Evening star., 1934-03-16
R.F.C. ASKSPOWER
TO BROADEN WORK
New Legislation Would Au.
thorize Body to Engage
in General Banking,
Copyright, 1884. by the Associstea Press.

Copyright, 1884. by the Assoeistea Press.
Unprecedented power to engage In
general banking business, heretofore
confined to private banks, was sought
today by the Reconstruction Finance
Corporation.
Jesse H. Jones, chairman Of the
Corporation, will be called before the
Senate Banking Committee tomorrow
to explain the necessity for the legis-
lation just submitted on behalf of the
r. F. C. board. Under 1t, the Corpo-
ration could loan direct to industry.
Long a critic Of the lending policy
Of private banks, Jones Is expected to
urge the measure as a means Of pro-
viding sufficient credit for industrial
recovery.
The proposed power would be con-
ferred under the broad terms Of a
bill, drafted by the r. F. c., which
also would grant authority for financ-
ing foreign trade and extend the
corporations functions in other direc-
tions.
Whether the bill had the approval
of President Roosevelt was not I'M
mediately disclosed, but many argued
the Chief Executive must at least
have known Of the proposal.
Would Aid Industries.
Taking cognizance of steps already
underway to create system Of Fed
eral intermediate credit banks under
the Federal Reserve Board for lend
ing to industry, Jones said the board
did not want to oppose that proposal.
If this banking system is completed,
he said, "it would not be necessary
for the r. F. c. to make such loans.
but we could be in a position to do
so If desirable"
The r. F. c. bill would authorize
loans up to five years to industrial
and commercial concerns ito enable
such business to obtain working cap
ital, reduce and refnance its out
standing indebtedness, or make plant
Improvements or replacements.
They could only be made, however.
to companies employing 10 people or
more. that were fully complying with
the N. R. A.
To provide for smaller enterprises.
the bill would permit the r. F. c. to
purchase a participation" up to rs
per cent in loans for commercial and
industrial purposes by private banks
Jones personally recommended that
Federal Reserve banks be given au-
thority to make loans, with the ap-
proval Of the reserve board, to COM
merce and industry for as long as five
years.
Would Fill Credit Needs.
Such an amendment to the Fed
eral Reserve act, coupled with the
proposed amendments to the r. F. c.
act, would meet all legitimate credit
requirements of business ard irdus-
try" he said.
Under the private loan provision OF
the bill, the r. F. c. would be per-
mitted to loan to ANY established in
dustrial or commercial business "on
promissory notes, acceptances, redis-
counts, purchase of securities or other
wise" for the purposes stated.
SA0CA C4AC 4oiCASA 1lIldIlClIlS S6CLlOD,
the r. F. c. would be authorized to
extend credit to expand trade either
by direct loans to exporters up to five
years. or through export banks owned
by the United States.
The corporation noted that "other
leading industrial nations, almost
without exception, have provided aid
to their exporters by furnishing mid
die and long term credits, by estab-
fishing limited credit insurance facil-
tiles, or by actually assuming a por-
tion Of the risk involved"
Another significant section Of the
bill, designed to facilitate the reor-
ganization of railroads, would permit
the corporation to compromise claims
against carriers with the approval of
the Interstate Commerce Commission.
Other important provisions of the
measure would:
(A) Permit the r. F. C. to make
additional loans to complete and en-
large self-liquidation projects for
which advances had already been
made;
(B) Increase its fund available fC
reorganizing drainage and irrigato
districts from s50,000,000 to $780,
000.000:
CO Authorize the R. F. c. to sub
scribe for preferred stock or purchase
capital notes of mutual insurance
companies;
CD Facilitate the corporation in
suing through the courts for liquida-
ton Of collateral on loans;
(E) Permit the corporation 10 ex-
tend loans so that they could be re-
paid after recovery has been achieved;
(FO Authorize loans up to five years
instead of three as at present.