Evening star., 1951-02-15
RFC Reorganization Plans Face
Trouble in Divided Senate
By Robert K. Welsh

= ~S ~ =
By Robert K. Welsh
President Truman's belief that
Congress leans toward his ideas
for reorganizing the Reconstruc-
tion Finance Corp. has met trou-
BILE in the Senate, but Senators
themselves differ widely on what
to do about RFC.
The long-standing issue has be-
come entangled in dispute over
Presidential nominations Of the
agency's top command. The fate
of RFC will be key question at
Senate Banking Subcommittee
hearings next week on how to
strengthen the agency's resistance
against outside pressure.
A subcommittee investigator
meanwhile is preparing a report
on information he gathered in
Miami Beach recently about the
Saxony Hotel and its operator,
George D. Sax of Chicago, Sub
committee Chairman Fulbright
disclosed today.
Reforms Proposed.
Senator Fulbright announced
earlier that among the several
RFC loans to be considered at the
hearings next week will be the $1.5
million given for construction of
that hotel. He said the subcom-
mittee wants to determine also
whether Mr.. Sax, wealthy
punchboard manufacturer, is an
associate of big time gamblers.
The reforms urged for RFC are
abolition of the corporation, re-
placement of the five-member
board of directors by single
governor, transfer of the agency
to the Commerce Department on
Treasury, tighter curbs on its
money lending and stricter safe
guards for administrative inde-
pendence.
Senator Fulbright. sponsor of a
bill for the single RFC ad-
ministrator, has left the door
open for possible compromise
with any reorganization plan
the President might suggest.
He and Chairman Maybank of the
full committee nevertheless. oppose
putting RFC under the Commerce
Department.
The Presidents pending propos-
al, he indicated. will be similar to
one he submitted year ago. That
would have sent RFC to the Com
merce Department and provided
for single administrator. The
Senate killed the measure, after
Senator Fulbright and others de-
clared it would tend to "cover up"
and RFC abuses or inefflciency.
Speculation Aroused.
Mr.. Truman's comment last
week that the committee appar-
emily is coming around to his
views on RFC reorganization
raised further question today
whether his pending plan would
do away with the board of di-
rectors. Only last Monday, the
President again asked the Senate
to confirm the five present di-
rectors
Senator Fulbright's resolution,
however, will not have clear sail
ling either in the subcommitte or
the Senate. Senator Capehart,
Republican of Indiana, has been
caustic in criticism of alleged in
fluence and favoritism in RFC but
he believes the RFC board should
be strengthened instead of abol-
ished.
Senator Maybank also favors
keeping the board of directors
system. He is preparing a bill
with a lot of safeguards. One
provision would ban approval Of
loans except by a majority vote
of the board.
Although the Senate Banking
Committee has shown little senti-
ment for abolishing RFC itself,
some influential Senators-includ-
ing Senator Taft, Republican, of
IOhio-are on record in favor of
such move. Senator Taft more
than year ago advised Congress
to start thinking not only about
ending RFC but also about getting
out of the lending business.
She and Maj. Gen. Lewis B.
Hershey, Selective Service director,
have been discussing methods with
Army officials for several weeks.
Inductees are required to make
grade of at least 10 in the armed
forces qualification test - which
measures literacy and capacity to
learn-and officials claim that at
least 81 per cent of the adult
population could make that score.
The 26-month provision, in
cluding furloughs, was adopted on
an amendment from Senator
Byrd, Democrat. of Virginia. In
effect, it would provide the same
thing as the subcommittee pro-
posal of "a months service, ex-
cluding furloughs.
Out in Two Years. ..s
Senator johnson explained that
intent of the 24-month wording
is to allow men to get out of uni
form at the end of two years, If
they do not use any leave time.
With the 26-month provision ap-
proved, he said, they still will be
ahJe tn do IT. if thew forco- 1eaves,