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. 5000 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 for 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 o 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 ay 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 alled. Receipts for payments by the United States of America for or on unt of such stock shall be issued by the corporation to the Secretary of e Treasury and shall be evidence of the stock ownership of the United States f America.

SEC. 3. The management of the corporation shall be vested in a board of etors consisting of the Secretary of the Treasury, the governor of the Feral Reserve Board, and the farm loan commissioner, who shall be memers 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 Tote his time not otherwise required by the business of the United States principally to the business of the corporation. Before entering upon his duties of the two directors so appointed and each officer of the corporation shall ake an oath faithfully to discharge the duties of his office. Nothing contained this or in any other act shall be construed to prevent the appointment and ensation as a director, officer, or employee of the corporation of any er or employee of the United States in any board, commission, independent ablishment, or executive department thereof. The terms of the two directors appointed by the President of the United States shall be five years from date of the enactment hereof, and thereafter the term of each director apointed shall be five years from the date of the expiration of the term which bis predecessor was appointed. When ever a vacancy shall o cur the directors so appointed the person appointed to fill such vacancy hold office for the unexpired portion of the term of the director whose

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place he is selected to fill. The two directors of the corporation appointed as hereinbefore provided shall receive salaries at the rate of $12,000 per annum each: Provided, That any director receiving from the United States any salary or compensation for other services shall not receive as salary from the corporation any amount, which, together with any salary or compensation received from the United States, would make the total amount paid to him by the United States and by the corporation exceed $12,000 per annum.

SEC. 4. The corporation shall have succession for a period of ten years from the date of the enactment hereof, unless it is sooner dissolved by an act of Congress. It shall have power to adopt, alter, and use a corporate seal; to make contracts, to purchase or lease and hold or dispose of such real estate as may be necessary or convenient for the transaction of its business; to sue and be sued, to complain and to defend, in any court of competent jurisdiction, State or Federal; to select, employ, and fix the compensation of such officers, employees, attorneys, and agents as shall be necessary for the transaction of the business of the corporation, without regard to the provisions of other laws applicable to the employment and compensation of officers or employees of the United States; to define their authority and duties, require bonds of them and fix the penalties thereof, and to dismiss at pleasure such officers, employees, attorneys, and agents; and to prescribe, amend, and repeal, by its board of directors, by-laws, rules, and regulations governing the manner in which its general business may be conducted and the powers granted to it by law may be exercised and enjoyed, including the selection of its chairman and vice chairman, together with provision for such committees and the functions thereof as the board of directors may deem necessary for facilitating its business under this act. The board of directors of the corporation shall determine and prescribe the manner in which its obligations shall be incurred and its expenses allowed and paid. The corporation shall be entitled to the free use of the United States mails in the same manner as the executive departments of the Government. The corporation, with the consent of any board, commission, independent establishment or executive department of the Government, including any field service thereof, may avail itself of the use of information, services, facilities, officers, and employees thereof in carrying out the provisions of this act. The corporation shall have such incidental powers as its board of directors shall deem necessary or expedient in carrying out the provisions of this act.

SEC. 5. The corporation is authorized and empowered to make loans, upon such terms and conditions not inconsistent with this act as it may determine, to any bank, banker, savings bank, trust company, clearing house, or other association of banking institutions, building and loan association, insurance company or other financial institution in the United States (here'n referred to as financial institutions). All such loans shall be fully and adequately secured in such manner as the corporation shall require. The corporation, under such conditions as it shall prescribe, may take over or provide for the adm.nistration and liquidation of any collateral accepted by it as security for such loans. Such loans may be made directly upon promissory notes of such financial institutions, or by way of discount or rediscount of obligations tendered by them for the purpose, or otherwise, in such form and in such amount and at such interest or discount rates as the corporation may approve. Each such loan may be made for a period not exceeding three years, and the corporation may from time to time extend the time of payment of any such loan, through renewal, substitution of new obligations, or otherwise, but the time for such payment shall not be extended beyond five years from the date upon which such loan was made originally. The corporation may make loans under this section at any time prior to the expiration of one year from the date of the enactment hereof; and the President may from time to time postpone such date of expiration for such additional period or periods as he may deem necessary, not to exceed two years from the date of the enactment hereof. Within the foregoing limitations of this section, the corporation may also make loans to or aid in the temporary financing of steam railroads engaged in interstate commerce, when in the opinion of the board of directors of the corporation such railroads are unable to obtain funds upon reasonable terms through banking channels or from the general public and the corporation will be adequately secured.

SEC. 6. Section 3202 of the Revised Statutes of the United States as amended (U. S. C. Title 12, ch. 2, sec. 82) is hereby amended by striking out the words War Finance Corporation act" and inserting in lieu thereof the words "Reconstruction Finance Corporation act."

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SEO. 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 antes, 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 stipulated 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 Japer 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 xing authority. The corporation, including its franchise, its capital, reserves, and surplus, and its income, shall be exempt from all taxation now or hereafter sed 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, icipal, 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

under this act the Secretary of the Treasury is authorized to prepare such forms as shall be suitable and approved by the corporation, to be held in the Treasury subject to delivery, upon order of the corporation. The engraved plates, dies, bed pieces, etc., executed in connection therewith shall remain in the custody of the Secretary of the Treasury. The corporation shall reimburse the Secretary of the Treasury for any expenses incurred in the preparation. custody, and delivery of such notes, debentures, bonds, or other obligations.

SEC. 12. When designated for that purpose by the Secretary of the Treasury, the corporation shall be a depositary of public money, except receipts from customs, under such regulations as may be prescribed by said Secretary; and it may also be employed as a financial agent of the Government; and it shall perform all such reasonable duties, as depositary of public money and financial agent of the Government, as may be required of it. Notes, debentures, bonds, or other such obligations of the corporation shall be lawful investments, and may be accepted as security, for all fiduciary, trust and public funds the investment or deposit of which shall be under the authority or control of the United States or any officer or officers thereof.

SEC. 13. Upon the expiration of the period of one year within which the corporation may make loans, or of any extension thereof by the President under the authohrity of this act, the board of directors of the corporation shall, except as otherwise herein specifically authorized, proceed to liquidate its assets and wind up its affairs. It may with the approval of the Secretary of the Treasury deposit with the Treasurer of the United States as a special fund any money belonging to the corporation or from time to time received by it in the course of liquidation or otherwise, for the payment of principal and interest of its oustanding obligations or for the purpose of redemption of such obligations in accordance with the terms thereof, which fund may be drawn upon or paid out for no other purpose. The corporation may also at any time pay to the Treasurer of the United States as miscellaneous receipts any money belonging to the corporation or from time to time received by it in the course of liquidation or otherwise in excess of reasonable amounts reserved to meet its requirements during liquidation. Upon such deposit being made, such amount of the capital stock of the corporation as may be specified by the corporation with the approval of the Secretary of the Treasury but not exceeding in par value the amount so paid in shall be canceled and retired. Any balance remaining after the liquidation of all the corporation's assets and provision being made for payment of all legal obligations of any kind and character shall be paid to the Treasurer of the United States as miscellaneous receipts. Thereupon the corporation shall be dissolved and the residue, if any, of its caital stock shall be canceled and retired.

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SEC. 14. If at the expiration of the ten years for which the corporation has succession hereunder its board of directors shall not have completed the liquidation of its assets and the winding up of its affairs, the duty of completing such liquidation and winding up of its affairs shall be transferred to the Secretary of the Treasury, who for such purpose shall succeed to all the powers ant duties of the board of directors of the corporation under this act. such event he may assign to any officer or officers of the United States in the Treasury Department the exercise and performance, under his general supervi sion and direction, of any such powers and duties; and nothing herein shall be construed to affect any right or privilege accrued, and any penalty or liability incurred, any criminal or civil proceeding commenced, or any authority con ferred hereunder, except as herein provided in connection with the liquidation of the remaining assets and the winding up of the affairs of the corporation. until the Secretary of the Treasury shall find that such liquidation will no longer be advantageous to the United States and that all of its legal obligations have been provided for, whereupon he shall retire any capital stock then outstanding, pay into the Treasury as miscellaneous receipts the unused balance of the money belonging to the corporation, and make the final report of the corporation to the Congress. Thereupon the corporation shall be deemed to be dissolved.

Src. 15. The corporation shall annually make a report of its operations to the Congress as soon as practicable after the 1st day of January in each year. SEC. 16. (a) Whoever makes any statement knowing it to be false, or whoever wilfully overvalues any security, for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the cor

poration, under this act, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

(b) Whoever (1) falsely makes, forges, or counterfeits any note, debenture, bond, or other obligation, or coupon, in imitation of or purporting to be a note, debenture, bond, or other obligation, or coupon, issued by the corporation, or (2) passes, utters or publishes, or attempts to pass, utter or publish, any false, forged or counterfeited note, debenture, bond, or other obligation, or coupon, purporting to have been issued by the corporation, knowing the same to be false, forged or counterfeited, or (3) falsely alters any note, debenture, bond, or other obligation, or coupon, issued or purporting to have been issued by the corporation, or (4) passes, utters or publishes, or attempts to pass, utter or publish, as true any falsely altered or spurious note, debenture, bond, or other obligation, or coupon, issued or purporting to have been issued by the corporation, knowing the same to be falsely altered or spurious, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

(c) Whoever, being connected in any capacity with the corporation, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged or otherwise entrusted to it, or (2) with intent to defraud the corporation or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the corporation, makes any false entry in any book, report, or statement of or to the corporation, or without being duly authorized, draws any order or issues, puts forth or assigns any note, debenture, bond, or other obligation, or draft, bill of exchange, mortgage, judgment, or decree thereof, shall be punished by a fine of not more than $10.000 or by imprisonment for not more than five years, or both.

(d) No individual, association, partnership, or corporation shall use the words "Reconstruction Finance Corporation," or a combination of these three words, as the name or a part thereof under which he or it shall do business. Every individual, partnership, association, or corporation violating this prohibition shall be guilty of a misdemeanor and shall be punished by a fine of not exceeding $1,000, or imprisonment not exceeding one year or both. (e) The provisions of sections 112, 113, 114, 115, 116, and 117 of the Criminal Code of the United States (U. S. C. title 18, ch. 5, secs. 202 to 207, inclusive), in so far as applicable, are extended to apply to contracts or agreements with the corporation under this act, which for the purposes hereof shall be held to include loans, advances, discounts, and rediscounts; extensions and renewals thereof; and acceptances, releases, and substitutions of security therefor. The Secret Service Division of the Treasury Department is authorized to detect, arrest, and deliver into the custody of the United States marshal having jurisdiction any person committing any of the offenses punishable

under this section.

SEC. 17. The right to alter, amend, or repeal this act is hereby expressly reserved. If any clause, sentence, paragraph, or part of this act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Bet, but shall be confined in its operation to the clause, sentence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered.

[H. R. 5116, Seventy-second Congress, first session]

A BILL To create a national relief finance corporation and provide credits for industries and enterprises in the United States and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-NATIONAL RELIEF FINANCE CORPORATION

That the Secretary of the Treasury and four additional persons (who shall be the directors first appointed as hereinafter provided), are hereby created a body corporate and politic in deed and in law by the name, style, and title of the "National Relief Finance Corporation (herein called the corporation), and shall have succession for a period of five years: Provided, That in no event shall the corporation exercise any of the powers conferred by this act,