Financing

“ We need to make sure that the valve of aggregate monetary supply is well controlled, maintain moderate growth in M2 money supply, credit, and aggregate financing, ensure a reasonable, stable level of liquidity, and increase the proportion of direct finance, particularly equity finance. ”

“ The part which debenture credit, nominal and virtual, plays in the financing of modern industrial corporations is very considerable, and the proportion which it bears in the capitalization of these corporations apparently grows larger as time passes and shrewder methods of business gain ground. ”

“ Local financing platforms will be required to transform themselves and shift toward market-based financing, the securitization of tangible assets such as infrastructure will be explored, and debt financing will be increased. ”

“ New arrangements have been made to provide facilities for the financing of industrial development and to meet particularly the credit needs of small merchants and farmers. First, a special trust fund of P10,000,000 has been set up for the special account of the counterpart fund to guarantee a large share of the risk to be assumed by banking institutions granting industrial loans. ”

“ My financial policy is the result of my sales policy. I hold that it is better to sell a large number of articles at a small profit than to sell a few at a large profit. This enables a larger number of people to buy and it gives a larger number of men employment at good wages. It permits the planning of production, the elimination of dull seasons, and the waste of carrying an idle plant. Thus results a suitable, continuous business, and if you will think it over, you will discover that most so-called urgent financing is made necessary because of a lack of planned, continuous business. ”

“ The government financing guaranty will be expanded to cover more micro and small businesses. We will strive to create a favorable financing environment and help resolve the financing difficulties of enterprises in the real economy, especially MSMEs. ”

“ The Investment Bank must participate in the preparation of draft plans for the financing of all investment projects undertaken by central and local state organizations from the ministerial down to the enterprise level. ”

“ We will expand the scale of new loans, see that increases in money supply and aggregate financing are generally in step with nominal economic growth, and keep the macro leverage ratio generally stable. ”

“ Nations around the world have responded to this situation with bold measures, and our actions are having an impact. Credit markets are beginning to thaw, and businesses are gaining access to essential short-term financing. ”

“ In fact it pays more, as the reports show. And then there is the larger business—lending money on sound enterprises, financing industrial companies, and especially advancing money on bills of lading for goods in transit. ”

“ This 3 per cent. interest, these profits, and these monopolies, as we shall soon see, might easily amount to the sum of eighty millions annually, which the creditors were formerly paid. Thus far they were not defrauded by this forced conversion of securities; a credit entirely new was substituted for one which was worn out; an establishment had been created, which, combining the functions of a commercial bank and the administration of the finances, must become the most colossal financial power ever known. ”

“ Funds obtained on credit are applied to extend the business; competing business men bid up the material items of industrial equipment by the use of funds so obtained; the value of the material items employed in industry advances; the aggregate of values employed in a given undertaking increases, with or without a physical increase of the industrial material engaged; but since an advance of credit rests on the collateral as expressed in terms of value, an enhanced value of the property affords a basis for a further extension of credit, and so on. ”

“ For, in my pictures of the three main phases of “finance”—the industrial, the life-insurance and the banking—he, as arch plotter in every kind of respectable skulduggery, was necessarily in the foreground. My original intention was to demolish the Power Trust—or, at least, to compel him to buy back all of its stock which he had worked off on the public. I had collected many interesting facts about it, facts typical of the conditions that “finance” has established in so many of our industries. ”

“ If a banker can loan on a bill of lading or a warehouse receipt, or a trader can buy the same, or if a man can give a trust receipt to his banker agreeing that all his general shipments or stock in trade shall be the property of that banker until his debt is paid, it makes enormously for the rapid turning over of capital, and the extension of credit. ”

“ The advantages of the Bank may consist in this: in the profits of the contracts made with Government, which should bear interest to be annually paid in specie; in the loan of money at interest, say six per cent.; in purchasing lives by annuities, as practised in England, etc. The benefit resulting to the Company, is evident from the consideration, that they may employ, in circulation, a great deal more money than they have specie in Stock, on the credit of the real property which they will have in other use. ”

“ Manufacturer, you have summarized the discussion upon credit remarkably well, I think.
Mr. Merchant: So do I, and I am sure that we all understand what constitutes the difference between the right and wrong basis of demand obligation—convertibility or non-convertibility—quick assets or slow assets—the commercial fund and the investment fund. If we keep this thought steadily in view it will help us amazingly when [Pg 193] we come to draw a banking bill demanding the recognition of this fundamental distinction. ”

“ Prices first rise in the particular enterprise, production augments, the movement spreads to other lines of business, and the new enterprises are financed by loans from the banks or trust companies, or by the sale of securities on a capitalization proportionate to the anticipated earnings. In times of buoyancy we are continually capitalizing anticipated earnings and future hopes, and we do this through the utilization of credit on a large scale. ”

“ Yes, madam, the mightiest financial scheme the world has ever witnessed, the grandest exemplification of the principle of credit that has ever been promulgated by man, was his invention. He farmed the whole revenues of France, and at one stroke annihilated the peculation of receivers-general, and secured the revenue of the nation. ”

“ Our merchants and bankers owe unsettled balances or accounts, and large amounts of our securities are held there—National, State and municipal bonds, bonds and stock of our railroads, street railways and industrial corporations, and even mortgages on city property or farms, placed there by loan companies. ”

“ Or, lastly, there is another process by which, in England and other commercial countries, a large portion of the requisite supply of loans is obtained. Instead of its being afforded by persons not in business, the affording it may itself become a business. A portion of the capital employed in trade may be supplied by a class of professional money lenders. These money lenders, however, must have more than a mere interest; they must have the ordinary rate of profit on their capital, risk and all other circumstances being allowed for. ”

“ Under these circumstances, Law confidently brought forward his scheme of a bank, that was to pay off the national debt, increase the revenue, and at the same time diminish the taxes. The following is stated as the theory by which he recommended his system to the regent. The credit enjoyed by a banker or a merchant, he observed, increases his capital tenfold; that is to say, he who has a capital of one thousand livres, may, if he possess sufficient credit, extend his operations to a million, and reap profits to that amount. ”

“ The credit, which is rendered as secure as possible in all its stages by the accumulating securities of the drawer, acceptor, and endorsers of a bill of exchange, brings capital into activity,—it carries it directly to those channels in which it may be profitably employed,—it conducts it to those channels by a systematic mode of payment for its use, which we call interest, or discount;—and it therefore carries forward accumulation to its highest point of productiveness. ”

“ To the credit of the account he pays in such sums as he may not have occasion to use, and interest is charged or credited upon the daily balance, as the case may be. From the facility which these Cash Credits give to all the small transactions of the country, and from the opportunities which they afford to persons who begin business with little or no capital but their character to employ profitably the minutest products of their industry, it cannot be doubted that the most important advantages are derived to the whole community. ”

“ Coupons and drawn bonds are payable in sterling at the countinghouse of the issuing firm. The extent of the other information given varies considerably. Some firms rely so far on their own prestige and the credit of those on whose account they offer loans, that they state little more than the bare terms of the issue as given above. Others deign to give details concerning the financial position of the borrowing Government, such as its revenue and expenditure for a term of years, the amount of its outstanding debt, and of its assets if any. ”

“ The funding system is not money; neither is it, properly speaking, credit. It, in effect, creates upon paper the sum which it appears to borrow, and lays on a tax to keep the imaginary capital alive by the payment of interest and sends the annuity to market, to be sold for paper already in circulation. ”

“ Fifth: Credit from a commercial point of view, when granted to create consumable commodities, the necessaries of life, is filling its proper function.
Sixth: Credit granted to facilitate the sale, transfer and distribution of consumable commodities, the necessaries of life, is filling its proper function from a commercial point of view.
Seventh: Credit extended in the form of acceptances of checks, drafts or bills of exchange, growing out of the actual production and distribution of the necessaries of life, is filling its proper function from a commercial point of view. ”

“ The design of the new law is to supply just enough money or credit, when and where business needs it, to create for our commerce, as has been said, foundations so even, so broadly laid, and so deeply planted that they can not be shaken. ”

“ A general proposition is that banks are limited in making loans by the possession of capital, a bank of large capital and deposits being able to make large loans, a bank of small capital and deposits, small loans. A second proposition is that the demand for legitimate loans varies with the exchanges of goods and collateral and the opportunities for investment. With an increasing activity in business, however—either sound or speculative—the expansion of loans is limited by the resources of the bank. ”

“ The lenders receive a certificate of indebtedness, and have the right to buy each year a quantity of my books at half the retail price. Thus, if you lend ten dollars, you can get $5 worth of books for $2.50. These books must be ordered in one shipment, so as to save handling costs; under the Loan Plan you may place one such half-price order every year. The saving takes the place of interest on your money; it amounts to 25% interest—a pretty good rate, but not so high as millions of poor farmers are having to pay to national banks all over the country—see my “Letters to Judd”! ”

“ My charge that the directors of the great life-insurance corporations of America use the funds of the companies they control in stock speculation for their personal benefit is but one contention in my argument against the character of their management. Here I formally add another charge: It is that in the placing of loans, in the purchase of properties and securities, and in the underwriting of enterprises, there are enormous profits made, directly and indirectly, which are pocketed by individuals and are never shown on the books of the corporation. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ As this great creditor class was the principal employer of labor and controlled both the buying and selling of products which the people must have for the purposes of consumption, thus fixing both the income and the expenses of the producer, it was not difficult to collect their tribute. A pro rata of the great annual charge of interest, dividends and profits against the people was collected from the producer in the shape of a discount on what he had to sell, whether it was his labor or its products. ”

“ The high price of public stocks and indeed of all species of stocks, the reduction of the public debt, the unimpaired credit of the general government, and the large amount of existing bank-stock in the United States leave no doubt of the practicability of obtaining the necessary loans on reasonable terms. ”

“ When the modern captain of industry reorganizes and consolidates a given range of industrial business concerns, therefore, and gives them a collective form and name as an up-to-date corporation, the completed operation presents, in syncopated form and within a negligible lapse of time, all that intricate process of cumulative augmentation of business capital through the use of credit which otherwise may come gradually in the course of business competition. ”