UNEMPLOYMENT RELIEF TUESDAY, JUNE 7, 1932 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met at 10.30 o'clock a. m., in the committee room of the Senate Committee on Interstate Commerce, Hon. Peter Norbeck, chairman, presiding. Present: Senators Norbeck (chairman), Goldsborough, Couzens, Townsend, Walcott, Blaine, Carey, Davis, Glass, Wagner, Bulkley, and Morrison. The CHAIRMAN. The committee will come to order. We have under consideration this morning Senate bill 4632, together with an amendment to the same, both offered by Senator Davis. I suggest that the bill and its amendment be printed in the record at this point. (The bill, S. 4632, is here printed in full as follows:) [S. 4632, Seventy-second Congress, first session] A BILL To authorize the Reconstruction Finance Corporation to make loans to States and municipalities Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5 of the Reconstruction Finance Corporation Act is amended by adding at the end thereof the following: "Within the foregoing limitations of this section the corporation may also make loans to States or municipalities or political subdivisions thereof to aid in temporary financing for unemployment relief, and when, in the opinion of the board of directors of the corporation, any such State, municipality, or political subdivision is unable to obtain funds upon reasonable terms through banking channels or from the general public and the character and value of the security offered are such as to furnish adequate assurance of ability to repay within the time fixed therefor and to meet other obligations in connection therewith: Provided, That the aggregate sums advanced under this paragraph shall not exceed $500,000,000." (The amendment to S. 4632 is here printed in full as follows:) [S. 4632, Seventy-second Congress, first session] AMENDMENT Intended to be proposed by Mr. Davis to the bill (S. 4632) to authorize the Reconstruction Finance Corporation to make loans to States and municipalities, viz: On page 2, line 7, strike out the period and insert in lieu thereof a colon and the following: "Provided further, That in any case where any such State, municipality, or political subdivision is unable to obtain a loan from the corporation for such purposes because of existing constitutional inhibitions or because it has already borrowed to the full extent authorized by State or municipal law, the corporation may, upon request of the governor of such 87 State or of the proper authorities of the municipality or political subdivision, make temporary advances for such purposes upon condition that the governor or such authorities shall agree to recommend to the legislature of the State and to the people thereof such action as may be necessary and appropriate to insure the repayment to the corporation of all amounts so advanced." The CHAIRMAN. The committee will hear first from Senator Davis. STATEMENT OF HON. JAMES J. DAVIS, A SENATOR OF THE UNITED STATES FROM THE STATE OF PENNSYLVANIA Senator DAVIS. I just want to call attention to Senate bill 4632 and the amendment offered thereto, and to ask that in view of the fact that the President suggests $300,000,000 whereas I have suggested $500,000,000, that be given consideration. Senator TOWNSEND. Do you mean that just on the request of the governor alone a request for funds should be granted? Senator DAVIS. Yes; the governor would make his proposition to the Reconstruction Finance Corporation. It is a question with the Reconstruction Finance Corporation whether or not it will grant it after he makes his presentation. The bill is for general relief for States, municipalities, or political subdivisions which, because of constitutional inhibitions, are unable to raise money. They will present the matter to the Reconstruction Finance Corporation, and if that body deems it wise, the loan will be made. In other words, it provides: That in any case where any such State, municipality, or political subdivision is unable to obtain a loan from the corporation for such purposes because of existing constitutional inhibitions or because it has already borrowed to the full extent authorized by State or municipal law, the corporation may, upon request of the governor of such State or of the proper authorities of the municipality or political subdivision, make temporary advances for such purposes upon condition that the governor or such authorities shall agree to recommend to the legislature of the State and to the people thereof such action as may be necessary and appropriate to insure the repayment to the corporation of all amounts so advanced. Senator TOWNSEND. Would you mind adding that any Federal appropriations should be withheld until it is paid? Senator DAVIS. I do not think that it is necessary to do that, but I would not have any objection to that. I think that if the State of Pennsylvania made its request for a loan, and the request was granted, the loan would be paid back. Senator WALCOTT. Suppose the people do not vote to do that borrowing, and the money has already been loaned and spent? Senator DAVIS. I do not have any objection to that saving clause being put in. Senator WALCOTT. I think there ought to be some way of collecting it from a State. The CHAIRMAN. What was your suggestion? Senator WALCOTT. I say, in the event that the people do not vote to borrow, and the money has already been loaned to the State, the Federal Government would have no collateral and nothing at all but the pledge of the governor. How is the Federal Government going to be reimbursed unless the Federal Government has a lien on the assets of the State? Senator DAVIS. I do not think there is any State in the Union that would want to repudiate a debt to the United States. Senator WALCOTT. You can not tell that. They have done so, a good many of them. Senator DAVIS. I have no pride of authorship in this bill, because it has been before the Senate on many occasions; but I am interested in getting loans for the States. . The CHAIRMAN. You would not limit it to States, would you? Senator DAVIS. I would go so far as to include a municipality. That is all that I wanted to present. The CHAIRMAN. Thank you, Senator Davis. The committee will now go into executive session. (Whereupon, at 10.40 o'clock a. m., the hearing in the aboveentitled matter was concluded and the committee proceeded to consider other matters in executive session.) UNEMPLOYMENT RELIEF TUESDAY, JUNE 7, 1932 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The committee met at 2.30 o'clock, p. m., pursuant to call, in the Interstate Commerce Committee room, Capitol, Senator Peter Norbeck presiding. Present: Senators Norbeck (chairman), Goldsborough, Townsend, Walcott, Couzens, Wagner, Bulkley, and Gore. Present also. Senator Barbour. The CHAIRMAN. The committee will come to order. The meeting is called for the purpose of considering Senate bill 4822, introduced by Senator Barbour of New Jersey. The bill will be made a part of the record at this point. (The bill S. 4822 is as follows:) [S. 4822, Seventy-second Congress, first session] A BILL To amend the Reconstruction Finance Corporation Act to authorize loans for the purpose of providing additional employment through the construction of economically sound projects, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Reconstruction Finance Corporation act is amended by adding after section 5a the following new sections: SEC. 5b. The corporation is authorized and empowered to make loans to any State or political subdivision thereof, or to any agency constituted pursuant to the authority of such State, or to any corporation organized under the laws of any State or of the United States and having resources adequate for its undertaking, for the purposes of enabling them to finance the construction, replacement, or reconstruction of economically sound and useful projects the construction, replacement, or reconstruction of which will provide employment at an early date for a substantial number of persons, subject to the limitations of section 5 of the Reconstruction Finance Corporation act as to the periods within which the corporation may make loans and amounts thereof. The corporation may make such loans in such manner and amounts, for such periods not in excess of five years, upon such terms as to repayment of principal thereof and interest thereon, and subject to such other conditions, as the corporation may determine. Each such loan shall be fully and adequately secured, and shall be made only upon a showing to the satisfaction of the board that the State, political subdivision, agency, or corporation applying for the loan is unable to obtain sufficient funds for the purpose upon reasonable terms through banking channels or from the sale of its bonds or other securities to the general public and that the operation of the project when completed will yield sufficient income to be self-sustaining, including the repayment of the loan made hereunder with the interest thereon in accordance with its terms and conditions. 66 SEC. 5c. The corporation is authorized and empowered to make loans to bona fide financial institutions organized under the laws of any State or of 91 |