Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-04-26
Profitable New Deal
Acknowledgements
By Queen L. Scott.

All honors in competition for the title
of champion Government spender have
been won by Harry Hopkins with his
w. P. A.
The latest in the way of competition.
lust getting under way in earnest, is for
the title of champion profit producer Tor
the Government First returns suggest
that Jesse Jones, with his r. F. c.. is
going to carry off the honors.
Red ink. for six years. has splashed
lavishly over the daily statement that
shows the condition of the United States
Treasury. The red splash is expected to
set peace time record during the pres
ent fiscal year.
In the midst of this red there are &C.
casional dabs of black. They represent
an excess of credits meaning that
the agency involved is returning more
money to the Treasury than it is paying
out.
The biggest users of Treasury funds
of two and three years ago today are
discovered to be either profit producers
or potential profit producers. They are
in the race for the new honorS.
The lineup at the start looks like
this:
Jesse Jones, with more than s8,000,000.-
900 of disbursements through the Re-
construction Finance Corporation he
heads, actually has returned to the
Treasury during this fiscal year $145.-
100000 more than he has drawn out.
His organization has an operating profit
of SIPS, 100000, cleaned from earnings
on loans.
John Fahey. with nearly 100000 900
in Federal credit loaned through the
Home Owners Loan Corporation, is
estimating that his organization soon
will be returning an operating profit to
the Government. He thinks the profit
will reach $50, 900 900 a year
w. I. Myers, with nearly $4,000, 600 900
paid out through the Farm Credit Ad-
ministration. is down for an "eXceSs of
credits amounting to $40, 00O0 900 for this
fiscal year. He looks for an operating
profit from this agency in the future.
Among them the heads of these
agencies have stepped into the banking
breach to the extent Of approximately
S14 ,0OO, 10000
Yet their activities attract little public
attention. This years political campaign
is expected to come and go without in
volving either the r. F. c., the H. o.
L. C. or the F. c. A. in partisan attack.
Even SO, the implications of these VEN
tures-involving Government banking
are more significant than many of the
programs drawing hostile fire. All of
them aim at snoring up the Nations
capital structure at its weakest point
They put the Government into strategic
position to dominate. if not to absorb,
much of the banking industry.
How is this so? The answer is found
in the experience of the last few years.
Mr.. Myers, through the wide ramifica-
lions of F. c. A., has control of the
machinery that today finances the
greater portion of the entire farming
industry. Government. credit is doing
much of the work formerly done by
private credit.
Mr.. Fahey through the billions of
H. o. L. c.. has foot in the door of the
business in mortgage credit-much the
biggest field of credit. Just about 1000
| 600 home owners now are financing their
| properties with Government credit. New
lending has stopped for the time being,
but Government has ventured once and
will be expected to venture again.
x y
But it is Mr. Jones who has under
| taken the most significant operations
| The r. F. c., in the size of it's activities,
| overshadows the individual banks of the
| country 1t is being pushed by Congress
| into new fields of banking. and today
| offers the nucleus of vast Government
bank in case Congress should wish to
| form such an institution.
Authorized loans and commitments of
the r. F. C. total nearly $4,000 900
| Actual disbursements have reached more
than s8.5Oo.0OO, 900. Repayments total
So, 500 900 600.
Government. through the r. F. c.,
| holds voting stock in more than one
half of the banks of the country. Its
investment in this stock is above sl,000,-
100000. Nearly $4,000, 100000 more went
to bolster the banking structure during
the period Of crisis three and four years
ago. Most of this money has been re-
paid.
| But today Mr.. Jones is carrying on a
| financing program for farm commodities
| that dwarfs that of the old Federal
Farm Board. He is financing railroads
| to the tune of $500,000000. His r. F. C.
| money is involved in financing the ex-
| port of farm commodities. in developing
the mining business, in aiding individual
| business borrowers.
X X
| Only a few million dollars has gone
| out to individual business men in COM
| petition with banks, but the technique
and the experience for Government
operation is being gained in that field.
So efficiently has the R. F. c. done
| its job that Congress and the President
| turn to it instinctively when there is
new Government banking job to be done.
Recent creations and prospective new
tasks include: An r. F. G. mortgage
company, a program of disaster loans
| to aid individuals whose property suf-
fered in the Spring floods and tornadoes,
a plan for financing rural electrif1ca-
ton and possible financing OF low
| cost housing program.
This Government banking institution
gets its money from the Federal Treasury
| at the rate of % per cent. Its cost of
administration are set at about one
half of / per cent. Loans are made, for
the most part, at 4 per cent. On that
spread of three-quarters of per cent
the R. F.. c. has earned its operating
profit of $126,8OO,O0O.
What is the r. F. c. aiming at? Is
| Government getting in the banking
business to stay?
On that point Mr.. Jones said recently:
ct should like to see the Government
olIt of the lending business. but not until