Evening star. [volume] (Washington, D.C.) 1854-1972, 1951-03-11

depression. It did an important
brink of ruin. 1t was giant in the
days of World War 1.-THE Gov
ernment's agency for building up
a synthetic rubber industry, for
adding to the aluminium produc-
tive capacity of the Nation. and
for other important and necessary
activities. 1t has continued its
lending operations since the close
of that war-and it may become
again a big wheel in the national
defense program.
A demand for the abolition of
the RFC has come from -Repub-
lican Senator KEN of Missouri.
Jesse Jones, former head of the
great agency, has indicated he
thinks it is no longer necessary.
Some of those who support the
idea of it's elimination say that
the banks of the country are bulg-
ling with money; that borrowers
for legitimate business purposes
can get all the money they need;
that all the borrowers have to do
is convince the bankers that they
are good risks.
Elimination Unlikely
It seems quite clear that some
| thing must be done about the
RFC. It's elimination, however, does
not appear to be in the cards. In
deed, Senator Fulbright, Arkansas
Democrat and chairman of a Sen
ate Banking and Currency sub
committee investigating the RFC,
says fatty he will oppose move
to abolish the agency. He favors
reorganization, and he and his
subcommittee have already recon-
mended the present system of adj
Enthusiastically a five-man board
of directors-be replaced by a sin
gle headed administration. In
addition President Truman has
sent to Congress a reorganization
plan which follows pretty closely
the recommendation of the Senate
subcommittee for an administra-
TORN place of the present board.
If not vetoed by either house of
Congress. the Presidents reorgani-
zation plan will go into effect
and the board of directors, about
whose heads the charges of favor
itism have shuttled, will pass out
of official existence.
Senator Fulbright admits that
the practice Of having the Govern
ment make direct loans of money
in peacetime, when production
and employment are high-may
not be advisable. He says that per.
thaps system Of Government "in.
surance" for loans may be better
1 The argument is made by sup.
porters of the RFC that despite
the ability of the banks to make
loans, the abolition of the big
lending agency would work a great
hardship particularly on small
businesses and small businessmen.
The bankers, whose institutions
are fat with depositors' money,
ind it eaSier-and always safe
to invest in Government securities,
even though the rate of interest
is low.
The Reconstruction Finance
Corps life was extended by Con-
gress in May, 1948, for a period
OF eight years. with authority to
continue making loans for six of
those years. This means that un-
less in the interim Congress acts
either to continue the corporation
or to abolish it, it will live until
May rs. 1856, and may make loans
until May, 1854.
The latest turn in RFC discus
sion is political. The Republicans
in Congress have seized upon
the investigation and it's revela-
lions as an issue against the Tru-
man administration and against
President Truman's official family.
There are indications the G. o. P.
members may oppose reorganiza-
ton Of the agency, if only to keep
alive the whole issue.
A survey of the big lending
agency is timely. It's huge bust
ness and ramif1cations lend color
to the idea that its abolition would
create a chaotic condition and
leave a vacuum difficult to fill.
Here Is a going institution, too,
which could again prove of great
value in the event of another war.
and if it were abolished another
agency might have to be organized
from the ground up.
The borrowing authority of the
RFC-that is the amount of
money the agency may borrow
from the United States Treasury
for the purpose of making RFC
loans-on January 81, 1851, to-
tailed $1,243, 100000. To put it
another way, the RFC may make
loans and commitments not to
exceed that figure. The present
outstanding loans and commit
ments total 1856, 945, 900 on jan
uary 81, 1851. This left $685.
055,Q00 still available for loans
and commitments as of that date.
There were pending applications
for a total of 500 million-for all
types of loans-at the close of
January.
Approach Billion Mark
To complete the picture, how
ever, it is necessary to take into
account 1892, 1851 900 of loans and
commitments made prior to the
act of June 80. 1947, which ex-
tended the life of the corporation.
OF that amount approximately
$519 million has been disbursed.
Also, the disbursements against
the 81 ,243 100000 limitation placed
in the present act, are approx