INQUIRY INTO THE OPERATION OF THE RECONSTRUCTION FINANCE
CORPORATION AND ITS SUBSIDIARIES UNDER SENATE RESOLUTION 132

A RESOLUTION FOR AN INQUIRY INTO THE OPERATION

OF THE RECONSTRUCTION FINANCE COR-

PORATION AND ITS SUBSIDIARIES

69127

PART 1

DECEMBER 3, 11, AND 12, 1947

Printed for the use of the Committee on Banking and Currency

COMMITTEE ON BANKING AND CURRENCY

CHARLES W. TOBEY, New Hampshire, Chairman

Eccles, Marriner S., Chairman, Board of Governors, Federal Reserve

System...

Page

126

Goodloe, John D., Chairman, Board of Directors, Reconstruction

Finance Corporation..

31

Herz, Theodore, Assistant Director of the Corporation Audits Division,

General Accounting Office..

100

8

McGarrigle, J. Cyril, in charge of financial analysis for the sub-

committee...

Munzall, Daniel, Jr., associate counsel for the subcommittee..

Snyder, John W., Secretary of the Treasury, accompanied by Edward

F. Bartelt, Fiscal Assistant to the Secretary; Thomas J. Lynch,

Acting General Counsel; and George C. Haas, Director of Technical

Staff, Treasury Department----

Stevens, Lewis M., Counsel and executive director for the subcom-

mittee...

Whelan, Joseph A., associate counsel to the subcommittee_

Exhibits:

Exhibit 1. Senate Resolution 132 [to investigate the operations of the

RFC and its subsidiaries], Eightieth Congress, first session_.

Exhibit 2. Public Law 132 [to extend the succession, lending powers,

and the functions of the RFC], Eightieth Congress, first session_..

Exhibit 3. Descriptions of the Legislative Authorizations to RFC...

Exhibit 4-A. Consolidated balance sheet.

Exhibit 4-B. Net income from lending activities, and net income

from war-damage insurance program_-

5, 14

117

1

21

147

147

153

168-169

170

Exhibit 4-C. Unrecovered costs, etc., nonlending activities for na-

Exhibit 6-A. RFC direct business loans-28 borrowers

account for

82 percent of the unpaid balance..

180

Exhibit 6-B. RFC investment in railroads-active loans.

181

Exhibit 6-C. RFC purchase of securities from PWA-15 projects

account for 91 percent of the total unpaid balance_-_.

Exhibit 6-D. RFC loans to self-liquidating projects-10 projects

account for 97 percent of the total unpaid balance..

Exhibit 6-E. RFC loans to drainage etc. districts- -15 borrowers

account for 49 percent of the unpaid balance___

Exhibit 6-F. RFC loans and investments in national banks-56 per-

cent of the remaining investment is concentrated in 11 banks...

Exhibit 6-G. RFC loans and investments in State banks-60 percent

of the remaining investment is concentrated in 21 banks....

Exhibit 6-H. RFC participation in bank loans-principal RFC par-

ticipations__

181

182

182

182

183

183

Exhibit 7-A. RFC loans to business enterprises-graph of authoriza-

tions, disbursements, repayments and other deductions___

Exhibit 7-B. Table in explanation of exhibit 7-A.........

Exhibit 7-C. RFC loans to business enterprises other than national

defense graph of authorizations, disbursements, repayments and

other deductions__

184

185

186

Exhibits-Continued

Exhibit 7-D. Table in explanation of exhibit 7-C.

Exhibit 7-E. RFC loans to business enterprises for national defense-

authorizations, disbursements, repayments and other deductions___

Exhibit 7-F. Table in explanation of exhibit 7-E..

Exhibit 8-A. Detailed schedule of loans outstanding to other than

Government agencies, June 30, 1947, with other financial informa-

tion in reference to loan activities.

Exhibit 8-B. Loans and investments authorized during the fiscal year

ended June 30, 1947, and during the 4 months ended October 31,

1947___

Page

187

188

189

190

192

Exhibit 8-C. Net income from lending activities, July 1, 1947, to

August 31, 1947

192

Exhibit 9. RFC loan agencies, managers, assistant managers, and

members of the advisory committees

193

Exhibit 10. Officers and directors, Preferred Accident Insurance Co.

of New York, prior and subsequent to reorganization__

Exhibit 11. Number and amount of loans authorized by RFC for

the fiscal year 1947 and for the months July to October 1947.

Exhibit 12. Regular participations authorized.

Exhibit 13. Blanket participations authorized

Exhibit 14. Small loan participations authorized.

211

212

213

213

213

Exhibit 15. Business loans authorized, cumulative through October

31, 1947.

213

Exhibit 16-A. Memorandum dated December 10, 1947, relating to

RFC market guarantee agreements concerning prefabricated

houses

213

Exhibit 16-B. Memorandum dated December 19, 1947, as an adden-

dum to exhibit 16-A.

216

Exhibit 16-C. Terminated marketing agreements concerning pre-

fabricated houses_

Exhibit 17. Veterans' Emergency Housing Act of 1947, Public Law

388, Seventy-ninth Congress, sections 11 and 12.

217

217

Exhibit 18. RFC letter of November 22, 1947, to Senator Buck re

internal reorganization of RFC...

218

Exhibit 19. RFC-lending and investment functions, November 30,
1947.

220

Exhibit 20. Preferred stock, capital notes, and debentures of banks

held by RFC..

221

Exhibit 21. RFC letter of March 11, 1947, to the Comptroller of the

Currency concerning retirements of investments in preferred stock

of banks.

Exhibit 22. Letter of National Housing Administrator dated January

10, 1947, to RFC concerning dissolution of Federal National Mort-

gage Association..........

Exhibit 23. Tabulation of number and amount of mortgage loans

insured by the FHA, etc., together with a tabulation of the number

and amount of such loans purchased by the RFC Mortgage Com-

pany and Federal National Mortgage Association.

Exhibit 24. Proposed amendment of RFC to the RFC Act__

Exhibit 25. Letter of RFC dated April 15, 1947, to Senator Tobey

concerning bill, S. 408...

Exhibit 26-A. Statement concerning status of liquidation of wartime

assets and operations and question of legislative cancellation of

wartime obligations___

Exhibit 26-B. Letter of RFC dated June 12, 1947, to Secretary of the

Navy concerning Pacific Ocean program of U. S. Commercial Com-

pany

222

223

224

224

225

227

231

Exhibit 26-C. Letter of President of the United States to RFC, dated

August 20, 1947, concerning transfer of U. S. Commercial Company

to Navy Department.

232

Exhibit 26-D. Letter of RFC to U. S. Commercial Company dated

October 24, 1947, concerning transfer of U. S. Commercial Com-

pany to the Navy Department_

233

Exhibit 26-E. Letter of Acting Secretary of the Navy to RFC dated

October 30, 1947, concerning U. S. Commercial Company ---

235

Exhibits Continued

Exhibit 27. Letter of John R. Steelman to RFC dated June 30, 1947,

concerning proposed RFC loan to the Lustron Corp.

Exhibit 28. Statement of Mr. Theodore Herz, Assistant Director of

the Corporation Audits Division, General Accounting Office, before

the Subcommittee on Procurement and Buildings of the Committee

on Expenditures in the Executive Departments, House of Repre-

sentatives.

Exhibit 29. Memorandum of the Controller of the RFC to Chairman

of the Board, RFC, dated December 18, 1947, concerning state-

ment of Mr. Theodore Herz.

Exhibit 30. Letter of RFC to Mr. Lewis M. Stevens, chief counsel,

RFC inquiry, dated November 13, 1947, concerning Texas City

tin smelter....

Exhibit 31. Letter of RFC to Mr. Lewis M. Stevens, chief counsel,

RFC inquiry, dated November 22, 1947, concerning synthetic-

rubber program.

Exhibit 32. Letter of RFC to Mr. Lewis M. Stevens, chief counsel,

RFC inquiry, dated November 17, 1947, concerning surplus

property..

Exhibit 33. Letter of RFC to Hon. George H. Bender, chairman,

concerning testimony of Mr. T. Coleman Andrews before the

House subcommittee..

Exhibit 34. Bank questionnaire-Answers of commercial banks..

Page

235

236

246

249

249

250

251

252