Plentywood herald. [volume] (Plentywood, Mont.) 1908-current, 1936-01-30
JAPAN LEAVES FARLEY
BANKERS DISLIKE RFC
HOW 1T HELPS RAILROADS
LOANED BILLIONS no BANKS
NEW BUDGET MYSTERY
GOVERNMENT LOSES
FLETCHER'S COMPLAINT
NEUTRALITY A PROBLEM
DEMOCRATS END DEFICIT N

Denleu an upper common limit,
which means naval equality with tn
United States and Great Britain, ia
panese delegates withdrew from tn
London naval conference last week
This action ended all hope of pro.
longing existing treaties relating t.
the size of major navies and fortifca-
tons in the Pacific. While response.
bility for breaking up the parley rest.
upon Japan it may be said that hel
position has been clear for months
Whether any satisfactory limitations
of naval ornaments can be effected
with Japan outside and insisting upon
equality with this country is to be
doubted.
Bankers are of the opinion that the
government should get out of the lend
ing business and dislike very much
the tenor of Jesse Jones' remarks that
this will not happen until "a free flow
of credit" with reasonable interest
rates to the small fellow" as we'll as
to the big fellow" is provided by the
banks. The chairman of the RFC
backs up his ideas with action.
When the Great Northern railway
sought Sis, 900 to re-fnance obli-
cations, the banks asked five percent
plus a 100000 underwriting charge
and an additional one percent on such
bonds as they might buy. Thereupon
the RFC offered the money at four
percent. BY contrast, the Great North
ern, which has never defaulted on an
obligation in 81 years, has been paying
7 percent on the issue for Is years al
though the bankers got the bonds at
a discount of more than eight percent.
The railroad will ave $4,000 600 a
year, which will more than meet its
social security tax.
Mr.. Jones points out that the pres
emf bank act allows national banks to
lend on improved real estate for as
long as ten years and on unimproved
real estate for five years. 1t allows
loans to industry up to ten years. The
loans are available for rediscount by
the banks at the federal reserve, and
inasmuch as SO percent of all deposit
tors are insured and banks runs are
unlikely, there is no reason for banks
to maintain extreme liquidity, or to
fail to meet the legitimate require
mems of real estate, business and in
dustry in proper proportion to their
lending funds"
Incidentally, the RFC has been a
God-send to the banks themselves.
Since beginning operations nearly
four years ago it has loaned to banks
and trust companies $1,931, OTIS, invest
ed 81 1924, 258 in the stock of 1854 banks
and loaned or authorized an addition
al 81, 17O,031, 1888 to 1865 closed banks
in order to help them pay off deposit
tors. These items amount to $4,395,-
365, 032-all of it being government
money advanced to help the bankers
of the nation and thus establish a
strong banking system. Of this vast
amount 1921, 303,971 is now available
when conditions are met and the bal
ance, $1,669, 1902 represents tn e
amount that the RFC now has invest
ed in bank stocks, loans and securi-
ties.
Just how much money the federal
government will spend during the fis-
cal year beginning July / is a real
mystery. The presidents budget mes
sage forecast a probable deficit of ST.
O96, 900 900 but did not include any
item for work relief or for the pay
ment of the soldiers bonus. The pres
ident expected to make a definite rec
om~mendation on work relief after
watching developments.
The payment of the soldiers bonus
at a cost estimated at between one
and two billion dollars and the nee
essity of providing funds for farm re-
lief viii increase the estimated deficit
considerably, although new taxes for
payments to farmers are likely to meet
these expenditures.
The amount needed for work relief
is an unknown factor but one notes
that the conference of mayors has
called upon congress to appropriate
S2,340,000, 900 for work relief during
the next fiscal year. Speaking through
its executive committee, the mayors
warn the government that "at least
three million eases" involving twelve
million men, women ard children will
remain after next July and that an
additional two million cases, repre-
senting seven to nine millions per-
sons, will be dependent on state,
ty and municipal relief funds.
The supreme court, having ordered
the return of $500, 600, 900 of i'm
pounded AA taxes, the question arises
whether the government will have to
return the $1,000, 0OO, 900 already COL
lected from professors under the farm
act. Some difference of opinion exists,
with AAA counsel c~ontending that the
S1.0O,0O0 900 could not be returned
unless professors proved, as required
by law, that they had not passed on"
thn taxes to the consumer. The court