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y P.W. 5653 F3DSFJ& EMERGENCY ADMINISTRATION OF PUBLIC WORKS PWA PRESS SECTION IMMSRIAIS H3L7:AS3 Release No. 495. Public Works Administrator Harold L. Ickes today directed his staff to investigate the possibility of selling certain of the municipal "bonds which have been purchased by PWAO Such sales, when and if found advisable, would be exploratory for the purpose of determining procedure in a new phase of the PWA program* Any selling of the local issues in the PWA portfolio or about to be received by PWA would indicate something of a reversal in general trends. Such action would also be in strict accord with the Public Works theory of governmental aid in financing qualified employment-creating works in times of economic stress when private sources of such finance fail to function, with the intent of reselling securities thus acquired by the Government when opportimity presented, with a market able to absorb such sales* Administrator Ickes1 instructions revealed PWA contemplated receiving bids for some of the bonds of municipalities, counties, States and other public bodies which it acquired in the process of financing non~Federal public works projects. The Administrator said: "Sale of these bonds to the highest qualified bidders, provided the prices bid and the responsibility of the bidders are satisfactory, is being given serious thought* I am having the Finance and Legal Divisions of PWA make a study of the matter for report to me* P.W. 5653 "If proper bids are not forthcoming and it does not seem advantageous to sell, the matter will not "be pushed at the present time because the Government is receiving interest on its investment in such "bonds while it holds them. will "be reserved in all circumstances to reject all and any bids. The right It does not ap- pear advisable in embarking on such a plan to seek to dispose of any large blocks of securities until satisfactory selling procedure is perfected.11 The Public Works Administration holds local general obligation and revenue bonds which it has purchased in blocks and in some cases entire issues in financing public works projects which have been scrutinized for legal, financial and engineering feasibility. The Public Works section of the National Industrial Recovery Act states PWA has the right " to sell any security acquired tf which authorization has not been exercised heretofore. PWA bid par and accrued interest for bonds of public bodies with interest rates of 4 percent. Ordinarily they are acquired in small blocks v/ith the actual purchase consummated and funds transferred as needed to continue construction work on the non-Federal projects. In a few instances, however, PWA has taken or will take over entire issues at one time. The bonds are purchased by PWA under the terms of a bond purchase contract which is entered into by the Administrator and the borrower. The Federal Reserve Banks are utilized as custodians of securities by the Administrator and as agents for PWA in the purchase of securities to finance the construction of approved projects. If PWA decides to sell some of these securities, details of the procedure will be announced in advance of the sale. 2
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