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U.S. R E C O N S T R U C T I O N F I N A N C E 1 A n n u a i n a n c i a 5 l a F 9 l S F OT C T C M . B 4 5 8 R . R 1 9 5 2 e p o r t d TRUCTIONGRESS A 2 R n C O R P O R A T I O N t a JA N. 1 2 9 , 2 3 I O N t e m e n t s KNOWLLOU L I B R A R Y o f the O H I O A U N I V S E R T S L A W LIBRARY I T E T Y 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 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 of the Sen ate The S p e a k e r of th e H o us e I have of R e p r e s e n t a t i v e s the h o n o r to t r a n s m i t h e r e w i t h th e A n n u a l R e p o r t and Financial S t a t e m e n t 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 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 5 2 , p u r s u a n t to t h e 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 Act , as a m en d e d , a n d the l e g i s l a t i o n a u t h o r i z i n g t he C o r p o r a t i o n ' s o p e r a t i o n s in the p r o d u c t i o n of s y n thetic rubber , tin and abaca Piber . 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 o r e a l s o r e q u i r e d by the 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 Act is th e s ub j e ct of a separate report . Thi s r e po r t c o v e r s the f i r s t y e a r of a d m i n i s t r a t i o n of the C o r p o r a t i o n I am u n d e r the p r o v i s i o n s of R e o r g a n i z a t i o n P l a n No. 1 of 19 51 . p l e a s e d to r e po r t th e C o r p o r a t i o n . that t h e r e o r g a n i z a t i o n h a s d o n e m u c h to s t r e n g t h e n This is r e f l e c t e d in t he h i g h m o r a l e of the s ta ff wh o a r e e f f e c t i v e l y a n d e f f i c i e n t l y c a r r y i n g out t he responsibilities . Corporation's Respectfully , T o aH a r n r yi A. t a c Dro n ia l de M Administrator December 1 , 1952 . s RECONSTRUCTION FINANCE CO RPORATION 811 Vermont Avenue W a s h i n g t o n 2 5 , D . C. OFFICERS H A R R Y A. M c D O N A L D , Administrator C L A R E N C E A. BE U TE L . D e p u t y Administrator L E O H. NIELSON .. .Secretary ..Treasurer W I L L I A M C. B E C K , JR ... SOLIS H O R W I T Z .. G e n e r a l Counsel ... Controller NATHANIEL ROYALL LOAN POLICY BOARD H A R R Y A. M c D O N A L D .. .Administrator of R F C C L A R E N C E A. B E U T E L . . .Deputy Administrator of R F C J O H N W . SNYDER . .Secretary of the Treasury CHARLES S AW YE R . .Secretary of C o m m e r c e JESS LAR SON . .Administrator, Defense Materials Pr oc ur eme nt A g e n c y Officers a n d L o a n Policy B o a r d as of D e c e m b e r 1, 1952 C M I 45 8 7 1 9 5 2 N 30 69 TABLE O F CONTENTS Page 5 Highlights 6 Le nd ing pr o g ra m s Production p r o g r a m s : General 15 Re por t on synthetic rubber operations .. 15 Report on tin operations .. 23 Report on abaca operations .... 27 Liquidation of wa rt im e p r o g r a m s. 31 C o m m e n t s on financial statements ... 34 Exhibit A - Comparative balance sheet ... 38 Exhibit B - Comparative statement of net income f r o m lending activities . . 40 Exhibit C — Comparative balance sheet - Activity under Sections 302 a n d 303 , Defense P r o duction Ac t of 1950 .... 41 Exhibit D — Comparative statement of income a n d expense - loans approved under Section 302 , Defense Production Act of 1950 ... Exhibit E - Statement of accountability to U.S. Treasury for funds expended b y R F C 41 in national defense, w a r and reconversion p r o g r a m s .. 42 Exhibit F - Statement of accountability to U.S. Treasury for net assets transferred f r o m Smaller W a r Plants Corporation .. 43 Schedule 1 - Assets, liabilities a n d funds held in connection with national defense, w a r a nd reconversion activities 44 Schedule 2 - Statement of operation of synthetic rubber program . 46 Schedule 3 4 S t a t e m e n t of tin smelter operations... 47 Schedule 4 - Statement of operations of purchased refined tin program ... 48 Schedule 5 - Statement of operations of abaca program .. 49 Notes to Financial Statements .... 50 A p p e n d i x A - L oa n Policy Statement.. 51 List of R F C L o a n Agencies ... 54 4 | H I G H L I G H T S _ F I S C A L Y E A R 1 9 5 2 (Dollar Figures Are In Millions ) LENDING P R O G R A M S Lo ans Authorized Loans Disbursed Loans a n d Mortgage Re p ay m en t s : Loa ns Number Amount 3,851 3,048 $378.2 148.7 2,277 * 603 * Insured a nd guaranteed mortgages .. L oans a nd Mortgages Outstanding : L oa ns 9,389 16,297 2,583 Insured an d guaranteed mo r tg a ge s . Deferred participation b a n k loans.. 252.4 6.4 649.1 74.9 75.0 *Represents loans and mortgages fully liquidated. 34.1 Interest a nd Other I n c o m e . Interest Exp ense Administrative a nd Other Exp ense 7.6 14.0 1.6 Provision for Losses.... Net Earnings Return o n Capital Stock Held B y U. S. Treasury (Percent ) Dividend Accrued to U. S. Treasury . PRODUCTION 10.9 10.9 12.3 PROGRAMS Synthetic R u b b e r : Sales (746,551 long tons ) a n d other i n c o m e. Costs a n d other expenses . 416.5 400.4 16.1 N e t income Production rate : Beginning of year 840,000 long tons E n d of year 685,000 long tons Tin - Smelter Operations: Sales (40,138 long tons ) of refined tin . Costs a nd other expenses . N e t loss 97.0 97.7 .7 Production – 22,293 long tons of tin metal Trading Operations - Imported Refined Tin : Sales (35,482 long tons ) of refined tin . Costs a n d other expenses . N e t income 96.7 96.3 .4 Abaca : Sales (30,861,900 p o un d s ) of Abaca .... Costs a n d other expenses .. N e t loss Production - 32,041,250 p oun ds 7.9 8.4 .5 5 A N NU A L R E P O R T - FISCAL Y EA R 1952 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 Ac t , as a m e n d e d , a n d Sections 302 and 714 of the Defense Production Act of 1950 , as a m e n d e d ; 2. T o m a k e loans to, or purchase securities of, States , Counties , municipalities , and other p u bl i c agencies to aid in financing public projects ; 3. T o subscribe for or m a k e loans upon the non -assessable preferred stock of insurance c o m p a n i e s , or to purchase capital notes or debentures of insurance companies ; 4. T o m a k e necessary an d appropriate loans for the rehabilitation of d a m a g e caused by disaster ; 5. T o m a k e loans or purchase securities for the purpose of aiding in financing projects for civil defense purposes under Section 409 of the Federal Civil Defense Act of 1 9 5 0 ; 6. T o manufacture an d sell synthetic rubber as provided by the R u b b e r Act of 1948 , as a m e n d e d ; 7. T o operate the Government's Texas City tin smelter, and to purchase a nd sell refined tin ; 8. T o produce and sell abaca (manila h e m p ) as provided b y the A b a c a Production A ct of 1950 ; 9. 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 and reconversion activities during the 1940-1945 period . LENDING PROGRAMS R F C ' s lending activity throughout fiscal year 1952 w a s geared to three pri ma ry considerations : 1. Financial aid to assist, expedite, increase or maintain the production of goods or services n e c e s sary to m ee t either military or essential civilian requirements. 2. N o n -defense lending limited to essential civilian requirements . 3. Effective a n d immediate aid to an almost unprecedented n u m b e r of disaster victims . All applications are first considered for eligibility under the lending authority granted b y the R F C A ct . W h e n determined to be not eligible under that authority , applications are considered for eligibility under the provisions of Sections 302 a nd 714 of the Defense Production Act . In the case of wo r k in g capital loans , R F C , pursuant to the powers granted by Executive Order 10281 dated A u g u s t 28 , 1951, considers loan applications eligible for consideration u n d e r Section 302 of the Defense Production Act if satisfactory evidence f r o m a defense procurement a g e n c y discloses that a defense contract has been aw ard ed or that important defense work is being pe rfo rme d for whic h the wor ki ng capital is needed . In the case of expansion loans , such loans are eligible only upon the receipt as required b y Executive Order 10281 , of a certificate of essentiality issued by : 1. T h e Defense Production Administrator , with business enterprises. respect to loans to manufacturers a nd other 2. T h e Secretary of Agriculture, with respect to loans for the production of food. 3. T h e Defense Materials P ro cu re men t A dm in is tra to r, with respect to loans for the production of strategic an d critical materials and ma chin e tools. 6 L o a n applications are eligible for consideration under Section 714 of the Defense Production A ct o nl y upon the issuance of a recommendation f r o m the Administrator of the Small Defense Plants Administration certifying that the applicant is a qualified small business concern engaged in defense o r essential civilian activities. T h e terms an d conditions of all business enterprise loans under all authorities are determined by R F C . U n d e r Section 4 09 of the Federal Civil Defense Act of 1950 , the Corporation is authorized to purchase securities or to m a k e loans to aid in financing projects for Civilian Defense purposes upon the certifica tion of Federal Civil Defense Administrator. T h e restriction of business lending during fiscal year 1952 to defense a nd essential civilian purposes resulted in the rejection of m a n y loan applications. D u r i n g the fiscal year upw ar ds of 40,000 inquiries w e r e received concerning the granting o f financial assistance, including 12,000 relating to catastrophe loans . E a c h inquiry w a s given a careful screening in order to determine eligibility under the various lending authorities . T h i s preliminary screening resulted in further consideration of 5,810 applications a n d authorization of 3,851 loans in the a m o u n t of $378.2 million. B y legislative authority these we re divided as follows : Total No. Authority Amount (Dollars are in Millions ) Section 4 , R F C Ac t Business Loa ns Catastrophe Loa ns Public A g e n c y L o an s Section 714 , D P A Section 302 , D P A Section 409 , F C D A 547 3,055 17 $ 125.8 21.7 25.3 55 175 2 4.2 199.5 1.7 3,851 $378.2 Business Loans Business loans authorized under all authorities (exclusive of disaster loan authority ) totalled 777 loans in the a m o u n t of $ 329.5 million. Business Loans U n d e r the R F C Act 547 loans we re authorized during the year under R F C Act . O f these, 284 in the a m o u n t of $ 109.5 million we re loans to aid in the defense effort and 263 in the a m o u n t of $ 16.3 million wer e for defense supporting or essential civilian needs , a result attributable to R F C ' s strict adherence to the national policy of credit limitation to such purposes . Business Loans U n d e r the Defense Production Act L oa n s authorized pursuant to Section 302 of the Defense Production A c t, totalled 175 loans in the a m o u n t of $ 199.5 million, while under Section 714 , Defense Production A ct , 5 5 loans were authorized in the a m o u n t of $4.2 million. Since Se pte mbe r 8 , 1950 , date of enact ment, to June 30 , 1952, 215 loans in the a m o u n t of $267.5 million have be en authorized under Section 302 of the Defense Production Act . S D P A r e c o m m e n d e d approval of 153 loans in the a m o u n t of $ 19.3 million. H o w e v e r , of these loans 37 in the a m o u n t of $ 4.0 million a n d 15 in the a m o u n t of $ 4.8 million we re authorized by the C o r p o r a tion under the R F C Ac t and Section 302, Defense Production A ct , respectively. 55 loans i n the a m o u n t of $4.2 million we re approved u n d e r Section 714 , Defense Production Act . O f the remaining 46 appli cations which were re c o mm e n de d , 5 were wi thd ra wn, and 41 were pending at June 30 , 1952. Participation with B a n k s R F C is permitted to m a k e loans o nl y w h e r e credit is not otherwise available on reasonable t erm s. B y m e a n s of participation loans R F C is frequently able to assist banks in extending credits w hich , 7 without such participation , mig ht be unacceptable to the banks for reasons of legal lending limitations or length of maturity . In m a n y other instances banks indicate their willingness to extend short -t e r m credit to borrowers provided R F C will m a k e the desired long -term fixed asset loans . It is the policy of R F C to encourage such relationship with ban ks . B a n k participation loans included in authorizations for fiscal year 1952 w e r e : A m o u n t (in thousands ) Number Authorized Total R F C Share Bank Share 79 92 $ 61,511 11,996 $ 44,943 6,722 $ 16,568 5,274 171 $ 73,507 $ 51,665 $21,842 Im med iat e participation Deferred participation O f t h e total loans authorized under R F C Ac t for the fiscal ye ar , b a n k participation loans r e p r e sented 29 % in n u m b e r and 54 % in a m o u n t, co mp ar ed with 27 % and 23 % in fiscal year 1951 . Use of L o a n Proceeds O f the purposes for w hi ch proceeds of loans authorized we re to be used , construction a n d expansio n or conversion of facilities accounted for 71.5 % an d wo rk ing capital requirements 18.7 % . This c o m p a r e s with approximately 43 % for e a c h of these purposes in fiscal year 1951. T h e change in these proportions is attributable to the preponderance in 1952 of loans to manufacturing industries in whic h the necessary investment in plant a n d e q u i p m e n t is relatively heavier than in non -manufacturing lines. Loans to Aid in the Defense Effort De fen se loans u nd er all authorities ranged in size f r o m $2,750 to a lead -reclaiming concern to $ 57.2 million for the production of copper. T h e loans listed below are typical o f the contribution of individual borrowers to increased capacity for production of materials, goods a n d services needed in the national defense program : Increasing capacity in established lines of products an d manufactures : A m o u n t of L o a n $ 57,200,000 Purpose M i n i ng , milling and smelting of copper - increasing domestic production of this critical material 45,000,000 Steel - increased ingot and finishing capacity 12,000,000 Military aircraft 8,600,000 Pig iron a n d coke 6,751,000 M ac h i ne tool manufactu re 2,000,000 Aircraft - components a nd assemblies 1,520,000 Specialized radio a n d electronic equipment a n d production 1,300,000 Aircraft - m a g n e s i u m wi ngs an d fuselages. Parts for rocket missiles. T o w targets. research , development, design Conversion of established lines of products a n d services to defense purposes : A m o u n t of L o a n $50,000 20,000 Established Line Defense Purpose L a u n d r y a n d dry cleaning equipment Aircraft parts Nickel -chro me furniture C o m p o n e n t s for aircraft tire changers 8 A m o u n t of L o a n CT are cio res Ons ary Iual unal Established Line Defense Purpose Paint sprayers a n d air compressors Assemblies for aircraft 14,750 M i n i n g m ach ine ry Machi ning jet engine parts 18,500 Metal a wn in gs Metal stampings for Air Force 15,000 Kitchen equipment Processing a l u m i n u m sheets for aircraft 22,000 Oil extraction machines M a c h i n e g un a nd rocket parts. rubber items for A r m y a nd N a v y 12,000 Civilian aircraft parts a n d accessories Assembling of shielding for spark plug ignition systems for N a v y boats 17,523 B a ke r y equipment a nd utensils, lighting fixtures . Parts for A r m y trucks 25,000 W o o d w o r k a n d furniture Medical therapy tables - basket type litters 22,060 T r uc k transportation H i g h explosives transportation 27,025 Steel fabrication a n d ma chinery H ea t e x ch a n g er s, tanks a nd pressure vessels for A E C 30,000 General ma ch in e shop Ma c hi ne parts for A E C $ 45,000 Plastic a n d Business Loans Outstanding C han ge s in the portfolio of business loans are tabulated below : Ju ne 30 , 1951 Number Ju ne 30 , 1952 Amount Number Change Amount Number Amount ( Dollar figures are in thousands ) U n d e r R F C A ct a n d Section 714 , D P A Act : Direct a nd immediate participation loans .. Deferred participation in ba nk loans Su b -Total 7,067 $463,387 5,794 $ 365,652 -1,273 - $ 97,735 3,933 120,859 2,581 74,633 - 1 , 3 52 46,226 11,000 $ 584,246 8,375 $440,285 -2,625 - $ 143,961 17 6,777 101 59,338 2 349 8,478 $ 499,972 U n d e r Section 302 , D P A Ac t : Direct an d immediate participation loans .. Deferred participation in b a n k loans Total + + 84 52,561 + 11,017 $ 591,023 + 2 -2,539 349 - $ 91,051 Disbursements b y R F C on direct loans, immediate participations a n d deferred participations p u r chased w e r e $73.9 million on 575 loans.R e p a y m e n t s a m o u n t e d to $ 166.9 million, including final p ay m en ts on 1,699 loans, with other credits of $4.8 million arising principally from liquidation of 149 loans through foreclosure or other proceedings . O f the 1,699 loans repaid in full, 1,268 w er e paid in advance of maturity. T h e changes in deferred participation b a n k loans include repayments to b a n k s of $43.6 million , with final p ay me nt s on 994 loans. Cancellation or purchase of c o m mi t m e nt s by R F C w a s $ 12.3 million on 436 loans. 78 n e w loan disbursements by banks a m o u n t e d to $ 9.7 million. 9 Y T I S R E V I N U A s in the case of loan authorizations , the bulk of the 8,375 loans, m a d e under the R F C A c t a n d Section 714 , D P A Act , outstanding at Jun e 30 , 1952 wer e for a mo u nt s of $ 100,000 or less. In 4 6 3 instances outstanding loan obligations to R F C exceeded $ 100,000. T h e portfolio of business loans disbursed under authority of Section 302 , Defense P ro du c ti on Act, increased from 17 loans w i t h outstanding balances o f $ 6.8 million at J u n e 30 , 1951 to 101 loan s with outstanding balances of $ 59.3 million at Ju ne 30 , 1952. Du r in g the year 92 loans w er e disbursed in the a m o u n t of $ 57.3 million , with repayments am ou nti ng to $4.7 million including final p a y m e n t s o n 8 loans . Catastrophe Loans Included in the Corporation's lending authority under the R F C Act is a specific provision to m a k e such loans as it m a y determine to be necessary or appropriate because of floods or other catastrophes. Pursuant to this authority the Corporation has a t all times been alive to its responsibility to t a k e immediate and aggressive mea sure s for the rehabilitation o f inhabitants an d resources of areas stricken b y floods, fires, earthquakes and storms. Rarely has the havoc attendant up on disasters b ee n a s s eve re or as widespread as during fiscal year 1952. In recognition of this, the Congress increased the limitation of funds for disaster loans from $40 million to $100 million in October 1951 , at the s a m e time extending to 20 years the m a x i m u m maturity of loans for the purchase or construction of housing by the borrower . D ur i ng the year there we re twenty -three areas of the nation visited by m a j o r disasters as follows : Na tur e of Disaster Flood T o rn a d o Flood Flood Flood Flood T o rn a d o T o rn a do Gales Flood T or n ad o Tornadoes Flood Flood Fire Flood Flood Flood Flood Flood Tor na do Flood Flood Location Date W es tm or el an d Co unt y , P a . W a k e e n e y , Ka nsa s Kansas Missouri and Illinois Oklahoma Wisconsin Jackson County , Illinois Gary , Indiana L a k e Michigan shore , Wisconsin a nd Indiana Ohio River Fayetteville, Tennessee Ark ans as, A l a b a m a, Ke n tu c k y and Mississippi M o n t a n a , Nort h an d South Dak ota N eb ra sk a and Iow a Wrangell , Alaska Minnesota, Wisconsin , Nor th and South Dak ota Io wa , Nebr aska , Ka nsa s , Missouri Estral Beach , Michigan Utah Michigan Ala pah a, G a . Io wa and Illinois L o w e r peninsula of Michigan 7-5-51 7-12-51 7-13-51 7-13-51 7-18-51 8-2-51 11-15-51 11-29-51 11-29-51 1-31-52 3-4-52 3-28-52 4-9-52 4-14-52 4-14-52 4-15-52 4-28-52 4-28-52 5-7-52 5-9-52 5-19-52 5-19-52 5-22-52 Th ro ugh ou t these areas the Corporation authorized 3,055 loans in the a m o u n t of $ 21.7 million as follows : No. H o m e Loans (for restoration of h o m e s and personal effects ) ........ Business L o an s (for restoration of business facilities an d inventories ) Amount (000 omitted ) 2,119 936 $ 5,647 16,009 3,055 $21,656 Al mos t 80 % of the loans approved were in a m o un t s of $ 5,000 or less. Loans over $25,000 we re less than 5 % of the n u m b e r approved . 10 In processing applications for disaster loans during the year , 17 of the Corporation's w e r e involved . T o facilitate a nd speed up such processing, locala g e n c y staffs w e r e a u g me n t e d b y the te mpo rar y assignment o f examiners f r o m other offices o f the Corporation a n d the local b a nk s w e r e enlisted to receive applications and carry out initial processing steps . b a n k s cooperated generously in this tremendous undertaking . field offices as required services of These local T h e interest rate on business type loans m a d e under the catastrophe loan authority w a s increased f r o m 3 % to 5 % to be effective in a n y area declared a " disaster a r e a " o n or after Ju ne 16 , 1952 , a nd in t he case of a ny disaster loan applied for after July 31 , 1952 , f r o m a n y area designated a s a disaster a r e a prior to J un e 16, 1952. T h e interest rate of 3 % on h o m e loans approved under catastrophe loan authority remains unchanged . Catastrophe Loans Outstanding T h e catastrophe loan portfolio increased f r o m 1,014 loans with outstanding balances of $4.4 million at June 30 , 1951 , to 3,091 loans with outstanding balances of $ 16.2 million at Ju ne 30 , 1952. This c h a n g e results f r o m disbursement of 2,366 n e w l oans in the a m o u n t of $ 14.5 million ,w i t h rep ay men ts a n d other credits of $2.7 million, including 274 loans paid in full and 15 loans liquidated through foreclosure. Railroad Loans a nd Securities The Corporation's portfolio of railroad loans and securities w a s reduced during the fiscal year by $ 19.5 million o r 19 % of th e balance at the beginning of the year . Included in such reduction were bonds o f the Colorado an d S o u t h e r n R ail way C o m p a n y in the a m o u n t of $ 6.8 million an d notes of the F or t W o r t h and D en ve r City Rai lw ay C o m p a n y in the a m o u n t of $4.2 million, both of w hich were sold to the issuers w h o had obtained approval o f the regulatory authorities for refinancing with private funds . Included in the total of $83.1 million held at June 3 0 , 1952, were bonds of the Baltimore and O h i o Railroad C o m p a n y in the a m o u n t of $ 69.9 million , the issue of $ 80 million acquired in 1947 having been paid d o w n to this figure. A comparison of the railroad loans and securities in the Corporation's portfolio at June 30 , 1952 a n d June 30, 1951 is s h o w n below : Railroad Loans a n d Securities Outstanding J u n e 30 , 1951 No. Lo ans to receivers a nd trustees .. L oan s to railroad companies . Total loans Securities of receivers an d trustees Securities of railroad companies .. Total securities Total loans and securities .... Amount 12 3 $ 15 $ 4 5 $ 9 $ 24 Ju ne 30 , 1952 No. Amount Change No. ( Dollar figures are in thousands )1 7 1,255 12 $ 1,244 1 7 1 9,857 2 5,462 7 1 11,112 14 $ 6,706 7 1 4 $ 3,698 4,079 9 4 87,484 72,739 1 8 91,563 1 $76,437 $ 102,675 22 $ 83,143 -2 Amount $ 11 4,395 $ 4,406 $ 381 14,745 - $ 15,126 - $ 19,532 T h e Corporation also holds securities o f railroads reorganized pursuant to C o u r t proceedings in bankruptcy , accepted in settlement of claims for indebtedness arising from loans to, and securities p u r chased o f , predecessor railroads. Du r in g the fiscal year the Corporation m a d e public offerings of a n d sold $ 16.6 million of such securities, thereby reducing its holdings f r om $28.3 million to $ 11.7 million . In Jan uar y 1952, the Corporation authorized a loan of $2,236,800 to the Tennessee Central Ra ilw ay C o m p a n y under Section 302 of the Defense Production Ac t . U n d e r this authorization $ 634,000 w a s disbursed to the railway c o m p a n y evidenced by its equipment notes in that a m o u n t w hi c h the C o r p o r a tion held at June 30 , 1952 , in addition to the a m o u n t of its investments as tabulated above . 11 Public Age ncy Securities D u ri n g the fiscal year 1952 the Corporation authorized $ 25.3 million in security purchases to aid in the construction of public projects undertaken und er state or municipal laws . O f this total, $ 7.3 million represents a n increase in a n authorization to aid in financing a project of i m p r o v e m e n t and extension of the transit s y s t e m o f the City of Cleveland, Ohio ,for w h i c h a c o m m i t m e n t of $22.2 million ha d previously been m a d e ; $ 16.8 million w a s for the purpose of aiding in financing theconstruction of a hydroelectric p o w e r plant an d i m pr o v in g an existing electric utility system in P e n d Oreille C o u n t y , W a sh i n g to n ; a n d the balance of $ 1.2 million w a s for the purpose of aiding in the financing of 16 other projects. Because of p o w e r deficiency in the area to b e served , other G o v e r n m e n t agencies assigned to the P e n d Oreille project highest priority in the defense p o w e r p r o g r a m applicable to the north west a n d A to m i c E n e r g y projects. Ther e w a s a net increase of $844,000 in the outstanding balance of this classification of securities resulting f r o m disbursements of $ 2,915,000 on n e w issues a n d retirements a n d sales of $ 2,071,000. Drainage a n d irrigation districts have been aided b y the Corporation in the financing of the development a n d im pr ov em e nt of their systems to the extent of over $ 100 million since the middle 1930's, in evidence of w hich serial bonds of the districts we re acquired . B y retirements a n d sales the holdings of such securities we re reduced during the fiscal year by $ 1.2 million or 18.3% of the balance held at the beginning of the fiscal year . Securities acquired f r o m the Public W o r k s Administration w er e retired or sold during the fiscal year in the a m o u n t of $3.1 million or 44.7 % of the balance of such securities held at the beginning of the fiscal year . Included in the sales were bonds of Maverick C ou n ty W a t e r I m p r o v e m e n t District No. 1 , Eagle Pa ss, T e x a s, in the a m o u n t of $ 1.677 million, sold to the issuer, an d bonds of the M o n t a n a State W a t e r Conservation Board , acquired f r o m P W A at a cost of $ 1.3 million, sold to the State of Montana . T h e Corporation's portfolio of public agency securities at Ju ne 30 , 1952 is co mp ar ed with Ju ne 3 0 , 1951 in the following table : Public Ag enc y Securities Outstanding J u n e 30 , 1951 Drainage and irrigation districts Municipals purchased f r o m P W A Other public agency securities.. Total No . Amount 131 128 34 $ 6,761 6,966 5,729 293 $ 19,456 J un e 30 , 1952 No. Amount Change No. Amount ( Dollar figures are in thousands ) 118 $ 5,524 -13 - $ 1,237 3,853 -28 100 3,113 6,573 + 844 47 +13 265 $ 15,950 -28 $ 3,506 Financial Institution Loa ns an d Securities D ur in g the fiscal y e a r the Corporation disposed of a substantial portion of its portfolio of b a n k securities. It notified the banks that they should prepare plans for pa y in g off the go ve rn me nt investment in their institutions; it requested that the m a n a g e m e n t s a n d stockholders submit offers to purchase the securities of their institutions ; a n d advised t h e m that the Corporation wou ld n o longer consider itself obligated to adhere to its previous policy of giving ninety days prior notice of its intention to dispose of its b a n k obligations. T h e Corporation's holdings w e r e reduced $ 39.3 million during the fiscal year . Included i n the reduction w er e loans of $ 8 million to the Preferred Protective Corporation which were written off after the Superintendent of Insurance of the State of N e w Y o r k h a d taken over the Preferred Accident Insurance C o m p a n y for the purpose of liquidating it a nd at public auction sold its stock which w a s collateral to the loans. Exclusive of this write -off, 33.3 % of the dollar a m o u n t a n d 69 % of the n u m b e r of cases held at the beginning of the fiscal year were disposed of. O f the remaining balance of ba nk obligations approximately $38.5 million represents securities of banks w h o s e capital is impaired . In the interest o f avoiding financial d a m a g e to the ban ks with resulting loss to the Corporation , time will be required to effect the curing of the existing deficiencies an d to place 12 t h e securities on a sou nd a n d marketable basis for the ultimate benefit of the G o v e r n m e n t as well as the banks. T h e changes in the Corporation's portfolio of financial institution loans and securities during the fiscal year are set forth in the following table : Financial Institution Loans a n d Securities Outstanding Ju ne 30 , 1952 J u n e 30 , 1951 No. Amount No. Amount Change No. Amount (Dollar figures are in thousands ) Purchases of preferred stock, capital notes, a nd debentures ofb a n k s and trust companies L oa ns on preferred stock of ban ks a n d trust companies .. Lo ans on preferred stock of insurance companies Lo a ns to mo rt ga ge loan companies Total 370 $ 85,677 111 $ 54,416 2 120 2 116 4 8,233 1 210 1 26 1 25 377 $94,056 115 $ 54,767 -259 - $31,261 4 -8,023 o d -1 -262 - $39,289 T h e outstanding balance of $ 54.8 million at J un e 30 , 1952 is all that remains of $ 3.9 billion disbursed f r o m c o m m e n c e m e n t of the p r o g r a m of aid to financial institutions. Civil Defense Lo ans D u ri n g the year t w o loans in the a m o u n t of $ 1.75 million to aid in construction of hospital facilities w er e authorized p ursu ant to Section 409 , Federal Civil Defense A ct of 1950. N o disbursements ha d been m a d e at June 30, 1952. In addition to alleviating area deficits of hospital beds a n d facilities based on accepted public health standards, these loans w er e certified b y Federal Civil Defense Administration as necessary under its p r o g r a m for hospital construction in critical target areas . Loa ns to Foreign G o ve r nm en t s O n Sept ember 28 , 1951 the loan to the United K i n g d o m of Great Britain a n d Northern Ireland w a s paid in full. This loan w a s authorized in July, 1941 in the a m o u n t of $ 425 million for the purpose o f achieving the m a x i m u m dollar exchange value in the United States for the securities pledged under the loan . O f the a m o u n t authorized $390 million w a s disbursed an d $35 million w a s cancelled. In D e c e m b e r , 1951 the loan agr eem ent with the Republic o f the Philippines w a s revised , pursuant to wh ich revision the maturity of the then outstanding loan balance of $ 60 million w a s extended to p r o vide for t wen ty equal s e m i-annual installments a n d the interest rate w a s increased f r o m 2 % to 212 % per a n n u m effective J an uar y 1, 1952. T h e installments due J anu ar y 1 a nd July 1, 1952 under the revised ag ree men t have b e e n paid reducing the outstanding balance on J un e 30 , 1952 to $ 54 million . This loan was authorized a nd disbursed in 1947 in the original a m o u n t of $70 million, under authority of Public L a w 656 of the 79th Congress, to assist the G o v e r n m e n t of the Republic of the Philippines d u r i n g the transition period f r o m a w a r -ravaged e c o n o m y to a m o r e stabilized economic position. 13 Other Lending P ro g r am s T h e Corporation is charged with the liquidation of certain loans a nd securities included in assets acquired under terminated authorities of R F C a nd other G o v e r n m e n t agencies. These a r e Jun e 30 , 1952 J un e 30 1951 Change Number Amount Mortgages— T h e R F C M or t g ag e Co. F H A insured a n d V A partially guaranteed mor tga ges Number Amount Number Amount (Dollar figures are in thousands ) 16,951 $ 81,566 16,297 $ 74,894 Defense H o m e s Corporation R F C equity in mortgages held 4 31,201 4 30,239 Loans Smaller W a r Plants C o r p ... 52 2,383 37 2,023 -654 - $6,672 -962 -15 -360 T h e mo rtgages insured b y the Federal Ho us i ng Administration an d partially guaranteed b y t h e Veterans Administration remaining in R F C portfolio are those taken over as successor to T h e R F C M or t g a g e C o m p a n y . Du ri ng the year final p ay m e nt s w er e received on 486 mortgages , 117 w er e sold a n d 51 w e r e liquidated b y foreclosure. Defense H o m e s Corporation w a s transferred to R F C for liquidation effective July 1, 1948. N e t assets held b y R F C at June 30 , 1952 , consisting of m or tg ag e notes on four housing projects a n d a ccru ed interest, less related liabilities thereon , a m o u n t e d to $ 43.8 million. T h e a m o u n t due R F C , secured b y such net assets, w a s $30.2 million . A n y net assets remaining after p a y m e n t of all obligations of D H C a n d liquidation costs will be covered into the Treasury as miscellaneous receipts. O f the assets of Smaller W a r Plants Corporation transferred to R F C for liquidation, o n l y 37 loans with unpaid balances of $2 million remain . R e p a y m e n t s dur ing the ye ar a m o u n t e d to $ 374,079, including final p a ym e n ts o n 16 loans. T h e Corporation also purchased its c o m m i t m e n t in the a m o u n t of $ 14,240 on o n e deferred participation loan . T here still r ema in 8 outstanding b a n k loans with unpaid balances o f $ 70,000, in w h i c h R F C ' s c o m m i t m e n t s to participate a m o u n t to $ 56,000. Status of Limitations U n d e r Lending Authorities T h e following table sets forth limitations to the a m o u n t of loans, securities a nd c o m m i t m e n t s m a d e after J un e 30 , 1947 that can be outstanding at a n y one time and limitation to borrowings f r o m U. S. Treasury, provided b y the legislation pursuant to w h i c h the Corporation's lending activities are c o n ducted , a n d the status thereof at June 30, 1952 : J un e 30 , 1952 Lendin g Limitation (000 ) 993,000 R F C Act , Section 4 ... Federal Civil Defense Act , Section 409 Defense Production Act , Section 714 ... $ Total und er L end in g Limitation $ 1,343,000 (000 ) $329,407 100,000 (000 ) $ 441,588 1,750 248,250 693 3,292 96,015 $ 330,100 $ 227,047 $ 785,853 Outstanding Notes Payable Undisbursed to U.S. Treasury C o m m i t m e n t s 411,000 $ 57,200 $ 1,754,000 $387,300 $ Available (000 ) $ 222,005 250,000 B o r r ow i n g Limitation Defense Production Act , Section 304 (for lending under Section 302 ) Outstanding Undisbursed L o a n Balances C o m m i t m e n t s $ 131,885 Available $ 221,915 Total Len di ng and /or Borrowing Authority $358,932 $ 1,007,768 In addition to the loans a n d c o m mi t m e nt s outstanding as above , the Corporation also has outstan d ing loans a n d c o m m i t m e n t s aggregating $ 351,083,000, m a d e under authority wh i ch terminated at June 30 , 1947 . 14 PRODUCTION PROGRAMS Presented in the succeeding pages are the statutory reports o n operations of t h e Synthetic R u b b e r , T i n a n d A b a c a p ro g r am s for fiscal year 1952 , required b y the legislation under w hi ch the p r og ra m s are c o n d uc t e d . These p r o gr a ms w e r e initiated pursuant to pow ers delegated to the Corporation prior to a n d d u r i n g W o r l d W a r II. T h e y ha ve been continued under legislative authority subsequently enacted in the interest of national security with the objective of achieving insofar as possible self-sufficiency in these h i g h l y strategic and critical materials. T h e success of these p r o g r a m s has progressively reduced o u r dependence upon foreign sources, largely inaccessible in w a r t i m e, for natural r u b b e r , tin a nd abaca . T h e world's supplies o f natural r u b b e r a n d tin also have been controlled b y relatively small groups w hi c h by arbitrary price increases w e r e able to exploit our needs for these materials. T h e availability of synthetic rubber a n d of refined tin produced a t the Texas City Smelter largely f r o m western hemisphere ores, h a s g o n e far t o wa r d placing this nation, the largest c on su me r of r u b b e r a nd tin , in a m o r e favorable position to cope with p r o b l e m s w h ic h in the past h a v e operated to the disadvantage of the national e c o n o m y. REPORT ON SYNTHETIC RUBBER OPERATIONS FOR FISCAL Y E A R 1952 L eg a l Authority a n d Responsibilities D u r i n g the fiscal year 1952 the Corporation continued to carry out its synthetic rubber activities in accordance with the provisions of Public L a w 469 , 80th Congress (The R u b b e r A c t of 1948 ) a n d E x e c u t i v e O r de r 9942, dated April 1 , 1948. Public L a w 575 ,8 1 s t Congress, extended t h e earlier legisla tion a n d the authority for operation of the program to Ju ne 30 , 1952. O n Ju ne 23,1952 , Public L a w 404 , 8 2 n d C o n g r e s s , w a s enacted w h i c h extended existing legislation i n effect until M a r c h 3 1 , 1954. T h e principal responsibilities a n d functions of the Corporation under its authority are listed below : 1. Production of Synthetic R u b b e r — The R u b b e r Act 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 be not less than 200,000 long tons per a n n u m of general purpose ru bb er a nd not less than 21,667 long tons of special purpose rubber, of w hi ch at least 15,000 long tons shall be of a type suitable for use in pneumatic inner tubes . O n Apr il 10 , 1952, D P A directed that "if the requirements for G R -S drop to levels w hi c h wo uld not justify production rates in excess of 600,000 long tons per annum , the rate shall be m a i n tained at 600,000 until the G o v e r n m e n t-o w n e d inventory of G R -S h a s been built u p to 75,000 long tons. In the event requirements for G R - S further decrease , the production rate m a y then be correspondingly decreased to a m i n i m u m of 450,000 long tons per year, provided the inventory of G R -S is progressively increased as the production rate decreases so t ha t the G o v e r n m e n t o w n e d inventory is at least 122,000 long tons at the 450,000 long tons per a n n u m production rate ." T h e Corporation is charged with the responsibility for the production of these quantities of s y n thetic rubber a nd of such additional quantities for voluntary use as it d e e m s practicable . 2. Maintenance of St an db y Facilities — The R u b b e r A ct requires that there shall be maintained at all times within the United States active or standby rubber -producing facilities having a n ann ual rated production capacity of not less than 600,000 long tons of general purpose r ubber a nd not less than 65,000 tons of special purpose rubber ,of wh ich 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 in standby to to m e e t the foregoing requirements. 3. Research a n d De ve lop men t The Corporation is authorized to maintain a technologically a d vanced domestic rubber -producing industry. 4. Lease, Sale a n d Disposal of Facilities — The Corporation is authorized, subject to certain c ondi tions, to sell or lease surplus facilities not necessary t o fulfill the requirements o f the Ac t a n d obsolete property not required for t h e production of the rated capacity of the facilityi n wh i c h the property is located. T h e Ac t also requires the formulation of a p r o g r a m for the disposal of the G o v e r n m e n t -o w n e d rubber facilities to private industry a n d , pursuant to the Act , the Corporation has been designated b y the President to undertake this task . 15 R u b b e r Re quir emen t a n d Price Trends T h e accelerated synthetic rubber production a n d continuing large volume of natural rubber im por ts during the year assured the nation's security insofar as an adequate supply of n e w rubber is co nc er ned . B y July 1951 , the production rate of general purpose (G R -S ) synthetic r ub b er had reached the goal of 760,000 long tons per year as set forth in the series of four directives fr o m the Executive Office of the President. This production goal w a s achieved through the operation of existing plants at capacity a nd the reactivation of plants previously maintained in standby. A t the beginning of the fiscal year , consumption of rubber by manufacturers w a s under control of the National Production Authority . H o w e v e r, t he continuous excess of G R -S production over c o n s u m p tion during the first half of t h e year a n d the im pro ve d natural rubber position permitted the r e m o v a l, b y the National Production Authority , of restrictions on total use of G R -S as of Ja n u ar y 1, 1952. D u r i n g the last half of the fiscal year , it w a s possible to pattern G R -S production m o r e closely to c o n s u m p t i o n a n d inventories increased a t a slower rate. Th e se trends are illustrated in the a c co mp a ny in g chart . G E N E R A L THOUSAND LONG TONS 150 P U R P O S E PRODUCTION , CONSUMPTION THOUSAND LONG TONS 800 GR -S PRODUCTION By Fiscal Years (G R -S ) S Y N T H E T I C AND END OF PERIOD R U B B E R TOTAL STOCKS THOUSAND LONG TONS 150 THOUSAND LONG TONS 800 600 600 400 400 200 200 TOTAL STOCKS 100 100 1943 44 45 '46 47 48 49 50 '51 1952 50 50 CONSUMPTION PRODUCTION I J F M A M J J 1950 A S N O N D J F M A M J J 1951 A S O N D J F M A 1952 M J In order to m eet established production goals of general purpose synthetic rubber an d the consequent necessity of utilizing a high proportion of hi gh cost alcohol butadiene, the selling price of G R -S w a s raised effective Sep tem ber 1 , 1951 f r o m 24.5 cents per p o u n d to 26 cents per p ou nd . Later in the year, 16 a s it b e c a m e apparent that the established production rate w a s not required, use of alcohol butadiene w a s k e p t to a m i n i m u m thereby reducing the expected cost of production . Accordingly , the selling price of rimy G R -S w a s reduced , effective M a r c h 8, 1952 , to 23 cents per p ou n d. Docer In the case of butyl (G R -I) synthetic rubber , production w a s lifted above consumption d ur i ng the the early m o n t h s of fiscal year 1952 , resulting in rising inventories during t h e remainder o f the year. H o w e v e r, t he long-term production -consumption relationship w a s n o t considered as favorable asi n the case Capa: of G R -S a nd restrictions on industry consumption w er e not lifted b y the National Production Authority until April, 1952. D u r i n g the year the selling price of butyl remained un ch ang ed at 20.75 cents per po u n d . T h e trends of production, consumption and total stocks for butyl are s h o w n in the a cc om pa ny in g chart. B U T Y L Der THOUSAND LONG TONS ME 25 ent was ear, (G R -1 ) S Y N T H E T I C PRODUCTION , CO NS UM PT ION AND END OF GR -1 PRODUCTION By Fiscal Years THOUSAND LONG TONS 100 R U B B E R PERIOD TOTAL STOCKS THOUSAND LONG TONS 25 THOUSAND LONG TONS 100 80 80 60 60 40 40 20 20 20 20 15 15 0 1943 44 45 46 47 48 49 50 51 1952 10 10 TOTAL STOCKS *** CONSUMPTION 5 5 PRODUCTION J F M A M J J 1950 A S O N D J F M A M J J 1951 A S O N D J F M A 1952 M J All restrictions,w h i c h ha d the effect of limiting or preventing exportation of synthetic rubbers , we re r e m o v e d during the latter m o n t h s of the fiscal year. Manufacturing Activities General T h e Corporation retained in operation as of J un e 30 , 1952 , all twenty -eight facilities w hi c h c o n stitute the synthetic rubber p r o g r a m . These facilities are operated un der m a n a g e m e n t contracts with private corporations. A s o f June 30 , 1952 , one of the alcohol butadiene plants w a s being placed in standby. In addition , one -third of the G R -S plant at Institute, W e s t Virginia, h a d been r em o v ed f r o m service a nd instructions h a d been issued to the remaining alcohol butadiene plant to cease operations b y S ep te m be r 1, 1952 . 17 T h e twenty -eight plants consisted of thirteen copolymer plants, t w o butyl plants, ten butadiene plants, one styrene plant, one chemical plant a n d one development laboratory. During fiscal year 1952 , G o v e r n m e n t -o w n e d plants produced 799,266 long tons of synthetic ru b be r including 715,732 long tons o f general purpose (G R -S) synthetic rubber an d 83,534 long tons of butyl (G R -I) special purpose rubber principally fo r p n e u m a t i c inner tubes. This total represented 65.2 % of domestic n e w rubber consumption o f 1,227,000 long tons. T h e Corporation also produced c o m p o n e n t materials for synthetic rubber m an uf ac tu re wh ic h we 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 re 580,700 short tons of butadiene f r o m basic r a w materials a n d 52,700 short tons of styrene. T h e G R -S production rate during the first six m o n t h s of fiscal year 1952 w a s only slightly be l ow the 760,000 long tons annual rate whi ch ha d been reached at the end of fiscal year 1951. H o w e v e r ,d ur i ng the second half of the fiscal year , as it b e c a m e apparent that requirements h a d slackened , production w a s reduced in the m o s t economical'm a n n e r . This w a s accomplished b y minimizing alcohol but adiene p r o duction b y keep ing units idle wh ic h w e r e available for operation a n d t o w a r d the end of the y ea r r e m o v i n g alcohol butadiene facilities f r o m service. A m a j o r strike in the petroleum industry during M a y , 195 2 w a s a n added factor w hi c h contributed to the reduced annual production rate of 685,000 long tons d u r i n g the last six m o n t h s. Plans we re also formulated to reduce production t o even lower levelsd u r i n g fiscal year 1953. This involved removal of the remaining alcohol butadiene facilities f r o m service a n d release of certain quantities of petroleum butadiene plant feedstocks to the Aviation Gasoline program . O n April 13 , 1951 , the Defense Production Administration directed the Corporation to e x p a n d the productive capacity to 860,000 long tons per ye ar of general purpose rubber. Accordingly , a p r o g r a m w a s formulated to achieve this objective a n d t o increase to 90,000 long tons per year the productive capacity of butyl . This p r o g r a m involves expansion a n d bottleneck removal within existing r a w material a n d copolymer plants. It is anticipated that the p r o g r a m will be essentially completed b y J an uar y 1, 1 9 5 3 . T h e effective capacities of individual plants at the end of the fiscal year are s h o w n in the table on page 22 of this report. Important strides we r e taken in fulfilling the Corporation's responsibility to maintain an efficient a nd up -to-date synthetic rubber man ufa ct uri ng industry. These included n u m e r o u s process i m p r o v e m e n t items, provisions for facilities to manuf acture n ew an d special types of rubber , general expansion of capacity a n d replacement of w o r n -out and obsolete eq uip men t. G R -S Plants In the fiscal year 1952 , eight of the thirteen copolymer plants in operation w e r e producing cold rubber and three ot h e r s we re be in g converted to the production of cold rubber w i t h completion expected during the first half of the fiscal year 1953. A total of approximately 304,000 net long tons of cold rubber w a s produced during the year, equivalent to about 43 % of total G R -S production . Pr oduct ion of black masterbatch rubber a m o u n t e d to approximately 101,700 net long tons, oil-black masterbatch 19,530 net long tons a n d oil masterbatch 37,920 n e t long tons. T h e greater portion o f these masterbatch rubbers w a s prod uced b y the cold process a n d the total is included in the figure s h o w n above for cold rubber production . Five of the copolymer plants produced a total of approximately 34,240 long tons of G R -S latex during the year, a portion of w h i c h w a s the cold rubber type. T h e conversion to production of cold latex exclusively at o n e plant w a s essentially completed at the end of the year an d initial production w a s c o m m e n c e d in July , 1952 . D ur i ng the year the Corporation continued a n d accelerated the p r o g r a m to convert a large part of its facilities to the production of cold rubber in order to m a k e available the industry's requirements of this product. C o l d rubber possesses outstanding abrasion resistant properties a n d has gained acceptance b y industry to a n ever -increasing degree since initial production in 1948. T h e trend of cold rubber production in the G o v e r n m e n t-own ed plants over the four a nd one -half year period is s h o w n in the ac c om p an y in g chart. 18 C O L D R U B B E R P R O D U C T I O N By Six Month periods, March 1948 through June 1952 Thousand Long Tons 160 Thousand Long Tons 160 120 120 80 80 40 40 Mar-Jun 1948 Jul -Dec 1948 Jan-Jun 1949 Jul-Dec 1949 Jan -Jun 1950 Jul-Dec 1950 Jan-Jun 1951 Jul-Dec 1951 Jan -Jun 1952 A t t he beginning of the fiscal year , cold rubber a m o u n t e d to approximately 38 % of total production . Completion o f certain of the conversion projects m a d e available capacity for producing cold rubber of approximately 50 % of total production b y t h e e n d of the year. T h e cold r u b b e r p r o g r a m received a set -b ac k w h e n a n explosion occurred at the L a k e Charles, Louisiana, G R -S plant on J un e 28 , 1952. This will result in one -half of the plant being d o w n for approximately six m o n t h s a n d cold rubber production o n the remaining half interrupted f o r a period of approximately t w o m o n t h s . H o w e v e r , present i nve n tories of cold rubber plus t h e indicated increases in production will assure satisfying future industry d e m a n d . Projects expected to be completed by Ja nu ar y 1, 1953, will permit attainment of the goal of 75 % of the total production of cold rubber as r e c o m m e n d e d b y the N P A R u b b e r Industry Advisory Co m mi t te e . W h e n restrictions on the total use of G R -S we r e lifted J a n u a r y 1,1 9 5 2 , b y the National Production Authority , a limitation w a s placed on the percentage of the total w h ic h could b e cold rubber because of the d e m a n d for this type rubber. T h e limitation w a s set at 46 % for the first quarter of calendar year 1952 , a n d w a s raised to 5 0 % for the second quarter as m o r e cold rubber b e c a m e available. This w a s raised again in the third quarter to 70 % a nd it is expected that this one remaining restriction will be eliminated b y the e nd of the third quarter. Ma nu fa ctu re of high -M o o n e y -oil-softened G R -S w h i c h w a s initiated during the previous year w a s continued a nd production w a s increased in line with the d e m a n d for this n e w material. In the production of oil extended G R -S , a relatively high M o o n e y viscosity rubber is produced at the c opo lym er plant a n d f r o m 25 % to 50 % of a n oil extender is added .T h e resultant product is superior for s o m e uses and is the equivalent of the s a m e quantity of G R -S produced at a n o rm a l M o o n e y viscosity. Introduction of a n e w product of this type necessarily requires extensive an d t im e-consuming evaluation b y the rubber industry. 19 S o m e indication of the gradual acceptance of oil masterbatch rubber b y industry is given b y the increase in production from approximately 2 % of the total rubber production to approximately 6 % over t he 12 -m o n t h period. T h e t re n d of acceptance of oil-black masterbatch is not as definite, ho w e v e r, a n d a longer period of evaluation b y industry will probably be required. The production of black m a s t e rb a t c h rubbers experienced relatively small change o v e r the previous year. H o w e v e r, in order to i m p ro v e the rubber distribution pattern , facilities we re authorized for producing black masterbatch rubber in t h e W e s t Coast plant a nd installation w a s essentially completed b y the end of the year . G R -S latex has maintained an important position in the manufacture of f o a m sponge rubber a n d other special products . Production of this material a m o u n t e d to approximately 5 % of the total G R -S produced. Because of its superior properties, cold rubber latex is bec omin g of increasing importance in this field a n d conversions to the production o f cold latex have been m a d e in o rd er to satisfy the indicated requirements . Ov e r the twelve -m o n t h period , cold latex w a s increased f r o m a level of approximately 5 % to 25 % of the total latex produced . F u r t h e r increases will be possible during the early pa rt of fiscal year 1953 w h e n one of the A k r o n , Ohio G R -S plants, wh ic h w a s converted to cold latex exclusively , begins operation . Butadiene a n d Styrene Plants In line with operation of the p r o g r a m in the mo st economical m a n n e r , petroleum butadiene plants w e r e maintained at m a x i m u m production consistent with either feedstock availability or plant capacity . Insofar as p r o g r a m flexibility wo uld allow , alcohol butadiene w a s produced only in sufficient quantities to m e e t total butadiene requirements. Du rin g the first half of the year, butadiene w a s the limiting factor in the production of G R -S . This w a s due in large part to a series of events, such as feedstock shortages a n d fire d a m a g e to plants as previously mentioned. Dur ing the last half of the year , production of alcohol butadiene w a s minimized while reducing the production r at e of G R -S . In order to determine the applicability of a n e w butylene dehydrogenation catalyst, a plant scale evaluation w a s m a d e at the B a y t o w n, Te xas butadiene plant. This catalyst is potentially important to the p r o g r a m because of the high indicated efficiency of butylene con sum ptio n in the ma nuf ac tu re of butadiene. T h e plant scale experimental run w a s successful in determining the engineering a nd technical data required to evaluate t h e feasibility a n d economics of utilizing this catalyst at the other petr oleum butadiene plants. E x p a n s i o n of the Corporation's styrene plant at T or ra nc e, California, w a s completed during t h e year an d this plant is n o w capable o f producing 57,000 short tons p e r year o f styrene. Since this quantity of styrene i s not sufficient to satisfy th e needs of the program , the additional quantities required m u s t b e obtained b y purchases f r o m private suppliers. Butyl Plants After eliminating operating difficulties at one of the butyl plants, production of butyl rose c o n siderably a b o v e industry consumption a nd record high rates of production w e r e reached duri ng several m o n t h s of the year . T o w a r d the end of the fiscal year, butyl production w a s decreased slightly in order to stablize the rapid build -up of butyl inventories . W o r k w a s continued d ur in g the year on the expansion p r o g r a m at the butyl plants concurrent w it h G R -S expansion. Installation o f equipment as part of this p r o g r a m h a s been completed a t the B a y t o w n , Tex as plant. H o w e v e r ,th e e x p an s i on p r o g r a m at the Baton R o u g e, Louisiana plant will not be c o m pleted until next year. Research Activities D ur i ng fiscal year 1952 , research a n d development activities w er e conducted for the Cor pora tion b y eight industrial organizations operating G R -S production plants, b y t h e G o v e r n m e n t Laboratories operated b y t h e University of A k r o n , by a G o v e r n m e n t Tire Test Fleet at S a n Antonio,b y the National B u r e a u of Standards, an d b y eleven universities, institutes, an d other research organizations. D u r i n g the past year the following w e r e a m o n g the mo st noteworthy accomplishments of the research program : 1. Oil -masterbatched G R -S w a s developed to the point w h e r e it has b e c o m e a n established p r o d u c tion item because of a demonstrated i mp r ov e me nt in treadwear performance over cold G R - S 20 at a substantial reduction in tire cost. This product also provides a n expansion in apparent rubber supply with a m i n i m u m expenditure o f r a w materials an d equip ment. 2. A process using a so-called “ Alfin ” catalyst w a s devel oped a n d successfully carried out on a continuous pilot plant scale in the G o v e r n m e n t Laboratories. Substantial quantities o f high molecular weight Alfin polymers w e r e prepared for evaluation in tires an d other essential p r o d ucts . Alfin polymers are extremely tough a nd yet are free f r o m the degradation constituent k n o w n as “ gel.” 3. A type of G R -S approaching cold rubber in physical properties, but w h i c h can b e produced in non -refrigerated e qui pm en t , w a s developed . T e s t s of the new synthetic on the G o v e r n m e n t Fleet totalling 600,000 tire mile s , together with results reported on private tests, lead to the conclusion t h a t it is definitely better fo r treadwear than hot rubber, a nd possibly equal to cold rubber . This development increases the productive flexibility of the G o v e r n m e n t-o w n e d s y n thetic plants, because if full co nsum er acceptance of the n e w product is obtained on such matters as processability, the hot rubber capacity of the plants can be directed to the manufacture of an improved product. It is possible that further research a nd development m a y enable the n e w type of polymerization to b e utilized for the production of synthetic rubber i n cold rubber plant equipment so that a product even better than the present cold rubber m a y be eventually realized . T h e results of research f r o m all participants in the program are published a s rapidly as they can b e technically edited . D ur i ng the past year,9 4 articles w e r e published in scientific or technical papers. R F C formulates the over-all research p r o g r a m each year and with the aid of interrelated committees develops detailed plans, maintains a balance a m o n g the fun da men tal, applied, a nd developmental research w o r k a n d facilitates a continuous exchange of research findings. T h e general objectives are to m a k e synthetic rubber better and cheaper, a nd to produce it m o r e efficiently. Capital I mp ro ve me nt s D ur i ng the fiscal year 1952 capital expenditures a m o u n te d to $21,605,000 as c o mp a re d to $ 12,566,000 in the fiscal year 1951. Th ese expenditures w er e for costs o f (a ) expansion of productive capacity ; (b ) conversion to cold rubber capacity ; (c ) process a n d other i mpro veme nts ; a nd (d ) replacement of w o r n out a n d obsolete e qui pme nt. T h e p r o g r a m for conversion to cold rubber u po n completion will have cost approximately $ 12 million . Disposal of R u b b e r Facilities to Private Industry In the latter part of the fiscal year consultations w er e ha d with committees representing chiefly the rubber , petroleum a n d chemical companies n o w active in the synthetic rubber p r o g r a m to elicit their views o n the problem of disposal of the G o v e r n m e n t -o w n e d rubber facilities. T h e Administrator of the Corporation appointed a Special D e p u t y ,charged with the responsibility of formulating a p r o g r a m for disposal of the facilities. T h e R u b b e r A c t requires that a report on s uc h a p r o g r a m be submitted b y the Corporation to the President and the Congress by M a r c h 1, 1953 , a n d requires further that the President, after consultation with the National Security Resources Bo ar d , r e c o m m e n d to the Congress legislation with respect to disposal b y April 15 , 1953 . Statement of Operations N e t incom e for fiscal year 1952 a m o u n t e d to $ 16,113,542. This profit w a s attained despite curtail m e n t of production in the latter part of the year w h e n the d e m a n d w a s lower than the anticipated d e m a n d , in expectation of wh ich production in the earlier part of the year ha d been increased b y use of the m o r e costly alcohol butadiene i n the manufact ure of G R -S rubber . D u e to labor difficulties in the petroleum industry , high cost alcohol butadiene w a s also used in the limited production for M a y , 1952. Also, $ 3 million w a s provided to cover costs of shutting d o w n excess production facilities a nd the inventory of alcohol on h a n d at the end of the year w a s written d o w n by approximately $ 5 million to estimated m a rk e t value . A s a consequence of a d e m a n d for synthetic rubber lower t h a n the production levels to w hi ch the Corporation had been directed to exp and the capacity of its facilities, inventories o f bot h G R -S a n d G R -I increased during the course of the year . Inventories of G R -S increased from 29,000 long tons valued at $ 10,926,000 at the beginning of the fiscal year to 72,000 long tons valued at $ 27,889,000 a t the close of the year . Inventories of G R -I increased f r o m 3,600 lo ng tons at a cost of $1,352,000 on h a n d at the beginning of the year to 15,000 long tons at a cost of $5,080,000 accumulated by the end of the year . A financial statement presenting a s u m m a r y of operations of the synthetic rubber p r o g r a m appears in Schedule 2 of this report. 21 OPERATORS G O V E R N M E N T -O W N E D AND CAPACITIES O F SYNTHETIC RUBBER FACILITIES As of June 30, 1952 Operator Plant Location Type of Plant Approx .Production Capacity, Tons /Y r .* Firestone Tire & Rubber Co. Lake Charles, La . Akron , Ohio G R -S G R -S 90,000 26,000 B. F. Goodrich Chemical Co. Port Neches, Texas Institute, West Va . G R -S G R -S 90,000 115,000 Goodyear Synthetic Rubber Co. Houston , Texas . Ohio G R -S G R -S 93,000 25,000 United States Rubber Co. Port Neches ,Texas Naugatuck , Conn. G R -S G R -S 84,000 23,000 General Tire & Rubber Co. Baytown, Texas G R -S 36,000 Phillips Chemical Co. Borger, Texas G R -S 57,000 Midland Rubber Corp. Torrance, Calif. G R -S 72,000 Copolymer Corp. Baton Rouge, La . G R -S 42,000 Kentucky Synthetic Rubber Corp. Louisville, K y . G R -S 41,000 794,000 Cities Service Refining Co. Lake Charles, La. Butadiene from Butylenes 62,000 Copolymer Corp. Baton Rouge, La . Butadiene from Butylenes 23,000 Humble Oil & Refining Co. Baytown, Texas Butadiene from Butylenes 51,500 Neches Butane Products Co. Port Neches, Texas Butadiene from Butylenes 174,000 Sinclair Rubber, Inc. Houston , Texas Butadiene from Butylenes 80,000 Phillips Chemical Co. Borger, Texas Butadiene from Butane 67,000 Standard Oil Co. of Calif.and Shell Chemical Corp. Torrance, Calif. Butadiene from Butane 58,000 Carbide and Carbon Chemicals Div. Union Carbide and Carbon Corp. Louisville, K y. Butadiene from Alcohol 96,000 Koppers Company, Inc. Kobuta, Penn. Butadiene from Alcohol 128,000 739,500 The D o w Chemical Co. Torrance, Calif. Styrene 57,000 Esso Standard Oil Co. Baton Rouge, La. Butyl Rubber 47,000 Humble Oil & Refining Co. Baytown, Texas Butyl Rubber 43,000 90,000 * Capacities of rubber plants in net long tons/year, Monomer plants in short tons/year. G R -S plant capacities are for production of present types of rubber and do not represent m a x i m um productive capacity in a n emergency. 22 REPORT ON TIN O P E R A T I O N S FOR FISCAL Y E A R 1952 L e g a l Authority a n d Responsibilities T h e Corporation's authority a n d responsibilities in connection with its tin operations are covered b y Public L a w 125, 80th Congress, as a m e n d e d, an d by delegated authority issued in accordance with the D e f e n s e Production Ac t of 1950 , as am en de d . Public L a w 125,8 0 t h Congress, as a m e n d e d b y Public L a w 824 , 80th Congress, a n d Public L a w 723 , 8 1 s t Congress, provides primarily for the maintenance of a domestic tin -smelting industry. It e m p o w e r s t h e R F C , until June 30 , 1956 ; (1) to b u y , sell and transport tin a n d tin ore and concentrates;( 2) to i m p r o v e, 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 T e x a s City, Texas ; (3 ) to finance research in tin smelting and processing ; and (4 ) to do all other things n ec es sar y to the accomplishment of the foregoing. U n d e r the Defense Production Ac t of 1950 , as a m e n d e d , a n d related Executive Orders , the authority to purchase and m a k e c o m m i t m e n t s to purchase tin me ta l, tin ores an d concentrates, and tin contained in slags, flue dust, a nd drosses for G o v e r n m e n t use o r for resale w a s delegated to the R F C by the Admini strator of General Services Administration on M a r c h 5 , 1951 . R F C b e c a m e sole importer of pig tin und er National Production Authority Ord er M -8, effective M a r c h 12, 1951. T h e s a m e order placed all tin sales, with limited exceptions, under allocation b y N P A b egin ning M a y 1, 1951 (N P A Order M -8 w a s a m e n d e d , effective A u g u s t 1, 1952, permitting resumption of private importations o f tin). Pu rcha se a n d Sale of Tin Metal Whi le t h e R F C b e c a m e sole importer of tin metal on M a r c h 12 , 1951, the level of foreign m ar k e t prices resulted in suspension of purchases until Jan uary 1952. A g r e e m e n t w a s then reached betw een the British G o v e r n m e n t a n d the U n i t e d States G o v e r n m e n t w h e r e b y the United States w a s to obtain 20,000 tons of tin metal b y the end of 1952 at $ 1.18 per pound , f.o.b. foreign port of delivery. T h e British agree ment w a s the first break in the lengthy tin price controversy between the m a i n producing countries an d t h e United States, the principal con su mi ng country. While it did not involve tin concentrates for the Te xas City smelter, the pattern w a s set for negotiations with Indonesia a n d the Belgian C o n g o for tin metal an d tin concentrates an d with Bolivian producers for tin concentrates. O n M a r c h 18 , 1952 , agre ement w a s reached with Indonesian representatives on three -year contracts, beginning M a r c h 1 , 1952, covering the purchase of a m i n i m u m of 18,000 and a m a x i m u m of 20,000 long tons of tin and /or tin in concentrates each year. O f these quantities, 8,000 tons each y ear will consist of tin in concentrates. T h e basic price for the first t w o years will be $1.2075 per p o u n d of tin delivered c.i.f. United States ports. T h e price for the third year will be subject to negotiations. A g r e e m e n t has also been reached with African Metals Corporation on four -year contracts b e g i n ning M a r c h 1, 1952, covering the purchase of a m i n i m u m of 5,000 tons of pig tin and a m i n i m u m of 2,000 tons of tin in concentrates each year based on an expected over -all production of 13,000 tons of tin in concentrates per year f r o m the Belgian C o n g o . T h e contracts contain termination options for the third and fourth years. T h e basic price will be $ 1.2075 per p ou nd of tin delivered on dock , United States ports. D ur in g the period of suspension o f purchases, industry requirements w e r e m e t from reserve stocks and f r o m current production of the Te xas City smelter. Reserve stocks held b y R F C w hi ch a m o u n t e d to 18,829 long tons of tin metal on Jun e 30 , 1951 , w er e reduced to a low of 3,666 tons at the end of February , 1952. Since reentering the foreign tin m ark et in January , R F C has received n u m e r o u s offers of tin metal from private dealers a nd importers. T h e total of such short t er m c o m m i t m e n t s t hro ugh June 30, 1952 , amounted to 23,568 long tons. A s a result of deliveries under these contracts a n d those under long t er m contracts w i t h t h e British , Indonesians and Belgians, R F C stocks of tin metal rose f r o m a low of 3,666 tons at the end of Fe br ua ry to 18,320 tons at the end of Ju ne of w h i c h latter a m o u n t 15,000 tons are held under directive of Defense Production Administration . These results were obtained despite the fact that production at the Te xas City smelter during the four m o n t h s period ending June 30 a m o u n t e d to only 5,526 tons . This small production w a s attributable to lack of ore and a complete s h u td o w n in J un e due to a strike. 23 In accordance with its policy of setting reasonable selling prices for its tin, R F C maintained a price of $ 1.06 per pou nd f r o m June 18 to July 31, 1951 , and $ 1.03 p e r poun d f ro m A u g u s t 1, 1951 to J a n u a r y 21 , 1952. O n J an ua ry 22 the price w a s raised to $ 1.215 as the result of the British agreement a n d has since been maintained at that level. Dur ing this period the equivalent Singapore price fluctuated b e t w e e n a low of approximately $ 1.02 a nd a high of approximately $ 1.27. All sales of tin to industry b y R F C continue to be m a d e under allocations b y National Production Authority . D u ri n g the fiscal year and the six m o n t h s ending June 30 , 1952 , such sales a m o u n t e d to 46,600 tons a n d 21,800 tons respectively. These sales figures do not include sales to General Services Administration for the national stockpile a nd transfers of tin to a special reserve inventory p u r s u a n t to directive b y Defense Production Administration to be financed under Section 303 , Defense Prod uct ion A c t of 1950 . O r e Pr oc ur eme nt a n d Stocks O re receipts at the smelter during the six m o n t h s and the fiscal year ending J un e 30 , 1952 , a m o u n t e d to 6,958 tons, containing 4,832 tons of tin, and 30,249 tons containing 17,237 tons of tin respectively. T h e following table sh ow s a b re a k d o w n of these receipts by country of origin an d grade : Fiscal Year 1952 January -June 1952 Long Tons Ore BOLIVIAN High Grade Medium Grade Lo w Grade Total Bolivian Indonesia Thailand Belgian Congo Miscellaneous Total 3 4 % Tin Long Tons Tin % Total Content Long Tons Ore % Tin Long Tons Tin % Total Content 59.32 46.78 20.86 2,136 1,487 1,389 42.62 29.67 27.71 61.76 21 14.69 467 26.12 122 85.31 3,601 3,179 6,660 501 28.54 143 100.00 13,440 37.29 5,012 100.00 501 3,202 1,883 963 409 28.54 72.55 74.19 73.42 64.06 143 2,323 1,397 707 262 2.96 48.08 28.91 14.63 5.42 13,440 9,677 4,440 2,093 599 37.29 72.48 74.12 74.20 61.44 5,012 7,014 3,291 1,553 367 29.08 40.69 19.09 9.01 2.13 6,958 69.45 4,832 100.00 30,249 56.99 17,237 100.00 Stocks of tin concentrates a n d other tin -bearing materials, exclusive of refined tin, held b y R F C o n Ju ne 30 , 1952, contained a n estimated total of 21,756 tons of tin. M o s t of this represents n e wl y p u r chased material stored in foreign ports or in transit to the United States. Negotiations for a long t e r m contract with Bolivian producers have been going on intermittently since expiration of the 1950 contract. Several short t e r m agreements we re entered into during 1951 , t h e last of w h i c h covered 30 days ' production ending October 5, 1951 . Pending the conclusion of such negotiations, arrangements w er e m a d e wi t h various Bolivian p r o ducers for tin concentrates accumulated in Peruvian a n d Chilean ports. B y J un e 30 , 1952 , c o m m i t m e n t s under these spot contracts a m o u n t e d t o an estimated 15,000 long tons of tin contained in concentrates , of wh ic h 11,816 long tons h a d been delivered . T h e recent change in the Bolivian G o v e r n m e n t caused a further delay in negotiations for a long t er m over-all agree ment. A s of June 30 , formal talks h a d not been r esu me d . Other principal sources o f tin concentrates are Indonesia, Belgian Con go an d Thailand. A s previously indicated, n e w agreements effective M a r c h 1, 1952 , have been m a d e w h ic h provide for delivery f r o m Indonesia of 8,000 tons of tin contained in concentrates yearly for the next three years and of 2,000 tons of tin in concentrates yearly f r o m Belgian C o n g o . Prior contracts with these suppliers, wh i c h expired D e c e m b e r 3 1 , 19 51 , provided for yearly deliveries at the rate of 9,000 tons and 1,500 tons of tin content respectively . Purchases in Thailand are n o w being m a d e at a rate of approximately 4,000 tons of tin content per year . A s s u m i n g purchases of 1,000 tons of tin contained in concentrates f r o m miscellaneous sources such as Mexico, Portugal, Alaska a n d the United States, it is estimated that the total tonnage available f r o m countries other than Bolivia will total 15,000 tons of tin content annually . 24 S m e l t e r Operations a n d Results Since its inception the Tex as City smelter has been operated by Tin Processing Corporation as a n in d ep e nd e nt contractor under a n operating agre ement w i t h R F C . In conjunction with this ar ra ng e me nt, R F C purchases all concentrates, pays all operating costs an d sells the resulting tin. A bn or m al ly difficult operating conditions were encountered during the fiscal year ending June 30 , 1 9 5 2 . Shortage of ore forced a gradual curtailment in the production rate f r o m approximately 3,000 tons o f refined tin m o n t h l y in the first six m o n t h s of calendar year 1951 to approximately 1,840 tons m o n t h l y in t h e first five m o n t h s of 1952. In J un e , concentrates b e c a m e available in substantial quantities through s p o t purchases f r o m Bolivian producers and through the latest agreements with the Belgians and Indo nes ians but the smelter w a s closed d o w n the entire m o n t h by a strike of production workers . T h e strike w a s settled a nd operations re s um e d on A u g u s t 19 . T h e following table s ho ws production of refined tin b y m o n t h s for the fiscal year ending Ju ne 30 , 1952 : L o n g T on s 1951 July August Sep tem ber October November December 1952 Ja nu ary Fe bru ary March April May J un e Total 3 -Star Copan Total 2,405 2,543 2.117 2,091 1,806 1.805 1,803 1.800 1.800 1,800 1,800 100 99 49 50 25 25 50 26 50 50 2,505 2,543 2.216 2,140 1,856 1,830 1,828 1,850 1,826 1,850 1,850 21,770 524 22,294 T h e relationship betwee n L o n g h o r n smelter production, United States imports a n d United States c o n su m p t io n of p rim ar y tin is s h o w n i n the table below . T h e data pertaining to imports a n d c o n s u m p ti on coincide generally w i t h figures published by the International Ti n Study G r o u p . L o n g T on s Refined Tin Calendar Y e a r 1942 ... 1943 . 1944 . 1945 .. 1946 .. 1947. , 1948 . 1949 . 1950 .. 1951 . Total ... U.S. Imports U.S. Co ns u mp ti on 26,753 11,919 13,338 9,375 15,520 24,899 49,196 60,222 82,916 27,784 56,288 46,253 59,156 55,642 54,627 59,166 59,863 47,163 71,774 56,542 321,922 566,474 Longhorn Production 15,695 20,727 30,619 40,591 43,468 33,292 36,677 36,064 32,817 31,669 321,619 % of U.S. Co n s u m pt i o n 27.88 44.81 51.76 72.95 79.57 56.27 61.27 76.47 45.72 56.01 56.78 In the fiscal year e nded Jun e 30 , 1952 , the smelter treated 19,770 tons of Bolivian ore, 16,376 tons of alluvial orea n d 602 tons of miscellaneous ore, a total of 36,748 tons of p r i m a r y ore. T h e average grade of the ores treated w a s 35.88 % for Bolivian ore , 73.23 % for alluvial ore a n d 54.39 % for miscellaneous ore. O f the total production of 22,294 tons of refined tin, it is estimated that 19,145 tons we re recovered f r o m pr ima ry ores a n d 3,149 tons f r o m secondary materials. 25 Operations for the fiscal year resulted in a net loss of $ 703,011 after all expenses , c o m p a r e d with a net profit of $ 369,142 for fiscal year 1951. Expenses during the year included a n o n -recurring c h a r g e of $688,118 for tin loss in recovering rejects an d slimes a n d unusual expenses of $ 199,705 in connection with the strike at the smelter . T h e total payroll at the smelter normally n u m b e r s about 900. This w a s reduced to about 7 50 during the period of limited production, and , as a result of the strike, w a s further reduced to 279 as of J u n e 30, 1952 . Waste Acid Plant T h e W a s t e Acid Plant, like the smelter, w a s shut d o w n during the m o n t h of Ju ne d ue to the strike. In the preceding eleven m o n t h s a total of 1,267,138 gallons of commercial grade hydrochloric acid was produced for use in the smelter. A n additional 1,335,693 gallons of pre -concentrated waste acid was produced for sale to the City of H o u s t o n for treatment o f s ewa ge . B y -product metallic precipitates ( iron cements ) produced a m o u n t e d to 211 long tons, of whi ch 40 tons were sold in trial shipments t o two smelting concerns. W a s t e acid that ha d been pre -concentrated a nd its metallic contents reduced w a s found to be effective for leaching slimes a nd approximately 3,700,000 gallons of this product f r o m the W a s t e Acid Plant were used in the smelter over a seven -m o n t h period ending M a y 31. D u r i n g m u c h of the past fiscal year production of commercial grade acid has not been pushed because of curtailed operations at the smelter and lessened d e m a n d for acid. T h e acid plant as a whole , as well as the individual units , w a s subjected to frequent shutdo wns for tests, repairs and im pr ov em en ts in a strenuous effort to get the plant in shape for continuous large -scale production w h e n smelter require me n ts for acid are once again heavy . Research a n d Capital I mpr ove men ts W o r k of the Experimental D e pa r t m e n t at the smelter w a s devoted in large part to tests in c onn ec tion with W a s t e Acid Plant operations. T h e principal result of these tests w a s a decision to c h a n g e the drying, conveying a n d f u m e discharge s y s t e m s in order t o improve capacity a nd eliminate the hazards of discharge f u m e s. T h e s u m of $ 372,000 w a s authorized for this w o r k u t progress has been slow due to delays in securing the necessary eq ui pm en t. Other units of the acid plant have presented n u m e r o u s problems requiring study, investigation a n d tests before their eventual elimination. In the smelter proper investigations are constantly being m a d e to improve conditions of health and safety, devise n e w a n d better treatment processes, a nd m a k e the m os t efficient u s e of fuels, chemicals a n d engineering materials . That notable progress has been m a d e is attested to b y the successful elimination of m a n y impurities in the smelter circuit w hi ch formerly caused operating difficulties and resulted in poorer products. D u ri n g the fiscal year , expenditures for capital impr ovemen ts am o u nt e d to $ 167,876 for the smelter a n d $ 148,629 for the W a s t e Acid Plant, a total o f $316,505 . 26 REPORT OF ABACA OPERATIONS_FISCAL YEAR 1 9 52 Legal Authority a n d Responsibilities Because of the strategic importance of abaca tothe nation's military a n d industrial requirements, the A b a c a Production Ac t of 1950 ( Public L a w 683 , 81st Congress ), providing for the continuance a nd e x p a n s i o n of the g o v e r n m e nt -o w n e d plantations in this hemisphere, w a s enacted on A u g u s t 10 , 1950 . Concurrently with the signing of t h e Act, the President directed the Corporation to continue o p e r a tion of the plantations. T h e principal provisions of the L a w are as follows : 1. T ha t the plantations b e continued for a period of ten years f ro m April 1, 1950 , unless the Congress or the President shall direct earlier termination ; 2. T ha t at the direction of t h e President, the then existing acres in cultivation could be increased or decreased , except that the acreage under cultivation m a y not exceed 50,000 acres at any one time ; 3. T ha t research m a y be undertaken with a view to attaining m a x i m u m efficiency in abaca d e velopment , culture an d processing . O n A u g u s t 21 , 1950 , the President directed the Corporation to e xpa nd the plantations f r o m the existing 25,000 to the m a x i m u m 50,000 acres , as nearly as is practicable. History Wi thi n a short time after entry of the United States into W o r l d W a r II, the bulk of the nation's supply of abaca fiber w a s cut off b y the Japanese occupation of the Philippine Islands. U p to that time, the Philippines produced about 95 % of the world's abaca supply . T h e remainder c a m e f r o m the D u t c h E a s t Indies . W i t h the cooperation of the United Fruit C o m p a n y , a concern with over fifty years experience in tropical agriculture, the G o v e r n m e n t undertook the installation of five plantations in four Central A m e r i c a n countries . M a n y difficulties w e r e encountered in the process because of wa rt im e scarcities in labor , ma chine ry , shipping, etc., but b y 1943 , all of the plantations, consisting of approximately 28,000 acres, w er e installed. So on thereafter, these plantations beg an to turn out fiber badly needed in the w a r effort, in time to a u g m e n t the dwindling pre -w a r stockpile. A tabulation of the production f ro m these plantations f r o m inception through the close of fiscal year 1952 follows : Ab aca Production - Inception T h r o u g h June 3 0 , 1 9 5 2 (P o u n d s of Line Fiber ) F Costa Rica Guatemala Honduras Panama Total 894,285 2,793,314 10,386,635 21,888,350 12,223,475 36,130,325 40,281,175 29 ,710,300 22,330,800 9,599,400 31,815,000 218,053,059 (T wo P l a n tations) Calendar Calendar Calendar Calendar Calendar Calendar Calendar Calendar Calendar Calendar Fiscal year year year year year year year year year year year 1942 ... 1943 . 1944 . 1945 . 1946 1947 . 1948 .. 1949 . 1950 . 1951 (6 m o s .) . 1952 . Totals ..... 2,475,300 4,992,075 1,038,125 9,247,975 13,870,725 9,263,800 4,708 ,200 1,748,400 8,075,400 1,194,875 3,917 ,100 3 ,122 ,350 7,808,625 10,740,675 8,197,200 8,659,500 3,658 ,200 10,061 ,100 944,625 2,520,375 3,153,425 7,732,450 8,308,025 5,310,900 2,220,000 1,422,300 4,763,700 894,285 2,793,314 5,771,835 10,458,800 4,909,575 11,341,275 7,361,750 6,938,400 6,743 ,100 2,770,500 8,914,800 55,420,000 57,359,625 36,375,800 68,897,634 27 W h i l e t he production f r o m the government -o w n e d plantations is, at present, but 10 % of the world production , it does nevertheless provide the nucleus of the fiber needs of t he country during an e m e r g e n c y . It is therefore looked upo n as a “ stockpile -in-the-gr o un d ,” w hi ch has the effect of reducing the physical stockpile an d lessening rotation problems. Expansion T h e ma j or portion of the Corporation's efforts in the abaca p r o g r a m during the year just closed dealt with the preliminary steps necessary t ow ard accomplishing the acreage expansion directed b y the President . Location o f new areas for expansion purposes involves consideration of all k n o w n potential a r e a s in the We s t er n He mi sp he re, which entails time-consuming soil surveys and investigation of other factors , such as rainfall, transportation , drainage requirements, labor supply , e co n om ic conditions , etc. Since undertaking the expansion , over 150,000 acres of land have been surveyed and analyzed in an effort to locate the approximately 25,000 additional acres required . Also involved in the expansion is the wo rk in g out of arrangements a n d agreements with foreign governments a nd m a n a g e m e n t contractors . T h e agreements with the governments are essential in o rder that firm understandings regarding duties, taxes, etc., m a y be had . In s o m e instances,these a r r a n g e m e n t s m u s t be considered by the legislative bodies of the country . Additional m a n a g e m e n t contractors are b e in g brought into the p r o g r a m to the extent feasible and practicable. This entails extensive investigation of background , qualifications, financial stability, etc., as well as the w o r ki n g out of mutually acceptable terms . All of these activities are time -c on su m in g a n d require careful consideration in order that the t w i n objectives of m a x i m u m production a nd low cost be attained. B y the close of the y ea r, the Corporation h a d n a r r o w e d d o w n the vast n e w areas under consideration , and the list of prospective applicants to the limited n u m b e r required for the expansion , a nd it is antici pated t h a t the f o r m a l authorizations dealing with the bulk of the additional acr ea ge needed will be m a d e in the near future. A s to actual expansion , 5,025 acres we re authorized during fiscal year 1952. W o r k w a s beg un o n this acreage in October 1 9 5 1, but h a d to be suspended f r o m mid -N o v e m b e r through M a r c h because of the intervening rainy season . H o w e v e r , b y June 1952 , approximately 1,700 acres w e r e planted a nd u n d e r cultivation. It is contemplated that the re ma in in g 3,325 acres will be planted b y the third quarter of fiscal year 1953. In addition,construction of t h e attendant labor c a m p s, railroad facilities, drainage canals , etc., is u n d e r w a y, completion of wh ic h is anticipated at or about the s a m e time planting is concluded . Investigations are being concluded in connection with one project consisting of 4,000 acres in Costa Rica . The operator is currently performing the detailed engineering a n d topographical surveys necessary t o determine requiremen ts in drainage, roads , bridges, etc. Completion of planting is anticipated b y the close of the fiscal year 1953 . A recapitulation of the acreage in cultivation as at J u n e 3 0 , 1952 , together with acreage already authorized , a s well as acreage required to reach the goal of 50,000 acres, follows: Acres Original plantings remaining in cultivation June 30, 1952 N e w plantings during F Y 1952 ... 22,400 1,700 Total in cultivation June 30, 1952 .. T o be returned to United Fruit C o m p a n y b y provision of contract b y January 1, 1954 . 24,100 2,200 Authorized F Y 1952, to be planted F Y 1953 . 21,900 3,325 Ne ede d to attain goal of 50,000 ... 25 ,225 24,775 50,000 28 T h e foregoing tabulation indicates that 22,400 acres of the original plantings remained in cultiva t i o n a t t h e e nd of fiscal year 1952 , whereas approximately 24,000 acres we re in cultivation at the b e g i n n i n g of such year . T h e decrease of 1,600 results f r o m a b a n d o n m e n t s of inefficient and unproductive a c r e a g e , as well as acreage returned to the operator b y provision of contract m a d e in 1942. O p e r a t i o n s a n d Results A b a c a production , including Tow , during fiscal year 1952 a m o u n t e d to 32,041,250 pounds . Cost of p r o d u c t i o n , i.e., all costs incurred at t h e plantation level ( including depreciation totaling $ 747,527 ), a m o u n t e d to $ 7,595,775 , or a unit cost of 23.71c per p ound for fiber produced . After t h e addition of h o m e office expenses , such as interest a n d administrative expense , a substantial fire loss incurred at the H o n d u r a s plantation , a nd taking into consideration the change in inventories , the total cost a m o u n t e d to $ 8,439,192 . D u r i n g the fiscal year 1952 , 30,861,900 pounds of fiber w e re sold an d delivered for a total of $ 7,945,231 . Before addition of h o m e office charges and the fire loss, operations resulted in a profit of $ 4 3 8 , 5 3 9 . After all charges , operations resulted in a loss of $ 493,961 . T h e fire loss am o un t s to $419,372 s o that it m a y be stated that the loss during fiscal year 1952 f r o m n o r m a l operations, i.e., after all c h a r g e s ,including depreciation, interest, salaries of R F C personnel and other administrative expense, is a b o u t $ 75,000 . Analysis o f Operations Last year's report br o ug ht out the fact that, u p on passage of Public L a w 683 , 81st Congress, p r o v i d i n g for the continuation of the abaca p r o g r a m for a period of u p to ten years , the approach t o the operation of the plantations changed f r o m a short -term to a long-range basis. A s a result , during fiscal y e a r 1951 , efforts were concentrated up on the rehabilitation of the plantations, through fertilization, i n cre ased an d improved culture, etc., with an eye to sustained greater production in future years . It w a s anticipated, as set forth in last year's report ,that as a result of these measures, production wou ld increase f r o m the 19,500,850 pounds in 1951 to approximately 30,000,000 pounds in 1952 . T h e expected production w a s realized in 1 9 5 2 although , and in no small m ea su re , the increase over 1 9 5 1 is attributable to the ideal weat her conditions w h i c h prevailed last year . O f the $ 2,182,525 loss incurred at the plantations during 1 9 5 1, $ 1,681,881 w a s experienced at the Cos ta Rican plantations. I n furtherance of the general rehabilitation p r o g r a m adopted with the passage of Public L a w . 683 , a m a j o r corrective program ,involving the expenditure of approximately $ 1,000,000, w a s undertaken at the Costa Rican plantations during fiscal year 1952 in order to place operations there o n a m o r e sound economic basis. Essentially, this program is aimed at correcting the drainage a n d transportation facilities wh ich are believed t o have affected efficiency of operations in the past. Similar corrective w o r k on a smaller scale, w a s carried on at Costa Rica during 1951. These me asu res , coupled with the favorable weather conditions w hi c h prevailed last year, w er e responsible for the m a r k e d i m p r ov e m e n t in operations in Costa Rica. Cost of production at Costa Rica last year a m o u n t e d t o 30.650 p e r po u nd , as c om pa re d to 79.87c per po un d in 1951. Production in that country during 1952 w a s 8,170,400 pounds as c o m pa r e d to 3,312,100 pounds in 1951. A l t h o u gh operations in Costa Rica last year resulted in a loss of $ 487,941, this nevertheless is a substantial i mp r ov em e nt over the results of operations during 1951 . T he Gu at em al a an d P a n a m a plantations operated at a profit last year, after all charges. Before addition of the fire loss, the H o n d u r a s plantation also operated at a profit. H o w e v e r , the inclusion of the fire loss places the H o n du r a s project into a loss position. Unit cost of production at all plantations w a s reduced f r o m 39.39c per po u n d during fiscal year 1951 to 23.71c, a decrease of approximately 40 % . T h e final loss of $ 493,961, including the fire loss of $419,372, isto be co m p ar e d with the loss of $ 2,550,032 sustained in fiscal ye ar 1951 , It is anticipated that unit cost of production will a m o u n t to 23.5c per p o u n d during fiscal year 1953 , a slight reduction as c om pa re d to fiscal year 1952. Production is estimated at 32,820,000 pounds. While in total this represents only a slight increase over the 32,041,250 pounds produced d ur i ng 1952 , the rate of production anticipated during the c o mi n g year is estimated at 1,500 pounds per acre a s c om p a re d to the 1,370 pou nds per acre during 1952. H o w e v e r, the average acres i n cultivation during 1953 will be 29 approximately 2,000 less than in 1952 , the decrease being attributable to further a b a n d o n m e n t s templated during the year , for the reasons previously mentioned . con It is anticipated that not withstanding the further increase in production a n d decrease i n cost, operations in general during fiscal year 1953 will result in a substantial loss. This is due to the fact that the sales price of abaca is gradually declining. T h e average sales price prevailing during fiscal year 1951 w a s 27.74c per p o u n d . Last year , sales proceeds averaged 25.740 per p o un d . A further decline is expected during fiscal year 1953. T h e drop in price is associated with a general levelling -off of the ma r ke t to pre -K o re a levels, believed to b e b r ou g h t about by the continuing supply of Central A m e r i c an fiber as well as the gradual increase in Philippine production . Research Previous reports h a v e brought out the fact that the Corporation h a s entered into research a g r e e ments with the De p a r tm e n t of Agriculture a n d the A r m o u r Research Foundation . This is in i mp l e m en t a tion of the provision contained in Public L a w 683 , 81st Congress , regarding research into abaca culture a n d processing with a v iew to greater efficiency in operations. T h e research being conducted b y the D e p a r t m e n t of Agriculture is of a long -term nature , dealing with the investigation of the agricultural phases, such as varieties, culture, insect a nd disease control , etc. D urin g the year, the D ep ar t me nt installed a large n u m b e r of experiments designed to stu dy and uncover the causes of plant disease an d m e a n s of insect control . It also initiated test plots to study cultural practices, such as plant maintenance, fertilization , pruning , harvesting, etc. Several reports were issued on specific problems, all of whi ch have contributed to a better knowle dge of the operation with resulting im p ro ve m en t in operating practices. T h e research being carried on with respect to processing deals with the investigation of existing equipment an d examination into the possibility of utilizing abaca waste . This research is of a short t er m nature, aimed at correcting deficiencies in the existing processing equipment the results of which, w h e n incorporated in the production line, should increase fiber yields without extensive an d costly design changes. It also involves the development of processing equipment capable of cleaning the short an d tangled fibers currently going to waste , a nd w h ic h presently m u s t be disposed of at a cost of about $60,000 per year . B y the close of the year ,pilot operations at the project level under this research p r o g r a m h a d been concluded, a n d recommendations, which will be acted upon as soon as possible, a re in t h e course of preparation . Interim informal advices are encouraging . Future Outlook T h e 60 % increase in production attained last year over fiscal year 1951 is encouraging insofar as the e cono mic aspects of the g o v e r n m e n t -o w n e d abaca projects are concerned. This is so because of the fact that it is generally believed that reduction in unit cost of production m a y only c o m e about through an increase in production ,rather than through a n y reduction in over -all expenditures. Maintenance of the cultivations, a n d attendant costs, m u s t g o on at relatively the s a m e levels, irrespective of volume of production . It should be observed , ho w e ve r , that the question of wh eth er or not the projects m a y be operated ultimately at a profit is directly dependent on factors wh ic h are beyond th e control of t h e Corporation . Sales are m a d e to the national stockpile at the world ma r ke t price ( Philippines) prevailing at the date of sale, even though the cost of production is higher . Therefore, a reduction in unit cost does not carry with it the no r ma l assurance of a n im pr ov ed profit an d loss position, since the reduction in cost m a y be offset by disproportionate d o w n w a r d m ar ke t trends. 30 LIQUIDATION O F WARTIME PROGRAMS T h e orderly liquidation of the assets acquired a n d liabilities incurred under the terminated defense a n d w a r t i m e p ro gr am s continued apace during the fiscal year 1952. Properties in the a m o u n t of $ 19.3 million w h i c h b e c a m e surplus to the needs of the synthetic rubber p r o g r a m w e r e transferred to this p r o g r a m for liquidation. T h e y are included in the assets held as of June 30,1 9 5 1 in the aggregate a m o u n t of $ 109 million as reflected in the following s u m m a r y whic h also sh o ws decreases during the year a n d t h e assets remaining for liquidation at June 30 , 1952 in the a m o u n t of $67.1 million : June 30 , 1951 Loans, securities and accrued interest receivable ... in al 1.e Accounts receivable, advances, etc.: U . S. G ov e rn me n t agencies. Conditional sales contracts . L a n d grant freight claims . Other .. Total accounts receivable, etc... Property , plant, equipment and related facilities: N o t under lease .. Less - subject to conditional sales contracts . $ June 30 , 1952 Decrease 4.0 (In millions) $ 3.8 $ .2 .0 13.6 2.4 17.3 7.8 12.6 3.1 11.3 ( 7.8 ) 1.0 .7) 6.0 33.3 34.8 ( 65.9 33.3 40.6 32.0 25.3 1.3 ( 1.5 ) isti she Disposable properties . U nd er Lease . 32.6 35.7 8.6 19.8 24.0 15.9 COS shi an Total properties, etc.. 68.3 28.4 . 39.9 Other assets.. 3.3 3.4 Total . $109.0 $ 67.1 $ 41.9 dhe ofar oft arom unce me dedes cara Realizable Values T h e a m ou n ts in the s u m m a r y above are cost or gross book values. T h e Corporation h a s adopted a policy of reflecting in its financial statements realistic v a l ua ti o ns of all assets included in the Liquidation Program . A review a nd evaluation of the assets held at J un e 30 , 1952 , undertaken to imp lement such policy, resulted in assigning a total estimated realizable value of $ 30.6 million to the assets comprised in the book value of $ 67.1 million . Estimated realizable values by asset categories are s h o w n in Schedule I, " Assets, Liabilities a n d F u n d s Held in Connection with National Defense, W a r an d R e c o n version Activities." Loan s, Securities a n d Accrued Interest Receivable T h e decrease of $ .2 million results f r o m p ay me nt s on l o a n s m a d e by the f or mer Defense Supplies Corporation . T h e outstanding balances on these loans at June 30 , 1952 , a m o u n t e d to $ .8 million . T h e remainder of this category consists of securities of w h i c h the principal it em is $3 million capital stock of B a n c o do Borracha , n o w k n o w n as A m a z o n Credit B a n k , B e l e m , Brazil, acquired during W o r l d W a r II in connection with the natural rubber p r o g r a m . Estimated realizable value of $2.3 million has been assigned to this category of assets. Accounts Receivable , Advances, Etc. T h e increase of $ 7.8 in accounts receivable f r o m U.S. G o v e r n m e n t agencies is represented chiefly b y a receivable f r o m the N a v y D ep ar t me nt for cost of a plant constructed b y the for mer Defense Plants Corporation , originally leased to Curtiss -W r i g h t Corporation a n d later to Lustron Corporation . U p o n termination of the latter lease, the N a v y requisitioned and took possession of the plant pursuant to appropriate legislative authority. A r r a n g e m e n t s with the De pa rt m en t of the N a v y respecting re i m bu r s e m e n t have not yet been c o n s u m m a t e d . 31 T h e decrease of $ 1 million in conditional sales contracts includes pa ym en ts of $ 65,000 in final liquidation of 23 contracts a nd $ 875,000 on account of the 10 contracts stilloutstanding at June 30 , 1952 , i n the a m o u n t of $ 12.6 million . O f the latter a m o u n t, $ 11.2 million is receivable f r o m Republic Steel Corporation on 4 contracts to wh ich reference is m a d e later. L a n d grant freight claims receivable at Ju ne 30 , 1952 , aggregated $3.1 million co mp ar ed wi th $ 2.4 million at J u n e 30, 1951 , an increase of $ .7 million. During the fiscal year 1952 the Corporation filed 3,725 claims for $ 1.9 million an d collected $ 1.1 million on 3,692 claims; reductions in the a m o u n t of claims filed a nd cancellation of 315 claims aggregated $ .1 million. Since undertaking a review of all freight charges paid by its wa r ti m e subsidiaries on shipments of materials a nd equipment for military or naval u s e during the period in w hich the G o v e r n m e n t w a s entitled to reduced rates under the L a n d Grant Act , the Corporation has developed an d filed with the various railroads over the past five years an aggregate of 23,400 claims for $9.3 million. O f this a m o u n t 14,100 claims for $ 5.6 million h ave been collected, 1,800 claims for $ .6 million have been cancelled, leaving 7,500 claims for $3.1 million in the h ands of the carriers and unpaid at June 30 , 1952. It is estimated that 8,000 additional claims for an aggregate of $3.5 million re mai n to be developed , filed and collected . In this connection progress is being m a d e in negotiations with the A m e ri c a n Association of Railroads towards simplification of procedures w hi ch should result in substantial economies in the future processing and establishing of claims with the railroads . T h e decrease of $6.0 million in other accounts receivable, advances , etc., results fr om disposition of a large n u m b e r of miscellaneous receivables remaining f r o m n u m e r o u s pr og ra ms of the former w a r time subsidiaries of the Corporation . A m o n g the larger items disposed of were receivables of $ 1.5 million relating to the wa r ti m e m e a t subsidy program , $ 1.6 million arising f r o m O P A price differentials claimed in connection with the w art ime alcohol program , and $ .7 million of advances to n u m e r o u s nationals of Peru a n d Brazil in connection with the natural rubber program . T h e receivables included in this general category of accounts receivable, advances, etc., stem f r o m all activities whi ch the Corporation an d /or its subsidiaries w ere authorized to carry out during W o r l d W a r II. M a n y of the i t e m s n o w remaining constitute the rem nant s of vast p ro gr am s of construction, procurement a n d subsidies a nd of other activities pursuant to such w a rt i m e authority. A pa rt f r o m land grant freight claims and conditional sales contracts, such remaining items, while insignificant in relation to the total v olu me of the p r og r a ms from w hi c h they stem , present all the p ro b l em s characteristic of a clean -up function an d are unsettled despite aggressive administrative effort toward collection or other satisfactory disposition. M or eo ve r , w h e r e nationals of foreign countries are involved , effective action necessitates cooperation o f the State De p a r tm e n t . Consideration of all pertinent circumstances resulted in assigning estimated realizable values aggregating $ 14.9 million to the accounts receivable, advances , etc., comprised in the book value of $34.8 million . Property , Plant, E q u i p m e n t a n d Related Facilities Disposable properties decreased during the year b y $ 24 million , f r o m $ 32.6 million held at J u n e 30 , 1951 to $ 8.6 million at J un e 30 , 1952. S uc h decrease is accounted for b y the disposition of the following properties : Plancor 18 – Curtiss -W r i g h t - transferred to the D e p a rt m e n t of the N a v y — $7.8 million Plancor 1844 - Monolith Portland C e m e n t C o m p a n y — transferred to General Services Ad mi ni st ra tion— $ 4.4 million Plancor 1167 — Southern California G a s C o m p a n y - part transferred to active synthetic rubber rubber plants, part sold , a n d the balance of unrecoverable residual costs written off— $ 11.8 million Disposable property of $ 8.6 million at Ju ne 30 , 1952 consists of the following : No. of Projects Held for transfer to other Go v er nm e nt agencies upon enactment of legislation .. Amount 1 2 $4,273,380 Being dismantled . 1 2,387,422 Other .. 6 539 ,615 10 $ 8,565,970 In process of transfer to General Services Administration .. I 32 1,365,553 Properties under lease decreased during the year b y $ 15.9 million , f r o m $ 35.7 million at J un e 3 0 , 1 9 5 1 to $ 19.8 million at June 30 , 1952. This decrease includes a n accounting reclassification reducing R F C ' s accountability to the U. S. Treasury for experimental costs aggregating $ 13.9 million with respect t o the p lyw ood flying boat constructed b y T h e H u g h e s Tool C o m p a n y during W o r l d W a r II a nd sales o f properties costing $ 2.0 million to lessees. In the latter a m o u n t are facilities costing $ 1.2 million w h i c h we re leased t o Republic Steel Corporation and wh ic h w e r e sold to Republic for $ .4 million p u r s u a n t to exercise b y it of the purchase -option provided in the lease. D u r i n g the te rm of the lease Republic paid to the Corporation rentals of $ 1.1 million. Property under lease of $ 19.8 million at J u n e 30 ,1 9 5 2 is c ompo sed o f 14 properties of w hi c h 8 in th e a m o u n t of $ 11.9 million are under lease to Republic Steel Corporation . T h e status of Republic leases, together with the status of the four conditional sales contracts with Republic previously referred to is s h o w n in the following s u m m a r y : No. Leases : Projects with rentals limited to recovery of investment .... Recorded Cost of Property Rentals or Repayments during F Y 1952 Unpaid Balance of Sales Contracts Percent of Recorded Cost Recovered to 6-30-52 (Dollars are in millions ) 4 $ 10.0 $ .8 67.9 Projects on which rent als are payable to e x piration of leases.... 4 1.9 .1 48.6 Total leased projects.. —8 11.9 .9 64.8 Conditional sales c o n tracts ... -4 $ 15.4 $ .7 $11.2 27.1 T h e properties under lease are subject to p u r ch a s e options by the exercise of wh i c h Republic m a y purchase t h e properties prior to or u p o n expiration of the leases pursuant to the terms stipulated in the agreements. T h e properties under conditional sales contracts are transferable to Republic at the expiration dates of the contracts, subject to the periodic p a y m e n t of the a m ou n ts due und er the contracts based on production , without further mo ne ta ry consideration . A n estimated realizable value aggregating $ 13.3 million h a s b e e n as si gne d to property , plant, equipme nt and related facilities comprised in the book value of $28.4 million . S u c h values h a v e been determined u p o n the basis appropriate to the circumstances related to each property f r o m the v i e w point of an existing proposal for disposition or the remoteness of the time w h e n the property will b e c o m e available for disposal. Accordingly, in cases w h e r e proposals for disposition are under current consideration values assigned w e r e estimated realizable or salvage values ; in cases w h e r e properties w e r e subject to leases having several ye ar s to run , values assigned w e r e based u p o n consideration of depreciation accrued during period of operation b y lessees, anticipated future rentals, m i n i m u m p u r chase -option prices w h e r e such w e r e provided in the lease agreements a n d other factors bearing u p o n the diminution in value wh ic h , it is reasonable to expect, w o ul d be reflected in a realization u po n disposal at s o m e future date . Other Assets T h e decrease of $3.3 million in other assets is accounted for b y the disposition of $2.9 million of inventories a n d $ .4 million of miscellaneous assets. T h e inventories consisted of $2.1 million of platinum a nd $.2 million of anorthosite a nd limestone transferred to General Services Administration ; $ .3 million of quinine an d cinchona sold to the d r u g trade ; a n d $ .3 million of miscellaneous operating supplies, spare parts, etc., f r o m a n inactivated synthetic rubber plant in process of dismantling, part of w h i c h w a s sold at auction an d the balance transferred to active synthetic rubber plants. 33 Liabilities Liabilities under the Liquidation P r o g r a m at Ju ne 30 , 1952 w e re $2.7 million c o m p a r e d at Ju ne 30 , 1951 , a decrease of $ 2.4 million resulting f r o m liquidation of proved claims b y bursements or adjustments. A s in the case of accounts receivable previously referred to, the also involve problems incident to the clean -up status of m a n y of the items, s o m e of w hi ch are liabilities to , or counter claims filed by , debtors included i n the accounts receivable. FINANCIAL wi th $5.1 cash dis liabilities offsetting STATEMENTS Balance Sheet — Exhibit A T h e total assets show n on the Corporation's Balance Sheet at the close of the fiscal year w e r e $ 696 million, a decrease of $ 178 million co m p ar e d t o the previous year . This decrease in assets resulted from repayments during the year in excess of disbursements in all classes of loans except catastrophe loans. T h e liability to the U. S. Treasury for net proceeds f r o m liquidation of assets an d / or operation of facilities acquired un der national defense, w a r a n d reconversion p r og r a ms decreased to $43 million f r o m $ 153 million as of June 30 , 1951. This is a net decrease, after paying into the U. S. T reas ury the s u m of $ 113 million during fiscal year 1952. P a y m e n t s to the Treasur y in prior years w e r e $ 50 million in fiscal year 1951 , $ 25 million in 1950 a n d $ 100 million in 1949 . T h e liability to U. S. Treasury for net proceeds f r o m liquidation of assets transferredf r o m Smaller W a r Plants Corporation also decreased f r o m $ 4.8 million at June 30 , 1951 to $344,765 at J u n e 30 , 1952, after p a y m e n t to the Treasury of $ 5 million. T h e remaining proceeds of $ 344,765 are retained to cover expenses a n d contingent liabilities chiefly relating to outstanding agreements to participate in b a n k loans. T h e dividend to the U. S. Treasury of $ 12,293,880 represents the a m o u n t by w hi ch unreserved accumulated n et i n c o me at J un e 30 , 1952 , less dividends of prior years , exceeded $ 250 million . The a m o u n t of the dividend is m a d e u p of fiscal year 1952 earnings of $ 10,853,671 , less adjustment of $ 146,457 to prior year's i n c o m e; a nd adjustments of $ 1,586,666 to income reserved for contingencies. D u r i n g the fiscal year pa y me n t s m a d e to U. S. Treasury aggregated $215.9 million c o m p r i s i n g N e t reduction of notes payable .. P a y m e n t of interest on notes payable . P a ym e nt s on account of net proceeds from liquidation and /or operation of assets and facilities , Acquired under national defense,w a r and reconversion programs . Transferred from Smaller W a r Plants Corporation . P a y m e n t of dividend for fiscal year 1951 ... $ 76,877,350 4,676,939 113,000,000 5,000,000 16,345,812 $215,900,101 Total... T h e balance sheet does not reflect c o m m i t m e n t s wh ic h w e r e undisbursed at the close of the fiscal year . These w e r e as follows : C o m m i t m e n t s for direct loans to industrial and commercial enterprises (including co mm itm ent s for immediate participation in bank loans) .. C o m m i t m e n t s for deferred participation in ba nk loans.. Other loan commitments .. $153,407,709 50,046,060 54,978,464 $258,432 ,233 34 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 $ 42.6 million in 1951 to $ 34.1 million in 1952. T h i s decrease of $ 8.5 million is net a n d is due principally to reductions of $ 8.2 million in gross interest earnings of w h ic h $3.9 million w a s on the Corporation's loan to the Federal National M o rt g a ge A s s o DIS POSITION O F G R O S S I N C O M E ciation. ACTIVITIES F R O M L E N D I N G T h e chart to the left sh ow s FISCAL Y E A R 1952 the dispositiono f the Corporation's MILLION DOLLARS $ 18.5 gross income f r o m lending activi R ties for the fiscal year 1952 . E L E E E E E E Before provisions for losses net E E E E E C income a m o u n t e d to $ 12,484,264 E E L E E NET INCOME for fiscal year 1952 c o m p a r ed with E C $E 13.5 $10.9 MILLION L $ 13,072,302 in 1951. Additions to E (To be paid U.S.Treasury reserves for losses we re provided os dividends) in the a m o u n t of $ 1,630,593 in 1952 a n d $ 5,453,945 in 1951. T h e CAL Corporation maintains reserves for losses b y application to d i s bursements of a factor represent ing its cumulative loss experience in relation to cumulative disburse med m e n t s in the m a j o r loan classes. INTEREST T h e use of the factor m e t h o d r e $7.6 MILLION sults in a provision charge varying $ 1.6 with each year's loan disburse m e n ts , w h i ch w er e lower in 1952 $.5 than in 1951. T h e net income f r o m PROVISIONS ADMINISTRATIVE MISCELLANEOUS TO lending activities of $ 10,853,671 EXPENSES FOR LOSSES EXPENSES U.S. TREASURY in 1952 after deduction of loss p r o vision and the corresponding net GROSS INCOME TOTAL $ 34.1 MILLION income of $ 7,618,357 in 1951 , r e p resented a return of 10.9 % for 1 9 5 2 and 7.6 % for 1951 on the Treasury's investment of $ 100,000,000 in the capital stock of the Corporation . In addition to the $ 100,000,000 capital furnished b y the U. S. Treasury through its investment in t he Corporation's capital stock, un der existing legislation the Corporation is permitted to retain $ 2 5 0 million of its accumulated net earnings, wh i c h also represents interest-free capital. Activity U n d e r Sections 3 0 2 and 3 0 3 , Defense Production Act of 19 5 0 Balance Sheet — Exhibit C T h e total assets s h o w n o n the balance sheet at the close of the fiscal year w e r e $ 100 million, a n increase o f $ 93 million c om p a re d to the previous year . T hi s increase i n assets represents a n increase in outstanding loans approved un der Section 302 of $ 52 million and inventories of refined tin p u r chased d u ri n g the year u n d e r the provisions of Section 303 of $41 million. O n the basis of the Corporation's loss experience on business loans, a reserve of $ 1,250,000 has been provided against loans disbursed under Section 302 . T h e balance sheet does not reflect c o m m i t m e n t s w h ic h w e r e undisbursed at the close of the fiscal year . These w e r e as follows : C o m m i t m e n t s for direct loans (including comm itme nts for immediate participation in bank loans)..... C o m m i t m e n t s for deferred participation in ba nk loans. Total.. $ 129 ,122,259 262,000 $ 129,384,259 35 Statement of I n c o m e a n d Expenses — Exhibit D N e t income before provisions for losses in fiscal year 1952 w a s $315,429 as c o m pa r ed w it h a net loss in fiscal year 1951 of $231,144 . H o w e v e r , after providing for estimated future losses on loans m a d e under this program , net losses are indicated in a m ou n t s of $715,671 in fiscal year 1952 and $451,144 in fiscal year 1951. Such net losses are primarily attributable to the use of the “reserve m e t h o d " adopted b y R F C in comp uting loss provision on business loans a n d absorbing acquisition costs of n e w loans, both of wh ic h result in he a v y charges during periods of high dollar volum e of disburse me nt s . Since the purchase of the refined tin inventory w a s m a d e at the close of the fiscal year a n d there w e r e no further transactions in connection therewith , the statement of income a nd expenses relates solely to lending activities. Statement of Accountability - Exhibit E T h e Corporation h a s adopted a policy of reflecting a realistic valuation of assets , including capital facilities of the synthetic rubber, tin a n d abaca p rog ram s , for which it is accountable as a result of cancellation of notes payable to U.S. Treasury pursuant to Public L a w 860 , 80th Congress . Accordingly , with respect to the continuing p r o g r a m s, accrued depreciation on capital facilities has been included for the first t i m e as a charge against accountability reflected in Exhibit E a n d as a credit to the value of capital assets held reflected in Schedule I, as follows: EXHIBIT E Accrued depreciation, less retirements, to June 30, 1951 applied to Assets, at cost, June 30 , 1951 . Depreciation for fiscal year 1952 included in net income or loss from Synthetic rubber operations - Schedule 2 ... Tin smelter operations - Schedule 3... Abaca operations - Schedule 5 .. $311,807,798 41,485,515 481,684 747,527 $ 354,522,524 SCHEDULE I Depreciation on Synthetic R ub b er Program . Tin Program . A b a c a Program .. Capital Assets Held 6-30-52 Retirements Fiscal Year 1952 $338,571,771 4,024 ,780 5,178,894 $6,129,167 17,108 600,804 $347,775,445 $6,747,079 $ 354,522,524 W i t h respect to assets held for liquidation, an evaluation of such assets resulted in assigning an estimated realizable value of $30,620,765 as set forth in Schedule I and, accordingly , $ 36,503,660 has been charged to accountability as a provision for valuation of assets and estimated losses in collection of receivables. Also included in the provision charge is an a m o u n t of $9,150,515 for valuation of tinore inventories at June 30 , 1951 w hi ch w a s not recognized in the accountability maintained at that date on a cost basis a nd $62,432 for certain receivableso f the tin program . Unrecovered Capital Investment in Synthetic R u b b e r P r o g r a m T h e net book value of existing capital facilities of the Synthetic R u b b e r Program at J u n e 30 , 1952, as stated in Schedule I is $ 173.3 million, after deduction of accrued depreciation in the am o un t of $ 338.6 million. Included in latter a m o u n t is accumulated depreciation unrecovered to Ju ne 30 , 1952 in the a m o u n t of $ 104.3 million, consisting of (1) depreciation which accrued prior to June 30 , 1946 in the amount of $ 112.5 million o n that portion of existing facilities as we re utilized in productive operations from the date of initial operations to Ju ne 30 , 1946 (2 ) less $ 8.2 million, the a m o u n t b y w h i c h the net profits before depreciation for the period f r o m July 1 ,1 9 4 6 through J un e 30 , 1952 exceeded the amo unt of 36 depreciation applicable to such period. For the following reasons the $ 104.3 million has been recorded , b u t not s h o w n in the Statement of Assets Held , as unrecovered depreciation charges. In development of the Synthetic Rubber P r o g r a m it has not b ee n possible to fully recover f ro m sa les a nd other operating revenues all costs of the program , including costs of operation ,costs of research a n d development, costs of maintaining reserve capacity a n d a ratable recovery of the Government's i n v e s t m e n t in capital facilities represented b y accruing depreciation on such facilities employed in pr odu ct ive operations. T h e recorded a m o u n t is considered to be the ratable proportion of the Government's investment in existing capital facilities productively operated which should have been recovered prior to J une 30 , 1946 . S u c h a m o u n t w a s not recovered due to losses sustained in operations to that date under pressure of w a r t i m e d e m a n d s , with high over -all unit costs of a gradually increasing output during the period of d e v e l o p m e n t to m a x i m u m production an d with a sales realization restricted b y price ceilings a nd other w a r t i m e controls . Therefore, it has been determined that starting with fiscal year 1947 (the first full year of postwar operation ), annual net earnings f r o m the p r o g r a m after current depreciation charges should b e applied to amortization of unrecovered depreciation or, if net losses result, that unrecovered depreciation should b e increased b y the a m o u n t of such n e t losses not in excess of the current depreciation charges, to the e n d that accumulated depreciation charges unrecovered will be on record as a factor for consideration i n matters pertinent to recovery of the capital investment of the G o v e r n m e n t. P u r s u a n t to the foregoing determinations, accumulated depreciation charges unrecovered at J un e 30 , 1952 have been recorded as follows : Item Amount (in millions) Depreciation from M a y 1942 to June 30 ,1 9 4 6 on capital facilities existing at Ju ne 30 , 1952 which were productively operated prior to June 30 , 1946, unrecovered b y r e a son of deficit operations to that date ... $ 112.5 Amortization to operations subsequent to June 30 , 1946 of unrecovered depreciation : Profit before Depreciation Current Depreciation (in millions) $ 167.5 $159.6 Fiscal years 1947-1951 ..... Accumulated depreciation charges unrecovered - June 30 , 1951 . Fiscal Ye ar 1952 ... Accumulated depreciation charges unrecovered - June 30 , 1952. . Add : N e t book value of property, plant and e q u i p m e n t - June 30 , 1952 .... Unrecovered capital investment - June 30 , 1952 .. :: 56.7 40.6 + 7.9 120.4 -16.1 104.3 173.3 $ 277.6 In addition to the unrecovered capital investment recorded as set forth above, cumulative costs of the Synthetic R u b b e r Program to J un e 30 , 1952 , include research and development costs approximating $ 41 million a n d costs of maintaining reserve capacity approximating $73 million. Th ese costs, together with the unrecovered capital investment of $277.6 million , comprise a n aggregate expenditure of s o m e $ 390 million, without taking into account a n y interest on t h e Government's investment. T h e extent to which these expenditures can be recovered isa vital factor in the considerations wh ic h the Corporation m u s t bring to b e a r in discharging its responsibility for charting the future course of operation an d ultimate disposal of the facilities of the Synthetic R u b b e r Program . 37 R E C O N S T R U C T I O N EXHIBIT A C O A ss et s June 30, 1952 CASH ... LOANS , SECURITIES AND RELATED RECEIVABLES mortgages and loans to foreign governments ): June 30, 1951 $ 19,221,012 $ 11,987,822 (other than Loans, and securities at cost: Industrial and commercial enterprises.. Railroads.... Financial institutions.. $365,651,877 83,143,026 $463,387,482 16,239,265 102,675,461 94,055,652 19,456,387 4,401,196 Other receivables arising from loans and securities.. 535,750,658 7,028,426 1,808,937 683,976,178 9,268,044 3,817,639 Reserve for losses. 544,588,021 48,100,000 54,766 ,637 Political subdivisions of states and territories. Catastrophe loans.... 15,949,853 Accrued interest and dividends..... 496,488,021 697,061,861 58,300,000 638,761,861 MOR TGAGES AND RELATED RECEIVABLES: Mortgages partially guaranteed by Veterans Administration ..... Mortgages insured by Federal Housing Administration ... Accrued interest... Other receivables arising from mortgages... 74,672,335 221,293 81,112,539 453,035 74,893,628 256,965 81,565,574 307,240 92,247 75,242,840 54,000,000 54,000,000 113,856 81,986,670 LOANS TO FOREIGN GOVERNMENTS : United Kingdom ofGreat Britain and Northern Ireland...... Republic of the Philippines.... ,15,171,989 60,003 ,288 75 , 175,277 OTHER ASSETS : Properties and securities acquired in liquidation of loan indebted ness, including railroad reorganizations, at lower of cost or ap praised values... Equity in net assets of Defense Homes Corporation held for liquida tion . Miscellaneous accounts and other notes receivable, less reserve for losses of $69,020 in 1952 and $51,548 in 1951. . Furniture and fixtures, less accumulated depreciation. 19,876,770 33,519,608 30,238,959 31,201,026 638,637 720,790 51,475 ,156 $696,427,029 38 878,614 855,485 66,454,733 $874,366,363 N C E C BALANCE O R P O R A T I O N SHEET Liabilities June 30, 1951 June 30, 1952 LIABILITIES T O THE PUBLIC : Arising from loan programs: Accounts payable.. 680,847 14,933,824 Trust and deposit liabilities-- Note B. Arising from national defense, war and reconversion programs: Accounts payable .... Trust and deposit liabilities.. $ 1,010,913 6,785,841 15,614,671 7,796,754 65,032,318 2,614,367 51,220,530 4,563,405 67,646,685 $ 83,261,356 55,783,935 $ 63,580,689 LIABILITIES TO OTHER U. S. GOVE RNMENT AGENCIES : Accounts payable and sundry liabilities: Arising from loan programs.. Arising from national defense, war and reconversion programs... Notes payable to U. S. Treasury,including accrued interest — Note C. Dividends payable to U. S. Treasury.... Net proceeds from liquidation of assets and /or operation of facilities: Acquired under national defense, war and reconversion programs.. Transferred from Smaller War Plants Corporation .... 1,065,374 2,166,330 1,174,102 2,169,156 3,343,258 3,231 ,704 198,891,233 12,293,880 276,457,832 16,345,812 153,564,036 43,519,537 344,765 258,392,673 4,773,569 454,372,953 3,248,000 525,000 3,773,000 3,051,055 775,000 3,826,055 RESERVES : For employees'accrued annual leave..... For losses under deferred participations in bank loans... CAPITAL STOCK HELD BY U. S. TREASURY ... 100,000,000 100,000,000 SURPLUS : Accumulated net income- unreserved ... Less dividends accrued or paid to U. S. Treasury ... 606,050,437 593,756,557 343,756,557 356,050,437 250,000,000 1,000,000 Reserved for contingencies.. 250,000,000 251,000,000 $696,427,029 39 2,586,666 252,586,666 $874,366,363 RECONSTRUCTION FINANCE C O RP O R A TI O N EX HI BIT B - C O M P A R A T I V E S T A T E M E N T O F N E T I N C O M E F R O M L E N D I N G ACTIVITIES Fiscal Year Ended June 30,1952 Fiscal Year Ended June 30, 1951 INCOME : Interest and dividends earned on loans,securities,etc.: Industrial and commercial enterprises..... $ 17,641,476 Railroads, financial institutions,political subdivisions ofstatesand territoriesand catastrophe loans. 7,095,560 Insured and guaranteed mortgages. 3,124,484 1,445,425 Foreign governments..... Federal National Mortgage Association loan. 126,651 Accounts and notes receivable.... $ 18,929,092 8,306,202 3,661 ,927 2,669 ,177 3,946,311 106,325 29,433,596 37,619,034 2,816,370 769,778 617,283 464,516 2,650,835 790,911 842,197 710,633 34,101,543 42,613,610 3,987,690 3,648,974 13,463,111 386,539 130,965 9,579,037 4,239,309 15,249,884 453,023 20,055 21,617,279 29,541,308 12,484,264 13,072,302 1,630,593 5,453,945 $ 10,853,671 7,618,357 Income from properties and securities acquired in liquidation of loan indebtedness,including rail road reorganizations- net..... Income from equity in net assets of Defense Homes Corporation. Fees on loan participation agreements..... Application fees, commitment fees, premiums and other income. INTEREST AND OTHER EXPENSES : Interest on: Funds borrowed from U. S. Treasury... Funds held for U. S. Treasury and others. Administrative expenses.... Fees for servicing mortgages.. Guarantee fees and other expenses. NET INCOME BEFORE PROVISIONS FOR LOSSES.. PROVISIONS FOR LOSSES . NET INCOME. A NA LY SI S O F A C C U M U L A T E D N E T I N C O M E Unreserved $593,756,557 10,853,671 146,457* Accumulated net income June 30, 1951 ..... Income for fiscal year ended June 30, 1952,as above ... Adjustments to prior years income . Adjustment of amount reserved for contingencies: Self insurance... Other contingencies... $ 2,000,000 413,334 * 40 $ 2,586,666 1,586,666* 1,586,666 $606,050,437 * Deduct Reservedfor Contingencies $ 1,000,000 RECONSTRUCTION FINANCE C O R P O R A T I O N ACT IVIT Y U N D E R SEC TION S 302 A N D 303, D E F E N S E P R O D U C T I O N A C T O F 1950 EX H IB IT C — C O M P A R A T I V E B A L A N C E S H E E T June 30, 1951 June 30, 1952 ASSETS C a s h on deposit with U. S. Treasury .. L oa ns and related receivables: Loans to industrial and commercial enterprises. Accrued interest and other receivables arising from loans. $ 513,975 $ $ 59,338,499 643,701 59,982,200 1,250,000 Reserve for losses.. 356,942 58,732,200 Refined tin inventory - Note D . Miscellaneous accounts receivable. 6,776,649 31,845 6,808,494 220,000 6,588,494 40,766,879 69,506 LIABILITIES Notes payable to U. S. Treasury, including accrued interest ... Accounts payable to RFC : Arising from loan program . Arising from tin program . $ $100,013,054 $ $ 57,586,687 $ 7,425,778 59,954 40,766,879 7,014,942 40,826,833 2,766,802 1,100 1,168,368* Trust and deposit liabilities.... Reserve for losses under deferred participations in bank loans. Deficit ... 40,308 451 ,144 * $ 100,013,054 $ 7,014,942 * Deduct EX HI BI T D - C O M P A R A T I V E S T A T E M E N T O F I N C O M E A N D E X P E N S E Loans Approved Under Section 302 Fiscal Year Ended June 30, 1952 INCOME : Interest earned ... Commitment fees earned . $ Fiscal Year Ended June 30,1951 1,346,055 21,461 61,986 1,367,516 61,986 504,841 547,246 25,778 267,352 1,052,087 293 ,130 INTEREST AND OTHER EXPENSES : Interest on funds borrowed from U. S. Treasury . Administrative expense . Net profit (or loss*)before provisions for losses. 231,144 * 315,429 PROVISIONS FOR LOSSES . Net loss... $ 1,031,100 220,000 715,671 451 ,144 AN ALYS IS O F DEFICIT Deficit at June 30, 1951 ... Adjustments applicable to prior year Net loss fiscal year ended June 30, 1952 . $ Deficit June 30,1952 .... 451 ,144 1,553 715,671 $ 1,168,368 41 RECONSTRUCTION FINANCE C OR P O RA T IO N EX HI BI T E - 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 F U N D S E X P E N D E D B Y R F C IN N A T I O N A L D E F E N S E , W A R A N D R E C O N V E R S I O N ACTIVITIES ACCOUNTABILITY AT JUNE 30, 1951: Net proceeds realized and payable to U. S. Treasury - Exhibit A ..... Assets, at cost. Depreciation on capital assets of production programs through June 30, 1951 . $ 153,564,036 $799,451,422 311,807,798 487,643,624 641 ,207,660 CHANGES IN ACCOUNTABILITY DURING FISCAL YEAR 1952: ADDITIONS REPRESENTING : Net income (or loss*)from production programs: Income from synthetic rubber program - Schedule 2 .. Loss from tin smelter operations Schedule 3 ... Income from purchased refined tin program chedule 4.. Loss from abaca program - Schedule 5 . 16,113,542 703,011 * 429,081 493,961 * 15,345,651 Charges to net income from production programs representing interest on invested funds and provisions for shutdown expense .. Rentals and royalties earned ... Recoveries under land grant freight claims. Interest allowed on funds utilized in R F C lending activities. Other recoveries and adjustments to costs - net... 9,614,376 6,320,373 1,780,762 3,532,657 2,411,887 39,005,706 680,213,366 DEDUCTIONS REPRESENTING : Cost of property, plant, equipment and inventories transferred to other U. S. Government agencies without reimbursement.. Provision for valuation of assets and estimated losses in collection of receivables. Cumulative construction and other costs related to experimental plywood flying boat. Losses on sale and retirement of property, plant and equipment. Administrative expenses .. 6,559,325 45,716,607 13,859,064 13,226,938 700,097 80,062,031 113,000,000 Proceeds remitted to U. S. Treasury ... 193,062,031 $487,151,335 ACCOUNTABILITY AT JUNE 30, 1952.. REPRESENTED BY : Net proceeds from liquidation of assets and/or operation of facilities: Exhibit A — Note E ..... Assets at depreciated or appraised values — Schedule 1...... $ 43,519,537 443,631,798 $487,151,335 42 RE CONS TRU CTIO N FINANCE C OR P OR A TI ON E XH I B IT F - 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 ASSETS TR AN SF ERR ED F R O M SM ALL ER W A R PLANTS COR POR AT ION ACCOUNTABILITY AT JUNE 30, 1951: Net proceeds realized and payable to U. S. Treasury... Assets remaining for disposal: Loans and related receivables... Notes and other accounts receivable..... Property acquired in liquidation of loan indebtedness. $4,773,569 $2,562,583 335,773 576,455 3,474,811 8,248,380 C H A NG E S IN ACCOUNTABILITY DURING FISCAL YEAR 1952: ADDITIONS REPRESENTING : 90,759 1,266 54,386 61,569 Interest earned... Fees on loan participation agreements . Income from property acquired in liquidation of loan indebtedness - net. Interest allowed on funds utilized in R F C lending activity.... 207,980 8,456,360 DEDUCTIONS REPRESENTING : Loans, investments and receivables charged off... Other losses and costs - net... Administrative expenses. Provisions for losses.. Proceeds remitted to U. S. Treasury. 14,571 2,409 150,140 753,044 5,000,000 ACCOUNTABILITY AT JUNE 30, 1952... 5,920,164 $2,536,196 REPRESENTED BY : Net proceeds realized and payable to U. S. Treasury - Exhibit A .... Assets, at appraised value, remaining for disposal: Loans and related receivables..... Notes and other accounts receivable. $ $2,204,633 175,402 2,380,035 753,044 Less estimated losses in collection . Property acquired in liquidation of loan indebtedness. 344,765 $1,626,991 564,440 2,191 ,431 $2,536,196 43 R E C O N S T R U C T I O SCHEDULE 1- A S S E T S , L I A B I L I T I E S AND W A R A N D REG As set s June 30, 1952 SYNTHETIC RUBBER PR O GR AM $ Cash in transit and working funds.... Accounts receivable: U. S.Government agencies. Other ... Inventories: Synthetic rubber.. R aw materials, chemicals and processed stock . Supplies,spare parts and tools... Property, plant and equipment - Note F. Less accrued depreciation. Prepaid taxes,insurance, freight and other charges. Total assets — Synthetic rubber program ... $ 105,703 25,553,899 32,969,068 35,797,622 14,946,678 511,914,698 338,571,771 8,153,272 25,659,602 83,713,368 173,342,927 2,541 ,804 293,410,973 TIN P ROG RA M Cash working funds. Accounts receivable: U. S. Government agencies.. Other ... 202,504 40,805,239 656,883 41,462,122 62,430 Less estimated losses in collection. Inventories: Refined tin - Note G .. Tin ore . Other by-products. Operatingand other supplies . Property, plant and equipment . Less accrued depreciation . Prepaid insurance and other deferred charges . Total assets — Tin program .. 8,431,256 50,042,708 165,971 849,620 12,708,023 4,024 ,780 ABACA P RO GR AM Accounts receivable: U. S. Government agencies.. Other ... Inventories: Abaca . Operating and other supplies. Plantations and facilities operated for the production of abaca fiber.. Less accrued depreciation. Prepaid and deferred charges . Total assets - Abaca program .. 1,341,654 6,831 597 ,307 1,410,431 11,416,058 5,178,894 41,399,692 59,489,555 8,683,243 151 ,425 109,926,419 1,348,483 2,007,738 6,237,164 80.251 9,673,611 LIQUIDATION P ROG RA M Cash working funds. . Loans,securities and accrued interest receivable. Less estimated losses in collection . Accounts receivable, advances,etc.: U. S. Government agencies. Conditional sales contracts . Other ... 31,374 3,827,968 1,503,500 Less estimated losses in collection ... Property, plant, equipment and related facilities. Less reserve for valuation . Miscellaneous assets..... Total assets - Liquidation program TOTAL A S S E T S - Exhibit C ... FUNDS ARISING FROM NATIONAL DEFENSE ,W A R AND RECONVERSION ACTIVITIES USED BY THE CO R PORATION IN ITS LENDING FUNCTIONS - NOTE E. 44 7,752,295 12,622,947 14,418,246 34,793,488 19.877,046 28,384,691 15,123 ,114 2,324 ,468 14,916,412 13,261 ,577 86,904 30,620.765 443,631,798 113 ,178.776 $556,810,574 C E C O R P O R A T I O N D IN C O N N E C T I O N |A C T I V I T I E S i WITH NATIONAL DEFENSE , Liabilities June 30, 1952 SYNTHETIC RUBBER P RO GR A M Liabilities to the public: Trade and other accounts payable... Accrued and unbilled liabilities. Trust and deposit liabilities... 19,391,835 6,484,183 997,842 Liabilities to U. S. Government agencies. $ 26,873,860 1,999,323 Total liabilities -Synthetic rubber program . 28,873,183 TIN PR O GR AM Liabilities to the public: Trade and other accounts payable... Accrued and unbilled liabilities. Trust and deposit liabilities... 35,611,967 703 ,100 2,594 Liabilities to U. S. Government agencies. 36,317,661 30,570 Total liabilities — Tin program . 36,348,231 ABACA P RO GR AM Liabilities to the public: 963,763 771 ,965 Trade and other accounts payable.. Accrued and unbilled liabilities... 1,735,728 Liabilities to U. S. Government agencies. . 6,754 Total liabilities — Abaca program . 1,742,482 LIQUIDATION P ROGR AM Liabilities to the public: 878,572 224,641 1,459,672 Trade and other accounts payable. Accrued and unbilled liabilities.. Trust and deposit liabilities.. Liabilities to U.S. Government agencies... 2,562,885 132,458 Total liabilities-- Liquidation program . 2,695,343 TOTAL LIABILITIES. ACCOUNTABILITY TO U. S. TREASURY - EXHIBIT E. 69,659,239 487,151,335 $556,810,574 45 RECONSTRUCTION FINANCE CORPORATION SCHEDULE 2 - ST AT EM E NT OF OPERATIONS OF SYNTHETIC R U B BE R PR O GR AM Fiscal Year Ended June 30, 1952 INCOME: Sales of synthetic rubber.. $415,932,537 Revenue from tank car operations. 181,525 Other income . 444 ,107 416,558 ,169 OPERATING COSTS AND EXPENSES : Cost of rubber sold: Cost of production: Cost of materials consumed .. 291,054,410 Processing costs..... 60,769 ,790 351,824 ,200 12,278,086 Inventory of finished rubber at beginning of period.... 364,102,286 Less : 32.969,068 Inventory of finished rubber at end of period .. Finished rubber consumed in research .. 8,513 331 ,124,705 Cost of rubber sold...... Depreciation of operating plants and facilities (including $927,030 on leased facilities).. 40,635,392 Research and development. 6,939 ,476 Adjustment of raw material inventories at June 30, 1952 to the lower of cost or market — Note H. 5,023,513 930,894 Storage and handling of finished goods .. Administrative expense . 2,391 ,765 Losses from fire and other casualties. 1,383,451 740,923 Other expenses and losses. Total operating costs and expenses. 389 ,170,119 NET INCOME FROM OPERATIONS . 27,388,050 INTEREST ON U. S. GOVERNMENT FUNDS INVESTED IN NET OPERATING ASSETS . 5,305,646 PROVISIONS FOR SH UTDO WN EXPENSE - NOTE I.. 3,000,000 REACTIVATION EXPENSE . 1,982,158 EXPENSES FOR MAINTENANCE AND PROTECTION OF STANDBY PLANTS AND FACILITIES (includes $850,123 de preciation on standby plants).... NET PROFIT .. 986,704 $ 16,113,512 46 RECONSTRUCTION FINANCE CORPORATION 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, 1952 INCOME : Sales of refined tin..... $ 97,012,602 OPERATING COSTS AND EXPENSES : Cost of tin sold: Cost of production - longhorn tin: Cost of tin ores consumed . 49,621,048 Processing costs.... 4,073,780 53,694,828 Cost of production at the smelter.. 42,098,487 Inventory of refined tin at beginning of period. 95,793,315 Less: Net transfers of refined tin to smelter for re-refining and inventory adjustments . 80,753 1,903,225 Inventory of refined tin at end of period .. Cost of tin sold ... 93,809,337 Depreciation and net loss on retirement of operating plants and facilities.. 495,687 Tin loss in reclaiming rejects and slimes —Note J.. 688,118 Freight and other expenses. 207,374 Expenses due to shutdown of plant during strike. Administrative expense . 199,705 493,001 3 26 Total operating costs and expenses . 95,893,222 NET INCOME FROM OPERATIONS . 1,119,380 INTEREST ON U , S. GOVERNMENT FUNDS INVESTED IN NET ASSETS . 963,664 WASTE ACID PLANT STARTING -UP EXPENSE 858,727 NET Loss. 703,011 11 113 47 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 O P E R A T I O N S O F P U R C H A S E D R EF I N ED TIN P R O G R A M Fiscal Year Ended June 30, 1952 INCOME : $ 96,742,590 Sales of purchased refined tin — Note D ..... OPERATING COSTS AND EXPENSES : Cost of tin sold: Cost of refined tin purchased.. 102,574,893 6,527,163 Less: Inventory of refined tin at end of period.... Cost of tin sold... 96,047,730 Domestic freight and other expenses.. 11,840 Administrative expenses.. 34,375 Total operating costs and expenses. 96,093,945 NET INCOME FROM OPERATIONS.. 648,645 INTEREST ON U. S. GOVERNMENT FUNDS INVESTED IN NET ASSETS . NE T PROFIT.. 219,564 429,081 48 RECONSTRUCTION FINANCE CORPORATION SCH EDUL E 5- S T AT E ME NT OF OPERATIONS O F A BA CA P R O G R A M Fiscal Year Ended June 30, 1952 INCOME : Sales of Central American abaca .. $7,945 ,231 OPERATING COSTS AND EXPENSES : Cost of abaca sold: Cost of production . 6,764,388 628,103 Inventory of finished abaca at beginning of period ... 7,392,491 Less: Loss offinished abaca due to fire..... 119,869 597,307 Inventory offinished abaca at end of period . Cost ofabaca sold...... 6,675,315 Depreciation and net loss on retirement of operating plantations and facilities.. Research and development expense .. 831,387 152,168 31,560 Selling and other expenses - net... Administrative expense . 176,857 Total operating costs and expenses. 7,867,287 NET INCOME FROM OPERATIONS . 77,944 LOSSES RESULTING FROM FIRE AT THE HONDURAS PLANTATION . 419,372 INTEREST ON U. S. GOVERNMENT FUNDS INVESTED IN NE T ASSETS . 152,533 NET Loss ... $ 493,961 49 N O T E S T O FINANCIAL S T A T E M E N T S NOTE 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, 1951, and June 30, 1952. Assets shown on the balance sheet for both years represent those pertaining to the Corporation's lending activities, in which it has both titlea n d beneficial interest. The 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. NOTE B In addition to the liabilities reflected by the balance sheet the Corporation is responsible for funds collected from mortgagors for the payment of taxes, insurance, etc., by servicing institutions. At June 30, 1952, such funds amounted to $1,385,657, all of which was on deposit with commercial banks covered by F DIC insurance. NOTE C In addition to notes payable to the U. S. Treasury reflected in Exhibit A , the Corporation had outstanding notes payable in the amounts of $57,586,687 at June 30, 1952, and $ 7,425,778 at June 30, 1951, including accrued interest, issued pursuant t o Section 304, Defense Production Act of 1950, for funds expended or held pursuant to Sections 302 and 303, Defense Production Ac t of 1950. The Assets and Liabilities for activities under Sections 302 and 303, Defense Production Act of 1950, are shown on page 41 of this report. NOTE D A reserve inventory of 15,000 long tons of refined tin was established pursuant to provisions of Section 303, Defense Production Act of 1950. This tin was previously carried in inventories of tin produced at the smelter and of the refined tin purchase program . NOTE E Funds arising from national defense, war and reconversion activities, comprising net proceeds from liquidation of assets and/or operation of facilities and funds held for payment of liabilities, to the extent utilized in lending activ ities, are considered in the same light as borrowings from the Treasury and interest thereon is charged lending opera tions in accordance with rates prescribed by the Secretary of the Treasury. NOTE F In addition to the present net book value of existing facilities currently in operation reflectedin the Statement of Assets Held, the amount of $ 104,294,000 has been recorded at June 30, 1952, for unrecovered depreciation charges. The purpose and determination of this amount is set forth in the discussion of financial statements on page 36 of this report. NOTE G The inventory of refined tin includes some pieces of refined tin carried at a value of $868 remaining from a pro gram of trading operations in imported refined tin under which purchases were terminated prior to March 12, 1951. At that date R F C became sole importer of pig tin under National Production Authority Order M -8 but did not re-enter the foreign tin market until January 1952,following price agreement between the United States and British Govern ments. The Statement of Operations of Purchased Refined Tin Program- Schedule 4, covers operations since re-entry into the foreign tin market. At June 30,1951, the remaining inventory of the terminated program was $73,036. Of this inventory, tin costing $72,168 was sold subsequently for $46,488, leaving $868 in the inventory at June 30 , 1952. NOTE H The cost of inventories of alcohol and other raw materials held for use in the production of synthetic rubber at June 30, 1952, exceeds by $5,023,513 a valuation based on the lower of cost or market. This decline in value has been charged to synthetic rubber operations for fiscal year 1952. NOTE I In anticipation of a cutback in production,the sum of $3 million has been provided for shutdown costs of facil. ities operated in 1952 which will be taken out of operation in 1953. NOTE J During the period of operation under wartime pressure, large quantities of hard-to-process tin -bearing materials were accumulated and stored for processing when the need for high tin production became less urgent. During fiscal year 1952 a portion of these materials w a s processed and resulted in a tin recovery which w a s less than the calculated tin content of the materials as carried in the in-process inventories. The charge of $688,118 represents adjustment of the calculated tin content of in -process inventories, including an estimate of the adjustment that will ensue upon determination of recoveries from the remaining materials. NOTE K The Corporation is a party defendant in legal proceedings, relating to national defense, war , and reconversion activities, involving contingent liabilities estimated at $5,000,000. Contingent liabilities with respect to claims received from contractors, operators, and others are estimated at approximately $2,000,000. I n addition, the Corporation has outstanding firm commitments relating to the procurement of refined tin and tin in ores and concentrates aggregating 46,000 tons of tin amounting to approximately $125,000,000 and for the procure ment of alcohol for the synthetic rubber program of approximately 9,500,000 gallons amounting to $6,360,000. 50 A P P E N D I X LOAN POLICY A BOARD POLICY S T A T E M E N T N O . 1 (AS A M E N D E D 1) T h e purpose of this do cum en t is to establish the principles and policies to be followed b y the R F C in the c o n d u c t of its lending operations, including participations in loans. T h e general policies are contained in Part I. T h e s e general policies incorporate the statutory requirements of t h e R F C Act a n d expressions of Congressional intent as to the ma n ne r in which the loan operations of the C orporation should be conducted . In addition, there are included various standards, implementing the statu t o r y provisions and the expressions of Congressional intent. In the pursuit of the objectives of the R F C Act , the general policies of the R F C shall, to the m a x i m u m e x t en t possible, be correlated witht h e general programs and policies of the Federal G ov er nm en t s uch as the present anti-inflation and defense mobilization prog rams. Accordingly, Part II of thisstatement of loan policies prescribes additional loan standards to b e followed during the present period of mobilization and r earma ment. T h e standards in Part II are not in substitution for, b ut are supplemental to, the general standards embodied in Pa rt I. These standards for loan policies are not intended to and cannot be automatically operative in each indi v i d u a l case. Accordingly,appropriate instructions and interpretations will be issued from time to time to the several managers 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 by the R F C m us t be of such character as to accomplish one or mo re of the stated objectives of t h e R F C A c t, namely , to aid in financing agriculture, com me rc e , and industry, to encourage small business, t o help in maintaining the economic stability of the country , and to assist in promoting m a x i m u m e mp lo y me nt a n d production . B. Specific Statutory Restrictions All loans b y the R F C mu st at all times meet the following requirements of the R F C Act : (1) That no financial assistance be extended unless the credit requested is not otherwise available on reasonable terms. N o loan shall be m a d e in competition with private sources of credit. Loans shall not be m a d e to an applicant where credit is available from private sourcesunless the terms , including the interest rate at which the credit is so available, are clearly unreasonable. In most cases, it should be insufficient to find only o ne commercial b an k unwilling to grant the loan. T h e applicant should s ho 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 ) Th at all securities and obligations purchased and all loans m a d e be of such sound value or so secured as reasonably to assure retirement or repayment. (3 ) That all loans m a d e and all obligations and securities purchased , except those of public governmental agencies, mature in ten years or less. (4) Th at in agreements with banks to participate in loans wherein the Corporation's disbursements are deferred, the a m o u n t of the Corporation's participation be limited to 70 percent of the balance o u t standing at the time of disbursement in those cases where the total a m o u n t borrowed is $ 100,000 or less, an d be limited to 60 percent 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 ) Th at no loan shall be m a d e t o any state, or political subdivision thereof, for the p ay m e nt of ordinary governmental expenses as distinguished from specific public projects. (6 ) T ha t loans to c o m m o n carriers, such a s railroads and airlines, m us t m e e t the standards set b y the regulatory agencies, specifically the Interstate C o m m e r c e Commission an d the Civil Aeronautics Board , in addition to the usual standards for all R F C loans. 1A s amended August 23, 1951. 51 (7) T ha t loans to financial institutions mu st meet standards set b y the Treasury and are subject to Treasury approval. (8) T h e objective in emergency disaster lending should be to relieve the hardships attendant u p o n such disasters. Such loans are not required to meet all the credit standards governing loans for normal purposes. (9) T h at no director, officer, attorney, agent,or employe of the Corporation participate directly or indi. rectly in the deliberation upo n or determination of a ny question affecting his personal interests. C. Implementation of Basic Statutory Provisions In addition to meeting the general objectives and requirements of the R F C A c t, all loans shall b e made in accordance with the following principles: (1) T h e primary consideration in determining whether to grant a loan shall be the interest of the general public rather than the interest of the individual borrower. (2) Loans shall not be granted which in effect would promote monopoly . (3) In carrying out the objectives of the R F C Act , 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 o u t ” 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 an existing debt . (3) N o loan shall be m a d e for effecting a change in the ownership of a going business or for purchasing an interest in such business. (4 ) Except in the cases of loans for the construction of military and defense housing and housing in critical areas , n o loans shall be m a d e for acquiring, constructing or improving real property which 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 any newspaper , magazine, radio broadcasting companies or other similar organizations. (8 ) N o loan shall be m a d e for providing capital to an enterprise engaged in the business of lending. (9) N o loan shall be m a d e for operating an establishment whose income is derived in whole or in part from gambling or from rental of the premises for gambling or from rental of the premises for gambling purposes. (10) N o loan shall be m a d e for operating an establishment whose income is derived predominately from 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 and rearma ment : (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. 52 (2 ) (a ) T h e receipt of a “ certificate of necessity ” for accelerated tax amortization or the receipt of a defense contract (either a prime contract or subcontract) or a purchase order by the Borrower or the existence of a national shortage of a co mm od it y or service or proof of a regional (normal market 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 an essential civilian requirement. (b ) Loans for the maintenance of existing production , processing, and orderly distribution of goods and services which are customarily recognized as necessities as distinguished from luxuries, m a y be considered loans for essentialcivilian requirements. (c) Loans for conversion to essential production m a y be considered in the interest of national defense . In each instance it should be determined a s far as possible whether granting a loan will or will not be inflationary. For a loan to be considered non -inflationary, the finding should indicate that the loan will produce either an increased supply of essential goods or services or the prevention of a decrease. 53 RECONSTRUCTION FINANCE L O A N 1 6 4 1 0 8 A CO RPOR ATI ON 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 Street Chicago, Ill. Milnor 0. 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 Street Denver, Colorado China R. Clarke Railway Exchange Bldg. 17th & C h a m p a Streets Detroit, Mich. Everett W. Barber Griswold Building 1214 Griswold Street 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 South Hill Street Louisville, Ky . R. D. Bottomley 139 South 4th Street Minneapolis, Minn. Bernard E. Boldin Minnesota Federal Savings and Loan Building 607 Marquette Avenue 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 143 Liberty Street Oklahoma City, Okla. Carl B. Sebring Commerce Exchange Bldg. 130 Northwest Grand Ave. Philadelphia, Pa. Harry Batchelder Lincoln -Liberty Bldg. Broad and 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. Charles G. Alexander Arcade Building San Antonio, Texas Theodore T. Perkins 128 South Flores Street San Francisco, Calif. John S. McCullough, Jr. 130 Sutter Street Seattle, Wash . H. Sanford Saari Central Building 810 Third Avenue ( 74) Spokane, Wash . ov O. M. Green Columbia Building First and Howard Streets C 1 1 9 V 54