Private RFC

Where will business find the billions of dollars needed for postwar expansion? Will private capital flood forth to finance new ventures and help small business grow? Or must business go hat-in-hand to the Government for money? Last week grey, energetic Herbert Frank Boettler, 53, and rotund, easygoing John Wesley Snyder, 47, both vice presidents of the venerable First National Bank in St. Louis, thought they had some answers to these questions. Their suggestion: that a titanic National Industrial Credit Corp. be formed to pump risk credit into business. Labor, business, banks, insurance companies, railroads and private citizens would be invited to subscribe at least $500 million of N.I.C.C. capital. Government money would be spurned.

This private RFC would bridge the gap in the supply of available credit to small business by doing what banks and insurance companies cannot do, and what Boettler & Snyder fear investors may be unwilling to do. N.I.C.C. would:

P:Invest in common and preferred stocks in new corporations, or in small firms needing additional funds.

P:Make short-or long-term loans to corporations or individuals on their notes, debentures or bonds.

P:Guarantee, in special cases, all or part of the obligations of its clients.

P:Limit its operations to a period of 15 years, with an added ten years for orderly liquidation.

The mock-up model looked good, although numerous important details were still lacking. But would it work? Before banks and insurance companies could participate in any such risk venture, Federal and State laws would need some drastic revision. Tax laws applying to N.I.C.C. would also have to be revised. If N.I.C.C.'s profits on successful loans are taxed unmercifully, it could not build up reserves to cover the inevitable losses incurred on businesses that flop.

Messrs. Boettler & Snyder sat back to hear the reaction to their proposal.

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