State Capitalism

Archive Report

Government Involvement in Business

Appeal of Faltering Companies for Federal Help

Six months after the Penn Central Transportation Company declared bankruptcy in June 1970, Congress responded by passing a bill to provide $750 million in government-guaranteed loans to the Penn Central and other faltering railways. There is persistent speculation that the government may yet have to engineer a similar rescue operation for the Lockheed Corporation. By late March 1971, legislators were discussing the need for a new Reconstruction Finance Corporation, similar to the one which underwrote loans to private business-and sometimes controlled them-during the Depression of the 1930s.

The concurrent ravages of inflation and recession which contributed to the failure of the largest railroad and the problems of one of the largest defense contractors1 have affected many ...

locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles