Evening star., 1933-05-25
|CITIES AND STATES TO RECEIVE
2,5OO,0O0,OOO IN FEDERAL AID
Increase of Two Billions In Direct Doles
Revealed at Conference of
Mayors Here.

public works program, In the legislation
now pending, the unused lending powe..
OF the Reconstruction Finance Corpora
ton, which amounts, approximately, to
1,soo. .ooo. 900.
Distribution. In Three Cateeories.
This 81 900. .o0o, 900 is to be distributed
in three general categories, as follows:
Direct grants to States for
rellef ......-............$ $500, ,0O0 900
Conservation Corps ....... $50, 200 900
rarm mortgages ......... 65,000,000
Home mortgages ..... 100000 900
TOTAL .................$9 .$9l5, 900 900
The farm mortgage item Of $65, ,000,-
900 includes $50, 900, 900 for guarantee
ing the interest Of Farm and Bank
bonds and $4,000, 900 to reimburse the
Farm Land Banks for reducing interest
on outstanding mortgages.
Direct loans to farmers to pay taxes
and other operating expenses on
first or second mortgages or what
ever security $500 .00o, 900
Subscription to the original capital
stock Of Home Owners Loan Cor
poration for capital to issue bonds
~ IcluidlSC Qld4udSC o1oti ASbo.
$4,000 900
Total $3.50 900 900
For the original purposes of the
RI c., such as loans to banks,
railroads, insurance companies,
building and loan associations. ap-
proNmately .S5O0,0O
Presidents Latitude Greater.
It was pointed out the Presidents
latitude under the bill Is even greater
than indicated when the bill was sub
mitted. since authorizations under the
new public works appropriation in the
pending legislation and authorize tions
under the remainder Of the Reconstruc-
ton Finance Corporation borrowing
power are made interchangeable IN his
discretion.
In addition to seeking Government
loans for imperative operating ex-
penses, the mayors asked the President
to use his good Offices with the Federal
Reserve Board to the end that Reserve
banks will lend those hard-pressed
municipalities money upon anticipated
tax receipts, money which will tide
them over until better times return.
This would seem to indicate the ad-
ministration will have little success in
lending large sums Of money to cities
and States for public improvements
unless there Is tacit understanding that
no efforts win be made to collect the
sums which may be borrowed.
Direct grants are to be made only 70
those cities and States with balanced
budgets. and only then to cover ap-
proximately IS per cent of the cost OF
| the improvements, the other IS per
cent to be passed out In loans.
The serious plight Of scores Of the
American municipalities was cited to
| the President by the Committee OF
Mayors This group, composed Of
| Mayor James M. Curley OF Boston,
president of the Conference Of Mayors;
Mayor Nelson 8. Sparks Of Arkon
| Mayor Oscar Holcombe Of Houston,
Mayor D. w. Hoan Of Milwaukee and
Mayor T. s. Walmsley OF New Orleans
declared that go of the 90 largest cities
in the country. although solvent, were
facing serious crises.
They asserted the breakdown Of pr1-
| yate financial institutions distributing
securities and the collapse Of munich
pal credit facilities has forced these
cities into q financial strait Jacket. u
They added that nearly all cities live
on borrowed money for o part OF each
wear, and, In the past, loans were easy,
but, today, the banks are able to alb
sorb only q portion Of the municipal
needs.
More Credit Called Imperative.
Unless more credit Is obtained the
following results were foreseen:
81. Solvent cities will be forced tc
default because cash viii not be avail
able.
"2. Thousands Of municipal en-
ployes will not be paid.
"3. Cities will be forced to resort
to script, which will circulate at un-
certain prices.
a. Essential Government services
will break down.
as. A public works program. the bull
Of which is municipal construction, WI
be absolutely impossible"
The committee pointed out the easy
way to finance municipal needs at the
moment Is for the Federal Reserve
Ranks to absorb tax-anticipation notes
The law authorizes this, 1t was declared
but the banks appear to have been
reluctant to engage In such operations