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Lus Treasury depts Docs Report To The Congress DOCUMENTS DEPARTMENT MAR 25 1958 LIBRARY UNIVERSITY OF CALIFORNIA LIQUIDATION RECONSTRUCTION FINANCE CORPORATION Dog JUNE 30, 1957 Department ofThe Treasury U.S.S.D. THE SECRETARY OF THE TREA SURY V W A S H I N G T O N December 10, 1957 Sirs : I have the honor to submit herewith a report on the liquidation of the Reconstruction Finance Corporation. Reports on the liqui dation of the Corporation were required quarterly under the pro visions of the RFC Liquidation Act, as amended (Public Law 163, 83rd Congress). The Reconstruction Finance Corporation was abolished at the close of June 30, 1957, as directed by the provi - sions of Reorganization Plan No. 1 of 1957. Previous reports in this series were primarily devoted to the progress made during quarterly reporting periods. This report is a summary of the entire liquidation and disposition of all assets owned or administered by the RFC at any time from the effective date of the RFC Liquidation Act (September 28, 1953) to the aboli tion of the Corporation on June 30, 1957. Included among these assets were the Government-owned facilities for the production of synthetic rubber and refined tin, which have been sold to private operators . The report also includes the Corporation's financial statements for the fiscal year ended June 30, 1957 , and a schedule of individual loans of $100,000 or over, which were required to be submitted an nually under the provisions of the RF C Act. RautCenderara Secretary of the Treasury T o the President of the Senate To the Speaker of the House of Representatives 2 KD 3 HG 3 729 A 5961 1957 Docs TABLE OF C O N T E N T S Page RFC Liquidation Act.. 1 Assets to be liquidated. 1 Liquidation policy Reorganization Plan No. 2 of 1954. Lending program assets... Business loans and securities Smaller business loans.- 2 2 2 3 4 Large business loans.-- 4 Securities of business enterprises. 7 Railroad securities.. 7 8 8 8 Public agency securitiesSecurities of financial institutions. Defense production loans.. Civil defense loans . World War II assets. Production programs. Synthetic rubber... Tin .. Abaca . Other World War II assets.. Smaller War Plants Corporation. Payments to TreasuryAbolition of R F C . Financial statements,June 30, 1957 Borrowers with actual or potential liability of$100,000 or more,June 30,1957-.. 9 10 11 11 12 13 14 14 15 15 17 18 iii Report to the Congress PROGRESS OF LIQUIDATION, JUNE 30, 1957 The Reconstruction FinanceCorporationwas Otherprovisions of the RFC Liquidation Act abolished on June 30, 1957,as directed by sec directed that the following programs be trans ferred from the Corporation: tions 6 and 7 of Reorganization Plan No. 1 of 1957. The liquidation of the Corporation was con ducted in accordance with the provisions of the Reconstruction Finance Corporation Liquida tion Act which became effective September 28, 1953. At that time,the RFC held or admin istered assets and commitments totaling in ex cessof$2 billion. Less than $100 million of this remained when the Corporation was abolished. The remaining assets were transferred by the provisions of Reorganization Plan No. 1 of 1957 to other Government agencies administer ing continuing programs of similar natures. This report outlines the policies, programs, and procedures followed in the liquidation of the Corporation's assets, and summarizes the financial results of the liquidation. Lending undersection409,Federal Civil Defense Actof1950,totheSecretaryoftheTreasury,effec tive September 28,1953. Lending under titleIII,Defense Production Act, as amended, as directed by the President. By Executive Order 10489,the President transferred this program to the Secretary of the Treasury, effective September 29,1953. The production programs conducted under the Rubber Act of 1948 (synthetic rubber),the Abaca Production Act of 1950 (abaca fiber), and Public Law 125,80th Congress (tin)—as directed by the President. By Executive Order 10539, effective June 30, 1954,the synthetic rubber and tin pro grams were transferred to the Federal Facilities Corporation, and the abaca fiber program was transferred to the General Services Administra tion. The Federal Facilities Corporation was or ganized by the Secretary of the Treasury,as di rected by the President under the provisions of the Rubber Act of 1948 . T H E RFC LIQUIDATION ACT ASSETS T O BE LIQUIDATED The RFC Liquidation Act (Public Law 163, 83d Cong.) was approved July 30,1953. This act provided for liquidation of the Corporation At the time the RFC liquidation became effective, the assets held or administered by in accordance with sections 9 and 10 of the the Reconstruction FinanceCorporation totaled RFC Act,asamended (47 Stat.5). Under these $1,760,500,000. In addition, there were out provisions,the RFC continued as an independ ent agency until June 30, 1954. Thereafter, standing commitments to make or participate in loans which amounted to $250,500,000. for further liquidation, the Secretary of the After giving effect to liabilities of $39,400,000 Treasury succeeded to all powers,duties,and authorities previously exercised by the Admin and reserves of $461,100,000,the bulk ofwhich istrator of R F C . assets,the net Government investment in these programs on September 28, 1953, was $1,260 The RFC Liquidation Act also provided for termination of the Corporation's authority to make loans,effective September 28, 1953,and progress in the liquidation of the lending port folio is measured from that date. consisted of reserves for depreciation of fixed million,with a potential additional investment of $250,500,000 represented by the undisbursed commitments. This investment in its main categories was as follows: 1 In millions of dollars Net in value of vest ment of U .S . Undis bursed commit assets Govern ments Gross m en t (b) The loans made by RFC to the Gov. ernment of Ecuador and the N e w foundland Railway of St. Johns, N e w foundland; (c) The capital stock of the Banco de Barracho (later known as the Amazon RFC lending program. Defense Production Act lending program. Civil Defense lending program .- 726. 9 672. 4 110. 3 136. 5 130. 9 136. 4 1. 9 1. 8 3. 8 891. 7 452. 2 3. 5 2. 7 Production programs and other assets remaining from World W a r II. - Smaller War Plants Cor poration -Total . 1, 760. 5 1, 260. O 250. 5 Credit Bank ),Belem,Brazil; (d) All foreign bonds and securities ac quired by RFC in the liquidation ofits lending programs. 2. To the Small Business Administration : The loans made by RFC to victims of floodsorothercatastrophes. 3. To the Federal National Mortgage Associ ation : LIQUIDATION POLICY The RFC Liquidation Act directed that the liquidationofthe Corporation “be carried outas expeditiously as possible.” It was the aim of the liquidation program to comply with that directive but also to achieve maximum recovery of the Government's investment of taxpayers' funds. At the same time,every possible con sideration was given to the interests of those indebted to the Corporation and the com munities in which their businesses were located. REOR GANIZAT ION PLAN N O . 2 O F 1954 When the liquidation of RFC was under taken, it was apparent that the Corporation held certain assets in itslending program which would require a protracted period to work out to the best advantage. To retain such assets in RFC would have required continuation of the Corporation far beyond the time when it couldserveeconomicallyasaliquidatingagency. Therefore,Reorganization Plan No. 2 of 1954 was proposed and adopted, effective June 30, 1954. Under this plan,the functions of liqui dating certain lending program assets were transferred to agencies conducting continuing programs of similar natures. The transfers effected under the plan were as follows: 1. To the Export-Import Bank of Wash ington: 2 The mortgages held by RFC which were made or acquired under the authorities of the RFC Mortgage Company or the Defense Homes Corporation. RFC L E N DI N G P R O G R A M ASSETS The assets held on September 28, 1953, in connection with RFC's lending program were as follows: In thou sands of dollars Cash . Loans and securities... Accrued interestreceivable. Acquired collateral. Other assets and receivables.. 22,886 686,471 7, 226 7,551 2,840 726,974 Reserves for losses amounting to $48,267,000 were carried in connection with the loans and securities. In addition to the assets actually carried on the books,the Corporation had outstanding on September 28, 1953, commitments to make loans amounting to $110,320,000; of these, $26,424,000 were deferred commitments to purchaseparticipationsinloansmade by banks. Included in the portfolio of loans, securities, and commitments noted above are those which later were to be transferred from R F C under the provisions of Reorganization Plan No. 2 of (a) The loanmade by RFC to theRepublic 1954. The amounts of these, and the reduc of the Philippines under section 3 of theJoint Resolution ofAugust 7,1946; tions made in the portfolio up until the time of transfer, were as follows: Dollar amounts in thousands Outstanding Sept. 28,1953 N um b er Am oun t Net reduction in portfolio N um b er Am oun t Outstanding June 30,1954 N u m be r A mou nt Transferred to Small Business Adminis tration : Disaster loans. $16, 143 2,226 143 223 $1,396 1,724 3,230 $14,747 9 502 15,594 69,484 556 5,266 15,038 4 42,304 785 4 64,218 41,519 1 48,000 6,000 1 42,000 19,204 178,157 15, 171 18,282 162,986 3,373 232 Disaster loan commitments. Transferred to Federal National Mortgage Association : Direct,insured, and partially guaran teed mortgages Purchase money mortgages Transferred to Export-Import Bank :Loan to Republic ofthe PhilippinesTotal .. 922 As noted in the table on page two,the loans there was $510,540,000 in loans and securities and securities of RFC's lending program and $108,094,000 in commitments considered amounted to $686,471,000 on September 28, to be of types whose liquidation could best be 1953,and therewere in addition commitments of $110,320,000, of which $26,424,000 were de ferred. Excluding those assets later trans accomplished by the Corporation itself. The ferredunderReorganizationPlan No. 2 of1954, 30,1957,are shown in the following tabulation: composition of this portfolio on September 28, 1953,and the liquidation accomplished to June Dollar amounts in thousands Outstanding Sept. 28,1953 N um b er Business enterprises: Am oun t Net reduction in portfolio Nu m be r Am oun t 4,543 $352,327 43,205 3, 788 85 $300,828 85 13 1 83,915 5 75,348 717 1 717 35 45,490 33 268 29 28,808 37,748 4,974 business loans made by banksGrand total... Loans and securities. Commitments .-- Outstanding June 30,1957 N u mb e r Am oun t 755 $51,499 761 8 8,567 40,711 2 4,779 199 29 24,172 36,248 69 4,636 1,500 592,210 4, 140 520,468 834 71,742 1,676 26,424 1,590 19,857 86 6,567 6,650 618,634 5,730 540,325 920 78,309 42,444 Railroads : Loans and securities. Commitments . Securities of financial institutions. Public agencies: Securities Commitments . Total. Commitments fordeferred participation in B U S I N E S S L O A N S A N D SE CU RIT IE S Liquidation of thebusinessloan portfolio was themost complex task confronting the Corpora tion. On September 28, 1953, there were 4,628 direct business loans and commitments Not only did the business loans represent the heaviest investment in the portfolio but the major portion of the Corporation's administra tive costs were incurred in servicing this large number of loans scattered throughout the Nation . The loans varied in size from a few outstanding which amounted to $395,532,000. with outstanding balances of less than $100 to In addition, the Corporation was committed, on a deferred basis, to purchase participating shares in 1,676 business loans made by banks, one loan of$48,400,000. Fewer than 100 of the loans had balances exceeding $500,000. In approximately 3,000 cases, the amount due such commitments totaling $26,424,000. R F C was less than $25,000. 3 DISPOSAL OF S M A LL E R BUSINESS L OANS tions of the RFC Loan Pool are summarized in the table below : To dispose of the smaller business loans in its portfolio,the Corporation,with the cooperation of a committee of bankers appointed by the Dollars in thousands American Bankers Association and the Associ Pool loans outstanding Interest ofparticipants ationofReserve CityBankers,developed aplan Number for the creation of what was termed the “R F C Loan Pool." As of February 28, 1954, 2,848 loans were selected for the pool. All but two of these had outstandingbalances under $500,000. The aggregate amount of the unpaid balances and commitments was $73,381,000. Certifi cates of Interest bearing interest at the rate of 372 % per annum ,each representinganundivided shareof thepoolloans,were sold to nearly 1,000 banks and private investors. The certificates of interest totaled $47,165,000, and their sale resultedin theimmediate return ofthatamount to the Government. Feb. 28, 1954 . 2,818 $ 73,381 $ 26, 216 June 30,1954. June 30,1955. June 30,1956 . June 30, 1957. 2,403 1,489 931 498 59, 144 32,333 18,723 7,669 26,216 19,035 18,056 7,669 Certificate holders $47, 165 32,928 13,298 667 In the 40 months to June 30, 1957, more than 80 percent of the loans placed in the pool had been retired and nearly 90 percent of the original outstanding balances repaid. The certificates of interest were completely retired on July 5, 5 1956. With the assistance of Regional Advisory Committees composed ofleading bankers, 1,194 banks were enlisted to take over the servicing ofpoolloans toborrowersin theirown or nearby RFC Amount DISPOSAL O F L A R G E BUSINESS L O A N S The disposal of the larger business loans communities. This step made it possible to presented entirely different problems than those involved in the smaller loans placed in closeall of the RFC Regional Offices and there the loan pool. The size of the outstanding by relieved the Corporation of the major share balances and the divergent provisions of the loan agreements made it necessary to under of its administrative costs. It also served to establish or reestablish a close relationship between RFC borrowers and private banks. take disposal of these loans through individual negotiations with borrowers and with banks, In establishing the loan pool,it was antici pated that this closer relationship would result investment houses, and other financing in stitutions. in repayment or refinancing of the loans at The list below shows those borrowers who dates much earlier than otherwise would have had RFC loans and commitments aggregating $500,000 or more on September 28, 1953, and notes the disposition made of their obligations occurred. This expectation was borne out in actual experience. The results to June 30, 1957, of the opera to the Government. RFC BUSINESS LOANS AND COMMITMENTS AGGREGATING $500,000 OR MORE TO ANY ONE B O R R O W E R , SEPT . 28, 1953 Outstanding and undisbursed,* Sept. 28, 1953 Bank partici pation (percent) Disposition (grossamount) Alabama : Alabama Grain Elevator,Mobile Belcher, W. E., Lumber Co., Center $1,185,963 *194,036 664,454 Sold outright. 23% . Privately refinanced. ville. Arizona:Copper Cities Mining Co., Miami. Do. 3,500,000 *4,000,000 California : Coastal Plywood & Timber Co,Clover 885,000 425,000 Ensher, Alexander & Barsoom, Sacra 989,657 dale. 25 40 Sold subject to repurchase agreement; Government liability later canceled. Privately refinanced. mento . Langley Corp.,San Diego . Northrop Aircraft,Inc.,Hawthorne ) 4 321,660 *230,339 2,629,230 $340,130 outstanding June 30, 1957. Privately refinanced. RFC BUSINESS LOANS A N D C O M M I T M E N T S A G G R E G A T I N G $500,000 O R M O R E TO A N Y O N E B O R R O W E R , SEPT . 28, 1953 — Continued Outstanding and undisbursed, Sept. 28, 1953 (grossamount) Bank partici Disposition pation (percent) California - Continued Pacific States Steel Corp.,Oakland.-- 1,351,898 Hal Roach Studios,Inc.,Culver City-- 1,152,632 23. 4 Sold subject to repurchase agreement; Government liability latercanceled. Sold subject to repurchase agreement; Government commitment $ 649,188 on June 30, 1957. Connecticut : Fenn Manufacturing Co.,Hartford .. New Haven Clock & Watch Co., New 20 10 10 109,826 225,407 392, 100 1,357,165 Also had D P A loan of $ 360,000 which has been repaid ; $924,169 of RFC H a ve n . Florida:Simberg, H. & J.,Miami Beach.- 713,966 Paid in full. Do. Do. loan outstandingJune 30,1957. Privately refinanced. - Illinois: Martin, H. S. & Co., Evanston .. SoloCup Co.,Chicago South Water Building Corp., Rockford. South Water Machinery Corp., Rock ford. Iowa:Davenport Besler Corp., Davenport Kentucky:Green River Steel Corp.,Owens 275,000 *225,000 - - - - Sold subject to repurchase agreement; Government liability latercanceled. Do. 604, 192 425, 125 *275,875 802, 114 *1,461,886 $453,138 outstanding June 30, 1957. $990,548 outstanding June 30, 1957. 771,688 Paid in full from proceeds of voluntary 3,556,126 Also has D P A loan of $5,000,000; RFC loan taken over under D P A authority. Paid in full at maturity. liquidation. boro . Maine: Portland Copper & Tank Works, 600,000 33% Portland. Massachusetts : A. & P. Corrugated Box Corp., Lowell. 870,969 Borden, R. Mills Corp.,Fall River ---- *526,885 353,716 413,238 Hayward Woolen Co.,Whittinsville --Monument Mills,Inc.,Housatonic. Waltham Watch Co.,Waltham.-Michigan : Detroit Steel Corp., Detroit. Sold subject to repurchase agreement; Government liability latercanceled. Paid in full in advance of maturity. Do. 839,367 95,000 509,000 1,353,336 35, 160,000 *8,000,000 $423 ,967 outstanding on June 30,1957. Paid in full. Privatelyrefinanced. $1,013,205 outstanding June 30, 1957. 10 10 Privately refinanced; RFC accepted $6 million in preferred stock as part payment- balance in cash; $3 million of the preferred stock later retired; Heidrich Tool & Die Corp., Detroit---- 586,671 *7,272 Huck Manufacturing Co., Detroit----Kaiser-Frazer Corp.,Willow R un . Kaiser-Frazer Sales Corp., Willow Run . Ryan Industries,Inc., Detroit... *1,400,000 24,940,077 Missouri : American Fixture & Manufac $3 million of preferred stock out standing on June 30, 1957. Sold subject to repurchase agreement; Government liability later canceled. Commitment canceled. Paid in full. Do , 8,421,900 17,440 600,000 Privately refinanced. Do. Sold subject to repurchase agreement; Government commitment $ 486,761 on June 30, 1957. 1,470,459 turing Co., St. Louis (now Chromcraft Corp.). Nevada: Mapes Hotel Corp., Reno.. 813,221 New Jersey: Pantasote Co., Passaic.- 552, 166 25 Sold subject to repurchase agreement; Government liabilitylatercanceled. Sold outright. N e w York : Carthage Hydrocol, Inc., New York -- 8,475,000 3,275,000 Notes sold outright to institutional in vestors. Deep Water Terminals, Inc.,Brooklyn . General Textile Mills,Inc.,New York .. 5,998,595 730,000 470,000 164,000 $427,500 outstanding on June 30, 1957. Segal Lock & Hardware Co.,Inc.,New 1,444,064 Liquidated through bankruptcy pro ceedings. York . Paid in full. Do. Ohio : Braun Bros. Packing Co., Troy 569,000 Davey Compressor Co.,Kent. 550,000 56,000 Glass Fibers, Inc.,Waterville. 1,916,498 125,680 $352,508 outstanding on June 30,1957. Paid in full. Do. Refinanced from proceeds of private sale of debentures. 447782–68 -2 5 RFC BUSINESS LOANS AND COMMITMEN TS AGGREGATING $500,000 OR MOR E TO ANY ONE BORROWER , SEPT. 28, 1953— Continued Outstanding and undisbursed,* Sept. 28, 1953 (gross amount) Bank partici Disposition pation (percent) Ohio — Continued Ric Wil Co., Cincinnati... Tyson Bearing Corp.,Massillon. 592,500 80,000 675,434 Yeager Co.,Akron... Oklahoma: Lawton Community Hotel,Inc., 994, 000 13. 2 Privately refinanced. Also had DP A loans of $1,375,000; all refinanced through purchase by new interest. 15. 4 14. 3 *700,000 Lawton . Oregon : La mb Weston, Inc.,Weston Oregon Fibre Products,Inc.,Pilot Rock Roseburg Lumber Co.,Roseburg- Privately refinanced. Disbursed and sold subject to repur chase agreement; Government c o m mitment$524,775 on June 30,1957. 500, 000 Paid in full. 689, 757 $2,830,000 outstanding June 30,1957. *2,410, 242 1,832,000 Snellstrom Lumber Co., Eugene- 550,000 *125,000 South Carolina : Carolina Giant Cement 3,141,807 60 Sold subject torepurchase agreement; Government liability later canceled. Sold outright. Undisbursed commitment canceled. 10 $2 million retired through refinancing; balance retired from borrower's own Co., Harleyville. funds. Tennessee: Wheland Co., Chattanooga- 3,765, 198 251,401 Sold subject to repurchase agreement; Government commitment $2,418,300 on June 30, 1957. 2,809, 100 Sold subject to repurchase agreement; Texas : Alford Refrigerated Warehouse, Dallas Government commitment later can 251,401 celed. Civic Hotel Corp.,OdessaHyde Corp., Fort Worth .. Lone Star Steel Co.,Dallas--- Texas City Refining Co.,Texas CityTexas Consolidated Oils, Dallas. Texas Frozen Foods Corp., Harlingen. Virginia: Albemarle Paper Manufacturing Co., 515,422 $2 75,000 outstanding on June 30,1957. Paid in full. 900,000 88,000 34,940,485 *13,500,000 Do. 3,861,065 12,390, 141 *772,579 632,355 35. 4 Also has DPA loan of$40.3 million; the DPA loan and $15,962,994 of RF C loan outstanding on June 30, 1957, Sold subject to repurchase agreement; Government liability latercanceled. Government share $7,305,885 on June 30, 1957. $545,355 outstanding June 30, 1957. Privately refinanced. 4,979,638 Richmond . Virginia Lincoln Corp., Marion -- Washington: Seidelhuber Steel Rolling Paid through bankruptcy proceedings. 645,269 *824, 730 760,000 $686,679 outstanding June 30, 1957. Mills,Seattle. West Virginia: West VirginiaSteel& Manu 2,969,833 Privately refinanced through sale of facturing Co., Huntington, co mpan y . Alaska : Alaska Plywood Co.,Juneau. Bellingham Canning Co., Yakutat. 593,300 16%3 $360,417 outstanding on June 30, 1957. Paid in full. 559 , 489 *2410, 510 The program to dispose of the larger business loans through negotiations was successful in achievingarapidreduction in thedollarvolume of the RFC business loan portfolio. From September 28,1953,through June 30,1957,885 loans amounting to $125,154,000 were removed from the portfolio as theresult of thesenegotia tions,and theproceedsreturned to theTreasury much earlier than would have been possible if the loans had been liquidated according to scheduled repayment terms. Throughout the liquidation program , the Corporation maintained a firm policy in the collection or sale of business loans of requiring 6 payment at full face value without compromise or discount. The table below summarizes the results of the program for negotiated disposal of business loans. Nu mbe r Am oun t (in thousands) Sold outright or otherwise refi nanced .. Sold subject to deferred partici pation (repurchaseagreement). Prepaid 6months or more in ad vance of maturity Total.- 421 $93,036 99 25,828 365 6,290 885 125, 154 D I S P O S A L O F SE CU RIT IE S O F B U S I N E S S ENTERPRISES On September 28, 1953, there were two in > stances in which R F C held the securities of business enterprises. In both of these cases Reynolds Metals Co. and Steep Rock Iron Mines, Ltd.-- the securities were disposed of in the market. LIQUIDATION OF RAILROAD SECURITIES On September 28, 1953, RFC had, in the portfolio of its lending program ,securities and notes of eight railroad companies with a par or stated value of$88,537,052. In addition,there was one undisbursed commitment for equip ment trust certificates in the amount of $717, 000. Included in the total were securities with The securitiesof Reynolds Metals Co.,which a par or stated value of $10,571,000 which had consisted of serial4 percent mortgage notes due annually to 1967, with a par value of $20, 991,600, were sold in January 1954 to private indebted to RFC and which were carriedon the Corporation's books at an appraised value of interests after an exhaustive effort to develop buyer interest and secure the bestpossibleprice. The issue was sold for $20,357,187,representing a price of 95 and accrued interest of $415,167. The securities of Steep Rock Iron Mines, a been accepted in reorganization of a company $5,948,960 The program for disposal of RFC's railroad obligations included public sale offerings,nego tiations with the railroads and private invest ment institutions, and direct sales in organized markets . Canadian corporation, with a par value of The railroad obligations held by RFC , and $4,300,000,were disposed of to private investors thedispositions made of them throughJune 30, in February 1954 at par plus accrued interest. 1957,are shown in the table below: Railroad securities Par or principal Disposition amount Bonds and stocks : Baltimore & Ohio RR .: 4% collateral trust bonds, due Jan. 1, 1965. Bangor & Aroostook R R .: 4% collateral trust bonds, $65,000,000 Sold in June 1954 for average price of 1,675,000 9536,plus interest. Retired at par plus interest through refunding due July 1, 1961 . Central of Georgia Ry .: 1st mortgage 4% bonds,due Jan. 1, 1995 General mortgage 472% income bonds, due 35,803 55,346 Jan. 1 2020 . Preferred stock (par $100),711 shares Erie RR .: Income mortgage 412% bonds, due Jan. 1, 71 , 100 1 10,571,000 2015 . Mortgage bonds sold for $64,670; preferredstock stillheld on June 30, 1957 . Sold for $7,716,830, slightly above market, in October and November 1953 . Meridian & Bigbee R R .: 1st mortgage 4% bonds, due Jan. 1, 1961 Income mortgage 4 % bonds,due Jan. 1, 1998 Common stock (nopar- stated value, $73.31 49,000 500,000 781,626 Sold for $950,000 in August 1955. per share), 10,716 shares. Equipment trust certificates and notes: Georgia & Florida RR . (receiver): Equipment trust of 1950, 3% due serially to July 1, 1960. Equipment trust certificates. New York, Ontario & Western Ry .(trustee): Equipment trust of 1945, 3 % due serially to May 1, 1955. Equipment trust of 1947, 3% due serially to 662,000 $302,000 outstanding June 30,1957. 2 717,000 $465,000 outstanding June 30,1957. 1,008, 000 $453,000 outstanding June 30,1957. 1,705,000 $1,525,000 outstanding June 30,1957. Dec. 1, 1957. Tennessee Central Ry.: Equipment trust certificates, 3% series E. Equipment trust certificates, 3% series F. Promissory notes: Tennessee Central Ry ., due Oct. 1, 1957 Tennessee Central Ry ., due Apr. 1, 1960 Receiver's certificates: Georgia & Florida R R ., receiver certificates, 4% . 170,000 $58,000outstanding June 30,1957. 504, 000 $182,000 outstanding June 30, 1957. 100, 118 5,306, 102 339,957 Repaid . $5,181,703 outstandingJune 30,1957. $322,466 outstanding June 30, 1957. 1Securities accepted in reorganization -appraised value,$5,948,960 2 Undisbursed commitment on Sept. 28,1953. 7 D I S P O S A L O F PU BLI C A G E N C Y S ECU RI TIE S On September 28, 1953, RFC held or was committed to purchase a total of $66,556,000 in 297 issues of the obligations of political sub divisions of States and Territories. Efforts to dispose of these holdings were at first concentrated on advertised sale. Sealed bids were invited for 171 lots amounting to $9,284,000. The offering was announced in financial publications with nationwide circula priceof97.6359and accruedinterestof$224,662. The other large public agency security issue was $22,450,000 of bonds of Public Utility District No. 1 of Pend Oreille County, Wash . After completion of the hydroelectric project for which these bonds were issued, the district retired the entire amount at par from the pro ceeds of a refunding issue. LIQUIDATION OF SECURITIES OF F I N AN CIAL INSTITUTIONS The securities of the 35 financial institutions tions and was circularized to more than 1,900 municipal bond dealers, insurance companies, and other potential purchasers. The bids were held by RFC on September28,1953,amounted opened on November 17, 1953, and were far ferred stock and debentures of banks. These below expectations. Bids were received on only 98 lots,and only those for 39 lots having a par value of $1,600,700 were acceptable. The amount accepted for these was $1,492,982,plus accrued interest. Following the unsatisfactory sealed bid offering,continuingeffortsweremade to dispose of the remaining securities through negotiated sales. Revised listsof the public agency securi ties held by RFC were widely circulated to investment dealers and other interested parties. Negotiated sales resulting from this program produced prices greatly in excess of the bids submitted at the sealed bid sale. This program to $45,490,000 and consisted mainly of the pre remained from the $3.9 billion invested in approximately 9,000 banks and otherfinanical institutions by RFC during the early years of its existence. The program for liquidation of these holdings was to assist the institutions in obtaining new capital or in the formulation of other plans which would enable them to retire their obligations to the Government. Through June 30,1957,these effortsresulted inthe retire ment of all securities of financial institutions, except those those of two banks, aggregating $4,779,000. DE FE NSE P R O D U C T I O N LOA NS Under titleIII of the Defense Production Act wascontinuedthroughouttheliquidationperiod and,up toJune30,1957,resultedinthedisposal of allbut 69 issues,which had a carrying value of 1950,the President was empowered to make provision for loans to business enterprises for of $4,636,000. Those which remained were the residue of the more than 6,200 issues purchased expansion of capacity, development of tech nological processes, and the production of by RFC which had a value exceeding $1,300 essential materials. To carry out the purposes of the act, the President was authorized to utilize such existingagencies ofthe Government million. The marketable quality of those remaining was generally very low and many of them were in default. Two issues accounted for about three-fourths of the amount outstanding or committed at the start of the liquidation period. The largest as he deemed appropriate, or to create new agencies. Loans made under the Defense Pro duction Act were financed by borrowings from the Treasury under the authority ofsection304 of these was $28,885,000 of 4 percent bonds issued by the City of Cleveland,Ohio,Transit of the act. Authority. Sale of this issue was made as the 9, 1950,the President directed that the facili ties of the RFC be utilized for the purposes result of intensive negotations over an extended period of time and,finally,competitive bidding. Since the 4-percent interest rate on these bonds was below the rate carried by other large transit bond issues, it was obvious that the bonds would have to be marketed at a discount. The $28,426,795receivedwhen thesalewas consum mated exceeded expectations, representing a 8 By Executive Order 10161,dated September of the Defense Production Act,and the Cor poration thereafter served as credit adviser and fiscal agent for the Defense Production A d ministration in processingloan applications and servicing loans made. The Corporation con tinued to perform these services under the Defense Production Act until September 28, 1953,when the provisions of section 107 of the placed RFC in this program , the activities RFC Liquidation Act became effective. This were administered by the same management section provided that the Defense Production which was responsible for the liquidation of RFC. The program and policies followed in Act lending program be transferred from RFC to an agency to be named by the President. In Executive Order 10489,dated September 26, 1953,the President transferred the program to the liquidation of RFC's business loans were applied to the Defense Production Act loans, to the end that the Government's investment the Secretary of the Treasury. The Secretary insuchloansbe recovered asrapidlyaspossible. arranged to utilize RFC as his agent for the administration of this program , and this ar amounting to $383,189,421 had been authorized rangement continued until June 30, 1954. under the authority of the Defense Production Thereafter, the program was administered by the Secretary of the Treasury through the Defense Lending Division in the Treasury Department. Although theRFC served only as an agent in the Defense Production Act lending program , the lending policies and procedures established for RFC's own lending program were followed in the making and administration of loans. Later, when the Secretary of the Treasury re Through June 30,1957,a total of 349 loans Act. Disbursements amounting to$288,727,552 were made on 261 of these authorizations. Of the total, 340 authorizations amounting to $352,489,022 were made prior to September 28, 1953,when the program was transferred to the Secretary of the Treasury. The loans and commitments outstanding on September 28, 1953, and changes to June 30, 1957,are summarized below: Dollar amounts in thousands Outstanding Sept. 28,1953 N um b er Loans .. Total,loans and commitments... N u m b er A mou nt Outstanding June 30,1957 Number A mo u nt 190 $132,599 -161 + $47,635 11 2 136,212 -11 +7 –130,212 185 + 18 ,142 9 18,327 203 268,996 - 165 – 64,435 38 204,561 Commitments : Direct . Deferred . A mo un t Changes toJune 30,1957 - 29 (1) $180,234 6,000 Partial. Included in the reductions made in the Defense Production Loan portfolio are 6 loans for $1,793,000 sold outright, 30 loans for $22,616,000 sold subject to repurchase agree ments,and 19 loans for $5,592,000 which were paid 6 months or more in advance of maturity from the proceeds ofrefinancing. A few very large loans made up the bulk of the amount outstanding on June 30, 1957. San Manuel Copper Corp. White Pine Copper Co. Green River Steel Corp. been unsuccessful. However,the negotiations are being kept alive; with the outstanding balances reduced by scheduled repayments, with more seasoning,and more private invest ment funds available, it should be possible in due course to arrange forprivaterefinancing. CIVIL D E F E N S E L O A N S These were : Lone Star Steel Co. private investment houses. Due to conditions in the money market, these efforts have so far $37,000,000 70,751,638 51,448,048 8,556,126 Efforts to secure refinancing of these loans, or otherwise to recover the Government's investment in them , have been continuous. Protracted negotiations to this end have been held with banks, insurance companies, and The Federal Civil Defense Act of 1950 (sec. 409) authorized the R F C to make loans for civil defense purposes upon certification by the Federal Civil Defense Administrator. The totalamount outstandingat anyone time under this authority is limited to $250 million. Loans made under this authority are financed by borrowings from the Treasury. 9 Although the Federal Civil Defense Act did In the RFC Liquidation Act (sec. 104) it was directed that all powers, duties, and not specifically limit the use of the lending authority of RFC under the Federal Civil Defense Act be transferred to the Secretary of authority, all loans authorized were for the construction of hospitals. A total of 10 loans the Treasury. This transfer became effective amounting to$7,918,000wereauthorizedbefore the Congress effectively stopped the considera tion of applications for new loans by failing to September 28, 1953. After the transfer, the program was administered by the samemanage ment which was directing the liquidation of RFC and the defense production lending program , and the primary objective was to approve a request for a limiting amount on recover asrapidly as possible the Government's lending program is summarized in the table investment in civil defense loans. below : expendituresforadministrativepurposesduring fiscal year 1956. The complete civil defense Amou nt outstanding June 30, 1957 Amount authorized G ov er n me nt share NorthShore Hospital,Manhasset, B a n k share $450,000 $750,000 Disposition (Government share) Direct loan; authorized Mar. 28, 1952; matures Jan. 1, 1963. N. Y. Forest Hills Foundation, Forest 1,000,000 Direct loan; authorized May 5, 1952; privately refinanced when 375,000 Direct loan; authorized Nov. 17, 1952; commitment expired with Hills, N. Y. balance was $635,000. North Adams Hospital, North Adams, Mass. out disbursement . Hospital, 400,000 Clara Maass Memorial Hospital, Newark, N. J. 750,000 Guernsey Memorial Cambridge,Ohio. 335,904 Direct loan; authorized Jan. 8, 750,000 Originally a directloan of 2 million 1953; matures Feb. 27, 1973. $1,250,000 authorized Jan. 19,1953;changed to Government guarantee of $750,000 in a loan of $2 million by an insurance company. Total loan undisbursed as of June 30, 1957. Forrest S. Chilton Memorial Hos pital,Pompton Plains, N. J. Pascack Valley Hospital, West 443,000 421 ,385 60,000 540,000 540,000 Direct loan; authorized Feb. 16, 1953; matures May 10, 1979. Originally a direct loanof $600,000 authorized Mar. 5,1953; changed d , N. J. to 90 percent deferred participa tion. Project not started under this financing; commitment author ized Jan. 25, 1954 ; expired Apr. McLeod Infirmary,Florence,S. C. 315,000 35,000 Englewood Hospital Association, 900,000 100,000 546, 795 Deferred participation authorized 900, 000 100,000 862,815 Deferred participation authorized July 2,1951. 27 , 1955 . Apr. 19, 1954 . Englewood, N. J. BethIsrael Hospital Association, Passaic, N. J. LIQUIDATION OF ASSETS A N D LIABILI TIES R E M A I N I N G F R O M W O R L D W A R II porations Appropriation Act of 1949, the Con gress directed the Secretary of the Treasury to cancel the notes of RFC in the amount of Through subsidiary corporations, the Recon struction Finance Corporation engaged in a wide variety of construction,procurement,and production activities during the national de fense,war,and reconversion periods beginning in 1940. Following World War II,it was ap parent that the Corporation would be unable to recover from these activities amounts suffi cient to retire the borrowings from the Treasury used to finance them. In the Government Cor 10 $9,313,736,531,plus interest accrued thereon subsequent to June 30,1947. This amount rep resented unrecovered costs to the Corporation as ofJune 30, 1947,of its national defense,war, and reconversion activities. The Congress further directed that any amounts recovered from the assets of these activities subsequent toJune 30,1947,should be paid into the Treas ury as miscellaneous receipts after the deduc tion of related expenses. The assets remaining from these programs at the time of the note cancellation consisted continuedproduction of tinby the Government at the Texas City, Tex.,smelter. primarily of industrial property,plants,equip ment, and related facilities which either had been or were expected to be declared surplus. In addition, there were significant amounts represented by inventories of strategic mate rials, and a variety of loans, advances, re and reconversion activities. ceivables,and securities. Some of the industrial properties held by the The effective date of the RFC Liquidation Act (September 28, 1953) had no special sig Corporation were continued in operation for nificance insofar as the production and World War II liquidation programs were concerned. the account of the Government after the re conversion period. Continued operation of the synthetic-rubber-producing facilities was Except for the facilities related to the three production programs noted above, the RFC carried on continuously from 1947 a program to dispose of and liquidate the assets and liabili ties remaining from its national defense,war, However,in this report, the progress made in the disposal and liquidationof these assets and liabilities ismeasured from September 28,1953, provided for by the Rubber Act of 1948 and subsequent amendments; the Abaca Produc agement and personnel engaged in the liquida tion Act of 1950 provided for continuation of tion of RFC's lending program assets. At that Government production of abaca fiber on its Central American plantations; and the joint resolution approvedJune 28,1947,provided for since the program was conducted by theman time, the RFC was accountable to the Treas ury for $452,168,832 in the net assets of these programs, distributed as follows: In millions of dollars Total Synthetic Tin Abaca rubber Funds held by R F C - 126. 3 Cash working fundsLoans,advances,and receivables- 2. 8 33. 1 134. 1 180. 3 6. 0 2. 21. 73. 162. 356. 3 p r o g ra m 7 9 8 9 0.1 .7 58. O 8. 2 3. 1 30. 4 Net investment.- 325. 9 Total accountability- 452. 2 Inventories Property,plant,and equipment (net) . Other assets . Total assets. Liabilities SYNTHETIC R U B B E R Disposal to private industry of the Govern ment'ssynthetic-rubber-producing facilitieswas contemplated in the Rubber Act of1948. This act required the RFC to develop such a pro gram and report to the President and the Con gressbefore March 1,1953. On April 14,1953, , the President sent a message to the Congress in which he recommended legislation to implement Liquidation 10. 4 9 0. 1 2. 3 7. 1 1. 9 264 , 4 22. 8 67. 9 4. 4 11. 4 2. 6 12. 6 .6 241. 6 63. 5 8. 8 12. 0 2. 1 1 Producing Facilities Disposal Commission, which was formally organized on November 10, 1953. Through the Commission's efforts, all of the synthetic-rubber-producingfacilitieswere sold to private industry, except an alcohol butadiene plant at Louisville, Ky., which is under lease to a private operator,and a small catalyst manufacturing facility in Baltimore, Md . Full details of the Commission's disposal efforts and their results are contained in the the disposal program presented in the RFC report. This resulted in the Rubber Producing reports made to the Congress by the Commis Facilities Disposal Act of 1953, approved A u sion . gust 7, 1953. The Disposal Act established the Rubber While the Disposal Act was under considera tion, the RFC Liquidation Act was adopted, 11 and section 107 of this act directed that all RFC to Federal Facilities Corporation, organ powers,duties,and authorityof the RFC under ized by the Secretary of the Treasury. 2 the Rubber Act of 1948 be transferred from The synthetic rubber program assets and RFC not later than June 30,1954. By Execu liabilities transferred from RFC to Federal tive Order 10539, effective June 30, 1954,the synthetic rubberprogram was transferred from as follows: Facilities Corporation on June 30, 1954, were Cash .. $11,242,893 17,371,841 72,936,097 Accounts receivable Inventories ofsyntheticrubber,raw materials,and supplies--Production facilities . $530,596,888 386,030,165 Less depreciation. 144,566,723 2,347,368 Other assets.. Total assets . 248,464,922 15,190,484 Liabilities... 233,274,438 Net investment .. 9 Federal Facilities Corporation continued to operate the synthetic rubber plants for the Government's account until they were sold or leased under the program of the Rubber Pro ment,the bulk of which was the alcohol buta diene plant at Louisville, Ky ., under lease to a private operator; the remainder consisted of catalyst manufacturing equipment located in ducing Facilities Disposal Commission. The proceeds from the program to dispose Baltimore, Md . of the Government's synthetic-rubber-produc Because of the strategic importance of tin metal, operation of the Government-owned tin ing facilities were as follows to June 30, 1957: Sales of fixed assets. $264,286,843 Sales of in-process inventories, spare, parts,tools, etc.-Total.--- 21,702,279 285,989,122 Less purchase money mortgages out standing June 30, 1957- . Cash proceeds realized.--- 9,261,171 276,727,951 On June 30,1957,liquidationoftheremnants of the synthetic rubber program became the TIN smelter at Texas City,Tex.,was continued fol lowing World War II. This smelter was con structed by an RFC subsidiary in 1941–42 as part of the Government tin program under taken in1940,and istheonlymajor tinsmelter in the Western Hemisphere. On September 28, 1953, when the RFC Liquidation Act became effective,thenet value of the properties,inventories, and other assets making up the tin program was $63,500,000; responsibility of the Administrator of General of this more than $58 million was in inventories. Services, who succeeded the Secretary of the Treasury as the executive head of Federal Fa cilities Corporation under the provisions of Section 107 of the RFC Liquidation Act, ap Executive Order 10720. The principal assets of the synthetic rubber program remaining on June 30, 1957, were $9,261,171 in purchasemoney mortgages and $5,982,838inunsoldproperty,plant,and equip 12 provedJuly30,1953,directed thatallfunctions, powers,duties, and authority of RFC relating to the tin program be transferred from RFC. In Executive Order 10539,the President trans ferred the tin program to the Federal Facilities Corporation. The composition of theGovern ment's investment so transferred was as follows: Cash.-- $15,244,231 Receivables.. 1,648,228 15,119,393 Inventories.Production facilities. $13,183,989 5,697,841 Accumulated depreciation.. 7,486,148 Other assets. 32,570 Total assets. Liabilities.- 39,530,570 3,890,268 Net investment. Authority to operate the smelter and carry on the tin program under the joint resolution approvedJune28,1949,extendeduntilJune30, 1956. In Senate Concurrent Resolution 26, 84th Congress,the President was requested to have conducted a study and investigation as to 35,640,302 ices in accord with the provisions of Executive Order 10720. At that time, the remaining assets of the tin program consisted primarily of the $1,215,000 due on the purchase-money mortgage taken in the sale of the smelter. ABACA the most feasible methods of maintaining a permanent domestic tin smelting industry and Beginning in 1942,the RFC had engaged in report his recommendations to the Congress the production of abaca fiber on plantations in before March 31, 1956. As the result of this Central America. study,Public Law 608,approved June 22,1956, Abaca, or manila hemp, which has strategic uses in rope, twine, and provided for operation of the tin smelter until January 31, 1957, and also directed Federal marine cordage, cannot be grown in the con tinental United States. Facilities Corporation to take steps to sell or lease the tin-producing facilities. in Costa Rica,Guatemala,Honduras,and Pana After exhaustive negotiations, an agreement forthesaleofthesmelterwas signedon January ma . The Abaca Production Act of 1950 pro vided for continuation of the program until 3,1957,with the Wah Chang Corp. The sale March 31, 1960, unless earlier termination is directed by the President or the Congress. price was $1,350,000, with a 10-percent cash downpayment and the balance in annual in stallments over a period of 10 years. The purchaser also agreed to make additional pay ments up to $2 million contingent upon the volume of tin metal, tin alloys, and tungsten produced The Government plantationswere established In the RFC Liquidation Act,itwas provided that the abaca program be transferred from RFC . General Services Administration was named by the President to receive the abaca program in Executive Order 10539, effective Effective June 30, 1957, responsibility for liquidating the remnants of the Government's tin program passed from the Secretary of the June 30, 1954. Treasury to the Administrator of General Sery Administration by this order was as follows: Cash ... Receivables Inventories. Less valuation reserve.. The composition of the Government's invest ment transferred from R F C to General Services $8,100,000 348,745 $4,388,776 1,107,936 3,280,840 Production facilities.--. Less accumulated depreciation.. Other assets. Total assets . Liabilities. Net investment.. 12,907,719 5,804,147 7,103,572 62,458 18,895,615 1,530,052 17,365,563 13 O T H E R ASSETS R E M A I N I N G F R O M W O R L D W A R II ACTIVITIES For funds expended under wartime programs other than syntheticrubber,tin,and abaca,the R F C was accountable for a net investment of $12,026,878 on September 28,1953. The com position of that investment and the progress made in liquidation to June 30, 1957,are sum marized in the table below : Sept. 28,1953 Funds held by RFC . Working funds... Loans and securities. Less reserves for losses. June 30, 1957 (1) $3,180 $7,558,005 3,560,220 6,900 1,753,500 1,806,720 6,900 7,743,790 2,066,456 6,300 15,264,333 10,318,132 25,074,579 16,456,923 10,324,432 5,537,464 8,617,656 4,786,968 6,653, 186 4,273,380 5,029,759 6,357,055 15,956,325 6,386,809 5,059,525 Accounts receivable : U. S. Government agencies. Land -grant freight claims. Other receivables.. Less allowance for losses. Property,plant,and equipment: Under lease Under useand occupancy permit. Held for disposal.-Less allowance for losses. 13,808,975 Miscellaneous assets.. Total assets,net Liabilities. Ne t investment .. 29,754 2, 147,350 91,759 1,327,284 12,666,665 13,679,158 639,787 166, 119 12,026,878 13,513,039 1 iFunds heldby RFC for this program were intermingled with thoseofother programs on Sept. 28,1953and no breakdown isavailable. Included in the foregoing table forSeptember 28,1953,in the category “loans and securities” The property shown as under a use and oc cupancy permit was a magnesium forging are $3 million face amount in the capital stock plant used by the United States Air Force of the Banco de Borracha (Amazon Credit Bank) and $498,201 in a loan to the N e w without rental. This property was transferred foundland Railway. Under the provisions of accordance with Public Law 388, approved Reorganization Plan No. 2 of 1954, both of August 12, 1955. these were transferred to the Export-Import Bank of Washington for final liquidation. SMALLER W A R The accounts receivable from Government agencies on September 28, 1953, included $7,737,547 due RFC from the Navy Depart ment under a provisional arrangement for the to the Air Force without reimbursement in PLANTS CO R P O RA T I O N Under Executive Order 9665, dated Decem ber 27, 1945, the assets of the Smaller War Plants Corporation were transferred to RFC for collection or disposal.. Public Law 132, transfer of an aircraft plant. The Navy D e 80th Congress, directed RFC to continue this partment’s conditional obligation to RFC was liquidation program . At the time of transfer, the unliquidated assets of the Smaller War Plants Corporation totaled approximately $40 million, and con sisted of loans, leases, industrial plants, and equipment. By September 28,1953,these had canceled by Public Law 978,approved August 3,1956. The amounts due under conditional sale contracts arose primarily from the sale of steel producing facilitiesfollowing World War II. 14 been reduced to $2,198,965 and consisted pri marily of 21 loans with unpaid balances of $1,540,071. Liquidation of these remaining assets was continued under the policies and procedures followed in the liquidation of RFC's program . The liquidation accomplished from September 28,1953,to June 30, 1957,is sum marized in the table below : Outstanding Sept. 28,1953 Loans.. Notes and accounts receivable. Less allowances for losses.. Outstanding June 30, 1957 Reduction $1,540,071 218,139 677,431 $845,950 1,204 558,657 $694, 121 216,935 118,774 1,080,779 288,497 29,791 261 ,254 410,964 Property acquired in liquidation ofloans 440,755 792,282 Cash .. 1,252,423 2,773,957 82,972 579,542 2,194,415 Liabilities.-- 1,716 81,256 2,690,985 577,826 2,113,159 Total. - P A Y M E N T S T O T RE AS UR Y F R O M LIQUIDATION P R O CE E D S 991, 169 RFC The funds becoming available and used in the liquidation of RFC's assets were as follows: There was returned to the United States Realization of loans and investments.. $507,470,637 Realization of World War II assets, other than production programs. 12,457,605 Income - lending programs.. 44, 713,129 Income -World War II assets, other than production programs--5,430,358 Gross profit on sale of commodities--245,525,977 Recoveries under land grant freight Treasury from liquidation of the assets held by RFC on September 28, 1953, a total of $1,033,099,617. In addition,from the proceeds of liquidation, $10,327,000 was transferred to other Government agencies in connection with the abaca fiber program and synthetic rubber research. The foregoing figures do not include transactions related to the Defense Production Act or civil defense lending programs which were transferred from RFC to the Secretary of claims.- Sale ofproduction facilities. Recovery of working capital.. 5,434,894 275,538,123 83,641,566 1,180,212,289 the Treasury at the time the RFC liquidation program began. The composition of the amount returned to Payments to Treasury (as above)----- 1,033,099,617 Loans disbursed .- 76, 751,668 the Treasury from the liquidation of RFC is as Capital expenditures - production pro follows: grams. Administrative expenses. 11,957,823 Other expenses. 37,228,912 Payments in reduction of RFC bor rowings from Treasury (net)Retirement of RFC capital stock.---Payment ofearnings and proceeds from $9,867,697 65,000,000 gram. Cash transferred with abaca program and synthetic rubber research. liquidation of RFC lending pro 285,267,276 10,844,269 10,327,000 1,180,212,289 Payment ofearningsand proceeds from World War II assets. Payment of earningsand proceeds from liquidation of synthetic rubber and tin programs— FFC .. Payment ofearningsand proceedsfrom 208,346,199 460,000, 000 liquidation of assets of Smaller War Plants Corporation.. 2,075,000 Increase in amount of cash on deposit with Treasury--- 2,543,445 1,033,099,617 T H E ABOLITION O F RFC Under the provisions of Reorganization Plan No. 1 of 1957,the assets held by RFC on June 30, 1957,were transferred for final liquidation to other Government agencies administering similar continuing functions and the Recon struction Finance Corporation was abolished effective at the close ofJune 30,1957. 15 In general, the transfers made under the plan were as follows: assets and liabilities remaining in the liquidation of the former Smaller War Plants Corporation. 4. To the Secretary of the Treasury: (a) Those 1. To Small Business Administration : Those assets and liabilities related to business loans and assets and liabilities relating to business loans with individual balances outstanding of less $250,000. securities with individual balances of $250,000 than or more, (b) all securities of and loans made to railroad companies,and (c)allsecuritiesoffinancial institutions. 2. To Housing and Home Finance Agency: Those assets and liabilities relating to securities issued by and loans made to political subdivisions of States and Territories. 3. To General Services Administration : (a) The assets and liabilities remaining from RFC's ter minated World War II activities, and (b) the The assetsandliabilitiesremainingwithRFC on June 30,1957,and their disposition among other Government agencies are summarized in the following table: Transferred t o Total GSA IIHFA SBA Secretary of Treasury I. Lending programi Cash -Escrow funds. Business loans. Railroad loans and securities. l l o n i i i i i Public agency securities ! ! I i Financial institutions securities Acquired collateral. Other receivables Less reserves Total Liabilities.. Equity of U. S. Government. $9,321,528 1,228, 102 51,499,370 8,567,094 4,635,591 4,779,000 1,732,744 2,581,350 15,200,000 $1,505,004 69, 144,779 400,714 5,895,771 5,004 68,744,065 5,890,767 $9,332 $2,324,053 $5,483,139 14,612,019 36,887,351 8,567,094 1,228, 102 4,635,591 4,779,000 492 399,367 2,872,785 9,332 9,332 1,695,258 594, 144 1,984,971 36,994 587,839 10,342,244 17,240,503 145,897 45,999,173 240,481 17,094,606 45,758,692 II. World War II activities Cash Receivables Property (net)-- . 7,558,005 4,793, 870 1,327,283 7,558,005 4,793,870 1,327,283 Total. Liabilities 13,679,158 Equity of U. S. Government. 13, 513,039 13,513,039 261,254 261 ,254 13,679,158 166, 119 166, 119 - III. Smaller War Plants Corporation Cash . Receivables Loans .. Acquired collateral. Less reserves . 879 879 845,950 29,791 558,332 845, 950 29,791 Total . Liabilities . 579,542 Equity of U. S. Government 577,826 16 1, 716 ! ! ! ! 558,332 ! ! 579,542 1,716 577,826 ! ! 1 ! BALANCE SHEET -LENDING PROGRAMS , JUNE 30, 1957 Assets Loans,securities and related receivables: Business loans. $51,499,370 8,567,094 4,779,000 4,635,591 Railroads.. Financial institutions - Public agencies. Total loans and securities... Accrued interest and dividends. Other related receivables.- 69,481,055 2,278,139 268,650 Total.- 72,027,844 15,200,000 Reserve for losses .. $56,827,844 Other assets: Assets acquired in liquidation of loans and securities— at lower of cost or ap praised value. 1,732,744 Escrow funds .. 1,228,102 34,561 Miscellaneous accounts and notes receivable - 2,995,407 Cash . 17, 140,787 Total 76,964,038 Liabilities Liabilities under lending programs: Accounts payable---Trust and deposit accounts. $91,319 128,244 219,563 181,151 Reserve for employees'annual leave.- Equity of U. S. Government: Funds held for terminated World War II programs. Capital stock . Surplus. 7,819,259 35,000,000 33,744,065 76,563,324 Total --- 76,964,038 STATEMENT OF NET INCOME FROM LENDING ACTIVITIES,FISCAL YEAR ENDED JUNE 30,1957 Income : Interest and dividends earned on loans,securities,etc. Other income. $3,644,286 292,790 $3,937,076 Expenses: Administrative expenses. Other expenses. 1,008,038 120,351 1,128,389 Net income . 2,808,687 Analysis of surplus Balance,June 30, 1956 $26, 193,788 Income for fiscal year 1957,as shown above Adjustments applicable to prior fiscal years: For reduction in reserve for losses on loans,securities, etc. For annual leave of employees--> Other -- 2,808,687 5,198,634 75,433 446,780 Less payment to U. S. Treasury- 34,723,322 979,257 Balance June 30, 1957 33,744,065 Total . 17 BORROWERS WITH ACTUAL OR POTENTIAL LIABILITY OF $100,000 OR MORE AT JUNE 30,1957 BUSINESS LOANS RFC portfolio R F C amount Arkansas: Jack Tar of Arkansas, Inc.,Hot Springs $365,000 California: California Art Tile Corp., Richmond . 112,837 Hovden Food Products Corp.,MontereyLangley Corp.,San Diego.. 139,896 340,130 Oriental Foods,Inc.,Los Angeles. Colorado: Landers Packing Co.,Denver. 154,353 250,678 Connecticut: Horle Arms Co.,Deep River.. New Haven Clock & Watch Co.,New Haven.. Delaware: Price, W. W. ,Co.,Inc., Smyrna District of Columbia: Gospel Spreading Association building fund,Washington.- 102,253 924,169 104,500 277,919 Illinois: Galesburg Soy Products Co.,Galesburg Mosow Screw Co., Waukegan .. South Water Building Corp.,Rockford.. South Water Machinery Corp.,Rockford. Indiana: Stadler Packing Co.,Inc.,Columbus. 188,000 231,900 453,138 990,548 118,099 Massachusetts: Hayward Woolen Co.,Whittinsville. Waltham Watch Co.,Waltham. 423,967 1,013,205 Michigan : Detroit Steel Corp.,Detroit (preferred stock) Hammond Standish & Co.,Detroit.-- Nevada: Copper Canyon Mining Co., Battle Mountain... New Jersey: National Tool & Manufacturing Co.,Kenilworth .. Seaboard Refractories Co.,Perth Amboy ---- 3,000,000 134,181 117,105 115,500 182,633 N ew York : Deep Water Terminals, Inc.,Brooklyn - 427,500 Meyerstein,Anthony M., Inc., Brooklyn. Soya Corporation of America, New York.. 132,577 126, 120 Ohio: Braun Bros. Packing Co.,Troy - Oklahoma: Community Hotel Co.,Norman .. Oregon: Oregon Fibre Products, Inc., Pilot Rock 352,508 235,730 2,830,000 Texas : Borger Hotel Corp., Borger. Civic Hotel Corp.,Odessa 222,713 275,000 15,962,994 Lone Star Steel Co.,Dallas_ (Borrower has additional loan of $37 million (with deferred interest of $3,332,819) approved under sec.302,Defense Production Act.) Texas Frozen Foods Corp.,Harlingen .. 545,355 (Also deferred interest, $25,000.) Texas Consolidated Oils, Dallas -(Also undisbursed commitment, $692,787.) Washington: 7,305,885 Arlington Lumber & Plywood Co.,Arlington Bolinger Orchards,Methow .. (Participation purchased,gross,$110,193.) Seidelhuber Steel Rolling Mills,Inc.,Seattle. 128,413 49,587 686,679 Alaska: Alaska Plywood Co.,Juneau .. Matanuska Valley Lines, Inc., Anchorage. 18 360,417 118,880 Loans in RFC loan pool Unpaid loan balance $140,025 Kentucky: Modern Welding Co.,Inc.,Owensboro Massachusetts : Eastern Container Corp., Springfield. 109,736 127,507 Phaneuf Hospital,Inc., Brockton.. Michigan: Stainless Ware Company of America,Walled Lake.. Missouri: Binkley Manufacturing Co.,Warrenton . North Carolina: Kalmia Dairy,Inc., Hendersonville Ohio: Imperial Glass Corp., Bellaire---- 122,059 124,750 138,274 117,359 Pennsylvania:Reichard Coulston,Inc.,Bethlehem. 192,447 Wisconsin: Menominee Sugar Co.,Green Bay - 120,000 Loans sold subject todeferred participation R F C amo unt $201,490 Arkansas: Owosso Manufacturing Co.,Benton. California:Hal Roach Studios,Inc.,Culver City 649,188 Kentucky: Louisville Builders Supply Co.,Louisville--- 251,131 486,761 Missouri: Chromcraft Corp.,St. Louis.-New York : The Virgin Isle Hotel,Inc., New York . 154,800 524,775 Oklahoma: Lawton Community Hotel,Inc.,Lawton . Pennsylvania: 152,711 Butcher & Hart Manufacturing Co.,Altoona France Packing Co., Philadelphia-- 140,201 2,418,300 Tennessee: Wheland Co.,Chattanooga. Washington,D. C.: YMCA of the City of Washington. 151, 122 RAILROADS Georgia: Georgia & Florida R R .Co., Augusta --New York : New York,Ontario & Western Ry .Co.,New York. Tennessee: Tennessee Central Ry ,Co.,Nashville 1,089,465 1,978,000 5,421,703 (Borrower has additional loan of $1,648,909 approved under sec.302,Defense Production Act.) PUBLIC AGENCIES Alabama: Cherokee,Town of, Cherokee- Illinois: Chicago Board of Education, Chicago.. (Par value,$177,628.) Robbins Village of Cook County, Robbins Kentucky: Middlesboro, City of, Middlesboro.. Montana : Billings Bench Water Association, Billings Nebraska: North Loup River PublicPower & Irrigation District,Ord... North Carolina: Kure Beach,Town of,Kure Beach. 128,750 26,644 1,125,000 180,900 116,000 176,400 246,000 1,100,000 Texas: Galveston,City of,Galveston.. FINANCIAL INSTITUTIONS New Jersey: Commonwealth Trust Co.,Union City Vermont: Vermont Savings Bank, Brattleboro. 1,779,000 3,000,000 SMALLER W A R PLANTS CORPORATION Mississippi: Standard Millwork & Supply Co.,Jackson. Montana : Jardine Mining Co., Jardine. Pennsylvania: McGann Manufacturing Co.,Inc.,York.. 108,835 558,332 121,897 19 U. S. GOVERNMENT PRINTING OFFICE :1958