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COMMITTEE ON BANKING AND CURRENCY
HENRY B. STEAGALL, Alabama, Chairman ALAN GOLDSBOROUGH, Maryland
JOHN B. HOLLISTER, Ohio MICHAEL K. REILLY, Wisconsin
JESSE P. WOLCOTT, Michigan FRANK W. HANCOCK, JR., North Carolina PETER A. CAVICCHIA, New Jersey CLYDE WILLIAMS, Missouri
HAMILTON FISH, JR., New York 0. H. CROSS, Texas
CHARLES L. GIFFORD, Massachusetts BRENT SPENCE, Kentucky
EVERETT M. DIRKSEN, Illinois PRENTISS M. BROWN, Michigan
CLARE G. FENERTY, Pennsylvania
J. T. CRAWFORD, Clerk
INTERMEDIATE CREDIT CORPORATION
TUESDAY, JULY 30, 1935
HOUSE OF REPRESENTATIVES,
Washington, D. C. The committee met at 10:30 a. m., Hon. Henry B. Steagall (chairman) presiding.
The CHAIRMAN. Gentlemen, the committee will come to order.
Gentlemen, I invited Mr. Jones down to discuss the Kopplemann bill, H. R. 5918.
Mr. Jones, I will not undertake to direct your discussion of this bill, but the committee will be glad to hear you, and you may proceed to discuss the legislation as you see fit.
STATEMENT OF JESSE H. JONES, CHAIRMAN RECONSTRUCTION
Mr. JoNEs. Mr. Chairman, it has been some time since I read the bill. It contemplates $500,000,000, does it not ?
The CHAIRMAN. I think it is $1,000,000,000.
The CHAIRMAN. That is what I want. The committee will interrogate you, but I thought you might desire to proceed in your own way.
Mr. JONES. I will be glad to answer questions or to comment.
The CHAIRMAN. Well, the committee, of course, would like to know just what we are doing toward taking care of loans required by industries under legislation heretofore passed, not alone by your organization, the Reconstruction Finance Corporation, but also, as far as you can inform us, by the Federal Reserve banks.
Mr. Jones. Well, applications to the Federal Reserve banks and to the R. F. C. for industrial loans are approximately the same in amount and not greatly different in number.
The CHAIRMAN. Give us that information, both as to numbers and as to amounts, if you can, or approximately.
Mr. Jones. We have had applications filed at our agencies approximating 4,600 in number. About 2,800 have been sent to Washington, either with or without recommendation. Our rules are that, whether the agency can recommend the loan or not, if the applicant wants the application sent to Washington, it is sent to us for review here. Of the 2,800 applications which have reached Washington, we have authorized a little over one-half in number. The net amount is about $72,000,000 now.
The CHAIRMAN. You are speaking of authorizations?
Mr. Jones. Authorizations; yes. We have disbursed about $33,000,000 of the $72,000,000. A great many of the loans are made on the budget basis, where the applicant gets the money as he needs it and only pays interest as he gets the money.
The Federal Reserve, I think, has put out a little more, their authorizations being about $76,600,000 net, and they have disbursed about $33,000,000 of the $76,600,000. So that there is not a great deal of difference. Perhaps their amount is a little more than that. They have larger loans and they are not required by law to get a security. They can make the loans on general credit, on a man's note, if they want to.
The CHAIRMAN. What you mean by that is, they are the sole judges of the security ?
Mr. JONES. Yes.
Mr. Jones. In our case, we must get security that will, in our opinion, reasonably assure the repayment of the loan. I think that is the exact language of the law.
The CHAIRMAN. Well, we would not be authorized to assume, for a moment, that less rigidity of regulation or requirement is practiced by the Federal Reserve than by your corporation ?
Mr. JONES. How is that?
The CHAIRMAN. We would not be justified in assuming, for a minute, that the Federal Reserve banks are less rigid than your standards, would we? They would certainly expect to be reasonably assured of repayment?
Mr. Jones. I suspect that their requirements are a little more exacting than ours.
The CHAIRMAN. I thought you meant to intimate the contrary.
The CHAIRMAN. They have a freer hand, but their requirements are more restricted than yours?
Mr. JONES. They have a freer hand; and, incidentally, the Government contributes one-half of the money for them, and they do not have to pay it back. In other words, they are 50-cent dollars. And we must get it all back.
The CHAIRMAN. The Government is putting up all of yours!
Mr. Jones. Yes; and at the same time, they tell us to get security. The Federal Government contributes to the Federal Reserve banks one-half of the money they lend.
The CHAIRMAN. As a matter of fact, the Federal Reserve banks have more to lend, for the reason that one-half of it is being supplied by the Treasury and represents reimbursements to the banks of the amount subscribed by them to the capital stock of the Federal Deposit Insurance Corporation ?
Mr. JONES. That is right.
The CHAIRMAN. And they are not required, in the ordinary sense of the word, to repay the Government?
Mr. JONES. That is right.
The CHAIRMAN. They are not required to repay the Government the amount submitted by the Government?
Mr. Jones. That is right.