BANKS: Hold The Line

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N. C. C. To check bank failures President Hoover last October sponsored National Credit Corp., chairmanned by Manhattan's Mortimer Buckner. N. C. C. was to have a capital of $450,000,000, subscribed by 4,200 banks. Of this amount N. C. C. called for only $135,000,000, borrowing another $23,000,000 from New York banks. Its loans, real or promised totaled $188,000,000 to 1,210 wobbly banks. After the Government began bank-saving directly (see below), N. C. C. was gradually liquidated as a relief agency. Last week it owed subscribing banks only $56,000,000.

R. F. C. Up to last week Reconstruction Finance Corp., a government bulwark against Deflation, had lent $455,478,693 to hard-pressed railroads, banks and other borrowers. Approved last week was R. F. C.'s largest rail loan—$27,500,000 to the Pennsylvania to carry out the electrification of its line between New York and Washington.

So far R. F. C. has been entirely financed by the Government. The Treasury has subscribed the maximum amount —$500,000,000—to R. F. C.'s capital. In addition it has bought R. F. C.'s only offering of debentures—$250,000,000.

R. F. C.'s two principal achievements up to last week were: 1) a marked reduction in the number of bank failures; 2) railroads saved from bankruptcy. Last October bank failures reached an all-time high of 522. During April they had been brought down to 68 while the first week in May showed only eleven. No Class I carrier has gone into receivership since the Wabash on Dec. 1, 1931, 63 days before the R. F. C. went into action.

As R. F. C.'s chairman, Mr. Meyer gives almost as much time to its affairs as he does to the Federal Reserve. Each day at 2:30 p. m. the R. F. C. board meets in its big bare room in the old Department of Commerce building to pass on loan applications. Amid a haze of tobacco smoke members carefully ponder each request, regardless of size. A $6,000 loan has been known to require 30 minutes discussion whereas one for $1,000,000 has gone through in five.

R. C. C When the Interstate Commerce Commission allowed the railroads to raise freight rates (TIME, Jan. 11), the proceeds from the increase went into a pool known as Railroad Credit Corp. From R. C. C. roads not in bankruptcy could borrow to meet their fixed charges. Last week Edward Grant Buckland, R. C. C. president and board chairman of the New York, New Haven & Hartford, announced that R. C. C. could care for all interest charges until July 1. What would happen thereafter no one knew. R. C. C. originally estimated an income of $100,000,000 and an outgo of $60,000,000. Last week Mr. Buckland revealed that these figures were now reversed.