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CIRCULAR No. 3
OF THE
RECONSTRUCTION
FINANCE CORPORATION
INFORMATION FOR PROSPECTIVE APPUCANTS FOR
LOANS FOR "SELF-LIQUIDATING" PROJECTS
UNDER THE EMERGENCY RELIEF AND
CONSTRUCTION ACT OF 1932
AUGUST 1932
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON, 1932
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INFORMATION FOR PROSPECTIVE APPLICANTS FOR LOANS FOR
"SELF-LIQUIDATING" PROJECTS UNDER THE EMERGENCY
RELIEF AND CONSTRUCTION ACT OF 1932
In order to assist in creating employment the Reconstruction
Finance Corporation has been authorized to make loans to aid in the
financing of certain specified types of "self-liquidating" construction
projects. Loans for the refunding or refinancing of obligations
already outstanding are not within the purposes of the Act, the
applicable sections of which are reprinted on the closing pages of
this circular.
No application will be considered unless (a) the project is
shown to be" self-liquidating," (b) the proposed loan is shown to be
fully and adequately secured, and (c) complete information is supplied as to all phases of the project.
1. ELIGIBLE BORROWERS AND PURPOSES OF LOANS.
(1) Loans to States, Municipalities, Etc.
(a) The Corporation may make loans to, or contracts with,
States, municipalities, and political subdivisions of States, public
agencies of States, of municipalities, and of political subdivisions of
States, public corporations, boards and commissions, and public
municipal instrumentalities of one or more States. Only agencies
and corporations owned completely by a State, municipality, or
subdivision of a State are deemed to be public agencies or public
corporations. The District of Columbia, Alaska, Hawaii, and
Puerto Rico are included in the term "State."
(b) The loan or contract must be to aid in financing a project
authorized under Federal, State, or municipal law.
(c) The project must be self-liquidating in character.
· (aJ The loan or contract may be made through the purchase
of securities of the applicant or otherwise, and the Corporation is
authorized to bid for such securities.
(e) Loans or contracts may be made for a period exceeding ten
years·only when it is the judgment of the board of directors of the
Corporation that it is necessary to purchase securities of the applicant and that it is not practicable to require the reimbursement of
the Corporation, within ten years, through the repurchase or payment of such securities, or in any other manner.
(1)
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(2) Loans to Regulated Housing Corporations.
(a) Loans may be made only to corporations formed wholly
for the purpose of providing housing for families of low income, or
for reconstruction of slum areas.
(b) No such loan can be made unless the applicant corporation
is regulated by law as to rents, charges, capital structure, rate of
return, and areas and methods of operation. Prospective borrowers
should therefore determine whether such a law is in force in the
place where the project is to be erected. Helpful suggestions for
legislation may be found in the New York State Housing Law, the
pioneer act in the field.
(c) The loans must be to aid in financing projects undertaken
by such corporations which are self-liquidating in character.
(d) The project should be approved by the local regulatory
authority before application is made for a loan.
(e) Loans may be made for a period not exceeding ten years.
(3) Loans for Privately Owned Projects Devoted to Public Use.
(a) Loans may be made to private corporations to aid in carry-
ing· out the construction, replacement, or improvement of bridges,
tunnels, docks, viaducts, waterworks, canals, and markets.
(b) The project must be devoted to public use.
(c) The project must be self-liquidating in character.
(d) Loans may be made for a period not exceeding ten years.
{e) No loan may be made to a railroad or to a receiver of a railroad except on the approval of the Interstate Commerce Commission.
(4) Loans for Protection and Development of Forests, Etc.
(a) Loans may be made to private limited dividend corporations
to aid in financing projects for the protection and development of
forests and other renewable natural resources.
(b) The project must be regulated by a State or a political subdivision of a State. Prospective borrowers should therefore determine whether such regulations are in force.
(c) The project must be self-liquidating in character.
(d) Loans may be made for a period not exceeding ten years.
(5) Loans for Publicly Owned Bridges Supported in Part by Taxation.
(a) Loans may be made to aid in financing the construction of
any publicly owned bridge to be used for railroad, railway, and highway uses, the construction cost of which will be returned in part by
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means of tolls, fees, rents, or other charges, and the remainder by
means of taxes-imposed pursuant to State law enacted before July 21,
1932 (the date of enactment of the Emergency Relief and Construction Act of 1932).
· (b) Bonds of any State, municipality, or other public body or
agency issued for the purpose of financing the · construction of any
such bridge may - be purchased · by · the Reconstruction Finance
Corporation irrespective of the dates of maturity of such bonds, when
it is the judgment of the board of directors of the Corporation that it
is necessary to purchase such securities and that it is not practicable
to require the reimbursement of the Corporation, within ten years,
through the repurchase or payment of such securities, or m any
other_manner.
2. DEFINITION OF SELF-LIQUIDATING PROJECTS.
A ·"self-liquidating project" is defined in the Act as follows:
". . . a project shall be deemed to be self-liquidating if such project will be made
eelf-BUpporting and financially solvent and if the construction cost thereof will .be returned within a reasonable period by means of tolls, fees, rents, or other charges, or by
such other means (other than by taxation) as may be prescribed by the statutes which
provide for the project."
·
This provision of the Act clearly imposes the requirement that
in order to be eligible for a loan the project must be one which will
produce sufficient revenues to make it "self-supporting" and to return
its construction cost within a reasonable period. _ TO,Xation is expressly excluded as a source of revenue for such purposes.
If the project meets these requirements its eligibility will not
be affected by the fact that the power of taxation is additionally
available for the payment of the loan.
In case of doubt as to whether the revenues of the project may
not be derived from taxation (for example, where such revenues are
derived from assessments imposed substantially in proportion to the
use cif the facilities afforded by the project), it is suggested that applicants, before preparing any formal application or other data with respect
to the project, furnish to the Reconstruction Finance Corporation proof
that such revenues do not constitute taxation. Such proof should
be accompanied by copies of all statutes, ordinances, and regulations
providing for or applicable to the revenues to be derived from the
project, together with full and detailed information as to the source
and nature- of· such revenues, the exact basis on which they are to be
assessed or collected, their relationship to the use of the project by
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those paying the same, and the purposes for which such revenues are
to be used. In case of several classes or sources of revenue, full
information should be given as to each and as to the expected amount
thereof.
The comments of this paragraph do not apply to projects for
publicly owned bridges which comply in all other respects with the
provisions of subdivision (5) of paragraph 1 above.
3. FULLY AND ADEQUATELY SECURED.
The Act expressly requires that all such loans made by the
Corporation shall be fully and adequately secured. In addition to
stating the amount of the loan requested from the Corporation and
the security offered therefor, applications should specifically state
what additional cash or property will be invested in the enterprise
and what security, if any, will be given therefor.
No loans or advances of the character referred to in this circular
may be made upon foreign securities or foreign acceptances as
collateral.
4. TERMS OF LOANS.
Loans may be made for such periods (not exceeding those stated
under paragraph 1 above), in such amounts, at such rates of interest
or discount, and on such terms and conditions, not inconsistent with
the Act, as the board of directors of the Corporation may determine
in each instance in the light of all the circumstances.
Loans of the character referred to in this circular may be made
at any time prior to January 23, i934.
S. 30-HOUR WEEK; PREFERENCE FOR EX-SERVICE MEN; CONVICT LABOR.
The Act prescribes certain limitations and conditions upon loans
and the Corporation will require a proper showing that such conditions will be met.
(a) Except in executive, fl.dministrative, and supervisory
positions, so far as practicable no individual directly employed
on any project shall be permitted to work more than thirty hours
in any one week.
(b) In the employment of labor in connection with any project preference shall be given, where they are qualified, to exservice men with dependents.
(c) No convict labor shall be directly employed on any
project.
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6. APPLICATIONS FOR LOANS.
Applications should be made in writing to the Reconstruction
Finance Corporation at its office at 1825 H Street N. W., Washington,
D.C.
In view of the diverse types of projects eligible for loans, it has
not been deemed advisable to prepare printed forms for applications.
All applications for such loans should present the information indi-:cated below and in the order there given.
Applications should be accompanied by appropriate maps, plans,
specifications, and all other data and memoranda necessary to a full
examination of the project. Such items should be marked as Exhibits "1," "2," etc., and the statements in the application should refer
to the pertinent pages of such exhibits. All exhibits should bear the
address of and be signed by the engineers, architects, appraisers,
accountants, and other experts who prepared them.
The application and all such exhibits should be firmly fastened
together, preferably in a single binder.
Three signed copies of each application (complete with all exhibits) should be filed, together with three additional copies of the
application proper to which exhibits need not be attached.
FORM OF APPLICATION
Summarized General Information
(1) Type of project and location.
(2) Full legal title of applicant, address, law under which organized, and date of organization.
(3) Name, title, and address of the person with whom correspondence should be conducted, and name and address of counsel for
the applicant and of consulting engineers, architects, etc.
(4) Summarized total cost of project, with subtotals showing:
(a) cost of construction,
(b) cost of land, rights of way, etc., and
(c) aggregate of other costs.
(5) Amount of loan applied for; proposed time or times of
repayment.
(6) Brief statement as to nature and sources of revenue.
(7) Statement that loan will be fully and adequately secured.
(8) Ti.me that will elapse after funds available, if loan granted,
before:
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(a) work can be commenced,
(b) project will be completed,
(c) project will become fully self-supporting, and
(d) construction cost will be fully returned from net
revenues.
(9) Condensed estimates of average number of men to be directly
employed thirty hours per week and cost of construction materials
to be delivered to the work during first three months after the loan
is made and for each succeeding quarterly period. Such data may
be shown in further detail in the construction schedule referred to
in subdivision (15) below.
(10) Statement as to all objections that are known to have
been made in respect of the project or the application to the Reconstruction Finance Corporation, together with names and addresses
of objectors; if no such objections, so state.
Nature and Coat of Project
(11) Condensed statements as to nature of project, and need
or market for the proposed service. Plans, specifications, maps
and explanatory memoranda, including reports by engineers, architects, appraisers, and other experts, should be attached to the
application.
(12) Statements as to the exact location, area, and assessed
valuation of land necessary for the project (including rights of way,
etc.), character of present improvements thereon, present ownership,
and proposed method of acquisition, together with a full discussion
of all known advantages and disadvantages of site for this particular project.
(13) Descriptions and amounts of all mortgages, mechanics'
liens, accrued taxes and other encumbrances on the property and
structures to be used in the project; if none, so state.
(14) Condensed statement as to estimated costs. Detailed
estimates should be attached to the application, segregated as to
(a) organization expenses, (b) cost of preliminary investigations
and engineering, architectural, and legal services, etc., (c) cost of
land, rights of way, etc., (d) cost of construction, and (e) carrying
charges for interest, insurance, taxes, etc., until project in full
operation. Const~ction costs should be shown in sufficient detail
to facilitate checking.
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(15) Condensed table showing sums required during the period
of construction, segregated by monthly intervals from the commencement of operations. Construction schedules showing times
for commencing the various parts of the project and the estimated
expenditures at various stages in the progress of the work, segregated by monthly intervals, should be attached to the application.
(16) Present status and :financial condition of project, including
statement as to work already done and its cost, and amounts
remaining unpaid thereon.
·
Fmancing of the Project
(17) Full statement of plans for financing the project to completion, including details as to methods of paying organization and other
expenses incurred to date; statement as to all additional future
:financing necessary or contemplated.
(18) Statement as to the proposed terms of the loan applied for,
including amount, type of obligations offered, interest rate, times
when it is desired that funds should become available to the applicant, times for repayment of the loan, sinking fund provisions, redemption privilege, if any, tax payment or refund features, if any,
and all like matters.
(19) Statements as to proposed provisions for giving "full and
adequate security" for the loan, including amount of cash and property to be invested in addition to the proceeds of the proposed loan,
and details as to conditions to be performed by applicant, or by
supervising architects, engineers, or others, before respective installments of proceeds of loan are to be made available, and as to completion bonds or other assurances as to application of the proceeds and
completion of the project.
(20) Full statement as to efforts to finance all or a substantial
part of the project through sources other than the Reconstruction
Finance Corporation, together with full information as to the time
of such negotiations, the parties thereto, the terms offered and
asked, and other details.
Revenues of the Project
(21) Nature and source of expected revenues, schedule of proposed charges, and statement as to whether the same are subject to
control by public authority and, if so, as to whether the requisite
approval has_been obtained.·
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(22) Statement as to existing and pi;ospective enterprises with
which the project might be considered to compete, and schedules
showing their charges; if no such enterprises, so state.
(23) Condensed estimates (with references to supporting data) as
to ,gross and net income conservatively to be expected from the
project during each year until the construction cost has been fully
repaid. Private corporations should also give like estimates covering
their entire business, including this project and all other enterprises
in which they are or expect to be engaged.
Detailed estimates and supporting data should be attached, such
exhibits showing, for each such year:
(a) detailed estimate of gross revenues, segregated accordto nature and source,
(b) detailed estimate of operating, maintenance, administrative, depreciation, obsolescence, and other expenses and
charges (including amortization of organization expenses and
initial carrying charges) and taxes, if any, other than income
taxes, but excluding interest on indebtedness,
(c) estimated net income before interest on indebtedness,
(d) interest requirements for such year on proposed loan,
and on all other indebtedness to be outstanding,
(e) provision for estimated income taxes, if any,
(j) net profit for such year, and
(g) sinking fund and principal requirements for such year
on proposed loan and on all other indebtedness to be outstanding, and estimated special assessments, or similar items, for
such year.
The basis for each estimate should be fully explained and data in
support thereof included.
Credit Information from Private Corporations
(24) Comparative balance sheets at the end of each of the last
five fiscal years and at the latest available date, certified by public
accountants, together with statement as to any change in the financial condition of the applicant since such date.
(25) Comparative earnings statements for each of the last five
fiscal years, and for the present fiscal year to the latest available
date, certified by public accountants.
(26) Copy of latest available auditors' report; if none, so state.
(27) Amount of net proceeds realized or to be realized per $100
on each issue of securities made since 1922 or proposed to be made;
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copies of prospectus or circular for each such issue should be attached
or the terms of such issue fully stated.
(28) Names, · addresses, credit references, salaries, and other
occupations of all officers and directors and amount of stock or other
securities of corporation owned by each; names and addresses of
ten largest stockholders and amount held by each.
Credit Information from Statea, Municipalities, Etc.
(29) Copy of published report or certified statement by chief
fiscal officer for each of the last three fiscal years, and for the present
fiscal year to the latest available date, showing in reasonable detail
the revenues and expenditures of the applicant for each such fiscal
period.
(30) Certificate by the proper official, covering each of the last
three fiscal years and the present fiscal year to the latest available
date, showing for each such fiscal period:
(a) assessed valuation of taxable real and personal property,
stated separately,
(b) basis of assessment,
(c) amount of taxes levied and rate,
(d) amount uncollected at time when taxes became de1inquent, and
(e) amount of taxes for such fiscal period now uncollected.
(31) Amount of net proceeds realized per $100 on each issue of
obligations at any time made in connection with the project, or any
similar project, and on the latest issue of general obligations of the
applicant; copies of prospectus or circular for each such issue should
be attached or the terms of such issue fully stated.
(32) Where available the data mentioned above under subdivisions (24) and (25) should also be supplied.
(33) Applications from States, municipalities, etc., requesting
the Corporation to purchase securities having a maturity of more
than ten years (see subdivisions (1) (e) and (5) (b) of paragraph 1
above) should contain detailed statements as to the efforts that have
been made to sell the proposed securities to others, together with all
additional information necessary to enable the directors of the
Corporation to pass judgment on the necessity for the purchase of
such securities and the impracticability of requiring reimbursement
of the Corporation within ten years through the repurchase or payment of such securities or in any other manner.
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Further Credit Information From All Appl~canta
(34) Complete information as to the applicant's credit relations
with banks and other financial institutions, and high and low quotations for each of the past five years of all obligations of the applicant
held by the public and current quotations thereof.
(35) Financial history of any similar projects undertaken by
applicant or principal parties in interest.
(36) Full particulars as to any default, present or past, in respect
of any indebtedness of the applicant; if no such default, so state.
(37) Statement as to any legal limitation on amount of debt
that can be incurred, and amount of obligations presently issuable
thereunder.
Legal Data
(38) A signed copy of an opinion by counsel for:lthe applicant
should be attached, such opinion to be to the effect that the application has been executed by a duly authorized officer, that the Reconstruction Finance Corporation has full authority to make the proposed
loan, that such loan would constitute a valid and binding obligation
of the applicant, and that there are no legal obstacles to carrying
out the proposed project or to giving the Corporation the proposed
security.
A legal memorandum should also be attached, signed by counsel
for the applicant, discussing in detail all legal questions arising in
connection with the acquisition of the properties, the proposed construction work (including damages to abutting owners and other like
problems), the operation of the project after completion, the validity
of the proposed charges for the services to be rendered by the project,
the validity of the loan, and the proposed security offered. Among
other points the memorandum should discuss fully:
(a) the constitutional, statutory, and corporate power of the
applicant to enter into the project and to incur the proposed indebtedness, with particular reference to debt limitations,
(b) the legal proceedings and formalities taken and required
to be taken by the applicant with respect to the project and the
proposed loan,
(c) any franchises, approvals, permits, water rights, certificates of convenience and necessity, etc., obtained or required
to be obtained from Federal, State, . municipal, or other
authorities,
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(d). any applicable franchise rights or rights of eminent
domain or condemnation,
(e) regulation by any public authority as to the proposed
charges,
(f) validity of the security offered,
· (g) any statutory or other provisions for the recapture or
other acquisition of the project by any State, municipality, etc.,
and
(h) the status of the proposed obligations offered to the
Corporation as regards any exemption from State, municipal, or
local taxation if in the hands of private investors, and as regards
qualification as a legal investment for savings banks, insurance
companies, trust funds, etc., under the law of the State in
question.
All constitutional provisions, statutes, ordinances, regulations,
charter or by-law provisions, etc., applicable to the project or the
:financing, construction, or operation thereof, or the revenues to be
derived therefrom, or the proposed loan or the security therefor, and
any franchises, approvals, permits, etc., obtained from Federal, State,
municipal, or other public authorities, and any proceedings taken
by the applicant with respect to the project or its financing, should
be cited in the memorandum. Copies of all such documents which
will be of importance for proper consideration of such legal questions by the Corporation should be attached.
(39) Full statement as to any litigation, pending or threatened,
which might affect the project, the proposed loan, or the financial
condition of the applicant; if no such litigation pending or threatened,
so state.
(40) Brief description of terms of all existing and proposed contracts, leases, and other agreements with respect to the project, or
the financing, construction, operation, maintenance, or use thereof,
copies of which should be attached as exhibits.
Miacellaneoua
(41) Full statement as to all financial, corporate, or personal relationships, direct or indirect, between any person, firm, or corporation
which has entered into any contract, lease, or other agreement with respect to the project or the.financing, construction, operation, maintenance, or use thereof, or which it is proposed will enter into any such
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contract, lease, or other agreement, and (a) the applicant, (b) any
official, officer, director, or stockholder of the applicant, or (c) any
interest affiliated with the applicant; if no such relationship, so state.
(42) Statement that the applicant consents to and authorizes such
examinations as the Reconstruction Finance Corporation may require
and/or that reports of examinations by constituted authorities may
be furnished by such authorities to the Corporation upon request
therefor.
(43) Statement that no fee or commission has been or will be paid
by the applicant in connection with the application or any loan made
or to be made by the Reconstruction Finance Corporation, and that
no agreement to pay any such fee or commission has been or will be
made.
(44) Statement that the applicant agrees that no convict labor
shall be directly employed on the project, and that (except in executive, administrative, and supervisory positions), so far as practicable,
no individual directly employed on the project shall be permitted to
work more than thirty hours in any one week, and that in the employment of labor in connection with the project preference shall be given,
where they are qualified, to ex-service men with dependents.
(45) Certificate under the seal of the applicant, by its secretary
or other proper officer, and sworn to before a notary public, as to the
names, titles, signatures, and incumbency and term of office of the
appropriate officers of the applicant.
7. PROCEDURE
Corporate and municipal applicants should have resolutions
adopted by their boards of directors or other governing bodies
authorizing one or more of certain named officers to execute and
deliver the application and any exhibits thereto in the exact form in
which it is submitted, and further authorizing such officers to supply
the Reconstruction Finance Corporation with any other instruments
or data it may request in connection with such application. Acertified copy of such resolutions should be attached to the application
as an exhibit.
All applications, including those from States, municipalities,
etc., should be verified. The verification by corporations and municipalities should be in substantially the following form:
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STATJI 01' - - - - - - -
County of------------------, as:
---------------------------------- makes oath and says that he is the
(Name or a111ant)
__________ of --------------------------------------------------------------i that he has care(Ollloe held by alllant)
(Full legal title or applicant)
fully examined each and all of the statements contained in the foregoing application and in
the exhibits and other data attached thereto or submitted therewith; that such statements
are true and correct to the best of his knowledge and belief; that such application is made with
the approval and at the direction of the ------------------------------- of said applicant,
(Governing body)
as appears by a resolution duly adopted at a meeting thereof, a certified copy of which is
attached to such application, said meeting having been held at _____________________________________ _
on the ____________ day of---------------, 193 ; and that he is the person who has
been authorized by such resolution to execute such application.
(Signature or afllant)
Subscribed and sworn to before me, a --------------------------------------------- in and for the
State and county above named, this __________________ day of ------------------------------------, 193
[Sl!IAL]
My commission expires ------------------------------------------------
Applications by States should be verified by the Governor and the
chief fiscal officer, appropriate changes and omissions being made in
the above form.
The applicant will be duly notified of any additional information
required, and of the action taken by the Reconstruction Finance
Corporation.
8. STATUTORY PROVISIONS.
The following sections of the Emergency Relief and Construction
Act of 1932, applicable to loans of the character referred to in this
circular, are quoted for the information of applicants:
Title 11-Loana by Reconatruction Finance Corporation.
S:mc. 201. (a) The Reconstruction Finance Corporation is authorized and empowered(1) to make loans to, or contracts with, States, municipalities, and political subdivisions
of States, public agencies of States, of municipalities, and of political subdivisions of States,
public corporations, boards and commissions, and public municipe.l instrumentalities of one
or more States, to aid in financing projects authorized under Federe.I, State, or municipal law
which are self-liquidating in character, such loans or contracts to be made through the
purchase of their securities, or otherwise, and for such purpose the Reconstruction Finance
Corporation is authorized to bid for such securities: Provided, That nothing herein contained
ahall be construed to prohibit the Reconstruction Finance Corporation, in carrying out the
provisions of this paragraph, from purchasing securities having a maturity of more than ten
years;
(2) to make loans to corporations formed wholly for the purpose of providing housing
for families of low income, or for reconstruction of slum areas, which are regulated by State
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or municipal law as to rents, charges, capital structure, rate of return, and areas.and methods
of operation, to aid in financing projects undertaken by such <'Orporations which are selfliquidating in character;
(3) to make loans to private corporations to aid in carrying out the construction,
replacement, or improvement of bridges, tunnels, docks, viaducts, waterworks, canals, and
markets, devoted to public use and which are self-liquidating in character;
(4) to make loans to private limited dividend corpora~ons to aid in financing projects
for the protection and development of forests and other renewable natural resources, which
are regulat.ed by a State or political subdivision of a State and are self-liquidating in character; and
(5) to make loans to aid in financing the construction of any publicly owned bridge to
be used for railroad, railway, and highway uses, the construction cost of which will be
returned in part by means of tolls, fees, rents, or other charges, and the remainder by means
of taxes imposed pursuant to State law enacted before the date of enactment of the Emergency
Relief and Construction Act of 1932; and the Reconstruction Finance Corporation is further
authorized and empowered to purchase bonds of any Stat.e, municipality, or other public
body or agency issued for the purpose of financing the construction of any such bridge
irrespective of the dates of =turity of such bonds.
For the purposes of this subsection a project shall be deemed to be self-liquidating if
such project will be made self-supporting and financially solvent and if the const~ction
cost thereof will be returned within a reasonable period by means of tolls, fees, rents, or other
charges, or by such other means (other than by taxation) as may be prescribed by the
statutes which provide for the project. All loans and contracts made by the Reconstruction
Finance Corporation in respect of projects of the character specified in paragraphs (1) to (5)
of this subsection shall be subject to the conditions that no convict labor shall be directly
employed on any such project, and that (except in executive, administrative, and supervisory positions), so far as practicable, no individual directly employed on any such project
shall be permitted to work more than thirty hours in any one week, and that in the employment of labor in connection with any such project preference shall be given, where they are
qualified, to ex-service men with dependents.
The provisions of this subsection shall apply with respect to projects in Puerto Rico
and the Territories to the same extent as in the case of projects in the several States, and as
used in this subsection the term "States" includes Puerto Rico and the Territories.
(b) The Reconstruction Finance Corporation shall submit monthly to the President
and to the Senate and tne House of Representatives (or the Secretary of the Senate and the
Clerk of the House of Representatives, if those bodies are not in session) a report of its
activities and expenditures under this section and under the Reconstruction Finance Corporation Act, together with a statement showing the names of the borrow~rs to whom loans
and advances were made, and the amount and rate of interest involved in each case.
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(f) All loans made under this section, and all contracts of the character described in
paragraph (1) of subsection (a), shall be fully and adequately secured. The corporation,
under such conditions as it shall prescribe, may take over or provide for the administration
and liquidation of any collateral accepted by it as security for such loans. Such loans shall
be made on such terms and conditions, not inconsistent with this act, as the corporation
may prescribe, and =Y be made directly upon promissory notes or by way of discount or
rediscount of obligations tendered for the purpose, or otherwise in such form and in such
amount and at such interest or discount rates as the corporation may approve: Provided,
That no loans or advances (except loans under subsection (c)) shall be made upon foreign
securities or foreign acceptances as collateral.
(g) 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:
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Prowled, That .l~ans or contracts of the charact.er described in subsection (a) may be made
for a periQ<i _n ot exceeding t.en y~: Provided further, That loans or contracts of the character
desaribed in paragraph (1) or (5) of subsection (a) may be made for a period exceeding ten
years when it is the judgment of the board of directors of the corporation that it is necessary
to purchase securities as provided in such paragraphs and that it is not practicable to require
the reimbursement of the corporation, wit~ ten years, through the repurchase or payment
of such securities, or in any other manner.
(h) The corporation may make loans under this section at any time prior to January
23, 1934.
(i) No fee or commission shall be paid by any applicant for a loan under the provisions
of this 1!8Ction in connection with any such application or any loan made or to be made under
this section,, and the agreement to pay or payment of any such fee or commission shall be
unlawful. .
(j) No loan under this section shall be made to a railroad or to a receiver of a railroad
except on·the approval of the Interstate Commerce Commission. Any railroad may obligate
itself in such form as shall be prescribed and otherwise comply with the requirements of the
Interstate .Commerce Commission and the corporation with respect to the deposit or assignment ·of security hereunder, without the authorization or approval of any authority, State
or Federal, and without compliance with any requirement; State or Federal, as to notifica-tion, oth~ than such as may be imposed by the Interstate Commerce Commission and
the corporation under the provisions of this section.
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·S.11c. ~4. Section 8 of tlie Reconstruction Finance Corporation Act is amended to read
as follows:
"SEC. 8. In order to enable the corporation to carry out the provisions of this Act and the
Emergency Relief and Construction Act of 1932, the Treasury Department, the Federal Farm
Loan Board, 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 information as they may have available relating to the condition
of applicants with respect to whom the corporation has had or contemplates having transactions under either of such Acts, or relating to individuals, associations, partnerships, corporations, or other obligors whose obligations are offered to or held by the corporation as
security for loans under either of such Acts, and to make, through their examiners or other
employees for the confidential use of the corporation, examinations of applicants for loans.
Every applicant for a loan under either of such Acts shall, as a condition precedent thereto,
consent to such examination as the corporation may require for the purposes of either of such
Acts and that reports of examinations by constituted authorities may be furnished by such
authorities to the corporation upon request therefor."
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Smc. 206. * * • As used in this title and in section 15 of the Reconstruction
Finance Corporation Act the term ''State" includes the District of Columbia, Alaska, Hawaii,
and Puerto Rico.
SEC. 207. No loan or advance shall be approved under this section or under the Reconstruction Finance Corporation Act, directly or indirectly, to any financial institution, any
officer or director of which is a member of the board of directors of the Reconstruction
Finance Corporation or has been such a member within the twelve months preceding the
approval of the loan o-:: advance.
The following sections of the Reconstruction Finance Corporation Act are also quoted for the information of applicants:
SEc. 16. (a) Whoever makes any statement knowing it to be false, or whoever willfully
overvalues any security, for the purpose of obtaining for himself or for any applicant any
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loan, or extension thereof by renewal, cleferment 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 corporation, or for the purpose of obtaining money, property, or anything of
value, 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 pa.BB, 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 p&BB, 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,
or any person who willfully violates any other provision of this Act, shall be punished by a
fine of not more than $10,000 or by imprisonment for not more than five years, or both•
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(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.
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@FedFRASER