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M t B t t k S t o w i n g O N E E i t i * H , 3 n t . B R O A D W A Y NEW YORK 4, N. Y. TELEPHONE • WHITEHALL CABLE ADDRESS June 4, 1947 "MESECKTUGS* Mr. Marriner S. Secies, Chairman Federal Reserve Board 33 Liberty Street New York, New York Dear Mr. Secies: I was very sorry to see i n the newspaper today that you recommended before the House Banking and Clearing Committee that the R.F.C. should go out of business. The R.F.C. should not go out of business. The R.F.C • saved this company from going into the hands of the receivers. This towing comparer is an old one omd today i s being operated by & t h i r d generation of Mesecks. During the entire existence of this company we received very l i t t l e financial assistance from any bank. Our applications for loans were continually turned down by the various banks on the plea that our assets, consisting of towboats, were either ^fra&en*1 or ^fixed^. We operate 22 tugboats. Not a single ship can enter or leave the Port of New York without the assistance of a tiigboat, therefore, our business for this reason i s m, very essential one. During the war we towed battleships, mirplane carriers mnd destroyers, transported and assisted i n making up and distributing the numerous convoys that entered and l e f t this Port. I n compliance with m request of the Navy, we b u i l t tugboats in" our own shipyard i n Newburgh, New York, •using our own capital money for the purpose, we having no written contract with the Government. Five of our tugs were requisitioned by the Government. 3-1550 - 2 - Mr. Marriner S. Eccles, Chairman Federal Reserve Board June 4, 1947 This tug building program, plus the high taxes collected by the Government during the war, placed this company i n a very embarrassing financial position about two years ago* We applied to various banks for financial assistance but were repeatedly turned down on the same old excuse of frozen or fixed assets* However, we f i n a l l y succeeded i n getting a loan from the R*F*C* with the Bank: of Manhattan, Fortysecond Street branch, participating 30 per cent* This loan was secured i n June, 1944> "the amount being #250,000* I t was repaid down to #150,000 about A p r i l , 1946 • About this time the whole country was struck with a series of strikes, and I w i l l here enumerate the strikes: Railroad strike Longshoremens * strike Seamens* Strike Coal miners strike Steel strike Automobile companies' strikes Strike of our own tugboat men Steamship deck officers 1 and engineers1 strike Longshoremens1 strike again Teamsters strike i n New York City These strikes hurt us very much, so much so that we were compelled to go to the Bank of Manhattan Company, pointing out what the strikes did to our earnings, and asked the Bank for a temporary easement of the terms of our loan* This was refused, and the Bank people to protect about #45,000 of the $150,000 remainder of the original loan, insisted that we s e l l our tug assets forthwith i n order to liquidate the loan* I t was a very serious situation for this company* You cannot s e l l any property unless you get a willing b^yer* Throwing tugs worth #300,000 each on the market i n order to realise #45,000 to settle a bank loan is not good business* The R+F*C* people i n Few York City were simply grand* They could not see eye to eye with the Bank of Manhattan Company's position and they stood by me nobly• The R*F*C* people investigated our whole financial set up and reported that we should never have applied for a loan of #250,000 i n the f i r s t place. What we really needed was a loan of #500,000* The R*F*C* representatives asked the Bank of Manhattan i f they would go along and participate i n a loan of #500,000 to the leseck Towing Lines* I t was an academic question and, as expected, the Bank refused point-blank to do anything of the kind* "They wanted their money* - 3 Mr. Marriner 5. Eccles, Chairman Jme 4, 1947 The R.F.C. people said i n that ease they would make the loan themselves and on May 28, 194*6 they granted us a loan of #500,000. This enabled us to set our financial house in order immediately. We kept up our payments of |10,000 a month regularly and promptly, ana last December we sold two of our tugs to the Standard O i l Company of New Jersey for #500,000, the same tugs that the Bank was insisting we s e l l i n order to realise #40,000 to pay them. The check from the Standard Oil Company for the #500,000 was made out to the R.F.C. The R.F.C. took #250,000 of the $500,000 which enabled us to replace the two tugs we sold to the Standard O i l Company with two identical tugs which we built ourselves i n our own Newburgh Shipyard which the Government requisitioned i n 1944• Today after about a year f s time our loan with the R.F.C. stands at #190,000 with the same or even better collateral. I repeat, and I think you w i l l agree i n view of the foregoing, that the R.F.C. should not be put out of business. I t was formed to take care of small businesses just like mine, and I object very strongly to anyone saying the R.F.C. should be abandoned and businessmen like myself thrown to the wolves. Yours very truly MESSCK TOWING LIMES, INC JMrmjm cc: Joseph Meseck Honorable Jesse Wolcott, Chairman, Banking Committee House of Representatives Washington, D. C. Financial Editor, N. Y. Evening Sun Financial Editor, N. Y. Journal Mr. John D. Goodlowe, Chairman Reconstruction Finance Corp. 811 Vermont Avenue Washington, D. C. Mr. Raymond J. Connelly Reconstruction Finance Corp. 44 Pine Street New York Honorable Herbert Hoover Washington, D. C. June 10, ±9U7. Mr. Joseph Meseck, Meseck Towing Lines, Inc., One Broadway, New York 4, New York. Dear Mr. Meseck: This is to acknowledge your letter of June U and to say that the newspaper account of ray testimony on the RFC was in error because I did not recommend that i t should go out of business, fohen I was questioned specifically about the RFC, I expressed the opinion that the Federal Reserve System should have the authority to guarantee in part loans by private banks and that the RFC should discontinue this particular activity. At the same time I said that I felt i t was desirable to have suctt an organization as* a standby for emergency periods and to help finance important public projects that private capital cannot very* well undertake% such as, for example, the San Francisco Bridge. Your own experience with the RFC is particularly interesting and the help they provided for your company certainly was a salvation. I t illustrates again the fact that in numerous cases private banks cannot or at least do not provide credit for small business on adequate terms eyen though, as in your case, the loan may be a perfectly good one. I f , as I hope, Congress authorizes the heserve Banks to guarantee in part loans by private banks i t is quite possible that they would be able to take care of a situation like yours in the future. I t occurs to me that you might be interested in seeing the statement I presented to the Committee on behalf of this proposed authority and I , accordingly, enclose a copy. Sincerely yours, M. £>. Eccles, Chairman. Enclosure ET:b
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