The Corporation is required to retire its capital stock, or pay such dividends and purchase such stock of the Federal home-loan banks in an aggregate amount of not to exceed $300,000,000, to be determined by the Secretary of the Treasury, but the amount to be used for each of such purposes within the limitation fixed by the Secretary of the Treasury is to be determined by the Reconstruction Finance Corporation with the approval of the Federal Loan Administrator.

Section 3 extends the limitation of the amount mentioned in section 5 of the Reconstruction Finance Corporation Act as amended, which the Reconstruction Finance Corporation may use for furnishing assistance to railroads from $350,000,000 to $500,000,000, and also extends from January 31, 1945, to January 31, 1955, the period within which obligations taken by the Reconstruction Finance Corporation in connection with certain loans or advances to borrowers may mature. Section 4 authorizes the Federal Farm Mortgage Corporation to repay on or before June 30, 1941, to the Secretary of the Treasury all amounts in excess of $100,000,000 subscribed before such date to the capital stock of the Corporation. The proceeds of such repayment are to be held in the Treasury of the United States as a fund which is to be available for subscription to the capital stock of the Corporation when in the judgment of its board of directors additional subscribers are necessary.

Section 5 amends the Reconstruction Finance Corporation Act so as to permit loans to, or the purchase of the capital stock of, corporations for the purpose of acquiring and carrying strategic and critical materials and for plant construction, expansion, and equipment and working capital to be used in the manufacture of equipment and supplies necessary to the national defense.

It is also provided that when requested by the Federal Loan Administrator, with the approval of the President, the Reconstruction Finance Corporation may create or organize corporations with power to acquire and carry strategic and critical materials; to purchase land, to purchase, build and expand plants, and to purchase equipment and machinery, for the manufacture of equipment and supplies necessary to the national defense; to lease such plants to private corporations; and if the President finds it necessary for a Government agency to engage in such manufacture, to itself engage in such manufacture. The Reconstruction Finance Corporation is authorized to make loans to or purchase the capital stock of any such corporation for any purposes related to the national defense program.

The terms, conditions, and maturities of such loans are to be determined by the Reconstruction Finance Corporation.

The section also provides that any corporation so created or organized by the Reconstruction Finance Corporation may, with the approval of the President, make payments against the purchase price to be paid for strategic and critical materials in advance of the delivery thereof. Whenever practicable the Corporation may require such payments to be used for purchases of raw or manufactured agricultural commodities to be exported from the United States.

76TH CONGRESS 3d Session

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SENATE

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REPORT No. 1726

RECONSTRUCTION FINANCE CORPORATION LOANS FOR DEVELOPMENT OF DEPOSITS OF STRATEGIC AND CRITICAL MINERALS

MAY 31 (legislative day, MAY 28), 1940.—Ordered to be printed

Mr. MILLER, from the Committee on Banking and Currency, submitted the following

REPORT

[To accompany S. 4008]

The Committee on Banking and Currency, to whom was referred the bill (S. 4008) to authorize the Reconstruction Finance Corporation to make loans for the development of deposits of strategic and critical minerals and other metallic and nonmetallic minerals, and to authorize the Reconstruction Finance Corporation to make more adequate loans for mineral developmental purposes, having considered the same, report favorably thereon with amendments and recommend that the bill as amended do pass.

Under existing law, the Reconstruction Finance Corporation is authorized to make loans for mineral developmental purposes to corporations, individuals, and partnerships engaged in the development of deposits of gold, silver, tin, or gold and silver. The bill, as amended by the committee, would, if enacted into law, authorize the Corporation to make such loans to those who are engaged in the development of deposits of strategic and critical minerals which in the opinion of the Corporation would be of value to the United States in time of war.

The maximum loan which the Reconstruction Finance Corporation is permitted, by existing law, to make to any corporation, individual, or partnership for mineral developmental purposes is $20,000. The bill, if enacted into law, would enable the Corporation to make additional loans, not in excess of $20,000, for such purposes to any corporation, individual, or partnership which has previously obtained a loan for such purposes from the Corporation and which has so expended the funds previously obtained as to justify the Corporation's making an additional loan for such purposes.

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MAY 31 (legislative day, MAY 28), 1940.-Ordered to be printed

Mr. ADAMS, from the Committee on Banking and Currency, submitted the following

REPORT

[To accompany S. 71]

The Committee on Banking and Currency, to whom was referred the bill (S. 71) to repeal the act entitled "An act relating to Philippine currency reserves on deposit in the United States," having considered the same, report favorably thereon with a recommendation that it do pass.

Identical bills passed the Senate, S. 3486 during the second session of the Seventy-fourth Congress, and S. 892 during the first session of the Seventy-fifth Congress. Representatives of the Philippine Government have presented their views as to this legislation upon each occasion when this measure and its predecessors have been considered by the subcommittee of the Committee on Banking and Currency to which the respective measures were referred. Neither of the two previous bills was considered by the committee to which it was referred in the House, consequently did not receive consideration by that body. The following is a statement of facts which in the opinion of the committee not only justify, but require, for the protection of the Government, the passage of this measure.

The United States devalued its gold dollar on January 31, 1934. On that date the government of the Philippine Islands had on deposit in 41 banks in the United States the sum of $56,276,056.92. With the exception of a portion of the account carried by the Chase National Bank of New York, all of these deposits were time deposits drawing interest. These deposits were opened at different periods over a course of years, the average length of time such funds had been on deposit being over 10 years.

On the same date, January 31, 1934, there were approximately 50,000,000 separate deposit accounts of residents of the United States in the various banks of the United States, aggregating some $40,000,000,000.

At no time did the Philippine government or any of these depositors have a right to demand payment of these deposits in gold. All of these deposits were payable in lawful money of the United States. The deposits of the Philippine government were specifically payable in "lawful money" in accordance with the terms of the deposit agreements.

After April 5, 1933, none of these deposits could have been lawfully paid in gold. The only coins minted for use in the Philippine Islands were silver. The Philippine Islands at no time have coined or issued any gold coins.

The Congress of the United States in 1903 declared the gold peso to be the unit of value and to contain 12% grains of gold, being equal to one-half of the American gold dollar. The silver peso was declared to be legal tender for all debts, public and private, and prior to the devaluation of the silver peso by the Philippine Government in 1906 contained 416 grains of silver 0.900 fine, or 4 grains more than the standard American dollar. In 1906, by reason of an increase in the value of silver and the subsequent danger of its disappearance, the Philippine Government devalued the silver peso 34 percent.

The only paper money of the Philippine Government was issued upon deposit of a full equivalent in silver pesos and was redeemable in silver pesos, though the insular government reserved the option of redeeming this currency in gold.

The acts of Congress authorizing the issuance of this paper currency specifically required that a redemption fund in coin equal to 100 percent of the paper currency outstanding should be maintained and used for no other purpose.

The deposits in United States banks comprised two funds created under authority of acts of the Philippine Legislature.

The first fund was known as the gold-standard fund and was constituted mainly from the proceeds of Philippine Government bonds sold in the United States and payable in United States dollars for the purpose of maintaining the parity between a theoretical gold peso and the actual silver peso. It is to be particularly noted that the silver peso, both prior and subsequent to the devaluation of the American gold dollar, has continued to be accepted at par in the markets of the world.

The second fund was known as the Treasury certificate fund and was provided for the exclusive purpose of the redemption of the certificates issued in exchange for deposits of silver pesos.

On January 31, 1934, the Treasury certificate fund amounted to $37,163,803.50 and the gold standard fund to $19,112,253.42.

These deposits were in form identical with the deposits of other depositors in American banks. The Philippine Government had collected interest aggregating more than $15,000,000 upon them. It is the universally recognized principle of law that when a deposit is made the title to the money deposited is transferred to the bank and the relationship between the bank and its depositor is that of debtor and creditor, and that the deposit represents no identified or identifiable part of the assets of the bank. The Philippine currency while computed in terms of the gold standard was a silver currency and its paper money secured by a 100-percent coin-redemption fund. Notwithstanding these facts the administration and the committees of the Congress were given to understand that these two funds were