Loans, investments, and allocations disbursed prior to Mar. 4, 1933, and after Mar. 4, 1933

Authorizations by States for distribution to depositors in closed banks through reorganization and liquidation, from Feb. 2, 1932, through Dec. 31, 1935

[Includes loans to receivers, conservators, loans through mortgage-loan companies to aid closed banks, and loans on assets of closed banks under sec. 5e of the Reconstruction Finance Corporation Act]

Purchases of preferred stock and capital notes and debentures in banks and trust companies, including loans on preferred stock, from Mar. 9, 1933, through Dec. 31, 1935

State

11, 294, 258, 169. 411, 040, 973, 339. 23

Includes $37,500,000 authorized and $12,500,000 disbursed to the Export-Import Banks of Washington, D. C., and $2,500,000 repaid by the Second Export-Import Bank of Washington, D. C.

CIRCULAR NO. 4 (REVISED)

RECONSTRUCTION FINANCE CORPORATION

The Reconstruction Finance Corporation was created by "An act to provide emergency financing facilities for financial institutions, to aid in financing agriculture, commerce, and industry, and for other purposes", approved January 22, 1932, which may be cited as the "Reconstruction Finance Corporation Act." The powers of the Corporation were increased and the scope of its operations extended or otherwise affected by subsequent legislation, the text of which is contained in a pamphlet entitled "Reconstruction Finance Corporation Act, as amended, and other Laws and Documents pertaining to Reconstruction Finance Corporation", revised and issued in November, 1936.

The Corporation may perform all functions it is authorized to perform under law until February 1, 1937, or such earlier date as the President may fix by proclamation.

This circular outlines the organization, functions, and authority of the Corporation under existing law.

I. MANAGEMENT AND ORGANIZATION

The Reconstruction Finance Corporation was organized on February 2, 1932, pursuant to the provisions of the Reconstruction Finance Corporation Act, which provides that it shall have succession for a period of 10 years from January 22, 1932, unless sooner dissolved by an act of Congress. Under the Act, as amended, its management is vested in a board of directors consisting of the Secretary of the Treasury (or, in his absence, the Under Secretary of the Treasury), who is a member ex officio, and six other persons appointed by the President of the United States, by and with the advice and consent of the Senate.

The Corporation functions through a principal office at Washington and loan agencies established in cities throughout the United States,' as follows:

Atlanta, Ga.; Birmingham, Ala.; Boston, Mass.; Charlotte, N. C.; Chicago, Ill.; Cleveland, Ohio; Dallas, Tex.; Denver, Colo.; Detroit, Mich.; El Paso, Tex.; Helena, Mont.; Houston, Tex.; Jacksonville, Fla.; Kansas City, Mo.; Little Rock, Ark.; Los Angeles, Calif.; Louisville, Ky.; Minneapolis, Minn., Nashville, Tenn.; New Orleans, La.; New York, N. Y.; Oklahoma City, Okla.; Omaha, Nebr.; Philadelphia, Pa.; Portland, Oreg.; Richmond, Va.; St. Louis, Mo.; Salt Lake City, Utah; San Antonio, Tex.; San Francisco, Calif.; Seattle, Wash.; Spokane, Wash.

In addition to the foregoing, the Corporation has a special representative and a custodian at San Juan, Puerto Rico.

The Federal Reserve banks are authorized and directed by law to act as depositaries, custodians, and fiscal agents for the Corporation. The proceeds of loans generally are disbursed by the Corporation through the Federal Reserve banks and their branches, which also, acting as custodians, hold the primary obligations of borrowers evidencing indebtedness to the Corporation, as well as the collateral pledged with the Corporation as security therefor. Since there is no Federal Reserve bank in Puerto Rico, the insular treasurer at San Juan acts as custodian for the Corporation.

The funds of the Corporation are kept on deposit with the Treasurer of the United States.

II. LOANS UNDER SECTION 5 OF THE RECONSTRUCTION FINANCE CORPORATION ACT, AS AMENDED 2

1. To financial institutions, State insurance funds, and railroads.—The Corporation, under the provisions of section 5 of the Reconstruction Finance Corporation Act, as amended, is authorized to make loans on full and adequate security and upon the terms and conditions stated in the law, to

"Any bank, savings bank, trust company, building and loan association, insurance company, mortgage loan company, credit union, Federal land bank, joint-stock land bank, Federal intermediate credit bank, agricultural credit corporation, livestock credit corporation, organized under the laws of any State, 1 A map showing the territory served by each loan agency will be found on p. —.

? Section 5. Reconstruction Finance Corporation Act (47 Stat., Ch. 8, pp. 6-8); as amended by sections 202, 203, and 211, Emergency Relief and Construction Act of 1932, approved July 21, 1932 (47 Štat., ch. 520, pp. 714, 715-16): secs. 10, 12, and 13, act of Congress approved June 10, 1933 (48 Stat., ch. 55, pp. 121-122); act of Congress approved June 14, 1933 (48 Stat., ch. 72, p. 141); act of Congress approved June 21, 1934 (48 Stat., ch. 692, p. 1198); and sec. 4, act of Congress approved Jan. 31, 1935 (49 Stat., ch. 2, pp. 2–3). 3 Regarding loans to closed banks, see also p. 9.

the District of Columbia, Alaska, Hawaii, Puerto Rico, or the United States, including loans secured by the assets of any bank, savings bank, or building and loan association that is closed, or in process of liquidation, to aid in the reorganization or liquidation thereof, upon application of the receiver or liquidating agent of such institution; any State insurance fund established or created by the laws of any State (including Alaska, Hawaii, and Puerto Rico), for the purpose of paying or insuring payment of compensation to injured workmen and those disabled as a result of disease contracted in the course of their employment, or to their dependents; and any fund created by any State (including Alaska, Hawaii, and Puerto Rico), for the purpose of insuring the repayment of deposits of public moneys of such State, or any of its political subdivisions, in banks or depositories qualified under the law of such State to receive such deposits."

Under the same section of the law, as amended, the Corporation, with the approval of the Interstate Commerce Commission, including approval of the price to be paid, may, to aid in the financing, reorganization, consolidation, maintenance, or construction thereof, purchase for itself, or for account of a railroad obligated thereon, the obligations of railroads engaged in interstate commerce, including equipment trust certificates, or guarantee the payment of the principal of, and 'or interest on, such obligations, including equipment trust certificates, or, when, in the opinion of the Corporation, funds are not available on reasonable terms through private channels, make loans, upon full and adequate security, to such railroads or to receivers or trustees thereof for the aforesaid purposes. In the case of loans to or the purchase or guarantee of obligations, including equipment trust certificates, of railroads not in receivership or trusteeship, the Interstate Commerce Commission shall, in connection with its approval thereof, also certify that such railroad, on the basis of present and prospective earnings, may reasonably be expected to meet its fixed charges, without a reduction thereof through judicial reorganization, except that such certificates shall not be required in case of such loans made for maintenance of, or purchase of equipment for, such railroads. The Reconstruction Finance Corporation Act, as amended, provides that in respect of loans or renewals or extensions of loans or purchases of obligations under section 5 of the Reconstruction Finance Corporation Act, as amended, to or of railroads, the Corporation may require as a condition of making any such loan or renewal or extension for a period longer than 5 years, or purchasing any such obligation maturing later than 5 years from the date of purchase by the Corporation, that such arrangements be made for the reduction or amortization of the indebtedness of the railroad, either in whole or in part, as may be approved by the Corporation after the prior approval of the Interstate Commerce Commission.

2. To parties to marketing agreements.-Section 8b of the Agricultural Adjustment Act, approved May 12, 1933, as amended, authorizes the Corporation to make loans under section 5 of the Reconstruction Finance Corporation Act, as amended, to parties to any marketing agreement entered into by the Secretary of Agriculture with processors, producers, associations of producers, and others engaged in the handling of any agricultural commodity or product thereof, only with respect to such handling, however, as is in the current of interstate or foreign commerce or which directly burdens, obstructs, or affects, interstate or foreign commerce in such commodity or product thereof, for the purpose of carrying out any such agreement.

3. To the fishing industry.-Section 15 of the act of Congress approved June 19, 1934, authorizes the Corporation to make loans under section 5 of the Reconstruction Finance Corporation Act, as amended, to any person, association, or corporation organized under the laws of any State, the District of Columbia, Alaska, Hawaii, or Puerto Rico, for the purpose of financing the production, storage, handling, packing, processing, carrying and/or orderly marketing of fish of American fisheries and/or products thereof."

More detailed information regarding loans to the fishing industry is contained in Reconstruction Finance Corporation Circular No. 17.

Section 5 of the Reconstruction Finance Corporation Act, as amended provides, that in no case shall the aggregate amount of advances made thereunder to any Sec. 8, Agricultural Adjustment Act (48 Stat., ch. 25, p. 34), as amended by sec. 4, act of Congress ap. proved Aug. 24, 1935 (49 Stat., ch. 641, p. 753).

48 Stat., ch. 653, pp. 1112-1113.

The Corporation also may make loans to the fishing industry under the provisions of section 5d. Reconstruction Finance Corporation Act, as amended. (See "VII. Loans to industrial or Commercial Business Direct", etc., pp. 7-8.)