Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-12-02
WAR FINANCE UNIT
MAY Be RESTORED
Possibility of Agency's Re.
YivaI Starts Discussion
in Wall Street.
BY FRANK III. MCCONNELL,
Associated Press Financial Writer.


NEW YORK, December 2.-The tale
Of the prodigal son may be reversed in
the case of Uncle Sam and the War
Finance Corporation, once his sturdy
World War child.
After an active life in Washington
wartime family Of governmental bu-
reaus and postwar progeny, the War
Finance Corporation was turned adrift
on November 30, 1924, and its affairs
wound up, except for a few minor trans
actions which still await completion.
But today there is growing discussion
of restoring the corporation to its for
mer great power.
Sponsors of the idea believe there may
be work to do which no agency could
accomplish better than the War Finance
Corporation. Just as it helped to keep
American private industry alive during
and Immediately after the war, they be-
lieve it might stimulate the heartbeat
OF American business today.
Plan Excites Discussion.
The idea has been actively discussed
since President Hoover announced his
six-point program early in october,
which included the plan of the National
Credit Corporation. He also said at
that time that, if necessary, he would
recommend the creation Of finance
corporation similar in character and
purpose to the War Finance Corpora
ton, with available funds sufficient for
any legitimate call in support of credit"
AS yet the proposal has apparently
not advanced beyond the realm of con-
versation, but this conversation has
grown active in Wall Street of late. 1t
has been suggested that such cor
poratlon might have a mildly imitation
airy tendency, which would tend to
break the vicious circle of def1ation, If
il has not already been broken. 1t
has been suggested it might make loans
to the railroads and to other corpora
lions which may be unable to meet bond
maturities owing to the abnormal con-
dition of the bond market.
OF course, there is a wide range of
opinion in financial quarters as to the
necessity or ACCESSIBILITY of reviving the
War Finance Corporation. Critics hold
that setting up the corporation, once a
sort of war lord over private industry,
might lead to Government encroach-
ment upon private fields, and that it
might be subject to serious abuses.
Formed on May 20, 1918, the War
Finance Corporation advanced $780,
430,l00 in loans up to November 80,
1924, when, officially, it became extinct
OF these $500, 431 100 of loans all
DuL DGSSytOO nave UtGIl lulIY REPAID
with interest. This small balance, still
outstanding, is well secured and there
is reason to believe that it, too, will be
taken up as soon as conditions thaw
out a little more
In the meantime the corporation
made net profit of $64, 1852, 1853, which
it paid into the United States Treas
ury. This is $50 times more than the
remaining balance Of unpaid loans.
Work of Corporation.
While leading spirits in Wall Street
finance are naturally reluctant to en-
courage the formation of more Govern
ment bureaus, they have carefully
studied the unusual history of the War
Finance Corporation.
When the United States took UP the
bayonet it needed billions of dollars
for foods, ammunition and transporta-
ton of its fighting forces. Private in
dustry faced financial pinch. 1t
seemed unlikely there would be money
enough to go around.
The War Finance Corporation was
created to meet this emergency. 1t
loaned ST. $4,000 in the first six
months of operation. After the armis-
tice, Americas railroads and export
trade were in financial straits. Con-
gress authorized the War Finance Cor
poration to go to the rescue. 1t did,
loaning s89, 100000 in 1919.
So effective was the war child's
moves that Congress widened its abii-
tty. Soon the corporations directors
were passing on requests for loans
which varied from money needed for
shipping locomotives, to requests for
money to carry the cost Of stocking a
farm with cattle.