Full text of Report of the Reconstruction Finance Corporation : 1952 Annual Report and Financial Statements

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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

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KNOWLLOU

L I B R A R Y

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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

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TABLE

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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
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(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

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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

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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

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