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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

KD 3

HG 3 729

A 5961
1957
Docs
TABLE OF C O N T E N T S
Page

RFC Liquidation Act..

Assets to be liquidated.

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.--

Securities of business enterprises.

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-..

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:

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;

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:

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

502

15,594

69,484

556

5,266

15,038

42,304

785

64,218
41,519

48,000

6,000

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

75,348

717

45,490

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

8,567

40,711

4,779

199
29

24,172
36,248

4,636
1,500

592,210

4, 140

520,468

834

71,742

1,676

26,424

1,590

19,857

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 )

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

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

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

Sold subject torepurchase agreement;
Government liability later canceled.
Sold outright.
Undisbursed commitment canceled.

$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

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.

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

18,327

203

268,996

- 165

– 64,435

204,561

Commitments :
Direct .
Deferred .

A mo un t

Changes toJune 30,1957

(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

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

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

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.

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 ..

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

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

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

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

845,950
29,791
558,332

845, 950
29,791

Total .
Liabilities .

579,542

Equity of U. S. Government

577,826

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 .

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.

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

Full text of Report to the Congress : Liquidation of Reconstruction Finance Corporation

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