Selectively Tight

"We're all trying to do too much too fast. Too much private investment, too much government spending, rising consumer appetites. And all of the coun tries are looking to monetary policies alone for avoiding the inflationary im pact." So said Federal Reserve Board Member Dewey Daane last week, focusing on the fact that the U.S., among other countries, has sought to restrain its economic exuberance by making money costlier and scarcer than at any other time in the 1960s.

Just who is being pinched by the money squeeze -- and how badly? The victims are mostly the risky "marginal" borrowers. Many lenders are rejecting youngsters facing the draft, chronic job jumpers, families already loaded with debts. Almost every other consumer, however, can still find a friendly lender ready to advance cash for furniture or appliances, which is one reason why color TV sales continue to run at double last year's record.

Price: Higher. The price of money is higher, of course. Last week New York's Chase Manhattan Bank, second largest in the nation, lifted its rates on auto and some other consumer loans. The charge on auto loans went up from 4 1/4% to 5 1/4%, but because the true size of the loan declines as the borrower pays off in installments, the actual interest is closer to 10 1/2%. Some bankers have cut their customary kickbacks to auto dealers who steer loan customers to them from 1% to 1/2% of the to tal loan.

In housing, the scarcity and high cost of mortgages are undoubtedly the major factors that will send housing starts down from 1,500,000 last year to 1,300,000 this year. Some lenders have lifted minimum down payments from 10% to 25%, increased interest rates from 5 1/4% to 6 1/2%, and will not do business with people who have moved in from outside the community. Slump ing even faster than the sales of new homes are sales of used homes; many lenders demand an extra 1/2% mortgage interest to finance them.

Pressures: Easing. Businessmen seek ing credit to buy other companies, spec ulate in real estate or build up inven tories are having a tough time. Few lenders anywhere seem willing to take on new corporate customers, and many now insist that companies keep hefty cash balances on deposit if they want credit. It is getting harder to keep those deposits up. Last week corporations made their quarterly income tax payments, and because of the speedup in collections this year, the bill came to $8.7 billion, nearly 17% more than last year. Partly to pay their taxes, and partly to finance expansion plans, companies abruptly reduced their long-term "certificates of deposits" in commercial banks by nearly $500 million, thereby diminishing the resources that banks have to lend.

The monetary brakes are still not as tight as they could be. The nation's money supply for the past several months has been expanding at an annual rate of almost 7%, faster than the real growth in the economy. The Federal Reserve Board could not reduce the rate of monetary expansion without disrupting the nation's economy, if only because the demand for capital is so intense. Thus the board has little room to tighten money further without kicking up the discount rate once again. That is a step which a majority of the board opposes, partly because it would stir up a political tempest, and partly because quite a few financial men recognize that the upward pressures on the economy are easing.

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