Evening star., 1943-07-18
Continued from Page C-1D

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program. The defense subsidiaries of
RFC were directed to procure and stock
pile materials, it is declared, but only
such materials as the President named
as strategic.
Early in the emergency, the story goes,
Edward r. Stettinius of the National
Advisory Defense Commission urged the
President to inaugurate at once a pro-
gram for 100000 annual tons of artificial
rubber. Mr.. Roosevelt is said to have
refused on the ground that in case of
war it would take Japan 18 months or
two years, if at all, to conquer the rubber
areas of the Far East, and that this
would give the United States plenty of
time to set up a synthetic industry The
program did not really get under way till
Pearl Harbor and Jones was held re-
sponsible for the delay. He endured the
blame, his friends say in magnanirnous
silence.
On most OF his appearances before
congressional committees, Jones has ex-
cited resentment by his habit Of Tending
off leading questions with wisecracks
Testitying some days ago before the
sympathetic Joint Economy Committee
of which Senator Harry F. Byrd OF Vir-
ginia is chairman, the Secretary for once
took down his hair. 1t was one Of his
most revealing pronouncements.'
He began by drawing a sharp line be-
tween two periods in the history of the
Reconstruction Finance Corp. The first
began with the creation of the pioneer
governmental corporation on January
%, 1882, under the administration of
President Hoover, and continued until
June, 1910, when the earliest RFC de-
fense subsidiaries were set up. The Sec
ond period started in June, 1910, and is
still in process.
Washes Hands of War.
In effect, Jones washed his hands OF
the war, which he evidently regarded as
an irritating and demented interlude,
sweeping overheard the orderly practices
of finance and leaving no certainty ex-
cept heavy cash losses, which can only
be guessed. His testimony breathed a
heartfelt nostalgia for the days Of nor
malcy, when a banker could exact safe
collateral borrow money at low rate
and relend it at a higher one, calculate
profit and loss with assurance, balance
his books and take command, under
natural law, of any enterprise In which
he invested funds.
The witness grew eloquent over the
peacetime glories of RFC. OF its orig
inal capital stock of O0,0O0,000, he said
SITS 100000 have been retired. Outside
of its defense and war agencies, the es-
tablishment has earned profit of $780,
100000, in addition to reserve OF $l25,-
100000
Referring to subsidiaries not directly
involved in the war, he related that the
Export Import Bank has operated at a
profit of $40 100000; that the losses on
$4,000, 900 of loans by the Disaster Loan
Corp. will be less than 10 per cent; that
the RFC Mortgage Co. has $97 1000, 900
in loans outstanding, with little lkeli-
hood of appreciable losses" and has
gained $1,70o,0o0 in net earnings; and
that the Federal National Mortgage
Association has earned Is millions over
and above operating expense and the
cost of borrowed money.
Prior to the war" he exclaimed, I'VE
handled IL or Is billions. We haven't
cost the taxpayer cents. If you think
you can make any better statement than
that, you just try it.
II have been in business probably so
years, and 1 do not believe there Is a
private corporation in the United States,
however big, that is any better managed
than RFC"
The statement continued that in the
era of peace Jones borrowed money from
the Treasury at per cent and re-loaned
it at 81. He added gloomily that the re-
lending rate to war agencies has fallen
to an average of per cent. He acknowl-
edged also that, in the absence of statu-
tory direction, RFC has never permitted
the General Accounting Office to audit
its books. The chief of this establish
ment is the controller general of the
United States.
Wallace Accuses Jones.
Wallace accused Jones and his subordi-
mates OF "hamstringing bureaucracy"
"backdoor complaining" delay of pro-
duction projects because of possible
dollar losses" and "exasperating rear
guard action by RFC officials who are
still fighting the war with peacetime
red tape, corporate technicalties and un-
necessary caution"
The oficial RFC complaint against
Wallace and his executive secretary,
Nilo Perkins, was that they were seeking
to uss tias war tor raising ths standard