266 JOURNAL OF FORESTRY 



many industries. Second, that there be some measure of public control 

 of the speciaHzed financial institution in order that the idea of service 

 to the public by the industry may have adequate consideration. Wise 

 public intervention also creates confidence on the part of the investor 

 and thus assists in moving the securities issued at a reasonable rate 

 of interest. Since the chief function of such institutions is to loan 

 capital to the individual units of the industry and use the credit instru- 

 ments received in return for such loans as collateral for large bond 

 issues to be sold in the money markets of the world, and since the 

 large size of such issues (which makes them well known) assists in 

 marketability, it is plain that Federal agencies have a better chance of 

 success. Few better means of freeing industries of monopolistic control 

 can be devised since under this plan of public intervention a situation 

 such as is known to exist in waterpower development where certain 

 agencies are able to prevent the financing of competing plants can 

 scarcely arise. (Legitimate restriction of plant development to the 

 needs of any locality is right and proper, but prevention of needed 

 plant construction is not.) Industries, such as the steel industry, which 

 are organized in large units easily get capital under favorable terms 

 so that central organization of their credits with assistance of the Fed- 

 eral Government is not so necessary from the standpoint of economy, 

 though it may be from the standpoint of freeing that industry from 

 monopoly and allowing the small concern to exist on equal terms with 

 the larger. 



Industries organized entirely in small units, as is agriculture, cannot 

 get capital on cheap terms, hence this has led already to the successful 

 organization of the Federal Farm Loan Board, which may be con- 

 sidered the best existing example of a specialized financial institution 

 serving one industry. Other precedents of closely similar kind were 

 created during the war, while the Edge bill permitting creation under 

 the Federal Reserve Board of organizations for financing foreign trade 

 is a recent similar example. 



Although the funds advanced to the Federal Farm Loan Board by 

 the Federal Government are rapidly being returned, farmers are get- 

 ting capital at a less rate of interest than the lumber industry, not 

 because they are being subsidized by the Federal Government, but 

 through the power of efifective organization of farm credits. 



As in the case of the farms, forest industry is and will continue to 

 be for the most part organized in small units unless monopoly is allowed 



