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THE SECRETARY OF COMMERCE
WASHINGTON
March 21, 1942
TO THE PRESIDENT AND THE CONGRESS OF THE UNITED STATES:
As of March 7, 1942, the Reconstruction Finance Corporation and
its subsidiaries, including the Export-Import Bank, had authorized loans
and commitments aggregating $11,494,438,962 in connection with the war.
Under authority granted it June 25, 1940, as amended, the RFC
has created, and owns all of the capital stock of, Rubber Reserve Company,
Metals Reserve Company, Defense Plant Corporation, Defense Supplies
Corporation, and War Insurance Corporation.
These companies are all owned,
managed and operated by RFC directors and personnel, under my supervision.
Th&y act as service agencies in the war program.
When the President, the
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War Production Board, the Army, the Navy, the Maritime Commission or the
Board ot Economic Warfare, establishes the need tor plant facilities,
materials or supplies, tor which no other provision is made, the RFC, when
requested to do so, undertakes to provide them.
responsible for war production policies.
In this way it serves those
It does not make policy.
The commitments have been made by:
Defense Plant Corporation
Defense Supplies Corporation
Metals Reserve Company
Rubber Reserve Company
War Insurance Corporation
RFC loans direct
Export-Import Bank
Total
14,797,757,903
1,749,521,213
2,21s,ata,ooo
875,000,000
100,000,000
1,259,865,964
496,475,882
lll,494,438,962
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Defense Plant Corporation was established August 22,
1940, primarily to provide defense production facilities - plants,
machinery, tools, eta. - for the manufacture or arms, ammunition,
implements or war, and various supplies and materials necessary to
the defense effort.
Its charter was later amended to provide tor
production facilities for any constituent or necessary supply or
material tor the manufacture ot any product necessary to the defense effort.
Defense Supplies Corporation, Metals Reserve Company, and
Rubber Reserve Company are all engaged in the production or acquisition ot strategic and critical materials vitally necessary to the
Nation's war effort.
Rubber Reserve Company deals exclusively in
rubber and Metals Reserve Company in metals and minerals, whereas
Defense Supplies Corporation deals in a wide variety ot materials
necessary to the war program.
DEFENSE PLANTS
Defense Plant Corporation has financed and contracted to
finance the construction or expansion or over 700 plants throughout
the country tor the production ot ships, planes, tanks, guns, ordnance,
magnesium, aluminum, steel, synthetic rubber, 100-octane aviation gasoline, etc., at an aggregate estimated cost or $4,797,757,903.
The War Production Board recommends that we contract with a
particular manufacturer for the construction and operation ot a particular
plant at a particular location.
It is then our responsibility to work
out the terms and conditions ot the contracts and arrange the financing.
The plants and equipment are owned by Defense Plant Corpora-
I ! 33 i 98
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tion and operated by manufacturers under lease or other agreements.
Detense Plant Corporation is protected either by a rental charge received trom the lessee or by a contract ot reimbursement entered into
with the Army or Navy Department or other defense agencies ot the Government.
Aluminum
In the aluminum expansion program Detense Plant Corporation and
the RFC have made commitments aggregating 1423,000,000 for the construction ot plants which will increase annual capacity by more than 1,513,500,000
pounds ot aluminum, 2,220,000,000 pounds ot alumina, 360,000,000 pounds of
aluminum sheet, and 194,200,000 pounds ot aluminum alloy and extruded products.
Metals Reserve Company and the RFC have contracted to buy l,000,000,000
pounds of aluminum trom the Aluminum Company ot Canada tor delivery in
1942, 1943, and 1944.
Magnesium
In the magnesium development and expansion program Detense Plant
Corporation and the RFC have made commitments aggregating 1360,000,000 tor
the construction ot magnesium plants with annual capacity ot 627,500,000
pounds.
Steel
In the steel program Defense Plant Corporation and the RFC have mad•
commitments tor $694,000,000 to increase the annual iron and steel production
by 6,200,000 tons ot steel ingots, 5,500,000 tons ot iron ore, 10,030,000
tons ot pig iron, 1,950,000 tons ot steel plate, 1,879,000 tons ot armor
and torgings, and 1,180,000 tons ot blooms, bars, castings, and tubing; and
also provided tor increased capacity ot coke, coal mining, and annealing
and heat treating
or
steel.
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Tin
A tin smelter to smelt Bolivian tin ore, which will start operation8
next month, is being built by Defense Plant Corporation at a cost of approximately 15,000,000.
It will have an annual capacity of 30,000 tons of fine tin
from Bolivian ore and 21,600 tons of fine tin from alluvial tin ores.
The plant
will be readily capable of expansion to 50,000 tons annually from Bolivian tin
ore.
It will commence operations in April 1942.
Tin concentrates have already
been imported for more than a year's operation and we have a substantial
stockpile of tin on hand.
Defense Plant Corporation commitments include over $1,085,400,000 for
plants and equipment for the production of aircraft and parts, ll,196,000,000
for the manufacture or purchase ot machine tools, $377,000,000 tor the production ot ordnance, 1171,000,000 for the construction and equipment ot shipyards
and vessels, 145,000,000 tor the manufacture of radio and scientific equipment,
and numerous other items.
DEFENSE SUPPLIES
Defense Supplies Corporation is authorized, among other things, to
(l) produce, acquire, carry, sell, or otherwise deal in materials and supplies
which are classified as strategic and critical or are otherwise necessary to,
or used in any way in conjunction with, the national defense program, (2) produce, lease, purchase, or otherwise acquire railroad equipment and commercial
aircraft and to lease, sell, or otherwise dispose thereof, (3) acquire facilities for the training of aviators, and (4) take such other action as the
President and the Secretary ot Commerce may deem necessary in order to expedite
the defense program.
In addition to its activities under this authority, the
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Corporation has undertaken various projects pursuant to delegated authority,
which projects are financed by allocations made to it by the otticials or
agencies delegating such authority.
The commitments ot Defense Supplies Corporation aggregate
11,749,521,213 and its varied activities include, among others, those specifically mentioned in the following paragraphs.
The Corporation has entered into arrangements tor the transportation,
storage, and purchase ot Australian, South African, and South .American wool.
These arrangements contemplate the transportation to, and the storage in, the
United States ot 250,000,000 pounds ot Australian wool, the wool being the
property ot Great Britain.
The Corporation has agreed, however, to purchase
all Australian wool shipped on or before April 30, 1942, at an estimated cost
ot 177,000,000, including the cost ot transportation and storage.
The
Corporation has arranged tor the transportation to, and the storage in, this
country ot 125,000,000 pounds ot South African wool at an estimated cost ot
14,000,000.
The South African wool is lik~wise the property ot Great Britain,
but Defense Supplies Corporation has an option to purchase or use the wool
tor detense purposes.
The Corporation also has agreed to purchase approximately
5,400,000 pounds ot South American wool at a cost ot approximately 12,500,000.
In connection with these operations the President made available $12,000,000
from the F.mergency Fund tor the President included in the Act approved June
13, 1940.
At the request ot the President the Corporation has contracted to
purchase manganese, chromium, asbestos, platinum, santonin, and other strategic
and critical materials trom Amtorg Trading Corporation, a United States
corporation owned by Russian interests.
This contract contemplates the
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purchase o~ such materials to the approximate value ot 1100,000,000 and provi.des ~or advance payments, not to exceed $50,000,000, to Amtorg Trading
Corporat1.on against the purchase price ot these materials.
The proceeds ot
such advances are to be used in paying tor supplies purchased by the Russian
Government in the United States.
To date $48,665,916 has been advanced
under the contract.
The Corporation has agreed to purchase the 1942 sugar cane crop ot
Cuba 1.n the torm of raw sugar and high-test and blackstrap molasses.
The
cost ot this program is estimated at $200,000,000, and it is contemplated
that the purchase will embrace the entire crop with the exception ot sugar
and molasses necessary tor Cuban consumption, a small amount reserved tor
Pan-American countries, and the portion of the crop required to till Cuba's
direct consumption quota which is usually sent to the United States.
The Corporation has arranged for the purchase of any and all foreign
hides and skins that the War Production Board may recommend from time to
time and the sale ot such hides and skins to such tanners or other persons
as the War Production Board may recommend.
Under this program it is
estimated that arrangements will be made tor the purchase and sale ot
approximately 6,000,000 hides and skins having an estimated value ot
145,200,000.
It is expected that most ot the purchases will be made trom
South American countries, principally Argentina.
The Corporation has arranged for the purchase of all the available
Argentine horse hair, the best known substitute for hog (pig) bristles used
in making brushes.
It is estimated that 5,500,000 pounds will be purchased
at a cost ot about $8,000,000.
RJ'C, through the Defense Supplies Corporation and Metals Reserve
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Company, has contracted with Mexico tor the purchase ot Mexico's exportable
surplus of a number ot strategic and critical tibers and metals, including
mercury, manganese, lead, zinc, tin, tungsten and antimony.
The Defense Supplies Corporation has approved a program tor the
production of abaca in Central America involving the planting ot 20,000 acres
~n abaca during 1942, the estimated cost ot which is $1,500,000.
The
Corporation has also approved a program tor the harvesting and decortication
of the abaca grown, which will involve approximately an additional 11,500,000.
It is estimated that the yield ot tiber from the abaca cultivation will be
between 1000 and 1500 powids per acre per year, beginning about 20 months after
planting.
The President has allocated 18,000,000 from the Emergency Fwid tor
the President contained in the Act approved June 11, 1940, to finance the
development and Americanization of transportation facilities in the LatinAmerican Republics in order to facilitate trade between these countries, and
for other purposes affecting our national defense.
This activity is being
carried out through Detense Supplies Corporation.
The Corporation has authorized 11,588,600 to further a program for
the technical aviation training in the United States ot citizens of the other
American Republics.
In addition, $50,000 has been received from the Oftice ot
Emergency Management to be used tor the payment of certain transportation
expenses in connection with.this program, making a total ot 11,438,600
available for the program.
The Corporation is cooperating with the Office of the Coordinator of
Inter-American Attairs in providing industrial, commercial, and agricultural
scholarships in the United States tor young men from each of the other
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American Republics.
Atter an educational period these young men are placed
with representative industries, where they are given training and experience
in our methods ot production and business procedure.
The program is being
initiated with the sum ot $100,000, which has been allocated to the Corporation
by the 0ttice ot the Coordinator ot Inter-American attairs.
The Corporation has agreed to buy approximately 500 privately owned
airplanes tor the Army and Navy at an estimated cost ot $11,545,000.
These
p1anes are to be used principally tor transport and cargo service.
Detense Supplies Corporation has authorized the purchase ot 12
transport planes from var,ious commercial air lines tor the Department of
Commerce, that Department acting as the agent of the War Department.
This
purchase was made through the Corporation at the request of the President,
in order to facilitate the execution of the transaction.
Nine ot the planes
have been purchased at a cost ot $1,082,874 and the remainder of the
authorization has .been cancelled.
The War Production Board has recommended the purchase of 2,000,000
ounces ot quinine.
Defense Supplies Corporation purchased 2,000,000 ounces,
500,000 ounces of which were lost at sea.
been received.
The balance, 1,500,000 ounces, ha~
The Board of Economic Wartare subsequently recommended that
additional purchases of quinine be made up to 5,000,000 ounces.
Defense
Supplies Corporation has agreed to buy the 5,000,000 ounces additional but
it is unlikely that this amount can be obtained in view of recent developments in the Far East.
While the War Production Board has not yet
increased its quinine recommendation, Defense Supplies Corporation has made,
in addition to the above purchase, an emergency purchase in the form of bark,.
equivalent to about 5,165,000 ounces, and arranged for its immediate shipmen~
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to Australia tor trans-shipment to the United States.
The total cost ot the
quinine program is estimated to be $6,050,000.
fhe War Production Board has recommended the purchase of 1,500 cases
ot opium (approximately 120 tons) and this recommendation was approved by the
Commissioner ot Narcotics.
Defense Supplies Corporation has arranged tor the
purchase ot 40 tons from Iran and 37 1/2 tons from India.
The Board of Economic
Warfare recomended the purchase of the entire quantity available in Turkey.
The purchase of Turkish opium, in whatever amount is available up to approximately 325 tons, has been authorized and is being negotiated, although no increase has been made in the recomendation ot the War Production Board.
fhe
total cost ot this program is estimated to be $6,000,000.
Upon the recommendation ot the Petroleum Coordinator and the
Secretaries ot War and Navy, the Corporation is financing the expansion of
~aoilities tor the production ot 100-octane gasoline and the purchase and
storage ot such gasoline.
The present production ot this high-test gasoline
runs approximately 40,000 to 50,000 barrels per day.
Under this expansion the
production will be increased to approximately 200,000 barrels per day.
To date,
contracts have been entered into involving the purchase of approximately
113,000 barrels per day for a period of one to three years at a total cost of
about $762,000,000.
This includes an estimated amount of $81,990,ooo· to be
advanced tor plant expansion.
The gasoline is tor the use of the Army and Navy.
In cooperation with the Petroleum Coordinator, RFC authorized a loan
up to $56,000,000 tor the construction ot a crude oil pipe line to bring oil
trom Tezas and Louisiana to the Eastern Seaboard, but for lack ot available
steel the line has not been started.
Arrangements have also been made tor the purchase ot aviation alky-
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-10l.ate. used in the manufacture ot 100-octane gasoline, amounting to 900 barrels
per day which, with base stock, is convertible into approximately 1800 barrels
o-r 100-ootane aviation gasoline.
The estimated cost ot the alkylate tor a
5-year period is 17,243,425.
fhe Corporation has agreed to purchase excess inventories ot new
t1res and tubes tor passenger automobiles, frozen under the rationing order ot
the o-rtice ot Price Administration, from dealers, jobbers, distributors and
manuracturers.
It is estimated that ot the 7,500,000 tires and tubes in the
hands ot manufacturers and dealers, the Corporation will purchase up to
e,000,000 in this transaction, representing a total commitment ot $75,000,000.
These tires and tubes will be marketed through the regular channels ot distribution under the rationing program.
At the request ot the President and pursuant to the authority ot the
Corporation to finance the acquisition ot railroad equipment and parts and
facilities necessary in connection therewith, the Corporation has disbursed
12,100,000 tor the rehabilitation ot the Newfoundland Railway.
fhe Corporation has made a commitment ot $6,000,000, ot which
$2,370,000 has been disbursed, to the Arrtl'/ Exchange Service, which controls the
system ot post exchanges in the United States Arrtl'/, both in the United States
and its expeditionary forces.
fhis co11111111itment was made upon request ot the
President and pursuant to the general authority ot the Reconstruction Finance
Corporation to authorize defense corporations to take any action determined by
the President and the Secretary ot Commerce to be necessary to expedite the
natioDal. defense program.
In addition to the commitments specifically mentioned, Defense
Supplies Corporation has also made commitments as scheduled below at the
approximate costs indicated:
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Critical and Strategic Materials
Approximate
Cost
Aconite Root •••••••••••••••••••••••••••••••••••••••••••••••••
I
A1coho1-Synthetic ••••••••••••••••••••••••••••••••••••••••••••
Be11adonn.a Leaves •••••• •••.••••••••••.••••••••••••••••••••••••
Be11adonna Root ••••••••••••••••••••••••••••••••••••••••••••••
Bur1ap .. ....•.............•....•..•.••.....••••.•..•.....•.••
Cocoanut Oil .....•.... .......•..........••.....••.•......•.•••
Cork •• •.•••••••••••••••••••••••••••••••••••••••••••••••••••••
Cotton Linters ■ ••••••••••·•••••••••••••••••••••••••••••••••·•
Cotton Sheeting ••••••••••••••••••••••••••••••••••••••••••••••
DerrLs Root ••••••••••••••••••••••••••••••••••••••••••••••••••
Diamond Dies ■ ••••••••••••••••••••••••••••••••••••••••••••••••
Ergot•••••••••••••••••••••••••••••••••••••••••••·••••••••••••
Flax Fiber • •••••••••••••••••••••••••••••• • • •·• • ••••••• • • • • • • • •
Henbane • ••••••••••••••••••••••••••.•••••••••••••••••••••••••••
Hog (Pig) Bristles••••••••••••••••••••••••••••••••••••~••••••
Jewel Bearings•••••••••••••••••••••••••••••••••••••••••••••••
Jute Fiber •••••••••••••••••••••••••••••••••••••••••••••••••••
Kapok •••• ••••••••••••••••••••••••••••••••••••••••••••••••••••
Leather, South American ••••••••••••••••••••••••••••••••••••••
Manila Fiber•••••••••••••••••••••••••••••••••••••••••••••••••
Nitrate ot Soda••••••••••••••••••••••••••••••••••••••••••••••
Osnaburg •••••••••••••••••••••••••••••••••••••••••••••••••••••
Quebracho ••••••••••••••••••••••••••••••••••••••••••••••••••••
Rs-• Silk •••••• •••••••••••••••••••••••••••••••••• •. • •. • • • • • • • •
Shellac••••••••••••••••••••••••••••••••••••••••••••••••••••••
Sisal ••••••••••••••••••••••••••••••••••••••••••••••••••••••••
Sugar-Domestic •••••••••••••••••••••••••••••••••••••••••••••••
Teakwood .... •••••••••••••••••••••••••••••••••• • •• • • • • • • • • • • • • •
Tung Oil •••••• •••••••••••••••••••••••••••••••••••••••••••••••
50,000
16,000,000
330,000
135,000
41,820,000
16,800,000
10,000,000
5,000,000
10,000,000
1,250,000
451,000
588,160
9,100,000
300,000
2,000,000
1,000,000
3,600,000
3,526,000
131,184
8,000,000
6,303,000
30,000,000
3,600,000
40,000,000
15,680,000
33,013,900
40,992,000
200,000
5,800,000
(1)
(i)
(2)
(3)
Other Projects
Diamond Die Jlanutacturing Plant •••••••••••••••••••••••••••••• $
Lockheed Airplane••••••••••••••••••••••••••••••••••••••••••••
Pacitic Development Co., Inc .................................. .
Pan American Airways Co••••••••••••••••••••••••••••••••••••••
Revolvers, Ritles, Small Arms, etc •••••••••••••••••••••••••••
The Rio Grande Southern Railroad Company •••••••••••••••••••••
40,000 (4)
60,000
500,000 ('5)
2.517,450 (1)
1,413,450
65,000
All other commitments including those specitically mentioned
in text preceding this schedule •••••••••••••••••••••••••• $1,439,255,069
Total Commitments Detense Supplies Corporation ••••••• ll,749,521,213
(1) Cancelled (2) 618 tons costing $55,394.09 lost in transit: fully
covered by insurance (3) 80,510 lbs. costing $111,689.10 lost in transit;
fully covered by insurance (4) $20,000 cancelled (5) $450,000 cancelled.
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RUBBER RESERVE COMPANY
Under Congressional authority granted for the first time on June 25,
1940. and at the request of the President, Rubber Reserve Company entered into
an agreement on June 29, 1940, with the International Rubber Regulation Comm~ttee (which committee controls over 97% of the world's output ot crude rubber}
to purchase a reserve supply ot crude rubber.
It increased the agreement from
time to time, buying all the rubber produced which could be.exported to the
United States that was not bought by the rubber industry in the United States.
We were continually urging them to produce more rubber.
agreed to buy all available rubber produced in Brazil.
In addition the Company
The amount actually
received and in transit to the United States is approximately 673,000 tons
purchased at a cost of approximately $292,000,000.
This includes 90,503 tons ot
so-called barter rubber which Rubber Reserve Company took over from Commodity
Credi~ Corporation.
Rubber Reserve Company has agreed to pay Commodity Credit
Corporation approximately $45,500,000 for this rubber.
We have a much better stockpile of rubber now than we have had at anytime, but due to the tact that we have to consider the problem of supplying the.
other United Nations and are using more rubber for military purposes than.was
ever contemplated, a very strict rationing of rubber is now necessary.
The subject of synthetic rubber was discussed by representatives of
the National Defense Council in the Fall ot 1940.
Mr. Stettinius advised
the building ot plants sutticent to manufacture 100,000 tons of synthetic
rubber a year.
I discussed the matter with the President and he approved
the expenditure of up to $25,000,000 tor this purpose.
We started negotiations with some or the rubber manufacturing companies and oil companies tor the production ot synthetia rubber.
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-1:5The patents were not generally available to all the companies and the
rubber industry as a whole insisted upon having a part in any synthetic
rubber program that was undertaken by the government.
Reither the rubber companies nor the oil companies owning
the patents were willing to spend any of their own money in manufacturing synthetic rubber, notwithstanding that the rubber manufacturing industry, the oil industry and the automobile industry are
all dependent upon rubber tires for their profits.
In my testimony before the Senate Banking and Currency
Committee May 8, 1941, I stated, •rt would seem we have rubber
enough to run as at least 1 1/2 years if we were cut off tomorrow from
a supply of natural rubber and we could build synthetic rubber plants
within that time.
Estimates brought to me indicate that we could run
for 2 1/2 years, but I have cut that time down to 11/2 years, and that
would give us about the time required to build synthetic rubber
plants.•
The problem of synthetic rubber
was generally discussed
in the Committee and it was the consensus that limited operations
should be undertaken.
The President concurred in this course.
On Kay 16, 1941, we concluded agreements with some of the
leading producers of rubber, chemicals and oil products for the
construction and operation of plants for the manufacture of synthetic
rubber sufficient to increase the total annual capacity in the country
to approximately 100,000 tons.
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!mediately after Pearl Harbor, which no one had foreseen,
w:l.th the approval ot the President we started negotiations tor the construction
o-r t"acilities sufficient to increase our productive capacity ot synthetic
rubber to a minimum ot 400,000 tons annually upon the thought that our
source ot supply from the Far East might be reduced by interrupted shipping
conditions.
When the tall ot Singapore threatened, another unexpected turn
ot" events, we, at the request ot WPB and with the approval ot the
President, authorized the construction ot additional facilities sutticient to increase our production to a minimum ot 700,000 tons annually,
including what will be produced with privately-owned facilities.
RFC
expenditure tor these plants will be approximately $600,000,000.
It the construction materials are made available to the contractors, facilities tor the manufacture of 90,000 tons per year should
be completed in 1942, 250,000 tons by June 1943, and the entire amount
by the end ot 1943.
METALS RESERVE COMPANY
The comitments ot Metals Reserve Company, aggregating
12,215,818,000, are indicated, by materials, in the following tabulation:
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Material
Amount
.......................................................
I
.......................................................
.......................................................
.....................................................
...
......................................................
........................................................
.........................................................
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.......................................................
.......................................................
........................................................
.......................................................
...........................................................
.......................................................
.................................... ............... .
........................................................
...........................................................
................................................
.........................................................
245,089,000
7,053,000
215,000
8,741,000
882,000
194,000
31,808,000
60,000
226,402,000
3,469,000
486,000
128,000
21,896,000
117,881,000
6,043,000
132,858,000
3,277,000
6,340,000
332,000
4,469,000
................................................
.....................................................
.........................................................
....................................................
........................................................
.......................................................
...........................................................
.......................................................
............................................
.............
............................... .
...........................................
..................................
...........
......................... .
1,292,000
3,814,000
119,000
559,000
207,556,000
129,922,000
154,035,000
146,570,000
9,808,000
121,000
12,325,000
5,724,000
5,250,000
1,100,000
720,000,000
A1uminum
Antimony
Asbestos
Bauxite
Beryllium
Cadmium
Chrome
Cobalt
Copper
Diamonds
Graphit~
Iridium
Iron Ore
Lead
Lead Ore
Manganese
•·•
Mercury
Mica
Molybdenite Ore
Bickel
Crude Platinum (Iridium, Osmium, Palladium,
Rhodium and Ruthenium)••••••••••••••••••••••••••
Quartz Crystals
Rutile Ore
Speiss
Tin-Refined
Tin Ore
Tungsten
Zinc
Zinc Ore
Brazilian Materials
Chilean Materials
•:
Chrome Plant Commitments ••••••••••••••••••••••••••••••••••••••••
Philippine Materials
Bicaro Hickel Company (Stock)
Domestic Scrap Materials
•·•
$2,215,818,000*
*Includes coamitments totaling $38,143,000 which were
cancelled, principally due to inability or sellers to
deliver.
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The toregoing schedule includes a commitment to undertake, in
accordance with the request of the War production Board, a program of convert~ns to war purposes certain types ot scarce materials.
This includes the
acquisition of partially fabricated materials, scrap and obsolete materials and
other inactive inventories of aluminum, copper, brass, iron, steel, tin, ferro
a11oys and other critical materials and their reduction to a usable state
for war purposes.
It is estimated that the total cost of this program may
run as high as $720,000,000 and that there probably will be a loss of at
least one-halt of this amount in making the materials available to the trade
at current ceiling prices.
EXPORT-IMPORT BANK
September 26, 1940, Congress increased the lending authority of th&
Export-Import Bank from $200,000,000 to $700,000,000, allowing a revolving
fund up to $500,000,000 •to assist in the development or the resources, the
stabilization or the economies, and the orderly marketing or the products o~
the countries or the Western Hemisphere.•
Out or this $500,000,000 loan authorizations of $496,000,000 tor
Latin America have been made.
Total loans and outstanding comitments ot
the Bank as or March 14, aggregate $767,000,000,including two commitments
approved in principle.
The directors or the Export-Import Bank include representatives
or the State, Treasury, Agriculture and Commerce Departments, and the
Reconstruction Finance Corporation.
Bo loan is considered without tirst
clearing it with the State Department.
Requests have been reasonable and w&
have been able to work out an acceptable loan in the case or every applicat.ioni
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sponsored by a Government.
It is my considered opinion and that or the State
Department that the activities or the Bank have been or great help in further
cementing the friendly relations which exist between our country and Latin
America.
DEFENSE HOMES
Defense Homes Corporation was incorporated under the laws or the
State or Maryland on October 23, 1940, pursuant to request or the President.
The request contained an allocation or $10,000,000 from the Emergency Fund
~or the President to the Federal Loan Administrator to enable the Administrator to subscribe for the capital stock or such a corporation.
Defense Homes Corporation constructs homes only in designated
defense areas when requested by the Housing Coordinator and with the approval
or the President.
The homes are small residences and apartment buildings
tor small family units, with the exception or dormitories being built in
Washington tor Government workers, both men and women, white and colored,
and one in Charleston, South Carolina, tor single Navy Yard workers.
All the housing is of a durable nature and should have renting or.
sales value after the emergency.
While it is expected that the homes will
be rented on an economic basis, it is not contemplated that the ~entals
will be more than most defense workers or Army and Navy officials can afford
to pay.
Such rentals should amortize the cost with interest to the Government
over a period or 20 to 25 years.
Defense Homes Corporation does not compete with private builders
who are erecting houses tor sale nor with Government or other existing
housing agencies which provide housing that cannot be rented on an economic
basis.
'
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2,376 housing units in 9 locations have been completed; 8,800
~n 11 locations are under construction or contracted tor; and in 7 locations suggested by the Coordinator, land has been acquired.
8 locations
have been approved as locations requiring Defense Homes type or housing,
subject to the
Ansry
and Havy making a decision as to whether they are
needed.
In connection with its operations to date, Defense Homes Corporation has expended approximately 115,000,000.
To complete the projects now
a1located to it by the Housing Coordinator will require approximately
159,000,000.
In addition to its 110,000,000 capital, Defense Homes Corporation
has borrowed needed funds from the Reconstruction Finance Corporation.
The
Corporation has been operated at a minimum or expense due to the tact that
most or the work has been done by RFC personnel.
By Executive Order dated February 24, 1942, Defense Homes Corporation was transferred to the National Housing Agency.
WAR IHSURAHCE CORPORATION
On December 13, 1941, the Reconstruction Finance Corporation, with
the approval or the President, undertook the creation or a corporation to
provide reasonable protection against losses incident to the destruction or
injury ot tangible property, real and personal, resulting from enemy attacks.
This action was taken pursuant to the authority or the Reconstruction Finance
Corporation to empower defense corporations to take such action as the President
and the Secretary or Commerce may deem necessary in order to expedite the
national defense program.
The capital or this corporation is to be established
at 1100,000,000 with a maximum loss liability or ll,000,000,000.
The pro-
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s~tuated in the continental United States, but this limitation was extended
December 22, 1941, to include certain territories and outlying possessions.
The scope or the authority and the extent or the operation has just been
approved by Congress.
RFC DEFENSE ARD WAR LOANS
In addition to the creation and capitalization or the corporations
mentioned, and loans to them as outlined, the Reconstruction 7inance Corporation has authorized 675 direct loans aggreiating $664,006,979 to 480
borrowers engaged in defense production.
620 or these loans were for less
than 11,000,000 each.
The Reconstruction Finance Corporation, in keeping with its usual
policy, cooperates with banks in m:aking loans to manufacturers engaged in
defense work loans tor plant expansion, machinery, equipment, working
capital, and other purposes by taking participations in any such loans.
If any bank wishes to carry the entire loan, the Corporation will enter a
definite take-out agreement.
The Corporation has authorized participations
to the extent ot $23,055,668 in such loans aggregating $36,692,234.
Practi-
cally all or these loans were made by banks.
With the purpose or speeding the war effort by spreading war work
among smaller business enterprises throughout the country, Reconstruction
Fimmce Corporation on February 19, 1942, authorized its 30 Loan Agencies,
located in practically every city where there is a Federal Reserve Bank or
Federal Reserve Branch Bank, to approve on their
in excess or $100,000.
OWD
responsibility loans not
During the month this procedure has been in effect
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70 loans aggregating approximately $2,150,000 have been approved by the
Loan Agency llanagers, including 52 loans tor the manufacture of products
essential in the war effort and 18 loans to other small business enterprises.
The ReoonstruotLon Pinance Corporation directly and through Defense
Supplies Corporation has arranged to assist authorized dealers, finance
companies, and banks in the carrying and orderly marketing of approximately
125,000 automobiles and light trucks shipped on and after January 16, 1942,
before the conversion of the automobile industry to war production,
these
oars having been frozen by the Office of Price Administration until at least
April 1, 1943.
These cars may be disposed of only in accordance with regula-
tions promulgated by the Office of Price Administration.
In this program
Reconstruction Finance Corporation has allocated approximately $121,000,000.
Section 5d of the Reconstruction Finance Corporation Act, as amended.
authorizes the Corporation, upon the approval of the Secretary of Commerce
and the President, to make loans to foreign governments on the security of
American obligations.
Pursuant to this authority the Reconstruction
Finance Corporation has authorized a loan of $4.25,000,000, of which
$390,000,000 has been disbursed, to the United Kingdom of Great Britain and
Northern Ireland.
The loan is secured by listed and unlisted securities of
United States corporations (including 41 United States insurance companies)
and by the assignment of earnings of the United States branches of 41 British
insurance companies.
This loan was made to provide the British with
additional dollar exchange without necessitating the forced sale of their
American securities.
The proceeds will be used by Great Britain to pay
tor war supplies purchased in this country and contracted tor prior to the
approval on March 11, 1941, of the Lend-Lease Act.
Total collections on
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account of this loan to date aggregate $25,482,289, of which $1,377,446
represents proceeds of the sale of collateral and $24,104,842 interest,
dividends and other income from the security.
The construction of all defense plants and the acquisition of
equipment, facilities, and machinery are undertaken at the request of the
President, the War Production Board, the Army, the Navy, the Maritime Commission or the Board of Economic Warfare.
The larger defense loans made to
manufacturers engaged in fulfilling Government contracts are made in cooperation with the War Production Board, and purchases of defense supplies and
strategic and critical materials are made at the request of, or in cooperation with, the War Production Board.
Obviously very substantial losses will
result from these war and defense operations.
No defense activity has been delayed by a lack of credit or
financing by RFC and its agencies, and every request from War, Havy,
OPM, SPAB, or WPB has been promptly met, all with the approval of the
President.
Sincerely yours,
Secretary of Commerce
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@FedFRASER