Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1918-08-05
advisability OF using money In a given
direction.
DECISIONS OF COMMITTED
HAVE NOT BEEN oUEsTIoSEp

HAVE NOT BEEN QUESTIONED
The decision of tho Capital Issues
Committee upon the necessity for suc.,
issues. as may be proposed, has been
final in every case so far presented
But singular feature OF the law on
this subject Is the fact that there is
no penalty clause in it. In other words
the corporation which may be turned
down by the committee may go right
ahead with it's financing without fear
OK punishment. However, the influence
OF the government is SO powerful in
such matters that no bank no stock
exchange and few individuals would
dare invest IN security which this
committee had Condemned.
In practice il has been found that
much money is being invested in stocks
and bonds or corporations with capital
.rSa than 100000 which are exempt
from supervision by the. Capital Issues
Committee. This diversion OF money
% unnecessary private use resulted in
the formation of the subcommittee in
each OF the Federal reserve districts
and in the plugging up OF the flow OF
money into small businesses OF an un-
essential character. The subcommittee
have no power under the law. but
they have behind them the influence
OF the government, and this is strong
enough to effect results without pen
altics or enactmcnts
There is no immediate relationship
between the Capital Issues Committee
and tho War Finance Corporation. al
though both were created IL the same
act OF Congress. This corporation with
capitalization Of 100000 all of
which is subscribed by the Federal
government. is authorized To make di-
rect loans TO such institutions and in
dustries as need war financing. fl may
loan money To banks and trust com
pan!es which may. in turn. have made
loans 10 war industries. 1t may make
loans 10 savings banks and building
and loan associations for n period o:
one year on mortgages, and il may
make loans direct to private interests
in need of money. which such interests
are unable to negotiate, except at OK
cessivo rates.
Tho ordinary loans. which may be
made. can only be made for ~ per
cent OF the value of the bonGs or
other obligations pledged as collateral
There is. however. u provision under
which a loan may he made for the
fun value IL additional security Is
given by the bank or trust company.
No loan mag be made for "A longer
period than five years In effect IN.
function Of the War Finance Cornora-
ton Is to extend the service OF the
Federal reserve system. which can
discount commercial! per for no more
than ninety days. and agriculture!
mortgages FOR no more than six
months. All concerns securing loans
must be going enterprises. No money
Will he advanced for promotian pur-
poses
There is one point OF contact be-
tw-en the Capital Issues Committee
and the War Finance Corporation.
This occurs in the case OF corpora
tia, which wishes to float securities.
and which wishes the War Finance
Corporation TO take part Of those Sc
curittes. An instance OF this occurred
in the case of the Bethlehem Steel
Corporation. This company wanted a
license 10 issue S50,OOooOo in bonds
for extensions. These extensions were
urged by the War Industries Board.
but before they could be noatea. the
Capital Issues Committee had to ap-
prove them.
After the issue was approved. and
the fact made known 10 the war FL /
nance Corporation. that corporation
was applied to for s2o,O0o.ooo Of the
T5o'coo'ooo. This sum was advanced
to the Bethlehem company on cono,- /
ton that il would he unable 10 sell
the whole s5o.ooCooO in the open mar
ket 1t has since developed tina, prac-
ticaIly the whole issue has been dis
posed Of 10 banking syndlcatcs, and i,
Is unlikely that any part o. the 500
100000 loan granted Will be nce1ed nv I
Mr.. Schwab's company.
FCsz Ezszsxssrazsaos,ssy IN .~n--.--,