LOOPHOLE FOUND

Gisborne Herald, Volume LXVI, Issue 20032, 2 September 1939, Page 4

LOOPHOLE FOUND

U.S. WAR EXPORTS LENDING POWERS ASSISTANCE TO BRITAIN (Elec. Tol. Copyright—United Press Assn.) (Reed. September 2, 11 a.m.) NEW YORK, Aug. 31. A loophole in the law permitting the United States to assist Britain and France in event of war, was revealed to-day. Mr. Jesse Jones, Administrator *of the Federal Lending Agency, announced, after conferring with President Roosevelt, that the Johnson Act prohibiting the Government from granting credits to countries in default with their debts, does not apply to the Reconstruction Finance Corporation. of the Export and Import Bank.

Mr. Jones added that the latter institution was not in a position to finance the exports of surplus commodities, wlhfle Reconstruction Finance Corporation has plenty of unused credit with which to finance industrial production in the United States in the event of war.

Thus, the United States will be able to respond to British and French requests for commodities in event of a protracted war,

Mr. Jones doubted if ‘the agency would be called on to make loans direct to foreign Governments. Its normal function was partly to underwrite shipments to private exporters through recourse to loans.

Mr. Jones stressed the fact that under no circumstances would the bank underwrite the export of war materials, but manufactured articles, other than war materials, would be eligible. However, the operations probably would be mainly confined to agricultural surpluses,