Evening star., 1935-04-01
.R.E.C. SEEN M|RED
MBUS|NESS DEALS.
Note on Webster Corp, Now
Overdue, Offers 1000
Utility Plants.

BY the Associated Press.
The Reconstruction Finance Corp.
finds itself drawn more and more
deeply into the Nations business as
borrowers default or the corporation
Is forced to step in to save borrower
concerns from collapse.
The r. F. c. now has taken over
control of a number of diversified
Businesses, ranging from railroad to
distilleries and from insurance COM
panies TO machine shops.
"It looks as though we are in the
utility business whether we want to
be or not said Jesse H. Jones, chair
man Of the board Of the R. F. c
This statement came as a result of
disclosure that note of the Webster
Corp, secured by stock of the Utili-
ties Securities Corp, was overdue and
that Harley Clarke of Chicago, head
Of the company, had sought unsuc-
cessfully to have it extended. The
note was given the corporation as
part Of the security for the $780,
OO0, 900 loan to the Central Republic
Bank g. Trust Co. Of Chicago, COM
monty known as the Dawes Bank
1000 Plants Involved.
As ramification Of this, the cor
poration could, if it desired, take over
control of around 1000 public utility
plants throughout the Middle West,
including large corporations serving
st. Louis and Indianapolis and other
large Western and Middle Western
cities.
The corporation today owns out
right, or can control:
Three insurance companies.
One real estate mortgage loan COM
pany.
One very profitable railroad.
Scores CT National banks.
-Four million bales of cotton.
And has hand in wineries, dis
tillerieS, machine shops, boundaries
and other business through its loans.
Following the best banking prac-
tices, Jones and the board of directors
of the corporation insist on keeping
in close touch with the security be-
hind loans made by the corporation.
The biggest and most important loans
are negotiated through the chairman.
He personally dickers with railroad
officials and owners before any COM
nitments are made and recently he
has been insisting that arrangements
must be made so that interest and
other fixed charges of the borrowers
are reduced.
The corporation, founded during
the Hoover administration as a means
of aiding stricken banks, has gradual
,ly evolved into a general lending busi-
ness in an effort to put the country
back on its feet.
Put Own Men on Jobs.
A year or so ago two big insurance
companies In Baltimore needed re-
organization. The corporation bought
preferred stock in them and then in
sisted on putting its representatives in
the companies, one of them as presi-
dent and other as general counsel
Out in Detroit last year the Detroit
Life Insurance Co., to which the cor
poration had lent money, got into
difiulties and was ordered sold by the
courts To protect its interest and
the policy holders, the corporation
bid In the company and now owns
and operates it.
In Chicago when banks were being
reorganized, the corporation took the
controlling interest in the Continental
National Bank and put a former
Treasury official in as president.
Scores of other banks passed into
its control, but, with the exception of
seeing that friendly men are on the
boards Of directors, the corporation
has. its officials say, kept its hands
out Of the management.
Took Stock as Collateral.
Three months ago the Denver &
Rio Grande Western Roalroad, now
being reorganized, could not take up
its option on the controlling stock of
the highly profitable Denver & Salt
Lake Railroad.
The corporation lent them the
money, took the stock as collateral,
and then put former director in as
president Of the road and other repre-
sentatives among its operating Of
fcials.
Some of the loans developed unex-
pected angles. Recently revenue
agents raided large vinegar plant in |
New York State and reported they
found thousands of gallons of alcohol |
and apple brandy that had not paid |
taxes. Some time before the Recon- |
struction Finance Corporation had |
lent the owner of the company $40 900 |
as an aid IN processing the apple crop