New-York tribune., 1918-02-16
Approves
The War Finance
Corporation Bill
Says Plan Is Best Offered
and Prompt Action
Is Required

e. Co., chairman Of the committee Of
bankers which prepared last fall, at
the request of the Treasury Depart
ment, a report outlining plan for
government regulation of corporation
security issues, declared himself yes
terday as strongly approving Secretary
McAdoo's proposed $50O,0OO,OOO War
Finance Corporation, legislation for
the organization of which has been liz
troduced in Congress. Mr.. Lamont
made known his attitude toward tie
proposed Federal Finance Corporation
in response to an inquiry.
81 have heard nsiderable criticism
of the so-called War Finance Corpora
tion measure" said Mr.. Lamont, "bu. !
have not yet heard any one propose a
better plan for rendering financial as
sistance to industries essential to the
conduct Of the war.
Urges Haste
"The fact is that the present situ-
alton in this country demands prompt
action. Government loans nave. nat
urally and properly, absorbed the chief
investment power of the country. Yet
there are many industries to- day. con-
tributing directly or indirectly, to the
efficiency of the community, that rr-
gently require new capital for the OK
tension of plant facilities-captal
which their banks arc in no position
to furnish and which should normally
come from the investing public.
"How shall we meet such a situa-
ton? The proposed measure is one
answer to it, and unless we have d
better one to propose would it not be
we'll for the community TO study it and
thus determine if it is not worthy of
earnest and immediate support?
I'VE heard the bill criticised on var-
GUS grounds. One is that the Secre-
tary of the Treasury has too much
power in naming the board Of direc-
tors, with the approval of the presi-
dent; the directors with the broad
powers that the bill confers, having
wide control over industry throughout
the country. On this point my mind
IS open to any fresh suggestion But
am not fearful that the secretary will
name incompetents, and l believe the
method of selection proposed will put
the corporation into order little
sooner than any other. Expedition is
what VIC require in this situation.
There has been Il great deal of talk
about possible imitation as result of
tins measure, and some of our best
spaper economists have pointed out
ways in which imitation might result
But here again I haven't seen any
methods proposed to accomplish the
ends desired and at the same time
avoid all chance of minor evils result
ing. When the government took over
the operation of the railways it was
easy to see disadvantages that would
probably result. But the advantages
presumably outweighed the drawbacks
And so it is with every war measure
that the need for prompt execution
| forces upon the country. Moreover. in
this particular case | sec no reason
why, with prudent handling, the work
ings of this War Finance Corporation
should lead to imitation. At least, if
imitation results, [ believe it will be
less of a factor than the imitation that
VIC should see if VIC compelled the
banks, already carrying large amount
of loans, to assume q further consider
able loan expansion TO supply funds
which ordinarily would come from
/ private investors.
About Directors
'''Thc proposed measure provides that
none OF the directors may be directors
OF any other corporation. Most people,
who realize the extremely important
/ functions to be performed by the dircc-
! tors of this corporation. believe that
the government will wish 30 com
mandeer asS directors Of it the most
/ experienced. the wisest men available
I in the whole country, men who may at
/ present be the heads Of large enter
prises in which they have shown their
prudence and skill; men who would
gladly volunteer their services TO the
government without compensation, but
who ought not to be compelled simply
for the space Of the war to forego.
Yer: likely for all time, their present
positions and future means of liveli-
| hood.
among its other advantages the new
measure contains provisions of the ut
most value to the preservation intact t
of our whole savings bank system.
whose workings, with the present mar
row market for corporate bonds, has
been a source of some concern. And the
whole measure, as said before, is, in
to the situation the relief which it
critically needs"
Secretary McAdoo's War Finance
Corporation bill has the approval of
Paul NJ. Warburg, of the Federal Re.
serve Board, and some other leading
financiers and bankers. The bill pro
vides for the creation Of a $780, .0OO,-
600 corporation to make loans and ad-
vances to enterprises essential to the
war and otherwise assist in private
financing. The corporation would have
the power to make advances to banks
which finance industries essential to
the war or to buy direct the securities
OF such corporations, subject to GER
tain restrictions concerning price and
length of loans.
lnf1ationary Feature
The corporation would be empow-
cred to have outstanding at anv one
time eight times its capital, or the sum
OF $4,000, 100000 in its own notes. run
ming for not less than one year nor
over five years, and bearing rate Of
interest to be fixed by the corporation,
such notes to be a first charge on its
assets and to be issued at par in pay
ment of advances and offered for sale
publicly or to any individual firm or
corporation at price to be fixed by
the corporation. 1t further provides
that these notes could be dealt in by
the Federal Reserve banks in the same
manner as bonds and notes of the
United States not bearing the circula-