The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ATTENTION :
THIS REPORT
IS N O T F O R R E L E A S E U N T I L
M O N D A Y , D E C E M B E R 24 , 1951
F O R P. M. N E W S P A P E R S
S .
R
E
C
O
N
S
T
R
U
C
T
I
O
N
F
1
A
N
N
U
A
9
I
N
A
N
C
I
A
N
A
5
L
R
N
S
N
E
C
M
U
.
B
5 8 R . R
1 9 5 1
E
C
O
R
P
O
R
P
O
R
T
T
E
M
E
D
T
A
C FINANCE
ESS
JA
CONGR
N.
O
C
E
R
C
1
L
A
F
I
91
23
N
T
S
A
T
I
O
N
EWLED
TU
KA
NLO
GRE
L I B R A R Y
o f
O
H
I
U
N
I
O
V
E
the
S
T
A
T
E
R
S
I
T
Y
RECONSTRUCTION
811
FINANCE
Vermont
Washington
CORP ORATIO N
Avenue
2 5 , D.
C.
OFFICERS
W . S T U A R T S Y M I N G T O N , Administrator
PET ER I. B U K O W S K I ..
D e p u t y Administrator
L E O H. NIELSON ..
.Secretary
W I L L I A M C. B E C K , JR ..
SOLIS H O R W I T Z
.Treasurer
General Counsel
D O N S. B U R R O W S ..
.Controller
LOAN
W . S T U A R T S Y M I N G T O N ...
P E TE R I. B U K O W S K I ..
POLICY B O A R D
..Administrator of R F C
.Deputy Administrator of R F C
J O H N W . SNYDER .
Secretary of the Treasury
CHARLES SAWYER .
.Secretary of C o m m e r c e
Officers as of D e c e m b e r 1, 1951
,
2 7
1 4 5
/
7
TABLE
OF
CONTENTS
Page
Letter of transmittal.....
4
Highlights ..
6
Lending pr ogr ams :
7
Production programs:
General.....
17
Report on synthetic rubber operations....
20
Report on tin operations.
28
Report on abaca operations...
32
Liquidation of wartime programs ..
35
C o m m e n t s on financial statements.i .
38
Exhibit A - Comparative balance sheet ....
42
Exhibit B - Comparative statement of net income from lending programs....
44
Exhibit C - Statement of accountability to U. S. Treasury for net funds expended in national defense,
war and reconversion programs .
45
Schedule 1 – Assets, at cost, liabilities and funds held in connection with national defense, wa r and
reconversion programs . .
46
Schedule 2 - Statement of operations of synthetic rubber program ...
48
Schedule 3 — Statement of tin smelter operations..
49
Schedule 4 _ S ta t e m e n t of trading operations — imported refined tin :
50
Schedule 5 — Statement of operations of abaca program .
51
Exhibit D _ S t a t e m e n t of accountability to U. S. Treasury for net assets transferred from Smaller W a r
Plants Corporation .
52
Notes to financial statements ..
53
Appendix A - Loan policy statement ..
54
Appendix B - Report on activities under Section 302 , Defense Production Act of 1950 ....
57
Ap pend ix C — S u m m a r y statement of operations — Cumulative f r o m Inception through J un e 30 , 1951
59
List of R F C L o a n Agencies ..
60
R E C O N S T R U C T I O N
FINANCE
C O R P O R A T I O N
W A S H I N G T O N
OFFICE OF THE
ADMINISTRATOR
TO : The P r e s i d e n t
The P r e s i d e n t
The
of the S e n at e
S p e a k e r of t he H o u s e
of R e p r e s e n t a t i v e s
P u r s u a n t to p r o v i s i o n s of th e R e c o n s t r u c t i o n F i n a n c e C o r p o r a t i o n A c t , as a m e n d e d ,
t h e r e is t r a n s m i t t e d h e r e w i t h t he r e p o r t of t h e R e c o n s t r u c t i o n F i n a n c e C o r p o r a t i o n
f o r th e f i s c a l y e a r e n d e d Ju ne 30 , 1 9 51 .
The f i n a n c i a l r e s u l t s a n d a c c o m p l i s h m e n t s
f o r t h in the b o d y of th e r ep o rt .
of th e C o r p o r a t i o n d u r i n g
the y e a r are
set
The s c h e d u l e of i n d i v i d u a l l o an s a n d i n v e s t m e n t s of $ 1 0 0 , 0 0 0 or m or e , r e q u i r e d
u n d e r th e p r o v i s i o n s of the R e c o n s t r u c t i o n F i n a n c e C o r p o r a t i o n A c t , as a m e n d e d , is
the s u b j e c t of a s e p a r a t e re p o r t .
In t r a n s m i t t i n g the C o r p o r a t i o n ' s a n n u a l r e p o r t f o r the f i s c a l y e a r 19 51 , m a y I
o u t l i n e b r i e f l y t he s p e c i fi c o b j e c t i v e s of R e o r g a n i z a t i o n P l a n No. 1 of 1 9 5 1 , a n d
t he s t ep s t a k e n s i n c e last M a y to o b t a i n th os e o b j e c t i v e s .
Th is R e o r g a n i z a t i o n P l a n ha s
policies .
s t r e n g t h e n e d a d m i n i s t r a t i o n of t he n e w l e n d i n g
Said Plan provides for :
1.
An Administrator
in l i e u of a B o a r d of D i r e c t o r s .
2.
A L o a n P o l i c y B o a r d c o m p o s e d of th e S e c r e t a r y of the T r e a s u r y , t h e
S e c r e t a r y of C o m m e r c e , the R F C A d m i n i s t r a t o r , a n d the R F C D e p u t y A d m i n i s
trator .
Th is B o a r d l ays d o w n b a s i c l e n d i n g p o l i c i e s .
3.
A B o a r d of R e v i e w w i t h i n t he C o r p o r a t i o n , c o m p o s e d of f i v e e x p e r i e n c e d
l o a n e x a m i n e r s . A l l l o a n a p p l i c a t i o n s ar e r e f e r r e d to t hi s B o a r d .
In
t he e v e nt the d e c i s i o n of the A d m i n i s t r a t o r on a l o a n is c o n t r a r y to th e
r e c o m m e n d a t i o n of the B o a r d of R e v i e w , t he A d m i n i s t r a t o r m us t p la c e in
th e r e c o r d a s t a t e m e n t of the r e a s o n s f o r h is a c t i o n .
S i n c e M a y th e f o l l o w i n g a c t i o n s h a v e b e e n t a k e n to s t r e n g t h e n a d m i n i s t r a t i o n of the
l e n d i n g pr og ra m :
1.
A L o a n P o l i c y S t a t e m e n t , a p p r o v e d b y th e L o a n P o l i c y B o a r d , h a s b e e n
issued .
This s t at e m e nt a p p e a r s in A p p e n d i x A of the a c c o m p a n y i n g
re p or t .
2.
F i n a l a p p r o v a l of a l l
Washington Office .
3.
A l l s a le s of e i t h e r s e c u r i t i e s or p r o p e r t y h e l d b y the
no w made on competitive bidding .
4.
A p o l i c y of f ul l d i s c l o s u r e of l o a n i n f o r m a t i o n h a s b e e n i n s t i t u t e d .
D a t a a r e a v a i l a b l e to the p u b l i c on e a c h a p p r o v e d loan .
5.
l oa n s , e x ce p t
disaster loans , has been placed
in th e
Corporation are
A l l a t t o r n e y s or r e p r e s e n t a t i v e s of p r o s p e c t i v e b o r r o w e r s m u st
p r i o r to f u r t h e r d i s c u s s i o n of t h e i r l o a n a p p l i c a t i o n .
register
C u r r e n t R F C p o l i c y is to se ll to p r i v a t e i n v e s t o r s a l l s e c u r i t y h o l d i n g s w h e n a
s a t i s f a c t o r y p r i c e c a n be o b t a i n e d f o r the Go v e r n m e n t . U n d e r t hi s r e c e n t l y
i n s t a l l e d p o l i c y m a n y m i l l i o n s of d o l l a r s h a v e a l r e a d y b e e n r e t u r n e d to the
T r e a s u r y of the U n i t e d S t a t e s .
4
On S e p t e m b e r 9 , 1 9 5 0 , u n d e r S e c t i o n 3 0 2 of th e D e f e n s e P r o d u c t i o n Ac t , the R F C
b e c a m e f i s c a l a g e n t f o r l o a n s c e r t i f i e d b y the D e f e n s e P r o d u c t i o n A d m i n i s t r a t i o n .
By E x e c u t i v e O r d e r No. 1 0 28 1 of A u g u s t 2 8 , 19 51 , R F C wa s a s s i g n e d r e s p o n s i b i l i t y
f or d e t e r m i n i n g the t e r m s a n d c o n d i t i o n s of f a c i l i t i e s e x p a n s i o n l o a ns c e r t i f i e d b y
D PA a n d t h e D e p a r t m e n t of A g r i c u l t u r e .
It w a s al so giv en a u t h o r i t y to m a k e
w o r k i n g c a p i t a l l oa ns u n de r S e c t i o n 3 0 2 .
Under m a n a g e m e n t contracts with private corporations , RFC directs
of s y n t h e t i c r u b b e r f r o m G o v e r n m e n t - o wn ed p l a n t s .
A bo ut
6 5 p e r c en t of a ll r u b b e r u s e d
in t hi s
the p r o d u c t i o n
c o u n t r y is n o w s y n t h e ti c .
To m e e t c u r r e n t r e q u i r e m e n t s d u r i n g t h e f i s c a l y e a r 1 9 5 1 , R F C r e a c t i v i a t e d 11
additional synthetic rubber p l a n t s ; and production has been expanded from 419,000
tons i n 1 9 4 9 to a p l a n n e d 9 5 0 , 0 0 0 t on s in 1 9 5 2 .
G e n e r a l p u r p o s e s y n t h e t i c r u b b e r is s o l d at 26 € p e r p o u n d , a p p r o x i m a t e l y h a l f th e
c u r r e n t p r i c e of n a t u r a l r u b b e r .
S p e c i a l p u r p o s e s y n t h e t i c r ub b e r , b u t y l , is s o l d
at 2 0 % € p e r p o u n d .
A l c o h o l is n o w u s e d in a d d i t i o n to p e t r o l e u m a s a b a s e f o r
production .
If p e t r o l e u m o n l y w e r e
employed , this synthetic price
synthetic
rubber
c o u l d be c ut a bo u t
one - t h i r d .
In a d d i t i o n , t h r o u g h t h e n o w r a p i d d e v e l o p m e n t of oi l e x t e n s i o n , t h e p r i c e
s y n t h e t i c r u b b e r u l t i m a t e l y w i l l be f u r t h e r h e a v i l y r e d u c e d .
of
Intense research has resulted in synthetic rubber becoming qualitatively superior
to n a t u r a l r ubber , f o r a l m o s t a l l u s e s ex c ep t h e a v y d u t y t i r e s ; a n d t h e p e r cent of
s y n t h e t i c u s e d in th e l a t t e r p r o d u c t is r i s i n g s t e a d i l y .
S h o u l d the c u r r e n t v o l u m e r e q u i r e m e n t of s y n t h e t i c r u b b e r b e r e d u c e d , t he p l a n t s
u t i l i z i n g a l c o h o l w o u l d be the f i r s t t o shut down , r e s u l t i n g in m u c h l o w e r p r i c e s
for s y n t h e t i c .
Americ a consumes about half the world tin production .
As r e q u i r e m e n t s r os e f o l l o w i n g K o r e a , t he p r i c e of t i n i n c r e a s e d f r o m l e s s t h a n 7 7
c e n t s a p o u n d to o v e r $ 1. 93 .
A c c o r d i n g l y , i n F e b r u a r y , 19 51 , t he R F C b e c a m e
use .
so le
i m p o r t e r of t i n f o r c o m m e r c i a l
W i t h the c o g n i z a n c e a n d a p p r o v a l of the S t a t e D e p a r t m e n t , R F C has b e e n n e g o t i a t i n g
f or t i n w i t h v a r i o u s c o u n t r i e s . A t e m p o r a r y c o n t r a c t at $ 1 . 1 2 p e r p o u n d w a s s i gn e d
w i t h on e c o u n t r y - B o l i v i a .
The R F C w i l l b u y t i n f r o m a n y s ou r ce at a n y t i m e - b u t
fa ir to th e A m e r i c a n t a x p a y e r .
o n l y at a p r i c e r e a s o n a b l y
RF C a l s o p r o d u c e s a b a c a f i b e r i n C e n t r a l A m e r i c a , to p r o v i d e a " s t o c k p i l e -in -t h e
g r o u n d " of t hi s v i t a l w a r m a t e r i a l if s u p p l i e s f r o m th e P h i l i p p i n e s w e r e a g a i n
cut off .
In a c c o r d a n c e w i t h t h e A b a c a P r o d u c t i o n A c t of 1 9 5 0 , c u l t i v a t i o n of th e p r e s e n t
2 5 , 0 0 0 a c r e s is b e i n g e x p a n d e d t o 5 0 , 0 0 0 a c r e s .
In it s l e n d i n g f u n c t i o n s , its m o b i l i z a t i o n f u n c t i o n s , a n d its p r o c u r e m e n t
p r o d u c t i o n f u n c t i o n s , t h e R F C is o p e r a t i n g w i t h e f f i c i e n c y a n d d i s p a t c h .
for t h i s c o n d i t i o n g o e s to the
and
C re d it
fi ne m e n a n d w o m e n wh o m a k e u p ou r o r g a n i z a t i o n .
Respectfully ,
J e w e d
D ec e m be r 1 , 1 9 5 1 .
5
I m m i n g e r
H
I
G
H
L
I
G
H
T
S
-
F I S C A L
Y
E
A
R
1 9 5 1
(Dollar Figures Ar e In Millions )
LENDING
PROGRAMS
Number
Amount
Loa ns Authorized
3,271
$289.8
Loa ns Disbursed ... ,
2,797
207.3
2,014 *
2,690 *
322.0
18.8
8,782
790.3
81.6
L o a n and Mortgage R ep ay m en ts :
Lo an s
Insured a n d guaranteed mort gages ..
Loans and Mortgages Outstanding :
Loan s
.
Insured an d guaranteed mor tgages ..
16,951
3,933
Deferred participation in b a n k loans .
120.8
•Represents loans and mortgages fully liquidated.
Interest an d Other I n c o m e .
$42.6
Interest Expense
13.8
Administrative and Other Expense .
15.7
Provision for Losses .
5.5
Net Earnings
7.6
Return o n Capital Stock Held B y U. S. Treasury ( Percent )
Dividend Accrued to U. S. Treasury ..
PRODUCTION
7.6
16.3
PROGRAMS
Synthetic R u b b er :
Sales (629,365 long tons ) a nd other income
Costs a nd other expenses ..
N e t income ..
Production rate :
Beginning of year 452,000 long tons
E n d of year 840,000 long tons
11 plants reactivated
$ 298.3
286.4
11.9
Tin — Smelter Operations :
Sales (28,622 long tons) of refined tin ...
Costs a n d other expenses .
Ne t income
81.7
81.4
.3
Production – 35,893 long tons of tin metal .
Trading Operations - Imported Refined Tin :
Sales (10,455 long tons ) of refined tin .
Costs and other expenses ...
N e t income
31.2
21.9
9.3
A ba ca :
5.5
Sales (19,987,200 lbs.) of Abaca ...
Costs a n d other expenses .
8.0
N e t Loss
2.5
Production — 19,500,850 pounds .
A N N U A L
R E P O R T -
FISCAL
Y E A R
1951
U n d e r existing legislative authority , the Corporation has responsibility for these functions :
1. T o m a k e loans to business enterprises under Section 4 (a ) of the R F C A c t , as a me n d e d , a n d
Section 302 of the Defense Production Act ;
2. T o m a k e loans or purchase securities in order to aid in financing projects authorized under
Federal , state or municipal law ;
3. T o m a k e loans for the rehabilitation of disaster victims w h e r e necessary or appropriate ;
4. T o ma nuf actu re a n d sell synthetic rubber as provided b y the R u b b e r Act of 1948 ;
5. T o operate the Government's Texas City tin smelter, a n d to purchase a n d sell refined tin ;
6. T o produce a n d sell abaca (manila h e m p ) as provided b y the A b a c a Production A c t of 1950 ;
7. T o liquidate the affairs of certain G o v e r n m e n t corporations created in connection with national
defense, w a r a nd reconversion activities during the 1940-1945 period.
LENDING P R O G R A M S
T h e compelling considerations affecting all financial institutions in the channeling of credit during
mobilization are these :
1. Ex pa n si on of the production underlying our defense effort. This includes the financing of n e w
facilities as well as providing the wo r k in g capital required to process procurement contracts
in existing facilities.
2.
Maintenance of adequate supplies of essential civilian goods an d services.
3.
Restricting the inflationary elements inherent in all types of credit financing.
National policy has called for curtailment of c on su me r credit, m or t g ag e credit, and non -essential
business credit. A t the s a m e time, in the Defense Production Act , provision has been m a d e to exp and
credit facilities for defense production . Because R F C ' s business loans have m a d e u p the bulk of its
lending activity during recent years , it is in this field that the effects of conformance to national policy
are m o s t noticeable.
T h e basic la w governing the Corporation's lending operations provides that the total a m o u n t of
loans, purchases, and c o m m i t m e n t s m a d e after June 30 , 1947 , shall not exceed $ 993,000,000 outstanding
at a ny one ti me. (This does not include $250,000,000 provided for loans under the Federal Civil Defense
Act .) Charges against this limitation, including unpaid principal a m ou n t s of outstanding loans a nd
undisbursed c o m m i t m e n t s , a m o u n t e d to $630,000,000 at the close of the fiscal year . T h e remaining
$363,000,000 is available for use in carrying out the objectives of the R F C Act.
Business Loa ns
Th ro ugh ou t the period covered b y this report, business activity has been on a tem por ary plateau
typical of a transitional period. N o pronounced economic expansion or contraction w a s reflected,although
weaknesses w e r e appearing in s o m e civilian lines at the s a m e time that defense requirements w e r e taking
a slowly increasing share of production. Previous experience has s h o w n that R F C business loan
activity is relatively low during such transitional periods. This fact, coupled with the restrictions
required under national credit policies, produced the results s h o w n in t h e a c co m pa n yi n g chart.
7
B U S I N E S S
APPLICATIONS
L O A N
AP PL IC AT IO NS
RECEIVED AND ACTION TAKEN
NUMBER
1500
NUMBER
1500
RECEIVED
1000
1000
WITHDRAWN
DECLINED
500
500
APPROVED
O
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN
1951
1950
1949
Small Business
Following the historical pattern , nearly 90 per cent of the loans authorized in fiscal year 1 95 1
w e r e for a m o un t s of $ 100,000 or less. Th e s e have b e e n classed as " small business " loans. T h e loans
approved during fiscal year 1951 w e r e distributed as follows :
Number
Size Class
$ 10,000
$ 10,001
$ 25,001
$ 50,001
or
to
to
to
less...
$ 25,000 .
$50,000 .
$ 100,000 ..
Sub -total $ 100,000 or less.
$ 100,001 to $ 500,000 .
O v e r $ 500,000
Total
* Includes banks' share of participation loans.
8
% of
Total
Number
A m o u n t *(000 )
744
651
542
47 4
27.5
24.1
20.1
17.5
$
4,022
11,657
21,018
38,279
2,411
89.2
$ 74,976
233
58
8.6
2.2
52,836
173,537
2,702
100.0
$301,349
Classification of loans for $ 100,000 or less as " small business ” loans is purely for convenience.
N o n e of the larger loans w e r e m a d e to concerns even approaching domination of their fields. Nearly
three-fourths of t h e loans above $ 100,000 w er e authorized to relatively small concerns in manufacturing
industries
T h e financial problems of small business have been widely discussed : T h e y are prevented f r o m
obtaining funds in t he securities markets b y lack of public interest an d the prohibitive cost of floating
small issues ; institutional investors are not interested in lending the relatively small a m o u n t s required ;
and b an ks frequently prefer not to m a k e the types of long -term loans mo st suited to the needs of
smaller concerns. B y providing long -term loans for small businesses, R F C ha s helped to preserve a n d
strengthen that se gm en t of th e business e c o n o m y wh i ch is essential to the maintenance of our system
of free competitive enterprise.
T h e re are approximately four million business enterprises in the nation. A b o u t three million of
these h a v e fewer than f ou r employees. These three million very small concerns operate on a bare
m i n i m u m of invested capital. M o s t of the financial requirements of these very small concerns are m e t
f ro m the resources of the proprietors a n d their friends, sup plem ente d with credit extended b y s u p
pliers. In these very small businesses, it is the ability a n d energy of the proprietors w h i c h determine
the success or failure o f t he venture to a far greater extent t h a n the availablility of capital an d credit.
A m o n g the one million business concerns with four or m o r e employees , there are approximately
6,500 havi ng over 5 0 0 employees . These larger firms are not usually represented a m o n g t he concerns
which receive R F C loans . T h e Corporation's business loans are concentrated a m o n g concerns with
m or e than three but fewer than 5 0 0 employees. Fo r the m os t part, such concerns have demonstrated
an ability to survive a nd prosper as very small enterprises an d have developed into m o r e efficient
small businesses . R F C loans ar e frequently the only available a n sw e r to the long -term financial problems
encountered in preserving an d strengthening the competitive positions of these small businesses.
Defense Loa ns
T h e policies adopted b y the Corporation following the declaration of the present e me rg en c y p r e
cluded the authorization of m a n y loans which , u n d e r less stringent circumstances, w ou ld h a v e been
found eligible for R F C credit. U n d e r these policies, the loans m a d e b y the Corporation fell into t w o
ma in classes :
1.
Tho se wh i ch h a d direct connections with the defense effort — such as those to concerns p e r
for ming on procurement contracts or producing critical basic materials, an d ,
2.
Tho se w hic h w oul d maintain or increase supplies of essential civilian or defense supporting
goods a n d services.
Shortly after the outbreak of hostilities in K or ea , R F C lending policies w e r e changed to give
priority, within R F C ' s existing authority ,to loans w hi c h wo ul d contribute directly to national defense.
Accordingly , while no relaxation of credit standards w a s allowed, every effort w a s m a d e to expedite
the handling of applications f r o m firms e ngaged as pr im e or subcontractors in the defense program ,
or as producers of strategic basic materials.
Authorizations for direct defense p u r p o s e s totalled $ 160,600,000 , o r nearly 57 per cent of the
aggregate a m o u n t of business loans authorized during fiscal year 1951. T h e n u m b e r of loans included
wa s approximately equal to the 4 8 4 “ V ” loans authorized t h r o u g h Federal reserve banks during the
same period. Excluding the $50 million authorization to the L o n e Star Steel C o m p a n y, the 460 direct
defense loans authorized b y R F C averaged $ 241,000 each , while the “ V ” loans av er ag ed $ 1,350,000 each .
In contrast to “ V ” loans, w h ic h a r e
direct defense loans authorized b y R F C
Funds for the wo r k in g capital needed in
of the loans. H o w e v e r , the loans m a d e b y
characteristic of fixed asset loans rather
m a d e solely for wo rk ing capital purposes .
m a d e almost exclusively for w o r k i n g capital purposes, the
included substantial a m o u n t s for expansion of facilities.
connection with expa nded facilities we re included in m a n y
R F C carried the intermediate a n d long -term maturity dates
than the short te r m maturities c o m m o n l y found in loans
R F C Participation in B a n k Loans
M o r e t h a n one-fourth o f the l o a n s authorized d u r i n g the y e a r w e r e b a n k loans i n wh i c h R F C
participated. Nearly 7 0 per cent of the participation loans w e r e on a deferred basis, m o s t of t h e m
9
being m a d e und er the Corporation's Small L o a n Pr ogram . Participation loans w e r e distributed m a i n l y
a m o n g those areas w h e r e industrial development is proceeding m o s t rapidly. A s u m m a r y of R F C
participation in b a n k loans during the past fiscal year is given in the ac co mp an yi ng table :
T y p e of L o a n
Number
Authorized
Total
Imm edi ate Participations
Deferred Participations
A m o u n t (000 )
R F C Share
B a n k s 'S h a r e
725
$ 68,961
Total
$ 47,977
$20,984
221
504
32,824
36,137
26,323
21,654
6,501
14,483
In cases w h e r e R F C authorized participation in b a n k loans, it is c o m m o n to find that the p a r
ticipating b a n k s' legal limits on loans to individual borrowers will not permit t h e m to m a k e the full
loan requested without assistance. B a n k s frequently request R F C participation in loans be yon d their
legal limits in order to provide financial assistance t o qualified applicants. It is the policy of the
Corporation to encourage such relationship with bank s .
Maturity of Loans
T h e proportionate n u m b e r of short a n d intermediate t er m loans m a d e b y R F C increased d u r i n g
the year,particularly in areas w h e r e banks w e r e unable or unwilling to m a k e " V " loans for w o r k i n g
capital in connection with procurement contracts. H o w e v e r , the great majority of loans authorized
provided for r epa yme nt over periods greater than three years. T h e distribution is given in the
a cc om pa ny in g table.
N u m b e r of L oa n s
Final Maturity
Less T h a n
21/2 Years
Total
L oa ns for $ 100,000 or less .
Loan s over $ 100,000 ..
212 - 51/2
Years
O ve r
512 Years
335
1,174
1,193
261
74
1,119
55
1,031
162
Geographic Distribution
A s s h o w n by table on opposite page every state in the Uni on , and U. S. territories a nd possessions
are represented in the loans a pp ro ve d to industrial a n d commercial enterprises during the fiscal year 1951 .
M a n y times it is found that financial facilities in rapidly developing areas d o not k e e p pace with the e x
pansion of business activity. A reflection of this appears in b a n k loans wherein R F C participates. M o r e
than three -fourths of the loans approved to industrial and commercial enterprises a nd nearly 80 per cent
of the participation loans authorized w e n t to borrowers in states we st of the Mississippi River or south
of a n extension of the M a s o n -Dixon Line. These regions have traditionally been regarded as being
outside of the "h a r d core ” of o u r industrial production , but the greatest relative expansion during
the past decade has occurred in these areas .
T h e decentralization of industry not only adds to the economic stability of the regions being
developed , but has especial significance during mobilization w h e n considered in the light o f production
needs and the President's Industrial Dispersion Policy.
Use of L o a n Proceeds
T h e loans authorized during fiscal year 1951 s h o w e d no significant change in pattern of the
purposes for w h i c h the proceeds w e r e to be used. Approximately 43 per cent of the a m o u n t authorized
w a s for wo r k in g capital purposes and a n equal a m o u n t for expansion of fixed assets. T h e proportion
intended for expansion of fixed assets w a s greater in ma nufacturing industries than in non -m a n u
facturing lines w h e r e investment in plant a nd equipment is relatively less important.
Large Lo ans
Th ere w e r e 27 loans for a mo u n ts in excess of $ 1,000,000 approved b y R F C under its regular
lending authority during fiscal year 1951. T h e total a m o u n t authorized in these loans w a s $ 150,528,505,
w h ic h includes $ 5,114,031 of b a n k participation in nine of the loans.
10
GEOGRAPHIC
DISTRIBUTION
OF
RFC
BUSINESS
LOANS
( Dollar figures are in thousands )
Area and State
Loans Authorized
Fiscal Year1951
Number
Amount
N EW ENG LAN D
Maine.
New Hampshire..
Vermont.
Massachusetts.
Rhode Island.
Connecticut.
9
10
2
78
9
28
136
972
2,459
62
26,599
1,214
13,837
45,143
63
50
65
4,804
4,142
5,290
178
4
29
7
39
10
34
24
115
84
EAST N OR T H CENTRAL
Ohio.
Indiana
Illinois.
Michigan .
Wisconsin
WEST SOUTH CENTRAL
Arkansas.
Louisiana.
Oklahoma.
Texas.
MOUNTAIN
Montana.
Idaho..
Wyoming
Colorado.
New Mexico
Arizona.
Utah..
Nevada
PACIFIC
Washington...
Oregon..
California
OTHER AREAS
Alaska
Hawaii.
Puerto Rico
VirginIslands.
Canada.
TOTAL ..
21
20
10
182
15
73
Amount
Percentof
Total Number
321
0.2
0.2
0.1
1.6
0.1
0.7
2.9
520
224
284
44,823
11,589
22,121
4.7
2.0
2.6
14,236
1,028
694
3,790
510
2,396
5,076
2,088
5,493
5,326
4,005
8
96
28
164
47
114
70
514
343
78,533
328
16,144
3,891
36,017
2,018
5,464
4,354
11,602
8,922
0.1
0.9
0.3
1.5
0.4
1.0
0.6
4.7
3.1
346
29,378
1,384
88,740
12.6
55
40
75
105
36
6,243
2,998
8,706
35,976
2,674
239
185
340
388
145
16,819
6,693
15,827
91,864
8,798
2.2
1.7
3.1
3.5
1.3
311
56,597
1,297
140,001
11.8
57
23
54
17
2
21
19
2,609
1,762
3,367
772
36
952
1,216
212
110
247
48
36
293
127
19,503
3,588
9,904
1,171
558
5,641
3,505
1.9
1.0
2.2
0.4
0.3
2.7
1.2
193
10,714
1,073
43,870
9.7
62
222
107
42
5,393
15,452
8,413
2,064
279
718
401
148
6,333
22,653
11,319
8,613
2.5
6.6
3.6
1.4
433
31,322
1,546
48,918
14.1
128
33
111
241
3,154
2,016
2,562
59,845
492
118
470
1,092
10,455
4,306
6,352
55,050
4.5
1.1
4.3
9.9
513
67,577
2,172
76,163
19.8
44
24
6
66
26
28
29
3
2,556
715
266
4,790
1,532
1,068
1,250
155
176
107
58
226
101
124
127
16
4,965
2,505
1,831
8,188
2,422
3,251
2,838
1,471
1.6
1.0
0.5
2.1
0.9
1.1
1.2
0.1
226
WEST NOR TH CENTRAL
Minnesota.
Iowa.
Missouri.
North Dakota .
South Dakota.
Nebraska..
Kansas.
EAST SOUTH CENTRAL
Kentucky .
Tennessee
Alabama
Mississippi.
Number
$ 1,022
1,734
376
23,371
287
8,710
35,500
MIDDLE ATLANTIC
New York .
New Jersey:
Pennsylvania .
SOUTH ATLANTIC
Delaware.
Maryland.
District of Columbia.
Virginia.
West Virginia.
North Carolina
South Carolina.
Georgia.
Florida.
Loans Outstanding
June 30,1951
9.3
12,332
935
27,471
8.5
138
32
146
6,372
6,573
18,434
544
226
360
17,133
8,111
31,794
4.9
2.1
3.3
316
31,379
1,130
57,038
10.3
34
1
14
1
1,364
78
1,191
38
67
2
42
2,765
10
2,115
520
4,300
0.6
0,4
2,702
$301,349
11,000
$605,944
100.0
Includesagreements to participate in bank loans.
11
T h r e e loans exceeding $ 1,000,000 each w e r e authorized during the fiscal year subsequent to th e
effective date of Reorganization P l a n N o . 1. These three loans totalled $12,250,000 and p r o v i d e d
for e xpan ded production facilities in
(a ) a ce men t plant producing for the construction of a n e w atomic plant ( $4,500,000 including
b a n k participation of $450,000 ) ;
(b ) a plant producing gu ns a nd ordnance equipment for the A r m y
($4,000,000 ), a n d
(c) a steel rolling mill ($3,750,000 ).
D u r i n g fiscal year 1951 , prior to the date the Corporation's affairs w er e placed under the a u t ho r i t y
of a n Administrator, there w e r e twenty -four loans aggegating $ 138.3 million approved for individual
a m o u n t s exceeding $ 1,000,000, of w hi ch thirteen w e r e primarily for the purpose of providing w o r k i n g
capital in man ufacturing industries.
In m o s t cases , the concerns to wh ic h these loans w e r e m a d e w e r e processing G o v e r n m e n t c o n
tracts for defense materials. T h e re m a in i n g large loans w e r e for expansion of facilities in such ba s i c
industries as steel, glass fibers, petroleum products a n d building materials.
Outstanding Business Lo ans
A t the close of the year, the Corporation h a d outstanding 11,000 business loans with bala nces
of $606 million (including bank s ' shares of participation loans ). This is 1,092 loans a n d $ 108 million
below the comparable figures for Ju ne 30 , 1950. T h e greatest part of the decrease in the n u m b e r o f
outstanding loans is due to the large n u m b e r s of Blanket Participation A g r e e m e n t loans (m a d e d u r i n g
the 1945-1947 period ) wh i ch m at u re d a n d w e r e retired during the year. T h e $ 108 million reduction
in the outstanding dollar a m o u n t is largely th e reflection of full r ep ay me nt during the year on t h e
$ 92,000,000 Kaiser Steel Corporation loan . T h e vo l u m e of business loans outstanding at J u ne 30 , 1 9 5 1 ,
is c om p a re d with the previous year in the table below :
J un e 30 , 1951
Ju ne 30 , 1950
Number
Total
R F C loans
Deferred participa
pation in bank
loans .
12,092
Amount
Number
Amount
Change
Number
( Dollar figures are in thousands )
$713,730
11,000
$ 605,944
-1,092
Amount
$_ 1 0 7 , 7 8 6
6,667
539,181
7,067
485,085
+400
-54,096
5,425
174,549
3,933
120,859
-1,492
-53,690
Following the pattern of loan authorizations, mo st of the 11,000 loans outstanding at J un e 3 0 ,
1951 , w e r e for a m o u n t s of $ 100,000 or less. There w er e 597 instances in w h ic h R F C ' s obligation o n
outstanding loan balances exceeded $ 100,000 .
Loans C harg ed Off
D u ri n g the year losses sustained on 231 loans a m ou n ti n g to $2,159,255 w e re charged a g a i n s t
reserves provided for that purpose . Since initiation of the business loan p r o g r a m in 1934 , the C o r p o r a
tion , under all authorities, has granted over 62,000 loans to business enterprises in the aggregate a m o u n t
of $ 4.9 billion. Against these loans, disbursements b y R F C a m o u n t e d to $ 2.4 billion, of which $64.3 m i l
lion have been charged off as unrecoverable . Excluding $ 35.5 million charged off in connection with loans
to the Lustron Corporation , this represents a loss ratio of 1.2 per cent of disbursements .
Loans un d er Section 3 0 2 of the Defense Production Act
Acting under the provisions of Executive Order 10161 , the Corporation's facilities have b e e n
utilized during the fiscaly e a r to serve as advisor an d fiscal agent for the Defense Production A dm i ni st r a
tion in handling loan applications under Section 3 0 2 of the Defense Production A ct . Approximately
450 D P A loan applications w e re directed to R F C for review during the fiscal year . From these applica
tions, 38 loans for $62,580,000 w e r e authorized under Section 4 (a) of the R F C A c t . T o this extent,
R F C ' s lending authority supplemented that provided in the Defense Production Ac t . Applicants for
12
D P A loans w it h d r e w their proposals in 34 instances while they w e r e under review in R F C a n d 6 9
applications w e r e being considered in R F C at the close of the year. D P A loan applications wh ic h did
not qualify for loans under R F C ' s regular lending authority w e r e returned to the appropriate Delegate
Agencies, together with reports on the credit standing of the applicants for the information of the
Delegate Agencies in determining wh et he r loans should be m a d e in the interest of national defense .
M o r e th an 3 0 0 such reports w e r e furnished to the Delegate Agencies during the past fiscal year ; the
loans requested in these applications totalled over $ 765 million .
U n d e r the provisions of the Defense Production A c t , the Defense Production Administration
issued loan certificates to 40 borrowers during fiscal year 1951. These 40 loans totalled almost $6 8
million . B o t h in n u m b e r a n d a m o u n t , these D P A loans fell short of the 460 direct defense loans
authorized b y R F C under its regular authority.
Additional details on D P A loans will be found in A p p e n d i x B.
Catastrophe Loans
E a c h year floods, fires, earthquakes a n d storms take their toll of the nation's resources. H u m a n
considerations a n d the general public interest d e m a n d that rehabilitation of the inhabitants a n d
resources of stricken areas be undertaken f r o m every possible avenue .
Included in the general limitations on R F C ' s lending authority is a specific provision providing
that the total a m o u n t of catastrophe loans outstanding at a n y one time shall not exceed $ 4 0 million .*
D u r i n g the past fiscal year there w e r e nineteen areas of the nation visited b y m a j o r disasters.
These w e r e :
Location
N a t u r e of Disaster
Date
7-11-50
Flood
East Central N e b ra s ka
Flood
Darlington , Wisconsin
8-8-50
Flood
8-7-50
Hurricane
Wichita County , T ex a s
Florida W e s t Coast
Hurricane
Florida
10-23-50
Flood
O re g o n
11-1-50
9-8-50
Flood
N orth ern & Central California & W e st e r n N e v a d a
11-22-50
Windstorms
To r n ad o
Coastal A r e a f r o m M a i n e to D ela wa re
Greenville, Illinois
11-28-50
12-11-50
Unseasonable Freezes
Flood
Tyler, Texa s
12-19-50
Nor thwest W a sh i n g to n
2-16-51
Flood
Southwestern areas in Minnesota along
the M i n n . & R e d w o o d Rivers
4-10-51
Flood
Southeastern South Da k ot a
4-11-51
Flood
A r e a along Mississippi River
through W i s ., I o w a & Ill.
5-17-51
Flood
H a y s , Ka n sa s
Flood
N eb ra s ka
6-13-51
T o rn a do
R i c h m o n d , Virginia
6-14-51
Flood
T o rn a do
Ronceverte, W . Virginia
C o r n & Colony, O k l a h o m a
6-21-51
6-7-51
6-21-51
R F C ' s facilities for financial rehabilitation of disaster victims operated in each of these areas. A
total of 560 loans for $2,400,000 w a s authorized to individuals a n d business concerns in these regions.
Only eleven of these loans w e r e for a m ou n t s in excess of $ 25,000.
* Increased to $100 million P L 202,82nd Congress, in October, 1951.
13
T h e policy of allowing four m o n t h s without interest on such loans , and the liberal te rm s w h i c h
place h u m a n considerations above m on e t ar y ones, result in R F C ' s disaster relief loan activity s h o w i n g
a loss in its operations of this program .
Public Agency Loans
D ur i ng the past 19 years , the Corporation has authorized approximately $ 1.5 billion in loans
a n d security purchases to aid in financing public w o r k s projects undertaken under Federal , S t a t e or
municipal l a w s. Existing legislation provides that the total outstanding for these purposes shall not
exceed $200 million at a n y one time .
General i m pr o v em e n t in the m ar k et for municipal securities has greatly reduced R F C activity
in this field, a n d during recent years efforts have been concentrated o n the liquidation of loans a n d
securities in the portfolio. M o r e than 100 issues of bonds with a par value of $ 4.9 million w e r e sold
during fiscal year 1951 .
C h an g es in R F C ' s portfolio of public agency loans a n d security purchases during the past y e a r
are s u m m a r i z e d in the ac co mp an yi ng table :
Outstanding Lo ans , Etc.
Ju ne 30 , 1951
Ju ne 30 , 1950
No.
Amount
No.
Amount
Total ....
397
(Dollar figures are in thousands )
293
$24,907
$ 19,456
Lo ans for drainage ,
levees, a n d irrigation ...
156
Other public agency loans ..
Municipal securities
purchased f r o m P W A ...
Decrease
No.
Amount
104
$5,451
$ 9,280
131
5,812
34
$ 6,761
5,729
25
44
10
$2,519
83
197
9,815
128
6,966
69
2,849
In addition, outstanding c o m m i t m e n t s to disburse loans totaled $26.9 million, including $22.2
million authorized in a conditional ag reement in connection with the i mp r o v em e n t a n d extension of
the transportation system of Cleveland, Ohio .
T h e Federal Civil Defense Ac t of 1950 authorized R F C to purchase securities or m a k e loans to
aid in financing civil defense projects certified b y the Civil Defense Administrator . N o applications
have been received under this authority.
Railroads
T h e continued high earnings e njoy ed b y m o s t railroad companies h ave greatly reduced the nee d
for R F C financial assistance in this industry. T h e Corporation has continued t o concentrate its
efforts on the orderly liquidation of its railroad loans an d investments. Less than ten per cent of
the total disbursed on railroad loans an d securities remained in the Corporation's portfolio o n J une 30 ,
1951. T h e outstanding balance o n that date w a s $ 103 million, of w hi ch $ 74.7 million represented the
unpaid balance of a loan to the Baltimore a n d Ohio Railroad. Reductions in the outstanding balance
have been m a d e b y direct repayments or through sale of securities held in connection with loans. T o
date, this p r o g r a m has b e e n carried on without a n y net loss to the Corporation .
R F C also holds railroad securities in the a m o u n t of $28,300,000 w h i c h w e r e received under
reorganization plans of railroads indebted to the Corporation or in refunding interest claims. N e g o t i a
tions are n o w u n d e r w a y wh ic h will provide for fu l re p ay me nt of $ 13.8 million prior to maturity.
R F C ' s portfolio of railroad loans an d securities on Ju ne 30 , 1951 , is c om p a re d with Jun e 30 , 1950,
in the following table :
14
Outstanding
5
J un e 30 , 1950
Total ..
L o a n s - Total .....
T o receivers &
trustees
T o railroad
companies
Ju ne 30 , 1951
Change
No.
Amount
23
$ 110,427
15
$ 12,749
15
$ 11,112
12
1,255
12
1,255
3
11,494
3
9,857
91,563
+1
-6,115
+1
+781
No.
Amount
(Dollar figures are in thousands )+
1
24
$ 102,675
Securities - Total
8
97,678
9
9
Receivers &
trustees
Railroad
3
3,298
4
4,079
5
94,380
5
87,484
companies
Amount
No.
$— 7 , 7 5 2
$
1,637
-1,637
-6,896
I n addition t o the assets set forth in its financial statements, the Corporation h el d securities of
S e a b o a r d A i r Line Railroad C o m p a n y aggregating $ 16,967,496 * (par or stated value ) for servicing
a n d liquidation for the account o f the Treasury De p a r tm e n t pursuant to Executive Ord er 9543 .
Financial Institutions
D u r i n g the past fiscal year there w er e no applications for assistance received f r o m financial institu
tions , no applications w e r e approved , a n d no disbursements m a d e .
T h e n u m b e r of institutions represented in R F C ' s portfolio dropped f r o m 495 t o 377 during the
y ea r. Nearly 60 p e r cent of the balance remaining o n J une 30 ,1 9 5 1, is accounted for b y preferred
stock purchased f r o m seven banks a n d one $8 million loan to an insurance c o m p a n y .
T h e Corporation's portfolio of financial institution loans a n d securities at the close of the past
t w o fiscal years is c om p a re d in the ac co mp an yi ng table :
Outstanding
J un e 30 , 1950
d
f
e
!
Total ..
Purchases of preferred
stock , capital notes,
and debentures of banks
and trust companies .
Ju ne 30 , 1951
No.
Amount
No.
Amount
495
(Dollar figures are in thousands )
$ 109,969
377
$ 94,056
Decrease
No.
Amount
118
$ 15,913
118
15,873
488
101,550
370
85,677
L oa ns on preferred stock
of ba nks a n d trust
companies .....
Loa ns on preferred stock
of insurance companies ....
2
136
2
120
16
4
8,255
4
8,233
22
L oans to m or tg ag e loan
compa nies
1
28
1
26
2
.
* Subsequent to June 30, 1951, these securities were disposed of by public sale.
15
Other Lending P r og r a m s
I n addition to the lending p r og r a m s for which continued authority is provided , the Corporation
is charged w i t h the liquidation o f certain loans a nd securities acquired under discontinued p r o g r a m s
of R F C a n d other G o v e r n m e n t agencies .
Mortgages
The assets an d R F C personnel assigned to th e Federal National M or t g ag e Association , fo rmer ly
a subsidiary of R F C ,w e r e transferred to the H o u s i n g a n d H o m e Finance A g e n c y on S e p t e m b e r 7,
1950 , as required by Reorganization Plan No. 22 of 1950. T h e mo rt gag e portfolio transferred c o n
sisted of 164,611 m o r t g a g e s totalling $ 1.1 billion.
T h e m ort ga ge s r e m a i n i n g in R F C portfolio are those acquired as successor to the R F C M o r t g a g e
C o m p a n y . A t the close of the fiscal year, R F C held 16,951 mortgages in a total a m o u n t of $ 81.6 million.
T h e 1951 year-end figures are significantly below those of the previous year . This is the result of
a vigorous p r o g r a m to secure the sale of m ortgages remaining in the portfolio.
2,232 mor tgages a m o un t i ng to $ 12.5 million w e r e sold during fiscal year 1951 , while r e p a y m e n t s
a n d other reductions r em o v ed f r o m t h e books 552 additional m ortgages a nd $ 6.8 million.
Defense H o m e s Corporation Mortgages
Defense H o m e s Corporation w a s transferred to R F C for liquidation effective Ju ne 30 , 1948. T h e
assets held by R F C at J un e 30 , 1951, consisted of m o rt g a ge notes on four housing projects h a v i n g
unpaid balances aggregating $44.4 million . T h e a m o u n t d u e R F C at J un e 30 , 1951 ,w a s $ 31.2 million
w hi ch w a s s e c u r e d b y the assets of D H C held for liquidation . A n y n et assets remaining after the
p a y m e n t of all obligations of D H C a nd liquidation costs will be covered into the Treasury as miscellaneous
receipts.
Loans to Foreign Go ve rnm en ts
T h e Corporation's loan to t h e United K i n g d o m w a s reduced f r o m $ 68 million to $ 15 million , a
reduction of $53 million , during the past fiscal year .*
T h e Corporation's loan to the Republic of the Philippines remained at $ 60 million. T h e first
principal r ep ay me nt on this loan is due in January , 1952. Interest has been paid currently.
Smaller W a r Plants Loans
On ly 52 loans with unpaid balances of $2.4 million r emain f r o m the assets of the Smaller W a r
Plants Corporation wh i ch w e r e transferred to R F C for liquidation. T h e n u m b e r of outstanding loans
w a s reduced f r o m the 118 outstanding on June 30 , 1950 , a n d the a m o u n t w a s reduced by $ 1.1 million .
*Note : This loan was repaid in full on September 28, 1951.
16
PRODUCTION
PROGRAMS
T h e natural resources of the United States are deficient in s o m e materials vital in the production
of b o t h military a n d civilian goods . T h e national security d e m a n d s m e a s u r e s to m a k e this nation
self-sufficient in such materials insofar as possible. Responsibility for accomplishing this in the fields
of synthetic rubber,tin a n d abaca fiber (m a n i l a h e m p ) w a s assigned to this Corporation prior to a n d
during W o r l d W a r II. T h e Corporation's p r o g r a m s for the production of these strategic a n d critical
materials w e r e then initiated a n d have since been continued under appropriate legislation. T h e w i s d o m
of main tainin g these pr o g ra m s over the years w a s never m o r e app ar ent than now .
O n e of the mo st notable successes in the p r o g r a m for self-sufficiency in strategic materials has
been the development of m a n -m a d e rubber . T h e principal sources of natural rubber are in foreign
lands w h i c h have usually b e e n inaccessible in w a r t i m e. R F C ' s synthetic rubber p r o g r a m has given
the nation large supplies o f a product w h ic h is equal or superior to natural rubber in m o s t applications.
T h e synthetic rubber p r o g r a m is conducted on t w o m a j o r lines :
1.
T h e maintenance, operation an d progressive modernization of synthetic rubber production
facilities to supply the needs of the nation in w a r a n d peace.
2.
A research p r o g r a m in wh ic h the rubber industry a n d various public and private institutions
cooperate with t h e G o v e r n m e n t to discover and develop improved types of rubber a n d m o r e
efficient a n d economical manufacturing processes.
Like tin, m o s t o f the world's supply of natural rubber is controlled by a relatively small group .
A s o ur n ee d s for rubber grew , prices w e r e raised to exploit our necessity. H o w e v e r , rapidly increasing
production of synthetic rubber ,coupled with its low price a n d substantial quality imp rov eme nts, soon
forced a dr op in the world m a r k e t price for natural rubber. T h e following chart s h o w s the g r o w t h of
synthetic rubber production a n d the relationship between natural a n d synthetic rubber prices.
S Y N T H E T I C
R U B B E R
P R O D U C T I O N
F ISCA L Y E A R S
A N D
R U B B E R
P R I C E S
1950-1952
80
80
OBJECTIVE, JUNE 1952
950,000 LT PER YEAR
NATURAL RUBBER PRICE
(CENTS PER POUND)
PROJECTED
PRODUCTION RATE
60
60
SYNTHETIC RUBBER PRODUCTION
(THOUSAND LONG TONS PER MONTH )
40
40
GENERAL PURPOSE
SPECIAL PURPOSE
20
20
SYNTHETIC RUBBER PRICE
(CENTS PER POUND)
J A
S O N D J F M A M J J A S
1950
1949
* I RIBBED SMOKED SHEETS, SPOT, NEW YORK.
O
N
D
J
F
M
A
M
J
J
1951
17
A
S
O
N
D
J
F M A
1952
M
J
Tin is o f pri me importance as a protective coating on metal containers for food a n d other
commodities. T h e m e t a l also has m a n y other important industrial applications. In the f o r m o f solder,
bronze or babbitt, it is a necessity w he re ve r wheels turn .
T h e m o s t extensive deposits of tin ore a re found in the M a l a y Peninsula, Indonesia, the Belgian
Congo , a n d in Bolivia. B y 1 9 4 2 , w h e n supplies of tin f r o m outside the W e s t e r n He m i s ph e r e w e r e cut
off, R F C h a d been designated to build a n d operate a tin smelter in this country to process tin ores
f r o m Bolivia, together with such quantities of ores as m i gh t b e obtained from other sources. That
smelter, at Texa s City , T e xa s, is the only m a j o r tin smelter in the W es t e rn H e mi s p h er e a n d at the
close of the fiscal year h ad provided this country with m o r e than 308,000 long tons of refined tin .
Because this nation has practically no native tin ores, the price of ores im p or t ed for smelting here
has dep ende d u p o n refined tin prices in world ma rkets. Fol lowi ng the outbreak of fighting in K o r e a ,
foreign tin suppliers increased prices at the expense of the taxpayers and consumers of this co u n tr y,
the world's largest user of tin. T h e rapid j u m p of tin prices following J un e 30 , 1950 , is s h o w n in the
following chart .
U.S.
JANUARY
TIN
1950
P R I C E S
THROUGH
JUNE
1951
CENTS PER POUND
200
CENTS PER POUNO
200
MONTHLY
AVERAGES
180
180
STOCKPILE
PURCHASES
SUSPENDED
160
160
140
140
120
120
100
100
KOREAS
80
60
JAN
80
FEB
MAR
APR
MAY
JUNE JULY
1950
AUG
SEPT
OCT
NOV
DEC
JAN
FEB
1
MAR APR
1951
MAY
60
JUNE
SOURCE : AMERICAN METAL MARKET.
O n M a r c h 12, 1951 , R F C w a s m a d e the sole U. S. importer of tin a n d tin -bearing materials, s u b
ject to certain m i n o r exceptions. A t approximately the s a m e t im e, U. S . G o v e r n m e n t purchases of
tin w e r e suspended . R F C then adopted the policy o f settingreasonable selling prices for its tin, without
regard to the world ma rk et. T h e results of these m o v e s are graphically illustrated on the following
chart. It is anticipated that millions of dollars will be saved for A m e r i c a n taxpayers a n d consumers
in consequence .
18
TIN
P R I C E S
FISCAL Y E A R
1951
CENTS PER POUND
200
CENTS PER POUND
200
WEEKLY
AVERAGES
SINGAPORE PRICE
180
180
STOCKPILE
PURCHASES
SUSPENDED
160
160
1 40
140
U.S. PRICE
120
120
100
100
80
80
RFC FIXED PRICES
OPEN MARKET
60
1 .
1
1
is ¿
16 1 30 14 ; 28 11 1 25 9 2 3 6 1 2'o 1
12 26 9 23 7 21 4
18
16 30 13 27
AUG
SEPT
OCT
NOV
DEC
JAN
1950
SOURCE : AMERICAN METAL MARKET.
IADJUSTED FOR DELIVERY TO NEW YORK.
. .
221
15 29
JULY
iz i
1
1
10 24
FEB
60
1
1
i iz 1 31 14 1 28 iz | 26 | 9 ! 23 !
10 24
21 5
19
2 16 30
MAR
APR
MAY
JUNE
1951
A b a c a fiber, c o m m o n l y k n o w n as manila h e m p, possesses unique properties wh ic h m a k e it eminently
suitable for use in cordage, particularly for ropes a n d ha ws er s u se d in nava l operations.
Prior to the time w h e n R F C w a s designated to develop a source of abaca in the W e s t e r n H e m i s p h e r e,
virtually all of the world's supply c a m e f r o m the Philippines. R F C began the development of a b a c a
plantations in P a n a m a, Costa R ica , H o n d u r a s and G ua te ma l a during 1 9 4 2 a n d h a s operated t h e m
u n d e r m a n a g e m e n t contract with the United Fruit C o m p a n y continuously since that t i m e.
Following the declaration of the present emer gency , the Corporation w a s directed to e x pa n d its
i plantations f r o m about 25,000 acres to 50,000 acres. A n n u a l production f r o m R F C ' s present plantations
is expected to reach 30,000,000 pounds in the fiscal year 1952. Since M a r c h 1951 , all abaca produced b y
the Corporation has been transferred to the national stockpile.
T h e statutory reports required b y legislation under w hi ch the production p r o g r am s are conducted
are contained on the succeeding pages .
19
REPORT
ON
SYNTHETIC
RUBBER
OPERATIONS
FOR
FISCAL Y E A R
1951
Legal Authority a n d Responsibilities
D ur i ng the fiscal year 1951 the Corporation continued to carry out its synthetic ru bbe r activities
in accordance w i t h the provisions of Public L a w 469 , 80th Congress ( The R u b b e r A ct of 1 9 4 8 ) and
Executive O r d e r 9942 , dated A p r i l 1, 1948. Public L a w 475 , 81st Congress , extended t h e earlier
legislation a n d the authority for operation of the p r o g r a m to June 30, 1952. T h e principal respon
sibilities a n d functions of the Corporation under this authority are listed below :
1. Production o f Synthetic Rubber— T h e R u b b e r A ct provides that production of synthetic rubber
f r o m facilities operated by the G o v e r n m e n t or private persons shall b e not less t h a n 200,000
long tons per a n n u m of general purpose r ubb er a n d not less than 21,667 long tons o f special
purpose rubber , of whi ch at least 15,000 long tons shall be of a type suitable for use in pneumatic
inner tubes. T h e Corporation is charged with the responsibility for the production o f these
quantities of synthetic rubber , a nd of su ch additional quantities for voluntary use as it deems
practicable.
2. Maintenanc e of St andby Facilities — The R u b b e r Act requires that there shall be mai nt ain ed at
all times within the United States active or standby rubber -producing facilities h a v i n g an
annual rated production capacity of not less than 600,000 long tons o f general purpose rubber
a n d not less than 65,000 tons of special purpose rubber , of w hi c h at least 45,000 tons shall be
of a type suitable for use in pneumatic inner tubes . In addition to facilities in actual operation ,
the Corporation is responsible for the maintenance of a sufficient n u m b e r of plants i n standby
to m e e t the foregoing requirements.
3. Research an d D ev e lo p me n t – The Corporation is authorized to undertake research and develop
m e n t activities necessary to maintain a technologically advanced domestic rubber -producing
industry.
4. Lease a n d Sale of Facilities — The Corporation is authorized to sell or lease surplus facilities
not necessary to fulfill the requirements o f t he Act (provided that they shall n ot be u se d to
produce rubber for m a n d a t o r y consumption ) an d obsolete property not required for the p r o
duction of the rated capacity of the facility in wh ich the property is located .
R u b b e r Requirements a nd Price Trends
T h e 18 m o n t h s ended J un e 30 , 1951 , witnessed a rapid increase in d e m a n d and a resulting steady
increase in production of synthetic rubber w hi ch is expected to continue through fiscal year 1952 .
Beginning in Jan ua ry 1950 , a b o o m i n g civilian e c o n o m y, coupled with accelerated military require
m e nt s a n d natural rubber stockpiling, resulted in a d e m a n d f o r rubber of all t ypes w h ic h rapidly
outstripped t h e supply . Active competition for available supplies of natural rubber skyrocketed the
natural r ubb er price f r o m 18.3 cents per p o u n d in January , 1950 , to a high of 73.0 cents per p o u n d in
N o v e m b e r , 1950 .
In order to assure sufficient natural rubber for strategic purposes a n d
m ark et , General Services Administration w a s designated , in D e c e m b e r
natural rubber in the United States. T h e rapidly increasing production
country, aided b y controls o n natural rubber imports, gradually reversed
prices.
stabilize the natural rubber
1950 , the sole im porter o f
of synthetic rubber in this
the trend of natural rubber
D ur i ng the early part of this period, it w a s possible to maintain the selling prices of both general
purpose (G R -S ) a n d butyl (G R -I) synthetic rubbers a t 18.5 cents per pound . But because o f the
accelerated synthetic rubber production p r o g r a m a n d attendant higher costs of production , particularly
the production of butadiene f r o m alcohol, it b e c a m e necessary in D e c e m b e r, 1950 , to increase the selling
price of G R -S to 24.5 cents per p o u n d a nd G R -I to 20.75 cents per po un d .
A t the beginning of fiscal year 1 9 5 1, t h e annual production rate of general purpose rubber w a s
approximately 400,000 long tons a nd butyl stood at about 52,000 long tons. These rates represented
the m a x i m u m productive capacity of the plants then in operation. A s it b e c a m e evident that the existing
capacity f or producing synthetic rubber w o u l d fall far short of the rapidly accelerating d e m a n d , R F C
w a s directed b y a series of letters f r o m the Executive Office of the President to reactivate synthetic
rubber plants held in standby condition . In this over -all program , a production goal of 760,000 long
tons p e r year w a s set for general purpose a n d 80,000 long tons per year for butyl synthetic rubbers.
20
Reactivation o f the standby facilities w a s p u s h e d as rapidly as possible in a n attempt to m ee t
t h e ever -increasing d e m a n d. T h e task of essentially doubling the existing rate o f production b y pressing
i n t o service plants w hi c h h ad remained idle over a period of years w a s a tremendous one , but that
p r o d u c ti o n goal w a s achieved before the end of fiscal year 1951. E v e n before this goal ha d been reached ,
h o w e v e r , it b e c a m e evident that even higher production rates wou ld be required i n order to assure the
nation's security with regard to this vital material. Accordingly , R F C w a s requested on April 13 , 1951 ,
t o e x p a n d annual productive capacity to 860,000 long tons of general purpose rubber . A t the end of
fiscal y e a r 1951 plans h a d been m a d e to achieve this n e w production goal and to increase to 90,000 long
t o n s the annual productive capacity of butyl.
M a n u f a c t u r i n g Activities
T h e Corporation retained in operation on J un e 30 , 1951 , twenty -eight of the fifty -one facilities wh i ch
constituted the wa r ti m e synthetic rubber program . A t the beginning of fiscal year 1951 , seventeen
facilities w e r e engaged in active production, consisting of eight copolymer plants, t w o butyl plants,
f o u r butadiene plants, one styrene plant, one chemical plant a n d one development laboratory .
D u r i n g the year , as a result of the accelerated production program , the 11 plants which h a d been
m a i n t a i n e d in standby w e r e reactivated and placed i n operation . A t the end of the fiscal year the 28
p l a n t s in active production consisted of 13 copolymer plants, 2 butyl plants, 10 butadiene plants, 1
s t yr e n e plant, 1 chemical plant and 1 development laboratory.
D u r i n g fiscal year 1951 , G o v e r n m e n t -o w n e d plants produced 594,466 long tons of synthetic rubber ,
including 528,841 long tons o f general purpose rubber ( G R -S) a n d 65,625 long tons of butyl (G R -I)
special purpose rubber principally for pneumatic inner tubes . This represented 40.7 per cent o f the
dome stic natural an d synthetic rubber supply of 1,455,500 long tons. T h e G o v e r n m e n t also produced
c o m p o n e n t materials for synthetic rubber m anu fa ct ur e w hi c h w e r e not available in sufficient quantities
f r o m private industry. T h e m a j o r items of components produced we r e 429,900 short tons of butadiene
f r o m basic r a w materials a nd 36,100 short tons of styrene. T h e trends of production of G R -S and G R -I
since 1943 are s h o w n in the following chart.
S Y N T H E T I C
THOUSAND
LONG TONS
800
R U B B E R
P R O D U C T I O N
By Fiscal Years
THOUSAND
LONG TONS
80
GR -S
600
60
400
40
200
20
GR - 1
i
1943
44
45
'46
'47
48
'4 9 ' 5 0
'51
1943
21
44
'45
46
'47
'48
49
50
'51
A s previously stated in this report, the Corporation w a s directed to reactivate an d place i n operation
certain of the synthetic rubber plants w hi ch we re being maintained in standby an d i n c r e a s e th e p r o
duction of G o v e r n m e n t synthetic rubber to 860,000 long tons of G R -S a n d 90,000 longs t o n s o f butyl.
Table I, inserted at the end of this report, s ho w s the plants reactivated a n d placed i n operation
during fiscal y e a r 1 951, under the first four Presidential Directives, with the product, o p e r a t o r and
design capacity of each plant.
Tables II a n d III s h o w all plants in operation at June 30 , 1951 , with the location , o p e r a t o r and
approximate production capacity of each .
T h e levels successfully established by the five individual Directives a n d the production p a t t e r n of
G R -S are illustrated in the chart below .
A C T U A L
L E V E L S
G R -S
E S T A B L I S H E D
JANUARY
ANNUAL PRODUCTION RATE
THOUSANDS OF LONG TONS
900
P R O D U C T I O N
1950
B Y
THROUGH
A N D
D I R E C T IV E S
JUNE
800
1951
ANNUAL PRODUCTION RATE
THOUSANDS OF LONG TONS
900
GR -S PRODUCTION LEVEL
ESTABLISHED BY
DIRECTIVE OF:
800
APRIL 13, 1951
SEPTEMBER 14, 1 9 5 0 –
700
700
SEPTEMBER 1, 1950
600
600
JULY 28, 1950
500
500
JULY 6, 1950
400
400
MAXIMUM
GR -S PRODUCTION
PRIOR TO
REACTIVATION
300
300
2
0
0200
200
ACTUAL GR-S PRODUCTION
GR -S PRODUCTION
AS OF JANUARY 1950
100
J
F
M
A
M
J J
1950
A
S
O
N
D J
F
M
A
1951
M
100
J
It will be observed that the increase in production rate at the G R -S plants w a s a sustained one
a nd that the original goal of 760,000 long tons per year w a s achieved b y the end of fiscal year 1951 .
Several of the plants w h ic h w e r e in standby at the time of the reactivation orders h a d remained idle for
a n u m b e r of years and , while normal standby precedures w er e followed at these plants , extensive
reconditioning a nd s o m e replacements w e r e necessary in a n u m b e r of instances. This large v olu me
of w o r k , coupled with the g r o w i n g shortage of critical materials a n d unusual we ather conditions
during the winter m o n t h s, m a d e the problem of reactivating the plants a m a j o r o n e . B y the e n d of
fiscal y e a r 1951 , w o r k w a s well u n d e r w a y on expansion projects to increase G R -S production to
860,000 long tons per year a nd butyl to 90,000 long tons per y e a r.
D u ri n g the year , conversion o f copolymer plant facilities to the manufacture of cold rubber resulted
in increasing the annual production rate of this type of rubber f r o m 183,000 long tons to approximately
280,000 long tons. C ol d rubber possesses outstanding abrasion resistant properties wh i ch m a k e it
22
m a r k e d l y superior to natural rubber for use in tire treads. B y conversion of its facilities to the p r o d u c
t io n of cold rubber , the Corporation expects to m a k e available the industry's requirements for this
p r o d u c t. Half of total production will b e cold rubber w h e n the facilities w hi c h w er e in process of such
c o n ve r si o n at the e nd of fiscal year 1951 are placed in production . Further increases i n the d e m a n d
for this type of rubber are anticipated, an d a t the end of the year a p r o g r a m to convert 75 per
c e n t of total production to cold rubber w a s under w a y .
D u r i n g the year , eight of the 13 c op ol ym er plants in operation w e r e producing cold rubber,
a n d a total of 195,344 long tons of this material w a s produced . Three of the copolymer plants
p r o d u c e d 124,645 long tons of black masterbatch rubber in fiscal year 1951. , A portion of this
b l a c k masterbatch rubber w a s produced b y the cold process a n d is included in th e figure s h o w n above
f o r cold r u b b e r production. In o r d e r to m ee t t h e increasing d e m a n d f o r this type of rubber , facilities
w e r e being installed at the end of the year to permit production of black masterbatch rubbers at a
f o u r t h copolymer plant.
T h r e e of the co polym er plants produced a total of 30,686 long tons of G R -S latex during the year .
T h i s material is bec omin g of increasing importance in the manufac ture of f o a m sponge rubber an d
o t h e r special products a nd in order to m e et the increasing d e m a n d for it, facilities are being installed
to p e r m i t manufac ture of G R -S latex in five of the copolymer plants, a large portion of w hi ch will
b e t h e cold rubber type.
D u r i n g the year, manufa cture of high -M o o n e y -oil-softened G R - S w a s initiated. In the production
of oil-extended G R -S , a relatively high M o o n e y viscosity rubber is produced at the copolymer plant
a n d f r o m 15 per cent to 25 per cent of a relatively cheap oil extender is added . T h e resultant product
is for s o m e uses the equivalent of the s a m e quantity of G R -S produced at a no r ma l M o o n e y viscosity .
T h u s the potential of this development is t o extend substantially the availability of total G R -S with
no additional use of the basic r a w materials of butadiene and styrene, a n d to produce a rubber of
low er cost.
Initial production of oil-extended rubber w a s m a d e on M a r c h 11, 1951 , in the G o v e r n m e n t -o w n e d
cop oly mer plant at H oust on , Texas . Production problems encountered in the manufacture of this
n e w type of rubber w e r e w o r k e d out in a reasonably short period of time a nd sufficient quantities we re
produced at a n early date for distribution to the rubber manufacturers for evaluation. This rubber has
been m anuf actu red in the f o r m of both an oil masterbatch a n d an oil-black masterbatch . While the
future requirements of this material are difficult to anticipate at this early date, it is believed that
production of extended rubber will b ec o me a large factor in the synthetic rubber program .
In a large n u m b e r of applications, synthetic rubber has definitely superior characteristics o v e r
natural rubber . T h e tendency has been toward the development of " tailor-m a d e " types of G R -S
i especially suited to particular applications. A n e xa m pl e is the production o f cold rubber wh i ch , i n
combination with high area furnace backs, yields passenger tire t r e a d s having w ea r i n g qualities
superior to natural rubber treads. O n e of the limitations in the use o f G R -S has been its high heat
i build -up w h e n used in heavy -duty truck, bus a nd airplane tires, a n d this has necessitated t h e use of
high percentages of natural r u b b e r in these applications. H o w e v e r, im prov emen ts in p o l y m e r quality
and c o m p o u n d i n g techniques have resulted in increasing the ratio of synthetic rubber to natural
rubber required in these products.
In the case of butyl , there is a definite quality superiority over natural rubber for inner tubes of
all sizes, wit h the exception of the large heavy -duty applications . Butyl tubes retain air approximately
e
ten times as long as those m a d e from natural rubber a n d are m u c h m o r e tear -resistant. Bu t y l is also
superior rubber in its resistance to oxidation , weathering, aging , sunlight an d ozone a n d inits inertness
r tochemicals. Butyl is particularly suited for the m anufacture of tire curing bags a nd other products
? which, although potentially important, as yet require only a small tonnage. T h e problem of “ cold
: buckling " has been solved b y developments in t h e c o m p o un d i n g of butyl rubber, a nd in consequence
butyl tubes are n o w considered to have cold weather properties essentially equal to natural rubber tu bes.
At the beginning of fiscal year 1951 , it w a s possible to supply the total requirements for butadiene
from the petroleum butadiene plants alone a n d t o maintain t h e selling price of G R -S at 18.5 cents per
pound. H o w e v e r, w h e n greatly increased production rates m a d e itnec ess ary to obtain a relatively
large proportion o f the butadiene supply f r o m t h e higher -cost alcohol facilities, it b e c a m e necessary
in D e ce m be r, 1950 , to increase the selling price of G R -S to 2 4 . 5 cents per p o u n d . Also, because of
increases in production costs, it w a s necessary to raise the selling price of butyl rubber tó 20.75 cents
23
per p ou nd in D e c e m b e r , 1950. These price increases w e r e calculated to maintain a "no -loss” financial
position of the synthetic rubber program .
Research Activities
D u r i n g the ye ar , research and development w o r k w a s performe d for the Corporation b y 11 uni
versity groups, 7 industrial companies, 3 independent research organizations, 1 G o v e r n m e n t agency,
the G o v e r n m e n t Laboratories operated b y A k r o n University , a n d the G o v e r n m e n t Tire T e s t Fleet,
operated b y an industrial c o m p a n y. This represents the addition of one independent r e s ea r c h organiza
tion to the p r o g r a m a n d the elimination of one university group since the preceding year .
These organizations conduct three phases of research - fundamental, applied a n d developmental.
Expenditures d u r i n g the year for these p h as e s w e r e respectively 28 per cent, 10 per cent a n d 62 per
cent of the total. T h e Corporation formulates the over-all research plan for ea ch year , a n d w i t h the
aid of n u m e r o u s interrelated committees, develops detailed plans t o fit the policy f r a m e w o r k . It is
also the responsibility of the Corporation to maintain a proper relationship of the three p h a s e s of the
p r o g r a m a n d to expedite a continuous exchange of research findings.
Research w o r k continued to be directed t o w a r d developing a better general pu rp os e rubber,
particularly for heavy -duty tire carcass construction , a n d to improving a n d developing specialty
polymers. I n addition, because of the rapidly expanding d e m a n d for rubber, considerable research
effort w a s applied t ow ar d increasing productivity with m i n i m u m increase in cost a n d usage o f critical
materials.
Activity of the G o v e r n m e n t Tire Test Fleet w a s increased with emphasis on efforts to develop
polymers satisfactory for enlarged use in heavy -duty truck tires, w h e r e natural rubber at present
is still superior to synthetic. This w o r k is regarded as highly essential b y the D e p a rt m e n t of Defe nse.
D u ri n g the year, the following w e r e a m o n g the mo st noteworthy achievements of the research
program :
1. T h e de vel opm en t of three n e w G R -S types (raising the total to 33 ) a n d 60 n e w experimental
G R -S types (raising the total to 650 ). C e r t a i n experimental types have m e t unique national
defense requirements, including c om po ne n t parts for bazookas.
2.
T h e preparation of several hu nd re d experimental pilot plant polymers for laboratory or e nd
product-service evaluation .
3.
T h e development a n d production of cold latex to a stage s u c h that c on su me r acceptance r e
quired expanding productive capacity f r o m 200 tons a m o n t h to 3,000 tons a m o n t h .
4.
T h e development a nd production of oilm asterbatched G R -S , w hi c h promises a cost saving, a
supply expansion a n d a quality i m p r o v e m e nt.
5. T h e development of improved formulations for the m o r e rapid production of both hot and
cold G R -S .
6. T h e development of high -conversion a n d high -butadiene G R -S sh ow ing treadwear equal to
cold rubber.
7. T h e copolymerization of vinyl toluene, a styrene substitute, into satisfactory tire tread rubber.
8.
P o ly m er i m p r o v e m e n t, as established b y tire testing, to the extent that 68 per cent rather than
60 per cent h a s been specified as the synthetic rubber content for 11.00 x 20 size military tires.
9. T h e preparation of 93 articles for publication in scientific or technical papers .
T h e expenditure for research a n d development in fiscal year 1951 w a s $ 5,989,677 , which is
approximately 2 p e r c e n t of the gross i n c o m e f r o m the entire program . This expenditure w a s about
20 per cent higher in 1951 than in 1950. T h e increase w a s almost entirely spent on heavy -duty tire
development w o r k .
24
Capital I m p r o v e m e n t s
D u r i n g the fiscal year 1951 capital expenditures a m o u n t e d to $ 12,566,712 . These expenditures
cover t h e c o s t o f additional cold rubber capacity , bottle-neck removals, process i m pr ov e me nt s, an d
r e p l a c e m e n t s of wo rn -out a n d obsolete equipment i n the synthetic rubber program .
S t a t e m e n t o f Operations
A f ina ncia l statement, presenting a s u m m a r y of the operations of the Corporation in the field
of s ynt het ic rubber, appears in Schedule 2 of this report.
N e t i n c o m e for the fiscal year 1951 a m o u n t e d to $ 11,927,793 as c om p ar e d with a net loss of
$ 1,794,621 in fiscal year 1950. T h i s w a s d u e to the higher production rate a n d sales v ol um e together
w i t h a n increase in price of synthetic rubber effective D e c e m b e r 7 , 1950 .
E x p e n s e s for "maintenance a nd protection of standby plants a n d facilities" a m o u n t e d to $ 142,353 ,
as c o m p a r e d to $ 2,594,140 in 1950. This w a s the result of returning the standby plants to active
service . D u r i n g the year $20,500,000 w a s spent for reactivation of t h e plants.
.
2
5
TABLE
REACTIVATION
Operator
I
P R O G R A M
Annual
Design Capacity
Da te of
Initial Operation
Butyl, third unit
Petroleum Butadiene
G R -S Copolymer
12,667 L.T.
50,000 S.T.
60,000 L.T.
April 21 , 1951
Oct. 23 , 1950
Oct. 12, 1950
Petroleum Butadiene
Petroleum Butadiene
Petroleum Butadiene
G R -S Copolymer
G R -S Copolymer
18,000
25,000
15,000
60,000
30,000
S.T.
S.T.
S.T.
L.T.
L.T.
Dec. 7 , 1950
Dec. 8 , 1950
April 1, 1951
Dec. 16 , 1950
Dec. 3, 1950
Alcohol Butadiene
First Unit
Alcohol Butadiene
First Unit
G R -S Copolymer
20,000 S.T.
Dec. 24 , 1950
20,000 S.T.
Nov. 18 , 1950
90,000 L.T.
Jan. 15 , 1951
20,000 S.T.
Feb. 13 , 1951
20,000
20,000
30,000
7,500
Feb. 9 , 1951
April 26 , 1951
Dec. 26 ,1 950
Feb. 25, 1951
Plant Location
Type of Plant
Plants Reactivated Under Directive of July 6, 1950
Esso Standard Oil Co.
Sinclair Rubber Inc.
U. S. Rubber Co.
Baton Rouge, La.
Houston ,Texas
Port Neches, Texas
Plants Reactivated Under Directive of July 28, 1950
Standard Oil Co. of California
Shell Chemical Corp.
Copolymer Corp.
Midland Rubber Co.
Kentucky Synthetic Rubber Co.
Los Angeles, Calif.
Los Angeles, Calif.
Baton Rouge, La .
Los Angeles, Calif.
Louisville, K y .
Plants Reactivated Under Directive of September 1, 1950
Louisville, K y .
Carbide & Carbon Chem . Div.
Union Carbide & Carbon Corp.
Koppers Company , Inc.
Kobuta, Pa .
B. F. Goodrich Chem . Co.
Institute, W. Va .
Plants Reactivated Under Directive of September 14, 1950
Carbide & Carbon Chem . Div.
Union Carbide & Carbon Corp.
Koppers Company , Inc.
Goodyear Synthetic Rubber Corp.
Copolymer Corp.
Louisville, K y .
Alcohol Butadiene
Second Unit
Alcohol Butadiene
Second Unit
Third Unit
G R -S Copolymer
G R -S Copolymer
Kobuta, Pa.
Akron , Ohio
Baton Rouge, La .
TABLE
S.T.
S.T.
L.T.
LT.
II
O P E R A T O R S O F G O V E R N M E N T -O W N E D B U T A D I E N E , S T Y R E N E A N D B U T Y L R U B B E R F A C I L I T I E S
As of June 30 , 1951
Operator
Cities Service Refining Co.
Copolymer Corporation
Humble Oil & Refining Co.
Neches Butane Products Co.
Sinclair Rubber, Inc.
Philips Chemical Co.
Standard Oil Co. of Calif. and
Shell Chemical Corp.
Carbide and Carbon Chemicals Div.
Union Carbide and Carbon Corp.
Koppers Company , Inc.
The D o w Chemical Co.
Esso Standard Oil Co.
Humble Oil & Refining Co.
Plant Location
Type of Plant
Lake Charles, La.
Baton Rouge, La .
Baytown, Texas
Port Neches, Texas
Houston , Texas
Borger, Texas
Butadiene from
Butadiene from
Butadiene from
Butadiene from
Butadiene from
Butadiene from
Torrance, Calif.
Butadiene from Butane
45,000
Louisville, K y .
Kobuta, Penna.
Torrance, Calif.
Baton Rouge, La .
Baytown, Texas
Butadiene from Alcohol
Butadiene from Alcohol
Styrene
Butyl Rubber
Butyl Rubber
70,000
105,000
57,000
40,000
40,000
* Butadiene and Styrene, Short Tons /Year Butyl Rubber, Long Tons /Year.
26
Butylenes
Butylenes
Butylenes
Butylenes
Butylenes
Butane
Approx . Production
Capacity, Tons / Yr .*
62,000
22,000
45,000
168,000
78,000
60,000
TABLE
III
O P E R A T O R S O F G O V E R N M E N T -O W N E D S Y N T H E T I C R U B B E R C O P O L Y M E R F A C I L I T I E S
A N D O T H E R C O M P A N Y PARTICIPANTS
As of June 30, 1951
Operator
Firestone Tire & Rubber Co.
B. F. Goodrich Chemical Co.
Goodyear Synthetic Rubber Corp.
United States Rubber Co.
Plant Location
Approx.Production
Capacity L.T./Yr.
None
Carlisle Corp.,Carlisle,Pa .
10
78,000
113,000
None
Denman Rubber Co.,Warren ,Ohio
10
87,000
23,000
None
General Latex and Chemical Corp.
Cambridge, Mass.
Mohawk Rubber Co.,Akron ,Ohio
35
10
None
Cooper Tireand Rubber Co.,
Findlay, Ohio
10
Lake Charles,La.
Akron , Ohio
86,000
25,000
Port Neches,Texas
Institute, W. Va .
Houston , Texas
Akron , Ohio
Port Neches,Texas
Naugatuck , Conn .
Percent of
Other Participating Companies Participation
76,000
25,000
General Tire and Rubber Co.
Baytown, Texas
37,000
Phillips Chemical Co.
Midland Rubber Corp.
Borger, Texas
54,000
Torrance, Calif.
76,000
Pacific Rubber Co.,Oakland,Calif.
*Copolymer Corporation
Baton Rouge, La .
43,000
Armstrong Rubber Co.,
West Haven , Conn .
Armstrong Rubber Mfg . Co.,
Des Moines, Iowa
Dayton Rubber Co.,Dayton ,Ohio
Gates Rubber Co.,
Denver, Colorado
Lee Rubber and Tire Corp.,
Conshohocken , Pa .
Mansfield Tire and Rubber Corp.,
Mansfield, Ohio
Sears, Roebuck & Co. ( Including
Armstrong Tire & Rubber Co.,
Natchez, Miss., in which Sears,
Roebuck & Co. owns 50% of the
voting stock )
Sieberling Rubber Co.,
Akron , Ohio
*Kentucky Synthetic Rubber
Corp.
37,000
Louisville, Ky .
McCreary Tire and Rubber Co.,
Indiana, Pa.
None
American Hard Rubber Co.,
N e w York, N. Y.
Boston Woven Hose and
Rubber Co., Boston, Mass.
Brown Rubber Co., Inc.
Lafayette, Ind.
Hewitt-Robbins, Inc.,
N e w York, N. Y.
Goodall Rubber Products Co.,
Trenton , N. J.
Sponge Rubber Products Co.,
Shelton, Conn .
Sheller Mfg . Corp., Portland,Ind.
Simplex Wire and Cable Co.,
Cambridge, Mass.
Thiokol Corp., Trenton, N. J.
Raybestos-Manhattan , Inc.
Passaic, N. J.
5
35
12.5
12.5
12.5
12.5
12.5
12.5
12.5
12.5
10
10
10
10
10
10
10
10
10
10
* Copolymer Corp. and Kentucky Synthetic Rubber Corp. are each separate corporations which are wholly owned by
the companies listed as equal stockholders.
27
REPORT
ON
TIN O P E R A T I O N S
FOR
FISCAL Y E A R
1 95 1
Legal Authority a n d Responsibilities
T h e Corporation is required t o render a s e m i -annual report to Congress on all of its activities
in the tin p r o g r a m under Public L a w 125 , 80th Congress, as a m e n d e d . T h e present report co vers the
six m o n t h s ended Ju ne 30 , 1951 , a n d , for comparative purposes, the fiscal year ended t h e s a m e date.
R F C ' s authority a n d responsibilities in carrying on its tin operations w e r e originally defined b y
Section 5d (3 ) of the a m e n d e d R F C Ac t . This general authority w a s superseded on J un e 28 , 19 47 ,
b y Public L a w 125 , 80th Congress, w hi ch e m p o w e r e d R F C , until J u n e 3 0 , 1949 a n d while it has
succession, (1 ) to b u y , sell a n d transport tin and tin ore an d concentrates ; ( 2) to improve , develop ,
maintain a n d operate b y lease or otherwise the G o v e r n m e n t -o w n e d tin smelter at Texas City, T e x a s ;
(3 ) to finance research in tin smelting a n d processing ; a nd (4 ) to do all other things necessary to
the accomplishment of the foregoing. T h a t authority w a s extended to June 30 , 1951 ,b y Public L a w
824 , 80th Congress, a nd to J un e 30 , 1956 , b y Public L a w 723 , 81st Congress.
A s a n interim m e as u r e, R F C , on January 12 , 1951 , w a s requested to undertake the function o f
acquiring an d disposing of tin -bearing materials (metals, ores , concentrates, etc.) in connection wi th
the Defense Program . I n accordance w i t h the Defense Production Ac t of 1950 a nd Executive O r d e r s
10161 a n d 10200, the Administrator of the General Services Administration , on M a r c h 5 , 1951 , d e l e
gated to R F C the authority to purchase a n d m a k e c o m m i t m e n t s to purchase tin metal, tin ores a n d
concentrates, an d tin contained in slags, flue dust, a n d drosses for G o v e r n m e n t use or for resale.
N P A Or d er M -8 , effective M a r c h 12 , 1951 , designated R F C , acting for a nd on behalf of Gene ral
Services Administration , as the sole importer o f pig tin, though N P A reserved the right to pe r mi t
others to do so u nder contracts executed prior to t h e effective date of the Ord er or otherwise . T h e
s a m e order placed all tin sales, with limited exceptions, under allocation b y N P A , beginning M a y 1, 1 9 5 1 .
Purchase a n d Sale of Tin Metal
D ur i ng the first half of the fiscal year 1951 , R F C m a d e n o purchases of foreign tin metal ; in the
second half, 600 tons of foreign tin metal an d 190 tons of tin recovered in the United States f r o m c o n
centrates of foreign origin w e r e purchased . ( Throughout this report, tonnages are expressed in
terms of long t o n s of 2,240 p o u nd s .) This foreign metal w a s covered b y purchases or c o m m i t m e n t s
m a d e prior to the issuance, o n M a r c h 6, 195 1, of the Tin Report b y the Preparedness S u b c o m m i t t e e of
the Senate A r m e d Services C om m i t te e, wh ic h r e c o m m e n d e d the discontinuance of such purchases.
T h e price of tin in N e w Y o r k rose f r o m 76.4c per p o u n d just prior to the outbreak of w a r in
K o r e a to $ 1.83 o n Jan ua ry 25 , 1951. O n Fe brua ry 14, the Singapore price reached $ 1.93, equivalent
to $ 1.97 in N e w Y o r k .
Issuance of the Preparedness Subcommittee's report on tin on M a r c h 6 , w a s followed b y these
developments :
O n M a r c h 7, the G e n e r a l Services Administration suspended all n e w purchases of tin for
the national stockpile a n d ann oun ced that purchases b y t h e G o v e r n m e n t for industrial uses
w ou ld be held to a m i n i m u m .
In a series of rapid drops, the price of tin fell to $ 1.34 per p o u n d b y M a r c h 9 .
O n M a r c h 12 , unde r N P A Orde r M -8 , private importation of pig tin w a s stopped and
R F C w a s m a d e sole importer. A s a result, no tin ma r k et existed in N e w Y o r k thereafter,
a n d there w a s no m ar k et price u po n w hi ch R F C could base its selling price of tin m eta l.
O n M a r c h 13 , R F C an nou nce d a selling price of $ 1.34 per p o u n d , the last N e w
quotation on the open m a r k e t .
York
A price recovery in foreign mark ets during late M a r c h led R F C to adjust its price to $ 1.505 on
M a r c h 3 0 to avoid selling at a loss. Thereafter R F C ' s selling price w a s f r o m time to time reduced
until a price of $ 1.03 w a s reached on A u g u s t 1, 1951 .
Since R F C w a s m a d e sole importer of tin it has m a d e no purchases of foreign tin metal. T h e
requirements of domestic industry have been m e t f r o m R F C ' s reserve stocks of metal a n d current
production of the Tex as City smelter. All R F C tin sales since M a y 1 have been in accordance with
N P A Or de r M -8, w hi ch places pig tin under allocation a n d prohibits, subject to limited exceptions,
a n y deliveries not covered b y allocation authorizations issued b y N P A . R F C ' s total sales in the four
28
m o n t h s b e g i n n i n g M a r c h 1 a m o u n t e d to 11,876 tons of tin bullion , including 350 tons of C o p a n alloy .
Total s a l e s d ur in g the eight m o n t h s p r ec e di n g M a r c h amounted to 10,558 tons. These figures do not
include deliveries to General Services Administration for the national stockpile.
O n J u n e 3 0, 1951 , R F C stocks o f tin metal a m o u n t e d to 18,829 long tons, including 724 tons of C o p a n
alloy . O n l y 1 51 tons of this inventory w e r e of foreign origin .
O r e P r o c u r e m e n t a n d Stocks
O r e receipts at the smelter during the last half of the fiscal year 1951 a m o u n t e d to 34,386 tons,
c o n t a i n i n g 16,200 tons of tin, a n d during the full fiscal year a m o u n t e d to 71,596 tons, containing
33, 942 t o n s of tin. T h e following table s h o w s a b r e a k d o w n of these receipts by country an d grade :
Fiscal Year 1951
January -June 1951
BOLIVIAN
H i g h Grade
M e d i u m Grade .
L o w Grade ..
Total
Bolivian
Indonesia
Thailand
Belgian Congo
Miscellaneous
Total
Tons
Ore
%
Tin
Tons
Tin
%
Total
Content
5,091
4,962
13,242
59.26
46.67
21.09
3,017
2,316
2,793
23,295
34.88
23,295
8,550
1,612
603
326
34,386
Tons
Ore
%
Tin
Tons
Tin
%
Total
Content
37.1
28.5
34.4
11,721
10,887
26,654
59.37
46.28
21.28
6,959
5,039
5,672
39.4
28.5
32.1
8,126
100.0
49,262
35.87
17,670
100.0
34.88
73.27
74.26
74.30
50.31
8,126
6,265
1,197
448
164
50.1
38.7
7.4
2.8
1.0
49,262
15,309
3,352
2,720
953
35.87
73.35
74.22
74.56
55.30
17,670
11,229
2,488
2,028
527
52.1
33.1
7.3
6.0
1.5
47.11
16,200
100.0
71,596
47.41
33,942
100.0
S toc ks of tin concentrates a n d other tin -bearing materials held b y R F C on June 30 , 1951 , c o n
tained a n estimated total of 15,920 tons of tin. T h i s is exclusive of the stocks of finished m e t a l f r o m
w h i c h R F C supplies domestic industry . These concentrates a n d tin -bearing materials w e r e not all
i m m ed i a t el y available for smelting, as s o m e w e r e still stored abroad or in transit to the smelter . T h e y
also included approximately 4,000 tons of tin in inactive inventories, such as rejects, slimes a n d f er ro
t u ng s t en w h i c h generally require special treatment a nd cannot be converted into metal quickly or on
a large scale .
T h e 1950 Bolivian contract expired D e c e m b e r 31 , 1950 , a n d w a s extended for t w o m o n t h s to
F e b r u a r y 28 , 1951. D u r i n g the following three m o n t h s R F C pro cu red Bolivian ores under an interim
contract, w h i c h expired M a y 3 1 , 1951. N o tin ores have been b o u g h t f r o m Bolivian sources f r o m that
date to A u g u s t 31, 1951 , although negotiations have continued . O n July 24 , 1951 * R F C annou nced
its willingness to p ay a tin price of $ 1.12 per p o u n d because of higher m ini ng costs in Bolivia.
R F C , in conjunction with the State D e p a r t m e n t, sent a mission to Bolivia to investigate tin p r o
duction costs a n d their relationship to the Bolivian e c o n o m y a n d the world tin m ark et. This joint
mission's findings a n d conclusions will be utilized in current a n d future contract negotiations with the
Bolivians.
U n d e r existing contracts, R F C continues to b u y tin concentrates f r o m Indonesia at the rate of a p
proximately 9,000 tons annually a n d f r o m Belgian C o n g o at the rate of about 1,500 tons annually. B o t h of
these contracts expire on D e c e m b e r 31 , 1951 , but contain options to r e n e w for the calendar year 1952 .
In addition , R F C is purchasing tin concentrates in Th aila nd , mostly on a spot basis, at t h e rate
of approximately 3,000 tons of tin content annually. Other pur cha ses f r o m Mexico, Alaska, Portugal
a nd miscellaneous sources usually a m o u n t in the aggregate to less than 1,000 tons of tin content annually.
T h e current annual rate of purchase of tin contained in concentrates originating in countries other
than Boliva therefore approximates 14,500 tons .
* Since the above date, under a 30 -day contract, approximately 4,280 tons of Bolivian ores, with a tin content of
1,920 tons, have been purchased at $1.12 per pound . A t the date of this report, a long term contract had not been
negotiated.
29
Smelter Operations a n d Results
T h e smelter operating contract between R F C and Tin Processing Corporation , based o n
plus -fixed -fee arr ang em ent ,has been extended to June 30 , 1952 .
a cost
Smelter production of tin bullion a mo u n te d to 18,579 long tons during the last half of fiscal year
1951 , a n d 35,893 long tons for the full fiscal year. Tonnages and percentages of the different grades
of tin m a k i n g u p this production are as follows:
3 Star
G ra de A
2 Star
Grad e B
Copan
Alloy
Total
Bullion
377
2.03
18,579
100.00
872
2.43
35,893
1 00 . 00
January -June 19 51
18,202
97.97
L o n g tons
Percentage of total .
Fiscal Year 195 1
33,716
93.93
L o n g tons ..
Percentage of total .
1,305
3.64
These figures do not include 3 S ta r tin resulting f r o m the upgrading of previously produced 2 St a r
tin. S u c h u p g ra d e d material a m o u n te d to 551 tons during the last half of the fiscal y e a r a n d 1,668
tons during the full fiscal year .
D u ri n g the last ten m o n t h s o f the fiscal year, 97.67 per cent of all tin bullion produced w a s 3 S t a r
material, a n d the remainder w a s C o p a n alloy. These results indicate that the equipment a n d processes
n o w used at the smelter are well adapted to the production of the highest quality product f r o m all
grades of ore ranging f r o m 15 per cent to 75 per cent tin content.
Grades of tin ore treated during the 15 m o n t h s ended June 30 , 1951 , averaged 73.58 per cent
tin for alluvial ores, 34.54 per cent for Bolivian ores a n d 56.33 per cent for miscellaneous ores. A v e r a g e
grade of all ore treated during this period w a s 47.09 per cent tin. Av er ag e grade of rejects treated
during the s a m e period w a s 15.13 per cent tin .
O p e r a ti n g costs before depreciation or by -product credits totalled $3,086,570 f o r the six m o n t h s
to June 30 , 1951 , a n d $ 5,946,931 f o r the full fiscal year . Operating cost per ton of tin bullion p r o du c e d
remained fairly constant during the year at approximately $ 173 .
T h e relation between L o n g h o r n Smelter production ,tin imports an d United States c on s u mp t io n
is s h o w n in the following table. T h e data pertaining to United States imports and United States c o n
sumption coincide generally with figures published b y the International Tin Study G r o u p .
L o n g Tons Tin Metal ( Bullion )
L o n g h o r n Smelter
Production
Calendar Year
1942
1943
1944
1945
1946
1947
1948
1949 .
1950
U.S.
Imports
26,753
11,919
13,338
9,375
15,520
24,899
49,196
60.222
82,949
U. S.
Co n su mp t io n
56,288
46,253
59,156
55,642
54,627
59,166
59,863
47,163
71,774
Long
Tons
% of U.S.
C o n su m p t i o n
15,695
20,727
30,619
40,591
43,468
33,292
36,677
36,064
32,817
27.88
44.81
51.76
72.95
79.57
56.27
61.27
76.47
45.72
Total 9 years .
January -June 1951
294,171
17,800 (a )
509,932
29,300 (a )
289,950
18,579
56.86
63.41
Total 94/2 years ..
311,971
539,232
308,529
57.22
(a) Approximate.
30
T h e importance of tungsten as a strategic metal has been stressed in recent m o n t h s. T h e o u t
break of the K o r e a n w a r cut off important sources of s up pl y in the F a r East a n d the defense agencies
are m a k i n g strenuous efforts to increase domestic production. L o n g before t he outbreak of the K o r e a n
war , Tin Processing Corporation w a s encouraged to carry on research on tin ores that contained t u n g
sten. This metal , du rin g the early years of t h e smelter operation , constituted a distinct d r a w b a c k
due to its f or min g a tin-tungsten furnace bottom on the furnace hearths , thus shortening the life of the
furnaces . F u rt h e rm o re, removal of the furnace bottoms f r o m the furnace hearths required long s h u t
do wn s of the furnaces a n d w a s very costly. Likewise, t he treatment of this p ro du ct for recovery of
the tin a n d tungsten w a s difficult a n d costly, a nd resulted in poor recoveries of the metals involved .
A s a result o f research an d tests, a process has been devised for extraction of a part of the tungsten
from the ore prior to smelting . Th i s process not only has materially decreased the formation of furnace
bottoms, but h a s m a d e possible the production of a high -grade synthetic scheelite in substantial
quantities. This production is n o w being allocated to industry for use in the defense program .
T h e r e has accumulated at the smelter a waste acid liquor , resulting f r o m eliminating impurities
from Bolivian type ores with acid, w hi ch is stored in earthen ponds covering m o r e than 50 acres. T o
recover the acid a n d to eliminate the hazard of this waste liquor, the R F C has h a d designed a n d c o n
structed a waste acid recovery plant.
C o m m e r c i a l grade hydrochloric acid is n o w produced at a mo nth ly rate of 120,000 gallons. In
addition, pre -concentrated waste acid (resulting from a preliminary step in commercial acid production )
averaging approximately 100,000 gallons per m o n t h is being sold to the City of H o u st o n for treatment
of s e w a g e. T h e plant has also been producing mo nth ly about nine tons of b y -product metallic p r e
cipitates containing approximately 340 ounces o f silver, 10 per cent copper a n d various percentages
of other metals per ton .
T h e acid plant w a s recently thoroughly overhauled a n d extensive tests w e r e m a d e in accordance
with a comprehensive p r o g r a m d r a w n up i n collaboration with Chemical Construction Corporation,
designer a n d builder o f the plant. These tests are still in progress, an d preliminary reports indicate
that s o m e revisions in the design of the plant, as well as the installation of additional e qui pm en t, will
be required to enable the plant to operate at rated capacity.
Research a nd Capital Im pro vem ent s
D u r i n g the fiscal year 1951 , the Experimental D e p ar t m e nt at the smelter devoted m u c h effort to
solving the problems arising f r o m waste acid plant operations. W o r k also continued on eliminating
impurities such as lead a n d arsenic f r o m the smelter circuit, improving the recovery of tungsten ,
reducing the consumption of reagents and controlling air pollution b y smelter gases.
Expenditures for capital im pro vem ent s during the fiscal year a m ou n t ed to $ 719,185, of w hi c h
$512,764 w a s expended on the waste acid plant. T h e remaining $ 206,421 w a s used for various i m
provements at the smelter.
31
REPORT
ON
ABACA
OPERATIONS
FOR
FISCAL Y E A R
19 51
Legal Authority a n d Responsibilities
Public L a w 683 , 81st Congress,provides for continuance o f G o v e r n m e n t production o f abaca in
the W e s t e r n H e m is p h e re for a period not to exceed ten years f r o m April 1, 1950 , plus such additional
time as m a y be necessary for the earliest practicable liquidation. T h e abaca p r o g r a m w a s instituted
b y R F C early in 1942. O n A u g u s t 10 , 1950 , the President authorized the Corporation to continue
to operate the G o v e r n m e n t plantations until further notice under that statute .
Public L a w 683 insures the basic fiber needs of this country during a n e me rg enc y . It sets up a
"stockpile -in -the-ground " in Central A m e r i c a a n d will prevent a recurrence of the e m er g e nc y which
existed with respect to abaca at the outbreak of W o r l d W a r II.
U n d e r this legislation Congress not only provided for the continuation of the original plantations
but also for their expansion f r o m the present 25,000 acres to a m a x i m u m of 50,000 acres w h e n , in the
discretion of the President, such expansion should be deemed necessary . In addition, the A c t permits
surveys a n d research in a ba ca development, because the existing plantations we re installed un de r war
pressures without opportunity for adequate surveys a nd studies. T h e m a s s -production of fiber on the
G o v e r n m e n t plantations is in its infancy. T h e history o f industrial an d agricultural development in
the United States indicates that substantial i mp r ov e me n t is possible.
ico
Expansion
O n A u g u s t 21 , 1950 , the President directed the Corporation to e x p a n d the present plantations to
the m a x i m u m 50,000 acres , as nearly as is practicable. T h e Corporation's efforts in the p r o g r a m during
the year have therefore been devoted mainly to the preliminary investigations necessary to the ful
fillment of the President's directive.
U n d e r ag ree ment with the D ep a r t me n t of Agriculture, the services of its technicians h a v e been
m a d e available to the Corporation t o aid in formulation of the expansion program . A t the close of
the y e a r , soil specialists h a d completed mo st of the surveys necessary to provide a basis for selection
of the desired additional acreage. A s a part of the project, surveys w e r e also m a d e to provide detailed
information on soil properties a n d characteristics o f the existing plantations (w h ic h h a d not been
secured at the time of original installation d u e to the then existing e me rg e nc y, o r later d ue to the
uncertain future of the program ) a n d to determine w het he r s o m e of the low -production areas should
be aba ndo ned because of poor drainage or other physical or chemical factors inimical to economic
operation .
F r o m survey reports o n new lands, the Corporation , assisted b y D ep a r t me n t of Agriculture
specialists, is n o w e ng age d in selecting the additional lands to be planted to abaca. T h e reports indicate
that sufficient additional acreage can b e secured to m a k e u p t h e 50,000 acres of abaca prescribed by
the President, after allowing for t h e probable a b a n d o n m e n t of 4,000 acres of existing plantations
because continued production of fiber f r o m t h e m appears to be uneconomical, a n d , under ter ms of
its contract with R F C , for ultimate repossession of 3,600 acres b y United Fruit C o m p a n y for its o w n use.
de
101
51
U n d e r this expansion p r o g r a m it is planned t h a t the 50,000 acres will have been planted by
D e c e m b e r , 1952. Since abaca usually matures in 18 to 30 m o n t h s, or a n average of about 24 m o n t h s,
after planting, m a x i m u m production will be reached in 1954 .
it
Research
ha
Research contemplated b y Co ngre ss in the passage of Public L a w 683 constituted a m a j o r p h a s e d
of the abaca p r o g r a m during the year . T w o research contracts w e r e entered into . O n e is with the
D e p ar t m e nt of Agriculture. It involves studies of m a n a g e m e n t a n d cultural practices designed to develop
cultural m et hod s b e s t suited to particular soils, im proved fertilizer application, better disease control,
a nd t h e like, all directed to war d greater an d m o r e economical production. T h e other is with the
A r m o u r Research Foundation of the Illinois Institute of Technology. It aims at the development of
m o r e efficient processing equipment to increase fiber recovery f r o m the stalk a n d the discovery of
uses for the short and tangled fiber, pulp a n d juice whi ch are residual products of stalk processing
and are currently discarded as waste .
la
32
Operations a n d Results
A b a c a production during the fiscal year 1951 a m o u n t e d to 19,500,850 p ounds . Production costs,
exclusive o f depreciation, interest a n d d o m e s t i c administrative expense, aggregated $6,447,146 , or a n
average cost of 33.06 cents per p o u n d. After addition of depreciation , interest and domestic administrative
expense, total cost of production w a s $ 8,049,127, or an average cost of 41.28 cents per p ou n d . Production
for the fiscal year 1951 w a s about 35 per cent less than for the preceding fiscal year, a n d aggregate
costs w e r e about 9 per cent greater .
T h e decline in production is attributable primarily to conversion of plantation operations f r o m
a short-t e r m p r o g r a m of meeting immediate needs to a long-term p r o g r a m of insuring future availability
in this h em is p he re of the abaca requirements of the nation envisioned in Public L a w 683. This involved
de -e m ph a s is in production as such , with m a j o r attention to rehabilitation of the plantations, including
altered harvesting techniques w h ic h , b y allowing i m m a t u r e stalks to g r o w to maturity, sacrificed current
fiber production to the greater, long range objective of increased a n d sustained production in the
future. O t h e r factors included excessive rains w h i c h reduced production at the Costa Rica plantations,
which compr ise about 10,000 acres or 40 per cent of total plantings.
In a ba ca operations, fluctuations in production influence costs to a lesser degree than in mo st
business enterprises. A f e w cost categories s u c h as harvesting a n d factory expense vary with production ,
but care a n d maintena nce of the plantations, w hi c h represent about 70 per cent o f production costs,
m u s t g o o n regardless of the v olu me of production . Du r in g the year 19 51, while there w a s a slight
decrease i n the aggregate of s o m e cost categories which are influenced b y production , there w a s a n
over -all increase in production costs, due primarily to the intensive fertilizer p r o g r a m undertaken
to rehabilitate the soil. Fertilizer costs a m o u n t e d to about $ 1,000,000 as c o m pa r e d w i t h a n average
outlay o f about $ 185,000 per year heretofore. H o w e v e r , fiscal year 1951 derived relatively little benefit
f r o m this expenditure, since no r m al l y there is a lapse of about 12 m o n t h s f r o m time of application
before the full effects of fertilization are felt.
19,987,200 p oun ds of fiber w er e sold during fiscal year 1951 , for a total of $ 5,543,578, an average
realization of 27.74 cents per p o u n d . U p to 19 51 , under ag ree me nt with G S A ,all of o u r Central A m e r i c a n
abaca w h i c h w a s not purchased b y the trade w a s sold to G S A . H o w e v e r , in M a r c h , 1951 , the Munitions
B o a r d r e c o m m e n d e d that the Corporation tender all line fiber produced f r o m the G o v e r n m e n t -operated
plantations t o G S A for possible purchase. A s a result, since that time all Central American line fiber
production h a s been going , an d for the foreseeable future presumably will go , to G S A for purposes of
the national stockpile.
Public L a w 683 provides for reimbursemen t of the losses incurred in the abaca p r o g r a m in f o r m
of a n annual grant f r o m Congress, u p on submission of the annual budget specifically setting forth a n y
losses sustained .
Analysis of Operations a n d Future Outlook
T h e graph on page 3 4 depicts costs, production a nd revenue of the abaca p r o g r a m for the fiscal
years 1945 ( the first year in w hi ch the existing plantations c a m e into relatively full bearing ) through
1951 .
T h e steady u p w a r d trend of costs f r o m 1945 to the present is believed to be attributable primarily
to additional costs associated with the development of t h e full cultural an d processing techniques n e c e s
sary to the production of abaca o n a large plantation basis. W a g e increases, an d additional social
benefits to Central A m e r i c a n workers account for a portion of the increase in over -all cost. Increases
in the cost of materials a n d supplies also have contributed to the rise in over -all cost. H o w e v e r , a s su m in g
a n absence of further substantial increases in the cost of materials a nd supplies, it is believed that the
relatively true per a c r e cost level of operating our present plantations h a s in effect been reached ,
and that such level should prevail for the future, except f o r possible occasional fluctuations due to
temporary or local conditions.
T h e extreme variations in the production curve f r o m 1948 f orward are due primarily to the a b o v e
mentioned acceleration o f harvesting operations after t h e w a r . This acceleration n o t only accounts
for the sharp rise in production to the p e a k of 41,642,000 po und s for the fiscal year 1948 but it also,
for reasons m ent ion ed earlier ,h a s a bearing on the progressive decline thereafter to the present low
point of 19,500,850 p o un d s. If harvesting operations ha d not been accelerated after t h e w a r, it is
believed that the production curve wo ul d have followed the cost curve in behavior , with a leveling off
at approximately 30,000,000 pou nds per year .
33
A B A C A
P R O G R A M
PRODUCTION , COST AND SALES
Fiscal Years 1945-1951
MILLION
POUNDS
50
MILLION
DOLLARS
10
SA LE S PROCEEDS
40
PRODUCTION IN POUNDS
3
0
6
COST OF PRODUCTION
2
0
10
O
1945
2
1946
1
1947
1948
1949
1950
1951
Sales of R F C ' s Central A m e r i c a n abaca are m a d e on the basis of the prevailing world m a r k e t
price. Prices for our top grade of fiber during fiscal year 1951 ranged f r o m a low of 21.38 cents per p o u n d
in July, 1950, to a hi gh of 34.07 cents per p o u n d in M a r c h , 1951. T h e rise in price during the year to the
peak reached in M a r c h , 1951 , is undoubtedly attributable primarily to the outbreak o f hostilities in
K o r e a and an anticipated shortage of fiber for expanded defense ne ed s. H o w e v e r, the continuing
supply of Central A m e r i c a n fiber, as well as a slight increase in Philippine production, has probably
had a settling effect on the ma rk et, so that prices in recent m o n t h s h a v e declined steadily. A t the
close of the fiscal year , the price w a s 29.95 cents per pound .
A s indicated above, operational costs at the plantations are relatively stable regardless of p r o
duction. Therefore, it is probably not to b e expected that operations can, to a n y material extent,
b e returned to a paying basis t hr oug h reduction i n over -all costs. Rather , it is to be expected that a
return to a pay ing basis can only be br ou ght about through increases in revenue resulting f r o m increase
in fiber production a n d the de ve lo pme nt of m a rk e t a bl e by -products. A s brought out a b o v e, diligent
efforts are being m a d e to accomplish such increase a n d development.
It is believed that as a result of (a ) the rehabilitation measures instituted at the plantations last
year , (b ) the research p r o g r a m s n o w under w a y , a n d (c ) the fact that under our direction the technical
staff of U n i t e d Fruit is constantly seeking w a y s a n d m e a n s o f i m p r o v i n g techniques a n d efficiency
at our plantations, production of fiber during the c o m i n g year will be increased about 50 per cent over
1951. This wo uld a m o u n t to about 30,000,000 po und s o f fiber. It is anticipated that such a production
would at least result in a recovery of all costs other than depreciation , interest a n d domestic a d m i n i s
trative expense .
34
LIQUIDATION P R O G R A M
T h r o u g h o u t fiscal year 1951 the Corporation continued the orderly liquidation of assets acquired
a n d liabilities incurred u n d e r terminated national defense a n d w a r t i m e p r o g r a m s. A t Ju ne 30, 1950 ,
there r emai ned for liquidation assets aggregating $ 116,729,065 compared with $ 89,650,643 at J u n e 30 ,
1 9 5 1 , a decrease of $ 27,079,422. Assets held an d decreases during the fiscal year are s u m m a r i z e d as
follows :
J un e 30 ,
1950
J un e 30,
1951
Decrease
(A m o u n t s in millions)
L o a n s, advances an d receivables :
Lo an s a n d advances ....
Conditional sales contracts .
Other accounts a n d notes receivable
$
Total loans, etc....
Inventories held for disposal ..
Property , plant, equipment a n d
related facilities :
N o t under lease ...
Less : Subject to conditional sales contracts ..
Disposable properties held ..
U n d e r lease
Total property , etc....
6.4
14.7
17.3
$ 5.1
13.6
14.3
$ 1.3
1.1
3.0
38.4
33.0
5.4
.7
.5
.2
43.6
23.3
51.3
33.2
(7.7 )
(9.9 )
20.3
36.1
18.1
17.1
2.2
19.0
56.4
35.2
21.2
15.5
2.1
3.6
15.3
2.1
3.6
.2
21.2
21.0
.2
$ 116.7
$ 89.7
$27.0
Ot her assets :
Experim ental plywood flying boat ..
Inventories of platinum .
Miscellaneous
Total other assets .
Total
L o a n s , advances a n d receivables
T h e decrease of $ 1.1 million in conditional sales contracts receivable includes pa ym en ts of $ 330,000
in final liquidation o f 52 contracts, a n d of $ 750,000 on account of the 3 3 contracts still outstanding at
J u n e 30 , 1951 , in the a m o u n t of $ 13.6 million . O f the latter a m o u n t, $ 11.9 million are receivable f r o m
| Republic Steel Corporation , to w hi ch reference is m a d e later.
O f the decrease of $3.0 million in other accounts an d notes receivable, $ 1.3 million represents
a reduction in land grant freight claims receivable . D u r i n g the year claims aggregating $840,000 w e r e
developed a n d filed, claims previously filed aggregating $ 360,000 w e r e cancelled ,and claims aggregating
$ 1.8 million w e r e collected, leaving $ 1.2 million outstanding claims at Ju ne 30 , 1951 , under liquidation
p r o g r a m s.
In addition, und er production p r o g r a m s, land grant freight claims aggregating $ 890,000 w e r e
filed, with cancellations of $60,000 on claims previously filed a nd collections of $800,000 , leaving $ 1.2
million outstanding at June 30 , 1951 .
U n d e r both liquidation a n d production p r o g r a m s, 7,800 land grant freight claims aggregating
$2.4 million we r e outstanding at Ju ne 30 , 1951. Cumulative collections to J un e 30 ,1 9 5 1, in both p r o
g r a m s a m o u n t to $ 4.6 million on approximately 10,400 claims. It is estimated that approximately
10,000 claims involving $4,375,000 h a v e yet to be developed an d filed.
on
Other remaining loans, advances and receivables at J un e 30 , 1951 , em br ac e liquidation activities
practically all phases of terminated national defense a nd wa r t im e p r o g r a m s, exclusive of the
35
production p ro g r am s continued under subsequent legislation . Other than current accruals of rentals
a n d interest, mo st of these receivables w e r e established in the accounts prior to fiscal year 19 51 , and
consist largely of claims and miscellaneous balances of doubtful collectibility remaining f r o m major
procurement, subsidy a n d other p r o g r a m s. M u c h administrative w o r k necessary to their final disposi
tion w a s accomplished during the year. This included completion of administrative actions o n over
300 miscellaneous items totalling approximately $ 10.5 million . O f the outstanding receivables at J u n e 30,
1951 , aggregating $ 19.4 million (other than conditional sales contracts ), approximately $ 12.5 million
represents receivables on which all administrative efforts t owa rd collection have been exhausted.
These have been referred to R F C counsel a n d the D e p a rt m e n t of Justice for appropriate legal action.
Liabilities u n d e r liquidating national defense a n d w ar t i me p r o g r a m s aggregated $ 5.1 million
at J u n e 30 , 1951 , c om p ar e d with $7.9 million at J u n e 30 , 1950 , a decrease of $ 2.8 million resulting
f r o m liquidation of proved claims payable b y cash disbursements or adjustments.
T h e foregoing comparisons of receivables an d payables at beginning an d end of the fiscal year
do not fully reflect the year's liquidation activity, since they are exclusive o f items accrued a n d liquidated
in whole or in part within t h e year . S uc h items included 38 n e w claims payable an d receivable totalling
over $ 1.9 million arising f r o m various w ar t i me p r o g r a m s,a n d approximately 350 protests filed under
w a r ti m e food subsidy pro gr am s involving pa ym en ts withheld for violation of O P A price a nd slaughtering
regulations. Substantial liquidation of these items w a s accomplished within t h e year .
Property , Plant, E q u i p m e n t a n d Related Facilities
Disposable properties held at J un e 30 , 1951, aggregated $ 18.1 million, c o m pa r e d with $ 20.3
million at J un e 30 , 1950 , a net decrease of $ 2.2 million. This net decrease reflects an increase of $ 7.7
million in total properties to w h ic h title is held (exclusive of leased properties ), as against a contra
increase of $9.9 million in properties held subject to conditional sales contracts.
T h e increase of $ 7.7 million in total properties not under lease is acc ounted f or substantially by
(1 ) charges resulting f r o m transfer of properties with a book value of $ 13.9 million f r o m properties
under lease; ( 2) charges f r o m properties w i t h a boo k value of $ 280,000 returned b y G S A , less (3 )
credits resulting f r o m disposals of properties with a book value of $2 . 5 million, a n d (4 ) credits f r o m
transfers of title to vendees on properties with a book value of $4.0 million u p o n liquidation during
the year of related conditional sales contracts.
T h e increase of $ 9.9 million in book value of properties subject to conditional sales contracts is
accounted for b y a credit resulting f r o m disposition o f Castle D o m e Mi n in g properties referred to later
(book value $ 13.9 million ), less debits resulting f r o m properties (book value $4.0 million ) transferred
to vendees under conditional sales contracts liquidated.
Composition of the disposable property of $ 18.1 million at J un e 30 , 1951 , is :
No. of
Projects
Amount
2
3
1
4
$ 12,010,889
5,759,685
28,528
290,356
10
$ 18,089,458
Held for transfer to other G o v e r n m e n t
agencies u p o n enactment of legislation ....
In process of transfer to G S A ..
Held for screening for defense needs .
Other .
T h e book value of properties under lease at June 30 , 1951 , aggregated $ 17.1 million c o m p a r e d
with $ 36.1 million, a decrease of $ 19.0 million resulting f r o m disposal of leased properties.
Part of this decrease arose f r o m the exercise of option to purchase b y Republic Steel Corporation
with respect to property under lease t o it, having a b o o k value of $ 5.1 million. T h e option price plus
cumulative rentals collected under the lease represented a recovery of 115.7 per cent of t h e book
value. T h e remainder of the decrease represents a disposal in anticipation of exhaustion of the ore
bo dy of low grade copper mi nin g properties with a book value of $ 13.9 million , wh ic h ha ve been
operated on a rental basis b y Castle D o m e C op p e r C o m p a n y since 1943. Including $7 8 5 , 0 0 0 received
f r o m sale of concentrator a n d mi nin g facilities plus cumulative rentals collected to J un e 30 , 1951 ,
recoveries to that date represent 143 p e r cent of the book value. T h e sale of the concentrator and
facilitiesis conditioned u p o n continued operation a n d full depletion of the Castle D o m e ore b od y, which ,
it is estimated, will be m i n e d out in 1954 .
36
T h e status of leases a n d conditional sales contracts with Republic Steel Corporation at J un e 30 ,
1951 , is s u m m a r i z e d as follows :
% to book
value of
Rentals or
cumulative
Un p ai d bal.
B o o k value
of sales
repayments
recoveries
to 6/30/51
No.
of property
contracts
F. Y. 1951
Leases :
Projects with rentals
limited to recovery
of investment
Projects on wh ic h rentals
are payable to expi ra
tion of leases .....
5
$ 11.2
4
1.9
$
$ 1.2
61.3
.1
42.4
T
Total leased projects ...
9
|
$ 13.1
H
$ 1.3
58.6
Conditional sales contracts
4
$ 15.4
$ 11.9 E
$ .6
23.0
Properties under lease revert to R F C u p o n expiration of the leases, unless purchase options p r o
vided u n d e r the lease a g re em e nt s a r e exercised b y Republic . Subject to p a y m e n t of a m o u n t s d u e under
rental provisions of the related leases, properties und er conditional sales contracts are transferable
to Republic without m on et a ry consideration u po n expiration of the related leases.
Other Assets
Disposition of the experimental plywood flying b o a t constructed b y T h e H u g h e s Tool C o m p a n y
under w a r t i m e authority representing a total expenditure of G o v e r n m e n t funds, including costs of test
flights, of $ 15,315,152 to J un e 30 , 1951 , is contingent u p o n test flights to be carried out during the
current fiscal year. This a m o u n t includes expenditures for machinery , equipm ent a n d m ix ed property
costing $ 909,312 .
Inventories of platinum at cost of $2.1 million represent platinum leased to fiberglass manufacturers,
of w h i c h 14,800 ounces are held by Glass Fibers, Inc. under bo nd of $ 950,000 t o insure re-delivery to
R F C , a n d 46,450 ounces b y O w e n s -Corning Fiberglas Corporation without b on d. T h e platinum is
ea rm a rk ed for transfer to the national stockpile u p o n expiration of the leases in J anu ar y 1952 .
T h e principal item in miscellaneous assets consists of securities costing $ 3.0 million . This r e p r e
sents acquisition i n 1942 of 60,000 shares (40 % ) of the B a n c o de Credito do Borracha , Brazil (n o w
k n o w n as A m a z o n Credit B a n k ) to assist in financing the natural rubber development a n d procurement
p r o g r a m in the A m a z o n valley a nd neighboring regions.
37
FINANCIAL
STATEMENTS
Balance Sheet
Exhibit A
T h e total assets s h o w n on the Corporation's Balance Sheet at the close of the fiscal year w e r e $874
million, a decrease of $ 1.2 billion c om p a re d to the previous year. This decrease in assets is primarily
attributable to transfer of the Corporation's f orm er subsidiary, Federal National M o rt g a ge Association,
a n d certain housing loans to Ho us in g a n d H o m e Finance A g e n c y . T h e corresponding decrease in
liabilities resulted f r o m application o f proceeds received f r o m that ag enc y to reduce the Corporation's
notes payable to the United States Treasury.
In all classes of loans , repayments received during the year exceeded n e w loan disbursements . The
largest single re pa y me nt w a s $ 92 million received in N o v e m b e r , 1950 , in retirement of the loan to Kaiser
Steel Corporation . T h e net decline during the fiscal year in th e Corporation's portfolio for all loan
classes w a s $ 156 million.
T h e liability to the U. S. Treasury for net proceeds f r o m liquidation of assets a nd /or operation of
facilities acquired under national defense, w a r a n d reconversion p r og r a ms decreased to $ 153 million
f r o m $ 178 million as of Ju ne 30 , 1950. This is a net decrease , after paying into the U. S. T r e a s u r y the
s u m of $ 50 million during fiscal year 1951. P a y m e n t s to the Treasury in prior years w e r e $2 5 million
in fiscal years 1950 a n d $ 100 million in 1949. A n additional p a y m e n t of $ 75 million will be m a d e to
the Treasury in D e c e m b e r of this year .
T h e liabilities of $ 4.8 million , representing proceeds f r o m liquidation of assets transferred f r o m
Smaller W a r Plants Corporation , will be substantially liquidated in D e c e m b e r of this year by p a y m e n t
to the Treasury of $ 4 million. T h e remaining proceeds are to be retained to cover expenses a n d c o n
tingent liabilities principally in connection with outstanding agreements to participate in b a n k loans .
T h e Corporation's liability for net p r e m i u m s realized f r o m liquidation of securities purchased f r o m
the Public W o r k s Administrator, Fed era l W o r k s Agency , w a s discharged during fiscal y e a r 1951. A t
the date of settlement (N o v e m b e r 30 , 1950 ) the Corporation w a s holding securities at a cost to it of
$ 13,758,857 , with an appraised value of $ 11,419,724 . After charging $2,339,133 against the liability of
$ 10,807,960 at N o v e m b e r 30 , 1950 , settlement w a s m a d e with General Service Administration , as s u c
cessor to the Federal E m e r g e n c y Administrator of Public W o r k s, in the a m o u n t of $8,468,827 . T h e
securities involved in this final settlement constituted the remnants of a p r o g r a m under w h i c h the
Corporation purchased securities at a cost of nearly $ 653 million. Resulting f r o m administration a n d
liquidation of these securities by the Corporation , net p r e m i u m s exceeding $ 50 million we re returned
t o the Public W o r k s Administrator or U. S. Treasury.
T h e dividend to the U. S. Treasury of $ 16,345,812 represents the a m o u n t b y w hi ch the unreserved
accumulated net inc ome at Ju ne 30, 195 1, less dividends of prior y e a r s, exceeded $ 250 million. T h e
a m o u n t of the dividend is m a d e u p of fiscal year 1951 earnings of $ 7,618,357, adjustments of $8,890,592
to prior years' income a n d adjustment of $ 163,137 to i n c o m e reserved for contingencies.
T h e balance sheet does not reflect c o m m i t m e n t s wh ich w er e undisbursed at the close of the fiscal
year . These w e re as follows:
C o m m i t m e n t for direct loans to industrial a nd commercial enterprises (includ
ing c o m mi t m e nt s for immediate participation in b an k loans )
$ 148,172,705
84,518,613
C o m m i t m e n t s for deferred participation in ba nk loans ...
Other loan c o m mi t m e nt s ....
62,357,273
$ 295,048,591
Statement of Net I n c o m e f r o m Lending Activities -
Exhibit B
Total income of the Corporation decreased f r o m $ 62 million in 1950 to $43 million in 1951. This
decrease of $ 19 million is net a n d is d u e principally t o reductions of $ 11.4 million in gross interest
earnings on the Corporation's loan to the Federal National M o r t g a g e Association a n d of $5 million i n
i n c o m e f r o m properties an d securities acquired in liquidation of loan indebtedness . Interest earned on
loans to industrial an d commercial enterprises increased during the year while interest earned declined
in each of the other loan categories.
38
6
+
DISPOSITION
F R O M
O F
G R O S S
LENDING
I N CO M E
ACTIVITIES
Fiscal Year 1951
MISCELLANEOUS EXPENSES.
$0.7 MILLION
PROVISIONS
FOR LOSSES
$3.5 MILLION
INTEREST PAID
U.S. TREASURY
$13.6 MILLION
In N o v e m b e r of 1950 , the Corporation increased the
interest rate f r o m 4 per cent to 5 per cent on new loans
to industrial a n d commercial enterprises, exclusive of
loans partially guaranteed b y Veterans Administration .
H o w e v e r , since disbursements on 5 per cent loans b e
c a m e effective late in t h e fiscal ye ar , earnings in the
current year derived little benefit f r o m the increased
rates . A t the s a m e time as the interest rate w a s in
creased , the Corporation also initiated a scale of fees
to be paid by loan applicants a n d b y borrowers w h o do
not, within reasonable time , utilize the Corporation's
c o mm i t m en t s to m a k e loans. Inc ome f r o m these fees
a mo u n te d to $458,171 during fiscal year 1951 .
T h e chart at the left s h o w s the disposition of the
Corporation's gross income f r o m lending activities for
the fiscal year 1951 .
ADMINISTRATIVE
EXPENSES
$15.2 MILLION
N et income before provisions for losses a m o u n t e d to
$ 13,072,302 i n 1951 , as co m p ar e d with $ 12,028,428 ,
NET INCOME
exclusive of extraordinary profits of $ 6,280,000 in
$7.6 MILLION
1950. T h e Corporation has provided for future losses
(TO BE PAID
U.S. TREASURY
on the basis of its past loss experience in the various
AS DIVIDENDS)
m a j o r classes of loans . Based on a m o u n t s charged off
through June 30 , 1950 , a n d estimated losses at that
date in relation to cumulative loan disbursements, the
loss experience factor with respect to business loans,
the class in wh ich the Corporation h ad m o s t of its
GROSS INCOME TOTAL $42.6 MILLION
activity during fiscal year 1951, w a s 2.8 per cent of
loans disbursed . T h e factor for fiscal year 1950 w a s
approximately 3.3 per cent. In operation , the "reserve m e t h o d ” results in heavy charges during periods
in w h i c h the Corporation is called u p o n to increase its loan portfolio — as it w a s during fiscal year ended
J u n e 30 , 1950. D u ri n g the fiscal year 1951 , however , disbursements were at a l ower level with a c o n
sequent decrease in provisions for losses to $ 5,453,945 as c om p a re d with $ 8,523,775 for fiscal year 1950 .
N e t income f r o m lending activities a m o u n t e d to $ 7,618,357 in the fiscal year 1951 as c o m pa r e d with
$9,784,653 , exclusive of dividends f r o m F N M A , in 1950. This represents a return of 7.6 per cent for
fiscal year 1951 on the Treasury's investment of $ 100,000,000 in the capital stock of the Corporation
a n d of 3.5 per cent, exclusive of extraordinary profits, for 1950. This compares favorably with the
a m o u n t of $ 1,875,000 interest paid b y the Treasury, at 1 %8 per cent p e r a n n u m of funds borr owed to
& furnish R F C interest -free capital. F o r the three-year period during whi ch the Corporation has operated
Es u n d e r existing legislation, net earnings have a m o u n t to $ 16,348,990, after eliminating extraordinary
profits of $6,280,000 . This represents a gross return of 5.4 per cent per a n n u m on the capital stock
outstanding.
In addition to the $ 100,000,000 interest-free capital furnished by the U. S. Treasury through its
investment in the Corporation's capital stock , the Corporation has, under existing legislation , been
permitted to retain $ 250,000,000 of its accumulated net earnings, wh ic h also represents interest-free c a p i
tal. H a d these invested funds and retained earnings of the Corporation not been available, outstanding
borrowings f r o m U. S. Treasury wo u ld have been $ 350 million m o r e , with a n increase of $ 6,562,500
in interest expense . In these circumstances net income f r o m lending activities wou ld have a m o u n t e d to
$ 1,055,857 for the fiscal year .
T h e Corporation has undertaken time a nd cost studies of operational actions an d procedures f r o m
which relative functional an d p r o g r a m cost factors have been tentatively determined f o r the purpose
of distributing administrative expense. There follows a table s howing net results by loan p r o g r a m s
after distribution of administrative expense b y application of such relative cost factors to the year's
workload units under each program , a nd allocation of credit for interest-free capital to business a n d
catastrophe loan p r o g r a m s , on the premise that the benefit of interest -free capital should be applied
as a m a rg i n for absorption of costs of granting a n d servicing smaller loans of low income potential
to those pr og ra ms in whic h small loans predominate a nd wh ich reflect accomplishment of the statutory
purposes of ai d to small borrowers in a m o r e diversified and widespread degree than a ny other loan
program .
39
Net I n c o m e f r o m Lending Activities
N e t I nc om e
or Loss *
Fiscal Y e a r 1951
Program
Business loans
$ 1,864,198
Railroad loans
2,076,826
711,116
Financial institutions
Political subdivisions or states a nd territories
285,815
Catastrophe loans
314,232 *
4,623,723
L oa n s to foreign governments
F H A insured an d V A
Other
724,320
934,831
guaranteed mort gages
1,335,483
$ 7,618,357
T h e loss on catastrophe loans is attributable primarily to the n u m e r o u s small loans of l ow income
potential in this category , as well as to the interest rate of 3 per cent which is effective four months
after the date of loan disbursement in recognition of the distress aspect of such loans.
1
40
1
R]
3:3
er)
8
3
ai
01
S
pl
S7
Financial
Exhibits
er
)
mi
S
iej
IC
i
j
41
RECONSTRUCTION
FINANCE C OR PO R AT I ON
S C H E D U L E 3 - S T A T E M E N T O F TIN S M E L T E R O P E R A T I O N S
Fiscal Year Ended June 30, 1951
INCOME :
Sales of refined tin ....
$ 81,736,037
OPERATING COSTS AND EXPENSES :
Cost of tin sold :
Cost of production - longhorn tin:
Cost of tin ores consumed ...
82,275,604
5,128,094
Processing costs.
Cost of production at smelter.....
87,403,698
24,418,464
Inventory of refined tin at beginning of period ...
111,822,162
Less: Inventory of refined tin at end of period — Note F ...
42,098,487
69,723,675
Cost of tin sold .....
Adjustment of ores and in -process inventories at June 30, 1951 to the lower of cost ormarket - Note G .....
9,150,515
Depreciation and net loss on retirement of operating plants and facilities...
462,947
Freight and other expenses - net...
Administrative expense .
435,525
204,559
79,977,221
Total operating costs and expenses....
INCOME FROM OPERATION BEFORE DEDUCTION OF INTEREST ON INVESTMENT .
INTEREST ON U. S. GO VE RNM EN T FUNDS INVESTED IN NET SMELTER OPERATING ASSETS .
NET INCOME FROM OPERATIONS .
1,758,816
844,221
914,595
WASTE ACID PLANT STARTING -UP EXPENSE ..
545,453
NET INCOME - NOTE H ....
369,142
This schedule is subject to the accompanying “Notes to Financial Statements”.
49
RECONSTRUCTION
FINANCE C O R P O R A T I O N
S C H E D U L E 4 - S T A T E M E N T O F T R A D I N G O P E R A T I O N S - I M P O R T E D R E FI N ED TIN
Fiscal Year Ended June 30, 1951
INCOME :
$ 31,168,740
Sales of refined tin ...
OPERATING COSTS AND EXPENSES :
Cost of tin sold:
2,973,043
Purchases - imported refined tin...
227,587
Cost of tin produced from ore treated abroad ..
Total refined tin acquisitions...
3,200,630
18,664,588
Inventory of refined tin at beginning of period.
21,865,218
73,036
Less:Inventory of refined tin at end of period....
Cost of tin sold .....
21,792,182
31,556
Freight and other expenses - net.
Administrative expense .
27,799
21,851,537
Total operating costs and expenses.
NET INCOME .
$
This schedule is subject to the accompanying “Notes to Financial Statements ”.
50
9,317,203
RECONSTRUCTION
FINANCE
CORPORATION
S CHE DUL E 5 - S T A T E M E N T OF OPERATIONS OF AB AC A P R O G R A M
Fiscal Year Ended June 30, 1951
INCOME :
Sales of Central American Abaca ..
$5,543,578
OPERATING COSTS AND EXPENSES :
Cost of abaca sold:
6,447,146
Cost of production ....
672,586
Inventory offinished abaca at beginning of period ..
7,119,732
Less: Inventory of finished abaca at end of period ....
628,103
Cost of abaca sold......
6,491,629
Depreciation and net loss on retirement of operating plantations and facilities.
Research and development expense .
1,234,474
106,377
27,973
Selling and other expense - net.
Administrative expense .
111,598
Total operating costs and expenses .
7,972,051
LOSS FROM OPERATIONS BEFORE INTEREST ON INVESTMENT .
INTEREST ON U. S. GO VE RN ME NT FUNDS INVESTED IN NET OPERATING ASSETS .
NET LOSS — NOTE H ..
2,428,473
121,559
$2,550,032
This schedule is subject to the accompanying “Notes to Financial Statements ”.
51
RECONSTRUCTION
FINANCE
CORPORATION
E XHI BI T D - S T A T E M E N T O F A C C O U N T A B I L I T Y T O U. S. T R E A S U R Y F O R N E T A S S E T S
TR AN SF ER RE D F R O M S MA LL ER W A R PLANTS CO RPO RAT IO N
ACCOUNTABILITY AT JUNE 30, 1950:
Net proceeds realized and payable to U. S. Treasury (less $155,600,000 previously remitted )....
Assets remaining for disposal:
Loans..
Notes and accounts receivable.
Machinery and equipment....
Property acquired in liquidation of loan indebtedness ...
$ 3,550,480
$ 3,458,310
963,505
215,838
621,767
5,259,420
8,809,900
TRANSACTIONS DURING FISCAL YEAR ENDED JUNE 30, 1951:
97,681
471,692
39,267
210,859
Losses on sale and retirement of property, plant and equipment.
Loans, investments and receivables charged off..
Other losses and costs - net...,
Administrative expenses .
819,499
Less:
Interest earned.....
127,524
4,968
4,909
39,134
Fees on loan participation agreements.
Rentals and royalties earned ....
Income from property acquired in liquidation of loan indebtedness -net.
176,535
642,964
8,166,936
81,444
INTEREST ALLOWED ON FUNDS UTILIZED IN R F C LENDING ACTIVITIES.
$ 8,248,380
ACCOUNTABILITY AT JUNE 30, 1951......
REPRESENTED BY :
Net proceeds realized and payable to U. S. Treasury – Exhibit A ......
Assets remaining for disposal:
Loans....
Notes and accounts receivable .
Property acquired in liquidation of loan indebtedness..
$ 4,773,569
$ 2,383,155
515,201
576,455
3,474,811
$ 8,248,380
This exhibit is subject to the accompanying "Notes to Financial Statements ”.
52
RECONSTRUCTION
FINANCE C OR P OR A TI O N
N O T E S T O FINANCIAL S T A T E M E N T S
NO TE A
The accompanying balance sheet and related statements of net income set forth the financial position of the Recon
struction Finance Corporation at June 30, 1950, and June 30, 1951.
Assets show n on the balance sheet for both years represent those pertaining to the Corporation's lending activities,
in which it has both title and beneficial interest.T h e unliquidated assets relating to programs for national defense, war
and reconversion , and assets transferred from Smaller W a r Plants Corporation are shown on other schedules of this
report and are not included in the Corporation's balance sheet.
NO TE B
In addition to the liabilities reflected by the balance sheet the Corporation is responsible for funds collected from
mortgagors f o r the payment of taxes, insurance, etc., by servicing institutions.A t June 30, 1951, such funds amounted
to $ 1,370,775, all of which was on deposit with commercial banks covered by FD IC insurance.
N OT E C
In addition to notes payable to the U. S. Treasury for general purposes at June 30, 1951, the Corporation had out
standing notes payable in the amount of $7,425,778, including accrued interest, issued pursuant to Section 304,Defense
Production A c t of 1950, for funds expended or held pursuant to Section 302, Defense Production Act of 1950. The
assets and liabilities for activities under Section 302, Defense Production Act of 1950, for which the Corporation acted
as fiscal agent, are shown on page 58 of this report.
A t June 30, 1950, the Corporation had outstanding an advance of $ 8,000,000 made by direction of Congress
(Public L a w 535, 81st Congress) to the Secretary of State. Funds for this purpose were borrowed from the U. S.
Treasury through issuance of non -interest bearing notes. This advance was repaid in full on November 15, 1950.
N O TE D
The $75 million indicated for payment to the Treasury is arrived at after giving consideration to the fund require
ments of the production programs, liquidation activities, and related contingency items. The amount indicatedfor the
abaca program provides sufficient funds to finance the activities of this program as authorized by Public L a w 683, 81st
Congress.T h e amount retained for liquidation activities assures availablefunds to meet claims arising in connection with
these activities should they prove valid . The amount set aside for contingency items is to provide mainly for working
capital requirements that m a y materialize in the rubber and tin programs, such as a temporary increase in rubber
inventories resulting from a fall-off in sales in any one month , or the necessity of purchasing tin ores in greater quanti
ties than estimated at any one time.
N OT E E
At June 30, 1951, funds held arising from national defense,war and reconversion activities amounted to $211,360,203,
including $57,796,167 for payment of liabilities and $153,564,036 of net proceeds from liquidation of assets and /or
operation of facilities. T h e amount of funds held at June 30, 1950 was $ 208,703,880,of which $ 30,299,080 was for p a y
ment of liabilities and $ 178,404,800 was net proceeds. To the extent utilized in lending activities, such funds are con
sidered in the same light as borrowings from the Treasury and interest is charged lending operations in accordance
with the rates prescribed by the Secretary of the Treasury.
N OT E F
The valuation of inventories of smelter -produced refined tin at June 30, 1951, reflects a change in costing sales to a
last-in-first-out basis. As compared with the average cost basis used in prior years, this has resulted in a reduction of
$2,138,202 in the inventory valuation at June 30, 1951, with a corresponding decrease in net income for the fiscal year.
NOTE G
The cost of inventories of tin ore a n d tin in process at June 30,1951, $38,943,686, exceeds by $9,150,515 a valuation
based on the lower of cost or market ($1.06 per pound base ). This decline in value has been charged to tin operations
for fiscal year 1951.
NOTE H
T h e statements of operations of synthetic rubber, the tin smelter and fiber (Schedules 2, 3 a n d 5 respectively)
include as operating costs interest on the Government's investments in the net operating assets of theseprograms. This
item has been included for the purpose of reflecting more accurately the net results to theGovernment of these operations.
NOTE I
T h e Corporation is a party defendant in legal proceedings, relating to national defense, war and reconversion
activities, involving contingent liabilities of approximately $12,987,839. I n addition the Corporation has contingent
liabilities, including claimsreceived from contractors, operators, and others of approximately $5,533,586. The Corpora
tion has outstanding commitments relating to the procurement of tin ore not delivered at June 30 ,1951 , aggregating
approximately $ 18,604,568.
Any future expenditures on account of such contingent liabilities, for which no provision has been made in the
Corporation's statements, will be charged against the retained portion of the net proceeds from liquidationsho wn in
Exhibit A as a liability to the U. S. Treasury.
53
APPENDIX
LOAN
A
POLICY B O A R D
POLICY S T A T E M E N T N O . 1
T h e purpose of this d oc ume nt is to establish the principles a n d policies to be followed b y the RFC
in the conduct of its lending operations, including participation in loans .
T h e general policies are contained in Part I. These general policies incorporate the statutory
requirements of the R F C Ac t a n d expressions of Congressional intent as to the m a n n e r in which the
loan operations of the Corporation should be conducted . In addition, there are included various
standards, implementing t h e statutory provisions a n d the expressions of Congressional intent.
In the pursuit of the objectives of the R F C A c t, the general policies of the R F C shall, to the max i
m u m extent possible, be correlated with the general p r o g r am s a n d policies of the Federal Government
such as the present anti-inflation a n d defense mobilization p r o g r a m s. Accordingly, P ar t II of this
statement of loan policies prescribes additional loan standards to be followed d u r i n g the present
period of mobilization a n d r e a r m a m e n t. T h e standards in Part II are not in substitution for, but are
supplemental to, the general standards em bodi ed in Part I.
These standards for loan policies are not intended to an d cannot be automatically operative in each
individual case . Accordingly , appropriate instructions an d interpretations will be issued f r o m time to
time to the several m a n a g e r s of R F C loan agencies .
P A R T I.
G E N E R A L L O A N POLICIES
A. General Objectives
All loans b y the R F C m u s t be of such character as to accomplish one or m o r e of the stated objec
tives of the R F C Act , n a me l y , to aid in financing agriculture , c o m m e r c e , a n d industry, to encourage
small business ,to help in maintaining the economic stability of the country , a nd to assist in promoting
m a x i m u m e m p l o y m e n t a nd production .
B. Specific Statutory Restrictions
All loans by the R F C m u s t at all times meet the following requirements of the R F C A c t :
(1 )
T h a t n o financial assistance be extended unless the credit requested is not otherwise avail
able o n reasonable t e r m s. N o loan shall be m a d e in competition with private sources of credit.
Lo ans shall not be m a d e to a n applicant w h e r e credit is available fr om private sources unless
the t e r m s, including the interest rate at w hich the credit is so available, are clearly unrea
sonable. In m o s t cases, it should be insufficient to find only one commercial b an k unwilling
to grant the loan . T h e applicant should s h o w w h y h e should not dispose of a marketable
asset in order to obtain all or a n y portion of the funds needed .
(2 )
That all securities a nd obligations purchased a n d all loans m a d e be of such sound value or
so secured as reasonably to assure retirement or r ep aym en t.
(3 )
Th at all loans m a d e and all obligations a n d securities purchased , except those of public g o v
ernmental agencies, m at u re in ten years or less.
(4 )
Th at in agreements with b anks to participate in loans wherein the Corporation's disburse
m e n t s are deferred , the a m o u n t of the Corporation's participation be limited to 70 per cent
of the balance outstanding at the time of disbursement in those cases wh er e the total amount
b or ro we d is $ 100,000 or less, and be limited to 60 per cent of such a m o u n t in those cases where
the total a m o u n t is over $ 100,000 .
(5 )
T h at no loan shall be m a d e to an y state, or political subdivision thereof, for the p a y m e n t of
ordinary governmental expenses a s distinguished f r o m specific public projects.
(6 )
T ha t loans to c o m m o n carriers, such as railroads an d airlines, m u s t me et the standards set
b y the regulatory agencies , specifically the Interstate C o m m e r c e C om mis si on and the Civil
Aeronautics Boa rd , in addition to the usual standards for all R F C loans .
54
(7 )
T h a t loans to financial institutions m u s t me e t standards set by the Treasury a n d are subject
to Treasury approval .
(8 )
T h e objective in e me rg en cy disaster lending should be to relieve the hardships attendant
u p o n such disasters. S u ch loans are not required to m e e t all the credit standards governing
loans for normal purposes .
(9 )
T h a t no director, officer, attorney , agent, or employee of the Corporation participate directly
or indirectly in the deliberation up o n or determination of a n y question affecting his personal
interests.
C. Implementation of Basic Statutory Provisions
In addition to meeting the general objectives a n d requirements of the R F C A c t, all loans shall be
m a d e in accordance with the following principles :
(1 )
T h e pr ima ry consideration in determining wh eth er to grant a loan shall be the interest of
the general public rather than the interest of the individual borrower .
(2 )
L oa ns shall not be granted wh ic h in effect wou ld pro mote mo no p ol y .
(3 )
In carrying out the objectives of the R F C Ac t , particular consideration shall be given to the
credit needs of small business enterprises.
D. Particular Types of Loans W h i c h D o Not Qualify
(1 )
N o loan shall be m a d e to "bail out” creditors, i.e., to pa y off creditors w h o are inadequately
secured or likely to sustain a loss.
(2 )
N o loan shall be m a d e primarily to refinance a n existing debt.
(3 )
N o loan shall b e m a d e for effecting a chan ge in the ownership of a going business or for
purchasing a n interest in such business.
(4 )
N o loan shall be m a d e for acquiring, constructing, or improving real property wh ich is to be
held for investment,
(5 )
N o loan shall be m a d e for speculative investments or purchases.
(6 )
N o loan shall be m a d e to an eleemosynary institution.
(7 )
N o loan shall be m a d e to a n y n ew spa pe r , m a g az i n e, radio broadcasting companies or other
similar organizations.
(8 )
N o loan shall be m a d e for providing capital to a n enterprise eng aged in the business of
lending.
(9 )
N o loan shall be m a d e for operating a n establishment w h o s e income is derived in whole or in
part f r o m ga mbli ng or f r o m rental of the premises for ga mbli ng or f r o m rental of the
premises for gambling purposes.
(10 )
N o loan shall be m a d e for operating an establishment w h o s e income is derived predominately
f r o m the sale of alcoholic beverages.
P A R T II. L O A N POLICY IN P R E S E N T E M E R G E N C Y
In addition to the loan policies prescribed in Part I hereof, the following principles shall be effective
during the present period of defense mobilization a n d r e a r m a m e n t :
(1 )
All loans b y the R F C m u s t assist, expedite, increase or maintain the production of goods or
services necessary to meet either military requirements or essential civilian requirements.
55
(a )
T h e receipt of a " certificate of necessity " for accelerated tax amortization or the receipt of a
defense contract (either a prim e contract or subcontract ) or a purchase order b y the B o r
rower or the existence of a national shortage of a c o m m o d i t y or service or proof of a regional
(no rm al ma r ke t area ) shortage so great that m i n i m u m needs cannot be m e t at reasonable
prices m a y be considered as evidence that the loan is for a defense purpose or a n essential
civilian requirement.
(b )
Loans for the maintenance of existing production , processing, a n d orderly distribution of
goods a n d services wh ic h are customarily recognized as necessities as distinguished from
luxuries, m a y be considered loans for essential civilian requirements.
(c)
Loa ns for conversion to essential production m a y be considered in the interest of national
defense.
(2 )
In each instance it should be determined as far as possible wh ether granting a loan will or
will not be inflationary. F o r a loan to be considered n o n -inflationary,t h e finding should indi
cate that the loan will produce either an increased supply of essential goods or services or
the prevention of a decrease.
56
APPENDIX
REPORT
OF
ACTIVITIES U N D E R
B
S E C T I O N 302 , D E F E N S E
PRODUCTION
ACT O F
1950
T o expedite production a nd deliveries or services to aid in carrying out G o v e r n m e n t contracts for
the p r o c u r e m e n t of materials or the performance of services for the national defense, the President, under
the provisions of Section 302 , Defense Production Ac t of 1950 , authorized the Corporation as fiscal agent
for the D e f e n s e Production Administration an d the D e pa r t m en t of Agriculture to m a k e loans to business
enterprises for t h e expansion of capacity, the development of technological processes, o r the production
of essential materials,including the exploration, development, an d mi nin g of strategic a n d critical metals
and minerals .
U n d e r procedures established to effectuate the purposes of the Act, R F C exa mine d loan application
referrals b y the a b o v e Delegate Agencies. Applicants w h o m e t prescribed statutory standards w e r e
granted loans under R F C ' s regular lending authority. Applications n o t qualifying for loans under R F C ' s
regular lending authority w e r e returned to the Delegate Agencies together w i t h credit reports and r e c
o m m e n d a t i o n s for the guidance of the Delegate Agencies i n the event they determined that loans should
be m a d e in the interest of national defense. In those instances w h e r e the Delegate Agencies found loans
necessary in the interest of national defense , certificates of approval, directing R F C as fiscal agency to
disburse the loans ,w e re issued through the Defense Production Administration .
D u r i n g the period ended J u n e 30, 1951 ,4 5 3 loan applications aggregating $ 1.2 billion w e re directed
to R F C for review . O f these applications, 38 w er e approved for loans in the a m o u n t of $ 62.6 million
under R F C ' s regular lending authority. 312 applications in the a m o u n t of $765.5 million did not qualify
for loa ns under R F C' s regular lending authority an d w e r e returned to the Delegate Agencies, together
with credit reports a n d r ec o mm en d at io n s for the guidance of the Delegate Agencies in the event they
determined that loans should be granted . O f the 312
a pplications, the Defense Production Administration
approved 4 0 loans totaling $68 million under the provisions of Section 302 , Defense Production A c t of
1950. O f the 40 loans certified to R F C , nine loans in the aggregate a m o u n t of $ 418,528 w e r e for $ 100,000
or less, 17 loans in the a m o u n t of $6 million we re for a m o un t s between $ 100,000 and $ 1,000,000, an d 14
loans in the a m o u n t of $ 61.6 million we re over $ 1,000,000. 8 3 per cent o f the funds provided b y these
loans w e r e to be used for construction or the purchase of mac hinery a n d e qui pme nt. T h e Defense P r o d u c
tion Administration cancelled three of the loans certified to R F C leaving 37 loans am ou nt in g to $ 55.2
million to b e serviced b y R F C as fiscal agent . Disbursements a m o u n t i n g to $7.9 million w e r e m a d e on
20 loans during the fiscal year . Thre e loans we r e repaid in full, leaving 1 7 loans in the a m o u n t of $6.8
million outstanding at J un e 30, 1951. Also , at June 30, 1951 , there w e r e 17 undisbursed c o m m i t m e n t s
totaling $ 47.3 million .
Subsequent to the close of the period covered b y this report, Executive Or der 10281 , dated A u g u s t
28, 1951 , directed that applications f o r loans under Section 302 of the Defense Production Act shall be
received f r o m applicants b y the Corporation or such agencies of the G o v e r n m e n t as the Corporation shall
designate, and that loans under Section 302 of the Defense Production Ac t (1 ) shall be m a d e u p o n such
terms a n d conditions as the Corporation shall determine ; (2 ) shall be m a d e only after the Corporation
has determined in each instance that financial assistance is not available on reasonable terms f r o m
private sources or f r o m other governmental sources ; a n d ( 3) except in the case of w or k in g capital loans
( involving no m o r e than m i n o r expansion of capacity w h i c h is incidental to a loan for working capital)
shall be m a d e only u p o n certificate of essentiality of the loan , whi ch certificate shall be m a d e b y the
Secretary of Agriculture with respect to food an d food facilities a n d b y the Defense Production A d m i n i s
tration with respect to all other materials a nd facilities.
Financial Statements
T h e balance sheet a nd statement of i n co m e a n d expense appearing on the following p age reflect the
Corporation's activities under Section 302 of the Defense Production Ac t f r o m c o m m e n c e m e n t through
June 30 , 1951. T h e Corporation's costs in performanc e o f its functions have b e e n greatly in excess o f
income thus far. Interest earned on the relatively small a m o u n t of loans disbursed w a s $ 62,000 while
costs a m o u n t e d to $ 293,000 .
In addition to continuing servicing costs on loans approved , the latter a m o u n t includes the costs of
reviewing the large v olu me of applications directed to R F C by Delegate Agencies as well as costs of
furnishing credit reports a nd recommendations for guidance of these agencies, a n d cost of funds b o r
rowed f r o m U. S. Treasury for loans disbursed a n d administrative expenses of the program . O n the basis
of the Corporation's loss experience on business loans, a reserve of $ 220,000 has b ee n provided against
potential losses on loans disbursed .
57
RECONSTRUCTION
FINANCE
CORPORATION
ACTIV ITY U N D E R S EC TI O N 302, D E F E N S E P R O D U C T I O N A C T O F 1950
BAL ANCE SHEET
June 30,1951
ASSETS
Cash on deposit with U. S. Treasury .
Loans toindustrial and commercial enterprises.
Accrued interest and other receivables arising from loans.
$
356,942
$ 6,776,649
31,845
6,808,494
220,000
Less estimated losses in collection ..
6,588,494
Miscellaneous accounts receivable....
69,506
$ 7,014,942
LIABILITIES
$ 7,425,778
40,308
* 451,144
Notes payable to U. S. Treasury,including accrued interest.
Trust and deposit liabilities.
Deficit...
$ 7,014,942
B O RR O W I N G AUTHORITY
SE C TI ON 304, D E F E N S E P R O D U C T I O N A C T O F 1950
J U N E 30, 1951
$ 75,000,000
Borrowing authority ...
Less notes issued and outstanding.....
7,400,000
Available borrowing authority ...
67,600,000
Less commitments for loans and expenses - net of cash.
47,030,547
Uncommitted borrowing authority ..
$20,569,453
S T A T EM E N T OF I NC O ME A N D EXPENSE
Fiscal Year Ended June 30, 1951
INCOME :
Interest earned....
61,986
INTEREST AND OTH ER EXPENSES :
Interest on funds borrowed from U. S. Treasury .
Administrative expenses .
25,778
267,352
293,130
NET Loss BEFORE PROVISIONS FOR LOSSES..
231,144
PROVISIONS FOR LOSSES ..
220,000
$
NET Loss ..
* Deduct
58
451,144
APPENDIX
C
S u m m a r y Statement of Operations
C U M U L A T I V E F R O M IN CE PT IO N T H R O U G H J U N E 30, 1951
(Dollar Figures Are in Millions)
LENDING
Amount
Number
L O A N S AUTHORIZED :
Business loans..
Other loans..
Purchase of insured and guaranteed mortgages.
62,154
61,847
513,777
Total...
INTEREST AND O THER INCOME ..
INTEREST EXPENSE ..
ADMINISTRATIVE AND OTH ER EXPENSE .
PROVISIONS FOR LOSSES .
A C C U M U L A T E D NET INCOME (including $ 14.9million transferred to H H F A ).
DIVIDENDS ACCRUED OR PAID TO U. S. TREASURY .
$
637,778
4,900.7
8,546.7
3,564.8
17,012.2
1,463.0
410.1
247.8
193.8
611.3
343.8
NE T FUN DS DISBURSED U N D E R A UT H OR I TY OF CON GR ESS W I T H RESPECT T O W H I C H RFC NOTES
P A Y A B L E T O U. S. T R E A S U R Y W E R E C A N C E L L E D P U R S U A N T T O L EG ISL AT IO N
L E ND I NG ACTIVITIES :
Purchases of stock in other U. S. Government corporations and loansand advances to other G o v
ernment agencies to effectuate purposes not under R F C administration ..
N AT ION AL DEFENSE , W A R AND RECONVERSION ACTIVITIES :
Physical assets (property, plant, equipment, inventories, and strategic materials for stockpile)
transferred to other Government agencies....
$
$
3,459.6
6,344.5
Unrecoverable costs:
3,122.7
398.8
Subsidies to producers and others .
Interest on funds borrowed from U. S. Treasury .
3,521.5
Less :
Excess of sales proceeds, rentals and other income over costs and losses.
Profits on production programs since June 30, 1947 ...
InterestallowedU . S. Treasury on net proceeds of productionand liquidationprograms
utilized in lending operations .
Payments receivedfrom other U. S. Government agencies under agreements for contin
gent reimbursement of costs of wartime capital facilities.
43.1
180.8
12.6
1,379.8
1,616.3
Net unrecoverable costs....
1,905.2
Total physical assets transferred and net unrecoverable costs .
Assets held by R F C at June 30, 1951 :
For operation of synthetic rubber, tin and abaca programs.
For liquidation .
Proceeds utilized in lending operations ..
8,249.7
709.8
89.7
153.6
953.1
175.0
Total assets held ...
Add : Proceeds remitted to U. S. Treasury .
Total assets and proceeds..
Note cancellations related to national defense, war and reconversion activities.
O T H E R ACTIVITIES :
Land and buildings transferred to:
Public buildings administration .
Howard University ....
1,128.1
9,377.8
9.7
1.5
TOTAL NOTES PAYABLE TO U. S. TREASURY CANCELLED .
59
11.2
$12,848.6
RECONSTRUCTION
FINANCE
LO AN
6 4
1 0 8
COR POR ATIO N
AGENCIES
AGENCY
MANAGER
ADDRESS
Atlanta, Ga .
M. E. Everett
Healey Building
57 Forsyth Street
Birmingham , Ala.
Fred H. Foy
Comer Building
2nd Ave. & 21st St.
Boston , Mass.
John F. Golden, Jr.
50 Congress Street
Charlotte, N. C.
J. K. Wilson
317 South Tryon St.
Chicago, Ill.
Milnor O. Hoel
208 S. LaSalle St.
Cleveland, Ohio
J. A. Fraser
Federal Reserve Bank Bldg.
E. 6th St. & Superior Ave.
Columbia, S. C.
Robert L. Edwards
Federal Land Bank Bldg.
Dallas, Texas
Charles L. South
Rio Grande National Bldg.
251 North Field St.
Denver, Colorado
Roy A. Brownell
Railway Exchange Bldg.
17th & Champa Streets
Detroit, Mich.
Mathew J. McGrath
Griswold Building
1214 Griswold Street
Houston, Texas
Edgar L. Duke
City National Bank Bldg.
Main St. and McKinney Ave.
Jacksonville, Fla.
Fred H. Farwell
Graham Building
24 Laura Street
Kansas City, Mo.
David H. Powell
Federal Reserve Bank Bldg.
10th St, and Grand Ave.
Little Rock, Ark .
John J. Truemper
Pyramid Building
Second and Center Sts.
Los Angeles, Calif.
Hector C. Haight
417 S. Hill Street
Louisville, K y .
J. Fort Abell
139 South 4th Street
Minneapolis, Minn .
Bernard E. Boldin
Minnesota Federal
Savings & Loan Bldg.
607 Marquette Ave.
Nashville, Tenn .
R. Lee Davis
Nashville Trust Bldg.
315 Union Street
N e w Orleans, La .
Justin Green
348 Baronne Street
N e w York, N. Y.
George E. Chapin
Oklahoma City,Okla.
Carl B. Sebring
143 Liberty Street
Commerce Exchange Bldg.
130 Northwest Grand Ave.
Oma ha , Nebr.
China R. Clarke
Woodmen of the World Bldg.
14th & Farnum Streets
Philadelphia, Pa.
Bernard J. Kelley
Lincoln -Liberty Bldg.
Broad & Chestnut Sts.
Portland, Ore.
William Kennedy
Pittock Block
921 S.W. Washington St.
Richmond, Va .
W. B. Cloe
Southern States Bldg.
627 E. Main Street
St. Louis, Mo.
Arcade Building
Salt Lake City, Utah
Charles G. Alexander
Gerald L. Leaver
San Antonio, Texas
Theodore T. Perkins
San Francisco, Calif.
Seattle, Wash .
John S. McCullough, Jr.
H. Sanford Saari
Spokane, Wash
( . 3217 3)
3
O. M. Green
A
C
1 1 9
60
Dooly Building
109 W. Second, South
Transit Tower
310 S. St. Mary's St.
130 Sutter Street
Central Building
810 Third Avenue
Columbia Building
First & Howard Streets
@FedFRASER