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Show Mi PIS TO USE THE GHENT IF THENATION Recommends Legislation m Forming Half Billion Dollar Dol-lar Government Corporation Corpora-tion to Handle Securities. WASHINGTON", Jan. 28. Creation of what would be virtually a government pool of all corporate financing for the period of the war, was recommended to congress today by Secretary HcAdoo, who asked the formation of a half billion dollar government corporation. In effect, the plan would give broad power3 to the corporation, to dictate Into what channels the nation's available credit should be directed! The system would be similar to that maintained by Germany, and much more centralized than the British system, which relies more on voluntary co-operation of financiers in aiding the enterprises approved ap-proved by the treasury. Railroad financing would not be included, in-cluded, as this is to be managed by the railroad administration. Period of Five Years. Host loans would be for a period of five years or less, and would be made only to the corporations or enterprises which could not get new capital through regular banking channels. Interest rates would be determined by the corporation. Advances to savings banks would be for ninety days, and loans direct to war industries in-dustries would be made only in exceptional excep-tional circumstances, most financial transactions trans-actions being sent through banking channels. chan-nels. The corporation would have a life of ten years, hut would be compelled to start liquidation of its affairs within six months after the end of the war. If the legislation is enacted, the machinery ma-chinery created would Replace the federal fed-eral reserve board's newly created capital capi-tal issues committee, which is about to start a system of passing on proposed capital -issues,- based on voluntary cooperation co-operation of banks and business enterprises. enter-prises. Reserve Board Way Act. Since Secretary McAdoo's draft of the legislation specifies that members of the federal reserve board or directors of federal fed-eral reserve banks could be appointed directors di-rectors of the corporation, it is understood under-stood the plan contemplates enlisting the board in the administration of the corporation. cor-poration. Headquarters would be maintained main-tained in Washington, but branches might be established in other cities. Two of the Tour directors would be named to serve two years each, and the other two four years,' which thereafter would be the regular term of office. Their salaries would be determined by the secretary of the treasury. In addition to the usual ordinary commercial com-mercial powers of a corporation, the government gov-ernment body, under the bill,- would have cerla in defined powers to make loans and advances. Most of these would be to banks which have financed enterprises enter-prises "necessary or contributory to the prosecution of the war." The government govern-ment advances in such cases could not bo more titan 75 per cent of the face or market value of the industrial obligations, obliga-tions, or 100 per cent if 2H per cent additional addi-tional collateral acceptable to the corporation' cor-poration' were offered. Loans to Savings Banks. For the ninety-day loans to savings banks, securities amounting to 125 per cent of the loan would be required, and the interest rate would be at least 1 per cent more than the federad reserve board', discount rate on ninety-day com-nitrcifil com-nitrcifil paper. The savings bank feature fea-ture is considered of great importance, in view of the shrinking market value of rnanv securities held by such institution. institu-tion. The notes or bonds to be issued by the corporation would have much the same value as regular government certificates or bonds, as collateral for commercial paper acceptable by federal reserve banks. They would carry the same tax exemptions exemp-tions as treasury certificates or liberty bonds. Penalty for violation of any provisions of the -measure would be a fine of not more than $.tCuO, or. in the case of individuals, indi-viduals, not more than four years' imprisonment, im-prisonment, or the fine or both. If the legislation should be enacted, the corporation might absorb the existing 100,000,000 fund for guarantee of federal f ram loan bonds. |