BANKING FUNCTIONS

Northern Advocate, 19 March 1934, Page 5

BANKING FUNCTIONS

CREDIT FOR BUSINESS AMERICAN CONTROVERSY. CORPORATION AND RESERVE BOARD. (United Press Association—By Electric Telegraph.—Copyright.) (Received 9 a.m.) WASHINGTON, March 17. The Reconstruction Finance Corporation, is seeking power from Congross to perform complete banking functions.' President Roosevelt has long held that the private banks are

not adequately mooting the demand of business for credit, and is. prepared to put the Government agency directly in competition with them by allowing it to grant loans to industries and indivinduals.

A bill was sent to Congress today, which, if passed, will put the Government into the banking business on an unprecedented scale. Loans will be made to concerns which employ a minimum of ten persons. These loans will have maturity not exceeding five years, and will be contingent upon increased employment of labour.

The concerns will bo allowed to build up t heir reserves before repaying their 'indebtedness. The measure is designed also to meet “every legitimate credit requirement of , large and small industrial and commercial concerns,” '

Later in the day rather an anomalous situation developed when : it was revealed that the Federal Reserve Board is strongly opposed to the corporation’s measure, which was drawn up by tho latter’s chairman, Mr Jesse IT. Jones. The board has forwarded to Congress a measure of its own, which provides for an industrial immediate credit bank in' each Federal Reserve district, with a total of 300,000,000 dollars to "be provided by ah appropriation, by Congress. The proposal is that these credit banks should be empowered to make loans either direct to industry or through commercial banks, for five years. Critics of the corporation’s, plan point out that, whereas the corporation is an integral part of the Government, the now system of banks should be supervised by the semi-independent and “bank-minded” Federal Reserve Board.

A mysterious touch was given to the whole matter when Mr Roosevelt informed press correspondents he knew nothing about the measures. It is felt that a quarrel is brewing between the corporation and the Reserve Board, and that the Secretary of the Treasury, Air Henry Morgenthan, is supporting the latter.