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73D CONGRESS
2 N SESSION

RI
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I H ' F
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I N T H E SENATE OF T H E U N I T E D STATES
MAT 10 (calendar day, MAT 25), 1934
Ordered to be printed with the amendment of the House of Representatives

AN

ACT

Relating to direct loans for industrial purposes by Federal Reserve
banks, and for other purposes.
1

Be it enacted by the Senate and House of Representa-

2

tives of the United States of America in Congress assembled,

3

^hat the Federal Reserve Aetj as amended, is amended by

4

adding afte* section

5

follows:

thereof a new section reading as

6

"&eBt -tBbr I n exceptional circumstances, when it

7

appears te the satisfaction of a Federal Reserve bank that

8

an established industrial e* commercial business located m

9

its district is unable te obtain requisite financial assistance

10

en a reasonable basis from the usual sources, the Federal

11

Reserve bank? pursuant to authority granted by the Federal




2
1
X

Reserve Board, may make loans to? or purchase obligations
Reserve Board, may make leans toy or purchase obligations

2

ofy sueh businessy op may make commitments w iitth respect
business, or
w h

3

thereto, on a reasonable and sound basisy for the purpose
lor

4

of providing it with working eapitaly but no obligation shall

5 fee acquired or commitment made hereunder w i t h a maturity
be
6

exceeding five ycarsr

7

- Eaeh Federal Reserve bank shall also have power to
Each
shah

8

discount fory or purchase from, any b a n k y trust eompanyy
lory
banky

9

mortgage company,- credit corporation lor industry, or other
for

10

financing

institution operating i n its distriety obligations hav-

11

ing maturities not exceeding five yearsy entered into lor the
for

12

purpose of obtaining working capital lor any sueh estabfor

busmess-f
13 fished: industrial or commercial business-y to make loans or
fished

1_
J
14

advarmnfl direct to any sueh finrmoing2 institntirm on AA
meh financing institution
advances
to
the

15

security of sueh obligations-^ and to make commitments with

16

regard to sueh discount or purchase of obligations or w i t h

17

respect to sueh loans or advanc c s on the security thereof,

18

including commitments made i n advance of the actual under

19

taking of sueh obligations

20

shah obligate itself to the satisfaction of the Federal Reserve

21

bank for at learst 20 per eentum of any loss which may be

22

•sustained by sueh bank upon any of the obligations acquired

23

from sueh financing institution^ the existence and amount of

24

any sueh loss to be determined: i n accordance w i t h rcgula

25

tions of the Federal Reserve Roardr Provided, That m lieu




Each sueh financing institution

1

of sftcb: obligation against loss any sueh financing institution

2

may advance at least SO per eentum of sueh working eapital

IA-P n-nxT pqfnliliplipf] mrln ofyi n u " r i i i i i D i prpi uuoiiiuoo n l i i i WilliAnf"
n
tU
3 r cell y vijitujuiloliuu TilLlttt511 xcti 1 r niiUpniynn Uicll n 1 Tin c~vvpqc!u u t
4

obligating itself to tbe Federal Reserve bank against loss

5

on tbe amount advanced: b y tbe Federal Reserve bank:

6

Provided,

7

institution and tbe Federal Reserve bank sball be considered

8

as one advance, and repayment sball be made pro rata under

£ii

10

however, ¥hat sueh advances b y tbe

financing

Fbe aggregate amount of loans, advanccs7 and: eem-

L1

mitmcnts of tbe Federal Reserve banks outstanding under

12

tbis section at any one time,- plus tbe amount of purchases and

13

discounts under this section held at the same time, shall not

14

exceed the combined: surplus of the Federal Reserve banks as

15

of J u l y i y i O M y and: all operations of the Federal Reserve

16

banks under this section shall be subject to such regulations

17

as the Federal Reserve Roard may preseribor

18

—For the purpose of aiding the Federal Reserve banks

19

in carrying out the provisions of this seetionj there is hereby

20

established: i n eaeh Federal Reserve district an industrial

21

advisory eommitteej to be appointed by the Federal Reserve

22

bank subject to the approval and regulations of the Federal

23

Reserve Board, and: to be composed of not less than three

24

nor more than five members as determined by the Federal

25

Reserve Board.




Each member of sueh committee shall be

4
1

actively engaged at seme bwtestriai pttfssit witbbi tbe Fed-

2

eral Reserve district m wbieb tbe eommittoc is established,

3

and eaek mek member shall se?¥e witbeat eemponoatioa b«t

4

U

5

ef Sfteb district bis necessary expenses while engaged i s tbe

6

business e l tbe eemmittce, e? a per diem allowance » be«

7

thereof te be feed by tbe Federal Reserve Board.

8

application fef any saeh lea% advaseey purchase, discount^

9

ef commitment shall he submitted te the appropriate com

10

mittee andj after as examination by it of the business w i t h

11

respect to whieh the application is made-j the application

12

shall be transmitted to the Federal Reserve hanky together

13

w i t h the recommendation of the committee

fee

entitled to rcceive freei tbe Federal Reserve bask

Eaefe

14

SEGt St I n order to enable the Federal Reserve banks

15

to make the loans, diseonnts, advanccsj purehasesr and corn-

16

17

Reserve A e t j the Secretary of the Treasury upon the enact™

18

ment of this A e t j is authorised and directed to pay to each

19

Federal Reserve bank sueh portion O the sum of $139,
x

20

299,557 €bs may be represented: by the par value of the

21

holdings of each Federal Reserve bank of Federal Deposit

22

insurance Corporation stoekj upon the exeeutien by eaeh

23

Federal Reserve bank of its agreement -(to be endorsed on

24

the certificate of sueh stock)- to hold sueh steek uncncum

25

bered and to pay to the United States all fhvidendsj all pay-




5
1

meats en liquidation, aftd aH ethe? proceeds el meh steekj for

2

which dividends, payment^ and proceeds the United States

3

shall be secured by mek stock itsehr

4

bank, m addition, shall agree that, in the event sueh divi-

5

dcnds, payments, and other proceeds m any calendar yeas? de

6

net aggregate 4 pe* centum of the f m value of said stock,

7

it will pay te the United States in sueh year mek further

8

amount, if aayy up te 4- pe? centum of the pa# value of stieh

9

stock, as shaft be covered fey the net earnings ef the bank

10

fe? that year derived from the use ef the sum se paid: by

11

the Secretary ef the Treasury, and that fe* said amount se

12

due the United States shall have a fost claim against mek

13

earnings and stock, and further that it wiH continue sueh

14

payments until the final liquidation ef said stock by the

15

Federal Deposit Insurance Corporation.

16

to eaeh Federal Reserve bank by the Secretary ef the

17

Treasury shall become a paart ef the surplus fond ef sueh

18

Federal Reserve bank within the meaning ef section 4-Sb

19

ef the Federal Reserve Aetr

20

expended by the Secretary ef the Treasury in order te carry

21

out the provisions ef thi$ section shall be pdtd out ef the

22

miscellaneous receipts ef the Treasury created by the

23

increment resulting from the reduction ef the weight ef the

24

geld dollar under the President's proclamation ef January




Each Federal Reserve

The sum jse paid

AH amounts required te be

6
1

1934; aed there is hereby appropriated, etrt ef s«eh

ty receipts, such sum as shallfeerequired ler sueh purpeser
3

SEOt St

4
5

Seetien §293 ef the Revised Statutes ef the

States? as amended, is hereby amendedfeyadding
at the end thereof the following new paragraph:

6

" Tenth. Liabilities incurred under the previsions ef

7

QPRT-INM 1 QH

|

!5lJv3tlUii ±'dnJ t7x tllU X' Uttt5xtfc± i l U S v l V I

8
9
10

FLIP "TTWWNL "RP^PRVR A PF "

8EGt 4t Seetien

lid"

ef the Federal Reserve Aet is

amendedfeyadding at the end thereof the following new
paragraphs:

11

" (h) Whoever makes any material statement? know-

12

ing it tofeefalse, or whoever willfully overvalues any secur

13

ity? for fee purpose ef influencing in any way the action

14

of a Federal Reserve bank upon any application, commit-

15

ment, advance-, discount, purchase? er loan, er any cxtC'QSion

16

thereoffeyrenewal? deferment ef action, er otherwise? or

17

the acceptance, release? er substitution ef security therefor?

18

shallfeepunishedfeya fine ef net more than $5,000 er fey

19

imprisonment for net mere than two years, er both.

20

Whoever, feeing eonncctcd in any capacity with

31

a Federal Reserve feank -{ty- embezzles? abstracts,- purloins?

22

er willfully misapplies any moneys, funds, securities, er ether

23

things ef value? whether belonging te it er pledged er ether-

24

wise entrusted te rt? er (2) • with intent te defraud any




7
1

Federal Reserve bank? er m other body politic or eerpe-

2

rate, or any individual, of te deceive any officer auditor, er

3

examiner, makes any fake entry in any beefe? report? or

4

statement ef er te a Federal Reserve bank? er? without being

5

dnly authorized, draws any order er issues? puts forth, er

6

assigns any note, debenture, bend? er other obligation, O
F

7

draft-,- mortgage? judgment? er deeree shall be punished by

8

a fine ef net mere than $10,000 er by imprisonment for

9

net mere than five years, er both.

10

i ^ j f The provisions ef seetiens 44-3? 44^? 444? 44£?

11

44-6? and ^43- ef the Criminal Code ef the United States,

12

insofar

13

agreements ef any Federal Reserve bank- under this Aet?

14

which, for the purposes hereof, shall be held te include ad-

15

vanccs, loans, discounts, purchase, and repurchase agree

16

mcnts; extensions and renewals thereof; and acceptances,

17

releases, and substitutions ef security therefor.

tK5 IIJJUIIUIIUIvj

Ml

U extended te apply te contracts er

18

" (k) I t shall be unlawful for any person te stipulate

19

for or give er receive? er consent er agree te give or receive,

20

any fee? commission, bonus? er thing ef value for procuring

21

er endeavoring te procure from any Federal Reserve bank

22

any advance? lean? er extension ef credit er discount er pur-

23

ehase ef any obligation er commitment with respect thereto,

24

either directly from sueh Federal Reserve bank er indirectly

25

through any financing institution unless sueh fee? commis




8
1

sien? bonus? m thing el value and aH material faets with

2

respect te the arrangement m understanding therefor shall

3

be disclosed in writing in the application m request fe? sueh

4

advance, loan, extension ef credit, discount, purchase, e*

5

commitment.

6

graph shall be punishable by imprisonment fe* net more

7

than one yea* e* by a fine ef net exceeding $5,000, ef both.

8

I f a director, officer, employee, e* agent ef any Federal

9

Reserve bank shall knowingly violate this paragraph, he

10

shall be held liable in his personal and individual capacity

11

fe* any less or damage sustained by such Federal Reserve

12

bank in consequence ef sueh violation."

13

Seer

Any violation ef the provisions ef this para

Section 40 ef the Federal Reserve Aety as

14

amended, is further amended by changing the period at

15

the end ef the third paragraph thereof te a comma and

16

inserting thereafter the following: - and sueh assessments

17

may include amounts sufficient te provide fe* the acquisition

18

by the Board in its own name ef sueh site Of building in

19

the District ef Columbia as m its judgment alone shall fee

20

necessary ior the purpose ef providing suitable and adequate

21

quarters fe* the performance ef its functions.

22

proving sueh plans? estimates, and specifications as it shall

23

have caused te fee prepared, the Board may? notwithstand

24

ing any other provision ef law? cause te fee constructed en

25

the site se acquired fey it a building suitable and adequate




After ap-

9
1

in its judgment for its purpOS C S and proceed te tftk'C all

2

suefe steps as it mm- deem necessary er appropriate in

3

connection with tfee construction, equipment, and furnishing

4

ef suefe building.

5

remodel any building c t UJUuuil ULl vTr constructed and sfeaU
T
7

¥fee Board may maintain, enlarge, er

6 feave sele eentrel ef suefe building and spaee therein/-7

Se6t €T That tfee Reconstruction Finance Corporation

8

Ae% as amended -(U.S.C.y Snppt V l l y title

9

amended fey inserting before section 6 thereof tfee following

10

efer iA)-j is

new section:

11

" See? £dr Fer tfee purpose ef maintaining and incrcas-

12 ffig tfee employment ef labor, when credit at prevailing bank
13

rates fer tfee character ef lean applied for is not otherwise

14

available at banks er at tfee Federal Reserve bank ef tfee

15

district in which tfee applicant is located, tfee Corporation is

16

authorized and empowered te make loans te any industrial

17

er commercial business established prior te January

18

Such loans sfeall in tfee opinion ef tfee board ef directors ef

19

tfee Corporation fee adequately secured? may fee made di-

20

rectly in cooperation with banks er other lending institutions,

21

er fey tfee purchase ef participations, shall have maturities

22

net te exceed five years-, sfeafefeemade enly when deemed te

23

efier reasonable assurance ef continued er increased employ

24

ment ef labor-, shall be made enly when, in tfee opinion ef

1935.

25 fee board ef directors ef tfee Corporation, tfee borrower is




10
1

solvent, shall not exceed $250,OOOtOOO in aggregate amount

2

at any one time outstanding, and shall be subject te sueh

3

terms, conditions, and restrictions as the board ef directors

4

ef the Corporation may determine. ¥he aggregate amount

5

ef loans te any one borrower under this section shall net

6

exceed $1,000,000.

7

- T h e power te make loans given herein shall tcrmi

8

nate en January

9

President shall by proclamation fe^ but ne provision ef

10

law terminating any ef the functions ef the Corporation

11

shall he construed te prohibit disbursement ef funds en loans

12

and commitments, e? agreements te make loans, made under

13

this section prior te January 34-j 1935, e* such earlier date:

14

Provided, That it shall be unlawful for any Federal^ State,

15

county, e* municipal official, any member ef any National,

16

State, e* county committee ef any political party, e* any

17

other person except a bona fide and regularly employed

18

officer, agent, e* employee ef the person e* corporation

19

seeking a lean under the provisions ef this section, te seek

20

te influence in any way any agent, officer, e* employee ef

21

the Reconstruction Finance Corporation in connection with

22

a lean e* any application therefor,- under the provisions ef

23

this section, and if upon the request ef the person O corpora
E

24

tien seeking a lean sueh unlawful influence is used, the

25

person of corporation seeking saeh lean: shall be disqualified."




e* en sueh earlier date as the

11
1

SfiOr

Section

ef tfee Federal Reserve Aet is

2

hereby amended fey inserting ia tbe first sentence of th.o

3

second paragraph ef subsection -(y)- immediately after the

4

words " District ef Columbia — the following; " a e d the

5

Territory ef Hawaii."

6

That (a) section 882 of the Revised Statutes

7

title 28, sec. 661) is amended to read as follows:

8
9

(U.S.C.,

" SEC.. 882. (a) Copies of any books, records, papers,
or other documents in any of the executive departments, or

10 of any corporation all of the stock of which is beneficially
11

owned by the United States, either directly or

12

sAaZZ

13

thereof, when duly authenticated under the seal of such

14

department or corporation, respectively.

15

indirectly,

admitted in evidence equally with the originals

"(b)

Books or records of account in whatever form,

16

and minutes (or portions thereof) of proceedings, of any

17

swe/fc executive department or corporation, or copies of such

18

books, records, or minutes authenticated under the seal of

19

such department or corporation, shall be admissible as

20

evidence of any act, transaction, occurrence, or event as a

21

memorandum of which such books, records, or minutes were

22

kept or made.

23

«(c)

2^

The seal of any such executive department or

corporation shall be judicially noticed."




12
1

(b) Section 4 of the Reconstruction Finance Corpora's tion Act, as amended (U.S.C., Supp. VII,

title 15, sec.

3

604), is amended by inserting immediately before the semi-

4

colon following the words " corporate seal" a comma and

5

the ivords " which shall be judicially noticed

6

SEC. 2. Section 1001 of the Revised Statutes, as

7

amended (U.S.C., title 28, sec. 870), is amended by insert-

8

ing immediately after the word " Government"

9

lowing: " or any corporation all the stock of which is

10

beneficially owned by the United States, either directly or

11

indirectly

12

the fol-

SEC. 3. The Reconstruction Finance Corporation Act,

13

as amended (U.S.C.,

14

further amended by inserting after section 5a thereof the

15

following new section:

16
17

Supp. VII,

title 15, ch. 14), is

" SEC. 5b. Notwithstanding any other provision of
law—

18

"(1)

The maturity of drafts or bills of exchange which

19

may be accepted by the Corporation under section 5a of

20

this Act, and the period for which the Corporation may

21

make loans or advances under sections 201(c) and 201(d)

22

of the Emergency Relief and Construction Act of 1932,

23

as amended, and under section 5 of this Act, may be five

24

years, or any shorter period, from February 1, 1935:

25

Provided, That in respect of loans or advances under such




13
1

section 5 to railroads, railways, and receivers or trustees

2

thereof, the Corporation may require as a condition of mak-

3

ing any such loan or advance for a period longer than three

4

years that such arrangements be made for the reduction or

5

amortization of the indebtedness of the railroad or railway,

6

either in whole or in part, as may be approved by the Cor-

7

poration after the prior approval of the Interstate Commerce

8

Commission.

9

"(%) The Corporation may at any time, or from time

10

to time, extend, or consent to the extension of, the time of

11

payment of any loan or advance made by it, through

12

renewal, substitution of new obligations, or otherwise, but

13

the time for such payment shall not be extended beyond

14

five years from February 1, 1935: Provided, That the time

15

of payment of loans or advances to railroads, railways, and

16

receivers or trustees thereof, shall not be so extended except

17

with the prior approval of the Interstate Commerce Com-

18

mission, and, m the case of a loan to a railroad or railway,

19

with the prior

20

Commission that the railroad or railway is not in need of

21

financial reorganization in the public interest.
"(3)

certification of the Interstate Commerce

In connection with the reorganization under sec-

23

tion 77 of the Federal Bankruptcy Act, approved July 1,

24

1898, as amended, or with receivership proceedings in a

2^

cow£ or courts, of any railroad




or railway

indebted

14
1

to the Corporation, or of any railroad or railway the receivers

2

or trustees of which are indebted to the Corporation, the Cor-

3

poration may, with the prior approval of the Interstate

4

Commerce Commission, adjust or compromise its claim

5

against such railroad or railway, or any such receiver or

6

trustee, by accepting, in connection with any such reorgani-

7

zation or receivership proceedings and in exchange for secu-

8

rities or any part thereof then held, new securities which may

9

have such terms as to interest, maturity, and otherwise as

10

may be approved by the Corporation, or part cash and part

11

new securities so approved: Provided, That any such adjust-

12

ment or compromise shall not be made on less favorable

13

terms than those provided in the reorganization of the rail-

14

road or railway for holders of claims of the same class and

15

rank as the claim of the Corporation "

16

SEC. 4. Section 301 of the National Industrial He-

ll

covery Act (U.S.C.,

18

amended by inserting before the period at the end thereof

19

a colon and the following: " Provided further, That in con-

20

nection with any loan or contract or any commitment to

21

make a loan entered into by the Reconstruction Finance

22

Corporation prior to June 26, 1933, to aid in financing part

23

or all of the construction cost of projects pursuant to section

24

201(a)

25

of 1932, as amended, the Corporation may make such fur-




Supp. VII,

title 40, sec. 412) is

(1) of the Emergency Belief and Construction Act

15
1

ther loans and contracts for the completion of any such

2

project, or for improvements, additions, extensions, or equip-

3

ment which are necessary or desirable for the proper func-

4

tioning of any such project, or which will materially increase

5

the assurance that the borrower will be able to repay the

6

entire investment of the Corporation in such project9 in-

7

eluding such improvements, additions, extensions, or equip-

8
9

and the Corporation may disburse funds to the borROWER

thereunder, at any time prior to January 23, 1939,

10

notwithstanding any provisions to the contrary contained

11

m

12

and Construction Act of 1932, as amended: Provided fur-

13

ther, That any such further loans shall be made subject

14

to all the terms and conditions set forth in the Emergency

15

Relief and Construction Act of 1932, as amended, with

16

respect to the loans authorized by section 201(a)(1)

17

said Actr

section or in section 201(h) of the Emergency Relief

of

18

SEC. 5. Notwithstanding any limitations on its power,

19

the Reconstruction Finance Corporation, upon request of

20

any borrower under section 201(a) of the Emergency Re-

21

lief and Construction Act of 1932, as amended, may adjust

22

the maturities of any obligations of such borrower now

23

held by it, or hereafter acquired by it under lawful com-

24

mitments, to such periods as may in the discretion of the

25

Reconstruction Finance Corporation be proper, but such




16
1

adjustment shall not extend any such maturity

2

than twenty years from the advancing of the sum or sums

B

evidenced thereby.

4

to more

SEC. 6. Section 36 of the Emergency Farm Mortgage

5

Act of 1933, as amended (U.S.C., Supp. VII,

6

sec.

7

title 43,

is amended as follows:
(1) By striking from the first sentence thereof " $50,-

8

000,000 to or for the benefit of drainage districts, levee

9

districts, levee and drainage districts, irrigation

districts,

10

and similar districts," and inserting in lieu thereof "$125,-<

11

000,000 to or for the benefit of drainage districts, levee

12

districts, levee and drainage districts, irrigation districts, and

13

similar districts, mutual nonprofit companies and incorpo-

14

rated water users' associations

15

(2)

By

striking from the second sentence thereof

16

"district or political subdivision"

17

thereof "district, political subdivision, company, or associa-

18

tion

19

(3)

20

follows:

21

By

"(4)

amending clause (4)

and inserting in lieu

thereof to read as

the borrower shall agree, insofar as it may

22

lawfully do so, that so long as any part of such loan

23

shall remain unpaid the borrower will in each year

24

apply to the repayment of such loan or to the purchase

25

or redemption of the obligations issued to evidence




17
j

such loan, an amount equal to the amount by which

2

the assessments, taxes, and other charges collected by

g

it exceed (a) the cost of operation and maintenance of

^

the project, (b) the debt charges on its outstanding

g

obligations, and (c) provision for such reasonable

Q

reserves as may be approved by the Corporation;

rj

and

g

(4) By adding at the end thereof the following new

q

paragraph:

10

" When any loan is authorized pursuant to the provi-

U

sions of this section and it shall then or thereafter appear

12

that repairs and necessary extensions or improvements to the

13

project of such district, political subdivision, company, or

14

association are necessary or desirable for the proper func-

15

tioning of its project or for the further assurance of its ability

16

to repay such loan, and if it shall also appear that such

17

repairs and necessary extensions or improvements are not

18

designed to bring new lands into production, the Corporation,

19

within the limitation as to total amount provided in this

20

section, may make an additional loan or loans to such dis-

21

trict, political subdivision, company, or association for such

22

purpose or purposes. When application therefor shall have

23

been made by any such district, political subdivision, com-

24

pany, or association any loan authorized by this section may

25

be made either to such district, political subdivision, com-




S. 3487

2

18
I

party, or association or to the holders or representatives of

9

the holders of their existing indebtedness, and such loans

3

may be made upon promissory notes collateraled by the obli-

4

gations of such district, political subdivision, company, or

5

association or through the purchase of securities issued or to

(3

be issued by such district, political subdivision, company, or

7 association."
g

7. (a,) Sections 2 and 3 of the Act entitled "An

9

Jcf to authorize the Reconstruction Finance Corporation to

10

subscribe for preferred stock and purchase the capital notes

11

of insurance companies, and for other purposes ", approved

12

June 10, 1933, as amended (U.S.C., Supp. VII,

13

sees. 605f and 605g), are amended to read as follows:

14

title 15,

" SEC. 2. In the event that any such insurance com-

15

pany shall be incorporated under the laws of any State which

16

does not permit it to issue preferred stock, exempt from

17

assessment or additional liability, or if such laws permit such

18

issue of preferred stock only by unanimous consent of stock-

19

holders, or upon notice of more than twenty days, or if the

20

insurance company is a mutual organization without capital

21

stocky the Reconstruction Finance Corporation is authorized

22

for the purposes of this Act to purchase the legally issued

23

capital notes of such insurance company, or, if the company

24

is a mutual organization without capital stock, such other

25

form or forms of indebtedness as the laws of the State under




19
j

which such company is organized permit, or to make loans

2

secured by such notes or such other form or forms of indebt-

3

edness as collateral, which may be subordinated in whole or

4

m part or to any degree to claims of other creditors.

5

" SEC. 3. The Reconstruction Finance Corporation

6

shall not subscribe for or purchase any preferred stock or

7

capital notes of any applicant insurance company, (1) until

8

the applicant shows to the satisfaction of the Corporation

9

that it has unimpaired capital, or that it will furnish new

10

capital which will be subordinate to the preferred stock or

11

capital notes to be subscribed for or purchased by the

12

Corporation, equal to the amount of said preferred stock or

13

capital notes so subscribed for or purchased by the Corpora-

14

tion: Provided, That the Corporation may make loans upon

15

said preferred stock or capital notes, or other form or forms

16

of indebtedness permitted by the laws of the State under

17

which said applicant is organized, if, in its opinion, such

18

loans will be adequately secured by said stock or capital

19

notes or other form or forms of indebtedness and/or such

20

other forms of security as the Corporation may require, (2)

21

if at the time of such subscription, purchase, or loan any

22

officer, director, or employee of the applicant is receiving

23

total compensation in a sum in excess of $17,500 per annum

24

from the applicant and/or any of its affiliates, and (3) unless

25

at such time, the insurance company agrees to the satisfac-




20
1

tion of the Corporation that while any part of the preferred

2

stock, notes, bonds, or debentures (or, m iAe case o/ a

3

mutual insurance company, other form or forms of indebted-

4

ness permitted by the laws of the State under which the

5

company is organized) of such insurance company is held

6

by the Corporation, the insurance company, except with the

7

consent of the Corporation, will not (a) increase the com-

8

pensation received by any of its officers, directors, or em-

9

ployees from the insurance company and/or

any of its

10

affiliates9 and in no event increase any such compensation

11

to an amount exceeding $17,500 per annum, or (b) retire

12

any of its stock9 notes, bonds, debentures, or other forms of

13

indebtedness issued for capital purposes. For the purposes

14

of this section, the term " compensation" includes any

15

salary, fee, bonus, commission, or other payment, direct or

16

indirect, in money or otherwise for personal services

17

(b) Section 11 of such Act of June 10, 1933, as

18

amended (U.S.C.,

19

amended by adding at the end thereof the following new

20

sentence: "As used in this section and in sections 1, 2,

21

and 3 of this Act, the term ' State ' means any State, Terri-

22

tory, or possession of the United States, the Canal Zone,

23

and the District of Columbia."

Supp. VII,

title 15, sec. 605i),

is

24

SEC. 8. The Reconstruction Finance Corporation is

25

authorized and empowered to make loans upon full and




21
1

adequate security, based on mineral acreage, to recognized

2

and established incorporated managing agencies of farmers'

3

cooperative mineral rights pools not engaged in drilling or

4

mining operations, said loans to be made for the purpose

5

of defraying the cost of organizing such pools.

6

SEC. 9. The Reconstruction Finance Corporation is

7

authorized and empowered to make loans upon adequate

8

security, based on mineral acreage to recognized and estab-

9

lished incorporated agencies, individuals, and partnerships

10

engaged in the business of mining, milling, or smelting of

11

ores.

12

10. The Corporation is authorized and empow-

13

ered to make loans under section 5 of the Reconstruction

14

Finance Corporation Act, as amended, to any person, asso-

15

ciation, or corporation organized under the laws of any

16

State, the District of Columbia, Alaska, Hawaii, or Puerto

17

i?ico, /or the purpose of financing the production, storage,

18

handling, packing, processing, carrying,

19

marketing of fish of American fisheries and/or products

20

thereof upon the same terms and conditions, and subject to

21

the same limitations, as are applicable in case of loans made

22

under said section 5, as amended.

23

and/or

orderly

11. The Reconstruction Finance Corporation is

24

hereby authorized and empowered to make loans at any time

25

prior to January 31, 1935, out of the funds of the Corpo-




22
j

ration upon full

2

districts or other similar public-school authorities organized

3

pursuant to State law, for the purpose of payment of teachers'

4

salaries due prior to June 1,1984: Provided, That the aggre-

5

gate amount of such loans at any time outstanding shall not

q

exceed $75,000,000.

7

and adequate security, to public-school

SEC. 12. The Reconstruction Finance

Corporation

g

Act, as amended (U.S.C., Supp VII,

9

amended by inserting before section 6 thereof the following

10

title 15, ch. 14), is

new section:

11

" SEC. 5C. With the approval of the President, the

12

Corporation is authorized and directed, notwithstanding any

13

other provisions of law, to establish or to utilize export or

14

import trading and banking corporations in which the

15

United States shall own, directly or indirectly, the entire

16

beneficial interest, and to subscribe for and purchase the

17

common and preferred stock and obligations thereof, for the

18

purpose of aiding in financing and facilitating exports and

19

imports between the United States and other nations or the

20

agencies or nationals of either of them: Provided, That the

21

corporations in which the United States owns or controls,

22

directly or indirectly,

23

report to Congress annually and include in the report a

24

complete financial statement




the entire beneficial interest, shall

23
1

SEC. 13. The Reconstruction Finance Corporation Act,

2

as amended (U.S.C.,

3

amended by inserting before section 6 thereof the following

4

new section:

5

F7Z,

15, ch. 14), is

" SEC. 5d. For the purpose of maintaining and increas-

6

ing the employment of labor when credit at prevailing bank

7

rates for the character of loans applied for is not otherwise

8

available at banks, the Corporation is authorized and em-

9

powered to make loans to any industrial or commercial busi-

10

ness, which shall include the fishing industry, established prior

11

to January 1, 1934.

12

the board of directors of the Corporation be adequately se~

13

cured, may be made directly, or in cooperation with banks or

14

other lending institutions, or by the purchase of participa-

nt

tions, shall have maturities not to exceed five years, shall be

16

made only when deemed to offer reasonable assurance of con-

17

tinued or increased employment of labor, shall be made only

18

when, in the opinion of the board of directors of the Corpora-

Such loans shall in the opinion of

tion, the borrower is solvent, shall not exceed $300,000,000
20

in aggregate amount at any one time outstanding, and shall be

21

subject to such terms, conditions, and restrictions as the board

22

of directors of the Corporation may determine. The aggre-

23

gate amount of loans to any one borrower under this section

24

shall not exceed $100,000,




24
1

" The power to make loans given herein shall termi-

2

nate on January 31, 1935, or on such earlier date as the

3

President shall by proclamation fix; but no provision of

4

law terminating any of the functions of the Corporation

5

shall be construed to prohibit disbursement of funds on loans

6

and commitments, or agreements to make loans, made under

7

this section prior to January 31, 1935, or such earlier date"

8
9
10

SEC. 14. The Federal Reserve Act, as amended, is
amended by adding after section 13a thereof a new section
reading as follows:

11

"SEC. 13b. When it appears to the satisfaction of a

12

Federal Reserve bank that an established industrial or com-

13

mercial business located in its district is unable to obtain

14

requisite financial assistance on a reasonable basis from the

15

usual sources, the Federal Reserve bank, pursuant to author-

16

ity granted by the Federal Reserve Board, may make loans

17

to, or purchase obligations of, such business, or may make

18

commitments with respect thereto, on a reasonable and sound

19

basis, for the purpose of providing it with capital, but no

20

obligation shall be acquired or commitment made hereunder

21

with a maturity exceeding five years.

22

" Each Federal Reserve bank shall also have power to

23

discount for, or purchase from, any bank, trust company,

24

mortgage company, credit corporation for industry, or other

25

financing institution operating in its district, obligations hav-




25
1

ing maturities not exceeding five years, entered into for

2

the purpose of obtaining capital for

3

lished industrial or commercial business; to make loans or

4

advances direct to any such financing institution on the

5

security of such obligations; and to make commitments with

6

regard to such discount or purchase of obligations or with

7

respect to such loans or advances on the security thereof,

8

including commitments made in advance of the actual under-

9

taking of such obligations. Each such financing institution

10

shall obligate itself to the satisfaction of the Federal Reserve

11

bank for at least 20 per centum of any loss which may be

12

sustained by such bank upon any of the obligations acquired

13

from such financing institution, the existence and amount op

14

any such loss to be determined in accordance with regula-

15

tions of the Federal Reserve Board: Provided, That in lieu

16

of such obligation against loss any such financing institution

17

may advance at least 20 per centum of such capital

18

for any established industrial or commercial business without

19

obligating itself to the Federal Reserve bank against loss

20

on the amount advanced by the Federal Reserve bank:

21

Provided, however, That such advances by the financing

22

institution and the Federal Reserve bank shall be considered

23

as one advance, and repayment shall be made pro rata under

24

such regulations as the FederaUteserve Board may prescribe.




any such estab-

26
" The aggregate amount of loans, advances, and com-

1

2

mitments of the Federal Reserve banks outstanding under

3

this section at any one time, plus the amount of purchases

4

and discounts under this section held at the same time, shall

5

not exceed the combined surplus of the Federal Reserve banks

6

as of July 1,1934, and all operations of the Federal Reserve

7

banks under this section shall be subject to such regulations

8 as the Federal Reserve Board may prescribe.
9

" For the purpose of aiding the Federal Reserve banks

10

in carrying out the provisions of this section, there is hereby

XI

established in each Federal Reserve district an industrial

12

advisory committee, to be appointed by the Federal Reserve

13

bank subject to the approval and regulations of the Federal

14

Reserve Board, and to be composed of not less than three

15

nor more than five members as determined by the Federal

16

Reserve Board.

17

actively engaged in some industrial pursuit vnthin the Fed-

Each member of such committee shall be

18 eral Reserve district in which the committee is established,
19

and each mch member shall serve without compensation but

20

shall be entitled to receive from the Federal Reserve bank

21

of mch district his necessary expenses while engaged in the

22

business of the committee, or a per diem allowance in lieu

23

thereof to be fixed by the Federal Reserve Board.

24

application for any such loan, advance, purchase, discount,

25

or commitment shall be submitted to the appropriate com-




Each

27
1

mittee and, after an examination by it of the business with

2

respect to which the application is made, the applicatidn

o

shall be transmitted to the Federal Reserve bank, together

4

with the recommendation of the committee "

5

SEC. 15. Section 5202 of the Revised Statutes of the

6

United States9 as amended, is hereby amended by adding

7

at the end thereof the following new paragraph:

8
9

" Tenth. Liabilities incurred under the provisions of
section 13b of the Federal Reserve Act"

10

SEC. 16. Section 22 of the Federal Reserve Act 4$

11

amended by adding at the end thereof the following new

12

paragraphs;

13

"(h)

Whoever makes any material statement, know-

14

ing it to be false, or whoever willfully

overvalues any

15

security, for the purpose of influencing in any way the

16

action of a Federal Reserve bank upon any application9

17

commitment, advance, discount, purchase, or loan, or arty

18

extension thereof by renewal, deferment of action, or other-

19

wise, or the acceptance, release, or substitution of security

20

therefor, shall be punished by a fine of not more than

21

$5,000 or by imprisonment for not more than two years,

22

or both.

23

"(i)

Whoever, being connected in any capacity with

24

a Federal Reserve bank (1) embezzles} abstracts, purloins,

25

or willfully misapplies any moneys, funds9 securities, or other




28
1

things of value, whether belonging to it or pledged or other-

2

wise entrusted to it, or (2) with intent to defraud any

3

Federal Reserve bank, or any other body politic or cor-

4

porate, or any individual, or to deceive any officer, auditor,

5

or examiner, makes any false entry in any book, report, or

6

statement of or to a Federal Reserve bank, or, without being

7

duly authorized, draws any order or issues, pwfe forth, or

8

assigns any note, debenture, bond, or other obligation, or

9

draft, mortgage, judgment, or decree shall be punished by

10

0 fine of not more than $10,000 or by imprisonment for

11

not more than five years, or both.

12

" ( j ) The provisions of sections 112, 113, 114, 115,

13

116, and 117 of the Criminal Code of the United States,

14

insofar as applicable, are extended to apply to contracts or

15

agreements of any Federal Reserve bank under this Act,

16

which, for the purposes hereof, shall be held to include ad-

17

vances, loans, discounts, purchase, and repurchase agree-

18

ments; extensions and renewals thereof; and acceptances,

19

releases, and substitutions of security therefor.

20

"(k)

It shall be unlawful for any person to stipulate

21

for or give or receive, or consent or agree to give or receive,

22

any fee, commission, bonus, or thing of value for procuring

23

or endeavoring to procure from any Federal Reserve bank

24

any advance, loan, or extension of credit or discount or pur-

25

chase of any obligation or commitment with respect thereto,




29
1

either directly from such Federal Reserve bank or indirectly

2

through any financing institution, unless such fee, commis-

si

siow, bonus, or thing of value and all material facts with

4

respect to the arrangement or understanding therefor shall

5

be disclosed in writing in the application or request for such

6

advance, loan, extension of credit, discount, purchase, or

7

commitment

8

graph shall be punishable by imprisonment for not more

9

than one year or by a fine of not exceeding $5,000, or both.

10

If a director, officer, employee, or agent of any Federal

11

Reserve bank shall knowingly violate this paragraph, he shall

12

be held liable in his personal and individual

13

any loss or damage sustained by such Federal Reserve bank

14

in consequence of such violation."

Any violation of the provisions of this para-

capacity for

Passed the House of Representatives with an amendment May 23, 1934.
Attest:

SOUTH T R I M B L E ,
Clerk.

Passed the Senate May 10 (calendar day, May 14),
1934.




Attest:

EDWIN A. HALSEY,
Secretary.