R. F. C. To Work

Last week President Hoover made his fourth and last appointment to the directorate of his Reconstruction Finance Corp. By law his choice had to be a Democrat, by preference a Westerner. Appointee was Judge Wilson McCarthy of Salt Lake City, who had the backing of Utah's Democratic Senator King and Republican Senator Smoot. Cattleman, banker, lawyer, Director McCarthy was a delegate to the Democratic National Convention where he boosted the Brown Derby.

Confirmed by the Senate were the appointments of Charles Gates Dawes to be president of R. F. C. and Jesse Holman Jones and Harvey Crowley Couch to be directors (TIME, Feb. 1). A new Senate rule stipulating that no Presidential appointee may be sworn in until two executive sessions of the Senate have taken place after his confirmation, was waived. President Dawes and his board rolled up their sleeves and started to work. Applications to share the $2,000,000,000 credit fund, with which the Administration hopes to check the downward spiral of deflation, poured into the Treasury offices. There they were sifted by a clerical staff, prepared for study by the R. F. C. directorate, which hoped to make the first loan from new offices in the old Department of Commerce Building by the end of this week.

Conspicuously first-in-line for a Federal loan was Wabash Railway, ineligible for help from the railroad credit pool as it went into receivership before the pool was established. Wabash had $5,000,000 worth of securities. On this collateral it wished to borrow $18,500,000. Though R. F. C. ruled that no application or loan shall be made public, the Wabash plea became known through the Federal court handling its receivership.

When word came that R. F. C. was really ready to function, Board Chairman George M. Reynolds of National Credit Corp., privately financed at President Hoover's instigation last October to advance up to $500,000,000 to shaky banks, announced from Chicago that his agency would gradually cease operations when R. F. C. got into its full stride. Since its incorporation, said he, the pool had made 750 different loans totalling $153,000,000.* Of the 575 borrowing banks, 17 have failed; no one could say how perilously close to failure had been the other 558 banks which N. C. C. had helped.

Banks which ask N. C. C. for renewals of their loans will be advised to apply to R. F. C. Chairman Reynolds indicated that N. C. C. would need from six months to a year to wind up its work.

*In reporting how the Mayor of Urbana, Ill., as anxious to help banks as N. C. C., closed down all unnecessary business until fear of panic had subsided, TIME fortnight ago erroneously stated that First National Bank of Urbana had failed. The bank closed only in accordance with the Mayor's order, is now open as usual for business.

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