Full text of Circulars of the Reconstruction Finance Corporation : Circular No. 4 : Reconstruction Finance Corporation : Its Powers and Functions

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CIRCULAR No. 4
(REVISED)

RECONSTRUCTION
FINANCE CORPORATION
ITS POWERS AND FUNCTIONS

AUGUST 1933

UNITED~STATE.5
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1933

RECONSTRUCTION FINANCE CORPORATION
1825 H

STREET NORTHWEST

w ASHINGTON,

D. c.

DIRECTORS AND OFFICERS
JESSE H. JONES, Chairman, Board of Directors.
W. H. WooDIN (Secretary of the Treasury), Director Ex Officio.
JOHN J. BLAINE, Director.
HARVEY C. CoucH, Director.
WILSON McCARTHY, Director.·
CARROLL B. MERRIAM, Director.
FREDERICH. TABER, Director.
GEORGE R. CooKSEY, Secretary.
STANLEY REED, General Counsel.
HENRY A. MULLIGAN, Treasurer.

RECONSTRUCTION FINANCE CORPORATION
The Reconstruction Finance Corporation was created by "An Act to provide emergency financing facilities for financial institutions, to aid in financing
agriculture, commerce, and industry, and for other purposes", approved January 22, 1932, which may be cited as the "Reconstruction Finance Corporation
Act." The powers of the Corporation were increased and the scope of its operations extended by subsequent legislation. This circular outlines the organization, functions, and authority of the Corporation under existing law.
I. MANAGEMENT AND ORGANIZATION

The Reconstruction Finance Corporation was organized on February 2, 1932,
pursuant to the provisions of the Reconstruction Finance Corporation Act
which provides that it shall have succession for a period of 10 years from January 22, 1932, unless sooner dissolved by an act of Congress. Under the Act,
as amended, its management is vested in a board of directors consisting of
the Secretary of the Treasury (or, in his absence, the Under Secretary of the
Treasury), who is a member ex officio, and six other directors appointed by the
President of the United States by and with the advice and consent of the Senate.
The Corporation functions through a principal office at Washington and
loan agencies established in cities throughout the United States, as follows:
Atlanta, Ga.
Birmingham, Ala.
Boston, Mass.
Charlotte, N.C.
Chicago, Ill.
Cleveland, Ohio.
Dallas, Tex.
Denver, Colo.
Detroit, Mich.
El Paso, Tex.
Helena, Mont.

Houston, Tex.
Jacksonville, Fla.
Kansas City, Mo.
Little Rock, Ark.
Los Angeles, Calif.
Louisville, K y .
Minneapolis, Minn.
Nashville, Tenn.
New Orleans, La.
New York, N.Y.
Oklahoma City, Okla.

Omaha, Nebr.
Philadelphia, Pa.
Portland, Oreg.
Richmond, Va.
St. Louis, Mo.
Salt Lake City, Utah .
San Antonio, Tex.
San Francisco, Calif.
Seattle, Wash.
Spokane, Wash.

In addition to the foregoing, the Corporation has a special representative at
San Juan, Puerto Rico.
The Federal Reserve banks are authorized to act as depositories, custodians,
and fiscal agents for the Corporation. The proceeds of loans generally are
disbursed by the Corporation through the Federal Reserve banks and their
branches which also, acting as custodians, hold the primary obligations of borrowers evidencing indebtedness to the Corporation, as well as the collateral
pledged with the Corporation as security therefor. Since there is no Federal
Reserve bank or branch bank in Puerto Rico, the Insular Treasurer at San
Juan acts as custodian for the Corporation.
The funds of the Corporation are kept on deposit with the Treasurer of the
United States.
4843-33

(1)

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II. LOANS TO FINANCIAL INSTITUTIONS AND RAILROADS UNDER
SECTION 5 OF THE RECONSTRUCTION FINANCE CORPORATION
ACT, AS AMENDED

The Corporation, under the provisions of section 5 of the Reconstruction
Finance Corporation Act, as amended, is authorized to make loans at any time
prior to January 22, 1934, on full and adequate security and upon the terms and
conditions stated in the law, to:
Any bank, savings bank, trust company, building and loan association, insurance company, mortgage loan company, credit union,
Federal land bank, joint-stock land bank, Federal intermediate credit
bank, agricultural credit corporation, livestock credit corporation,
organized under the laws of any State, the District of Columbia,
Alaska, Hawaii, Puerto Rico, or the United States, including loans
secured by the assets of any bank, savings bank, or building and
loan association that is closed, or in process of liquidation, to aid in
their reorganization or liquidation, upon application of the receiver
or liquidating agent of such institution.
Under the same section of the law, the Corporation is authorized, upon tbe
approval of the Interstate Commerce Commission, to make loans to:
(a) Railroads and railways engaged in interstate commerce, to aid in
the temporary financing thereof, to railroads and railways in
process of construction, and to receivers of such railroads and
railways, when, in the opinion of the board of directors of the
Corporation, such railroads or railways are unable to obtain
funds upon reasonable terms through banking channels or from
the general public and the Corporation will be adequately
secured.
(b) Trustees of railroads which proceed to reorganize under section 77
of the Bankruptcy Act of March 3, 1933.
Loans under section 5 of the Reconstruction Finance Corporation Act, as
amended, may be made for a period not exceeding 3 years, and the Corporation
may renew or extend the time of payment up to a maximum of 5 years from the
dates upon which such loans were made originally.
Section 4 of an Act of Congress, approved June 10, 1933, provides that the
Corporation shall not make, renew, or extend any loan under the Reconstruction Finance Corporation Act, as amended, or under the Emergency Relief and
Construction Act of 1932:
(1) If at the tinrn of making, renewing, or extending such loan any
officer, director, or employee of the applicant is receiving compensation at a rate in excess of what appears reasonable to the
Corporation, and

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(2) Unless at such time the applicant agrees to the satisfaction of the
Corporation not to increase the compensation of any of its
officers, directors, or employees to any amount in excess of what
appears reasonable to the Corporation while such loan is outstanding and unpaid.
For the purposes of this section, the term "compensation" includes
any salary, fee, bonus, commission, or other payment, direct or indirect,
in money or otherwise for personal services.
Section 5 of the Reconstruction Finance Corporation Act, as amended,
provides that in no case shall the aggregate amount of advances made thereunder to any one corporation and its subsidiary or affiliated organizations
exceed at any one tinie 2% per centum of
(1) The authorized capital stock of the Reconstruction Finance Corporation, plus
(2) The aggregate amount of bonds authorized to be outstanding when
the capital stock is fully subscribed. 1
Section 5 also provides that no loans or advances shall be made upon
foreign securities or foreign acceptances as collateral or for the purpose of
assisting in the carrying or liquidation of such foreign securities and foreign
acceptances.
III. SUBSCRIPTIONS FOR PREFERRED STOCK OF NATIONAL OR
STATE BANKS OR TRUST COMPANIES, LOANS SECURED BY
SUCH STOCK AS COLLATERAL, OR PURCHASES OF CAPITAL
NOTES OR DEBENTURES OF STATE BANKS OR ,TRUST COMPANIES

Under section 304 of the Act of Congress approved March 9, 1933, as
amended, the Reconstruction Finance Corporation is authorized to subscribe
for preferred stock, exempt from double liability, in any National or State bank
or trust company,2 upon the request of the Secretary of the Treasury with the
approval of the President. The Corporation also is authorized to make loans
secured by the preferred stock of National or State banks or trust companies
as collateral, upon the request of the Secretary of the Treasury with the approval
of the President. In any case in which a State bank or trust company is not
permitted, under the laws of the State in which it is located, to issue preferred
stock exempt from double liability, or if such laws permit such issue of preferred
stock only by unanimous consent of stockholders, the Corporationis authorized, for the purposrs of this section, to purchase the legally issued capital notes
or debentures of such State bank or trust company.
The Corporation is further authorized, with the approval of the Secretary
of the Treasury, and under such rules and regulations as he may prescribe, to
1 See X.-FUNDS OF THE RECONSTRUCTION FINANCE CORPORATION under heading 2-Issue of
notes, debentures, bonds, or other such obligations, pp. l}-U.
2 As used herein "State bank or trust company" includes other banking corporations engaged in the business of industrial banking and under the rnr,erYision of State banking departments or of the Comptroller_ of the Currency,

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sell in the open market the whole or any part of the preferred stock, capital
notes, or debentures of any National or State bank or trust company acquired
by the Corporation pursuant to the foregoing authority.
More detailed information regarding this subject is contained in Reconstruction Finance Corporation Circular No. 6.
IV. SUBSCRIPTIONS FOR PREFERRED STOCK AND PURCHASES
OF CAPITAL NOTES OF INSURANCE COMPANIES, AND LOANS
SECURED BY SUCH STOCK OR NOTES AS COLLATERAL

Pursuant to the provisions of an Act of Congress approved June 10, 1933,
as amended, the Corporation is authorized, upon the request of the Secretary
of the Treasury with the approval of the President, to subscribe for preferred
stock of any class, exempt from assessment or additional liability, in any
insurance company 3 of any State of the United States which is in need of
funds for capital purposes either in connection with the organization of such
company or otherwise, or to make loans secured by such stock as collateral.
The Corporation further is authorized, with the approval of the Secretary of
the Treasury, and under such rules and regulations as he may prescribe, to sell
in the open market the whole or any part of the preferred stock of any such
insurance company acquired by it pursuant to the aforesaid provisions of law.
In the event that any such insurance company shall be incorporated under
the laws of any State which does not permit it to issue preferred stock exempt
from assessment or additional liability, or if such laws permit such issue of
preferred stock only by unanimous consent of stockholders, or upon notice of
more than 20 days, the Corporation is authorized, for the purposes indicated
above, to purchase the legally issued capital notes of such insurance company
or to make loans secured by such notes as collateral, which may be subordinated
in whole or in part or to any degree to claims of other creditors.
The Corporation may not subscribe for any such preferred stock or purchase any such capital notes of any applicant insurance company:
(1) If at the time of such subscription, purchase, or loan, any officer,
director or employee of the applicant is receiving total compensation, including any salary, fee, bonus, commission, or other
payment, direct or indirect, in money or otherwise, for personal
services, in a sum in excess of $17,500 from the applicant and/or
any of its affiliates; and
(2) Unless at such time the applicant agrees to the satisfaction of the
Corporation not to increase the compensation of any of its
officers, directors, or employees.
Subscriptions for preferred stock, purchases of legally issued capital notes, or
loans upon preferred stock or capital notes of insurance companies may be made
by the Corporation during the continuance of the emergency recognized by tha
Act approved March 9, 1933, as amended, or until the Act approved June 10,
'As used herein the term "insurance company" includes any corporation engaged in the business of insurance or in
the writing of annuity contracts, irrespective of the nature thereof, and operating under the supervision of a State super•
i!ltendent or department of tpsµrapce in any of the States of the United States,

5

1933, as am?nded, shall be declared no longer operative by proclamation of the
President.
The total amount of loans outstanding, preferred stock subscribed for,
and capital notes purchased and held by the Corporation pursuant to the
aforesaid provisions of law relating to insurance companies may not exceed
at any one time $50,000,000.
More detailed information regarding this subject is contained in Reconstruction Finance Corporation Circular No. 8.
V. LOANS TO REDUCE AND REFINANCE THE OUTSTANDING INDEBTEDNESS OF AGRICULTURAL IMPROVEMENT DISTRICTS
FOR THE BENEFIT OF FARMERS

Section 36 of the Emergency Farm Mortgage Act of 1933, as amended,
authorizes the Corporation to make loans, not to exceed a.n aggregate amount
of $50,000,000, to or for the benefit of drainage districts, levee districts, levee
and drainage districts, irrigation districts, and similar districts duly organized
under the laws of any State, and to or for the benefit of political subdivisions
of States, which prior to May 12, 1933 (the date on which the Emergency
Farm Mortgage Act of 1933 became law), have completed projects devoted
chiefly to the improvement of lands for agricultural purposes. Such loans
shall be made for the purpose of enabling any such district or political subdivision to reduce or refinance its outstanding indebtedness incurred in connection
with any such projects. They are subject, with certain exceptions, to the same
terms and conditions as loans under section 5 of the Reconstruction Finance
Corporation Act, as amended.
More detailed information regarding this subject is contained in Reconstruction Finance Corporation Circular No. 7.
VI. LOANS FOR THE EXPORTATION OF AGRICULTURAL OR OTHER
PRODUCTS

Under section 5a of the Reconstruction Finance Corporation Act, the
Corporation is authorized, subject to specified limitations, to accept drafts
and bills of exchange drawn upon it, having at the time of acceptance a maturity
of not more than 12 months, which grow out of transactions involving the exportation of agricultural or other products actually sold or transported for sale
subsequent to the enactment of the law, and in process of shipment to buyers
in foreign countries. All such drafts and bills of exchange must be in terms
payable in the United States, in currency of the United States, and, in addition
to the draft or bill of exchange, must at all times be fully secured by American
securities as collateral, or must be guaranteed by a bank or trust company of
undoubted solvency, organized under the laws of the United States or any
State, Territory, or insular possession thereof.
Under section 201 (c) of the Emergency Relief and Construction Act of
1932, the Corporation is authorized to make loans for the purpose of financing
sales of surpluses of agricultural products in the markets of foreign countries

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in which such sales cannot be financed in the normal course of commerce, in
order that such surpluses may not have a depressing effect upon current prices
of such products; but it is stipulated that no such sales shall be financed by the
Corporation if, in its judgment, such sales will affect adversely the world markets
for such products, and that no such loan may be made to finance the sale in
the markets of foreign countries of cotton owned by the Federal Farm Board
or the Cotton Stabilization Corporation. All loans made under this section
must be fully and adequately secured.

VII. LOANS FOR THE CARRYING AND ORDERLY MARKETING OF
AGRICULTURAL COMMODITIES AND LIVESTOCK
Under section 201 (d) of the Emergency Relief and Construction Act of
1932, the Corporation is authorized, at any time prior to January 23, 1934, to
make loans to bona fide institutions, organized under the laws of any State or
of the United States and having resources adequate for their undertakings, for
the purpose of ena.bling them to finance the carrying and orderly marketing of
agricultural commodities and livestock produced in the United States. All
such loans are required to be fully and adequately secured.

VIII. OTHER LOANS AND ADVANCES
1. Other Loans Under Section 5 of the Reconstruction Finance Corporation

Act, as amended
The Corporation is authorized to make loans under section 5 of the
Reconstruction Finance Corporation Act, as amended, to:
(a) Any State insurance fund established or created by the laws of
any State (including Alaska, Hawaii, and Puerto Rico), for
the purpose of paying or insuring payment of compensation
to injured workmen and those disabled as a result of disease
contracted in the course of their employment, or to their
dependents.
(b) Any fund created by any State (including Alaska, Hawaii, and
Puerto Rico), for the purpose of insuring the repayment of
deposits of public moneys of such State, or any of its political
subdivisions, in banks or depositories qualified under the law of
such State to receive such deposits.
(c) Parties to any marketing agreement entered into by the Secretary
of Agriculture with processors, associations of producers, and
others engaged in the handling, in the current of interstate or
foreign commerce, of any agricultural commodity or product
thereof, for the purpose of carrying out any such agreement; as
authorized by section 8 of the Agricultural Adjustment Act.
(d) Processors or distributors of agricultural commodities for the
payment of proceEsing and compensating taxes levied pursuant
to the provisions of Title I of the Agricultural Adjustment
Act; as authorized by section 19(c) thereof.

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2. Loans and Advances to the Secretary of Agriculture to Acquire Cotton
Under the provisions of section 5 of the Agricultural Adjustment Act,
approved May 12, 1933, the Corporation is authorized and directed to advance
money and to make loans to the Secretary of Agriculture to acquire (a) all
cotton owned by the Federal Farm Board and all departments or other agencies
of the Government, not including the Federal intermediate credit banks, and
(b) all cotton on which money has been loaned or advanced by any department
or agency of the United States, including futures contracts for cotton, or which
is held as collateral for loans or advances; and to pay the classing, carrying, and
merchandising costs thereon, in such amounts and upon such terms as may be
agreed upon by the Secretary of Agriculture and the Reconstruction Finance
Corporation.

3. Loans to Receivers Appointed under Section 29 of the Federal Farm Loan
Act, as amended, or by a United States District Court
Section 27 of the Emergency Farm Mortgage Act of 1933, approved May
12, 1933,. as amended, authorizes the Reconstruction Finance Corporation,
upon approval of the Land Bank Commissioner, to make loans to any receiver
appointed pursuant to section 29 of the Federal Farm Loan Act, as amended,
or to any receiver appointed by a district court of the United States for the
purpose of paying taxes on farm real estate owned by such bank in receivership
or securing the mortgages held by it. The receiver may issue receiver's certificates against the assets of such bank as security for any such loan received from
the Reconstruction Finance Corporation, and such certificates shall constitute
a prior lien on such assets.

4. Loan to the Corporation of Foreign Security Holders
The Corporation of Foreign Bondholders Act, i933, approved May 27,
1933, which is not to take effect until the President finds that such action is in
the public interest and by proclamation so declares, creates a body corporate
with the name of the "Corporation of Foreign Security Holders" for the purpose
of protecting, conserving, and advancing the interests of the holders of foreign
securities in default. Under section 209 of such Act, the Reconstruction Finance
Corporation is authorized to loan out of its funds not to exceed $75,000 for the
use of the Corporation of Foreign Security Holders.

5. Advances to the Reclamation Fund
Section 37 of the Emergency Farm Mortgage Act of 1933 authorizes the
Corporation, upon request of the Secretary of the Interior, to advance funds to
the reclamation fund created by the Act of June 17, 1902, not exceeding
$5,000,000 for the completion of projects or divisions of projects now under
construction, or projects approved or authorized. Funds so advanced shall be
repaid out of any receipts and accretions accruing to the reclamation fund
within such time as may be fixed by the Reconstruction Finance Corporation,

8

not exceeding 5 years from the date of advance, with interest at the rate of 4
per centum per annum. Sums so advanced may be expended in the same way
as other moneys in the reclamation fund.
IX. FUNDS OF RECONSTRUCTION FINANCE CORPORATION ALLOCATED AND MADE AVAILABLE TO OTHER GOVERNMENTAL
AGENCIES
1. Allocation of Funds to the Secretary of Agriculture and Farm Credit
Administration

Under section 2 of the Reconstruction Finance Corporation Act, the
Corporation was authorized to allocate and make available to the Secretary of
Agriculture a certain part of its funds in order to enable the Secretary to make
loans to farmers for crop production purposes during 1932. Pursuant to the
provisions of section 201 (e) of the Emergency Relief and Construction Act of
1932 the Corporation paid for the capital stock of the regional agricultural
credit corporations out of the unexpended balance of the amounts allocated
and made available to the Secretary of Agriculture under this section of the law.
By an Act of Congress approved February 4, 1933, the authority of the Secretary of Agriculture was extended with respect to the use of funds allocated and
made available to him by the Reconstruction Finance Corporation so as to
enable him to make loans, within certain limitations, to farmers during 1933.
The availability of funds allocated under the foregoing provisions of law for the
purpose of making loans to farmers was trans£ erred from the Secretary of Agriculture to the Farm Credit Administration by the Executive order of March
27, 1933, effective May 27, 1933, and to the Governor of the Farm Credit
Administration by section 5 of the Farm Credit Act of 1933.
2. Allocation of Funds to Land Bank Commissioner

The Corporation is authorized and directed, under section 30 (a) of the
Emergency Farm Mortgage Act of 1933, to make available to the Land Bank
Commissioner the sum of $100,000,000, to be used for a period not exceeding
2 years from the date of the enactment of such Act, i.e., May 12, 1933, for
the purpose of making loans to joint-stock land banks.
Under section 32 of the same Act, the Corpora.tion is authorized and directed
also to allocate and make available to the Land Bank Commissioner the sum of
$200,000,000, or so much thereof as mny be necessfily, to be used for the purpose
of making lonns to farmers.
3. Funds Made Available to the Federal Emergency Relief Administrator

Section 2 (a) of the Federal Emergency Relief Act of 1933 authorizes and
directs the Corporation to make available out of the funds of the Corporation
not to exceed $500,000,000, for expenditure in accordance with the terms stated
in the Act, upon certification by the Federal Emergency Relief Administrator,
for the purpose of furnishing relief to needy and distressed people. Section 3 (b)

of such Act provides that the Corporation shall pay the expenses, not exceeding

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$350,000, of the Federal Emergency Relief Administration, out of the funds
made available by the Act, upon presentation of vouchers approved by the
Administrator or by an officer of that Administration designated by him for that
purpose.

4. Capital of Federal Home Loan Banks Subscribed by the United States
Section 6 (f) of the Federal Home Loan Bank Act amended the Reconstruction Finance Corporation Act to provide that $125,000,000, or as much
thereof as may be necessary for the purpose, be allocated and made available
by the Corporation to the Secretary of the Treasury in order to enable him to
pay for the capital stock of Federal Home Loan Banks subscribed for by the
United States.

5. Capital of Home Owners' Loan Corporation Subscribed by the United States
Section 4 (b) of the Home Owners' Loan Act of 1933 authorizes and directs
the Reconstruction Finance Corporation to allocate and make available to the
Secretary of the Treasury the sum of $200,000,000, or so much thereof as may
be necessary, in order to enable him to make payments for subscriptions for
the capital stock of the Home Owners' Loan Corporation, created by such Act.

X. FUNDS

OF THE RECONSTRUCTION FINANCE

CORPORATION

1. Capital Stock

The capital stock of the Corporation was fixed by S<'ction 2 of the Reconstruction Finance Corporation Act at° $500,000,000, all of which was subscribed
by the Secretary of the Treasury on behalf of the Government of the United
States on February 2, 1932. The entire capital stock has been paid in by the
Secretary of the Treasury and is held by the United States.

2. Issue of Notes, Debentures, Bonds, or Other Such Obligations
The Reconstruction Finance Corporation Act, as amended by the Emergency Relief and Construction Act of 1932, authorizes the Corporation, with
the approval of the Secretary of the Treasury, to issue, and to have outstanding
at any one time, its notes, debentures, bonds, or other such obligations in an
amount aggregating not more than six and three-fifths times its subscribed
capital stock.
However, the National Industrial Recovery Act, which terminated the
power of the Reconstruction Finance Corporation to make loans or contracts to
finance self-liquidating projects, etc., under the provisions of section 201 (a) of
the Emergency Relief and Construction Act of 1932, as amended, provides that
the amount of notes, debentures, bonds, or other such obligations which the Reconstruction Finance Corporation is authorized to have outstanding at any one
time is decreased $400,000,000. On the other hand, the amount of notes, debentures, bonds, or other such obligations which the Corporation is authorized

10
to issue and have outstanding at any one time is increased by the provisions
of other laws, as follows:
(a) By an amount not to exceed $125,000,000, in order to enable the
Secretary of the Treasury to make payments for subscriptions
for capital stock of the Federal Home Loan Banks, as provided for in section 6 (f) of the Federal Home Loan Bank Act.
(b) By such amount as may be necessary(1) To enable the Corporation to subscribe for preferred
stock of National or State banks or trust companies,
to make loans secured by such stock as collateral, and
to purchase capital notes or debentures of State banks
or trust companies, as provided by section 304 of an
Act. approved March 9, 1933, as amended;
(2) To enable the Corporation to make loans to the Secretary of Agriculture to acquire certain cotton and to
pay the classing, carrying, and merchandising costs
thereon under the provisions of the Agricultural
Adjustment Act.
(c) By an amount not to exceed $50,000,000 to enable the Corporation
to subscribe for preferred stock, to purchase capital notes of
insurance companies, and to make loans secured by such stock
or notes as collateral, as provided by the Act approved June 10,
1933.
(d) By $500,000,000 to enable the Federal Emergency Relief Administrator to make grants to States and Territories (including
Alaska, Hawaii, the Virgin Islands, and Puerto Rico) and the
District of Columbia to aid in meeting the costs of furnishing
relief and work relief and in relieving the hardship and suffering
caused by unemployment, as provided by the Federal Emergency
Relief Act of 1933. Additional notes, debentures, bonds, or
other such obligations may be issued under this authority only
at such times and in such amounts as the President may approve.
(e) By $300,000,000 in order to provide funds for allocation to the
Land Bank Commissioner for the purpose of making loans to
joint-stock land banks and to farmers, as provided by the
Emergency Farm Mortgage Act of 1933.
(f) By an amount not to exceed $200,000,000 in order to provide funds
for allocation to the Secretary of the Treasury for the purpose of
making payments for subscriptions for the capital stock of the
Home Owners' Loan Corporation, as provided by section 4 (b)
of the Home Owners' Loan Act of 1933.
Notes, debentures, bonds, or other such obligations issued by the Corporation are to mature not more than 5 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 rate

11
of interest as may be determined by the Corporation. The Corporation, with
the approval of the Secretary of the Treasury, also may sell on a discount basis
short-term obligations payable at maturity without interest. The law provides
that the notes, debentures, bonds, or other such obligations of the Corporation
shall be fully and unconditionally guaranteed both as to interest and principal by
the United States and such guaranty shall be expressed on the face thereof.
The Secretary of the Treasury, in his discretion, is authorized to purchase any
obligations of the Corporation which may be issued pursuant to the provisions
of the law, and may, at any time, sell any of the obligations of the Corporation
acquired by him. He is further authorized, at the request of the Reconstruction Finance Corporation, to market for the Corporation its notes, debentures,
bonds, and other such obligations, using therefor all the facilities of the Treasury
Department authorized by law for the marketing of obligations of the United
States. The Reconstruction Finance Corporation Act, as amended, also provides that 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 (except surtaxes, estate, inheritance, and gift taxes) at any time imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority.
XI. REPORTS
1. Quarterly Reports

Section 15 of the Reconstruction Finance Corporation Act provides that the
Corporation shall make and publish areport quarterly of its operations to the
Congress stating the aggregate loans made to each of the classes of borrowers
provided for and the number of borrowers by States (including the District of
Columbia, Alaska, Hawaii, and Puerto Rico) in each class. The law further
provides that the statement shall show the assets and liabilities of the Corporation and the names and compensation of all persons employed by the Corporation
·
whose compensation exceeds $400 per month.
2. Monthly Reports
Under section 201 (b) of the Emergency Relief and Construction Act of
1932, the Corporation is required to submit monthly to the President and to
the Senate and the 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, together with a statement showing
the names of the borrowers to whom loans and advances were made, and the
amount and rate of interest involved in each case.

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XII. AUTHORITY OF RECONSTRUCTION FINANCE CORPORATION
TERMINATED AND FUNCTIONS TRANSFERRED TO THE JURISDICTION AND CONTROL OF OTHER GOVERNMENTAL AGENCIES
1. Regional Agricultural Credit Corporations

An Executive order issued on March 27, 1933, effective on May 27, 1933,
transferred the management and functions, records, equipment, and personnel
of the Regional Agricultural Credit Corporations from the Reconstruction
Finance Corporation to the jurisdiction and control of the Farm Credit Administration. The Reconstruction Finance Corporation will continue to pay
all expenses incurred in connection with the operations of these corporations,
and to rediscount paper for them, as provided in section 201 (e) of the Emergency Relief and Construction Act of 1932.
2. Self-Liquidating Loans, Etc., under Section 201 (a) of the Emergency
Relief and Construction Act of 1932, as amended

The power of the Corporation to make self-liquidating loans or contracts,
etc., under section 201 (a) of the Emergency Relief and Construction Act of
1932, as amended, was terminated at the close of June 26, 1933, pursuant to the
provisions of secti~n 301 of the National Industrial Recovery Act, which created
the Federal Emergency Administration of Public Works. The functions of the
Corporation in this field were superseded by the functions of that Administration. Section 301 of the National Industrial Recovery Act provided, however,
that the Corporation may issue funds to a borrower under section 201 (a) of
the Emergency Relief and Construction Act of 1932 prior to January 23, 1939,
under the terms of any agreement or any commitment to bid upon or purchase
bonds entered into with such borrower pursuant to an application approved
prior to the date of termination of the power of the Corporation to approve
applications under such section.
· 3. Funds for Relief of Destitution

The power of the Corporation to make funds available to States and
Territories under section 1 of the Emergency Relief and Construction Act of
1932 for the relief of destitution was terminated at the close of June 1, 1933,
pursuant to section 2 (c) of the Federal Emergency Relief Act of 1933, which
created the Federal Emergency Relief Administration.

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