The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1918-02-26
THE WAR FINANCE CORPORATION.

Bills have introduced simultaneously in the sep
ate and house for the creation Of the new War FL
nance Corporation. The corporation is to have an
authorized capital Of five hundred million dollars
all to be subscribed by the U. S. government and
to be used for the following purpoes:
az 10 enable banks to rediscount at the FEEDER
al Reserve Bank notes and other obligations of pub
lie utilities industrial and mercantile corporations
and firms which those banks own or have been car
rying.
~ To enable the government, in the interest
Of it's Liberty Loan financing, to regulate and con
troll the investment market and the current rate OF
interest on corporation securities, by having the
War Finance Corporation make loans direct to pub
lie utility industrial and commercial companies and
firms to enable them tOmeet and take care OF matur
ing obligations and to provide funds for such OK
tensions and additions may be found necessary
in order that the corporations so financed may rem
der additional service to the government and the
public in the prosecution of the war, which the
money market now makes almost impossible.
90 To assist the government in the marketing
Of it's Liberty Bonds, by permitting the War Finance
Corporation to go into the market and buy and sell
bonds of the government or Of any political subdlv-
ision thereof .....
The argument for this measure is urgent and we
present it without prejudice as follows: I. e
Governmental financing has practically
closed the investment market to all other financing
ton with the Liberty Loan financing to obtain mon
ely for any purpose except at prohibitive rates Of
interest and the excessive interest rates which Dor
rowers have been obliged to pay all corporation
loans floated or offered in recent months, have,
by contrast made the interest rate on Liberty Bonds
look unattractlve
It appears that over five hundred million dollars
Of public utility and other corporation Indebtedness
will mature in the year 1918 1t is obvious that the
refunding of any such amount Of Indebtedness, at
very high rates, would seriously interfere with the
flotation this year of Liberty Bonds.
Another advantage claimed from the funding of
these corporations through the Kar Finance Corpor
alton, as proposed will lie in the protection Of the
public against the payment Of increased rates to
public utilities and higher prices for the product
or service Of the other corporations and firms which
must follow the payment of abnormally high interest
rates. For instance, the payroll and fuel bill to-
gether, Of the average interurban street railway,
amount to per cent of it's total operating expenses
The balance represents supplies and manufactur
ed materials, the cost of which is found upon anay
SIS to be largely labor and fuel The price Of fuel
is fixed as result Of regulations and the
cost of labor is factor that lies largely beyond the
control of the railway company. We're it not for
government regulation the cost OF coal today
would undoubtedly be much higher than it is and it
follows that the cost Of service rendered by public
utilities and Of the products of manufacturing con-
would necessarily be higher, to reimburse them
for the increased cost of fuel
If the interest charges Of these corporations is
materially increased if by reason Of the existing
financial conditions, corporations find it impossible
to extend or pay their debts and are consequently
forced into receverships with all the attendant ire
mendous costs and expenses, or if the facilities of
these corporations are overburdened and nadequate
and money for their relief is not Forthcoming, the
public will have to pay.
Boiled down. the financing of these corporations
through the War Finance Corporations viii save the
government money by keeping EdcNn HE interest
rate o nits iherE Bonds and other tnlI at;pnsI
,erying 80 u, d .
The Fede1 ReseSye Bostl has p4ke it M Z
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