Evening star., 1932-01-24
The Reconstruction Corporation.

The Congress has passed and the
President has signed the bill earnestly
recommended by the administration
| which provides for q Reconstruction
Finance Corporation, with wide powers
to aid agriculture and industry. In q
measure, this law is the keystsne OF
the program advanced by President
Hoover to help meet the business sit
ustion In this country. 1t is the sec
ond bill so proposed to have received
final action by the two Houses of Con-
gress and approval by the President,
the first being the bill to amend the
Federal farm loan act by providing for
additional capital for the Federal land
banks. The Congress is pressing for
ward to good purpose with the relief
program.
The Presidents recommendation for
the establishment of the new Recon-
struotion Finance Corporation was for
mulated after he had carefully studied
the situation and taken counsel with
leaders in finance and industry, Demo-
Gratis as well as Republicans. The new
corporation is to have at its command,
If it is found necessary, a total OF
So 900 900, 900 to relieve the credit sit
uation and to stop defiation in agri-
culture and industry, and thus TO in
crease employment by the restoration
Of 10 thair. y,orroc1 {nfg - THE
quotation is from a statement issued by
President Hoover when he signed the
bill and made 1t law. OF this total
amount Congress has been asked imme-
diately TO appropriate 500oo0,0o0 to
enable the Treasury of the United
States to subscribe to the stock OF the
corporation. The board Of directors of
the corporation are authorized to issue
bonds or debentures of the corporation,
to be sold and bearing rate of interest
fixed by the board, up to $4,000, 900 900,
including the subscription which it Is
now proposed the Federal Government
shall make. The power of the Govern
ment Is back of the securities so issued
by the corporation.
The purpose of the law creating the
corporation is set forth clearly by the
President. 1t is not designed as an aid
to to "big business" although its op-
erations will necessarily aid all busi-
ness. 1t is set up for the support of
the smaller banks and financial insti-
tutions, making their resources Liquid"
1t is expected to give renewed support
to business, industry and agriculture,
and to permit them all to carry on
free from unexpected shocks and re-
tarding influences"
The belief has been expressed that
this new agency will revive courage
where more courage is needed today in
the industrial world, as well as provide
additional credit facilities. Loans will
be made to agriculture, commerce and
! industry on security considered adequate
! by the board of directors. Those who
may borrow from the corporation in
cluSe banks, savings banks, trust COM
panleS, DulluIls anu lobH aoSoL4dlioiio,
insurance companies, mortgage loan
companies, credit unions, Federal land
banks, Joint stock land banks, agricul-
tural credit corporations, live stock
credit corporations, receivers Of closed
banks and railroads engaged in inter-
state commerce. The relief, therefore,
covers a wide range. Certain limita-
tions are imposed regarding loans. No
one concern may borrow more than
500, ,O0O, 900, for example, and at no
time shall the outstanding loans to
closed banks exceed 100000, 600, nor
may loans be made on foreign
securities. To the Secretary Of Agri-
culture is allocated ten per cent, or
500, 900 900, to be loaned to farmers
to make this years crops, where the
emergency renders 1t necessary for them
to borrow.