WAR FINANCE CORPORATION, an organization established in 1918 for the purpose of supporting banking and in dustrial credit during the war. The plan was advocated before the Senate Finance Committee in February of that year by Secretary of the Treasury Mc Adoo, and after it had been considered in Congress the bill received the approval of the President. It provided for a cor poration with $500,000,000 capital, sub scribed by the Government, and author ized to issue $3,000,000,000 of notes toward enterprises regarded as essential to the prosecution of the war. Discount of the corporation notes at the Federal Reserve Banks were provided for, but the corporation notes were not to be avail 'able as a basis for the issue of Federal Reserve notes. In April, 1919, the cor poration had a $200,000,000 issue of bonds, which were put on sale at par and interest through the Federal Reserve Banks as fiscal agents. They were in denominations of $1,000, in bearer form, to run for one year from April 1, 1919, bearing interest at 5 per cent., payable semi-annually. They were exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, or by any local tax ing authority, except estate or inheri tance taxes, and graduated additional in come taxes, known as surtaxes, and ex cess profits and war profits taxes. The
proceeds from the sale of the bonds were used for the general purposes of the cor poration. Considerable amounts were taken up by advances to the railroads and other sums were docketed as likely to be necessary in the financing of com merce abroad. To this bond issue there were a large proportion of subscribers who bought in small amounts and as a result large blocks of securities remained in the banks. Later the corporation was stated to be buying back its own bonds, and notices were given out that it would redeem any of its bonds at 99.15.66. One of the functions committed to the War Finance Corporation was the duty of in vestigating and determining whether is sues of securities by private concerns were compatible with the national in terest, the Capital Issues Committee being created to attend to this work. The pri mary object of this committee was to see that no money which might be valuable in the prosecution of the war might be ex pended in unnecessary directions. In re ply to inquiries in the Senate in October, 1918, as to the corporation it was stated that it had 28 people in its employ, the compensation to them amounted to $6,229.83 per month, expenses being paid out of earnings.