Finish for RFC

In Washington last week, Senate and House conferees agreed on the death warrant of the biggest business the world has ever known: the Reconstruction Finance Corp. They completed a bill, still to be approved by Congress and the President, which would end RFC's lending powers in 60 days and dissolve the giant Government corporation within a year. In its place a new Small Business Administration would be set up with lending authority of $275 million (v. RFC's $1.4 billion) and power to make individual loans not exceeding $150,000 to small companies unable to raise private credit.

In recent years, RFC has been so heavily criticized for bad loans and influence peddlers that there were few tears, even among bureaucrats, at its prospective death. Furthermore, with the economy booming and money plentiful, there was no further need for it. But in its prime, RFC helped write some of the most important chapters in U.S. economic history. Set up by Herbert Hoover in 1932, RFC handled about $50 billion in funds, by the reckoning of its longtime (1932-45) mentor, Texas Banker Jesse Jones. Started with a capital of $500 million borrowed from the Treasury, it has since paid off $400 million of that amount, in addition has earned a net of $630 million from 643,000 loans totaling $17.8 billion. Items:

P:During the Depression, it lent and invested $4.8 billion in 26,663 banks and other financial institutions to keep them from going under, lent another $1.2 billion to railroads.

P:Some $2.7 billion in RFC money helped finance relief and thousands of public-works projects, including San Francisco's Bay Bridge ($73 million), the power line from Hoover Dam to Los Angeles ($23 million), and New York's Jones Beach State Park ($5,000,000).

P:RFC set up a host of Government agencies which have since gone their own ways, including: the Federal National Mortgage Association ("Fannie Mae"); Commodity Credit Corp., through which RFC lent $1.5 billion to farmers during the Depression; the Export-Import Bank; the Rural Electrification Administration.

P:During World War II, RFC invested and lent more than $9 billion to build 2,000 war plants, including a synthetic rubber industry, the Geneva steel plant in Utah, the Willow Run bomber plant, the Big Inch and Little Inch pipelines. It spent another $2 billion on raw materials to keep them out of Axis hands, spent $2.8 billion stockpiling strategic metals and minerals.

Liquidating RFC's $1.6 billion assets will be no easy job. RFC's rubber plants will be sold to private industry in the next year or two (TIME, April 27); its tin smelter and other properties will be transferred to other Government agencies. But with $832 million still outstanding in RFC loans that run as long as 30 years, the effects of the old Government agency will take a long time to fade away.

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