12 MISC. PUBLICATION 570, U. S. DEPT. OF AGRICULTURE 



left with which to buy the goods and services he wants — goods and 

 services produced largely by nonfarm labor. 



If, besides the maintenance of low interest rates, direct Govern- 

 ment loans continue to be made available, private enterprise will be 

 encouraged to enter fields otherwise considered too hazardous. The 

 risks themselves tend to disappear when such lending is used as an 

 integral part of a comprehensive program for promoting a higher 

 general level of economic activity. 



In the past, control of production and pricing policies of individual 

 firms by their bankers and financiers in order to prevent competition 

 with other companies financed by the same banking firm, has often 

 been described as one important way in which competition has been 

 stifled. It is probable, however, that this type of practice has been 

 on the wane in recent years, partly because of the increasing tendency 

 of corporations to finance their expansion internally through undis- 

 tributed earnings, and partly because of the availability of Govern- 

 ment credit through such agencies as the Reconstruction Finance 

 Corporation. The creation in peacetime of a Government-supported 

 Small Business Finance Corporation, and the vigorous use of RFC 

 funds for the expansion of peacetime industrial facilities — especially 

 by smaller concerns — would both be steps in the direction of prevent- 

 ing restrictive practices and of stimulating an expansion of invest- 

 ment and employment. 



Government-owned plants and facilities can be turned over to 

 private operators under appropriate management agreements. By 

 equity financing, that is by the purchase of nonvoting stock in busi- 

 ness enterprises, and thereby assuming some of the risks, the Govern- 

 ment could give encouragement to the further use of private capital. 



Residential Housing 



One of the largest single components of private investment is that 

 in residential housing. In 1929, for example, total business expendi- 

 tures for housing represented more than 10 percent of the total 

 expenditures for private construction, machinery, and equipment. 

 This is a field in which there is still a great need, in rural as well as 

 in urban areas. Ways and means for stimulating a sustained flow 

 of investment into housing fall into two broad categories : ( 1 ) Those 

 which tend to lower housing costs and (2) those which provide 

 adequate financing. 



Publicly supported research to find more efficient methods of con- 

 struction, improved materials, designs better adapted to pref abrica- 

 tion or other mass-production methods, and plans for the better 

 organizing and laying-out of jobs in erecting houses, is worthy of 

 Government attention as one means for lowering the costs. More- 

 over, the Federal Government could do much in the way of collecting 

 and publishing information respecting the volume of residential 

 construction, population shifts, numbers of families in different 

 groups, and similar data that would be of value to private builders 

 in projecting the probable market demand for various types and 

 classes of housing. A revision of building codes aimed at eliminating 

 wasteful use of materials could be valuable in enlarging the market. 

 County and municipal governments could well give attention to revis- 

 ing and extending zoning laws and regulatory controls over real 



