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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*
W applied to various banks for financial assiste
ance but were repeatedly turned down on the same old excuse of
frozen or fixed assets* However, w f i n a l l y succeeded i n gete
ting 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 w
e
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 w s e l l our tug
e
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 m nobly•
e
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.
W kept up our payments of |10,000 a month regularly
e
and promptly, ana last December w sold two of our tugs to the
e
Standard O i l Company of N w Jersey for #500,000, the same tugs
e
that the Bank was insisting w s e l l i n order to realise #40,000
e
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
w built ourselves i n our own Newburgh Shipyard which the Governe
ment 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,
N w York 4, New York.
e
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 m that you might be interested in seeing the
e
statement I presented to the Committee on behalf of this proposed
authority and I , accordingly, enclose a copy.
Sincerely yours,

M. £ . Eccles,
>
Chairman.

Enclosure

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