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CONTENTS

Statement of:

Page

Baldwin, C. B., Assistant Administrator, Farm Security Administra-

tion-

147, 242

Barkley, Hon. Alben W., Senator from Kentucky-

8

Carmody, John M., Administrator, Federal Works Administration.- 69
Eastman, Hon. Joseph B., Chairman, Interstate Commerce Commis-
sion.

155

Eccles, Hon. Marriner S., Chairman, Board of Governors of the Federal

Reserve System..

178

Jones, Hon. Jesse H., Federal Loan Administrator, Washington, D.C. 87, 248

McDonald, Thomas H., Commissioner, Public Roads Administration. 35, 50

Morgenthau, Hon. Henry, Jr., Secretary, Treasury Department.-- 119
Page, John C., Commissioner, Bureau of Reclamation, Department of
Commerce, Washington, D. C..

110
Pelley, J. J., president, Association of American Railroads, Washing-
ton, D. C

169
Pierson, Warren L., president, Export-Import Bank, Washington,
D. C..

202
Wallace, Hon. Henry A., Secretary, Department of Agriculture -- 16

EXHIBITS

Copy of Senate bill 2759..

1

Brief filed by the Government relating to Pioneer Rural Electric Cooper-

ative, Inc

85

Table A. Loans of selected amortized maturities (equal annual debt

service).

109

Table B. Loans of selected average maturities (or term loans)

110

Statement by Isador Lubin, Commissioner of Labor Statistics re Estimates

of the amount of labor created by federal loans or expenditures for con-

struction projects ---

138

Letter from the Associated General Contractors of America.

154

Statement by Hon. Joseph B. Eastman re Equipment trust certificates - 168

Statistical analysis of publicly offered foreign dollar bonds from the Insti-

tute of International Finance of New York University, appendix C.. 227

Activities of Export-Import Bank of Washington and Second Export-

Import Bank of Washington, D. C., February 12, 1934, through July 8,

1939-

230

General policy statement of Export-Import Bank of Washington, June 15,

1938.

241

Lending Our Way to Prosperity, an address by Leonard P. Ayres, vice

president, Cleveland Trust Co., chairman, Research Council, American

Bankers Association..

254

Estimates of the amount of labor created by Federal loans or expenditures

for construction projects.-

260

Memorandum on some legal aspects of the Federal power of eminent

domain, submitted by Alan Johnstone, general counsel, Federal Works

agency-

263

WORKS FINANCING ACT OF 1939

WEDNESDAY, JULY 12, 1939

UNITED STATES SENATE,
COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met at 10:30 a. m., pursuant to call, in room 301, Senate Office Building, Senator Robert F. Wagner, chairman of the committee, presiding.

Present: Senators Wagner (chairman), Glass, Barkley, Adams, Maloney, Radcliffe, Hughes, Herring, Miller, Clark of Idaho, Downey, Townsend, Tobey, Danaher, and Taft.

The CHAIRMAN. The meeting will come to order. We are meeting for the purpose of hearing testimony on Senate bill 2759, introduced by Senator Barkley. I suppose the first order should be to have a copy of the bill printed in the record.

(S. 2759 is as follows:)

[S. 2759, 76th Cong., 1st sess.) A BILL To provide for the construction and financing of self-liquidating 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 this Act may be cited as the “Self-liquidating Projects Act of 1939."

AUTHORIZATION OF BONDS

Sec. 2. In order to provide a sound method of financing which, without burdening the national taxing power, will make it possible to increase employment through a self-liquidating improvement program, the Reconstruction Finance Corporation (herein called the "Corporation”), upon the direction of the President, shall issue from time to time notes, debentures, bonds, or other obligations to enable the Department of Agriculture, the Public Roads Administration, the Public Works Administration, the Rural Electrification Administration, and the Corporation to carry out their respective functions as hereinafter provided.

PROVISIONS CONCERNING BONDS

Sec. 3. The provisions contained in the Reconstruction Finance Corporation Act, approved January 22, 1932, as amended, shall apply to the notes, debentures, bonds, or other obligations issued to carry out the provisions of this Act, except that

(a) Such notes, debentures, bonds, or other obligations may mature at such time or times, not exceeding forty years from their date, and contain and be subject to such terms, covenants, and conditions as the Corporation, with the approval of the Secretary of the Treasury, may prescribe; and

(b) The amount of notes, debentures, bonds, or other obligations which the Corporation may issue and have outstanding at any one time under existing law is hereby increased by the amount thereof directed to be issued by the President, not to exceed $2,560,000,000, plus an amount equal to the amount of unobligated balances of appropriations transferred under sections 10 and 12 of this Act.

1

DISPOSITION OF BOND PROCEEDS

Sec. 4. The Corporation is hereby authorized and directed to deposit all proceeds realized from the sale of notes, debentures, bonds, and other obligations issued for the purpose of carrying out this Act, with the Treasurer of the United States to the credit of the Corporation. The Treasurer of the United States is hereby authorized and directed to receive such moneys and hold the same in a special account or accounts to the credit of the Corporation, and to transfer from time to time such amounts as the Corporation, upon the direction of the President, shall order to such special disbursing accounts with said Treasurer as the Secretary of the Treasury shall designate, in order to provide funds for the following departments, administrations, and agencies of the Government in not to exceed the following amounts for the following purposes, in addition to sums available for such purposes from tolls and charges collected from the repayments of the interest on and principal of loans made, and from the sale of securities acquired, under this Act:

(1) To the Public Roads Administration: The sum of $750,000,000 for post roads, highways, parkways (in cooperation with the National Park Service of the Department of the Interior), grade crossings, underpasses, overpasses, viaducts, bridges, and tunnels, including crossings over or under navigable waters, and other transportation facilities, including works, undertakings, or projects incidental thereto or to encourage the use thereof, and all or any part of any of such facilities and appurtenances thereto, such as lands, rights in lands, rights of access, easements, buildings, equipment, and machinery (herein called "highway improvements”), as provided in section 5 of this Act and property acquired for investment purposes as provided in said section;

(2) To the Public Works Administration: The sum of $350,000,000 for projects of the character heretofore financed by loan or grant or both by the Federal Emergency Administration of Public Works under title II of the NationalIndustrial Recovery Act, the Emergency Relief Appropriation Act of 1935, the Emergency Relief Appropriation Act of 1936, the Public Works Administration Extension Act of 1937, and the Public Works Administration Appropriation Act of 1938 (herein called the "non-Federal public works”), as provided in section 7 of this Act;

(3) To the Corporation: The sum of $500,000,000 for engines, locomotives, tenders, freight and passenger cars of all types and classes, and parts thereof and appurtenances thereto and other rolling stock and railway shop equipment (herein

called “railroad equipment”), as provided in section 8 of this Act; (4) To the Rural Electrification Administration: $500,000,000 for projects of the character heretofore financed or authorized to be financed or carried on by the Rural Electrification Administration under the Rural Electrification Act of 1936 (herein called “rural electrification projects”), as provided in section 9 of this Act;

(5) To the Department of Agriculture: Six hundred million dollars for facilities for farm tenants, farm laborers, sharecroppers, and other individuals who obtain, or who have in the past obtained, the major portion of their income from farm operations, including rural rehabilitation loans, projects for the provision of additional water facilities, and farm-tenant loans as provided for in title I of the Bankhead-Jones Farm Tenant Act, approved July 22, 1937 (herein called “rural security projects”), as provided in section 11 of this Act.

HIGHWAY IMPROVEMENTS

Sec. 5. Subject to the provisions of this Act, and using in such connection States, municipalities, and other public bodies to the fullest extent consistent with sound administration and economical management, the Public Roads Administration shall have power

(a) To construct, reconstruct, alter, extend, enlarge, improve, repair, and acquire highway improvements with a view to promoting interstate commerce, aiding in the national defense, facilitating the use of the mails, or promoting the general welfare;

(b) To maintain and operate highway improvements;

(C) With the approval of the Corporation, to fix, maintain, and collect tolls, and other charges for the use of highway improvements which shall be sufficient (after making reasonable allowances for operation and maintenance expenses for depreciation to the extent not provided for by amortization, and contingencies) to amortize the cost of such highway improvements with interest as hereinafter provided;

(d) To use for further highway improvements the revenues derived from such collections to the extent not needed in the judgment of the Corporation to meet reasonable allowances for operation and maintenance expenses or for the amortization of the cost of highway improvements with interest as hereinafter provided, or for depreciation to the extent not provided for by amortization, and contingencies;

(e) To acquire in the name of the United States by gift, purchase, exchange, or by the exercise of the power of eminent domain or otherwise, and to hold, lease (as lessor with or without the option to purchase, or as lessee), use, sell, exchange, or otherwise dispose of real property necessary or convenient for carrying out any of its functions hereunder in connection with highway improvements or in connection with any construction undertaken in accordance with the Federal Highway Act, as amended and supplemented;

(f) In connection with any sale or lease to any State, municipality, or other public body to enter into such contracts and agreements as the Commissioner of Public Roads may deem desirable, which contracts and agreements may include provisions for deducting from the unpaid portion of the sale price, rental payments, or loans, an amount equal to any profit which the Corporation may determine to have been realized from the sale of adjacent property acquired pursuant to subsection (g) of this section;

(g) To acquire by purchase, but not by condemnation, for investment purposes, any real property in the vicinity of any highway improvements or Federal-aid construction if, in the opinion of the Commissioner of Public Roads and the Corporation the price at which such real property may be purchased is such as to make it probable that the United States will, as a result of appreciation in land values resulting from any highway improvement or Federal-aid construction, be able to dispose of such property, within twenty years, at such a price as to result in a profit; and to sell any such real property at public sale after advertisement and competitive bidding and upon such other terms and conditions as the Commissioner of Public Roads and the Corporation may in their judgment deem in the public interest;

(h) To expend moneys the purpose for which any real property has been purchased, or possession thereof has been taken during the course of condemnation proceedings and in advance of final judgment thereon, in demolishing existing structures thereon, in improving such real property in any way, or in constructing any highway improvement thereon, notwithstanding the provisions of section 355 of the Revised Statutes, or any other law restricting the expenditure of public moneys upon real property, the title to which has been acquired by the United States;

(i) To prescribe and publish such rules and regulations for the proper government and protection of, and maintenance of good order on, highway improvements or adjacent real property of the Authority, willful violation of which shall be punishable by a fine of not more than $500 or imprisonment for not more than three months, or both; and to authorize employees of any department of the Government, with the consent of the head of such department, to make arrests for the violation of such rules and regulations, and any person so arrested shall be taken before the nearest United States commissioner within whose jurisdiction the highway improvement is located for trial; and upon sworn information by any competent person any United States commissioner in the proper jurisdiction shall issue process for the arrest of any person charged with violation of such rules and regulations; but nothing herein contained shall be construed as preventing the arrest by an officer, agent, or employee of any public body, with or without process, of any person for the violation of any State cr local law, ordinance, or regulation, for the government and protection of, and maintenance of good order on highway improvements, and any person so arrested shall be tried and punished according to the laws of said State;

(j) To institute and carry on, under the direction of the Attorney General, condemnation proceedings for the purpose of taking any real property (which term includes for purposes of this Act property devoted to another public use, lands under water, water rights, incorporeal hereditaments, chattels real, and all rights and interests in land, whether fees simple absolute or any lesser interest) in the manner or mode of procedure provided by an Act entitled “An Act to authorize condemnation of land for sites of public buildings, and for other purposes”, approved August 1, 1888, as amended, or of an Act entitled “An Act to expedite the construction of public buildings and works outside of the District of Columbia by enabling possession and title of sites to be taken in advance of final judgment in proceedings for the acquisition thereof under the power of eminent domain”, approved February 26, 1931, as amended;

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