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Mr. BUCHANAN. Collections, $14,474,432.72 plus unidentified collections of $72,890.68 and telegraphic notices of deposits of $1,161, 557.25 making a total of $15,708,880.65 which is placed in a special fund to the credit of the Secretary of Agriculture, in the Treasury.

Secretary HYDE. Yes.

Mr. BUCHANAN. This $10,795,496.94 that you did not loan and which was left in your hands, is that to your credit in a special fund, just like collections?

Secretary Hyde. The 10,795,496.94, less expenses paid, plus the collections have been deposited in the same special account at the Treasury.

Mr. BUCHANAN. Which leaves to the credit of the Secretary of Agriculture in the special fund in the Treasury, $26,000,000?

Secretary HYDE. I would not put it in that form, because we have turned $15,000,000 back as you will see later on in the statement.

Mr. BUCHANAN. That is another return, then?

Secretary Hyde. Yes; an additional return; that is a return on collections; the other was a return on allotted capital.

Mr. BUCHANAN. Then this $15,000,000 is not to your credit?

Secretary Hyde. No; it is not to my credit in the Treasury. It is part of my accounting to the R. F. C. and is to my credit there.

Mr. BUCHANAN. Now you had $26,504,377.59 originally to your credit, after the first return. Later the Secretary of Agriculture returned to the R. F. C. $15,000,000, leaving now to his credit, less expenses, is it not?

Secretary HYDE. Yes.

Mr. BUCHANAN. Leaving to your credit $11,504,377.59. The expenses were $3,415,168.90, which leaves $8,089,208.69 unexpended and interest deductions and collections, $2,076,897.97. That leaves the total now to the credit of the Secretary of Agriculture in the special fund in the Treasury $10,166,016.66. Now what is this refund to borrowers" and farmers' seed loans due borrowers"?

Mr. Hall. That is where a borrower has paid in advance and we have to refund him the unearned interest we had deducted: where they have overpaid their account and we owe a refund, or where we have collected money on farmers' seed loan accounts. The collections on seed loan accounts are turned over to the department disbursing officer for deposit in the proper appropriation account in the Treasury.

Mr. BUCHANAN. Well, that is in the Treasury, then?
Mr. Hall. That is in the Treasury.

Mr. BUCHANAN. In other words, you deducted the interest in advance?

Mr. HALL. That is right.

Secretary HYDE. And when they pay in advance, we, of course, have to pay them back.

Mr. BUCHANAN. Now, you pay into the Treasury?
Mr. Hall. No; we have deducted on the loans interest in advance.
Mr. BUCHANAN. And this $83,611.15, is that interest?

Mr. Hall. That is interest, refunds due, plus refunds for overpayment of accounts plus collections we have made on farmers' seed-loan accounts, that we have to pay back to the farmers' seed loan. The seed-loan collections for 1931 and prior years is deposited in the Treasury to the proper appropriation account.

Mr. BUCHANAN. The amount of that is $83,611.15. 27 Mr. Hall. That is right. * Mr. BUCHANAN. Making total cash deposited to the Secretary of Agriculture, now remaining, $10,249,717.81. Mr. Hall. That is right.

Mr. BUCHANAN. Now, then, just a question or two on those seed loans. This is on seed loans, not crop-production loans.

Secretary Hyde. It is all crop-production loans?
Mr. HALL. Yes.

Mr. BUCHANAN. Now, then, Mr. Secretary, if this is a revolving fund for the purpose of crop-production loans, this $15,000,000 you returned to the R. F. C. evidently must have been returned for the purpose and used by them for the formation of the agricultural livestock credit banks.

Secretary HYDE. No. They capitalized these agricultural credit corporations out of that $47,000,000. The difference between that $47,000,000 and the $37,000,000 (which I understand is the amount of capital they put into them), or $10,000,000, plus $15,000,000, is there now, available for the use of the Secretary of Agriculture for the purposes

of these loans. Mr. BUCHANAN. You do not mean plus the $15,000,000 you returned, do you?

Secretary HYDE. Yes, plus the collections. You see, they allocated us $47,000,000 more than we used. Now they have used $37,000,000 of that $47,000,000 for capitalizing the agricultural credit corporations, leaving $10,000,000 balance. That $10,000,000 balance, plus the $15,000,000 of our collections, is in their hands, available for the purposes of this section, or a total of $25,000,000.

ACCOUNTING BY SECRETARY OF FUNDS ALLOTTED

Mr. BUCHANAN. The only question is why was it returned, then; why was it not just left in the fund to your credit?

Secretary HYDE. Under the law, I have to account to the R. F. C. There is no virtue in holding the funds in my hands.

Mr. BUCHANAN. Where do you get that law?
Secretary Hyde. That I have to account?
Mr. BUCHANAN. Yes.
Secretary HYDE. Well I am acting as their agent.

Mr. BUCHANAN. I was just wondering. Have you an opinion of the Attorney General on that?

Secretary HYDE. Yes.
Mr. BUCHANAN. That you are their agent?

Secretary HYDE. That I am governed by the same terms and conditions as the R. F. C.

Mr. Sandlin. You are part of the R. F. C., as to that?

Secretary HYDE. Yes. In other words, the R. F. C.'s job was to account on the basis of the amount of money they have given to me. Now my job to them is to account for the amount of money they have turned over to me and, in the final accounting to the Treasury, or to the Congress for their capital, for the amount of money they have used, they have to include my account, undoubtedly.

Mr. BUCHANAN. And you think their duty would go further than just merely saying "turned over to the Secretary of Agriculture” a certain amount of money?

Secretary Hyde. I surely do.

Mr. BUCHANAN. Have you an opinion of the Attorney General holding that?

Secretary Hyde. No, I have not an opinion of the Attorney General on that.

Mr. BUCHANAN. I have read that section and I do not see anything in it on that. I do not believe that was the intention of Congress; I think they intended that money to be turned over to you and for you to account to Congress for it, just like you did in these other seed loans.

Secretary HYDE. That is not my understanding; although I am perfectly willing to account and glad to account.

Mr. BUCHANAN. I understood from Mr. Jump the other day you were perfectly willing to render a full and complete account of the whole transaction, and not only willing but ready.

Secretary HYDE. Yes. Now, here is the opinion of the Attorney General, and section 2 covers the point you have in mind. I might read the whole opinion in order that you might have it in the record. This is dated February 27, 1932:

Specifically, I am of the opinion and have to advise you as follows:

(1) That loans made pursuant to section 2 of the act creating the Reconstruction Finance Corporation should not be made in the name of the Secretary of Agriculture, but may be made either in the name of the United States of America, acting through the Secretary of Agriculture, or in the name of the Reconstruction Finance Corporation, acting througu the Secretary of Agriculture, or in the name of the Secretary of Agriculture, acting in pursuance to section 2 of the Reconstruction Finance Corporation act, as may be most convenient for administrative reasons, to be determined after consultation with the officers of the Reconstruction Finance Corporation.

(2) The funds referred to in the second section, when they have served the purpose of the act, should be returned to the Reconstruction Finance Corporation or disposed of as the corporation may direct.

Mr. BUCHANAN. Then he holds that the funds should be returned to the R. F. C.?

Secretary HYDE. Yes.

ACCOUNTING OF FUNDS, LOANS, ETC., BY RECONSTRUCTION FINANCE

CORPORATION

Mr. BUCHANAN. And the only accounting, as I understand it, they have to make is their final accounting?

Secretary Hyde. No; they have to make quarterly accounts.
Mr. BUCHANAN. To whom?
Secretary HYDE. To Congress.
Mr. BUCHANAN. You mean to the Clerk of the House?

Secretary HYDE. Well, to the Congress. Here is section 15 of the first act, which reads as follows:

The corporation (that is the Reconstruction Finance Corporation) shall make and publish a quarterly report of its operations to Congress, stating the aggregate Joans made to each of the classes of borrowers provided for and the number of the borrowers, by States, in each class. The statement shall show toe assets and liabilities of the corporation. The first report shall be made April 1, 1932, and quarterly thereafter.

Mr. BUCHANAN. Well that really is not an accounting; it is just merely a report of the loans made and the amount of collections, but not a complete account of their stewardship under the act. Is there

anything in there requiring them to make a complete account of it, such as you make on your seed loans heretofore authorized to be made and collected?

Secretary Hyde. Of course this does say “report” rather than "account;" but certainly Congress did not put that in there merely as an empty act and abdicate the right to go beneath the figures and find out about it. I assumed that was an accounting transaction.

Mr. SUMMERS. Do they not use the words “report the financial transactions''?

Secretary HYDE. Here is one of the reports; I suppose it is a quarterly report indicating).

Mr. BUCHANAN. It says "make report showing the amount of loans," and so forth.

Secretary HYDE. That is quite a complete report you have there.

Mr. SUMMERS. The law requires that they shall state the aggregate loans made to each of the classes of borrowers provided for, and the number of borrowers by States in each class; that the statement shall show the assets and liabilities of the corporation. So that when you get all of those things, you have a pretty complete financial report, it seems to me.

Mr. BUCHANAN. Absolutely; you have a general summary of the activities of the corporation, but you have no account of the stewardship in making and collecting these loans and the disposition of the money. You could take that report and all you would find out was that this loan was made through the Secretary of Agriculture—$64,000,000 was loaned to the farmers for crop-production loans.

Secretary HYDE. You would have a right, I take it, to go beyond just the gross figure that we loaned, and get the detail of it

Mr. BUCHANAN. Now that brings up the next question.

Secretary HYDE. My thought has been, Mr. Buchanan, all the time—and I think it is correct—that in the end I have either to produce the money, or notes for the money, in my accounting to the R. F. C.

Mr. Buchanan. The question that bothers me—there is no doubt the report covers the disbursements by classes, in the total amount, and the latter part of it covers the collections, in the total amount, but that is merely the report of a corporation, like the president of a corporation makes to the directors. But the question that bothers me is there is no committee of Congress I know of that is authorized to conduct a searching investigation, like the appropriations committee does where a department has to come before it for more appropriations.

Secretary Hyde. Yes.
Mr. Buchanan. It is a corporation.
Secretary Hyde. Yes.

Mr. BUCHANAN. In your instance, if you were administering this fund and depending on Congress for appropriations for administrative expenses, or otherwise to continue it, you would come here before Congress every session and give a full account of what is done, the amount of collections made, what is outstanding, and what is necessary to prosecute the collections further, and in that instance Congress would have a complete accounting for it. But now it is tied up in

corporation and I do not know of any committee they have to come before. They have a revolving fund; they do not have to come before Congress for more money; it is a corporation. That

this

was my criticism of the act. However, that is something that does not concern your department.

Mr. Hart. Mr. Buchanan, the secretary is handling these seed loans, which are also a revolving fund-is not that a revolving fund?

Secretary HYDE. No; not the seed loans.
Mr. Hart. This other is, crop-production loans?
Secretary Hyde. Yes.
Mr. HART. I did not discriminate in the language.

Mr. Hart. Well the crop-production fund is a revolving fund, yet you come before this committee and give an accounting of itDo not you give any accounting on that?

Mr. Hall. Just to the R. F. C.
Mr. Hart. He has just told us what he did with it.
Mr. HALL. That is right.
Mr. BUCHANAN. He willingly and voluntarily does it.

Mr. Hart. Do you not think that the R. F. C., when it goes before the Independent Offices Committee for an appropriation

Mr. BUCHANAN. What are they going before it for?

Mr. HART. Don't they have to go before it to get their expense accounts, and so forth, the same as the Secretary of Agriculture?

Mr. BUCHANAN. Oh, no.
Mr. Hart. They are paid out of the act?
Mr. BUCHANAN. You see it is a revolving fund.

Mr. Hart. I mean they ask for appropriations to run the R. F. C.; I do not think they take their expenses out of the revolving fund, do thev?

Secretary HYDE. I am inclined to think they do.
Mr. BUCHANAN. Yes.
Secretary HYDE. I am not sure of that.
Mr. SANDLIN. Surely they take them out.

Mr. BUCHANAN. It is a corporation which is given so much capital stock, and they run it themselves.

Secretary HYDE. It seems perfectly clear to me, in the end, when they account for that money they have gotten out of the Treasury, to wit, their initial capital of $500,000,000, plus their security issues, they have to make a complete accounting.

Mr. BUCHANAN. I agree with you; but, you see, that final accounting is 10 years in the future.

Secretary HYDE. Maybe. Mr. BUCHANAN. That is what the act says. Secretary HYDE. Yes; but it may be 40 years. Mr. BUCHANAN. It may be 40 years, and I am inclined to think it will be.

Mr. Hart. It is not any worse than the Farm Board funding a $16,000,000 loan for 10 years with the Farmers National Bank Corporation (I do not know anything about their assets at all) on a capital of $78,000. It funded a loan of $16,000,000 for 10 years on a capital of $78,000.

Mr. BUCHANAN. Let me call your attention to the Budget under the heading “Reconstruction Finance Corporation.” They are asking for no money at all, but here is the full extent of it: Řeconstruction Finance Corporation, investments, expenditures, and obligations, 1932, $500,000,000.

Mr. Hart. It is very informative, is it not?

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