Evening star., 1951-03-15
The Political Mill
RFC Probe SpotIights
Whole Subject Of Loans
Federal Credit Restriction
Could Aid Inflution Curb
By Gould Lincoln

By Gould Lincoln
The drive to abolish the ReconStruc-
ton Finance Corp, in Congress, brings
into the spotlight the whole subject Of
Government loans and credit. In this
connection, it should be stated at the
start that the authority and money for
the huge lending programs all have been
approved by Congress. 1t was the 80th
Republican Congress which extended the
life Of the RFC for eight years in 1948.
This does not make these programs right,
but it nevertheless indicates that reasons
and arguments for the establishment of
the lending agencies have appealed to
the Congress and been acted upon.
Whether the country would be better off
without these agencies is the real ques-
ton at issue, aside from immediate
political advantage.
Take look at the picture as it stands
today, with Government lending agencies
in full flower. There are 81 Federal
corporations and nine other agencies
subject to business-type audits, many
of which are concerned with Govern
ment credit. The Governments invest
ment in Federal corporations now totals
mately 10 per cent of the Federal or
national debt. Among the Government
credit agencies outside of the RFC are
the Farm Credit Administration, the
Federal Crop Insurance Corp, the Hous-
ing and Home Finance Agency, the
Export-Import Bank, the REA and the
Farmers Home Administration.
Job of Providing Credit.
The administration has been urging
private lending institutions to restrict
credit as means of curbing imitation.
1t might be wiser to curtail Government
lending and let the private agencies take
over the job of providing credit. But
the administration is pressing for new
commitments, contained in the Presi-
dents budget, for these Federal lending
programs. to the tune of $13.3 billions
OF this more than $40 billions are for
housing and agriculture.
How the administration can hope to
accomplish much against imitation while
it continues to advocate these great Gov
ernment loans is a conundrum-but one
Of its moves has been to try to curtail
private credit-loanS by private banks,
etc.
How far Congress is really ready to 60
IN the way OF denying Government loans
ana credit is still question-but the
ODDS are against curtailing loans to
agriculture and for housing. However,
the RFC, which has been under fire for
weeks because of political favoritiSm and
the big fees collected by lawyers who
nave obtained loans for their clients
not to mention free fur coats Zone at
leaSt) and free hotel rooms in Florida.
Is an immediate and apparently vulner-
able target. Not because its loans have
oeen less sound or that as an agency 1t
mas cost the Government more than
other lending agencies, but because Of
the black eye it has taken in the open
through the public hearings of the Full
bright subcommittee of the Senate Bank
ing and Currency Committee.
Competition in Big Way,
The question arises, will the private
Lending agencies really fill the places
which the Government agencies now
occupy In the credit structure and econ.
omy OF the country? Nobody really
KNOWS. It's time some one inquired
INTO that angle Of the question. Gov
ernment housing programs have been
attacked by private business, to be sure,
But housing for the use of low-income
groups has been the prime reason for
government credits. Too much of the
private housing construction has been
Tor persons above the really low-in-
come families.
Every time the Government goes into
business-and it has gone into busi-
ness in big way-it goes into COM
petition with private buSiness-and the
excuse advanced is that only the Gov
ernment can or is willing to do the
business in question. The New Deal
erS, and later the Fair Dealers, have
oeen persistent advocates of putting
the Government into business activities.
1t was not long ago they were urging
tne government to get into the buSi-
ness OF providing more steel produc-
tlon. No one yet, however, has had
the temerlty to suggest the nationaliza-
tlon OF any industry in this country
except the railroads and waterpower.
Those are steps for the future, per-
haps.
When Government lends money it be-
gins to exert hold and power over
business. The progress of Government
control and operation of business has
not yet been OF major proportions. But
II there should come a great depres-
sion, the Government would be found
holding the bag and forced into the
operation of large businesses.
AT present there is no depression in
Slght-though ruinous imitation NAV
be around the corner The supporters
OF the abolition of the RFC say that
its loans should be liquidated and that
those functions which remain neces-
sary should be turned over to the Com
merce Department and other govern
mental agencies. What they really
mean is that there should be no more
direct loans of money to business made
by the Government. at a time when
the banks have plenty of money to
loan. The RFC, however, has been
useful, in recent years too, to private
corporations-and how-some of them
operated. and owned by loud critics Of
Government in business.