Evening star., 1939-06-17

- the Associated Press.
Belief that President Roosevelt
will propose to Congress a new pro-
gram of Federal lending to stimulate
business was strengthened today by
the action of one OF his foremost
financial advisers, Mariner S.
Eccles, in strongly advocating such
outlays.
Mr.. Eccles, who headed a -four
ishing chain bank system in Utah
and neighboring States before he
came to Washington with economic
and monetary ideas that led to his
appointment as chairman of the
Federal Reserve Board, took the
lead in an effort to muster public
support for the new lending pro-
posals.
Speaking before the Harvard Bus
iness School Alumni in Boston last
night, he said the industries which
offered greatest hope for re-employ-
ment of labor were housing con-
struction, railroads and utilities, and
that the Government ought to en-
courage them to make greater cap
ital expenditures.
Warns Against Drifting.
Declaring the Government must
not drift" along, hoping for mir
acles to improve business, Mr.. Eccles
added:
1--WE must adopt a program =
OF undertaking increased public in
Vestments in useful enterprises of a
kind that private capital will not
undertake. but which, nevertheless,
can be in large part -liquidating
Such public investment could take
the form of toll roads. tunnels and
bridges; rural rehabilitation and
farm tenancy loans. especially in the
South, to make our farmers inde-
pendent and self-supporting; an
extension of the rural electrification
program; hospital and sanitation
facilities to reduce the appalling
economic waste of sickness and to
make our people healthier and home
efficient, and expansion of public
housing for the lowest income
groups"
Rate Cut Held Possible.
Mr.. Eccles also discussed publicly
an idea which various administra-
ton officials want included in the
proposed new experimentation of
the present per cent maximum
interest rate on home mortgages
insured by the Federal Housing Ad-
ministration. Saying housing con-
struction might benefit from a new
crop of home owners if financing
rates could be reduced. the Federal
Reserve official continued:
Il think it would be possible to
lower interest rates from the pres
ent level another p or possibly
per cent, and thus tap another
strata of potential home owners"
Prior to the Eccles address, Mr..
Roosevelt had disclosed at a press
conference that he was consider
ing the proposed new program
which, he said, involved self -liqui-
dating projects that would add
nothing to the public debt. One of
the proposals he mentioned was
that Federal corporation buy new
railroad equipment and lease it to
the railroads. 1t was reported the
initial cost of this project might be
between s30O,000,O 900 and $500, 900 900.
Administration officials contended
the proposed new lending would add
neither to the Treasury's deficit nor
direct debt. They said the funds
would be borrowed directly by the
administering agencies from the
public and that these agency debts
would be carried on the Treasury's
books only as contingent liabilities.
The Treasury would have to pay
them only if the agencies proved
incapable of doing so.
Security Revision Urged.
OF the various proposals one of
the most controversial is the sug-
gested reduction in the present 5
per cent maximum interest rate on
home mortgages insured by the F..
H. A. Some banks already have re-
duced the rate on F. H. A.-insured
loans to 4l4 per cent, in an effort
to encourage borrowing. To offset
the anticipated protest of banks still
charging per cent, some fiscal Off
cials have suggested that the Re-
construction Finance Corp. make up
to the banks the difference between
the two rates.
In his Boston address Mr.. Eccles
urged revision of the Federal old-age
insurance program to provide "a
reasonable pension to old people i'm
mediately, regardless of whether Or
not they have contributed to the
. (old-age insurance. fund"
The present old-age insurance
program provides for payment of
pensions, beginning in 1912, to re-
tired workers who have paid old
age pension taxes. Legislation to
start such payments in 1910 was
passed by the House recently and
is now awaiting Senate action. In
addition to the insurance system,
existing law provides for Federal
contributions up to maximum of
SIS month, on dollar-for- dollar
matching basis with the States, for
pensions now paid to the needy
aged. The pending bill would raise
the maximum Federal contribution
for this purpose to $40 month.
Mr.. Eccles said utilities should "by
now" feel fairly well assured that
they need not be deferred from
needed plant expansion. He ex-
pressed agreement with the idea
that it was unwise public policy for
the Government to go into the util-
ity field in competition with private
capital.