A BILL TO PROVIDE FOR THE INSURANCE BY THE RECON- OF ENABLING SUCH ENTERPRISES TO INCREASE THEIR PRODUCTIONS, EXTEND THEIR OPER- AND S. 2343 A BILL TO PROVIDE FOR THE INSURANCE OF LOANS TO MAY 31, JUNE 1, 2, 5, 13, 15, 20, 21, 22, and 29, 1939 Printed for the use of the Committee on Banking and Currency Amt26859 4 4247 CONTENTS Page Copy of Senate bills S. 1482 and 2343_. Allen, Hon. Robert G., Representative in Congress from the Twenty- Ayres, Leonard P., vice president, the Cleveland Trust Co., Cleveland, 207 Barnard, Edmund J., president and treasurer, Boston Bookbinding 339 Benjamin, Alfred H., president, Anglo-American Trading Corporation, 396 Bloome, Charles P., executive vice president, Wearing Apparel Board Brown, Edward E., president, First National Bank of Chicago, Ill. Cohen, Samuel J., representing Amecco Chemicals, Inc., Rochester, Conely, Walter, president, Graham Printing Co., Detroit, Mich. Cook, H. E., president, Second National Bank, Bucyrus, Ohio; presi- dent, National Bank Division of the American Bankers' Associa- Courtney, Charles, Courtney Lock Co., New York City-- Draper, Ernest G., member of the Federal Reserve Board of Gov- ernors, Federal Reserve System, Washington, D. C----- Eccles, Hon. Marriner S., Chairman, Board of Governors of the Ellman, Samuel H., New York, N. Y.... Emery, DeWitt M., president, National Small Businesss Men's Asso- 331 Frank, Hon. Jerome N., Chairman, Securities and Exchange Commis- 51 Gottlieb, George A., secretary, Smaller Business Men's Association for New York, New Jersey, and Connecticut, New York, N. Y............ Hanes, Robert M., first vice president of the American Bankers Asso- ciation; president of the Wachovia Bank & Trust Co., Winston- Huck, Wallace, representing the Canteen Co., Nutley, N. J_. Jeffries, Hon. Walter S., Representative in Congress from the Second Koeneke, H. W., president of the Security Bank of Ponca City, Ponca City, Okla.; president of the State bank division of the American Kurtz, William Fulton, president of the Pennsylvania Co. for insur- 188 Pepper, Hon. Claude, Senator from the State of Florida-- Perkins, James H., chairman of the board, the National City Bank of Schwert, Hon. Pius L., Representative in Congress from the Forty- Shuman, William I., New York State division, American Federation 310 Smith, Walter, president of the Federal Advisory Council, president 150 258 Voorhis, Hon. H. Jerry, Representative in Congress from the Twelfth Westbrook, James, president of the Bridgeport unit of the National Woodward, Donald, Moody's Investors Service, New York, N. Y---. EXHIBITS Letter to Hon. Robert F. Wagner from Jerome N. Frank, Chairman, Securities and Exchange Commission---- Letter to Hon. Robert F. Wagner from the Associated General Con- Summary of special reports on loans to commercial and industrial busi- nesses with maturities of 1 year or more, submitted by Chairman Eccles- Statement on industrial advance operations of the Federal Reserve banks, submitted by Chairman Eccles-- Supplementary statement submitted by Howard A. Loeb, member of Fed- eral Advisory Council, representing the third Federal Reserve district__ Telegram addressed to Hon. James M. Mead from Smaller Business Asso- Brief in support of the Mead bill submitted by Alfred H. Benjamin, president, Anglo American Trading Corporation, 89 Broad Street, New Statement submitted by Mr. Rolf Nugent entitled "Business loans of credit agencies whose charges exceed normal banking rates". Supplement to the testimony of James S. Westbrook, of Bridgeport, Conn., No. 2 entitled "Number of corporations distributed by asset size"- No. 3 entitled "Working capital ratios of corporations according to 372 No. 4 entitled “Aggregate volume of working capital in industry". No. 5 entitled "Ratio of compiled new profits to gross sales for cor- No. 6 entitled "Notes and accounts payable, divided by sum of notes and accounts payable plus bonded debt and mortgage, by corpora- tions of various asset sizes". No. 7 entitled "Percentage of annual total of fixed debt compared with percentage of annual total of gross sales in each asset group"-- Supplemental statement of Mr. Donald Woodward, Moody's Investors Letter adressed to Hon. Robert F. Wagner by Mr. Alfred H. Benjamin___ Letter and report addressed to Hon. Jesse H. Jones, Chairman of the Board, Reconstruction Finance Corporation, by Mr. Richard C. Patter- son, Jr., Assistant Secretary of Commerce_ Statement of Jean C. Witter, president, Investment Bankers Association Hearings before the subcommittee on S. 3430 and S. 3630 (75th Cong.). TO PROVIDE FOR THE INSURANCE OF LOANS TO BUSINESS WEDNESDAY, MAY 31, 1939 UNITED STATES SENATE, SUBCOMMITTEE OF COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in room 301 Senate Office Building, Senator Robert F. Wagner presiding. Present: Senators Wagner (chairman of the subcommittee), Adams, Radcliffe, Hughes, Smathers, Clark of Idaho, Townsend, and Frazier. Present also, Senator Mead, of New York; Representatives Allen, of Pennsylvania, and Jeffries, of New Jersey. Senator WAGNER. The subcommittee will come to order. This subcommittee meets for the purpose of considering two bills introduced by Senator Mead, S. 1482 and S. 2343. The bills will be made a part of the record. (The bills S. 1482 and S. 2343 are here printed in full, as follows:) [S. 1482, 76th Cong., 1st sess.] A BILL To provide for the insurance by the Reconstruction Finance Corporation of loans made by banks to business enterprises for the purpose of enabling such enterprises to increase their productions, extend their operations, and modernize their plants, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That for the purpose of maintaining and increasing the employment of labor, the Reconstruction Finance Corporation (hereinafter referred to as the "Corporation") is authorized and empowered, under such terms and conditions not inconsistent with the provisions of this Act as it may prescribe, to insure national banks, and banks and trust companies incorporated under the laws of any State, Territory, possession, or the District of Columbia (hereinafter in this Act referred to separately as "bank") against losses which they may sustain as a result of loans and advances of credit made by them on and after July 1, 1939, and prior to July 1, 1941, to any industrial or commercial business, now or hereafter established, for the purpose of enabling such business to increase its production, extend its operations, or modernize its plant and equipment. SEC. 2. No insurance shall be granted under this Act to any such financial institution with respect to any obligation representing any such loan or advance of credit unless such loan or advance of credit (1) is not in exceess of $200,000, (2) is amortized in such manner as to provide for payment of principal and interest by periodic payments over a period of not in excess of seven years, (3) bears interest (exclusive of premium charge for insurance and service charge) of not in excess of 4 per centum on the amount of the principal obligation outstanding at any time, (4) does not provide for any service charge in excess of 1 per centum per annum of the original amount of such loan or advance of credit, and (5) is secured by a first mortgage upon real estate, or by a chattel mortgage upon personal property, determined by the Corporation to have a value |