RETIREMENT A N D REFINANCING Retail automobile dealer.— To repay existing bank loans. Manufacturer of electrical appliances.— For reduction of bank debt. Retail milk dealer.— To refinance existing indebtedness held by former owner of business. Chain variety stores.— To retire outstanding preferred stock. Favorable Favorable Unfavorable Unfavorable ACQUISITION OF EXISTING BUSINESSES Hotel operator.— To purchase building and equipment of hotel from owner who is retiring because of illhealth. Failure to effect transfer might create hard ship for community in having hotel closed. Approval based on assumption self-financing purchaser cannot be found or that seller is unable to accept a purchase-money mortgage. Trucking.— To purchase motor trucking company and equipment for expansion of present operations. Trucking business to be acquired is currently hauling foodstuffs but continued operation by present owner is assured until a sale can be made. Favorable Unfavorable (over) ACQUISITION OF E X ISTIN G BUSINESSES (Continued) Borrower and Purpose Opinion Pharmacist.— To purchase business, inventory and fixtures of an existing drug store. Accountant.— To purchase an established accounting business. Unfavorable Unfavorable ACQUISITION OF S TOCKH O L D E R S ’ OR P A R T N E R S ’ INTERESTS Individual (officer and principal stockholder— machine tool manufacturer).— To acquire one-third stock interest in company from widow of borrower’s former partner. Proceeds of this loan, used to purchase the minority interest in the company, would preserve continuity of management and avoid the minority stock interest’s getting into possibly unfriendly hands. Retail novelty store.— To buy other partner’s interest in business to become sole owner. Wholesale iron and steel.— To purchase minority shareholders’interest. Trucking company.— Family group operating company wishes to buy back 51 per cent of stock now held by outside interests. Favorable Unfavorable Unfavorable Unfavorable N E W VENTURES Retail grocer.— To stock a new store to be opened in a new and expanding com munity now lacking a grocery. Retail grocer.— To stock a new grocery store which facility appears not to be necessary in the community. Dentist.— To purchase furnishings and equipment necessary to operate a dental office. Borrower recently graduated from dental school. Retail men’s clothing.— To open new men’s clothing store. City has sufficient retailers to satisfy the demand. Retail gasoline distributor.— To equip a new self-service station. Present facilities in community are adequate. Amusement park.— For erection of plant and purchase of equipment necessary for operations. Other amusement and recreational facilities are available in area. Favorable Unfavorable Favorable Unfavorable Unfavorable Unfavorable LOANS TO FARMERS, ETC. Rancher.— To purchase and carry cattle. Farmer.— To clear 50 additional acres of land for pasturage. Farmer.— To purchase 260-acre farm for purpose of putting it into production. Farmer.— To purchase farm land for lease as an investment. Considered specu lative in character where the land is already in production and borrower desires simply to increase his holdings of real estate. Favorable Favorable Favorable Unfavorable D E V E L O P M E N T OF LAN D Individual.— To purchase acreage for housing developments in a defense area. Individual.— To purchase and develop land for sale as building lots. Municipality.— To acquire unimproved land for erection of parking facilities. Favorable Unfavorable Unfavorable O T H E R LOANS Housewife.— To buy single premium life insurance contract. To provide for purchase of discounted premium life insurance contract. Individual.— To purchase real estate for investment. Property isalready financed on a long-term basis. State Government.— For payment of bonus to veterans of World War II. Unfavorable Unfavorable Unfavorable
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