Liquidation Sale?

Virginia's Senator Harry Byrd beamed with joy at the prospect of a victory he once thought he might never live to see. Democrat Byrd has long waged unremitting war against the Reconstruction Finance Corp., the huge Government lending agency set up by Herbert Hoover in 1932 as a depression emergency measure and expanded in function and influence during the New and Fair Deals. For years Byrd's fight was a solitary one. Last week, however, Harry Byrd was sublimely confident that the 83rd Congress would ultimately pass his newly introduced bill to wipe out RFC as of next Dec. 31, neatly nipping in the bud any move to extend the agency's life beyond June 1954, when its lending authority expires.

Taxpayer's Blessing. Byrd's confidence seemed well grounded. Treasury Secretary George Humphrey, believes that RFC has long outlived its usefulness. Missouri's freshman Democratic Senator, Stuart Symington, the man who put RFC back on its feet after the mink coat and Lustron scandals of 1951 (TIME, Feb. 12, 1951 et seq.), is not expected to come to the agency's defense. Even enthusiastic RFC backers might go along in the liquidation if some other agency e.g., the Federal Reserve, were to take over the RFC function of small-business loans.

RFC's disappearance, as envisioned by Byrd, will be a boon to the taxpayer. Its huge security and mortgage holdings would be put up for sale by the Treasury. The proceeds, Byrd estimates, would amount to $700 million, and if his bill becomes law, they will be used "exclusively for reduction of the public debt."

Speculative Eying. Harry Byrd's soundings on RFC convinced him that the Eisenhower Administration might well carry out a general program to liquidate some of the 21 other Government corporations, and to render some of their fat back into the Treasury. Last week Commerce Secretary Sinclair Weeks put up for sale the Government-owned Inland Waterways Corp., which operates barge lines on the Missouri, Illinois, Mississippi and Warrior Rivers. (Inland Waterways, which has net assets of $14.4 million, has been put on the market before, but no prospective buyer has ever made an offer which the Government considered acceptable.) Meanwhile, both Congress and the Administration were speculatively eying several bigger Government corporations which could probably sell part of their holdings to private interests. Likely candidates: the Export-Import Bank, which has nearly $2.5 billion in outstanding loans, and the Federal National Mortgage Association ("Fannymae"), which holds about $2 billion in mortgages.

An all-out effort along these lines, Senate Banking Committee staffers estimated last week, might add about $1 billion to the Treasury in fiscal 1954. Harry Byrd thinks this is conservative, and expects that assets amounting to several billion dollars will be liquidated in the next few years. Among the Government's financial watchdogs, the staff of the General Accounting Office, there is heady talk that liquidations combined with reduced federal expenditures might even produce a balanced cash budget in fiscal 1954.

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