 It's time for the Laun Jean Chronoscope, a television journal of the important issues of the hour, brought to you every Monday, Wednesday and Friday. A presentation of the Laun Jean Wittner Watch Company, maker of Laun Jean, the world's most honored watch, and Wittner, distinguished companion to the world-honored Laun Jean. Good evening. This is Frank Knight. May I introduce our co-editors for this edition of the Laun Jean Chronoscope. Mr. William Bradford Huey, editor of the American Mercury, and Mr. Donald I. Rogers, an editor of the New York Herald Tribune. Our distinguished guest for this evening is Mr. Harry A. McDonald, chairman of the Reconstruction Finance Corporation. The opinions expressed are necessarily those of the speakers. Mr. McDonald, you, of course, are one of the world's biggest bankers as head of the Reconstruction Finance Corporation. Our viewers are always interested in how to borrow money, and tonight, why, if we'd like for you to tell us something about the RFC, which I believe is now about 20 years old. Now, sir, as a first question, why is the United States government in the business of lending money? Why is the government of the United States in the business of loaning money? Yes, sir. I think that has a very simple answer, because there's a need for it. All right. Now, the RFC was founded in 1932, I believe, and Mr. Hoover's administration. That's correct, isn't it? That is true. Now, what was its reason for being when it was founded? At the time, the RFC was first initiated and created. It was a stock-gap piece of legislation designed to take effect and aid in a faltering economy. Well, did it do that job of helping this country over the Depression? Oh, I think it did, very definitely. And then during the Second War, what was its function then? Well, of course, during the Second War, perhaps no other government agency received as many extraordinary duties as did the RFC. The President threw everything that couldn't otherwise be put somewhere into the RFC. Building defense plants and assuring supplies of short materials and that sort of thing. Quite definitely. And credit and all that sort of thing. So you're saying that during the Depression, you lent millions of dollars sustaining American business and helping us through the Depression. Then during the War, you aided the government with defense plants and so forth. Now today, what is the principal justification for the RFC? Well, it seems to me in the type of economy we have today where small businesses put to a greater strain, perhaps credit-wise than ever before, and where other, what do I say, calls upon business beyond the normal credit give of the banking institutions. I say that's where the RFC comes in. You do many things, but essentially today, you would point to the fact that you make a lot of loans to small businesses perhaps the most valuable contribution to the country now. I think if there were ever any time in our country's history when this thing called free enterprise, which is largely when finally analyzed called small business, if there was ever a time when small business needed help credit-wise, it needs it today. In other words, sir, you replace or supplant the banking industry in the local communities. I don't think we do. I think that the banking institutions and banking credit in a local community is just as necessary if not more so than ever was. Then why do not these small businesses get their loans from the local banks? That's quite a question. Small business can always be taken care of by the local banks first because of credit restrictions upon the banks themselves or loaning restrictions, and second because perhaps the credit of the institution requiring the loan or applying for the loan wouldn't exactly satisfy the bank. In other words, sir, you take over what a bank would consider a bad risk. Well, you can call it a bad risk if you like. We don't give credit to institutions where they can receive credit from any other institution. In other words, we only give credit where banking credit is not available. So that's so you won't compete with the banks. That's true. And may I make that clear so that there be no misunderstanding? In other words, we many times participate with the local bank and extending credit to a local to an institution or to an applicant. And do banks refer the applicants to you? Oh, quite definitely. Now what would be the procedure for a small businessman to get a loan from the RFC? Well, just as simple as he can make it if he hasn't credit available to him through his local bank. And if he is in need of credit, if it's a local institution employing local people and for a good public purpose, credit being refused, otherwise he applies the RFC. Do you finance new ideas or schemes or do you have to finance going businesses? Well, Mr. Rogers, I'm glad you asked that question because that's so often put up to us and that's so often advanced as an argument against the RFC. We don't finance pet schemes and pet theories. We finance going businesses. Do you make the businesses put up capital to back their loan or do they have to have collateral of any type? Well, you're assuming when you say we make the businesses put up, we don't finance new businesses as such. If an old business is in need of a financial loan, certainly we make them put up collateral if collateral is available. Now, Mr. McDonnell, you say that the RFC over its period of 20 years has rendered a variety of valuable services to the American people now. This, of course, is a bureau and you are a bureaucrat. Now, what does all of this service cost the American taxpayers? Mr. Huey, I salute your expression of bureaucrat. That's perhaps a general term applied. I happen to be a businessman of long standing and I'm in serving my government now as best I can. You asked the question of what does this cost our government to render this service to the American people, namely what does the RFC cost? Yes. Up to date, it hasn't cost them anything. They made a profit. You mean the American people over 20 years have had this advantage from the government and it's a profitable enterprise for us? I mean just that. Do you pay your salaries of something like 3,000 people who work for you? Do you pay them out of profits or are they paid out of general appropriations? Well, Mr. Huey, I can explain that in a very few words. I think since the inception of the RFC, which goes back to the Hoover administration of 1932, when the government created the RFC with a structure, a corporate structure of $100 million, with giving, of course, to a loaning capacity, the RFC has returned in the form of profits from the RFC activities alone. I think to a break-off period of March the 31st of 52, some 622 millions of dollars out of which has been paid back to the Treasury over half of it, the other half being retained in the corporation for working capital. You mean that this is an enterprise that the American people make money off of? We get these benefits and we still make money and it doesn't cost us anything. If you put it that way, that's exactly true. That's after all expenses of salaries, charge-offs, bad loans, losses, and everything that's after all expenses. Well, the RFC has been distinguished more recently, not for its profitable operations service, but for, shall we call it, Skull Duggery. There has been evidence presented in Congress of graft and influence in the RFC, which was before your administration. Now, has that been cleaned up? Well, Mr. Rogers, of course, that's a very easy question to answer. I can answer with one very short word, and that is yes. Well, could a Senator call you now and ask for some influence, say a friend of mine, Don Rogers in New York, once alone, and I'd like to have it go through. Could he call me and ask it to go through? He could call and ask perhaps, but if he were to insist, that would be something different. I haven't yet experienced that thrill of having a Senator insist and let alone go through. You get a lot of telephone calls from members of Congress, I assume. I think that as long as there's a Congress, there'll always be constituents, and there'll always be an honest interest in constituents. And I can't blame any congressman or any Senator for taking an honest interest in his constituent, but so long as he keeps it on that basis. What about from the White House? Do you occasionally get a call from some of the people over there? I'm very happy to tell you that the President, when he asked me to take this, I was going to say, honorous situation. He told me, he said, you will run that and I don't want anything to do with it. And that's it. So you're assuring our viewers that the Mink Coat Era at the RFC has come to an end? I don't know anything about a Mink Coat Era. I just know that at the present time, it's a clean business. Well, when the RFC was established, sir, it was more or less on an experimental basis. We have gone through two or three very serious periods in our economic history, which made it necessary for RFC to be in existence. Is the experiment over? Is the RFC going to last? Is it going to be in business from here on in? I would say this, and I'm asked that question so often. In fact, everywhere I go, when will the RFC cease to be an entity? When will it cease to be? I think, and this is not a partisan question at all. This is a common-sense question reasoned out by virtue of the economy in which we exist. The RFC can serve a purpose in our economy so long as it's well-administered. Well, thank you very much, Mr. McDonald. After all, the unfavorable publicity and misunderstanding, it's good to have the policies and programs of the RFC clarified for us. Thank you, Mr. Reddy. The editorial board for this edition of the Long Gene Chronoscope was Mr. William Bradford Huey and Mr. Donald I. Rogers. Our distinguished guest was Mr. Harry A. McDonald, Chairman of the Reconstruction Finance Corporation. Are you contemplating the purchase of a fine watch? Then may I give you some very sound advice. There's only one place to buy a fine watch. Your jeweler, because only a fine jeweler is qualified by experience to handle fine watches properly. Only a jeweler has the facilities to assure you permanent satisfaction from your investment. That is the reason why, since the inception of this company, Long Gene watches have always been distributed exclusively through fine jewelers, the Long Gene with nor authorized jeweler agencies. Now, let me show you a few of the hundreds of styles of Long Gene watches available at these jewelers. Each watch reflects some 86 years of fine watchmaking experience. Of each one you can say, this is the world's most honored watch, Long Gene, the only watch in history to win 10 world's fair grand prizes, 28 gold medals, and highest honors for accuracy from the leading government observatories. Long Gene, the world's most honored watch, premier product of the Long Gene with nor watch company, since 1866, maker of watches of the highest character. We invite you to join us every Monday, Wednesday, and Friday evening at this same time for the Long Gene Chronoscope, the television journal of the important issues of the hour, broadcast on behalf of Long Gene, the world's most honored watch, and with nor distinguished companion to the world honored Long Gene. This is Frank Knight reminding you that Long Gene and with nor watches are sold and serviced from coast to coast by more than 4,000 leading jewelers who proudly display this emblem. Agency for Long Gene with nor watches. Tune in the conventions on the CBS television.