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STANFORD

MAY

HEARINGS

150

BEFORE A

DIV.

SUBCOMMITTEE OF THE

DOCUMENT COMMITTEE ON BANKING AND CURRENCY

UNITED STATES SENATE

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EIGHTY-FIRST CONGRESS

SECOND SESSION

ON

A STUDY OF THE OPERATIONS OF THE
RECONSTRUCTION FINANCE CORPO-
RATION PURSUANT TO S. RES. 219,

EIGHTY-FIRST CONGRESS

TEXMASS LOAN

APRIL 13, 22, and 27, 1950

Printed for the use of the Committee on Banking and Currency

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COMMITTEE ON BANKING AND CURRENCY

BURNET R. MAYBANK, South Carolina, Chairman GLEN H. TAYLOR, Idaho

CHARLES W. TOBEY, New Hampshire J. W. FULBRIGHT, Arkansas

HOMER E. CAPEHART, Indiana A. WILLIS ROBERTSON, Virginia

RALPH E. FLANDERS, Vermont JOHN SPARKMAN, Alabama

JOHN W. BRICKER, Ohio
J. ALLEN FREAR, JR., Delaware

IRVING M. IVES, New York
PAUL H. DOUGLAS, Illinois
RUSSELL B. LONG, Louisiana

A. LEE PARSONS, Clerk
Jos. P. MCMURRAY, Staf Director

SUBCOMMITTEE ON RECONSTRUCTION FINANCE CORPORATION

J. W. FULBRIGHT, Arkansas, Chairman BURNET R. MAYBANK, South Carolina CHARLES W. TOBEY, New Hampshire J. ALLEN FREAR, JR., Delaware

HOMER E. CAPEHART, Indiana PAUL H. DOUGLAS, Illinois

GEORGE MEADER, Counsel

CONTENTS

Page

Senate Resolution 219.

1

Resolution of Senate Committee on Banking and Currency..

2

Statement of-

Considine, J. W., Comptroller, Reconstruction Finance Corporation.. 22

Dougherty, James L., general counsel, Reconstruction Finance

Corporation.

Dunham, Walter L., member, Board of Directors, Reconstruction

Finance Corporation_.

22, 78

Glidden, L. B., manager, Dallas Loan Agency, Reconstruction

Finance Corporation..

22

Gunderson, Harvey J., member, Board of Directors, Reconstruction

Finance Corporation..

79

Heller, Harry, Assistant Director, Division of Corporation Finance,

Securities and Exchange Commission.-

12

Hise, Harley, Chairman, Board of Directors, Reconstruction Finance

Corporation

22, 57

Mack, W. H., attorney, Securities and Exchange Commission.

Murrell, John H., DeGolyer & MacNaughton, Dallas, Tex....

181

Warren, Lindsay C., Comptroller General of the United States

5
White, Tell T., engineering staff, SEC.

167
Letters, statements, exhibits, reports, etc., submitted for the record-

Davis, Ralph E., Houston, Tex.: Letter to Senator Fulbright re-
garding Mr. White..

166
Fulbright, J. William, a United States Senator from the State of

Arkansas: Letter to Comptroller General Warren regarding Tex-
mass loan.

4
Garrett, Malvin M., consulting geologist, RFC:
Report, September 15, 1950, to RFC on Texmass-

35
Letter, September 15, '1949, to R. E. Burton, RFC, with attached
schedule of income, costs, etc.,
of Texmass-

38

Letter, February 3, 1950, to R. E. Burton, RFC, regarding Tex-

40

Herrington, C. E., Dallas agency examiner, RFC:

Formal report on Texmass application, June 8, 1949-

212

Supplemental report, June 24, 1949..

244

Second supplemental report, September 12, 1949.

248

Herz, Theodore, director of staff of subcommittee: Memorandum on

Texmass loan

200

Kravis, Raymond F., Tulsa, Okla.: Letter to Senator Fulbright

regarding Mr. White..

166

MacDonald, Harry A., Chairman, SEC: Letter to Senate Fulbright

enclosing Mr. White's analysis of Mr. Garrett's report_

205

MacNaughton, Lewis W., DeGolyer & MacNaughton, Dallas, Tex.:

Telegram to Senator Fulbright regarding Mr. White

165

Reconstruction Finance Corporation:

Statement on Texmass loan, with appendixes--

57

Dallas loan agency:

Examiner's report of June 8, 1949-

212

Examiner's supplemental report of June 24, 1949-

244

Examiner's second supplemental report of September 12,
1949

248

Business loan branch, Washington office:

Report of September 29, 1949.

254

Lettergram from Mr. Glidden, September 13, 1949. 263

Previous report of July 24, 1949.

264

Memorandum of Mr. Willard, September 16, 1949- 270

Rochelle, William J., examiner, Washington office, RFC: Report on

Texmass application, with comments of review committee 43, 261

Warren, Lindsay C., Comptroller General of the United States: Letter

to Senator Fulbright regarding Texmass loan.--

6

White, Tell. T., engineering staff, SEC: Analysis of Mr. Garrett's

report-

205

STUDY OF RECONSTRUCTION FINANCE CORPORATION

TEXMASS LOAN

THURSDAY, APRIL 13, 1950

UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON RECONSTRUCTION FINANCE CORPORATION,

Washington, D. C. "he subcommittee met, pursuant to notice, at 10 a. m., in room 301, Senate Office Building, Senator J. William Fulbright (chairman of the subcommittee), presiding.

Present: Senators Fulbright, Maybank, Frear, and Douglas.

Also present: Mr. Meader, chief counsel, and Mr. Herz, director of staff of subcommittee.

Senator FULBRIGHT. The committee will come to order.

This is the first public hearing of the Banking and Currency subcommittee on the Reconstruction Finance Corporation pursuant to the terms of Senate Resolution 219, the Eighty-first Congress, ordering a study to be made of the operations of the Reconstruction Finance Corporation.

At this point I will insert in the record a copy of that resolution. (The resolution referred to follows:)

(S. Res. 219, 81st Cong., 2d sess.)

RESOLUTION Resolved, That the Senate Committee on Banking and Currency, or any duly authorized subcommittee thereof, is authorized and directed to conduct a thorough study of the operations of the Reconstruction Finance Corporation, and its subsidiaries, with special attention given to the recommendations of the Commission on Organization of the Executive Branch of the Government with respect to such Corporation and its subsidiaries.

Sec. 2. The committee shall report its findings, together with its recommendations for such legislation as it may deem advisable, to the Senate at the earliest practicable date but not later than June 1, 1950.

SEC. 3. For the purposes of this resolution, the committee, or any duly authorized subcommittee thereof, is authorized to employ upon a temporary basis such technical, clerical, and other assistants, as it deems advisable, and is authorized, with the consent of the head of the department or agency concerned, to utilize the services, information, facilities, and personnel of any of the departments or agencies of the Government. The expenses of the committee under this resolution, which shall not exceed $50,000, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman of the committee.

Senator FULBRIGHT. The Senate Banking and Currency Committee has adopted a resolution de ignating this subcommittee as the one to conduct the study of the operations of the Reconstruction Finance Corporation directed by Sena ie Resolution 219. I will also place this resolution in the record at this point,

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