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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,
Board, may
may make
make leans
loans toy
to? or
or purchase
purchase obligations
obligations
Reserve
2
ofy sueh business,
businessy or
op may make commitments w
wiitthh respect
3
thereto, on a reasonable and sound basisy lor
for the purpose
4
of providing it with working eapitaly but no obligation shall
5 fee
be acquired or commitment made hereunder w i t h a maturity
6
exceeding five ycarsr
7
- Each
Eaeh Federal Reserve bank shall
shah also have power to
8
discount lory
fory or purchase from, any bbanky
a n k y trust eompanyy
9
mortgage company,- credit corporation for
lor industry, or other
10
financing
institution operating i n its distriety obligations hav-
11
ing maturities not exceeding five yearsy entered into for
lor the
12
purpose of obtaining working capital for
lor any sueh estab-
13 fished:
busmess-f to make loans or
fished industrial or commercial business-y
1
J_
14
2
advarmnfl
meh finrmoing
advances direct toto any sueh
financing institntirm
institution on AA
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
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3
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 Ox the sum of $139,
20
299,557 €bs may be represented: by the par value of the
21
holdings of each Federal Reserve bank of Federal Deposit
22
insurance Corporation stoekj upon the exeeutien by eaeh
23
Federal Reserve bank of its agreement -(to be endorsed on
24
the certificate of sueh stock)- to hold sueh steek uncncum
25
bered and to pay to the United States all fhvidendsj all pay-
5
1
meats en liquidation, aftd aH ethe? proceeds el meh steekj for
2
which dividends, payment^ and proceeds the United States
3
shall be secured by mek stock itsehr
4
bank, m addition, shall agree that, in the event sueh divi-
5
dcnds, payments, and other proceeds m any calendar yeas? de
6
net aggregate 4 pe* centum of the f m value of said stock,
7
it will pay te the United States in sueh year mek further
8
amount, if aayy up te 4- pe? centum of the pa# value of stieh
9
stock, as shaft be covered fey the net earnings ef the bank
10
fe? that year derived from the use ef the sum se paid: by
11
the Secretary ef the Treasury, and that fe* said amount se
12
due the United States shall have a fost claim against mek
13
earnings and stock, and further that it wiH continue sueh
14
payments until the final liquidation ef said stock by the
15
Federal Deposit Insurance Corporation.
16
to eaeh Federal Reserve bank by the Secretary ef the
17
Treasury shall become a paart ef the surplus fond ef sueh
18
Federal Reserve bank within the meaning ef section 4-Sb
19
ef the Federal Reserve Aetr
20
expended by the Secretary ef the Treasury in order te carry
21
out the provisions ef thi$ 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, OF
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 cTt7 UJUuuil ULl vTr constructed and sfeaU
¥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 OE corpora
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.
@FedFRASER