Subsection World

Buried almost out of sight in a subsection of a proposed bill which RFC Chairman Jesse Jones sent to the Senate last week, was a whole new world of Government money lending. The rest of the bill was largely concerned with details of RFC loans to banks, railroads, insurance companies, mortgage companies and similar institutions. The notable subsection, however, would authorize RFC to lend directly to private industry & commerce.

Any business could get RFC funds "for the purpose of furnishing working capital, reducing and refinancing existing indebtedness or making plant improvements or replacements." Such loans would be limited to companies employing ten or more men. The RFC is already the biggest public bank in the land; if the Jones subsection is enacted, the RFC may well become the only bank in the land.

Hot on the heels of Jesse Jones's bill came another bill which the Administration has been working on for weeks: to lend money directly to business without making the U. S. Government a full-fledged banker. It would set up twelve intermediate credit banks one in each Federal Reserve District, operating under Federal Reserve charters and authorized to discount or purchase long-term obligations issued by businesses to procure working capital. Banks and other institutions which sell such securities to the Intermediate Credit Banks would have to bear at least 20% of the losses if any.

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