The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-08-03

When GOV. Harding'S announcement
was reported to a banker intimately CON-
nected with the plans to form q $780,
100000 buffer corporation. he said !:
That settles 1t. Our plans are knocked
in the head. Some new method will have
TO be devised or the borrowings OF cor
porations will be sadly limited We had
hoped to aid not only public utilities but
all corporations in need of assistance.
The banks are well loaned sup. They
would not care to indorse or guarantee
the obligations generally Of debtor
corporations, and the War Finance
Corporation finds 1t difficult to make
loans on the collateral without some
guarantee II the War Finance Corpora
ton could loan a much larger amount
than S50.000,000 to our proposed inter-
mediary concern. the problem could have
been easily solved, but such a ruling puts
an end to a scheme that received strong
support and was carefully studied"
Mr.. Harding called yesterday on Mayor
Hylan and Controller Craig with refer
ence to the proposed marlborough Rapid
Transit financing and reported that he
had obtained from them full informa-
ton regarding the relations between the
city and marlborough and Brooklyn
Rapid Transit companies. He said
Il took advantage Of this trip to New
York to ascertain from the municipal
authorities the terms on which the COM
panies operate the lines owned by the
city, and Mayor Hylan gave me all
the information l required Tho Inter-
borough company had an application be-
fore the War Finance Corporation for q
direct loan. but this was subsequently
wrshdrawk / have received inttmation
that a fresh application is about to be
made and / secured first hand inforna-
ton regarding the company's financing
problems"
The Public Service Commission has
issue s39,416.0O0 per cent notes at
not less than 95ts OF their face value
convertible into per cent. bonds at
S7la. 1t had been expected that the
war Finance Corporation would take
about $Il,000,000 of these notes and
bankers expected to make use OF the
,roposed War Finance and Utilities
Corporation in connection with the sale
Of the balance The ruling Of Attorney
,i,ueraf Gregory, it was said yesterday.
Will make II more difficult for an under
writing syndicate to consummate this
tlninclng.
Proposed Corporations Plans.
The War Finance and Utilities Cor.
poration, organization of which awaited
favorable ruling from the Attorney
General. was to have been a 100000. 900
corporation at the start with ambitious
rlans for further enlargement. II was
being formed under section OF the
War Finance Corporation act, which
provides in brief that a bank or banking
establishment may make loans to any
business which is necessary or contrib
ut0ry to the prosecution OF the war and
may redlscount 10 per cent OF every
such loan at the offices Of the War
Finance Corporation. The limitation
to 100000 affects the extent Of re-
discounts and loans combined.
The original purpose Of the law was
10 have the banks throughout the coun-
Try make the loans. Other demands on
bankers, however, including those of the
Government. have been such that they
could not make 100 per cent loans to
corporations and be content with rs
yer cent rediscount offered by the War
Finance Corporation. In other words,
they are not in position to hold per-
manently. without privilege of redis-
Coant, % per cent of such loans as
companies must have.
II was hoped that the proposed War
Finance and Utilities Corporation would
do what the banks obviously were un-
able or unwilling to do. but the extent
Of aid from this direction is now ex-
uemely limited.