such rates of interest, and may be redeemable before maturity at the option of the corporation, as may be determined by the board of directors, but such rate or rates of interest shall be subject to the approval of the Secretary of the Treasury. Such bouds shall have a first and paramount floating charge on all the assets of the corporation, and the corporation shall not at any time mortgage or pledge any of its assets. Such bonds may be issued at not less than par in payment of any advances authorized by this title, or may be offered for sale publicly or to any individual, firm, corporation, or association, at such price or prices as the board of directors, with the approval of the Secretary of the Treasury, may determine.

Upon such terms not inconsistent herewith as may be determined tom time to time by the board of directors, with the approval of the Secretary of the Treasury, at or before the issue thereof, any of such bonds may be issued payable in any foreign money or foreign moneys, or issued payable at the option of the respective holders thereof either in dollars or in any foreign money or foreign moneys at such fixed rate of exchange as may be stated in any such bonds. For the purpose of determining the amount of bonds issued payable in any foreign money or foreign moneys the dollar equivalent shall be determined by the par of exchange at the date of issue thereof, as estimated by the Director of the Mint and proclaimed by the Secretary of the Treasury in pursuance of the provisions of section 25 of the Act entitled "An Act to reduce taxation, to provide revenue for the Government, and for other purposes," approved August 27, 1894.

SEC. 13. That the Federal reserve banks shall be authorized, subject to the maturity limitations of the Federal reserve act and to regulations of the Federal Reserve Board, to discount the direct obligations of member banks secured by such bonds of the corporation and to rediscount eligible paper secured by such bonds and indorsed by a member bank. No discount or rediscount under this section shall be granted at a less interest charge then 1 per centum per annum above the prevailing rates for eligible commercial paper of corresponding maturity.

Any Federal reserve bank may, with the approval of the Federal Reserve Board, use any obligation or paper so acquired for any purpose for which it is authorized to use obligations or paper secured by bonds or notes of the United States not bearing the circulation privilege: Provided, however, That whenever Federal reserve notes are issued against the security saci c'Vig: 1) ns c paper the Federal Reserve Board may make a spec al interest clatge on such notes, which, in the discretion of the Federal Reserve Board, need not be appli cable to other Federal reserve notes which may from time to time be issued and outstanding. All provisions of law, not inconsistent herewith, in respect to the acquisition by any Federal reserve bank of obligations or paper secured by such bonds or notes of the United States, and in respect to Federal reserve notes issued against the security of such obligations or paper, shall extend, in so far as applicable, to the acquisition of obligations or paper secured by the bonds of the corporation and to the Federal reserve notes issued against the security of such obligations or paper.

SEC. 14. In order to enable the corporation to carry out the provisions of this act, the Treasury Department, the Comptroller of the Currency, the Federal Reserve Board, the Federal reserve banks, and the Interstate Commerce Commission are hereby authorized, under such conditions as they may preseribe, to make available to the corporation in confidence such reports, records, or other information as they may have available resting to the condition of financial institutions and or railroads with respect to which the corporation has had or contemplates having transactions under thus ret. or relating to individuals, associations, partnerships, or corporations whose obligations are offered to or held by the corporation as security for ioans to financial institutions or railroads under this act, and to make through their examiners or other employees for the confidential use of the evaporation examinations of such nancial institutions or railroads. Every appleant for a loon under this act shall, as a condition to ecedent thereto, consent to such examinations 28 the corporations may require for the purposes of this act and or that reports of examinations by constituted authorities may be furnished by such auchorities to the corporation upon request therefor,

SEC. 15. That all net earnings of the corporation not required for its operations shall be accumulated as a reserve fund until such time as the corporation liquidates under the terms of täis title. Such reserve fund shall, upon the direction of the board of directors, with the approval of the Secretary of the

Treasury, be invested in bonds and obligations of the United States, issued or converted after September 24, 1917, or upon like direction and approval may be deposited in member banks of the Federal reserve system, or in any of the Federal reserve banks, or be used from time to time, as well as any other funds of the corporation, in the purchase or redemption of any bonds issued by the corporation. The Federal reserve banks are hereby authorized to act as depositaries for and as fiscal agents of the corporation in the general performance of the powers conferred by this title. Beginning six months following a proclamation of the President of the United States, that there is no further need or use for the National Relief Finance Corporation, the directors of the corporation shall proceed to liquidate its assets and to wind up its affairs, but the directors of the corporation, in their discretion, may, from time to time, prior to such date, sell and dispose of any securities or other property acquired by the corporation. After the assets of the corporation have been fully liquidated, excepting, however, the securities of the United States Government, and all the debts of the corporation have been fully paid, the amount subscribed by the Treasury of the United States for the capital stock of the corporation shall be turned over to the Federal Reserve Board, either in currency or securities of the United States, to constitute an emergency finance fund, which shall be used by the Federal Reserve Board for the same purposes as provided in this act whenever in the opinion of the President of the United States an emergency exists.

For this purpose the Federal Reserve Board is hereby constituted a special board to administer the emergency finance fund and is hereby empowered to convert any currency in said fund into securities of the United States Government. If and when the President has proclaimed that an emergency does exist, the Federal Reserve Board is authorized and empowered to administer the fund for the same purposes and in the same manner as provided in this act for the administration of the National Relief Finance Corporation.

Any balance over and above the amount subscribed by the Treasury of the United States for the capital stock of the corporation shall be paid into the Treasury of the United States as miscellaneous receipts, and thereupon the corporation shall be dissolved.

SEC. 16. That any and all bonds issued by the corporation shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, and (b) graduated additional income taxes, commonly known as surtaxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, corporations, or associations. The interest on an amount of such bonds the principal of which does not exceed in the aggregate $10,000, owned by any individual, partnership, corporation, or association, shall be exempt from the taxes referred to in clause (b). The corporation, including its franchise and the capital and reserve or surplus thereof and the income derived therefrom, shall be exempt from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except that any real property of the corporation shall be subject to State, county, or municipal taxes to the same extent, according to its value, as other real property is taxed.

SEC. 17. That the United States shall not be liable for the payment of any bond or other obligation or the interest thereon issued or incurred by the corporation, nor shall it incur any liability in respect of any act or omission of the corporation.

SEC. 18. That whoever (1) makes any statement, knowing it to be false, for the purpose of obtaining for himself or for any other person, firm, corporation, or association any advance under this title, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than five years, or both. Whoever willfully overvalues any security by which any such advance is secured, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

Whoever (1) falsely makes, forges, or counterfeits any bond, coupon, or paper in imitation of or purporting to be in imitation of a bond or coupon issued by the corporation; or (2) passes, utters, or publishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited bond, coupon, or paper purporting to be issued by the corporation, knowing the same to be falsely made, forged, or counterfeited; or (3) falsely alters any such bond, coupon, or paper; or (4) passes, utters, or publishes as true any falsely altered or spurious bond, coupon,

or paper issued or purporting to have been issued by the corporation, knowing the same to be falsely altered or spurious, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five year, or both.

Whoever, being connected in any capacity with the corporation, (1) embezzles, abstracts, or wilfully misapplies any moneys, funds, or credits thereof, or (2) with intent to defraud the corporation or any other company, body politic or corporate, or any individual, or to deceive any officer of the corporation. (a) make any false entry in any book, report, or statement of the corporation, or (b) without authority from the directors draws any order or assigns any note, bond, draft, mortgage, judgment, or decree thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

The Secretary of the Treasury is hereby authorized to direct and use the Secret Service Division of the Treasury Department to detect. arrest, and deliver into the custody of the United States marshal having jurisdiction any person committing any of the offenses punishable under this section.

SFC. 19. That the corporation shall file quarterly reports with the Secretary of the Senate and with the Clerk of the House of Representatives, stating as of the first day of each month of the quarter just ended (1) the total amount of the capital paid in, (2) the total amount of bonds issued, (3) the total amount of bonds outstanding, (4) the total amount of advances made under each of the sections 7, 8, and 9, (5) a list of the classes and amount of securities taken under each of such sections, (6) the total amount of advances outstanding under each of sections 7, 8, and 9, and (7) such other information as may be hereafter required by either House of Congress.

The corporation shall make a report to Congress on the first day of each regular session, including a detailed statement of receipts and expenditures. The CHAIRMAN. Mr. Sabath, we would be glad to have you make your statement.

STATEMENT OF HON. ADOLPH J. SABATH, REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. SABATH. Mr. Chairman and gentlemen of the committee, before I begin I desire to make a brief statement. It is not my desire to bring politics into this matter, but there are times when we can not tell the truth without placing the burden and the responsibility where it belongs. When I made the statement yesterday that I could not understand why a certain few gentlemen are demanding haste and demanding immediate reporting of the bill-without it being read even for amendments, as all bills are-I could not help but feel that it was rather peculiar to call for immediate action, when for over a year I had been pleading with the President, with Mr. Eugene Meyer, the governor of the Federal Reserve Board, and with everyone I thought could influence the President to secure action upon this legislation or some other legislation that would relieve the country from the terrible condition of depression or crisis.

At the end of the session we adjourned for holiday and I was delayed coming back one day on account of a funeral. So I was amazed when I saw half a dozen different newspapers all bearing the headlines that the President in his message urged Congress to “get busy.”

I do not hold a brief for Congress. Perhaps Congress has not been quite as diligent as it might have been, but there is one thing, and I repeat it, that notwithstanding the attacks upon Congress by certain influential gentlemen, I think the Congress is sincere in endeavoring to legislate in the interest of the Nation: I know the vast majority on the Democratic side is, and I know the majority of the members on the Republican side-the great majority, desires

to do what is right. Therefore, to attack Congress continually through this organized propaganda and lobby does not appeal to me, nor do I look with a great deal of pleasure on the part of you gentlemen trying to force a measure of this magnitude, of this importance, through the committee, when the administration had nearly two years' time in which to take some step to relieve the deplorable conditions that exist in our country.

Now, gentlemen, I think this legislation, as I have stated, is necessary. Secretary Mills stated yesterday that the real relief will come from confidence that people will have if such legislation is enacted, and not from the amount of money that will be required to restore confidence. Well, I concede that Secretary Mills is a very capable gentleman, a man of ability, but I do not know whether he comes in contact with the masses of the people throughout the United States, as some of us do. I, perhaps, know the conditions as well as anyone. I travel a great deal, and I meet many people; I talk to many people my efforts toward securing this legislation. Much information comes to me because of sending out thousands of letters to bankers, real estate men, business men on this bill and other propositions in connection with my crusade against Wall Street shört sellers. In this way I have obtained a great deal of information from every section of the country, and I know that the money, the capital, will be required and will be needed; and confidence, of course, will be restored provided the people will have confidence in the bonds. I want to stress that, gentlemen.

in

A few months ago the President had a conference with certain New York financiers, to which he invited some Republicans and some Democrats, and asked them to submit hastily certain plans. The day before the conference was held-I do not know whether or not it was by intuition or what it was-I had some idea of what the conference in the White House would be, and when I learned that the Speaker of the House of Representatives was invited to that conference I immediately wired him here that he should not be bound by any secret White House-Wall Street conference, but that he should insist that a special session be called and that he should insist that a finance corporation be created that would not be governed by people away from the international banker combination, but by people in whom the country has confidence.

The CHAIRMAN. Have you a copy of that telegram?

Mr. SABATH. I have the copy.

The CHAIRMAN. I suggest that you leave it and incorporate it in

your statement.

Mr. SABATH. I will read it for the record.

The CHAIRMAN. It fits in with what you say regarding this matter. Mr. SABATH. I will follow your suggestion and read it. This is my telegram to Speaker Garner, dated October 6, 1931. The conference was held the 7th, I believe.

Mr. BRAND. No; the conference was held on the 6th at night.

Mr. SABATH. I know this reached him before they went to the conference. I did not really know what the conference was to be. Mr. STEVENSON. The statement was handed out on the 7th; it got out a little after midnight.

Mr. SABATH (reading):

I read in to-day's papers that after a secret conference with the Wall Street bankers the President is calling a conference of Democratic Members for the purpose of binding them to the Wall Street formulated program. As you know, the Federal Reserve Board, under the domineering influence of Wall Street, has miserably failed and was in a great measure responsible for the complete demoralization of our industries and banking institutions. I therefore suggest that you do not bind the liberal and progressive Democrats to any Wall Street formulated program.

Demand that a special session of Congress be immediately called for the purpose of relieving conditions and to reestablish confidence.

I realize confidence is needed.

People have lost faith in President Hoover and his administration and are clamoring for action to save millions of people out of employment and out of food. Will demand the establishment of a $5,000,000,000 prosperity finance corporation to be managed by financiers uncontrolled by Wall Street destruc tive forces. Will also demand an increase in income and inheritance tax and immediate liberalization of the Volstead Act.

Now, I received an answer from the [reading]:

Speaker on the 6th

Your telegram received. We appreciate your clear-cut analysis of situation. Have no intention of binding myself nor of attempting to bind Democratic Members of the House. Coneur fully in your view that situation justifies calling special session.

JOHN GARNER.

In 1930 and 1931, I sent to the President several letters and several telegrams, but I stated in those letters that I was doing it not as a Democrat, but as an American citizen; and I did not desire to give these things any publicity: I to-day will avail myself of that right and privilege to have these telegrams and letters printed, including communications with the White House, on these four propositions: First, to stop the Wall Street bears from further destructive tactics in destroying values of bonds and securities, to create the Finance Corporation; third to create a separate institution that would take care of over a million American citizens who are about to lose their homes through so-called home loan banks or mortgage banks; and fourth, to widen the scope of the Federal Reserve Board so as to accept for rediscount other securities, better securities than they have been accepting, in order to relieve the banks of the United States and the business men and institutions of the United States.

On these four points I have communicated with the President, with Secretary Mellon, with Mr. Eugene Meyer, the Governor of the Federal Reserve Board, and with many other influential people.

I do not wish that you gentlemen should feel because I use the language I sometimes do that I do it willfully and that I am so constituted. I am handicapped in finding the proper words to express more diplomatically some of the things that I wish to express, and therefore sometimes I am compelled to use a harsh expression which, I assure you, I would not wish to use and would not do so if I had the ability to use more acceptable language.

Now, I made the statement at that time, and also in the telegram to Mr. Garner, our Speaker, that the people have lost confidence in the President and his administration. Well, if it pleases you better, gentlemen, I will modify it, and I will say this, that the President's influence has been shaken with people who desire and