Evening star., 1918-02-13
FOR AIDING PUBLIC
! UTILITY COMP PAN|ES
Mr.. McAdoo Explains Needs
of Railway, Power and
Lighting Plants.

That the administration purposes to
extend financial assistance to public
utility corporations-interur rail-
ways power and lighting plants. etc
has been brought out in the hearings
On the pending bill to create the war
finance corporation. Secretary Nc
Adoo, in his communications 10 the
Senate finance committee. has laid es-
pecial stress upon the urgent necessity
Of being empowered to do SO.
Steam railroads are TO be taken care
OF, with regard to their financial neces-
stiles, either through self financing.
based upon the governments guarantee
OF earnings, or out of the proposed
$780, 00O, 900 revolving fund. Eut no
provision is carried in the railroad bill
to help the intcrurhan lines and the
power plants supplying war Industries
This omission is to be supplied by the
operations Of the finance cor
poration. according TO the Secretary's $
plans.
Mr.. McAdoo Explains Need.
Secretary McAdoo pointed out to the
committee that borrowings for deEel-
opment of such Industries are no; eligi-
BILE for rediscount with federal reserve
banks. and ii is imperative. IN his opin-
ion, that some provision must be made
for them. He had reference particular
ly to transportation lines and power
plants which are collateral to indus
tries engaged in furthering the war
MANY banks" said the secretary. in
q communication to the finance COM
mittee, which are now called upon to
extend large lines of credit to custom
ers who are eXpending their business
to meet the present needs of the gov
ernment are obliged to take securities
yy-h hTFt nt
eligible for rediScount at federal re-
serve banks. At the same time these
banks are being called upon to extend
larger lines of credit to their CUSTOM
ers than ever before. Their customers
are calling upon them not only for
commercial loans to carry their large
Inventories, but for what are in effect
temporary capital loans, in order TO
construct new facilities and add ma
chinery to existing plants for the pur-
pose of filing government contracts
The burden of these banks is also in
creased by the financial requirements
OF the government, which at the same
time is calling upon them to lend large
sums through sales of Treasury GER
tiflcates of Indebtedness.
Banks Naturally Discriminate.
TN these circumstances the CONNER
cial banks are quite naturally discrimi-
mating in their loans between those
eligible for rediscount by Federal re-
serve banks and those which are not
The proposed act. however, would
largely remove the ground for any
such discrimination. for it provides a
means by which such banks may pro-
cure accommodation upon certain Sc
curftfeS arising out of war conditions
which are not eligible at federal re-
serve banks. The proposed act would
thus free credit pressingly needed at
the present time, both directly and in
urectly, for the governments use"
.Ihe Secretary then cited a number
% cases Of pressing needs which the
war Finance Corporation would have
Deen able to meet, and continued:
"A very large part of the manufac-
lures OF the country are conducted by
tne use Of electric energy, for which
Sne demand in some parts of the coun-
yfy necessitates immediate enlargement
g production by both steam and hy-
ofaulic power. Indeed, am informed
That in some important industrial dis
r1cts there exists a distinct shortage
01 electric power. which is badly need
% for war industries. If this deficiency
= to be supplied additional facilities
must be procured. and money is ur-
gently needed for the necessary acpital
expenditures. Existing financial con-
dttfons are such that power companies
4nd themselves unable to procure these
FUNDS on reasonable terms. That these
funds should be obtained to produce
She power needed for our war indus
tries Is matter Of prime Importance
and yet at the present time it is diff
suit. II not impossible. to obtain these
funds through the ordinary channels"