New-York tribune., 1918-08-03
Attorney General Limits
War Finance Advances
to Half That Sum
Harding Brings News
Bankers Back of Proposed In
termediary Corporation
to Confer

ElanS LOT Cne organization OF a $lUU,-
100000 Intermediary banking corpora
ton to purchase the securities of pub
lie utility and other corporations in
need of fresh capital, in turn discount
ing it's paper with the War Finance
Corporation, have been completely up
set by an Interpretation of the law by
the Attorney General.
w. P. G. Harding, governor of the
Federal Reserve Board and managing
director of the War Finance Corpora
tion, who was in the city yesterday on
official business, said that the con-
struction placed upon the law by the
Attorney General in his ruling just
handed down limited the advances that
the War Finance Corporation could
make to any one corporation to 10 per
cent of it's $50O,000,OOO capital, or
S5O,00O,0O0.
In view of this, Governor Harding
stated, the proposed plan for taking
care of public utility and other cor
porate financing through the projected
intermediary banking corporation could
not be put through in it's present form
1t is expected that efforts will now be
made to evolve new plan that will
comply with the law.
Bankers Formulated Plan
A committee of bankers headed by
James N. Wallace, president of the
Central Trust Company; Charles H.
Sabin, president of the Guaranty Trust
Company; Thomas W. Lamont, of j. P
Morgan & Co., and Frederick W.
Strauss, of J. e. W. Seligman & Co.,
which was appointed at the suggestion
of Governor Harding, has had the plan
for taking care of public utility capital
needs in its hands for several weeks.
1t was proposed to organize a great in
termediary banking corporation, capi-
tion would buy the securities of the
corporations in need of new capital
and would itself obtain advances from
the War Finance Corporation.
1t was hoped that unlimited advances
could be obtained from the Federal
corporation. Bankers throughout the
country would be asked to subscribe to
the capital stock of the intermediary
corporation, thus spreading the risk
that might be attached to the opera
tons The fact that the law makes it
impossible for the War Finance Cor
poration to advance more than $780,
100000 to any single corporation on
the Federal finance corporation would
probably have far exceeded that
amount in view Of the pressing needs
of public utility concerns all over the
country.
Bankers interested in the plan would
not say yesterday what their next
move would be in the matter. In some
quarters it was suggested that the law
might be so amended as to make it
possible for the War Finance Corpora
tion to make larger advances to single
corporations. Elsewhere hope was ex-
pressed that some other way might be
found for solving the problem. Con-
ferences of the bankers interested in
the matter will probably be held next
week.
1nterborough Financing Discussed
During his stay in the city yester-
day Governor Harding visited Mayor
Hylan and Controller Craig at City
Hall. His visit there had to do with
the matter of the projected new tinanc-
ing of the lnterborough Rapid Transit
Company. Governor Harding said that
he discussed with the city Officials the
status of the city in it's subway con-
tract with the Interborough company
in order to obtain information for the
War Finance Corporation.
1t developed yesterday that the ap-
pllcation recently made to the War Fl
nance Corporation by the Interborough
for an advance of $37 100000 has been
withdrawn. 1t is understood, however,
that new application for loan will
be made to the Federal corporation.
what caused the change in the Inter-
borough financing situation is not
known. 1t was announced at the end
of June that the War Finance Corpora
tlon had agreed to make a direct loan
to the 1nterborough Rapid Transit
Company of 80 per cent of it's S37, ,7OO.-
GOO requirements, or S11,31O,0O0, on
condition that the bankers arrange the
financing of the $26,390,OOO balance.