Arizona republican., 1922-06-08
BY Frederic j. Haskin

Once again the fate of the War FL
nance corporation, one of the greatest
business institutions ever organized,
is dependent upon the view which
congress entertains of its usefulness.
This experiment of the government
in the business of direct financing of
citizens has been subject several
times since its organization either to
change of purpose of the chance of
complete abandonment.
The War Finance corporation is one
of the biggest banks in the world, and
it is conducted by the government of
the United States. 1t has a capital
of $500,000,0 900 in government funds.
and authority to issue bonds to vast
amounts.
The original act creating the cor
poration was approved April 5, 1918.
This was entirely war measure. 1t
will be recalled that when the Unite d
States entered the war, the treasury
offered the Liberty loans, which alb
sorbed so much of the peoples money
that private corporations sometimes
had difficulty in getting enough
funds invested in their enterprises to
keep them going The government
recognized that this was injurious, so
this corporation was authorized to
make loans to enterprises of almost
any character which We're engaged
upon work tending to assist in the
prosecution of the war. Some of the
companies making war material were
in financial difficulties and loans
were made to them Street car COM
panies which carried employees in
ammunition factories to and from their
work were eligible to receive aid.
Many other companies, some of them
seemingly remotely connected with
the prosecution of war, were found
to be performing some duties which
helped the cause and therefore re-
ceived loans.
Coupled with this function, the
War Finance corporation act gave to
the capital issues committee, which ii
created, the authority to suppress the
issue of blue sky stocks and bonds,
that is, securities of doubtful value.
in order that funds be conserved for
investment in government bonds and
legitimate private enterprises.
Help for Cattlemen
AS the war developed it was found
desirable to expand the functions of
the corporation. One of the first ad-
ditional powers it was given was to
make loans to cattlemen on their
stock. 1t was shown that many cat
llGiiiCil were htiiIliS Oll ttltiI SlS1h
because they could not get enough
money from the banks to carry them
over the winter. 1t was recognized
that the country must have food, and
that it would be a national calamity
to permit the stockmen to kin their
immature stock for lack of financing
Immediately after the armistice
there was a general belief that the
exports from the United States, which
had reached high tide during the
war, would drop away to practically
nothing. This was regarded as an
undesirable development, so steps
were taken to stimulate exports
The belief was that if American ex-
porters could extend credit to foreign
buyers, the foreigners would take
American goods in substantial guam
titles. 1t was arranged that the
American exporter, upon granting
credit to the foreigner, could then
borrow of the War Finance corpora
tion which would await payment
from abroad
Affairs developed so that the cor
poration did very little of this sort OF
business. A wrong guess had been
made. Instead of a need existing
for the stimulation of exports, they
sprang Of their own accord to prev
iously undreamed of proportions
Much credit actually was given, but
it was worked on bankers accept
anceS through the federal reserve
banks in a manner which did not
require the good offices of the Wal
Finance corporation. But that is an.
ether story, which, if followed, woulc
open discussion of the whole post
war boom and the subsequent price
recession. At any rate, little export
financing was done by the corpora
tion and, the war being over, there
was no more of the war aid financing
to be done. The business of the cor
poration sagged
In fact, in May, 1920, the board o.
directors of the corporation, of whicf
Secretary of the Treasury Houston
then was chairman adopted a reso-
luton suspending activities. No new
loans were made; the corporation:
offices merely collected payments or
the loans outstanding.
That summer came the heavy fal
in prices, particularly in prices o.
farm products. In the autumn al
agitation was started to revive tht
War Finance corporation to help tht
farmers because people had achieved
the habit Of thinking this great gov
ernment bank could be turned to al
most any purpose. There were man!
who opposed the revival declarinS
that it was time the government GO
out of business.
After a spirited contest the corpo.
ration was revived by congressional
action, and proceeded to make loan.
to stimulate exports 1t had beer
ur0ad that If exportS OF farm nroducu