Government Subsidies to Private Industry

Report Outline
Administration Plan for Stimulating Production
Proposals for Emergency Subsidies to Industry
Wartime Mobilization and Financing of Industry
Early Public Subsidies to Railroads and Shipping
Present Subsidies to Shipping and Aviation
Special Focus

Administration Plan for Stimulating Production

Provision of financial aid to private industry, in the form of Reconstruction Finance Corporation loans and a possible government guarantee against loss on increased production, is being considered by the Roosevelt administration among its plans to mobilize industry and create new purchasing power. The President is reported to hold the opinion that granting of assistance to industries agreeing to expand their production would better enable them to take full advantage of the purchasing power resulting from increased employment on public works projects, while at the same time adding to that purchasing power through the increased manufacturing and retail employment thus made possible.

Under the plan, so far as its tentative provisions have become known, allotment and control of production would be vested in an agency comparable to the War Industries Board, whose decisions would be binding on the R. F. C. in the granting and guaranteeing of loans to industry. The whole scheme would be coordinated with the administration's plans for regulating wages and hours of work under the amendments to the Black (D., Ala.) 30-hour week bill sponsored by Secretary of Labor Perkins.

Senator Wagner (D., N. Y.) introduced a bill, March 20, 1933, to revise the Emergency Relief and Reconstruction Act of July 21, 1932, by authorizing the R. F. C. to make loans to states and municipalities for public works which are “needful and in the public interest” rather than necessarily self-liquidating. The bill also provides authority to make loans to private corporations to aid in the construction or improvement of self-liquidating bridges, tunnels, docks, and other public works. A similar bill was passed by the Senate, February 20, 1933, by a vote of 54 to 16. Its provision for loans to private, corporations would have to be enlarged to carry out the administration plan for loans to manufacturers. An authorization for R. F. C. loans to any person or industry, included in the relief bill passed by the House in June, 1932, led to a sharp controversy between Speaker Garner, its sponsor, and President Hoover, who vetoed the bill on the ground that it would put the government into “a gigantic pawnbroking business.”