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COMMITTEE ON BANKING AND CURRENCY
ON THE BILLS
H. R. 5060 and H. R. 5116
AND FOR OTHER PURPOSES
DECEMBER 18, 1931, AND JANUARY 5, 6, AND 7, 1932
WASHINGTON : 1932
COMMITTEE ON BANKING AND CURRENCY
HENRY B. STEAGALL, Alabama, Chairman CHARLES H. BRAND, Georgia.
LOUIS T. MCFADDEN, Pennsylvania. WILLIAM F. STEVENSON, South Carolina, JAMES G. STRONG, Kansas. T. ALAN GOLDSBOROUGH, Maryland. ROBERT LUCE, Massachusetts. ANNING S. PRALL, New York.
GUY E. CAMPBELL, Pennsylvania. JEFF BUSBY, Mississippi.
CARROLL L. BEEDY, Maine. MICHAEL K, REILLY, Wisconsin.
JOSEPH L. HOOPER, Michigan. FRANK HANCOCK, North Carolina. GODFREY G. GOODWIN, Minnesota. CLYDE WILLIAMS, Missouri.
BENJAMIN M. GOLDER, Pennsylvania, PERCY H. STEWART, New Jersey.
FRANCIS SEIBERLING, Ohio.
RECONSTRUCTION FINANCE CORPORATION
FRIDAY, DECEMBER 18, 1931
House of REPRESENTATIVES, CoMMITTEE on BANKING AND CURRENCY, Washington, D. C.
The committee met at 10.30 o'clock a.m., Hon. Henry B. Steagall (chairman) presiding.
The CHAIRMAN. The committee will this morning consider H. R. 5060 and 5116, which are as follows:
[H. R. 5060. Seventy-second Congress, first session]
A BILL To provide emergency financing facilities for banks and other financial institutions, and sor other purposes
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That there be, and is hereby, created a body corporate with the name “Reconstruction Finance Corporation ” (herein called the corporation). This act may be cited as the reconstruction finance corporation act.
SEC. 2. The corporation shall have capital stock of $500,000,000, all subscribed by the United States of America, payment for which shall be subject to call in whole or in part by the board of directors of the corporation, with the approval of the Secretary of the Treasury, at such time or times as may be deemed advisable. There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $500,000,000, for the purpose of making payments upon such subscription when and as
called. Receipts for payments by the United States of America for or on
account of such stock shall be issued by the corporation to the Secretary of
the Treasury and shall be evidence of the stock ownership of the United States
of America. SEC. 3. The management of the corporation shall be vested in a board of
directors consisting of the Secretary of the Treasury, the governor of the
Federal Reserve Board, and the farm loan commissioner, who shall be memhers ex officio, and two other persons appointed by the President of the United States by and with the advice and consent of the Senate. Each director shall devote his time not otherwise required by the business of the United States principally to the business of the corporation. Before entering upon his duties each of the two directors so appointed and each officer of the corporation shall take an oath faithfully to discharge the duties of his office. Nothing contained in this or in any other act shall be construed to prevent the appointment and compensation as a director, officer, or employee of the corporation of any officer or employee of the United States in any board, commission, independent establishment, or executive department thereof. The terms of the two directors so appointed by the President of the United States shall be five years from the date of the enactment hereof, and thereafter the term of each director so appointed shall be five years from the date of the expiration of the term for which his predecessor was appointed. When ever a vacancy shall occur among the directors so appointed the person appointed to fill such vacancy shall hold office for the unexpired portion of the term of the director whose
place he is selected to fill. The two directors of the corporation appointed
SEC. 7. All moneys of the corporation not otherwise employed may be deposited with the Treasurer of the United States, subject to check by authority of the corporation, or in any Federal reserve bank, or may, by authorization of the board of directors of the corporation, be used in the purchase or redemption of any notes, debentures, bonds, or other obligations issued by the corporation, The Federal reserve banks are authorized and directed to act as depositaries, custodians, and/or fiscal agents for the reconstruction finance corporation in the general performance of its powers conferred by this act. SEC. 8. In order to enable the corporation to carry out the provisions of this act, the Treasury Department, the Comptroller of the Currency, the Federal Reserve Board, the Federal reserve banks, and the Interstate Commerce Commission are hereby authorized, under such conditions as they may prescribe, to make available to the corporation in confidence such reports, records, or other infomation as they may have available relating to the condition of financial institutions and/or railroads with respect to which the corporation has had or contemplates having transactions under this act, or relating to individuals, associations, partnerships, or corporations whose obligations are offered to or held by the corporation as security for loans to financial institutions or railroads under this act, and to make through their examiners or other employees for the confidential use of the corporation examinations of such financial institutions or railroads. Every applicant for a loan under this act shall, as a condition precedent thereto, consent to such examinations as the corporation may require for the purposes of this act and/or that reports of examinations by constituted authorities may be furnished by such authorities to the corporation upon request therefor. SEC. 9. The corporation is authorized and empowered, with the approval of the Secretary of the Treasury, to issue, and to have outstanding at any one time in an amount aggregating not more than three times its subscribed capital, its notes, debentures, bonds, or other such obligations; such obligations to mature not more than five years from their respective dates of issue, to be redeemable at the option of the corporation before maturity in such manner as may be stipu“lated in such obligations, and to bear such rate or rates of interest as may be determined by the corporation: Provided, That the corporation, with the approval of the Secretary of the Treasury, may sell on a discount basis shortterm obligations payable at maturity without interest. The notes, debentures, bonds, and other obligations of the corporation may be secured by assets of the corporation in such manner as shall be prescribed by its board of directors. Such oligations may be issued in payment of any loan authorized by this act or may be offered for sale at such price or prices as the corporation may determine, with the approval of the Secretary of the Treasury. In the event that the corporation shall be unable to pay upon demand, when due, the principal of or interest on notes, debentures, bonds, or other such obligations issued by it, the Secretary of the Treasury shall pay the amount thereof, which is hereby authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, and thereupon to the extent of the amounts so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such notes, debentures, bonds, or other obligations. The Federal reserve banks shall have the same powers (1) to discount notes, drafts, and bills of exchange secured by obligations issued by the corporation under this act, (2) to make advances to member banks on their notes secured by such obligations, (3) to use all paper so acquired, and (4) to purchase and sell such obligations, as they have with respect to bonds and/or notes of the United States: Provided, That the rate at which any such discount or advance shall be made by any Federal reserve bank shall be 1 per centum per annum above its discount rate on ninetyday commercial paper then in effect. SEC. 10. Any and all notes, debentures, bonds, or other such obligations issued by the corporation shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. The corporation, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the corporation shall be subject to State, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. SEc. 11. In order that the corporation may be supplied with such forms of notes, debentures, bonds, or other such obligations as it may need for issuance