Reconstruction Finance Corporation would not be permitted to refinance acceptances now being held by the banks.

The CHAIRMAN. We were merely talking about the language of the law and Mr. Hancock raised the question as to whether that could be done, and inadvertently I answered in the negative, but upon examination of the language I am convinced that kind of a transaction would be permitted in this.

Mr. GOLDER. I thought that if there was danger in this practice. I wanted to know what the danger was.

Mr. STEVENSON. I want to call the gentleman's attention to this. This is a proposition that the Finance Corporation become the holder of that paper without any recourse to any banks at all, whereas the case that you suppose of a bank that has a lot of frozen assets and among them these foreign acceptances, they can get relief from this situation by the proper bureau, be relieved to the extent that it can carry these things until they are liquidated, but it will be the credit of the bank that the corporation is relying on, the bank itself will be the principal debtor, but as to this proposition to have the corporation handle these acceptances direct, we do not want it to handle the frozen ones. We do not want a lot of them unloaded on it without any bank between it and the corporation.

Mr. GOLDER. You would say no there to a bank that has those acceptances coming to the corporation for relief.

Mr. STEVENSON. The bank that has frozen assets of that kind or any other would have a right to borrow putting up security. Mr. CHAIRMAN. Mr. Brand has some questions.

Mr. BRAND. My question is: Suppose the bill is so construed chat you can borrow money from the corporation to take care of these frozen acceptances. How much money would it take, or do you contemplate that your export people would need if you include these present frozen acceptances?

Mr. ST. JEAN. We do not include the present frozen acceptances. Mr. BRAND. But, if you do; you could get money on them unless this is changed.

Mr. GOLDSBOROUGH. If a bank introduced law as we now propose to draw it, if a bank comes to this corporation whose collateral is foreign acceptances, they would not be acceptable.

Mr. STEVENSON. Yes.

Mr. ST. JEAN. Gentlemen, in a nutshell, my proposition is simply this: I am speaking on behalf of American citizens that have over $750,000 invested in American goods

Mr. BRAND. How much money are you going to ask from the corporation?

Mr. ST. JEAN. We can't get at the most more than $500,000,000, and they can turn it over about once a year.

Mr. SEIBERLING. As I read this paragraph 5 (a) it is possible for the corporation to take up acceptances up to $250,000,000 without having them fully secured, provided the individual acceptance is less than 1 per cent of the capital of the corporation.

Mr. ST. JEAN. Every acceptance is secured.

Mr. SEIBERLING. As drawn here the corporation can take up acceptances up to $250,000,000 without having them fully secured, provided each acceptance is less than 1 per cent.

Mr. ST. JEAN. Provided the acceptance granted any one drawer is less than 1 per cent without conforming to the technical requirements of "fully secured."

Mr. MCFADDEN. Let me ask a hypothetical question: Take the case of an American bank whose acceptances which are frozen, we will say, by way of illustration, that it has $10,000,000 of acceptances which is secured by cotton in a warehouse in Germany, and it is frozen. That can be made into a new transaction by negotiations conducted by the American bank with a new purchaser in Germany, whereas a new transaction would be eligible as new business to be financed and through this particular section that, at the same time, would liquidate about $10,000,000 worth of frozen assets or acceptance credit in Germany.

The CHAIRMAN. Well, that will all come up when you frame it. Now, gentlemen, I hope there is no such pressing demand for your time here that we can not come again to turn to the consideration of the bill for amendment. This is the situation: So far as I am concerned there are several amendments that we shall be obliged to insist on having incorporated in this bill. In the first place, I want to put in some provision that will authorize this corporation to extend aid to banks that are in process of liquidation, where they find an opportunity to aid in the reorganization of those institutions and render that service to the communities suffering in that sort of a situation. I want somewhere along the line to see if we can't arrange some provision in this bill to authorize them to aid the agricultural credit corporation and to assist agriculture. There are other amendments that I have in mind; one is with reference to foreign loans and foreign securities. The Senate committee, as I understand their action, has dealt with this matter, but has made an exception, I believe, with respect to certain Canadian securities. I question whether we ought to make any exception, even though we might feel like doing it. It is undiplomatic to favor one country alone. There are other amendments that I think some of us would want to see go into the bill, and there are some limitations that I think might be considered before we finally decide on our action, and it has occurred to me that we might save time and prevent unnecessary discussion and repetition, and I am not saying this in criticism of anybody, because I am just as guilty as anybody here as to that, but we might save unnecessary time in discussion and repetition if we took these measures. In the meantime, such information as may be available. through anything the Senate has done, and have a subcommittee to begin at once to undertake to frame a bill into shape for final action in the hope that maybe by this course we may be able to finish to-morrow, which I should like very much to do.'

Mr. GOLDSBOROUGH. In order to get something concrete before the committee I am going to make a motion that the chairman appoint a committee of two mebers of the majority and minority, hiself also to be a member of the committee ex officio, to amend this bill in the way that they think is proper and report it back to the full committee some time to-marrow when they are able to do so. The CHAIRMAN. Gentlemen, you have heard the motion. Mr. PRALL. I second the motion.

(The motion was put to vote and carried.)

The CHAIRMAN. I will appoint the ranking Democrats, Mr. Brand and Mr. Stevenson, and the ranking Republicans, Mr. McFadden and Mr. Strong.

Mr. GOODWIN. Mr. Chairman, may I ask permission to have two telegrams I received inserted into the record?

The CHAIRMAN. Yes; I am sure there will be no objection. (The telegrams are as follows:)

Hon. GODFREY G. GOODWIN,

Member of Congress.

I strongly urge on behalf of the farmers of this State that the proposed amendment drafted by the attorney general of this State of the reconstruction finance corporation act be adopted, so that the rural credit department of this and other States may participate in the benefits of this act with industry and finance.

FLOYD B. OLSON, Governor of Minnesota,

Congressman GODFREY G. GOODWIN,

House Office Building:

Following amendments to reconstruction finance corporation bill. House bill 5060, drafted by Attorney General Benson, as required, and sufficient to permit Minnesota Rural Credit Bureau obtaining low-interest loan from Federal Government to permit refinancing and lowering interest rates to 10,000 Minne sota farmer borrowers:

Amendment 1. Amend H. R. 5060 by inserting immediately following the comma, after the word "determined." in line 10, on page 5 of the printed bill, the following: "to any State for use in operating a system of rural credits established and maintained by it."

Amendment 2. Further amend said printed bill by striking out the period at the end of line 16 on page 5 of said printed bill and inserting in lieu thereof a semicolon and adding the following: "Provided, That loans to a State may be made upon the bonds thereof pledging the full faith and credit of such State."

Amendment 3. Further amend said printed bill by inserting a comma after the word "loan." in line 25 on page 5, and adding the following: "except loans to a State."

Amendment 4. Further amend said printed bill by adding a new sentence immediately following the period in line 19 on page 6. reading as follows: "For the purpose of consummating a loan to a State the corporation may submit a bid for the purchase of the bonds thereof where the law of such State requires such bonds to be sold upon competitive bids."

Unless these amendments are made, finance corporation regarded by people of Minnesota as of no value to farmers who are suffering most acutely of all from present economic depression, and credit situation State has been forced to foreclose on more than 2.800 farms because borrowers can not meet interest, and taxes relief must be provided if farmers now holding loans, numbering more than 10,000, can have their interest rate lowered materially will substantially help them to retain their farms. This can be done if State rural credit bureaus can obtain loans from Federal Government at low rates through finance corporation bill provides such credit for banks, insurance companies, and other private credit corporations, why not for the farmers rural credit bureau bonds in Minnesota, and also in other States are backed not only farm land but by the resources and credit of the States themselves, surely they should be given same right as private corporations glad furnish any further data.