Limited Loans

The Board of Education sent a telegram to RFC. The Chamber of Commerce wrote a letter. The City Council and the Rotary Club adopted resolutions. At least five other organizations pleaded by telegraph and mail. Thus last week did Toledo get behind a move to push through a $2,000,000 loan from the RFC to Willys-Overland Co.

Before it fell upon evil days in February 1933 Willys-Overland employed 25,000 workers, was one of Toledo's biggest companies. Since John North Willys and later President David Wilson were appointed receivers, it has employed some 3,000 who are now finishing up production of 7,500 units authorized by the court. Willys-Overland's plight, far from hopeless, is partly due to a deficiency of working capital. Receiver Davis last week declared that unless new capital were forthcoming, the plant would have to shut down. "A calamity!" shrieked the Chamber of Commerce. Its point: Would not the Federal Government rather lend money now to keep Willys-Overland payrolls going than spend it later for relief payments in Toledo?

In Washington, where Ohio's Senators Fess and Bulkley called at RFC headquarters to put in a good word for a state industry, RFC Chairman Jesse Jones seemed sympathetic. Willys-Overland had applied for its loan a month before, not directly, but through a mortgage association. Thus the application did not technically come under the Direct Loans to Industry bill which President Roosevelt signed last week and which limits to $500,000 the amount of money RFC may loan to one company.

Meanwhile, Chairman Jesse Jones announced a set of regulations to govern RFC loans to industry under the new law, which authorizes total RFC loans of $300,000,000, Federal Reserve Bank loans of $280,000,000. The law stipulates that adequate security must be put up, that no loans may be made to a company if it can borrow from commercial banks. Chair-man Jones's regulations were even more stringent: 1) Loans will be made primarily to supply working capital as opposed to fixed capital, but may not be used for large scale expansion or to finance exports or imports. 2) As long as any part of a loan is outstanding, the borrowing company may not pay dividends, salaries or bonuses which the RFC considers unreasonable. 3) The borrower must agree not to spend any of his loan on machinery, equipment or services supplied by a firm which does not pledge allegiance to the NRA.

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