Evening star., 1939-12-10

ClOSuTc CIldC CIle fIcCOQlSLTuCtlON F1QdIlCc
Corps original capitalization of half q
billion dollars has been written of, )" and
that by authority of Congress the Secre-
tary of the Treasury, during the fiscal
year 1878, Cancelled" its obligations to
the tune of $2,691 900, 900. Most of this
sum represented advances for relief.
The group as whole possesses no uni
form system of accounting, such as the
Federal Power Commission enforces
against public utilities and their sub
sidiaries Each component appears to use
what ever method 1t finds convenient.
Treasury officials express indulgence
toward this anarchy of bookkeeping, say
sonably satisfactory.
AS a bizarre climax comes the dis
covery that all of the Treasury systems
corporations and lending agencies, with
the single exception of the Commodity
Credit Corp, operate outside the national
budget. This remarkable situation rises
from the fact that the typical establish
ment is an emergency" organization.
Its term of life is fixed by statute and
may be extended only by act of Congress.
AS a result, under present circumstances,
its balances of profit and loss cannot
enter the budget until it Is suffered by
Congress to lapse and finally settles its
affairs.
That the delays of liquidation may
equal those of the law is exemplified by
the War Finance Corp, created in 1918.
Though it was ordered into liquidation
fourteen years ago, the process has not
yet been completed. In similar case are
two other companies inherited from the
World War. They are the United States
Spruce Production Corp, with 100000
of Government-owned stock, and the
United States Housing Corp, In which
Treasury held shares of $34,107,709 have
virtually been wiped out by a deficit Of
$32,207 ,197.
Hidden Liabilities"
In practical effect. the losses and obli-
cations of the Governments corpora
tion-credit system are not included in
the public debt. These may not with ac-
curacy be described as secret" liabilities,
since periodical reports are submitted to
Congress by every agency and sum-
married in the so-called annexed bud
gets" Obligations, but not losses, are
tabulated each year by the Bureau Of the
Budget under the heading, Contingent
Liabilities of the United States Govern
ment." But in relation to the national
debt, these losses and obligations consti-
tute a formidable volume of hidden"
liabilities.
Its dimensions may be judged from a
single instance. Eight Federal corpora
tions and agencies are empowered by
Congress to raise capital, like private
companies, through the sale Of their own
securities, both principal and interest Of
which are guaranteed by the Govern
ment. On September 80 the outstand-
ing obligations of five of the group were
as follows: Federal Farm Mortgage
Corp bonds, 81 ,279 SOC, 900; Federal Hous-
ing Administration debentures, $780,
900; Reconstruction Finance Corp. notes,
$819. 300 900: Home Owners Loan Corp.
bonds, 2,731 200 900, and United States
Housing Authority securities, $114, 900.
On July / of this year the Federal
Home Loa.. Bank Board had outstanding
debentures of s48,500,000. Through the
sale of bonds, the Tennessee Valley Au-
thority had acquired on that date sum
estimated by the Bureau of the Budget
at $4,000 900. Excluding the Commodity
Credit Corp, with outstanding notes Of
an there iS
represented an approximate hidden
debt" leaving possible losses out Of ac-
count, which totals $4997, 800 900.
1t is upon this feature that congress
sional attack is likely to center. The
Treasury is in favor of bringing the en-
tire corporation-cr system inside the
budget, after the example of the Com
modify Credit Corp. It believes that
profits and losses should be level over
series of years, instead Of eventually
dropping in huge lump sums into the
budget.
Under a 1898 amendment, the Secre-
tary of the Treasury is directed on
March 81 of each year to make an ap-
praisal of the assets and liabilities OF
the Commodity Credit Corp. and to
determine its net worth. Whenever its
capital has deprecated to less than
s1O0, 900, 900, he is instructed to restore
the impairment, subject to appropria-
ton of the necessary funds by Congress.
Full Of Curiosities.
From the point of view of organization
a survey of the system discloses sort
of Lewis Carroll wonderland" of Curl
osities. The Tennessee Valley Authority
is a Federal corporation without stock
but with Government capital interest
of s242, 100000. The Federal Surplus
Commodities Corp. enjoys the quiz"'cal
distinction of being a corporation which
not only has no stock, but not even any
capital. Its operating funds are derived
from customs receipts. The United
States Housing Authority is "a body
corporate of perpetual duration"
Most of the corporations are prohibited
by charter from making profits; others
regularly pay stock dividends. Admin
istrative expenses are betrayed in GER
tain cases from revenues and In others
by congressional appropriation. Some
have achieved handsome surpluses, and
| others mountainous deficits Several
are authorized to sell their securities not
only to other Government agencies, but
in the public market The total of such