Hail & Farewell

In the early days of the New Deal Jesse Holman Jones had to storm the stubborn walls of U. S. banking to get anyone to take money from his RFC. Bankers who really needed Government money were scared to take it because of the onus attached to RFC loans. Those in a sounder position could not find use even for the money they already had. Upshot was that Mr. Jones finally persuaded big super-solvent institutions to sell him notes or preferred stock as a patriotic gesture, thereby setting an example for smaller banks to follow. One of the first to do this was Chicago's First National, then headed by the late Melvin Alvah Traylor. Before he was through, RFChairman Jones injected $1,040,000,000 of Government capital into 6,057 U. S. banks and trust companies.

Last week Chicago's First National provided a potent illustration of the current reversal in this movement of RFC capital. First National announced that it would shortly buy back $15,000,000 in preferred stock now held by RFC, completing the retirement of the original block of $25,000,000 sold the Government in 1934. The bank retired the first $10,000,000 last December. To present shareholders First National will offer $10,000,000 in new stock, one new share at $200 for each five shares held, making up the difference with $5,000,000 from reserves.

Jesse Jones had previously announced that he welcomed such declarations of independence from RFC. Giving hail & farewell last week to First National's loan stock. Mr. Jones rumbled reminiscently: "As Melvin A. Traylor . . . very properly and aptly said, it was cheap insurance."

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