Imperial Valley press., 1933-01-30
R. F. c. QUIZ
To BE MADE
BY COUzENS
Michigan Senator Plans Search
ing Quiz Of Loans Made Dur
ing Years Existence.
IMMENSE SUM PAID OUT
Hints Made Of Irregularities In
Help Given Numerous Banks
And Large Railroads.
BY RAYMOND CLAPPER
United Press Staff CORRESPONDENT

BY RAYMOND CLAPPER
United Press Staff Correspondent
Copyright 1888 BY United Press
WASHINGTON, Jan. 80. =. The
long awaited day of accounting is
about to dawn for the Reconstruc-
tlon Finance Corporation.
For one dizzy year it has been
pumping into the veins of the ma
tion'S business a golden stream of
taxpayers money-$1 500 900, ,O00-a
sum equal to more than half the
total federal revenues.
The inevitable reckoning is be-
ing approached cautiously. In
vestigation of the corporations
railroad loans will begin tomorrow
before senate banking and cur
rency subcommittee headed by
Senator James Couzens (Rep.)
Michigan, eagle eyed millionaire
whose knowledge of business, bank
ing and railroads makes him the
most feared question asker in the
senate on these subjects.
His investigation is in support of
his pending resolution to forbid
further r. F. c. loans to railroads
except with approval of congress.
1t is the first serious attempt to lift
the cover from the secrecy-screen-
ed gigantic government lending
agency and find out exactly what
has been happening, and what the
chances are of this money being
paid back. 1t is an attempt to
consider whether the government
should continue trying to bolster
with cash the boom time financial
structures now suffering from un-
dernourishment due to low earn
ingS, or let them be deflated in
the same way wages and prices
have been deflated.
Congress has on the whole been
discreetly silent during the first
year of the r. F. C.'s attempt to
revive American business with in
jections of its golden hyperdermic.
There was hope that this costly
medicine would be successful. Sue
cess probably would have been ac-
cepted by congress as full justifi-
cation.
Defenders of the corporation de-
clare it has been worth what it
has cost because it warded off
panic and cushioned the difficult
ties of hundreds of banks and 9TH
er institutions. Those favoring self
liquidating projects as depres-
sion cure insist the r. F. G. has
not loaned enough in this direc-
ton.
Many Doubts Created
But doubts continue to grow in
the mind Of critics. Reports of
many kinds now in circulation are
aggravating these doubts. These
reports, and other circumstances
which are contributing to the
growing pressure for thorough
inquiry, are summarized herewith
without any implication as to their
merits.
Railroads which borrowed from
the r. F. C. to pay bankers who
refused to renew loans are COM
ing back again for more money
because they can't meet their
interest.
Of 5000 banks given R. F. C.
loans, 500 later closed, according to
one senator. Couzens says he was
misinformed by the r. F.. c., re-
garding the loan Charles G.. Dawes
received just after retiring as pres
ident of the corporation, the loan
being twice as large as the senator
had been led to believe. Institu-
tions in which three of the r. F.
c., we're interested received loans.
Charges have been made that
large amounts loaned to small
banks we're for the purpose of pay
ing off loans called by big banks
and that communities in which
the loans were originally sent re-
ceived no benefit. Two prominent
Republicans closely associated with
the administration are said to be
connected with institutions which
received generous loans.
One large loan was made to q
louisiana institution just before it
collapsed The same thing hap
pened in Nevada, each INSTANCE in
volving approximately $1,000,D0.