The Producers News

Billion
Dollars
to
be Given Big Banks
R.F.C.
WILL
DOLE OUT BILLION TO RICH BANK-
ERS
WHILE NEW DEAL REFUSES RELIEF
TO WORKING PEOPLE
Washington, Aug. 1.-One billion dollars more is go-
ing to be handed to the bankers by the Roosevelt admini-
stration as one of the major relief steps in the new deal
program. This is going to be done through the purchase
by the Reconstruction Finance Corp. of the preferred stock
of these banks.
Up to now the chief means for handing out millions to
the banks has been to lend it to them on their notes. Now
the R. F. C. will lend up to $50,000,000 to any one bank
through the purchase of preferred stock from them.
This plan was made public
tonight over a coast-to-coast
radio hookup by Jesse H.
Jones, Roosevelt - appointed
chairman of the R. F. C.
Roosevelt in a letter to Jones
"heartily endorsed" all that the
latter had to say about "the need
for credit and about cooperation in
the general scheme of everybody
back to work' ". 'This billion is to
be handed to the bankers under
the excuse that it is aiding "re-
covery." Actually it is nothing of
the sort, only a means to hand
relief to the bankers without mak-
ing them responsible for it even
to the extent of signing notes for
the money.
BAITING THE HOOK
In order to make the working
people swallow this kind of relief
the Roosevelt administration has
provided that the banks should
pay five per cent interest on the
preferred stock. The banks are.
however, allowed to decide if they
can pay the five per cent. It is
to be paid out of "net earnings"
only. The Banks can deduct suf-
ficient funds in the way of "re-
serves ... to provide reasonably
for losses, depreciations, etc." so
that there will be no net earnings.
If the banks can show that there
are insufficient "net earnings" the
dividends payable to the govern-
ment are just "accumulated."
STRENGTHENING BANKERS
MORALE
The Roosevelt
administration
gives as another reason for this
billion dollar relief to big bank-
ers the necessity for "strength-
ening their morale."
This measure is being carried
through to save the big banks and
their profits. Not one thing has
been done to pay the deposits of
the small depositors who lost their
few dollars when Roosevelt closed
the banks during the bank holiday
in March. The small banks have
been cleaned out in order to save
the big ones Now that the big
ones are shaking a billion dollars
is to be given to keep them going.